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8104.0 - Research and Experimental Development, Businesses, Australia, 2007-08 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 25/09/2009   
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EXPLANATORY NOTES


DATA SOURCES

1 The statistics presented in this release have been compiled from data collected from businesses in the Survey of Research and Experimental Development (R&D) in respect of the year ended 30 June 2008. The survey was conducted by the Australian Bureau of Statistics (ABS) via mail questionnaire and a 92% response rate was achieved.

2 Gross domestic product and gross state product figures used to derive R&D expenditure ratios are referenced in the tables below.

Gross Domestic Product, current prices

2003-04
2004-05
2005-06
2006-07
2007-08
$m
$m
$m
$m
$m

Gross domestic product
841 351
897 642
967 454
1 045 674
1 132 464

Source: Australian National Accounts: National Income, Expenditure and Product, June 2009 (cat. no. 5206.0)

Gross State Product, current prices

NSW
Vic.
Qld
SA
WA
Tas.
NT
ACT
$m
$m
$m
$m
$m
$m
$m
$m

2005-06
316 882
235 284
181 969
64 543
118 183
18 355
12 423
19 815
2006-07
335 828
247 789
198 514
68 327
139 247
20 221
14 014
21 734
2007-08
359 883
267 966
214 027
73 262
156 752
21 300
15 617
23 365

Source: Australian National Accounts, State Accounts, 2007-08 (cat. no. 5220.0)



STATISTICAL UNITS DEFINED ON THE ABS BUSINESS REGISTER

3 Statistical units are those entities from which statistics are collected, or about which statistics are compiled. In ABS economic statistics, the statistical unit is generally the business. The ABS Business Register (ABSBR) is used to record information about statistical units and is used to create the frames for most ABS economic collections.

4 The ABS uses an economic statistics units model on the ABSBR to describe the characteristics of businesses, and the structural relationships between related businesses. Within large, complex and diverse business groups, the units model is also used to define reporting units that can provide data to the ABS at suitable levels of detail.

5 This units model allocates businesses to one of two sub-populations:
  • Businesses with a simple structure - Most businesses and organisations in Australia need to obtain an Australian Business Number (ABN). They are then included on the whole-of-government register of businesses, the Australian Business Register (ABR), which is maintained by the Australian Taxation Office (ATO). Most of these businesses have simple structures; therefore, the unit registered for an ABN will satisfy ABS statistical requirements. For these businesses, the ABS has aligned its statistical units structure with the ABN unit. The businesses with simple structures constitute the ATO maintained population (ATOMP), and the ABN unit is used as the statistical unit for all ABS economic collections.
  • Businesses with a complex structure - For the population of businesses where the ABN unit is not suitable for ABS statistical requirements, the ABS maintains its own units structure through direct contact with the business. These businesses constitute the ABS maintained population (ABSMP). This population consists typically of large, complex and diverse businesses. For businesses in the ABSMP, statistical units comprise the Enterprise Group, the Enterprise and the Type of Activity Unit (TAU). The range of activities across the Enterprise Group can be very diverse. The TAU represents a grouping of one or more business entities within the Enterprise that cover all of the operations within an industry subdivision and for which a basic set of financial production and employment data can be reported.

6 Together these two sub-populations (of ABN units and TAUs) make up the ABSBR population, from which R&D survey selections are sourced.

7 The current economic statistics units model was introduced into the ABS in mid 2002, to better use the information available as a result of The New Tax System (TNTS). For more information please refer to Information Paper: Improvements in ABS Economic Statistics [Arising from The New Tax System] (cat. no. 1372.0).


Unit splitting

8 In cases where a TAU is deemed to have significant activities applying to more than one industry subdivision, the TAU is split for statistical purposes. Where a TAU has been split, the provider is asked to report data for all activities covered by the TAU (i.e. the TAU remains the collection unit). The data is then apportioned across the separate TAU splits (the statistical units) by ABS staff using factors determined during business profiling. TAU splits were implemented in the R&D survey for the first time, in the 2005-06 cycle, and were applied for previous cycles according to revision rules outlined in the Technical Note.


DEFINITIONS

9 R&D as collected by the ABS is defined in accordance with the OECD standard as 'creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of knowledge to devise new applications'. Although outside the economic boundary of R&D as defined by the OECD, R&D performed overseas by Australian businesses is included in these data.

10 Expenditures in this release represent R&D performed by the business itself (intramural). R&D funded by a business but performed wholly by another on their behalf (extramural) is out of scope of the survey. However, payments for analytical work, engineering or specialised services which form part of an R&D project performed by the business, are in scope of the survey.

11 For a more comprehensive interpretation of the definition of R&D, see the Australian and New Zealand Standard Research Classification (ANZSRC), 2008 (cat. no. 1297.0) or refer to the OECD publication Proposed Standard Practice for Surveys of Research and Experimental Development ('Frascati Manual' 2002).


