Australian Bureau of Statistics
6523.0 - Household Income and Income Distribution, Australia, 2007-08
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 20/08/2009
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7 The 2007-08 SIH content was largely similar to that used in the 2005-06 SIH with some changes in questions, definitions and methodology. Key changes to the collection include:
8 The ABS has revised its standards for household income statistics following the adoption of new international standards in 2004 and review of aspects of the collection and dissemination of income data. The 2007-08 income estimates in this publication reflect the changes in treatment of individual income components arising from the review.
9 Some limits have been placed on the new inclusions, where the magnitude of the individual amounts received exceed that likely to be used to support current consumption e.g. termination payments, workers' compensation payments. Where data are available, the estimates for 2003-04 and 2005-06 shown in the time series tables in this publication also reflect the new treatments.
10 Appendix 4 provides more detail on the nature and impact of the changes on the income data included in this publication.
Inclusion of child care data
11 There were additional questions on use of child care, including preschool for a selected child, covering type, time used, costs and child care benefit received. In addition, there were new data items on barriers to labour force participation due to child care related reasons. Table 7 'Child care' presents some summary statistics for this topic. The Information Paper: Survey of Income and Housing, User Guide, Australia, 2007-08 (cat. no. 6553.0), expected to be released in August 2009 will contain the full list of available data items covered by this topic.
Inclusion of additional housing data
12 The SIH 2007-08 included additional housing topics on housing mobility, housing condition and dwelling characteristics, home purchase for first home buyers, household finances of owners with a mortgage, rental arrangements and the affairs of renters, and neighbourhood. Refer to Appendix 6, 'Additional Housing Topics', for more information on additional Housing data.
13 Some changes have also been implemented within the derivation process to correct errors detected when calculating the disposable income for some households in receipt of tax offsets. Estimates for 2005-06 have been updated in this publication.
CONCEPTS AND DEFINITIONS
14 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
15 A major determinant of economic wellbeing for most people is the level of income they and other family members in the same household receive.
16 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.
17 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.
18 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. Nevertheless, as most of the relevant characteristics of persons relate to their household circumstances, Tables 6 to 16 primarily describe the households to which people belong.
19 Household income consists of all current receipts, whether monetary or in kind, that are received by the household or by individual members of the household, and which are available for, or intended to support, current consumption.
20 Income includes receipts from:
21 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 older Australians paid in 2000-01, 2005-06, and 2007-08, the one-off payment to families paid since 2003-04 and the one-off payments to carers paid since 2003-04 are included as income as they were primarily a supplement to existing income support payments. The maternity payment introduced in July 2004 is also included as income.
22 Gross income is the sum of the income from all sources before income tax and the Medicare levy have been deducted. Prior to 2005-06, family tax benefit paid through the tax system or as a lump sum was excluded from gross income for practical reasons. In 2005-06 and 2007-08 these payments have been included in gross income.
23 Disposable income better represents the economic resources available to meet the needs of households. It is derived by deducting estimates of personal income tax and the Medicare levy from gross income. Medicare levy surcharge was also calculated for the first time in 2007-08 and was deducted from gross income while calculating disposable income.
24 Income tax is estimated for all households using taxation criteria for 2007-08 and the income and other characteristics of household members reported in the survey.
25 Prior to 2005-06 the derivation of disposable income also included the addition of family tax benefit paid through the tax system or as a lump sum by Centrelink since for practical reasons it was not included in the gross income estimates.
Equivalised disposable income
26 Most analyses in this publication use equivalised disposable income rather than gross or disposable income since it enables comparison of the relative economic wellbeing of households of different size and composition. Equivalised disposable income is calculated by adjusting disposable income by the application of an equivalence scale. This adjustment reflects the requirement for 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.
27 When household income is adjusted according to an equivalence scale, the equivalised income can be viewed as an indicator of the economic resources available to a standardised household. For a lone person household, it is equal to income received. For a household comprising more than one person, equivalised income is an indicator of the household income that would be required by a lone person household in order to enjoy the same level of economic wellbeing as the household in question.
