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1301.0 - Year Book Australia, 2012  
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Research and Innovation

RESEARCH AND EXPERIMENTAL DEVELOPMENT (R&D)

The OECD defines Research and experimental development (R&D) 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.”

The ABS has extended this definition as follows: R&D is systematic investigation or experimentation involving innovation or technical risk, the outcome of which is new knowledge, with or without a specific practical application, or new or improved products, processes, materials, devices or services. R&D extends to modifications to existing products/processes but ceases (and pre-production begins) when work is no longer experimental.

R&D covers four type of activities: pure and strategic basic research, applied research and experimental development. Pure basic research is experimental and theoretical work undertaken to acquire new knowledge without looking for long-term benefits other than the advancement of knowledge, while strategic basic research is directed into specified broad areas in the expectation of practical discoveries. Applied research is original work undertaken primarily to acquire new knowledge, with a specific application in view. It is undertaken either to determine possible uses for the findings of basic research or to determine new ways of achieving some specific and predetermined objectives. Experimental development is systematic work, using existing knowledge gained from research or practical experience, which is directed to producing new materials, products, devices, policies, behaviours or outlooks; to installing new processes, systems and services; or to improving substantially those already produced or installed.

R&D can also be classified in various ways, including by field of research (FOR) and socio-economic objective (SEO). The FOR classification allows R&D activity to be categorised according to the methodology used in the R&D, rather than the activity of the unit performing the R&D or the purpose of the R&D. The FOR reflects the field in which the research was undertaken and is based on the processes and techniques used. The FOR classification is hierarchical with three levels: Division, Group and Field. The SEO classification allows R&D activity to be categorised according to the intended purpose or outcome of the research, rather than the processes or techniques used in order to achieve this objective. The SEO reflects the dominant beneficiary or beneficiaries of the research output. The SEO classification is also hierarchical and has four levels: Sector, Division, Group and Objective.

Statistics on the amount of expenditure and human resources devoted to R&D effort in the business sector are collected annually by the ABS, while comparable statistics for the government, higher education and private non-profit sectors are collected biennially.

In 200809, gross expenditure on R&D was $28,146 million (table 26.1). This represented an increase of 29% over 200607. The business and higher education sectors accounted for most of the increase.

26.1 GROSS EXPENDITURE ON R&D(a), By sector

2000–01
2002–03
2004–05
2006–07
2008–09
Sector
$m
$m
$m
$m
$m

Business(b)
4 983
6 940
8 676
12 639
17 264
Government
Commonwealth
1 405
1 531
1 544
2 046
2 252
State/territory
951
951
942
1 049
1 169
Total
2 356
2 482
2 486
3 095
3 420
Higher education(c)
2 790
3 430
4 327
5 434
6 717
Private non-profit
289
360
479
609
744
Total
10 417
13 212
15 969
21 777
28 146

(a) In current prices.
(b) 2008–09 data were revised as an outcome of the 2009–10 data collection cycle.
(c) Collected on a calendar year basis.

Source: Research and Experimental Development, Businesses, Australia (8104.0); Research and Experimental Development, Government and Private Non-Profit Organisations, Australia (8109.0); Research and Experimental Development, Higher Education Organisations, Australia (8111.0).


BUSINESS SECTOR

During 2009–10, expenditure on R&D undertaken by businesses (BERD) in Australia was $16,685 million, which represented a decrease of 3% from 2008–09 (table 26.2). Human resources devoted to business R&D in 2009–10 were 57,457 person years of effort (PYE), an increase of 6% from 2008–09.

BERD decreased by 3% in current price terms and 5% in chain volume terms, compared to 2008–09.

26.2 BUSINESS RESOURCES DEVOTED TO R&D

Expenditure on R&D
2005–06
2006–07
2007–08(a)
2008–09(a)
2009–10

Current prices
Value
$m
10 434
12 639
15 047
17 264
16 685
Dollar change
$m
1 758
2 205
2 408
2 216
–579
Percentage change
%
20
21
19
15
–3
Chain volume measures(b)
Value
$m
11 680
14 104
16 017
17 616
16 685
Dollar change
$m
1 539
2 425
1 913
1 598
–931
Percentage change
%
15
21
14
10
–5
Human resources devoted to R&D
Value
PYE
43 686
46 462
50 896
53 998
57 457
PYE change
PYE
3 228
2 776
4 434
3 102
3 459
Percentage change
%
8
6
10
6
6

(a) 2007–08 and 2008–09 data have been revised.
(b) The reference year for chain volume measures is 2009–10.

