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6524.0.55.002 - Estimates of Personal Income for Small Areas, Time Series, 2003-04 to 2006-07  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 17/12/2009   
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MAIN FEATURES


Introduction

Income change in Australia, 2003-04 to 2006-07

Income change for capital cities, states & territories

Change in Own unincorporated business income for Australia, 2003-04 to 2006-07

Change in Own unincorporated business income for South Australia

Change in Own unincorporated business income for Eyre Peninsula, South Australia


INTRODUCTION

This article presents selected data on estimates of personal income for the years 2003-04 to 2006-07, at a range of geographic levels. From 2003-04 to 2006-07 significant economic growth occurred in Australia, with personal income growing at an average annual rate of 8.2%.

Analysing change in sources of personal income over time can provide valuable insight into the nature of regional economies and aspects of the economic wellbeing of the people who live there. These data can be used to explore questions such as: whether regional incomes have grown at similar or different rates; whether high income areas also experience high growth in incomes; or if there are low income-high growth regions that are 'catching up' to high income regions. Even though income from all sources grew from 2003-04 to 2006-07, each income source grew at a different rate. Of the three largest income sources, income from Investments grew at the fastest rate. Every state and territory experienced strong growth in Investment income with the strongest growth occurring in Queensland. Income from Own unincorporated business (OUB) grew at the slowest rate, with significant variation in growth rates between capital cities and their respective balance of states/territories, including declines in parts of Australia, most noticeably in most of South Australia.

This article begins with an overview of the sources of personal income for Australia, highlighting some of these variations in growth rates. It then analyses regional growth and decline in sources of income and explores OUB income as a particular case of regional variation. While these data provide insights into the income in regional economies, wealth is also important to economic wellbeing, since some people on low incomes may have wealth to draw on such as property and business assets (Australian Social Trends, 2006, cat. no. 4102.0). Conversely, some people on high incomes may also have high levels of debt. This article has a focus on income data, but income alone does not necessarily always equate with overall economic wellbeing.

Further analysis of regional incomes, including other sources of income (Wages and salary, Investments and Superannuation and annuities) can be undertaken using the data contained in the spreadsheets attached to this article. For more detailed data on persons earning Wage and salary incomes please refer to Wage and Salary Earner Statistics for Small Areas (cat. no. 5673.0.55.003).

These income estimates have been compiled using aggregated individual income tax data from the Australian Taxation Office (ATO). The Australian Bureau of Statistics (ABS) wishes to acknowledge the invaluable support of the ATO in compiling these statistics. The estimates presented in this article are a break in series from other data released under the Estimates of Personal Income title, for further information please refer to the Explanatory Notes.

INCOME CHANGE IN AUSTRALIA, 2003-04 TO 2006-07

While total income grew by an average of 8.2% each year from 2003-04 to 2006-07, and each source of income grew, the average annual growth rates for each source of income varied considerably. There was also significant variation at the regional level, which will be explored later in this article.

Table 1. TOTAL INCOME, By source-Australia

2003-04
2004-05
2005-06
2006-07
Average annual
growth rate
Sources
$m
$m
$m
$m
%

Wage and salary
316,924.6
340,571.0
364,504.9
392,097.1
7.4
Own unincorporated business
29,765.8
30,484.5
31,028.1
33,083.1
3.6
Investment
34,690.1
39,351.5
43,992.5
53,485.6
15.5
Superannuation and annuities
11,002.1
12,514.5
14,500.7
16,577.1
14.6
Other
3,106.0
3,630.5
4,273.6
5,057.5
17.6
Total income
395,488.7
426,551.9
458,299.9
500,300.5
8.2


Of the three largest sources, income from Investments had the largest average annual growth rate (15.5%). Wages and salaries (the largest income source) grew at a slower rate (7.4%), but grew at a similar rate as the economy during this period.

