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8104.0 - Research and Experimental Development, Businesses, Australia, 2006-07 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 14/10/2008   
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EXPENDITURE ON RESEARCH AND EXPERIMENTAL DEVELOPMENT (R&D)

Business expenditure on R&D (BERD) in Australia during 2006-07 was $12,036 million. BERD increased by 16% in current price terms and 11% in chain volume terms from 2005-06. (See Explanatory Note 20 for information regarding the interpretation of chain volume measures.)

Resources devoted to R&D

2002-03
2003-04
2004-05
2005-06
2006-07

Expenditure on R&D
Current prices $m
6 940
7 770
r8 676
r10 333
12 036
Chain volume measures(a) $m
8 080
8 779
9 458
10 801
12 036
Human resources devoted to R&D PYE
35 939
37 430
r40 458
r43 491
46 027

r revised
(a) The reference year for chain volume measures is 2006-07. See Explanatory Note 20 for details.


Over the five years to 2006-07, BERD increased at an annual rate of 15% in current price terms and 10% in chain volume terms.

Business expenditure on R&D
Graph: Business expenditure on R&D


Subsequent expenditure figures and supporting commentary relate to current price terms.


Proportion of GDP

BERD as a proportion of GDP increased between 2005-06 and 2006-07, moving from 1.07% to 1.15%.

BERD, as a proportion of GDP(a)
Graph: BERD, as a proportion of GDP(a)


The following table shows BERD/GDP ratios for selected OECD countries. Although Australia's BERD/GDP ratio for 2006-07 remained below the OECD average of 1.56%, from 2005-06 it recorded one of the largest increases compared to other OECD countries.

BERD/GDP RATIOS OF OECD COUNTRIES(a)

2002-03
2003-04
2004-05
2005-06
2006-07
%
%
%
%
%

Sweden
na
2.86
2.67
2.81
2.79
Japan
2.36
2.40
2.38
2.54
2.62
Korea
1.90
2.00
2.18
2.29
2.49
Finland
2.34
2.42
2.42
2.47
2.46
Switzerland
na
na
2.14
na
na
United States of America
1.86
1.84
1.79
1.83
1.84
Germany
1.72
1.76
1.73
1.72
1.77
Austria
1.42
na
1.51
1.64
1.66
Denmark
1.73
1.78
1.69
1.67
1.62
Iceland
1.70
1.46
na
1.43
na
France
1.41
1.36
1.36
1.33
1.34
Luxembourg
na
1.47
1.43
1.36
1.25
Belgium
1.37
1.31
1.29
1.25
1.24
Australia
0.89
0.92
0.97
1.07
1.15
United Kingdom
1.18
1.13
1.07
1.08
1.10
Canada
1.17
1.16
1.16
1.12
1.06
Czech Republic
0.73
0.76
0.79
0.91
1.02
Netherlands
0.98
1.01
1.03
1.02
0.96
Ireland
0.76
0.79
0.81
0.82
0.89
Norway
0.95
0.98
0.87
0.82
0.82
Spain
0.54
0.57
0.58
0.60
0.67
Italy
0.54
0.52
0.52
0.55
0.54
New Zealand
na
0.48
na
0.49
na
Hungary
0.35
0.34
0.36
0.41
0.48
Portugal
0.25
0.24
0.28
0.31
0.35
Turkey
0.19
0.14
0.16
0.27
0.28
Mexico
0.15
0.15
0.22
0.25
na
Slovak Republic
0.37
0.32
0.25
0.25
0.21
Poland
0.11
0.15
0.16
0.18
0.18
Greece
0.18
0.18
0.17
0.18
0.17
Total OECD
1.51
1.51
1.49
1.53
1.56

na not available
(a) Ranked by 2006-07 BERD/GDP ratio.
Source: Main Science and Technology Indicators, 2008/1, OECD, Paris, 2008



Industry

In 2006-07, the largest contributors to BERD were Manufacturing ($3,780 million or 31% of BERD), Mining ($2,541 million or 21%) and Professional, scientific and technical services ($2,012 million or 17%). Of all industries, Mining and Information media and telecommunications reported the largest absolute growth from 2005-06, increasing their expenditure on R&D by $746 million (42%) and $341 million (77%) respectively. Other industries to record large increases included Professional, scientific and technical services (up $207 million or 11%) and Wholesale trade (up $146 million or 22%).

Business expenditure on R&D, by selected industries(a)
Graph: Business expenditure on R&D, by selected industries(a)



Employment size

In 2006-07, businesses with 200 or more employees made the largest contribution to BERD ($8,381 million or 70%), followed by those with 20-199 employees ($2,284 million or 19%). Making the smallest contribution to BERD were businesses with 0-4 employees ($380 million or 3%) and those with 5-19 employees ($990 million or 8%). Businesses with 200 or more employees contributed 89% ($1,509 million) of the total growth in BERD between 2005-06 and 2006-07.


