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), Government and Private Non-Profit Organisations for 2014-15.

2 The Survey of R&D, Government and Private Non-Profit Organisations is a biennial collection based on a financial year reference period.

DEFINITIONS

3 R&D, as collected by the Australian Bureau of Statistics (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 activity, 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 section 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 Organisations 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, Government and Private Non-Profit Organisations, the statistical unit used to represent the majority of organisations, and for which statistics are reported, is the ABN unit. The ABN unit is the organisation 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 organisation 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 organisations 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 entities, sub-entities or branches of an organisation within an Enterprise Group that can report production and employment activities. When a minimum set of data items are 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.


SCOPE AND COVERAGE

11 The Survey of R&D, Government and Private Non-Profit Organisations aims to be a complete enumeration of Australian government and private non-profit organisations with intramural expenditure on R&D during the reference period.

12 Intramural expenditure, which is defined as expenditure for R&D performed by in scope organisations during the reference period irrespective of the source of funds, is included in the survey. Expenditure made outside the statistical unit but in support of intramural R&D is also included. For further information, refer to the OECD Frascati Manual 2002. Intramural expenditure includes research performed by institutions:

• as a participant in unincorporated Cooperative Research Centres (CRCs); and
• on behalf of other legal entities where the institution maintains full management and control of the project.

13 R&D performed by in scope organisations, where the R&D is controlled by other legal entities, is excluded from the survey. The R&D performed by these entities will be in scope of the relevant R&D sector (business or higher education).

14 From the 2004-05 cycle of the Survey of R&D, Government and Private Non-Profit Organisations, the scope for the government and private non-profit sectors has been based on the Standard Institutional Sector Classification of Australia (SISCA); more specifically, Sector 3 (General Government) and Sector 5 (Not-For-Profit Institutions (NPIs) Serving Households).

15 Some information about SISCA Sector 3 and Sector 5 is provided below. For further details about the ABS sector classifications, refer to Standard Economic Sector Classifications of Australia (SESCA) 2008 (cat. no. 1218.0).

General Government sector

16 The General Government sector comprises all government units of the Australian government, each state and territory government, and all local government authorities. It includes courts, the Governor General's office, public universities, government departments, and all resident non-market Not-For-Profit Institutions (NPIs) that are controlled and mainly financed by those government units.

17 While the Government sector for the Survey of R&D, Government and Private Non-Profit Organisations is based on SISCA, the survey excludes higher education institutions, e.g. universities (which are included in the Survey of R&D, Higher Education Organisations), as per the Frascati Manual 2002 guidelines. Local government organisations are also excluded from the survey, as they are considered to have minimal R&D expenditure.

18 Government entities mainly engaged in market production or financial activities are not included in the General Government sector.

NPIs Serving Households sector

19 The NPIs Serving Households sector consists of resident non-market operators providing goods and services to households free or at prices that are not economically significant. It includes NPIs that are mainly financed from household member subscriptions and produce benefits primarily for the household members, and NPIs created for philanthropic purposes which are financed mainly from donations or government grants.

20 NPIs engaged in market production are not included in the NPIs Serving Households sector.

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).

LOCATION OF EXPENDITURE

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

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

23 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
	2004-05	2006-07	2008-09	2011-12	2012-13	2014-15
	$m	$m	$m	$m	$m	$m
GDP	921 929	1 086 534	1 258 459	1 491 046	1 524 383	1 609 513
Source: Australian National Accounts: National Income, Expenditure and Product, December 2015 (cat. no. 5206.0), released 2 March 2016.

GROSS STATE PRODUCT, current prices
	NSW	Vic.	Qld	SA	WA	Tas.	NT	ACT
	$m	$m	$m	$m	$m	$m	$m	$m
2012-13	480 592	336 158	290 416	94 436	244 965	24 508	19 114	34 194
2014-15	513 309	360 550	305 354	98 629	248 557	25 681	23 139	34 774
Source: Australian National Accounts: State Accounts, 2014-15 (cat. no. 5220.0), released 20 November 2015.

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

CHAIN VOLUME MEASURES

25 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 2014-15). 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 and Price Indexes (cat. no. 5248.0).

R&D deflators

26 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 the Survey of R&D, Government and Private Non-Profit Organisations statistics from the 2008-09 survey cycle.

ROUNDING

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

UPCOMING RELEASES

28 Research and Experimental Development, Businesses, Australia, 2015-16 (cat. no. 8104.0), scheduled for release in September 2017.

OTHER RELATED RELEASES

29 Users may also wish to refer to the following ABS releases:

Australian and New Zealand Standard Research Classification (ANZSRC), 2008 (cat. no. 1297.0)
Australian National Accounts: National Income, Expenditure and Product, December 2015 (cat. no. 5206.0)
Australian National Accounts: State Accounts, 2014-15 (cat. no. 5220.0)
Innovation in Australian Business, 2012-13 (cat. no. 8158.0)
Microdata: Business Longitudinal Database, Australia, 2006-07 to 2010-11 (cat. no. 8168.0.55.001)
Research and Experimental Development, Businesses, Australia, 2013-14 (cat. no. 8104.0)
Research and Experimental Development, Higher Education Organisations, Australia, 2014 (cat. no. 8111.0)
Selected Characteristics of Australian Businesses, 2013-14 (cat. no. 8167.0)
Summary of IT Use and Innovation in Australian Business, 2014-15 (cat. no. 8166.0)

30 Relevant OECD publications include:

Main Science and Technology Indicators
The Measurement of Scientific and Technological Activities: Proposed Standard Practice for Surveys of Research and Experimental Development - Frascati Manual 2002