RESEARCH AND DEVELOPMENT

Research and development (R&D) increases the stock of knowledge and innovation in the economy. In 2006-07, gross expenditure on R&D within Australia was $21 billion.

Recent years have seen a gradual increase in the proportion of GDP spent on R&D activities. At its previous peak in 1996-97, the proportion of Australian GDP spent on R&D was 1.6%. In 2006-07, although still below the average ratio of OECD countries (2.3%), the proportion of Australian GDP spent on R&D had risen to 1.9%.

The business sector continued to provide the majority of funding for R&D in Australia. In 2006-07, 57% of all R&D funding came from the business sector, a rise from 48% in 1996-97. In contrast, the proportion of funding originating from federal and state governments declined, from 24% in 1996-97 to 14% in 2006-07. Contributions from other sources including universities and non-profit organisations, have remained stable at around 29%.