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FEATURE ARTICLE 1: RESEARCH AND EXPERIMENTAL DEVELOPMENT IN WESTERN AUSTRALIA
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%).
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.
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.
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%.
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).
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).
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%.
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.
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.
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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