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6523.0 - Household Income and Income Distribution, Australia, 2002-03  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 03/12/2004   
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INTRODUCTION

1 This publication presents the income and characteristics of households and persons resident in private dwellings in Australia, compiled from the 2002-03 Survey of Income and Housing (SIH), previously known as the Survey of Income and Housing Costs. The survey collected information on sources of income, amounts received and characteristics of persons aged 15 years and over resident in private dwellings throughout non-sparsely settled areas of Australia.


2 The SIH was conducted continuously from 1994-95 to 1997-98, and then in 1999-2000, 2000-01 and 2002-03 (charges may apply). The 2002-03 SIH included an expanded sample of 10,000 households (up from about 7,000 households in earlier years). In 2003-04, and every sixth year thereafter, the Household Income and Expenditure Survey (HIES) has a sample of about 11,000 households contributing to income estimates. The SIH will be conducted, with an 11,000 household sample, every two years in between the HIES cycles, to provide a biennial household income series.


3 Previous surveys of household income were conducted by the Australian Bureau of Statistics (ABS) in 1979, 1982, 1986 and 1990. These surveys were generally conducted over a two-month period, compared to a twelve-month period for the SIH and HIES. The SIH and HIES also included improvements to the survey weighting and estimation procedures, changes to the population in scope and changes to interviewing methods.



CONCEPTS AND DEFINITIONS

4 The concepts and definitions relating to statistics of income are described in the following section. Other definitions are included in the Glossary.


Person and household data

5 A major determinant of economic wellbeing for most people is the level of income they and other family members in the same household receive.


6 While income is usually received by individuals, it is normally shared between partners in a couple relationship and with dependent children. To a lesser extent, it may be shared with other children, other relatives and possibly other people living in the same household, for example through the provision of free or cheap accommodation. This is particularly likely to be the case for children other than dependants and other relatives with low levels of income of their own. Even when there is no transfer of income between members of a household, nor provision of free or cheap accommodation, members are still likely to benefit from the economies of scale that arise from the sharing of dwellings.


7 Household characteristics, including household income, are therefore the main information required for analysing income distribution. However, it is the number of people who belong to households with particular characteristics, rather than the number of households with those characteristics, that is of primary interest in measuring income distribution and leads to the preference for the equal representation of those persons in such analysis. For example, if the person is used as the unit of analysis rather than the household, then the representation in the income distribution of each person in a household comprising four persons is the same as that for each person in a household comprising two persons. In contrast, if the household were to be used as the unit of analysis, each person in the four person household would only have half the representation of each person in the two person household.


8 In this publication, the income distribution measures are all calculated with respect to persons, including children. Such measures are sometimes known as person weighted estimates. They are described in more detail in Appendix 1 (Analysing income distribution). Nevertheless, as most of the relevant characteristics of persons relate to their household circumstances, tables 6 to 13 primarily describe the households to which people belong.


Income

9 Income refers to regular and recurring cash receipts from employment, investments and transfers from government, private institutions and other households. Gross income is the sum of the income from all these sources before income tax and the Medicare levy have been deducted. This differs from the household income definition used in the Australian System of National Accounts (ASNA). A detailed comparison of 1997-98 SIH and ASNA estimates was published as an appendix to the 1997-98 issue of this publication. Comparison of SIH data from 1994-95 to 2002-03 with ASNA data indicates that the relationship between the two estimates has not changed significantly over that period.


10 Sources from which income may be received include:

  • wages and salaries (whether from an employer or own corporate enterprise)
  • profit/loss from own unincorporated business (including partnerships)
  • investment income (interest, rent, dividends, royalties)
  • government cash transfers (pensions, allowances, benefits)
  • private cash transfers (e.g. superannuation, regular workers' compensation, income from annuities, child support, and other transfers from other households).

