R & D expenditure continues its steady growth

After four consecutive years of decline up to 1999/2000, the increase in research and development (R&D) expenditure in the manufacturing sector has continued into 2001/02, to A$2320 million and will increase further in 2002/03 to A$2600 million, according to a study completed by the Australian Industry Group (AiG).

Despite these increases, the report said the gains are cyclical in nature and are off the back of stronger profit performance, therefore weaker business activity and softer profit performance could see these gains halted or reversed in future.

The report, Research and Development Expenditure and Drivers in Australian Manufacturing, warns that R&D is still seen as "a short term cost rather than a long term investment" for many companies and that "structural impediments remain in terms of lifting business overall propensity to invest more in R&D."

According to the report, 96 per cent of all manufacturers undertake no R&D whatsoever and current R&D activity is equivalent to less than the average cost of a company's electricity bill. The survey, which was conducted in August/September 2002, covered manufacturers in all states with some 900 companies responding.

These companies had an annual turnover in excess of A$31 billion and employed 87,000 people. Total expenditure on R&D covered by the study was A$839 million or about 39 per cent of all R&D expenditure by the manufacturing sector.

Participating companies were asked to report on R&D expenditure in 2001/02, planned expenditure, main factors and drivers of R&D, impediments to further increases, the extent of collaboration with public research institutions and their awareness and use of government programs.