From 2003-04 to 2006-07 Australia experienced significant economic prosperity. Gross Domestic Product (GDP) in original, current price terms, had an average annual growth rate of 7.5% (Australian National Accounts: National Income, Expenditure and Product, Jun 2009, cat. no. 5206.0) and the seasonally adjusted unemployment rate fell from 5.5% in June 2004 to 4.3% in June 2007 (Labour Force, Australia, Sep 2009, cat. no. 6202.0). Please note that data in this article precedes the Global Financial Crisis which began in 2008.

Although total income from all income sources grew from 2003-04 to 2006-07, the percentage share of each source shifted (Table 2). There was an increase in the percentage share of Investment income and a fall in the percentage share of Wage and salary and OUB income.

There are many factors that may have influenced changing shares of income during this period. Some of these may include:
  • An ageing population, which may have caused an increase in the percentage share of Investment and Superannuation and annuity incomes and a decrease in Wage and salary and OUB incomes. As the population ages, people gain access to superannuation funds and may be more likely to draw income from Investments and less likely to earn Wages and salaries and income from OUB.
  • The increase in percentage share of income from Investments may be related to an increase in Wages and salaries in previous periods, resulting in more available money to invest towards the end of the period.

Table 2. PROPORTION OF TOTAL INCOME, By source-Australia

Wage and salary
Own unincorporated
business
Investment
Superannuation
and annuities
Other
Total income
Financial year
%
%
%
%
%
%

2003-04
80.1
7.5
8.8
2.8
0.8
100.0
2004-05
79.8
7.1
9.2
2.9
0.9
100.0
2005-06
79.5
6.8
9.6
3.2
0.9
100.0
2006-07
78.4
6.6
10.7
3.3
1.0
100.0


INCOME CHANGE FOR CAPITAL CITIES, STATES & TERRITORIES

Changes in source of income growth over time show more variation at regional levels. This section looks at regional variation in total income followed by analysis of average income from each source (Wages and salaries, OUB and Investment).


Total income

Are incomes in capital cities growing faster or slower than incomes in other regions? Table 3 shows the average annual growth rates of each source of income for each state/territory, and each capital city and balance of state/territory.

Generally, growth in total income from all sources did grow faster in capital cities compared to the rest of Australia. The rate of growth in Investment income was strong in every state and territory. The largest average annual growth rate for Investment income occurred in the state of Queensland (19.2%), with the region outside the capital city (Queensland Balance) recording the largest growth (19.3%). Queensland Balance also had the largest average annual growth in Superannuation and annuities (18.3%).

There was significant variation in the average annual growth rate of OUB income. In four states, OUB income fell in areas outside the capital cities, while growing in all capital cities. The largest negative average annual growth rates occurred in the following balance of states, New South Wales (-3.7%), Victoria (-6.3%), South Australia (-12.7%) and Tasmania (-2.0%). The state of South Australia also had a negative growth rate, with an average decline of 0.7% in OUB income each year. This decline is due to the large negative growth in Balance of South Australia.
Table 3. AVERAGE ANNUAL GROWTH RATES, By source of total income-2003-04 to 2006-07

Wage and salary
Own
unincorporated
business
Investment
Superannuation
and annuities
Other
Total income
Region
%
%
%
%
%
%