Source: Research and Experimental Development, Businesses, Australia (8104.0).


The industry divisions of Manufacturing and Mining continued to be the largest contributors to total BERD in 2009–10, contributing $4,219 million (25%) and $3,695 million (22%), respectively. Financial and insurance services ($2,651m or 16%) and Professional, scientific and technical services ($2,516m or 15%) were the next largest contributors (graph 26.3). Combined, these four industries accounted for 78% of BERD.

26.3 Business Sector Expenditure on R&D, By selected industries



Table 26.4 shows more detailed industry data by type of R&D activity.


26.4 BUSINESS EXPENDITURE ON R&D, By industry and by type of activity—2009-10

Pure basic research
Strategic basic research
Applied research
Experimental development
Total expenditure on R&D
Industry(a)
$'000
$'000
$'000
$'000
$'000

AGRICULTURE, FORESTRY AND FISHING

Agriculture
833
8 437
29 178
63 464
101 912
Aquaculture
np
np
8 022
13 315
27 896
Forestry and logging
np
np
23 012
np
37 579
Fishing, hunting and trapping
np
np
np
np
Agriculture, forestry and fishing support services
np
602
np
1 956
np
Total Agriculture, forestry and fishing
2 023
20 054
73 656
88 115
183 848

MINING

Coal mining
27 851
229 610
459 218
716 679
Oil and gas extraction
np
np
702 945
529 339
1 262 165
Metal ore mining
3 519
62 437
453 537
796 294
1 315 787
Non-metallic mineral mining and quarrying
np
np
np
88 760
179 468
Exploration and other mining support services
np
7 380
np
133 033
220 692
Total Mining
5 651
145 027
1 537 469
2 006 644
3 694 791

MANUFACTURING

Food product manufacturing
2 249
28 706
122 756
274 085
427 796
Beverage and tobacco product manufacturing
np
3 046
np
38 465
49 031
Textile, leather, clothing and footwear manufacturing
1 481
2 866
np
18 788
np
Wood product manufacturing
np
np
12 641
43 295
57 456
Pulp, paper and converted paper product manufacturing
np
np
45 242
np
Printing (including the reproduction of recorded media)
np
1 084
np
19 812
30 965
Petroleum and coal product manufacturing
239
1 436
18 219
57 614
77 508
Basic chemical and chemical product manufacturing
3 855
83 965
239 554
291 638
619 012
Polymer product and rubber product manufacturing
3 128
7 838
35 601
63 779
110 346
Non-metallic mineral product manufacturing
2 212
14 668
34 661
93 718
145 259
Primary metal and metal product manufacturing
1 347
17 982
94 390
324 485
438 204
Fabricated metal product manufacturing
894
11 193
58 099
118 218
188 404
Transport equipment manufacturing
1 580
14 971
113 069
737 666
867 286
Machinery and equipment manufacturing
5 901
35 616
410 469
523 313
975 299
Furniture and other manufacturing
746
3 260
7 051
19 505
30 562
Total Manufacturing
24 928
227 752
1 296 319
2 669 623
4 218 622

ELECTRICITY, GAS, WATER AND WASTE SERVICES

Electricity supply
245
4 312
116 064
97 373
217 994
Gas supply
np
np
np
Water supply, sewerage and drainage services
np
8 906
24 272
np
np
Waste collection, treatment and disposal services
np
2 171
np
59 528
75 161
Total Electricity, gas, water and waste services
1 238
15 389
213 885
164 200
394 712

CONSTRUCTION

Building construction
593
19 472
234 655
271 168
525 888
Heavy and civil engineering construction
764
3 010
116 821
164 203
284 798
Construction services
1 248
3 752
34 460
126 411
165 871
Total Construction
2 605
26 234
385 936
561 782
976 557

WHOLESALE TRADE

Basic material wholesaling
2 280
6 042
30 716
44 299
83 337
Machinery and equipment wholesaling
2 198
16 517
109 708
138 342
266 765
Motor vehicle and motor vehicle parts wholesaling
np
np
np
105 404
Grocery, liquor and tobacco product wholesaling
np
np
np
21 163
53 065
Other goods wholesaling
np
np
60 773
177 574
243 589
Commission-based wholesaling
np
np
np
8 591
Total Wholesale trade
5 971
28 767
242 461
483 552
760 751

