EXPLANATORY NOTES


INTRODUCTION

1 The statistics presented in this release have been compiled from data collected in the Survey of Research and Experimental Development (R&D), Businesses for 2013-14.

2 The Survey of R&D, Businesses is a biennial survey. The change to the collection frequency from annual to biennial was made after the 2011-12 survey.


DEFINITION OF R&D

3 R&D, as collected by the ABS, is defined in accordance with the Organisation for Economic Co-operation and Development (OECD) standard as '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'.

4 For a more comprehensive interpretation of the definition of R&D, see the Australian and New Zealand Standard Research Classification (ANZSRC), 2008 (cat. no. 1297.0) or refer to the OECD publication The Measurement of Scientific and Technological Activities: Proposed Standard Practice for Surveys of Research and Experimental Development - Frascati Manual 2002.

5 Data providers report and self classify R&D survey information based on their interpretation of OECD and ABS definitions and classifications. The ABS makes every effort to ensure correct and consistent interpretation and reporting of these data by applying consistent processing methodologies. See also the Non-Sampling Error sections of the Technical Note under the Explanatory Notes tab.


STATISTICAL UNIT

6 The Economics Unit Model is used by the ABS to describe the structure of Australian businesses and other organisations. The model consists of four types of units:

• Enterprise Group (EG)
• Type of Activity Unit (TAU)
• Legal Entity (LE)
• Location Unit

7 Businesses contributing to the estimates in this publication are sourced from the ABS Business Register (ABSBR), and are selected at either the Australian Business Number (ABN) unit or the Type of Activity Unit (TAU) level, as described below.

8 In the Survey of R&D, Businesses, the statistical unit used to represent the majority of businesses, and for which statistics are reported, is the ABN unit. The ABN unit is the business unit which has registered for an ABN, and appears on the Australian Tax Office (ATO) administered Australian Business Register (ABR). This unit is suitable for ABS statistical needs when the business is simple in structure. In these instances, one ABN equates to one statistical unit. These units are collectively referred to as the non-profiled population.

9 For more significant and diverse businesses where the ABN unit is not suitable for ABS statistical needs, the statistical unit used is the Type of Activity Unit (TAU). A TAU comprises one or more business entities, sub-entities or branches of a business entity within an Enterprise Group that can report production and employment activities. When a minimum set of data items is available, a TAU is created which covers all the operations within an industry subdivision. The TAU is classified to the relevant subdivision of the Australian and New Zealand Standard Industrial Classification (ANZSIC). These units are collectively referred to as the profiled population.

10 Further information on the ABSBR and ABS economic units model can be found in Australian Bureau of Statistics Business Register.


INDUSTRY CLASSIFICATION

11 The statistics in this release are classified to industry in accordance with the Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 (cat. no. 1292.0).

12 Each ABN unit/TAU is classified by the ABS to the industry in which it mainly operates. For the Survey of R&D, Businesses, where an Enterprise Group sets up a dedicated research unit, that unit is classified to the predominant industry of the group rather than to Scientific research services (ANZSIC 6910), in accordance with standards set out in the OECD Frascati Manual 2002.


SCOPE AND COVERAGE

13 From 2005-06, the survey scope was adjusted to:

• include businesses classified to Division A (Agriculture, forestry and fishing) of the Australian and New Zealand Standard Industrial Classification (ANZSIC); and
• exclude businesses with intramural expected expenditure on R&D of less than $100,000 in the reference period (i.e. introduction of an expenditure based scope cut-off).

14 Intramural expenditure is defined as expenditure for R&D performed by the statistical unit regardless of the source of funds. Expenditures made outside the statistical unit but in support of intramural R&D are included; for example, payments for analytical work, engineering or specialised services which form part of an R&D project performed by the statistical unit. R&D funded by the statistical unit but performed wholly by another on their behalf (extramural R&D) is excluded. R&D performed overseas by Australian businesses is included. For further information, refer to the OECD Frascati Manual 2002.

15 Prior to the 2005-06 cycle, the Survey of R&D, Businesses included all Australian businesses performing R&D (regardless of the expenditure value) with the exception of businesses mainly engaged in Agriculture, forestry and fishing activities.

16 The ABS identifies businesses for inclusion in the Survey of R&D, Businesses frame if the business:

• reported expenditure on R&D in previous surveys;
• applied for an AusIndustry administered R&D Tax Incentive and/or grant for industry R&D;
• were identified through other sources such as newspapers, journals, research compendia, etc. as likely to have expenditure on R&D.
  

SURVEY METHODOLOGY

17 Collection of data included in this release was undertaken based on a stratified random sample of approximately 3,991 businesses sourced from the Survey of R&D, Businesses frame. The sample was stratified by industry Division and/or Subdivision, and Size group based on their expected R&D expenditure. All businesses on the Survey of R&D, Businesses frame within certain strata were included in the sample if they met industry specific thresholds. Thresholds were based on industry characteristics, expected expenditure and number of businesses in the strata. While the sample design excludes businesses with intramural expected expenditure on R&D of less than $100,000, data of selected businesses which reported expenditure below this threshold are included in the estimates.