Sydney
6.2
4.7
14.3
15.2
19.9
7.2
Balance of New South Wales
6.2
-3.7
13.4
14.8
14.8
6.5
New South Wales
6.2
2.0
14.0
15.1
19.0
7.0
Melbourne
6.4
6.6
14.7
14.9
22.0
7.6
Balance of Victoria
5.7
-6.3
14.4
13.9
13.1
5.9
Victoria
6.2
2.7
14.6
14.7
20.7
7.2
Brisbane
9.5
7.2
19.0
15.9
19.8
10.3
Balance of Queensland
10.1
5.3
19.3
18.3
17.4
10.8
Queensland
9.8
6.1
19.2
17.1
18.6
10.5
Adelaide
6.0
5.8
13.7
11.0
9.6
7.0
Balance of South Australia
6.3
-12.7
15.0
13.2
11.9
4.9
South Australia
6.1
-0.7
14.0
11.4
10.1
6.5
Perth
11.1
11.4
19.1
13.7
13.5
12.0
Balance of Western Australia
10.2
0.9
17.0
17.3
8.8
9.8
Western Australia
10.9
8.2
18.6
14.4
12.8
11.4
Hobart
7.1
2.8
15.6
10.3
12.4
7.7
Balance Tasmania
6.3
-2.0
15.7
12.1
10.6
6.6
Tasmania
6.7
0.1
15.6
11.0
11.5
7.1
Darwin
8.1
11.2
16.2
11.4
15.4
8.6
Balance of Northern Territory
6.0
2.4
17.6
10.7
12.8
6.3
Northern Territory
7.4
9.3
16.6
11.3
14.8
7.9
Canberra
7.2
5.8
13.4
11.7
9.2
7.9
Balance of Australian Capital Territory
6.2
22.2
8.3
8.3
13.9
7.2
Australian Capital Territory
7.2
5.8
13.4
11.7
9.2
7.9
Australian Capital Cities
7.2
6.6
15.4
14.3
18.5
8.3
Balance of Australia
7.6
-1.6
15.8
15.4
14.7
7.8
Australia
7.4
3.6
15.5
14.6
17.6
8.2


Average income

Graph 1 presents the average income for each personal income source over the four year period. Even though all averages increased during this time, average Investment income had the largest average annual growth (11.7%), increasing from $5,834 in 2003-04 to $8,139 in 2006-07. Corresponding with its small growth in total income, average OUB income had the smallest growth rate (2.8%), increasing from $16,538 in 2003-04 to only $17,974 in 2006-07. Wages and salaries had the largest average income in each year, recording $42,081 in 2006-07.

Graph 1. AVERAGE INCOME, By source-Australia
Graph: Graph 1. AVERAGE INCOME, By sourceAustralia


Graphs 2-4 show regional variation by capital city and balance of state/territory for average annual growth of average income. Graphs are presented for the three largest sources of income: Wages and salary; Investment; and OUB.

Even though all regions experienced growth in Wages and salaries, the average annual growth rates for the capital cities and balance of states/territories were moderate, between 3.8% and 6.2%. The largest average annual growth rate occurred in Western Australia (6.2% in both Perth and Western Australia Balance of state) and the smallest average annual growth rate was in Victoria (3.8% in Melbourne and 3.9% in Victoria Balance of state). Within each state and territory the growth rates were similar, with minimal variations between capital city and balance of state/territory.
Graph 2. AVERAGE WAGE AND SALARY INCOME, Average annual growth rate-2003-04 to 2006-07
Graph: Graph 2. AVERAGE WAGE AND SALARY INCOME, Average annual growth rate2003-04 to 2006-07


Average Investment income also grew in all regions. The largest average annual growth rate was recorded in Northern Territory Balance (15.9%). However, the growth in Northern Territory Balance started from a small base of $1,932 in 2003-04 and reached $3,008 in 2006-07, which was below the national average Investment income. Queensland also had large growth in average Investment income, 13.6% in both Brisbane and Queensland Balance.
Graph 3. AVERAGE INVESTMENT INCOME, Average annual growth rate-2003-04 to 2006-07
Graph: Graph 3. AVERAGE INVESTMENT INCOME, Average annual growth rate2003-04 to 2006-07


In contrast to Wages and salaries and Investment, average OUB income did not grow in all regions (Graph 3). Four state and territories experienced average annual rates of decline in average income outside of their capital cities, and the most significant rate of decline was in South Australia Balance of state (-11.5%). The balances of New South Wales, Victoria and Tasmania also experienced negative growth, with most of the remaining areas outside of the capital cities growing minimally. The largest growth rates in average OUB income occurred in the capital cities, with Perth experiencing the greatest growth with an average annual growth rate of 10.1%. This suggests that the economic conditions affecting OUB in rural areas are different to the cities.