11 Receipts which are excluded from income because they are not regular or recurring cash payments include the following:
  • income in kind including employee benefits such as the provision of a house or a car
  • employer contributions to pension and superannuation funds
  • capital transfers such as inheritances and legacies, maturity payments on life insurance policies, lump sum compensation for injuries or other damage
  • capital gains and losses.

12 Receipts of family tax benefit are treated as income, regardless of whether they are received fortnightly or as a lump sum. The aged persons' savings bonus and self-funded retirees' supplementary bonus, paid as part of the introduction of The New Tax System in 2000-01, are regarded as capital transfers as they were designed to help retired people maintain the value of their savings and investments following the introduction of the GST. However, the one-off payment to seniors announced in the May 2001 Budget and paid in 2000-01 is included as income as it was primarily a supplement to existing income support payments.


13 While income generally provides a useful indicator of economic wellbeing, there are some circumstances which present particular difficulties. Some households report extremely low and even negative income in the SIH, which places them well below the safety net of income support provided by social security pensions and allowances. Households may underreport their incomes in the SIH at all income levels, including low income households. However, households can correctly report low levels of income if they incur losses in their unincorporated business or have negative returns from their other investments. Studies of income and expenditure reported in the 1998-99 ABS Household Expenditure Survey (HES) have shown that such households in the bottom income decile and with negative gross incomes tend to have expenditure levels that are comparable to those of households with higher income levels (and slightly above the average expenditures recorded for the fifth decile), indicating that these households have access to economic resources, such as wealth, which are not measured in the SIH, or that the instance of low or negative income is temporary, perhaps reflecting business or investment start up. Other households in the bottom income decile in the 1998-99 HES had average incomes at about the level of the single pension rate, were predominately single person households, the average age of the reference person was 53 years, and their principal source of income was largely government cash benefits. However, on average, these households also had expenditures above the average of the households in the second decile, which is not inconsistent with the use of assets to maintain a higher standard of living than implied by their incomes alone. Therefore it can be reasonably concluded that most are unlikely to be suffering extremely low levels of economic wellbeing, and income distribution analysis may lead to inappropriate conclusions if such households are included. For this reason, tables showing statistics classified by income quintile include a supplementary category comprising the second and third deciles, which can be used as an alternative to the lowest income quintile. (For an explanation of quintiles and deciles, see Appendix 1 (Analysing income distribution).)


Weekly income

14 Income is collected using a number of different reporting periods, such as the last financial year for own business and property income, and the usual payment for a period close to the time of interview for wages and salaries, other sources of private income and government cash transfers. The income reported is divided by the number of weeks in the reporting period. Estimates of weekly income in this publication therefore do not refer to a given week within the reference year of the survey.


Equivalised disposable income

15 For most analyses in this publication, gross income (as described in the previous paragraphs) is adjusted in two ways to facilitate the comparison of economic wellbeing between households. Firstly, disposable income is derived by deducting estimates of personal income tax and the Medicare levy from gross income. Disposable income better represents the economic resources available to meet the needs of households. A more detailed analysis of 'final' income which looks at the impact of indirect government benefits (i.e. non-cash benefits) and indirect taxes requires detailed information on expenditure patterns which is not available in the SIH. For details of this type of 'final' income analysis see Government Benefits, Taxes and Household Income, Australia, 1998-99 (cat. no. 6537.0).


16 Disposable income is also adjusted by the application of an equivalence scale to facilitate comparison of income levels between households of differing size and composition, reflecting the requirement of a larger household to have a higher level of income to achieve the same standard of living as a smaller household. Where disposable income is negative, it is set to zero equivalised disposable income. For more information on equivalised income see Appendix 3 (Equivalised disposable household income).


Annual income

17 The tables in the main body of this publication refer to 'current' weekly income, that is, income being received at the time the data were collected from respondents. The survey also produces measures of 'annual' income that reflect total incomes for the previous financial year. Appendix 2 (Current and annual income) explains how current income differs from annual income, notes some of the advantages and disadvantages of the two types of measure and presents some 'annual' income estimates.



