8104.0 - Research and Experimental Development, Businesses, Australia, 2010-11 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 11/09/2012   
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BUSINESS EXPENDITURE ON R&D (BERD)


INDUSTRY

Manufacturing and Mining remained the largest contributors to total BERD in 2010-11, contributing $4,760 million (27%) and $3,821 million (21%) respectively. Financial and insurance services ($2,749 million or 15%) and Professional, scientific and technical services ($2,697 million or 15%) were the next largest contributors. Together, these four industries accounted for more than three quarters (78%) of total BERD in 2010-11.

BERD, Top 10 industries (a)
Graph: BERD, Top 10 industries (a)


All four of the largest industry contributors to total BERD recorded increases in BERD in 2010-11. Manufacturing had the largest increase in BERD from 2009-10, up $499 million (12%), followed by Professional, scientific and technical services, up $140 million (5%). Financial and insurance services had the third largest increase (up $134 million or 5%) and Mining the fifth largest (up $108 million or 3%). Construction (up $127 million or 15%) had the fourth largest increase in BERD in 2010-11. The industry with the largest decrease in BERD from 2009-10 was Wholesale trade (down $49 million or 6%).

The top ten contributing industries to BERD remained almost unchanged in 2010-11, both in terms of proportional share of total BERD and ranking order. Manufacturing showed the largest change in proportional share of total BERD from 2009-10, up two percentage points. Compared to 2009-10, Administrative and support services replaced Agriculture, forestry and fishing as the tenth largest industry contributor to total BERD.


EMPLOYMENT SIZE

In 2010-11, businesses in the employment size group of 200 or more employees made the largest contribution to total BERD ($12,176 million or 68%), followed by businesses with 20-199 employees ($3,392 million or 19%). The employment size groups of 5-19 employees and 0-4 employees contributed $1,489 million and $823 million respectively to total BERD in 2010-11.

All employment size groups showed increases in BERD in 2010-11. The largest dollar increase was recorded by businesses with 200 or more employees (up $672 million or 6%), while businesses with 0-4 employees recorded the largest increase in percentage terms (up $178 million or 28%).

Compared to 2009-10, businesses with 0-4 employees showed the largest change in proportional share of total BERD (up one percentage point), but remained the smallest contributing employment size group to total BERD (accounting for 5% in 2010-11). Conversely, businesses with 200 or more employees had a decrease of one percentage point in share of total BERD, but remained the largest contributing employment size group to total BERD, accounting for 68% in 2010-11.

The comparability over time of estimates by employment size group may be affected by moves in classification between reference periods. See the Comparability of Estimates Over Time section of the Technical Note for more information.


TYPE OF EXPENDITURE

As in previous years, Current expenditure was the largest type of expenditure in 2010-11, accounting for $16,990 million or 95% of total BERD. Capital expenditure accounted for the remaining $890 million or 5% of total BERD. Both Current and Capital expenditure increased in 2010-11, up $937 million (6%) and $181 million (26%), respectively.

The overall 6% increase in Current expenditure in 2010-11 was the result of an increase of $1,228 million (13%) in Other current expenditure, partially offset by a decrease of $291 million (5%) in Labour costs. Compared to 2009-10, Other current expenditure increased as a proportion of total BERD (up three percentage points to 60%), while Labour costs decreased (down four percentage points to 35%). The shift in type of expenditure from Labour costs to Other current expenditure observed in 2010-11 can be partially attributed to businesses increasing their use of contractors for R&D work. Payments to contractors who are not on the payroll of the business are excluded from Labour costs, instead being included in Other current expenditure (see the definitions for Labour Costs and Other Current Expenditure in the Glossary for more information). The increased reliance on contractors rather than on businesses own employees contributed to the decrease in human resources devoted to R&D in 2010-11, as described in the Industry section of Business Human Resources Devoted to R&D.

Both components of Capital expenditure increased in 2010-11, with Land, buildings and other structures up $2 million (2%) and Other capital expenditure up $179 million (31%). Among types of expenditure, the two components of Capital expenditure were the smallest contributors to total BERD in 2010-11. Land, buildings and other structures contributed less than 1% of total BERD, and Other capital expenditure contributed 4% of total BERD.

In 2010-11, the Manufacturing and Mining industries reported the largest amounts of Current and Capital expenditure. The two industries together accounted for almost half (47%) of total Current expenditure (Manufacturing 26% and Mining 21%), and more than half (58%) of total Capital expenditure (Manufacturing 33% and Mining 25%).


SOURCE OF FUNDS

The Business sector remained the principal source of BERD funds in 2010-11, with $17,128 million (96% of total BERD) coming from Own funds and $213 million (1% of total BERD) from Other business. Commonwealth government and Overseas sources were the next largest funders of BERD, at $270 million (2% of total BERD) and $168 million (1% of total BERD) respectively. Commonwealth government (down $34 million or 11%) was the only source of BERD funds to decrease between 2009-10 and 2010-11.


LOCATION OF EXPENDITURE

Location of expenditure relates to the region in which the R&D activity was performed; see also Explanatory Note 26. New South Wales (NSW) and Victoria continued to have the highest levels of BERD in 2010-11, at $6,334 million (35% of total BERD) and $4,051 million (23% of total BERD), respectively.

