If United States investors were furious with the Federal Reserve last month for leaving vital sentence out of its monthly policy statement, try this local example of sloppy reporting for size.
The Ministry of Research, Science and Technology (MoRST), doing its bit for the research component of its name, sponsors the research and development survey conducted by Statistics New Zealand. The results of the latest survey announced last month showed total R&D expenditure in 2004 was $1.6 billion, up 13.1 percent from 2002.
More precisely, R&D in the 2004 reference period was 13.1 percent higher than in the 2002 reference period – this deals with the problem that some data gathered come from 2003/04 financial reporting year; some come from the 2004 calendar year.
The biennial survey measures the level of R&D activity, employment and expenditure by private sector enterprises, government departments, government-owned trading entities, and universities.
After the 2002 survey, Statistics New Zealand reviewed the methodology, evaluated the survey outputs and made several changes for the 2004 survey. Therefore, be careful when comparing data from 2004 with previous surveys.
Total R&D expenditure by the private sector in 2004 was $648.1 million, spending by government sector (excluding universities) was $498.4 million, and spending by universities was $454.8 million. The private-sector expenditure was hefty 24.5 percent more than in 2002. Government sector (excluding universities) and universities’ expenditure increased 8.4 percent and 4.4 percent respectively.
But as Statistics New Zealand points out, the reported increase for the private sector may have been affected by changes in the sample design. When investigating 536 private sector enterprises that were common in both the 2002 and 2004 surveys, there was 9.5 percent increase in expenditure on R&D.
Total R&D expenditure recorded from the survey was 1.17 percent of New Zealand’s gross domestic product. The private sector has been trending upwards over the past decade, from 0.26 percent of GDP in 1996 to 0.47 percent in the latest survey period. Over the same period, government sector R&D expenditure as proportion of GDP has declined slightly, but continues to be above the OECD average.
R&D activity
Three main types of R&D are embraced by the survey:
* Basic research ($564.1 million in 2004) is carried out to pursue planned search for new knowledge with either broad underpinning reference, or no reference to likely application.
* Applied research ($595 million) is investigation undertaken to acquire new knowledge. It is directed primarily towards specific practical aim or objective and determines possible uses of basic research.
* Experimental development ($442.2 million) is systematic work, drawing on knowledge gained from research and practical experience, that is directed at producing new materials, products and devices; installing new processes, systems and services; or improving substantially those already produced or installed.
Most of the research conducted in the private sector (56 percent) was at the experimental development stage. Most of the government and university sector R&D has been in the basic research category (49.1 percent and 63.6 percent respectively).
The Foundation for Research, Science & Technology is the Government’s major dispenser of public money for R&D. It invests over $460 million year in research, science and technology “to enhance the wealth and well-being of New Zealanders”.
But if we are to believe Parliament’s Primary Production Select Committee, there is much more money sloshing around among some state agencies than most of us appreciate. Including, we suspect, the Government.
Proof-reading points
Back in April, the committee reported to Parliament on the results of its 2003/04 financial review of AgriQuality, recommending nothing more than that “the House take note of its report”.
The House not only should have taken note, but should have asked what is happening to the money mentioned in the committee’s report.
AgriQuality is state enterprise that has operated since 1 November 1998. It operates in New Zealand and Australia, has five business divisions and delivers food safety and biosecurity services to the export and domestic dairy, meat, horticulture, food and forestry industries.
Obviously, it does this very well. According to the committee’s report, AgriQuality’s 2003/04 Annual Report shows that the company has delivered an increased operating profit. “Its net profit has risen from $2,400 million for 2002/03 to $3,271 million. The forecast revenue for 2003/04 was $75,764 million. However, the actual revenue was $91,668 million…”
Eat your heart out, Fonterra. The giant dairy cooperative ended the first half of the 2004/05 financial year with operating revenues of $5.7 billion for the six months to November 30, 2004.
On another measure, the AgriQuality revenue far outpaces the $60 billion-odd of total expenditure the Government has bud-geted to spend this 2004/05 financial year.
Alas, it is the product of some sloppy proof-reading. We can knock it down to size (and reality) simply by sticking full-points where the commas have been placed in the select committee’s report. Too bad.
Bob Edlin is regular contributor to Management.
