Australian Bureau of Statistics
6523.0 - Household Income and Income Distribution, Australia, 2011-12
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 16/08/2013
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SUMMARY OF FINDINGS
Some of the key net worth results from the 2011-12 SIH are:
Average (mean) equivalised disposable household income is the income that a single person household would require to maintain the same standard of living as the average person living in all private dwellings in Australia. In 2011-12, the average (mean) equivalised disposable income for all persons living in private dwellings was $918 per week (Table 1). There were approximately 22.2 million people living in private dwellings (Table 2).
In real terms, average equivalised disposable household income did not show any significant change between 2009-10 ($894) and 2011-12 ($918). In 2007-08 there was a break in series due to the improvements in measuring income introduced in that cycle. Adjusting for the break in series the net increase between 1994-95 and 2011-12 was 49%.
In real terms, average equivalised disposable household income increased from 2009-10 to 2011-12 by 5% ($23 per week) for low income households and by 4% ($33 per week) for middle income households. There was no significant change in average equivalised disposable household income for high income households.
Households with different characteristics tend to have different income levels, as shown in Table 6, and summarised in the following table. Wages and salaries were the main source of income (MSI) for 79% and 88% of households with middle and high income levels respectively in 2011-12 while government pensions and allowances dominated for low income households. However, low income households had the highest incidence of full ownership of their home, reflecting the high proportion of older people in the low income category.
Middle income households contained more people on average than high income households (2.9 compared to 2.5) but contained fewer employed persons (1.6 compared to 1.9). In part, this reflects the different age profiles of the two groups. Table 6 shows that middle income households had an average of 0.8 persons under the age of 18 and 0.3 aged 65 and over, compared to 0.4 and 0.1 respectively for high income households. Low income households had an average of 0.6 employed persons, and housed an average of 2.4 persons. Of these, on average 0.6 were under 18 years, 1.1 were 18 to 64 years, and 0.7 were aged 65 years and over.
The characteristics of Australian households are changing over time. Table 3 shows that the average number of persons per household declined from 2.69 to 2.57, or about 4% between 1994-95 and 2011-12. While the relative proportion of one family, multiple family and non-family households has not changed since 1994-95, there have been changes in types of one family households. In particular, the proportion of couple family with dependent children households has fallen from 30.5% to 26.2% and the proportion of couple only households has risen from 23.7% to 25.8%. Each main source of income retained its relative importance between 1994-95 and 2011-12 with 61.1% of households primarily dependent on wages and salaries in 2011-12. The proportion of households reliant on government pensions and allowances was 24.8% in 2011-12 down from 28.5% in 1994-95. There has been no change in the proportion of households with each main source of income since 2009-10. Since 1994-95, home ownership has ranged from 71% in 1994-95 to 67% in 2011-12.
Life cycle stages
Income levels across the population partly reflect the different life cycle stages that people have reached. A typical life cycle includes childhood, early adulthood, and the forming and maturing of families, as illustrated in Table 13. Other family situations and household compositions are shown in Table 12. The following table compares households in different life cycle groups.
Younger couples without children had the highest mean equivalised disposable household income of $1,352 per week (Table 13), with an average of 1.8 employed persons in the household. For couples with dependent children only, and with the eldest child being under five, mean equivalised disposable household income was $960 per week (29% lower than for the young couples without children). This lower income principally reflects the lower average number of employed persons in these households (1.5) and the larger average number of persons in these households (3.4) over which incomes are shared.
Average incomes were higher for households with non-dependent children, reflecting higher proportions of employed persons in these households, but were lower for households comprising older couples and lone persons, where the numbers of employed persons were substantially lower.
People living in households where the reference person was aged 65 and over had the lowest mean incomes, with lone persons' incomes at $526 (Table 13) per week. This was lower than for older couple only households where the reference person was aged 65 and over and the mean income was $656 per week. Older lone persons were more likely than older couples to have government pensions and allowances as their main source of income (76% compared to 61%), while older couples were more likely to fully own their home (82% compared to 72%).
Households comprising one parent with dependent children had a mean income of $618 per week (Table 12). Only 7% fully owned their home and therefore a substantially greater proportion were making mortgage or rental payments from their income. Of these households, 44% had government pensions and allowances as their main source of income. On average there were 0.9 employed persons in the household.