28 For more information on equivalised income see Appendix 3.
Lowest income decile
29 While equivalised 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 survey, which places them well below the safety net of income support provided by social security pensions and allowances. Households may under report their incomes in the survey 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.
30 Studies of income and expenditure reported in HES surveys 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 income decile). This suggests that these households have access to economic resources such as wealth, or that the instance of low or negative income is temporary, perhaps reflecting business or investment start up. Other households in the lowest income decile in past surveys had average incomes at about the level of the single pension rate, were predominantly single person households, and their principal source of income was largely government pensions and allowances. However, on average, these households also had expenditures above the average of the households in the second income decile, which is not inconsistent with the use of assets to maintain a higher standard of living than implied by their incomes alone.
31 It can therefore be reasonably concluded that many of the households included in the lowest income decile are unlikely to be suffering extremely low levels of economic wellbeing. Income distribution analysis may lead to inappropriate conclusions if such households are used as the basis for assessing low levels of economic wellbeing. For this reason, tables showing statistics classified by income quintile include a supplementary category comprising the second and third income deciles, which can be used as an alternative to the lowest income quintile. (For an explanation of quintiles and deciles, see Appendix 1.)
32 With the 2003-04 HES, analysis of households in the lowest income decile was improved through direct observation of the expenditure and net worth of these households. An examination of these low income households was presented in Appendix 4 of Household Wealth and Wealth Distribution, 2003-04 (cat. no. 6554.0).
33 Income is collected using a number of different reporting periods, such as the whole financial year for own unincorporated business and investment 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 pensions and allowances. The income reported is divided by the number of weeks in the reporting period. Estimates of weekly income in this publication do not therefore refer to a given week within the reference period of the survey.
34 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 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.
35 The survey collects information by personal interview from usual residents of private dwellings in urban and rural areas of Australia (excluding very remote areas), covering about 97% of the people living in Australia. Private dwellings are houses, flats, home units, caravans, garages, tents and other structures that were 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.
36 Usual residents excludes:
37 Information for each household was collected using:
38 Sample copies of the above documents are included in the Information Paper: Survey of Income and Housing, User Guide, Australia, 2007-08 (cat. no. 6553.0) to be released in August, 2009.
39 The sample was designed to produce reliable estimates for broad aggregates for households resident in private dwellings aggregated for Australia, for each state and for the capital cities in each state and territory. More detailed estimates should be used with caution, especially for Tasmania, the Northern Territory and the Australian Capital Territory (see Appendix 7).
40 For the 2007-08 SIH, dwellings were selected through a stratified, multistage cluster design. Selections were distributed across a eleven month enumeration period. The SIH is normally conducted over a 12 month enumeration period so that the survey results would be representative of income patterns across the year. In 2007-08 the estimates were adjusted during weighting so that the shorter enumeration period in the first quarter was compensated in the final estimates. In the final quarter of enumeration, 10% of the selected dwellings were deselected from the sample. This reduced the overall number of dwellings selected to participate in the survey. This outcome may increase the standard error in the final quarter estimates and hence the standard error in the annualised estimates. The relative change in sample size across the enumeration quarters may also introduce some bias to the annualised estimates but this is expected to be much less than the standard error.
41 Of the selected dwellings there were 11,126 in the scope of the survey. Of these, 1,781 did not respond at all to the questionnaire (including 46% that were not able to be contacted during the survey enumeration), or did not respond adequately. The remainder of these households included:
Partial response and imputation
42 Some other households did not supply all the required information but supplied sufficient information to be retained in the sample. Such partial response occurs when:
43 In these cases, 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).
44 Donor records are selected by finding fully responding persons with matching information on various characteristics (such as state, sex, age, labour force status and income) as 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 randomly chosen from the pool of individual records with complete information for the block of questions where the missing information occurs.
45 In the 2007-08 SIH, responses were imputed when not every person aged 15 or over residing in the household responded, but the significant persons provided answers to all key questions.
