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EXPLANATORY NOTES


DATA SOURCES

1 The statistics presented in this publication have been compiled from data collected from businesses in the Survey of Research and Experimental Development in respect of the year ended 30 June 2006. The survey was conducted by mail questionnaire and a 90.3% response rate was obtained.

2 The GDP and GSP figures used to derive BERD/GDP and BERD/GSP ratios are current at the time of manuscript finalisation and are referenced in the tables below.

Expenditure on Gross Domestic Product, current prices
	1997-98	1998-99	1999-00	2000-01	2001-02	2002-03	2003-04	2004-05	2005-06
	$m	$m	$m	$m	$m	$m	$m	$m	$m
GDP	577 373	607 759	645 058	689 262	735 714	781 675	840 285	896 568	966 442
National Income, Expenditure and Product, Australian National Accounts, March Quarter 2007 (cat. no. 5206.0)

Gross State Product, current prices
	NSW	Vic.	Qld	SA	WA	Tas.	NT	ACT
	$m	$m	$m	$m	$m	$m	$m	$m
2003-04	291 540	211 944	145 418	57 155	92 445	14 835	9 445	17 500
2004-05	305 859	222 221	160 986	59 457	102 837	16 054	10 678	18 473
2005-06	319 541	233 320	182 211	62 798	119 190	17 193	12 240	19 477
Australian National Accounts, State Accounts (cat. no. 5220.0)

STATISTICAL UNITS DEFINED ON THE ABS BUSINESS REGISTER

3 The ABS uses an economic statistics units model on the ABS Business Register to describe the characteristics of businesses (and other organisations, including government departments), and the structural relationships between related businesses. The units model is also used to break groups of related businesses into relatively homogeneous components that can provide data to the ABS.

4 In mid 2002, to better use the information available as a result of The New Tax System, the ABS changed its economic statistics units model. The new units model allocates businesses to one of two sub-populations. The vast majority of businesses are in what is called the ATO Maintained Population, while the remaining businesses are in the ABS Maintained Population. Together, these two sub-populations make up the ABS Business Register population.

ATO maintained population

5 Most businesses and organisations in Australia need to obtain an Australian Business Number (ABN), and are then included on the ATO Australian Business Register. Most of these businesses have simple structures, in which case the unit registered for an ABN will satisfy ABS statistical requirements. For these businesses, the ABS has aligned its statistical units structure with the ABN unit. The businesses with simple structures constitute the ATO Maintained Population, and the ABN unit is used for these businesses as the statistical unit for all economic collections.

ABS maintained population

6 For the population of businesses where the ABN unit is not suitable for ABS statistical requirements, the ABS maintains its own units structure through direct contact with the business. These businesses constitute the ABS Maintained Population. This population consists typically of large, complex and diverse businesses. The new statistical units model described below has been introduced to cover such businesses.

7 Enterprise Group: This is a unit covering all the operations in Australia of one or more legal entities under common ownership and/or control. It covers all the operations in Australia of legal entities which are related in terms of the current Corporations Law (as amended by the Corporations Legislation Amendment Act 1991), including legal entities such as companies, trusts, and partnerships. Majority ownership is not required for control to be exercised.

8 Enterprise: The enterprise is an institutional unit comprising (i) a single legal entity or business entity, or (ii) more than one legal entity or business entity within the same Enterprise Group and in the same institutional sub-sector (i.e. they are all classified to a single Standard Institutional Sector Classification of Australia sub-sector).

9 Type of Activity Unit (TAU): The 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 data for similar economic activities. When a minimum set of data items is available, a TAU is created which covers all the operations within an industry sub-division (and the TAU is classified to the relevant sub-division of ANZSIC). Where a business cannot supply adequate data for each industry, a TAU is formed which contains activity in more than one industry sub-division.

10 For more information on the impacts of the introduction of the new economic statistics units model, refer to Information Paper: Improvements in ABS Economic Statistics [Arising from The New Tax System] (cat. no. 1372.0).

Unit splitting

11 In cases where a TAU is deemed to have significant activities applying to more than one industry subdivision, the TAU is split for statistical purposes. Where a TAU has been split, the provider is asked to report data for all activities covered by the TAU (i.e. the TAU remains the collection unit). The data is then apportioned across the separate TAU splits (the statistical units) by ABS staff using factors determined during business profiling. TAU splits were implemented in the R&D survey for the first time, beginning with 2005-06 cycle, and were applied for previous cycles according to revision rules outlined in the Technical Note.

DEFINITIONS

12 R&D as collected by the ABS is defined in accordance with the OECD standard 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'. Although outside the economic boundary of R&D as defined by the OECD, R&D performed overseas by Australian businesses is included in the data in this publication.