SCOPE AND COVERAGE

12 Due to strong growth in the number of businesses performing R&D, changes were made to the scope of the R&D survey from the 2005-06 cycle to enable continued release of detailed R&D statistics within available resources. Prior to this, the survey scope included all businesses within the Australian business sector (i.e. all businesses and the private non-profit institutions mainly serving them) but excluded businesses mainly engaged in Agriculture, forestry and fishing. From 2005-06, the scope was adjusted to exclude businesses with expenditure on R&D of less than $100,000 in the reference period. Offsetting this change, however, was the inclusion of businesses classified to Division A (Agriculture, forestry and fishing) of the Australian and New Zealand Standard Industrial Classification (ANZSIC). The scope changes were not backcast for previous reference periods, given their offsetting nature and their relatively minor impact on key survey estimates.

13 It is estimated that the exclusion of businesses with R&D expenditure of less than $100,000 has resulted in total business expenditure on R&D being understated by less than 1%. Users should, however, exercise caution when comparing estimates for businesses with 0-4 employees prior to 2005-06, as the majority of units with expenditure below $100,000 fell into this employment size range. Most affected were estimates of PYE.

14 Businesses were included in the survey if they:
  • reported expenditure on R&D in previous surveys;
  • applied for an AusIndustry administered R&D Tax Concession and/or grant for industry R&D;
  • indicated expenditure on R&D of $100,000 or more in the reference year, via a coverage questionnaire; or
  • were identified through other sources such as newspapers, journals, research compendia etc. as likely to have expenditure on R&D.


INDUSTRY CLASSIFICATION

15 The statistics in this release are classified to industry in accordance with the Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 (cat. no. 1292.0).

16 Each ABN unit/TAU is classified by the ABS to the industry in which it mainly operates. In accordance with standards set out in the Frascati Manual, for cases where an Enterprise Group sets up a dedicated research unit, that unit is classified to the predominant industry of the group rather than to Scientific research services (ANZSIC 6910).


EMPLOYMENT SIZE

17 For output purposes, businesses are classified to employment size ranges based on data reported in the survey. Businesses were asked to report the number of persons working for the business during the last pay period ending in June 2008.


LOCATION OF EXPENDITURE

18 Location of expenditure relates to the region(s) in which the business reported having performed R&D during the reference period. This may not be the head office location of the business.


AUSTRALIAN AND NEW ZEALAND STANDARD RESEARCH CLASSIFICATION

19 Field of research, Socio-economic objective, and Type of activity statistics presented in this release have been collected and compiled based on the Australian and New Zealand Standard Research Classification (ANZSRC), 2008 (cat. no. 1297.0). Earlier issues of this release used the Australian Standard Research Classification (ASRC).

20 Data providers self-classify R&D expenditure based on their interpretation of OECD/ABS definitions. The ABS makes every effort to ensure correct and consistent interpretation and reporting of these data and applies consistent processing methodologies. See also the Reliability of Statistics and Revisions section of the Technical Note.

21 The ABS has not compiled previous cycle estimates on an ANZSRC basis or 2007-08 estimates on an ASRC basis. Previous cycle data compiled on an ASRC basis (including revised data for 2005-06 and 2006-07) are available in the data cubes accompanying this release.


CHAIN VOLUME MEASURES

22 The chain volume measures appearing in this release are annually reweighted chain Laspeyres indexes referenced to the current price values in a chosen reference year (currently 2007-08). They can be thought of as current price values re-expressed in (i.e. based on) the prices of the previous year and linked together to form continuous time series. They are formed in a multi-stage process of which the major steps are described in Section 15 of the Information Paper: Australian National Accounts, Introduction of Chain Volume Measures and Price Indexes (cat. no. 5248.0).

23 Deflators used to calculate the chain volume measure of expenditure on R&D have been revised to: better capture changes in the unit value of labour used in the production of R&D services; and to increase and refine the number of products included in the deflators. This release presents chain volume estimates calculated using the revised deflators, for the first time.


RELATED RELEASES

24 Users may also wish to refer to the following ABS releases:
25 Relevant OECD publications include:
      Main Science and Technology Indicators 2009/1
      Proposed Standard Practice for Surveys of Research and Experimental Development ('Frascati Manual' 2002)


ABS WEBSITE

26 Other information, including data cubes in spreadsheet format, relating to R&D and innovation can be found on the ABS website <www.abs.gov.au>. See the Innovation, Science and Technology Home page under Themes/Industry.


ABS DATA AVAILABLE ON REQUEST

27 As well as the statistics included in this and related releases, the ABS may have other relevant data available on request. Inquiries should be made to the National Information and Referral Service on 1300 135 070.


ROUNDING

28 Where figures have been rounded, discrepancies may occur between the sum of the component items and totals.


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