SURVEY METHODOLOGY

Scope and coverage

18 The survey collects information by personal interview from usual residents of private dwellings in urban and rural areas of Australia, covering about 98 per cent of the people living in Australia. Private dwellings are houses, flats, home units, caravans, garages, tents and other structures that are used as places of residence at the time of interview. Long-stay caravan parks are also included. These are distinct from non-private dwellings which include hotels, boarding schools, boarding houses and institutions. Residents of non-private dwellings are excluded.


19 The survey also excludes:

  • households which contain members of non-Australian defence forces stationed in Australia
  • households which contain diplomatic personnel of overseas governments
  • households in remote and sparsely settled areas of the Northern Territory, accounting for about 20% of the population in the Northern Territory.

Sample design

20 The sample for the income survey is a sub-sample of private dwellings included in the ABS Monthly Population Survey (MPS). The MPS sample is a multistage selection of private dwellings and a list sample of other dwellings.


21 The sample is suitable for producing reliable estimates at the Australian level for income of residents in private dwellings, classified by different population groups based on household composition (such as couples with children), income levels or income sources. Estimates at the state and territory level for broad aggregates are generally reliable although some estimates for Tasmania, the Northern Territory and the Australian Capital Territory should be used with caution (see Appendix 4: Sampling variability).


22 In each month in 2002-03 a sample of dwellings was selected for the SIH from the responding households in the MPS. Over the year, about 80% of persons over the age of 15 in this sample responded.


Non-response and imputation

23 Fully non-responding households are those selected for the survey but from which no information is included in the survey results. They include:

  • those affected by death or illness of a household member
  • those in which more than half of the persons over 15 in the household did not respond because they could not be contacted, had language problems or refused to participate.

24 Partial response occurs when:
  • some items of data in a schedule are missing because a person is unable or unwilling to provide the data
  • for a household, not every person over 15 residing in the household responds but at least half of these persons provide data.

25 In the first case of partial response above, the data provided are retained and the missing data are imputed by replacing each missing value with a value reported by another person (referred to as the donor).


26 For the second type of partial response, the data for the persons who did respond are retained, and data for each missing person are provided by imputing data values equivalent to those of a fully responding person (donor). Imputation using donor records is also applied for fully non-responding households that comprise one person or a sole parent whose children are all under the age of 15. Information about the household composition is obtained from the MPS.


27 Donor records are selected by matching information on sex, age and labour force characteristics of the person with missing information. As far as possible, the imputed information is an appropriate proxy for the information that is missing. Depending on which values are to be imputed, donors are chosen from the pool of individual records with complete information for the block of questions where the missing information occurs.


Final sample

28 The final sample on which estimates are based, is composed of persons for which all necessary information is available. The information may have been wholly provided at the interview (fully-responding) or may have been completed through imputation for partially responding or non-responding. The final sample consists of 10,211 households, comprising 19,402 persons 15 years old and over. All income information was imputed for 596 households comprising one adult or one adult with children under 15 years old, and was imputed for one or more persons in 240 partially responding multi-person households.

Number of responding households

Capital City
Balance of State
Total
Households
Persons(a)
Households
Persons(a)
Households
Persons(a)
no.
no.
no.
no.
no.
no.

NSW
1,325
2,590
838
1,491
2,163
4,081
Vic.
1,448
2,873
617
1,151
2,065
4,024
Qld
935
1,816
1,017
1,871
1,952
3,687
SA
943
1,760
321
611
1,264
2,371
WA
1,071
2,050
328
606
1,399
2,656
Tas.
308
563
433
808
741
1,371
NT
169
319
-
-
169
319
ACT
458
893
-
-
458
893
Aust.
6,657
12,864
3,554
6,538
10,211
19,402

- nil or rounded to zero (including null cells)
(a) Number of persons aged 15 years and over.