RETAIL TRADE

Motor vehicle and motor vehicle parts retailing
np
np
10 623
Fuel retailing
np
np
Food retailing
np
np
np
np
Other store-based retailing
np
np
13 266
38 842
58 766
Non-store retailing and retail commission-based buying and/or selling
np
2 879
np
np
Total Retail trade
1 356
7 738
24 577
78 144
111 815

ACCOMMODATION AND FOOD SERVICES

Accommodation
np
np
np
2 658
Food and beverage services
np
np
1 857
np
19 545
Total Accommodation and food services
np
np
np
19 554
22 203


TRANSPORT, POSTAL AND WAREHOUSING

Road transport
np
np
1 641
24 430
26 776
Rail transport
np
np
np
np
np
Water transport
Air and space transport
np
np
np
Other transport
np
np
np
Postal and courier pick-up and delivery services
np
6 061
np
36 427
51 144
Transport support services
np
np
26 718
29 769
57 632
Warehousing and storage services
np
np
4 223
20 472
24 964
Total Transport, postal and warehousing
2 378
10 803
53 493
185 260
251 934


INFORMATION MEDIA AND TELECOMMUNICATIONS

Publishing (except Internet and music publishing)
607
5 546
17 963
82 555
106 671
Motion picture and sound recording activities
np
np
6 898
10 494
19 076
Broadcasting (except Internet)
np
np
37 083
Internet publishing and broadcasting
np
np
np
6 006
np
Telecommunications services
np
np
97 368
np
272 724
Internet service providers, web search portals and data processing services
623
2 883
14 414
18 205
36 125
Library and other information services
np
np
np
Total Information media and telecommunications
2 373
21 077
146 980
311 471
481 901


FINANCIAL AND INSURANCE SERVICES

Finance
np
np
441 508
1 853 247
2 310 892
Insurance and superannuation funds
np
np
np
103 613
128 685
Auxiliary finance and insurance services
np
17 170
np
82 090
211 114
Total Financial and insurance services
2 652
38 411
570 678
2 038 950
2 650 691


RENTAL, HIRING AND REAL ESTATE SERVICES

Rental and hiring services (except real estate)
np
np
21 980
109 506
140 079
Property operators and real estate services
np
np
5 310
8 229
14 293
Total Rental, hiring and real estate services
1 593
7 754
27 290
117 735
154 372


PROFESSIONAL, SCIENTIFIC AND TECHNICAL SERVICES

Professional, scientific and technical services (except computer system design and related services)
12 440
97 963
698 342
664 891
1 473 636
Computer system design and related services
13 160
81 186
397 088
550 916
1 042 350
Total Professional, scientific and technical services
25 600
179 149
1 095 430
1 215 807
2 515 986


ADMINISTRATIVE AND SUPPORT SERVICES

Administrative services
np
np
33 876
32 727
69 811
Building cleaning, pest control and other support services
np
np
1 810
4 189
6 989
Total Administrative and support services
990
3 208
35 686
36 916
76 800

PUBLIC ADMINISTRATION AND SAFETY(b)

Public order, safety and regulatory services
np
420
np
4 866
9 447
Total Public administration and safety(b)
np
420
np
4 866
9 447


EDUCATION AND TRAINING

Preschool and school education
Tertiary education
np
np
1 317
4 915
6 825
Adult, community and other education
np
np
2 566
708
3 436
Total Education and training
np
np
3 883
5 623
10 261


HEALTH CARE AND SOCIAL ASSISTANCE

Hospitals
np
np
np
np
np
Medical and other health care services
np
np
22 865
np
np
Residential care services
np
np
Social assistance services
np
np
np
np
999
Total Health care and social assistance
3 242
14 992
33 635
25 357
77 226


ARTS AND RECREATION SERVICES

Heritage activities
np
np
np
np
np
Creative and performing arts activities
np
np
np
np
4 777
Sports and recreation activities
np
3 151
np
np
Gambling activities
np
np
np
Total Arts and recreation services
np
np
8 678
21 350
33 754


OTHER SERVICES(b)

Repair and maintenance
822
2 623
10 155
27 762
41 362
Personal and other services
693
1 049
5 220
11 087
18 049
Total Other services(b)
1 515
3 672
15 375
38 849
59 411

Total
85 162
754 417
5 771 705
10 073 798
16 685 082

— nil or rounded to zero (including null cells)
np not available for publication but included in totals where applicable, unless otherwise indicated
(a) Classified according to the Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 edition (1292.0).
(b) Not all subdivisions were included in the scope of the 2009–10 survey.