13 Expenditures in this publication represent R&D performed by the business itself (intramural). R&D funded by a business but performed wholly by another on their behalf (extramural) is out of scope of the survey. However, payments for analytical work, engineering or specialised services which form part of an R&D project performed by the business, are in scope of the survey.

14 For a more comprehensive discussion of R&D activity, see the Australian Standard Research Classification (ASRC), 1998 (cat. no. 1297.0) or refer to the OECD publication Proposed Standard Practice for Surveys of Research and Experimental Development ('Frascati Manual') 2002, OECD, Paris, 2003.

SCOPE AND COVERAGE

15 Due to strong growth in the number of businesses performing R&D in recent years, changes have been made to the scope of the R&D survey this cycle to enable continued release of detailed R&D statistics within available resources. Previously, the survey scope included all businesses within the Australian business sector (i.e. all businesses and the private non-profit institutions mainly serving them) but excluding businesses mainly engaged in Agriculture, forestry and fishing. Commencing with the 2005-06 survey cycle, the scope was adjusted to exclude businesses with expenditure on R&D of less than $100,000 in the reference period. Offsetting this change, however, was the inclusion of businesses classified to Division A (Agriculture, forestry and fishing) of the Australian and New Zealand Standard Industrial Classification (ANZSIC), 1993 (cat. no. 1292.0). The scope changes were not backcast for previous reference periods, given their offsetting nature and their relatively minor impact on key survey estimates.

16 It is estimated that the exclusion of businesses with R&D expenditure of less than $100,000 resulted in the understatement of estimated total business expenditure on R&D for 2005-06 by approximately 0.5%. Users should, however, use caution when comparing current and past cycle estimates for businesses with 0-4 employees, as the majority of units with expenditure below $100,000 fell into this employment size range. Most affected were estimates of PYE.

17 Within the scope of the survey, businesses were included if they:

• reported R&D activity in previous surveys;
• applied for an AusIndustry administered R&D Tax Concession and/or grant for industry R&D;
• indicated that R&D activity had been performed, with expenditure of $100,000 or more, in the reference year via a coverage questionnaire; or
• were identified as likely to have R&D activity from other sources such as newspapers, industrial journals, research compendia etc..

19 Each ABN unit/TAU is classified by the ABS to the industry in which it mainly operates. In cases 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 (ANZSIC 7810), in accordance with standards set out in the Frascati Manual.

EMPLOYMENT SIZE

20 Employment size relates to the number of persons employed by the business during the last pay period ending in June 2006.

AUSTRALIAN STANDARD RESEARCH CLASSIFICATION (ASRC)

21 Statistics classified by Research fields, courses and disciplines classifications (RFCD), Socio-economic objective (SEO) and Type of activity (TOA) have been collected and presented in this publication. Data were subjectively allocated by businesses at the time of reporting. See the Technical Note on Reliability of Statistics for further detail. For more information on these classifications, see the Australian Standard Research Classification (ASRC), 1998 (cat. no. 1297.0). Aggregated groupings of SEOs or RFCDs are annotated with n.e.c. and reflect the remnant of the relevant SEO Subdivision or RFCD Division.

CHAIN VOLUME MEASURES (CVM)

22 CVM in this publication are annually reweighted chain Laspeyres indexes referenced to the current price values in a chosen reference year (currently 2004-05). They are formed in a multistage process of which the major steps are described in Section 15 of the Information Paper: Introduction of Chain Volume Measures in the Australian National Accounts (cat. no. 5248.0).

RELATED PUBLICATIONS

23 Users may also wish to refer to the following publications:

Australian Bureau of Statistics 1998, Australian Standard Research Classification (ASRC), cat. no. 1297.0, ABS, Canberra
Australian Bureau of Statistics 2006, Innovation in Australian Business 2005, cat. no. 8158.0, ABS, Canberra
Australian Bureau of Statistics 2006, Research and Experimental Development, All Sector Summary, Australia, 2004-05, cat. no. 8112.0, ABS, Canberra
Australian Bureau of Statistics 2006, Research and Experimental Development, Government and Private Non-Profit Organisations, Australia, 2004-05, cat. no. 8109.0, ABS, Canberra
Australian Bureau of Statistics 2006, Research and Experimental Development, Higher Education Organisations, Australia, 2004, cat. no. 8111.0, ABS, Canberra
Organisation for Economic Co-operation and Development 2003, Proposed Standard Practice for Surveys of Research and Experimental Development ('Frascati Manual') 2002, OECD, Paris

ABS DATA AVAILABLE ON REQUEST

25 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.

ROUNDING

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