BERD, by location of expenditure
Graph: BERD, by location of expenditure


In 2010-11, all locations recorded increases in BERD. Queensland recorded the largest growth in dollar terms, up $322 million or 14%, and was also the only location to show an increase in proportional share of total BERD (up one percentage point to 15%). Growth in BERD for Queensland was driven by the Mining industry (up $209 million in Queensland).

Western Australia (WA) recorded the second largest increase in BERD in 2010-11, up $265 million or 9%, although its proportional share of total BERD remained unchanged at 18%. The Manufacturing (up $96 million in WA) and Mining (up $85 million in WA) industries were the main drivers of the increase in BERD for WA.


BERD and Gross State Product (GSP)

In 2010-11, the state with the highest level of BERD as a proportion of GSP was WA (1.49%), although it also recorded the largest decrease in BERD/GSP ratio (down from 1.64% in 2009-10). BERD as a proportion of GSP decreased for all states and territories in 2010-11, with the exception of Queensland, Tasmania and the Northern Territory.

BERD, by location of expenditure - proportion of GSP(a)

NSW
Vic.
Qld
SA
WA
Tas.
NT
ACT
%
%
%
%
%
%
%
%

2010-11
1.44
1.28
1.01
0.93
1.49
0.59
0.76
0.29
2009-10
1.48
1.30
0.94
0.94
1.64
0.50
0.74
0.30

(a) See Explanatory Note 29 for details.



TYPE OF ACTIVITY

In 2010-11, businesses continued to direct the majority of BERD into Experimental development ($10,970 million or 61% of total BERD) and Applied research ($5,886 million or 33% of total BERD). These types of activity had the largest dollar increases in BERD between 2009-10 and 2010-11, with Experimental development up $760 million and Applied research up $250 million. Pure basic research remained the smallest type of activity in 2010-11, accounting for 1% of total BERD. Applied research was the only type of activity to show a change in its proportional share of total BERD, down one percentage point from 2009-10.


FIELDS OF RESEARCH

The research fields of Engineering ($9,210 million or 52% of total BERD) and Information and computing sciences ($5,019 million or 28% of total BERD) together accounted for 80% of total BERD in 2010-11. Compared to 2009-10, the proportional share of total BERD for Information and computing sciences decreased by one percentage point and for Engineering remained the same. These two research fields had the largest dollar increases in BERD in 2010-11, with Engineering up $421 million and Information and computing sciences up $184 million.

Education (down $4 million), Law and legal studies (down $2 million) and Studies in human society (down $1 million) were the only research fields to record decreases in BERD in 2010-11.

The distribution of total BERD across fields of research remained almost unchanged from 2009-10, with the same fields making up the top ten contributors to total BERD, and the ranking order of the top five contributors to total BERD unchanged.


SOCIO-ECONOMIC OBJECTIVE

The majority of BERD in 2010-11 was directed towards the socio-economic objective (SEO) divisions of Manufacturing ($4,588 million or 26% of total BERD), Commercial services and tourism ($3,396 million or 19% of total BERD) and Energy ($2,578 million or 14% of total BERD), which together accounted for more than half (59%) of total BERD.

Mineral resources (excluding energy resources) (up $313 million), Manufacturing (up $222 million) and Construction (up $166 million) showed the largest dollar increases in BERD compared to 2009-10. Mineral resources (excluding energy resources) also showed the largest increase in proportional share of total BERD, up one percentage point to 12% in 2010-11.

Energy (down $156 million) and Cultural understanding (down $2 million) were the only SEO divisions to show decreases in BERD in 2010-11. Energy also showed the largest decrease in proportional share of total BERD in 2010-11, down two percentage points from 16% in 2009-10.

Compared to 2009-10, nine of the top ten SEO contributors to total BERD remained the same in 2010-11, and the ranking order of the top six contributors to total BERD was unchanged. Environment replaced Defence as the tenth largest SEO contributor to total BERD in 2010-11.


FOREIGN OWNERSHIP

Wholly Australian owned businesses again made the largest contribution to BERD in 2010-11, accounting for $10,445 million or 58% of total BERD. Compared to 2009-10, wholly Australian owned businesses were the only group to record an increase in BERD (up $1,730 million or 20%) and an increase in proportional share of total BERD (up six percentage points).

Businesses with greater than 0% and less than 10% foreign ownership had the largest decrease in BERD from 2009-10 (down $447 million or 36%), and showed the largest decrease in proportional share of total BERD (down three percentage points from 7%).

BERD, by level of foreign ownership(a)

EXPENDITURE ON R&D
PROPORTION OF TOTAL EXPENDITURE ON R&D
2008-09(b)
2009-10(b)
2010-11
2008-09(b)
2009-10(b)
2010-11
$m
$m
$m
%
%
%

Wholly Australian owned (0%)
7 858
8 715
10 445
45
52
58
Greater than 0% and less than 10%
1 061
1 240
793
6
7
4
10% to 50%
2 234
1 425
1 402
13
9
8
Greater than 50%
6 138
5 382
5 240
36
32
29
Total
17 291
16 762
17 880
100
100
100

(a) A definition of foreign ownership was not provided in the survey and data were accepted as reported.
(b) Some 2008-09 and 2009-10 data have been revised. See the Revisions section of the Technical Note for details.