Type of expenditure

As in previous years, BERD in 2006-07 was mainly comprised of Current expenditure ($11,244 million or 93% of BERD). Current expenditure was in turn comprised of $4,225 million in Labour costs and $7,019 million in Other current expenditure. Capital expenditure in 2006-07 totalled $792 million.

The industry with the highest level of Labour costs as a proportion of its BERD was Education and training (61%), while the lowest levels were reported in Mining and Construction (at 13% and 22% respectively).

Manufacturing ($266 million) and Mining ($201 million) made up more than half (59%) of total Capital expenditure.


Source of funds

The Business sector was the main source of R&D funds in 2006-07, with $10,913 million (91%) coming from Own funds and $310 million (3%) from Other business. Commonwealth government and Overseas organisations were the next largest funders of R&D, at $421 million (4%) and $268 million (2%) respectively.

Health care and social assistance and Professional, scientific and technical services had the lowest proportions of self-funded research, at 67% and 76% respectively.


Location of expenditure

Locations in New South Wales and Victoria continued to record the highest levels of BERD in 2006-07, at $3,813 million (32%) and $3,322 million (28%) respectively. New South Wales also reported the largest absolute growth in BERD (up $428 million or 13%) from 2005-06, followed by Western Australia (up $382 million or 25%) and Queensland (up $320 million or 24%).

BERD, by location(a)
Graph: BERD, by location(a)


While Manufacturing accounted for the largest proportion of BERD in a majority of locations, in 2006-07 the dominant industry in Western Australia was Mining (making up 60% of WA BERD).

Western Australia (1.37%) and Victoria (1.34%) reported the highest percentages of BERD as a proportion of Gross State Product (GSP). South Australia experienced the largest increase in its BERD/GSP ratio from 2005-06, rising from 0.99% to 1.20%.

BERD, by location - proportion of GSP(a)

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

2004-05
1.08
1.07
0.67
0.88
1.06
0.45
0.36
0.41
2005-06
1.07
1.28
0.74
0.99
1.29
0.43
0.80
0.50
2006-07
1.14
1.34
0.84
1.20
1.37
0.48
0.75
0.44

(a) See Explanatory Note 2 for details.



Type of activity

In 2006-07, the majority of BERD was directed into Experimental development (61% or $7,367 million) and Applied research (33% or $3,933 million). Experimental development showed the largest absolute growth between 2005-06 and 2006-07, increasing by $976 million.


Socio-economic objectives (SEO)

Much of the growth in BERD, between 2005-06 and 2006-07, occurred in SEOs Information and communication services (up $491 million), Mineral resources (up $402 million) and Energy resources (up $304 million). Together these three SEOs accounted for 70% of the total growth in BERD over the period.


Research fields

Accounting for 83% of BERD in 2006-07 were the Research fields of Engineering and technology ($6,865 million or 57%) and Information, computing and communication sciences ($3,166 million or 26%). The largest growth in expenditure within these Research fields, between 2005-06 and 2006-07, was recorded for Resource engineering (up $555 million or 34%) and Information systems (up $527 million or 59%).


HUMAN RESOURCES DEVOTED TO R&D

Human resources devoted to R&D in 2006-07 totalled 46,027 person years of effort (PYE), an increase of 6% from 2005-06.


Industry

In 2006-07, Manufacturing and Professional, scientific and technical services were the main contributors to total Human resources devoted to R&D, at 39% and 29% respectively. Professional, scientific and technical services and Manufacturing also recorded the largest increases in Human resources devoted to R&D from 2005-06, increasing by 1,112 PYE (9%) and 657 PYE (4%) respectively.

Business human resources devoted to R&D, by selected industries(a)
Graph: Business human resources devoted to R&D, by selected industries(a)



Employment size

Businesses with 200 or more employees accounted for 25,925 PYE (56%) of total Human resources devoted to R&D in 2006-07, while those with 0-4 employees contributed 1,312 PYE (3%). Businesses with 20-199 employees and 200 or more employees recorded the largest growth in PYE from 2005-06, at 10% and 6% respectively.


Type of resource

Researchers continued to be the main type of human resource devoted to R&D (54% of total PYE) in 2006-07 and also reported the largest absolute growth from 2005-06 (up 1,065 PYE).


FOREIGN OWNERSHIP

Level of foreign ownership was collected for the first time in 2006-07. Wholly Australian owned businesses made the largest contribution to BERD in dollar terms ($5,564 million) and human resource effort (23,651 PYE) for 2006-07. Businesses with Greater than 50% foreign ownership made the next largest contribution with $4,402 million of BERD and 15,223 PYE of total human resources devoted to R&D.

Resources devoted to R&D, by level of foreign ownership

Expenditure on R&D
Human resources devoted to R&D
$'000
PYE

Wholly Australian owned
5 563 554
23 651
Greater than 0% and less than 10%
615 226
2 461
10% to 50%
1 454 975
4 691
Greater than 50%
4 401 760
15 223
Total
12 035 515
46 027



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