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1367.5 - Western Australian Statistical Indicators, Jun 2007  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 04/07/2007   
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FEATURE ARTICLE 1: RESEARCH AND EXPERIMENTAL DEVELOPMENT IN WESTERN AUSTRALIA


INTRODUCTION

A recent report by the Productivity Commission 'Public Support for Science and Innovation' (9 March 2007) identified Research and Experimental Development (R&D) as an important source of economic growth through its contribution to increased productivity. It is not surprising, therefore, that Western Australia's recent economic boom has coincided with strong growth in the state's investment in R&D. This article examines results from the 2004-05 suite of ABS R&D surveys, highlighting the extent to which Western Australia's R&D expenditure has grown in recent years and the sectors of the economy responsible for that growth.



ABOUT THE DATA

R&D as collected by the ABS is defined in accordance with the OECD standard as comprising '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'. Recent ABS publications relating to R&D include:

  • Research and Experimental Development, Businesses, 2004-05 (cat. no. 8104.0);
  • Research and Experimental Development, Higher Education Organisations, 2004 (cat. no. 8111.0);
  • Research and Experimental Development, Government and Private Non-profit Organisations, 2004-05 (cat. no. 8109.0); and
  • Research and Experimental Development, All Sector Summary, 2004-05 (cat. no. 8112.0).


GROWTH IN WESTERN AUSTRALIA'S R&D EXPENDITURE

Since declining briefly in the late 1990s, expenditure on R&D in Western Australia has risen sharply. Between 1998-99 and 2004-05, gross expenditure on R&D in Western Australia more than doubled, rising from $844 million to $1,738 million. The largest part of this growth (70.9%), however, occurred between 2002-03 and 2004-05, when Western Australia's gross expenditure on R&D increased 57.4% ($634 million). Over this same period the state economy also surged, with Gross State Product (GSP) increasing 19.5% ($16,796 million) in current price terms. With the state's gross R&D expenditure rising almost three times faster than its GSP, the proportion of GSP devoted to R&D grew substantially over the period (up from 1.3% to 1.7%).

GROSS R&D EXPENDITURE, Western Australia
Graph: GROSS R&D EXPENDITURE, Western Australia



The rapid rise in the level of R&D investment in Western Australia has, however, contrasted with a slowing of growth at the national level. As shown in the graph below, bi-annual growth in Western Australia's gross R&D expenditure rose from 20.1% in 2002-03 to 57.4% in 2004-05, while Australia's bi-annual growth fell from 26.8% to 19.4% over the same period. The states mainly responsible for the slowdown nationally were New South Wales and South Australia.

GROWTH IN GROSS R&D EXPENDITURE
Graph: GROWTH IN GROSS R&D EXPENDITURE



With Western Australia's gross R&D expenditure underpinning much of the growth at the national level, the state's contribution to Australian gross R&D expenditure increased from 8.4% in 2002-03 to 11.0% in 2004-05.



WESTERN AUSTRALIA'S R&D EXPENDITURE BY SECTOR

The recent strong growth in Western Australia's R&D expenditure has primarily been driven by the state's business sector, although the higher education and private non-profit sectors also experienced large increases. By comparison, expenditure on R&D by the government sector (both State and Commonwealth) in Western Australia remained relatively stable. The contribution of each of these sectors to the state's R&D boom is discussed in more detail below.

GROWTH IN R&D EXPENDITURE BY SECTOR, Western Australia - 2002-03 to 2004-05
Graph: GROWTH IN R&D EXPENDITURE BY SECTOR, Western Australia-2002-03 to 2004-05



BUSINESS

Between 2002-03 and 2004-05, Western Australia's business sector accounted for almost three quarters (73.0%) of the growth in the state's gross expenditure on R&D. Over this period, expenditure on R&D by businesses located in Western Australia increased 78.6% ($463 million) to $1,051 million, compared to a national increase of 21.7%. As a consequence, the state's share of national gross business expenditure on R&D increased from 8.5% to 12.4%. Over the same period, the business sector increased its share of Western Australia's gross expenditure on R&D from 53.3% to 60.5%.

