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Business R&D spending in Australia declines

Australian Business Expenditure on R&D (BERD) was lower in 2019-20 than in 2011-12, both in dollar terms and as a proportion of GDP.

2011-12 18.32 31.7 2.11
2013-14 18.85 33.47 2.09
2015-16 16.66 31.18 1.88
2017-18 17.44 33.01 1.79
2019-20 18.17 35.6 1.79

The Australian Bureau of Statistics (ABS) released its latest BERD figures on 3 September, highlighting some key statistics:

  • During 2019-20, business expenditure on R&D (BERD) was $18,171 million
  • Businesses in the Professional, scientific and technical services industry recorded the largest increase in R&D expenditure (up $988 million or 19%) followed by Manufacturing (up $164 million or 4%) from 2017-18
  • 39% of total business R&D expenditure was in the field of Information and Computing Sciences

The data reflects business conditions before and during the COVID-19 pandemic, but still tells a dismal story (see table above).

The three industry sectors that invested most in R&D are Professional, scientific and technical services ($6.1Bn or 34%), Manufacturing ($4.76Bn or 26%), and Financial and insurance services ($2.7Bnor 15%). Together these three industries accounted for 75% of total BERD.

Australia’s Gross Expenditure on R&D (GERD) has actually fallen as a proportion of GDP since 2011-12; however, it has grown slightly in dollar terms thanks to significant growth in the Higher Education investment in R&D:

2011-12 18.32 3.55 8.88 0.94 31.7
2013-14 18.85 3.75 9.92 0.95 33.47
2015-16 16.66 3.96 9.55 1.01 31.18
2017-18 17.44 3.33 11.23 1.06 33.06
2019-20 18.17 3.38 12.71 1.33 35.6

The GERD figure is troubling because it reflects government, university and Public-Funded Research (PFR) as well as industry investment in R&D. At a time when government policy is emphasising the importance of sovereign industry capabilities and there is more grant money going towards R&D and commercialisation, the proportion of the country’s GDP devoted to R&D has been falling relentlessly.

It could be argued that the ABS figures, valuable as they are, fail to define R&D success in terms of national prosperity and therefore don’t address two key components of R&D success: commercialisation of IP generated by R&D; and collaboration, both between companies and between industry and the research sector, defined broadly.

It’s also arguable that there is a cultural problem in Australia, compounded by lack of vision within Government. The OECD’s own figures ( show that in terms of full-time business researchers per thousand people employed in industry, Australia with 3.9 came in ahead of Estonia, Italy, Latvia, Lithuania, Luxembourg (just!), Mexico, the Slovak Republic, Spain and Turkey. And well behind most of the others, with Sweden recording 15.7, South Korea 14.7, Finland 11.5, France 9.5 and the USA 9.4.

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