Graph 4. AVERAGE OWN UNINCORPORATED BUSINESS INCOME, Average annual growth rate-2003-04 to 2006-07
Graph: Graph 4. AVERAGE OWN UNINCORPORATED BUSINESS INCOME, Average annual growth rate2003-04 to 2006-07


CHANGE IN OWN UNINCORPORATED BUSINESS INCOME FOR AUSTRALIA, 2003-04 TO 2006-07

Given significant rates of decline in both total OUB income and average OUB income were identified in a number of regional areas, the following sections explore this. Map 1 presents the average annual growth rates of average OUB income, for Statistical Divisions (SDs) in Australia.

Large average annual growth rates occurred in some capital cities and parts of rural Queensland and Western Australia. High growth rates do not necessarily equate to high incomes, for example Central West in Queensland had a 20.1% average annual growth, but its average OUB income grew to only $15,082 in 2006-07. Some high growth regions did have relatively high incomes, for example Kimberley in Western Australia, with an average annual growth of 20.1%, had an average OUB income of $23,660 in 2006-07.

Areas with negative average annual growth rates were mostly clustered in the rural areas of South Australia, Victoria and New South Wales. These states, excluding their capital cities, experienced the largest negative average growth rates each year for total OUB income and average OUB income. Negative growth rates also occurred in parts of Tasmania and some areas surrounding Perth. The SDs with the largest negative growth generally had the lowest 2006-07 average OUB incomes. For example Wimmera in Victoria had the largest average annual decline (37.3%), with average OUB income falling from $20,026 in 2003-04 to $4,937 in 2006-07. In South Australia all of the SDs outside of the capital city had negative growth rates of average OUB incomes.

Map 1. AVERAGE OWN UNINCORPORATED BUSINESS INCOME, Average annual growth rate, Statistical divisions-2003-04 to 2006-07
Diagram: Map 1. AVERAGE OWN UNINCORPORATED BUSINESS INCOME, Average annual growth rate, Statistical divisions2003-04 to 2006-07

CHANGE IN OWN UNINCORPORATED BUSINESS INCOME FOR SOUTH AUSTRALIA

Given South Australia's high proportion of SDs with negative growth rates, OUB income in South Australian regions is explored further.

Graph 5 shows that Eyre, Yorke and Lower North, and South East SDs had the largest annual average rates of decline in average OUB income in South Australia. These were also some of the largest declines in Australia, with Eyre having the second largest average annual decline (-28.1%), Yorke and Lower North the fourth largest (-18.8%) and South East the eight largest (-14.6%) in Australia. These regions, along with South Australia's other SDs (except for Adelaide and Outer Adelaide) also had negative average annual growth rates of persons earning income from this source.

Graph 5. AVERAGE OWN UNINCORPORATED BUSINESS INCOME, Average annual growth rate-2003-04 to 2006-07
Graph: Graph 5. AVERAGE OWN UNINCORPORATED BUSINESS INCOME, Average annual growth rate2003-04 to 2006-07

Map 2 shows the percentage change in average OUB income between 2003-04 and 2006-07 for statistical local areas (SLAs) in South Australia. Most of the SLAs within the SDs that experienced large negative average annual growth rates, had large percentage falls in average OUB income.

Map 2. AVERAGE OWN UNINCORPORATED BUSINESS INCOME, Percentage change, Statistical local areas-2003-04 to 2006-07
Diagram: Map 2. AVERAGE OWN UNINCORPORATED BUSINESS INCOME, Percentage change, Statistical local areas2003-04 to 2006-07

CHANGE IN OWN UNINCORPORATED BUSINESS INCOME FOR EYRE PENINSULA, SOUTH AUSTRALIA

As Eyre SD had the largest rate of average annual decline in average OUB income (-28.1%), with average income falling from $24,465 in 2003-04 to $9,112 in 2006-07, the following sections of this article focus on the regions within Eyre to further explore the regional variation.