Weighting

29 Expansion factors, or weights, are values by which information for the sample is multiplied to produce estimates for the whole population. From this survey, estimates are produced referring to persons, to income units (although these are not included in this publication) and to households, and the weights are calculated so that each person in an income unit or household has the same weight and that weight is also used for the income unit and household.


30 Final weights are calculated through an iterative procedure in which initial weights are adjusted by a calibration process to ensure that survey estimates conform to independently estimated benchmarks. The initial weights are equal to the inverse of the probability of selection in the survey, with initial person weights being equal to initial household weights.


31 Four types of benchmarks are used in the calibration of the final weights:

  • numbers of persons aged 15 and over
  • numbers of children under age 15
  • numbers of households
  • for estimates for 1999-2000 and 2000-01, the value of government benefit cash transfers.

32 Person benchmarks for persons aged 15 and over are estimates of the number of people in each state and territory by age and sex, the number of people in each state and the ACT by labour force status and the number of people in each state living in the capital city or the balance of the state.


33 A separate set of benchmarks is used for children under 15, since there are not individual person records for them in the survey. Information about children is recorded on household records, however, and benchmarks for the number of children aged 0-4 and aged 5-14 are used for each state and territory.


34 Numbers of households are calibrated to benchmarks for total Australia with respect to household composition (based on the number of adults (1, 2 or 3) and whether or not the household contains children).


35 The person and household benchmarks are based on estimates of numbers of persons and households in Australia. The benchmarks are adjusted to include persons and households residing in private dwellings only and therefore do not, and are not intended to, match estimates of the Australian resident population published in other ABS publications.


36 The fourth type of benchmark relates to income from social security transfers, and is only used for estimates for 1999-2000 and 2000-01. The benchmark was introduced for these years because, without it, the survey estimates of income from government benefit cash transfers accounted for a significantly smaller proportion of aggregate social security payments reported by the Department of Family and Community Services and the Department of Veterans' Affairs. Extensive investigations could not identify any specific reasons for the decline, indicating that it is likely to be associated with differences between the characteristics of people who respond to the survey and the characteristics of those who do not respond. This type of problem is sometimes called non-response bias, and introducing additional benchmarks is a means of addressing it. The benchmark introduced in this case ensured that the survey estimate of government benefit cash transfers was maintained at a proportion of aggregate benefit cash transfers that is consistent with the proportion achieved between 1994-95 and 1997-98 and in 2002-03. More detail of the investigations that led to the introduction of this benchmark is provided in Appendix 4 (Sampling variability) of the 2000-01 issue of this publication, released in July 2003.


Estimation

37 Estimates produced from the survey are usually in the form of averages (e.g. mean weekly income of couples with dependent children), or counts (e.g. total number of households that own their dwelling or total number of persons living in households that own their own dwelling). For counts of households, the estimate is obtained by summing the weights of all households in the required group (e.g. those owning their own dwelling). For counts of persons, the household weights are multiplied by the number of persons in the household before summing. The SIH collects data on the number of people, including children, in each household but separate records with income and other detailed data are only collected for people 15 years and older. Therefore, counts of persons cannot be obtained by summing the weights of all persons.


38 Average income values are obtained in two different ways, depending on whether mean gross household income or mean equivalised disposable household income is being derived. Estimates of mean gross household income are obtained by multiplying the gross income of each household by the weight of the household, summing across all households, and then dividing by the estimated number of households. For example, the mean gross household income of couples with dependent children is the weighted sum of the gross income of each such household divided by the estimated number of those households. Estimates of mean equivalised disposable household income are obtained by multiplying the equivalised disposable income of each household by the number of people in the household (including children) and by the weight of the household, summing across all households, and then dividing by the estimated number of people in the population group. Appendix 3 (Equivalised disposable household income) illustrates the differences between mean gross household income calculated on a household weighted basis and mean equivalised disposable household income calculated on a person weighted basis.


