Moving from government research to academia
I can only answer for the situation in Germany (where fixed-term full professorships indeed exist). There are two different situations:
- In engineering your route is basically the default route to a full professorship. You do a PhD, go working in a company for five years or more and then apply for professorships. (You may also do a postdoc before working at a company.) In other fields it is not very common to return from outside academia (the only field I know for sure is mathematics and there I don't know anybody who returned back to academia).
- For professors at "Fachhochschulen" (often translated as universities of applied sciences) it is similar but not only for engineering but also for other fields. Do a PhD, work in companies, apply for professorships at Fachhochschulen. In fact, for professorships at Fachhochschulen it is even required to have working experience outside academia. However, Fachhochschulen are not exactly research institutions but focus more on higher education in science and technology, preparing people to work in companies. For example, they do not grant a PhD (but this may change in the future).
In the US, it is highly common that researchers move back and forth between national labs and universities in almost all the fields I know or know of. Sometimes national lab jobs are also considered a good starting point of one's career than a usual tenure-track position that comes with lots of teaching, administrative duties and stress of getting the tenured in the end. National lab jobs being non-teaching positions by default gives more time to get serious research done during the early part of one's career. Hence he or she can project themselves better for a senior level (associate or full prof) positions at universities after 5-10 years. The national lab jobs are also usually permanent right from the beginning (I am not talking about postdoc positions or other junior and non-permanent positions at national labs), hence one can escape the tenure-track process for 5-6 years and usually can enjoy better work-life balance. Again all this is arguable from both sides of course. I believe this should also be true in Australia up to certain extent. However, the tricky thing in your question is the '3 years position' in academia. In this case, most things would depend on the possibility of transferring this position into a permanent position after 3 years. Such a position indeed looks good on cv specially if it is an endowed chair level position as you mentioned to get the next job. However, I am not sure how the job market in Australia is in your field. The good looks of the cv matters if there are jobs available to which you can apply.
I know this is a bit old now. However as you have mentioned Australia in the title -I will gove you an Australian perspective.
Don't leave a full-time continuing position in Australia for a contract position (even at professor level). You are likely to be out on your ear after the three years, unless you can bring significant dollars through the door. Given the behind the scenes cut-backs that take place in Australia government funded research, you will be struggling to get any funding if you are new to the system.
Cheers