18 For the 2013-14 reference period, the survey has been conducted predominantly via online forms. The survey had a response rate of 94%.


EMPLOYMENT SIZE

19 Businesses were asked to report the number of persons working for the business during the last pay period in June 2014. For output purposes, businesses are classified to employment size groups based on data reported in the survey.


LOCATION OF EXPENDITURE

20 Location of expenditure relates to the region(s) in which the business reported having performed R&D during the reference period. This may not be the head office location of the business.


AUSTRALIAN AND NEW ZEALAND STANDARD RESEARCH CLASSIFICATION (ANZSRC)

21 Type of activity, fields of research and socio-economic objective statistics presented in this release have been collected and compiled based on the Australian and New Zealand Standard Research Classification (ANZSRC), 2008 (cat. no. 1297.0).

GROSS DOMESTIC PRODUCT (GDP) AND GROSS STATE PRODUCT (GSP)

22 The most recent GDP and GSP values available were used to calculate the R&D expenditure/GDP and R&D expenditure/GSP ratios presented in this issue. These values are referenced in the tables below and have been revised from those used to calculate ratios in previous issues.

GROSS DOMESTIC PRODUCT, current prices
	2008-09	2009-10	2010-11	2011-12	2013-14
	$m	$m	$m	$m	$m
Gross Domestic Product	1 258 074	1 295 727	1 407 865	1 488 028	1 581 974
Source: Australian National Accounts: National Income, Expenditure and Product, March 2015 (cat. no. 5206.0), released 3 June 2015.

GROSS STATE PRODUCT, current prices
	NSW	Vic.	Qld	SA	WA	Tas.	NT	ACT
	$m	$m	$m	$m	$m	$m	$m	$m
2013-14	492 478	350 343	296 341	96 977	264 545	25 051	21 904	35 917
2011-12	464 271	326 486	285 071	92 173	242 787	24 494	18 964	33 783
Source: Australian National Accounts: State Accounts, 2013-14 (cat. no. 5220.0), released 21 November 2014.

23 GDP is estimated by the ABS according to the recently updated international standards contained in the System of National Accounts, 2008 (2008 SNA) and is not directly comparable to GDP from countries where these standards have not been applied.


CHAIN VOLUME MEASURES

24 The chain volume measures appearing in this release are annually reweighted chain Laspeyres indexes referenced to the current price values in a chosen reference year (currently 2013-14). They can be thought of as current price values re-expressed in (i.e. based on) the prices of the previous year and linked together to form continuous time series. They are formed in a multi-stage process of which the major steps are described in Section 15 of the Information Paper: Australian National Accounts, Introduction of Chain Volume Measures and Price Indexes (cat. no. 5248.0).


R&D deflators

25 With the implementation of 2008 SNA, deflators used to calculate the chain volume measure of expenditure on R&D were revised to better capture changes in the unit value of labour used in the production of R&D services, and to increase and refine the number of products included in the deflators. The revised deflators have been used for Business R&D statistics from the 2007-08 survey cycle.


ROUNDING

26 Where figures have been rounded, discrepancies may occur between the sum of the component items and totals.


UPCOMING RELEASES

27 Upcoming releases of R&D statistics include:

Research and Experimental Development, Higher Education Organisations, Australia, 2014 (cat. no. 8111.0), scheduled for release in May 2016 
Research and Experimental Development, Government and Private Non-Profit Organisations, Australia, 2014-15 (cat. no. 8109.0), scheduled for release in July 2016

OTHER RELATED RELEASES

28 Users may also wish to refer to the following releases:

Summary of IT Use and Innovation in Australian Businesses, 2013-14 (cat. no. 8166.0)
Business Use of Information Technology, 2013-14 (cat. no. 8129.0)
Research and Experimental Development, Government and Private Non-Profit Organisations, Australia, 2012-13 (cat. no. 8109.0) 
Selected Characteristics of Australian Business, 2013-14 (cat. no. 8167.0) 
Research and Experimental Development, Higher Education Organisations, Australia, 2012 (cat. no. 8111.0) 
Microdata: Business Longitudinal Database, Australia, 2006-07 to 2010-11 (cat. no. 8168.0.55.001) 
Innovation in Australian Business, 2012-13 (cat. no. 8158.0) 

29 Relevant OECD publications include:

Main Science and Technology Indicators Database 

ACKNOWLEDGEMENT

30 The ABS acknowledges the ongoing contribution made by the Department of Industry and Science in providing R&D tax incentive and grants lists.

31 ABS publications draw extensively on information provided freely by individuals, businesses, governments and other organisations. Their continued cooperation is very much appreciated: without it, the wide range of statistics published by the ABS would not be available. Information received by the ABS is treated in strict confidence as required by the Census and Statistics Act 1905.


ABS DATA AVAILABLE ON REQUEST

32 As well as the statistics included in this and related publications, the ABS may have other relevant data available on request. Inquiries should be made to the National Information and Referral Service on 1300 135 070. The ABS Privacy Policy outlines how the ABS will handle any personal information that you provide to us.