Reliability of estimates

39 The estimates provided in this publication are subject to two types of error, non-sampling and sampling error.


Non-sampling error

40 Non-sampling error can occur whether the estimates are derived from a sample or from a complete collection.


41 Non-sampling error can arise through the inability to obtain data from all households included in the sample. Although adjustments are made through the weighting process (described in paragraphs 29 to 36) to reflect the differing response rates of the various groups in the population, some non-response bias may remain because of differences that exist between the characteristics of respondents and non-respondents.


42 There can also be errors in reporting on the part of both respondents and interviewers. Reporting errors may arise through inappropriate wording of questions, misunderstanding of what data are required, inability or unwillingness to provide accurate information, or mistakes in answers to questions.


43 Errors may also arise during processing of the survey data through mistakes in coding and data recording.


44 Non-sampling errors are difficult to measure in any collection. However, every effort is made to minimise these errors. In particular, the effect of the reporting and processing errors described above is minimised by careful questionnaire design, intensive training and supervision of interviewers, asking respondents to refer to records whenever possible and by extensive editing and quality control checking at all stages of data processing.


45 The error due to incomplete response is minimised by

  • call-backs to all initially non-responding households in order to explain the importance of their cooperation to the survey
  • adjustment to the weights allocated to the respondent households in order to allow for households with similar characteristics from which comprehensive data are not obtained.

Sampling error

46 The estimates are based on a sample of possible observations and are subject to sampling variability. The estimates may therefore differ from the figures that would have been produced if information had been collected for all households. A measure of the sampling error for a given estimate is provided by the standard error, which may be expressed as a percentage of the estimate (relative standard error). Further information on sampling error is given in Appendix 4 (Sampling variability).



ACKNOWLEDGMENT

47 ABS publications draw extensively on information provided freely by individuals, businesses, governments and other organisations. Their continued cooperation is very much appreciated: without it, the wide range of statistics published by the ABS would not be available. Information received by the ABS is treated in strict confidence as required by the Census and Statistics Act 1905.



STANDARD PRODUCTS

48 This publication, also available as a pdf file from this web site (for a fee), provides a summary of the income related data available from the Survey of Income and Housing. In addition to selected text and tabular information provided in this set of webpages, a range of other products and services are also available. All of the tables in the main body of this publication are available, for a fee, as spreadsheets from this web site. The data cubes under 6523.0 also include tables of RSEs provided (free of charge) for each publication table. Additional tables (cat. no. 6523.0.55.001) have been released on the ABS web site concurrently with this publication, including tables of counts relating to publication tables of proportions, as well as more detailed dissections, such as by age of persons in the household, and additional classifications.



SPECIAL DATA SERVICES

49 The ABS offers specialist consultancy services to assist clients with more complex statistical information needs. Clients may wish to have the unit record data analysed according to their own needs, or require tailored tables incorporating data items and populations as requested by them. Tables and other analytic outputs can be made available electronically or in printed form. However, as the level of detail or disaggregation increases with detailed requests, the number of contributors to data cells decreases. This may result in some requested information not being able to be released due to confidentiality or sampling variability constraints. All specialist consultancy services attract a service charge, and clients will be provided with a quote before information is supplied. For further information, contact ABS information consultants on 1300 135 070.



UNIT RECORD FILE

50 It is expected that a confidentialised unit record file (CURF) from the 2002-03 SIH will be released on CD-ROM in February 2005. It is also expected that a more detailed SIH CURF will be available through the ABS Remote Access Data Laboratory. A full range of up-to-date information about the availability of ABS CURFs and about applying for access to CURFs is available via this web site. Inquiries to the ABS CURF Management Unit should email: curf.management@abs.gov.au, or telephone (02) 6252 5853.



RELATED PUBLICATIONS

51 Users may wish to refer to the following ABS products which relate to income (charges may apply):


52 Users may also wish to refer to the following non-ABS products which relate to income:

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