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8104.0 - Research and Experimental Development, Businesses, Australia, 2008-09 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 23/09/2010   
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EXPLANATORY NOTES


INTRODUCTION

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 2009.

2 The survey was conducted by the Australian Bureau of Statistics (ABS) via mail questionnaire and achieved a response rate of 95%.


DEFINITION OF R&D

3 R&D as collected by the ABS is defined in accordance with the Organisation for Economic Co-operation and Development (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.

4 For a more comprehensive interpretation of the definition of R&D, see the OECD publication The Measurement of Scientific and Technological Activities: Proposed Standard Practice for Surveys of Research and Experimental Development - Frascati Manual 2002.

5 Data providers report and self-classify R&D survey information 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 sections of the Technical Note.


FRAME

6 The source of the frame for the Survey of R&D, Businesses is the ABS Business Register (ABSBR). The ABSBR records information about statistical units and is used to create the frames for most ABS economic collections.


Statistical units defined on the ABSBR

7 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.

8 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 businesses, the units model is also used to define reporting units that can provide data to the ABS at suitable levels of detail.

9 The units model allocates businesses to one of two sub-populations. The vast majority of businesses are in what is called the Australian Taxation Office (ATO) Maintained Population (ATOMP), while the remaining businesses are in the ABS Maintained Population (ABSMP). Together these two sub-populations make up the ABSBR population.

10 Most businesses and organisations in Australia need to obtain an Australian Business Number (ABN) and are then included on the whole-of-government register of businesses, the Australian Business Register (ABR), which is maintained by the 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 ATOMP, and the ABN unit is used as the statistical unit for ABS economic collections.

11 For the population of businesses where the ABN is not suitable for ABS statistical requirements, the ABS maintains its own units structure through direct contact with each business. These businesses constitute the 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.

12 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 the Information Paper: Improvements in ABS Economic Statistics [Arising from The New Tax System], 2002 (cat.no.1372.0).

13 Statistical units for the Survey of R&D, Businesses consist of ABNs for the ATOMP and TAUs from the ABSMP, except for a small number of cases where unit splitting occurs.


Unit splitting

14 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 and the 'TAU splits' become the statistical units. 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 the revision rules outlined in the Technical Note.


SCOPE AND COVERAGE

15 The Survey of R&D, Businesses aims to be a complete enumeration of businesses within the Australian business sector (i.e. all businesses and the private non-profit institutions mainly serving them) with intramural expenditure on R&D of $100,000 or more during the reference period.

16 Intramural expenditure is defined as expenditure for R&D performed by the statistical unit regardless of the source of funds. Expenditures made outside the statistical unit but in support of intramural R&D are included; for example, payments for analytical work, engineering or specialised services which form part of an R&D project performed by the statistical unit. R&D funded by the statistical unit but performed wholly by another on their behalf (extramural R&D) is excluded. For further information, refer to the OECD Frascati Manual 2002.

17 The ABS identifies businesses for inclusion in the survey if the business:

  • 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.


Changes to survey scope

18 Prior to the 2005-06 cycle, the Survey of R&D, Businesses included all Australian businesses with intramural expenditure on R&D (regardless of the expenditure value) with the exception of businesses mainly engaged in agriculture, forestry and fishing. From 2005-06, the survey scope was adjusted to:
  • include businesses classified to Division A (Agriculture, forestry and fishing) of the Australian and New Zealand Standard Industrial Classification (ANZSIC); and
  • exclude businesses with expenditure on R&D of less than $100,000 in the reference period (i.e. introduction of an expenditure based scope cut-off).

19 Strong growth in the number of businesses performing R&D and the inclusion of Division A resulted in the implementation of the scope cut-off. This approach was taken to enable continued release of detailed R&D statistics within available resources.

20 The impact of the two scope changes on key survey estimates was relatively minor due to the changes largely 'offsetting' each other; as such, estimates for previous reference periods were not recalculated (or backcast) based on the new scope.

21 It is estimated the scope cut-off 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 for human resources devoted to R&D.


INDUSTRY CLASSIFICATION

22 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).

23 Each ABN unit/TAU is classified by the ABS to the industry in which it mainly operates. For the purposes of the Survey of R&D, Businesses, in accordance with standards set out in the OECD Frascati Manual 2002, 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

24 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 in June 2009.


LOCATION OF EXPENDITURE

25 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.


TYPE OF ACTIVITY (TOA), FIELD OF RESEARCH (FOR) AND SOCIO-ECONOMIC OBJECTIVE (SEO)

26 TOA, FOR and SEO statistics presented in this release have been collected and compiled based on Australian and New Zealand Standard Research Classification (ANZSRC), 2008 (cat. no. 1297.0).

27 Some businesses may have experienced difficulty in classifying their R&D projects to TOA, FOR and SEO. See also the Reliability of statistics and Revisions sections of the Technical Note.


GROSS DOMESTIC PRODUCT (GDP) AND GROSS STATE PRODUCT (GSP)

28 The most recent GDP and GSP values available were used to calculate the R&D expenditure/GDP and R&D expenditure/GSP ratios presented in this issue. These values are referenced in the tables below.

Gross Domestic Product, current prices

2004-05
2005-06
2006-07
2007 - 08
2008-09
$m
$m
$m
$m
$m

Gross Domestic Product
925 864
1 000 787
1 091 327
1 181 750
1 254 651

Source: Australian National Accounts: National Income, Expenditure and Product, Jun 2010 (cat. no. 5206.0), released 1 September 2010.

Gross State Product, current prices

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

2006-07
352 162
261 200
209 173
71 725
138 688
21 249
14 339
22 791
2007-08
381 720
281 504
223 450
76 905
155 449
22 261
15 879
24 582
2008-09
402 334
291 637
243 901
78 986
169 950
23 176
17 168
25 969

Source: Australian National Accounts, State Accounts, 2008-09 (cat. no. 5220.0). Reissue released December 2009.


29 GDP is estimated by the ABS according to the recently updated international standards System of National accounts, 2008 (2008 SNA) and is not directly comparable to GDP from countries where these standards have not been applied.


CHAIN VOLUME MEASURES

30 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 2008-09). 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).


R&D deflators

31 With the implementation of 2008 SNA, deflators used to calculate the chain volume measure of expenditure on R&D were 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. The revised deflators have been used for Business R&D statistics from the 2007-08 survey cycle.


UPCOMING RELEASES

32 Upcoming ABS releases of R&D statistics include:
      Research and Experimental Development, All Sector Summary, Australia, 2008-09 (cat. no. 8112.0), to be released 11 October 2010.


OTHER RELATED RELEASES

33 Users may also wish to refer to the following ABS releases:
34 Relevant OECD publications include:

ABS WEBSITE

35 Other information relating to R&D and Innovation (including data cubes in spreadsheet format) can be found on the ABS website <www.abs.gov.au>. See the Innovation, Science and Technology theme page under Topics @ a Glance/Industry.


ROUNDING

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

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