Part of the reforms for Victorian VET announced today (see http://www.steveherbertmp.com.au/media-releases/skills-first-real-training-for-real-jobs/)  include a fund that explicitly acknowledges applied research:

the new Workforce Training Innovation Fund will provide funding for new training programs and products, projects or initiatives. This will include specialised curriculum development and applied research that develops new skills where there are identified gaps for new, emerging and priority sectors. The fund will support strong partnerships between industry, TAFEs, dual sector universities and high quality training providers