46 The final sample on which estimates were 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 households. Of the selected dwellings, there were 11,126 in the scope of the survey, of which 9,345 (84.0%) were included as part of the final estimates. The final sample consists of those 9,345 households, comprising 18,326 persons aged 15 years old and over. The final sample includes 2,026 households which had at least one imputed value in income or child care expenses. For 52.4% of these households only a single value was missing, and most of these were for income from interest and investments or information relating to household loans.
47 Weighting is the process of adjusting results from a sample survey to infer results for the total in scope population whether that be persons or households. To do this, a 'weight' is allocated to each sample unit e.g. a person or a household. The weight is a value which indicates how many population units are represented by the sample unit. The first step in calculating weights for each unit is to assign an initial weight, which is the inverse of the probability of being selected in the survey. For example, if the probability of a household being selected in the survey was 1 in 600, then the household would have an initial weight of 600 (that is, it represents 600 households).
48 An adjustment is then made to the initial weights to account for changes in the sample across the four quarters of survey enumeration; the sum of the weights after this initial adjustment of households in each quarter is equal.
49 The initial weights are then calibrated to align with independent estimates of the population of interest, referred to as 'benchmarks'. Weights calibrated against population benchmarks ensure that the survey estimates conform to the independently estimated distribution of the population rather than to the distribution within the sample itself.
50 In the 2007-08 SIH, all persons in each household were assigned a weight. This differs from the 2005-06 SIH where children aged 0-14 years were not given separate weights, but household counts of the number of children were benchmarked to population totals.
51 The SIH survey was benchmarked to the in scope estimated resident population (ERP) and the estimated number of households in the population. The 2007-08 cycle has used population and household benchmarks based on the 2006 Census instead of the 2001 Population Census estimates used for the 2003-04 and 2005-06 SIH. The differences in the estimated population that occur due to this change are outlined in the following table.
52 The benchmarks used in the calibration of the final weights for the 2007-08 SIH were:
53 More detailed age groupings have been used where possible in 2007-08 SIH. Previously in the 2003-04 SIH, ten year age groups up to 65 years and over were used . In SIH 2005-06 five year age groups were used up to 75 years and over, except for NT where the age groups were 15-24, 25-44, 45 and over. The 2007-08 age groups have been refined further where possible, five year age groups up to 80 years or older in all states. The two territories have used five year age groups age up to 75 or older for the ACT and 60 or older for the NT. The expanded detail for age groups in SIH 2007-08 aims to improve estimates across those ages. The impact of this change on all other estimates not involving age is expected to be minimal.
54 The person and household benchmarks were based on preliminary estimates of numbers of persons and households in Australia in 2007-08 based on the 2006 Population Census. The benchmarks used include households and persons residing in occupied private dwellings only and therefore do not, and are not intended to, match estimates of the total Australian resident population published by the ABS.
55 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).
56 Estimates produced from the survey are usually in the form of averages (e.g. average weekly income of couple households 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 was obtained by summing the weights for the responding households in the required group (e.g. those owning their own dwelling). For counts of persons, the household weights were 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 were only collected for people 15 years and older. Therefore, counts of persons cannot be obtained by summing the weights of all persons.
57 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 calculated on a household weighted basis. They 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 couple households 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 calculated on a person weighted basis. They 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 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
58 The estimates provided in this publication are subject to two types of error, non-sampling and sampling error.
59 Non-sampling error can occur in any collection, whether the estimates are derived from a sample or from a complete collection such as a census. Sources of non-sampling error include non-response, errors in reporting by respondents or recording of answers by interviewers and errors in coding and processing the data.
60 Non-sampling errors are difficult to quantify in any collection. However, every effort is made to reduce non-sampling error to a minimum by careful design and testing of the questionnaire, training of interviewers and data entry staff and extensive editing and quality control procedures at all stages of data processing.
61 One of the main sources of non-sampling error is non-response by persons selected in the survey. Non-response occurs when people cannot or will not cooperate or cannot be contacted. Non-response can affect the reliability of results and can introduce a bias. The magnitude of any bias depends upon the level of non-response and the extent of the difference between the characteristics of those people who responded to the survey and those who did not.