Source: Research and Experimental Development, Businesses, Australia, 2009–10 (8104.0).


In 2009–10, the largest businesses (those with 200 or more employees) made the largest contribution to BERD ($11,477m or 69%), followed by businesses with 20–199 employees ($3,097m or 19%). The overall decrease in BERD for 2009–10 was attributable to businesses with 200 or more employees, which decreased $582 million compared to the overall decrease of $579 million. In 2009–10, these businesses also had the largest percentage decrease in BERD (down 5%) and the largest decrease in proportional share of total BERD (down 1 percentage point), compared to 2008–09.

The business sector was the main source of BERD funds in 2009–10, with $15,930 million (96% of total BERD) coming from Own funds and $193 million (1% of total BERD) from Other business. Commonwealth government and Overseas sources were the next largest funders of BERD, at $308 million (2% of total BERD) and $166 million (1% of total BERD), respectively.

New South Wales and Victoria continued to have the highest levels of BERD in 2009–10, at $6,194 million (37% of total BERD) and $3,750 million (22% of total BERD), respectively. In 2009–10, NSW, Northern Territory and Overseas were the only locations with increased BERD compared to 2008–09. NSW had the largest dollar increase (up $832m) and also the largest increase in proportional share of total BERD (up 6 percentage points to 37%). Growth in BERD in NSW was driven by the Financial and insurance services industry (up $584m in NSW).

In 2009–10, the majority of BERD continued to be directed into Experimental development ($10,074m or 60% of total BERD) and Applied research ($5,772m or 35% of total BERD). Between 2008–09 and 2009–10, expenditure on Experimental development fell by $316 million, with Applied research falling by $150 million.

As in previous years, the two Fields of research (FOR), Engineering and Information and computing sciences accounted for more than 80% of total BERD in 2009–10.

The distribution of BERD across the Socio-economic objective (SEO) sectors of Defence, Economic development, Society, Environment and Expanding knowledge remained relatively stable between 2008–09 and 2009–10. At the SEO division level, Manufacturing accounted for the largest share of total BERD in 2009–10, at $4,383 million, or 26%. Commercial services and tourism and Energy SEOs had the next highest levels of BERD, at $3,161 million (19% of total BERD) and $2,722 million (16% of total BERD), respectively.

Of all SEO divisions, Mineral resources (excluding energy resources) had the largest dollar and percentage decrease in BERD, down $846 million (or 32%) compared to 2008–09, and the largest decrease in proportional share of total BERD (down 4 percentage points from 15% to 11% in 2009–10). The Commercial services and tourism SEO division had the largest dollar increase in BERD compared to 2008–09 (up $745m) and the largest increase in proportional share of total BERD (up 5 percentage points from 14% to 19% in 2009–10).

Wholly Australian-owned businesses made the largest contribution to total BERD, accounting for $8,614 million or 52% in 2009–10. These businesses also had the largest dollar increase (up $767m) and the largest increase in proportional share of total BERD (up 6 percentage points from 46%) compared to 2008–09.

BERD as a proportion of gross domestic product (GDP) decreased between 2008–09 and 2009–10, down from 1.38% to 1.30% (graph 26.5).

26.5 BUSINESS EXPENDITURE ON R&D, Proportion of GDP


HIGHER EDUCATION SECTOR

During the 2008 calendar year, expenditure on R&D undertaken by Australian higher education institutions (HERD) was $6,717m. Over the same period, human resources devoted to R&D by these institutions represented 61,310 person years of effort (PYE).

Most higher education human resources devoted to R&D in 2008 were Postgraduate students and Academic staff, accounting for 56% and 31% of total PYE, respectively. The remaining 13% was attributable to Other staff directly supporting R&D.

In 2008, HERD showed an increase of 24% in current price terms over 2006, and 18% in chain volume terms. HERD as a proportion of GDP increased from 0.50% in 2006 to 0.53% in 2008 (graph 26.6).

26.6 Higher Education Sector Expenditure on R&D, Proportion of GDP


The main sources of funds for HERD in 2008 were General university funds ($3,523m or 52% of HERD) and Australian competitive research grants ($1,181m or 18% of HERD). These were also the major sources of funds in 2006.

In 2008, higher education institutions based in New South Wales, Victoria and Queensland altogether contributed almost three-quarters (72%) of HERD (at $2,015m, $1,775m and $1,062m respectively).

In 2008, 41% of HERD ($2,772m) was directed towards Applied research, 29% ($1,941m) to Pure basic research, and 21% ($1,389m) to Strategic basic research. The remaining 9% of HERD ($615m) was directed towards Experimental development.