BUSINESS R&D EXPENDITURE, Western Australia
Graph: BUSINESS R&D EXPENDITURE, Western Australia



While many factors have contributed to the surge in Western Australia's R&D expenditure, the expansion of the state's resources sector has had the largest impact on R&D investment. Between 2002-03 and 2004-05, the mining industry in Western Australia increased its expenditure on R&D 130% ($255 million) to $452 million. Other industries to report large increases in R&D expenditure during this period included, manufacturing (up 48.6% or $100 million), property and business services (up 62.4% or $56 million) and construction (up 43.7% or $22 million).

GROWTH IN R&D EXPENDITURE BY INDUSTRY, Western Australia - 2002-03 to 2004-05
Graph: GROWTH IN R&D EXPENDITURE BY INDUSTRY, Western Australia-2002-03 to 2004-05



Within the mining industry, the strongest growth in R&D investment was recorded in metal ore mining (up $134 million) and oil and gas extraction (up $64 million) between 2002-03 and 2004-05. The strong resources sector also contributed to growth in R&D expenditure in other related industries such as machinery and equipment manufacturing (up $46 million) and metal product manufacturing (up $29 million).

GROWTH IN BUSINESS R&D EXPENDITURE, Top 5 industry classes - Western Australia

EXPENDITURE ON R&D ($m)
GROWTH 2002-03 TO 2004-05
Rank Industry class
2002-03
2004-05
$m
%

1 Metal ore mining
143
277
134
94.0
2 Oil and gas extraction
23
87
64
274.0
3 Services to mining
16
71
55
353.6
4 Machinery and equipment manufacturing
86
132
46
53.3
5 Metal product manufacturing
40
69
29
72.9


HIGHER EDUCATION

The next largest contributor to growth in Western Australia's R&D expenditure was the higher education sector, which accounted for 23.0% of the total increase between 2002-03 and 2004-05. During this period, expenditure on R&D by the state's higher education sector increased 49.4% ($146 million) to $442 million, almost twice the national rise of 24.9%. As a consequence, Western Australia's share of national higher education R&D expenditure increased from 8.6% to 10.3%.

HIGHER EDUCATION R&D EXPENDITURE, Western Australia
Graph: HIGHER EDUCATION R&D EXPENDITURE, Western Australia



The recent rise in R&D expenditure by Western Australia's higher education sector coincided with a series of reforms of the sector by the Commonwealth Government (the 'Nelson Reforms'). Amongst other changes, the Nelson Reforms established a framework for research in which all Commonwealth funding is either competitive or performance-based. As a consequence, some universities have strengthened their R&D activity to differentiate themselves in competitive local and international markets.


PRIVATE NON-PROFIT

Private non-profit organisations located in Western Australia accounted for 2.5% of the growth in the state's R&D expenditure between 2002-03 and 2004-05. Over this period, expenditure on R&D by the state's private non-profit sector increased 69.1% ($15 million) to $38 million, almost twice the rate of growth nationally (37.2%). This increased Western Australia's share of national private non-profit expenditure on R&D from 6.2% in 2002-03 to 7.7% in 2004-05.

PRIVATE NON-PROFIT R&D EXPENDITURE, Western Australia
Graph: PRIVATE NON-PROFIT R&D EXPENDITURE, Western Australia



GOVERNMENT

Commonwealth and State Government organisations located in Western Australia accounted for the remaining 1.5% of growth in the state's R&D expenditure between 2002-03 and 2004-05. Over this period, expenditure on R&D by government organisations located in Western Australia increased 4.7% ($9 million) to $207 million, well below the corresponding levels of growth reported by other sectors. However, governments also invest in R&D through a range of funding programs and initiatives available to the business, higher education and private non-profit sectors. Between 2002-03 and 2004-05, the amount of R&D that was funded by Commonwealth and State Government sources increased 19.1% or $1 billion nationally.

GOVERNMENT R&D EXPENDITURE, Western Australia
Graph: GOVERNMENT R&D EXPENDITURE, Western Australia



For further information about the ABS R&D survey program, including requests for more detailed data, please contact Kirsty Rothenbury on (08) 9360 5382.

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