62 The following methods were adopted to reduce the level and impact of non-response:
63 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 7.
64 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.
SPECIAL DATA SERVICES
65 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 analytical 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 from 9:00am to 4:30pm AEST Monday to Friday (International callers +61 2 9268 4909).
UNIT RECORD FILE
66 It is expected that a confidentialised unit record file (CURF) from the 2007-08 SIH will be released on CD-ROM in August 2009. It is also expected that a more detailed SIH CURF will be available through the ABS Remote Access Data Laboratory. All clients wishing to access the SIH 2007-08 basic and expanded CURF should refer to the ABS Website <http://www.abs.gov.au> (see Services, CURF Microdata) and read the CURF Microdata Entry Page, and other linked information, before downloading the appropriate Guide, Application and Undertaking forms and applying for access.
67 University clients should refer to the ABS web site <www.abs.gov.au> (see Services, Services for Universities). The SIH 2007-08 basic and expanded CURF can be accessed by universities participating in the ABS/Universities Australia CURF Agreement for research and teaching purposes.
68 Other prospective clients should contact the Microdata Access Strategies Section of the ABS at <firstname.lastname@example.org> or on (02) 6252 7714.
69 Users may wish to refer to the following ABS products which relate to income: All can be downloaded free of charge from the ABS website.
Survey of Income and Housing - Confidentialised Unit Record File, Technical Manual, 2007-08 (cat. no. 6541.0) is expected to be released in August 2009.
Housing Occupancy and Costs, Australia, 2007-08 (cat. no. 4130.0) is expected to be released in November 2009.
Housing Mobility and Conditions, Australia, 2007-08 (cat. no. 4130.0.55.002) is expected to be released in November 2009.
70 The earlier publications relating to the SIH are listed below. These publications can also be downloaded free of charge from the ABS website.
Estimates of Personal Income for Small Areas, 2001-02 to 2005-06 (cat. no. 6524.0.55.002)
Government Benefits, Taxes and Household Income, Australia, 2003-04 (cat. no. 6537.0)
Household Expenditure Survey, Australia: Summary of Results, 2003-04 (cat. no. 6530.0)
Household Expenditure Survey, Detailed Expenditure Items, 2003-04 (cat. no. 6535.0.55.001)
Housing Occupancy and Costs, Australia (cat. no. 4130.0.55.001)
71 The other ABS publications relevant to income statistics are listed below. These publications can also be downloaded free of charge from the ABS website.
Average Weekly Earnings, Australia (cat. no. 6302.0) - issued quarterly
Measuring Wellbeing: Frameworks for Australian Social Statistics, 2001 (cat. no. 4160.0)
Measures of Australia's Progress, 2006 (cat. no. 1370.0)
Information Paper: Experimental Estimates of Personal Income for Small Areas, Taxation and Income Support Data, 1995-96 to 2000-01 (cat. no. 6524.0)
Household Wealth and Wealth Distribution, Australia (cat. no. 6554.0)
Information paper: Changes to ABS Measures of Employee Remuneration, Australia, 2006 (cat. no. 6313.0)
72 Users may also wish to refer to the following non-ABS products which relate to income.
Taxation Statistics 2004-05: A summary of income tax returns for the 2004-05 income year and other reported tax information for the 2005-06 financial year
Taxation Statistics 2005-06
Taxation Statistics 2006-07
Statistical Paper No. 3: Income support customers: A statistical overview 2004 (Department of Families, Community Services and Indigenous Affairs)
link: under FaHCSIA Internet > About FaHCSIA > Publications & Articles > Research Publications > Statistical Paper series http://www.fahcsia.gov.au/about/publicationsarticles/research/statistical/Pages/default.aspx
Household, Income and Labour Dynamics in Australia (HILDA) Survey, Annual Report 2006 (Department of Families, Housing, Community Services and Indigenous Affairs)
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This page last updated 29 August 2011