Expenditure devoted to Medical and health sciences Field of research (FOR) ($2,064m) represented 31% of HERD in 2008, and was almost triple the value of the next highest FOR, Biological sciences ($689m). In total, Medical and health sciences, Biological sciences and Engineering FORs made up approximately half of total HERD.

Over a third (35% or $2,347m) of HERD in 2008 was directed to the Socio-economic objective of Health, which includes R&D related to the understanding and treatment of clinical diseases and conditions, and the provision of public health services.


GOVERNMENT SECTOR

During the 2008–09 financial year, expenditure on R&D undertaken by Australian Government organisations (GOVERD) was $3,420 million. Over the same period, human resources devoted to R&D by these organisations represented 17,042 person years of effort (PYE).

In 2008–09, GOVERD showed an increase of 10% in current price terms from 2006–07, and 4% in chain volume terms. GOVERD as a proportion of GDP decreased from 0.28% in 2006–07 to 0.27% in 2008–09 (graph 26.7).

26.7 GOVERNMENT SECTOR EXPENDITURE ON R&D, AUSTRLAIA, proportion of GDP



In 2008–09, the majority of GOVERD was sourced from Own funds at $2,287 million (or 67%). The next largest source of R&D funds was Other Commonwealth government at $449 million (or 13% of GOVERD). GOVERD in Victoria ($811m) and New South Wales ($780m) accounted for almost half (47%) of total GOVERD in 2008–09.

The distribution of GOVERD across type of activity in 2008–09 was largely unchanged from 2006–07. As observed for 2006–07, more than half of GOVERD was directed into Applied research (56% or $1,916m in 2008–09) and over a quarter into Strategic basic research (26% or $892m in 2008–09).

The Fields of research (FOR) attracting the largest amounts of GOVERD were Engineering ($611m), Agricultural and veterinary sciences ($545m) and Medical and health sciences ($452m). These three FORs accounted for 18%, 16% and 13% of total GOVERD, respectively.

In 2008–09, more than half (57%) of GOVERD was directed to the Socio-economic objective (SEO) sectors of Economic development ($1,159m or 34%) and Environment ($794m or 23%). At the SEO division level, a similar proportion of GOVERD (53%) was attributable to Environment ($794m or 23%), Health ($544m or 16%) and Defence ($486m or 14%) in 2008–09.


PRIVATE NON-PROFIT SECTOR

During the 2008–09 financial year, expenditure on R&D undertaken by Australian private non-profit (PNP) organisations (PNPERD) was $744 million. Over the same period, human resources devoted to R&D by PNP organisations represented 4,788 person years of effort (PYE).

In 2008–09, PNPERD increased by 22% in current price terms compared with 2006–07 and 15% in chain volume terms. PNPERD as a proportion of GDP increased by 6% between 2006–07 and 2008–09 (graph 26.8).

26.8 PRIVATE NON-PROFIT SECTOR EXPENDITURE ON R&D, AUSTRALIA, Proportion of GDP

The main sources of funds for PNPERD in 2008–09 were Commonwealth government ($285m or 38% of total PNPERD) and Own funds ($179m or 24%). Of all sources of funds, Commonwealth government had the largest dollar increase from 2006–07 (up $89m) and the largest change in proportional share of PNPERD (up 6 percentage points).

In 2008–09, almost 90% of PNPERD was in Victoria and New South Wales at $402 million (54%) and $259 million (35%), respectively. These locations also recorded the highest dollar increases in PNPERD from 2006–07, up $67 million and $65 million, respectively.

Almost 70% of PNPERD in 2008–09 was directed into Applied research ($261m or 35%), and Strategic basic research ($246m or 33%). PNPERD directed into Experimental development in 2008–09 ($164m) was more than double than in 2006–07.

In 2008–09, PNPERD devoted to the Medical and health sciences Field of research (FOR) represented 75% ($559m) of the total. This was more than four times the next highest FOR, Biological sciences (at $117m or 16% of PNPERD).

The majority (98%) of PNPERD in 2008–09 was directed to the Socio-economic objective sector of Society. At $685 million, the Health division contributed 94% to the Society sector and 92% to total PNPERD

 

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Statistics contained in the Year Book are the most recent available at the time of preparation. In many cases, the ABS website and the websites of other organisations provide access to more recent data. Each Year Book table or graph and the bibliography at the end of each chapter provides hyperlinks to the most up to date data release where available.


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