RESEARCH AND DEVELOPMENT EXPENDITURE
Research and experimental development (R&D) activity, in the business context, is defined as 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 activity also extends to modifications to existing products and processes.
Over the period 1994-95 to 2003-04, R&D expenditure by the mining industry more than doubled from $303m in 1994-95 to $783m in 2003-04. As a result, the mining industry's contribution to all industries R&D expenditure rose from 9% in 1994-95 to 11% in 2003-04. The manufacturing industry's share of total R&D expenditure continued to be the highest, accounting for 46% in 2003-04.
Graph 16.15 shows the type of R&D expenditure by the mining industry. For the period 1994-95 to 2003-04 current expenditure other than labour costs is the major component of R&D expenditure for the mining industry, accounting for 82% of mining R&D expenditure in 2003-04. This category includes: expenses on materials, fuels and other inputs; rent, leasing and hiring; repairs and maintenance; payments to outside organisations for use of specialised testing facilities or for analytical work, engineering or other specialised services in support of R&D projects carried out by the business; commission and consultant expenses for research projects carried out by the business (except direct labour costs); software for own account produced as part of R&D; and the proportion of expenses on general services and overheads attributable to R&D activity. In the mining industry, these expenses increased by $469m (271%) from $173m in 1994-95 to $641m in 2003-04. The amount spent on labour increased by $27m (41%) while capital expenditure fell by $16m (24%). As a result, labour costs and capital expenditure as a proportion of total R&D expenditure fell to 12% and 6% respectively in 2003-04. These proportions were significantly lower than the 22% for labour costs and 21% for capital expenditure recorded in 1994-95.
In 2003-04 the mining industry funded most of its R&D expenditure with $720m (92%) sourced from money owned by the mining business (own funds).