INNOVATION EXPENDITURE

INNOVATION EXPENDITURE BY DOLLAR RANGES

Innovation-active businesses were asked to estimate their expenditure (using ranges) on the development or introduction of all new goods, services, processes or methods during the reference period. Expenditure on innovation comprises all expenditure incurred by businesses on the development or introduction of all new or significantly improved goods, services, processes or methods over a financial year period.

Business expenditure on innovation activities may include: acquisition of machinery, equipment or technology, reorganisation of existing business models, training specific to innovation, marketing activities, internal and external Research and Experimental Development on innovation, design, planning or testing to develop or introduce innovation, acquisition of licences, rights, patents or other intellectual property associated with innovation, other labour costs related to innovation and any other activities not listed, that are related to the development or introduction of new innovations.

The proportion of innovation-active businesses that reported no expenditure on innovation was 28% and was highest amongst businesses with 0-4 persons employed (29%). Nearly half of all innovation-active businesses (46%) reported innovation expenditure of $1 to less than $25,000. Less than 1% of all innovation-active businesses reported innovation expenditure of $5,000,000 or more.

Amount spent on innovation expenditure, by employment size(a), 2014-15
	0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
	%	%	%	%	%
No expenditure	29.3	26.8	23.7	21.7	27.7
$1 to less than $25,000	52.0	43.0	31.4	6.6	45.9
$25,000 to less than $50,000	8.0	14.1	12.7	8.4	10.9
$50,000 to less than $100,000	5.5	5.9	10.8	9.4	6.3
$100,000 to less than $250,000	3.8	6.3	8.6	19.3	5.4
$250,000 to less than $1,000,000	1.2	3.2	8.4	14.7	2.8
$1,000,000 to less than $5,000,000	0.3	np	4.3	12.8	0.9
$5,000,000 or more	-	np	0.2	7.1	0.1
- nil or rounded to zero (including null cells).
np not available for publication but included in totals where applicable, unless otherwise indicated.
(a) Proportions are of innovation-active businesses in each output category.

Along with the proportions presented in the table above, a total estimate of innovation expenditure by all Australian business in 2014-15 was derived. In order to calculate this, an estimated total for innovation expenditure was derived by assigning a random value to each innovation-active business that reported expenditure within the bounded ranges. These data, and the values of those businesses that reported actual dollar values were then weighted to derive an innovation expenditure total. This simulation was run multiple times and an average of these simulations provides an approximate value of innovation expenditure. This was the preferred method of the three used to derive innovation expenditure in the 2012-13 reference period. See Innovation in Australia, 2012-13 (cat no 8158.0) Appendix 2, Innovation Expenditure for further background information.

Approximately one quarter of total innovation expenditure is derived from businesses that reported actual dollar values $5 million or greater. Based on calculations from multiple simulations assigning randomised values, the estimated total expenditure spent on innovation by Australian businesses in 2014-15 is between $26 billion to $30 billion.

Further data relating to innovation expenditure can be accessed via the Downloads tab.


PERCENTAGE BREAKDOWN OF TOTAL INNOVATION EXPENDITURE BY TYPE OF ACTIVITY

Businesses that reported undertaking any innovative activity during the year ended 30 June 2015 were asked to provide a percentage breakdown of their innovation related expenditure against the listed categories of innovation expenditure related items. Two new response options were added to the expenditure items list: re-organisation of existing business models, work practices and decision making processes and other labour costs related to the development or introduction of new goods, services, processes, or methods. This was the first time businesses were asked to report the percentage breakdown by activity of their innovation expenditure. As part of the quality assurance process, providers were contacted to clarify any anomalies that arose from the percentage breakdown of expenditure types for innovation purposes.

Percentage breakdown of innovation related expenditure, by activity(a), 2014-15
		Less than 10%	10% to less than 25%	25% to less than 50%	50% or more
		%	%	%	%
Acquisition of machinery, equipment or technology		2.6	22.6	14.3	60.6
Re-organisation of existing business models, work practices and decision making processes		11.8	44.9	19.0	24.3
Training		13.9	50.8	18.7	16.7
Marketing activities undertaken to introduce new goods and/or services to the market		11.7	37.5	16.0	34.8
Research and Experimental Development for purposes of introducing innovation only:(b)
	acquired from other businesses	^40.4	^41.6	6.6	11.3
	undertaken by the business	13.1	43.0	18.1	25.8
Design, planning or testing		13.4	45.6	19.3	21.7
Acquisition of licenses, rights, patents or other intellectual property		^30.9	^48.8	14.1	6.2
Other labour costs related to the development or introduction of new or significantly improved goods, services, processes or methods		8.7	41.7	21.6	28.0
Other activities related to the development or introduction of new or significantly improved goods, services, processes or methods		16.4	46.2	9.4	28.0
^ estimate has a relative standard error of 10% to less than 25% and should be used with caution.
(a) Proportions are of innovation-active businesses in each output category.
(b) A detailed definition of Research and Experimental Development was not provided. No interpretation checks were made.

Results for most types of innovation related expenditure showed businesses most commonly reported spending 10% to less than 25% of their innovation expenditure on a given activity.

Further data relating to type of innovation expenditure can be accessed via the Downloads tab.


TYPE OF INNOVATION RELATED EXPENDITURE

Innovation-active businesses were asked to report the percentage of innovation expenditure spent on each category. If a percentage was provided, the business was deemed to have had expenditure on that activity and this was used to derive proportions of businesses that had expenditure on those activities.

Types of expenditure for innovation purposes, by employment size(a)(b), 2014-15
		0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
		%	%	%	%	%
Acquisition of machinery, equipment or technology		43.1	45.3	45.1	51.8	44.3
Re-organisation of existing business models		23.3	28.1	29.6	29.0	25.9
Training		23.7	34.5	35.8	34.6	29.3
Marketing activities undertaken to introduce new goods or services to the market		26.0	33.0	32.0	27.8	29.4
Research and Experimental Development for purposes of introducing innovation only:(c)
	acquired from other businesses	5.2	4.4	5.0	4.9	4.9
	undertaken by this business	11.8	12.2	14.3	13.6	12.2
	any expenditure on Research and Experimental Development	14.0	12.8	16.8	15.6	13.8
Design, planning or testing		16.7	14.0	15.8	22.9	15.6
Acquisition of licenses, rights, patents or other intellectual property		8.8	7.6	5.9	9.6	8.1
Other labour costs related to the development or introduction of new or significantly improved goods, services, processes or methods		22.4	25.1	27.3	37.9	24.1
Other activities related to the development or introduction of new or significantly improved goods, services, processes or methods		10.0	10.3	7.7	5.8	9.9
(a) Proportions are of innovation-active businesses in each output category.
(b) Businesses were asked if they had incurred any expenditure during the reference period for activities related to innovation only.
(c) A detailed definition of Research and Experimental Development was not provided. No interpretation checks were made.

Acquisition of machinery, equipment or technology was the most common type of expenditure for the purpose of innovation, ranging from 43% of businesses with 0-4 persons employed to 52% of businesses with 200 or more persons employed.

By industry, Agriculture, forestry and fishing recorded the highest proportion of innovation-active businesses that had expenditure on acquisition of machinery, equipment or technology (60%), while Health care and social assistance recorded the highest proportion of innovation-active businesses that had expenditure on training (40%). The Rental, hiring and real estate industry recorded the highest proportion of innovation-active businesses that had expenditure on re-organisation of existing business models, work practices and decision making processes (42%).

Further data relating to type of innovation expenditure can be accessed via the Downloads tab.