States and territories
There were differences in the average levels of income between the states and territories (see Table 17). Tasmania, South Australia and Victoria had mean equivalised disposable household incomes below the national average (15%, 8% and 4% below the national average respectively). The Australian Capital Territory, Western Australia and the Northern Territory are shown to have the highest mean incomes (25%, 11% and 10% above the national average respectively). The high income levels reflect in part the younger age profile of the ACT and NT and the greater number of employed persons per household. The results for the Northern Territory also reflect the exclusion of households in very remote areas of the NT, which would be likely to reduce the mean income in that territory if included. This potential for an overestimated mean income in the NT is based on the large relative size of the very remote population for that territory.
New South Wales, with the largest state population, recorded a mean equivalised disposable household weekly income only 2% above the national average, which is not a statistically significant difference (Table 17).
There are also differences between the equivalised disposable household incomes recorded in capital cities compared to those earned elsewhere in Australia. At the national level, mean incomes in the capital cities were 21% above those in the balance of state (Tables 15 and 16), with all states (separate information is not available for the ACT and NT) recording capital city mean incomes above those in the balance of state. The largest differences recorded were for New South Wales and Victoria where the capital city incomes were 26% and 25% respectively, above the mean incomes across the rest of the state.
While the mean equivalised disposable household income of all households in Australia in 2011-12 was $918 per week, the median (i.e. the midpoint when all people are ranked in ascending order of income) was somewhat lower at $790 (shown as P50 in Table 1). This difference reflects the typically asymmetric distribution of income where a relatively small number of people have relatively very high household incomes, and a large number of people have relatively lower household incomes, as illustrated in the following frequency distribution graph.
Percentile ratios are one measure of the spread of incomes across the population. P90 (i.e. the income level dividing the bottom 90% of the population from the top 10%) and P10 (i.e. dividing the bottom 10% of the population from the rest) are shown on the above graph. In 2011-12 P90 was $1,555 per week and P10 was $379 per week, giving a P90/P10 ratio of 4.10. Changes in these ratios can provide a picture of changing income distribution over time (Table 1).
Another measure of income distribution is provided by the income shares going to groups of people at different points in the income distribution. The following table (S5) shows that, in 2011-12, 10.4% of total equivalised disposable household income went to people in the 'low income' group (i.e. those people with household income in the second and third deciles) with 39.5% going to the 'high income' group (i.e. the 20% of the population in the highest income quintile) (Table 1).
The Gini coefficient is a single statistic that lies between 0 and 1 and is a summary indicator of the degree of inequality, with values closer to 0 representing a lesser degree of inequality, and values closer to 1 representing greater inequality. For 2011-12 the Gini coefficient was 0.320.
Some of the change in the income distribution measures between 2005-06 and 2007-08 reflects the most recent improvements made in the 2007-08 cycle. The estimates presented in Tables 1-3 for 2003-04 and 2005-06 have been revised to be as comparable as possible with estimates from 2007-08 onwards.
For more information on analysing income distribution please refer to Appendix 1.
The addition of net imputed rent allows for more meaningful comparison of the income circumstances of people living in different tenure types. Including imputed rent as part of household income and expenditure conceptually treats owner-occupiers as if they were renting their home from themselves, thus simultaneously incurring rental expenditure and earning rental income. Imputed rent is included in income on a net basis i.e. the imputed value of the services received less the value of the housing costs incurred by the household in their role as landlord.
Table 18 presents the estimates of gross and net imputed rent for owner-occupied dwellings and other housing tenures where a rent imputation has been made for 2005-06, 2007-08, 2009-10 and 2011-12. The effect of adding net imputed rent to disposable household income is also shown (on an equivalised basis). The estimated mean gross imputed rent for owner-occupiers was higher than the mean imputation for subsidised renters or other tenure types. When housing costs were subtracted from gross imputed rent to derive net imputed rent, households who occupied their dwelling rent-free (2% of all private households) had the highest mean net imputed rent. Owners without a mortgage, who account for about a third of all private households, had the next highest mean net imputed rent.