Within Eyre, the SLAs that experienced the largest declines in average OUB income were in the Lincoln Statistical Subdivision (SSD). Table 4 shows that most of these SLAs recorded their lowest average OUB income in 2005-06, where five out of the eight regions had negative average income. The largest falls in average OUB income were in Kimba (DC) (-$42,569), Le Hunte (DC) (-$35,809), Elliston (DC) (-$30,660), Lower Eyre Peninsula (DC) (-$25,418) and Cleve (DC) (-$19,906). Kimba (DC), Le Hunte (DC) and Elliston (DC) also had the largest declines in Australia from 2003-04 to 2006-07. Persons in the Lincoln SSD earning income from OUB declined by an average of 2.4% each year during this period.

Table 4. AVERAGE OWN UNINCORPORATED BUSINESS INCOME, Statistical local areas(a) - selected statistical sub-divisions

2003-04
2004-05
2005-06
2006-07
Region
$
$
$
$

Lincoln
Cleve (DC)
22,962
15,042
-7,838
3,056
Elliston (DC)
31,328
19,193
-4,090
668
Franklin Harbour (DC)
17,512
28,469
-2,433
15,344
Kimba (DC)
29,325
10,840
-18,163
-13,244
Le Hunte (DC)
34,040
17,911
-7,764
-1,769
Lower Eyre Peninsula (DC)
34,610
22,971
10,800
9,192
Port Lincoln (C)
20,709
21,823
18,416
19,364
Tumby Bay (DC)
22,760
15,605
4,149
6,851
West Coast
Ceduna (DC)
13,618
10,706
14,577
10,732
Streaky Bay (DC)
18,787
10,346
6,481
7,097

(a) Excludes statistical local areas with less than 100 persons earning an income from Own unincorporated businesses.

Most of the SLAs within the Lincoln SSD had a relatively high dependence on agriculture for local employment at the time of the 2006 Census of Population and Housing. In general 17.6% of employed persons aged 15 years and over on the Eyre peninsula were employed in Agriculture. The SLAs with the largest proportions of employed people working in the agriculture industry were Kimba (DC) (44.2%), Elliston (DC) (43.8%) and Le Hunte (DC) (39.1%) (Census of Population and Housing, 2006).

Changes in income may be caused by a range of economic and other factors. In regional areas, incomes may be determined by factors such as agricultural and mining commodity prices, or environmental conditions affecting crop yields. Other data and information may assist in understanding some of the conditions that existed in these regions in this period. One possible factor is the impact of drought on regional areas. A number of regions in South Australia have been declared Exceptional Circumstance regions due to the affect of drought conditions on their incomes (see http://www.pir.sa.gov.au/pirsa/drought/exceptional_circumstances/primary_producers). In recent years this has included the Central Eyre Peninsula and Lower Eyre Peninsula areas which incorporate the SLAs that had the largest declines in average OUB income. In the years 2002 to 2006 before those areas were declared, a number of exceptional events occurred.

For further information about Exceptional Circumstance areas across Australia see the Department of Agriculture, Fisheries and Forestry, <http://www.daff.gov.au/agriculture-food/drought/ec>.

In order to properly consider what is happening to income in a region, one income source cannot be analysed in isolation, and other data such as Estimated Resident Population and Census of Population and Housing data can assist to better understand changes in particular regions. While there were declines in average OUB incomes in most SDs in South Australia during this period, average Wage and salary incomes increased. From 2003-04 to 2006-07 the average annual growth rate of average Wage and salary incomes for the Eyre SD was 4.6%, increasing from $27,624 in 2003-04 to $31,648 in 2006-07.

This area also had an increase in the number of persons earning Wages and salaries, with an average annual growth rate of 0.4%. Persons earning income from this source rose from 13,613 in 2003-04 to 13,769 in 2006-07. At the SLA level, the average Wage and salary income increased on average each year, however, the number of persons in some cases declined. In the Lincoln SSD, the SLAs of Cleve (DC), Elliston (DC), Kimba (DC) and Le Hunte (DC) had negative average annual growth rates in the number of persons with Wage and salary income and also persons with OUB income.

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