The value of intangible assets reported in the Commonwealth Consolidated Financial Statements was $7.7 billion for 2005-2006, including $3.8 billion worth of computer software assets, up from a few hundred million a decade ago.

"This damning report highlights Australia's vulnerability in protecting our IP assets against sophisticated and litigious firms," Bishop said. "Companies can currently place their own IP on such public assets, such as computer software, because the government has to date not been able to manage this process."

Bishop said agencies are often unaware of the IP they create and fail to see any benefit arising from owning such property.

"They need a whole-of-government approach and this government must accept responsibility for such IP management, otherwise we will see a 'brain-drain' through the back-door of expertise it has taken years to build," he said.

The auditor's report, which cost $324,000 to compile, was tabled in parliament late last week. Parliament House's Joint Committee of Public Account and Audit (JCPAA) is investigating, and supports, the proposed concerted approach to IP management.