In 2011-12 the addition of net imputed rent to disposable household income contributed, on average, an extra $55 (6%) to the income of all households. The effect in 2005-06, 2007-08 and 2009-10 was similar. For some housing tenures the addition of net imputed rent to disposable household income saw a significant increase in their mean equivalised disposable household incomes. The largest effect for homeowners was seen for households who occupied their dwelling as owners without a mortgage (20% increase in 2011-12). Consistent with previous years, there was also a significant increase in 2011-12 for tenants of state/territory housing authorities (17%). The overall effect of the addition of net imputed rent to disposable income is a reduction in the mean income disparities between housing tenures, with a significant decline in the ratio between tenures with the highest and lowest incomes. For example, in 2011-12 the ratio of the mean income of owners with a mortgage to the mean income of tenants of state/territory housing authorities declined from 2.2 to 1.9 when net imputed rent was included.
Impact on Income Distribution
The addition of net imputed rent to disposable household income has a partial equalising effect on the distribution of household income. This reflects that, for many home owners in lower income ranges the family home is the largest asset held by the household, and the net imputed rent income from that asset is a relatively large proportion of the household's incomes. In higher income ranges the net imputed rent income is a relatively smaller proportion of the household's incomes. This equalising effect of accounting for net imputed rent in income analysis is illustrated in the following frequency distribution graph, table and discussion of a range of distribution measures.
Table 19 shows that in 2011-12 P90 for equivalised disposable household income was $1,555 per week and P10 was $379 per week, giving a P90/P10 ratio of 4.10. When net imputed rent was added to income the P90/P10 ratio fell to 3.61. The addition of net imputed rent saw a decrease in the Gini coefficient from 0.320 to 0.301, a decrease of 5.9%. This further indicates that the inclusion of net imputed rent to income results in a more equal distribution.
The distribution of net worth across households is much more unequal than for income, partly reflecting the common pattern of people gradually accumulating wealth throughout their working life. In 2011-12 the 20% of households with the lowest net worth accounted for only 1% of total household net worth, with an average net worth of $31,205 per household (Table 7). The wealthiest 20% of households in Australia account for 61% of total household net worth, with an average net worth of $2.2 million per household.
The picture of wealth is more equally distributed when viewed from the perspective of the distribution of incomes. The households in which the 20% of people with the lowest equivalised household incomes live account for 15% of total household net worth, similar to the shares of net worth held by the households with people in the second and third household income quintiles (14% and 15% respectively) (Table 6). The households in which the 20% of people with the highest equivalised household incomes live account for 37% of total household net worth (Table 6).
The distributional pattern of net worth is also marked when considered in terms of sources of household income and household tenure. Households where the main source of household income is 'other' income (principally investment income) had average household net worth of $1.9 million, while for those where the main source of household income was government pensions and allowances the average household net worth was $366,129 (Table 9). Net worth in renter households was on average only about 13% of the net worth in owner households with no mortgage, and about 20% of the net worth of owner households with a mortgage (Table 11).
In this publication, the child care use and cost estimates are based on data collected from child care questions being asked of households in the survey where children 12 years of age or less were resident. Table 8 provides key child care information by specific household characteristics. The payments for Child Care Benefit and Child Care Rebate have been modelled, and these payments, with other reported cost of care estimates, are also shown on a household basis.
In SIH 2011-12 respondents were asked to report child care use for the month prior to interview. On this basis, the proportion of children using care may be smaller than a measure based on a usual (or regular) attendance basis due to temporary absences, and larger than the proportion attending in a shorter reference period (such as a school term week). The largest difference will reflect the numbers of school children who will attend vacation care but no other formal care during a school term.
The number of households with children aged 0-12 years using only formal care in the month prior to interview was 264,800 (13% of households with children of this age).
For informal care, 647,900 households with children aged 0-12 years were using only this type of care in the month prior to interview (31% of households with children of this age). Of households with children aged 0-12 years, 422,700 (20%) used both formal and informal child care.
For households using only formal child care, the average weekly cost per household for formal child care before the Child Care Benefit or Child Care Rebate was deducted was $162. For households using only formal child care, the average amount received per week for the Child Care Benefit and Child Care Rebate was $53 and $41 respectively.
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This page last updated 3 September 2015