There is evidence of important progress in 2004/5 on the prioritisation and targeting of national policy responses to innovation challenges. A key breakthrough is the fact that these topics have been given a high priority on the national policy agenda. In line with this, a process of reflection and review is underway to improve the national innovation system as a whole. It is envisaged that an important innovation policy learning curve is being set in motion which will hopefully accelerate in thecoming years. Progress is recorded on a number of fronts in terms of targeting of policy measures based on the National Budget 2005 indications, however further efforts are required on innovation policy challenges (improving the statistics for tracking innovation, increasing the percentage of S&E graduates and working population with tertiary degree, and improving patenting activity).

It is clear that national efforts to meet the Lisbon objectives have to be stepped up to address key areas in terms of member states' progress towards meeting the Lisbon goals: education and training, sustainable development, reduction of state subsidies. The lack of data for many of the Lisbon measures makes it difficult to ascertain the current status. An area of good practice is information society where Malta emerges as a leader among the new members and the social cohesion drive. In response to the CER Report, theGovernment is extending the scope and composition of the Competitiveness Cabinet Committee to spearhead the monitoring and national coordination of implementation of the Lisbon Strategy.