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6524.0.55.002 - Estimates of Personal Income for Small Areas, Time Series, 2003-04 to 2007-08  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 14/09/2010   
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MAIN FEATURES


Introduction
Income change in Australia, 2003-04 to 2007-08
Regional Variations in Average Income, 2007-08
Regional Variations in Income 'Mix', 2007-08


INTRODUCTION

This article presents selected data on estimates of personal income for the years 2003-04 to 2007-08, at a range of geographic levels. From 2003-04 to 2007-08 personal income in Australia grew at an average annual rate of 8.7%.

Analysing change in sources of personal income over time can provide valuable insight into the nature of regional economies and aspects of the economic well-being of the people who live there. This article begins with an overview of the sources of personal income for Australia, highlighting variations in average annual growth rates between 2003-04 and 2007-08 by source of income. It then analyses regional variations in average income from all sources at the State/Territory and Statistical Division level for 2007-08. The final section of the article examines variations in the 'income mix' between regions (i.e. the proportion each income source contributes to total income) using a number of Statistical Local Areas in Victoria as case studies.

While personal income data provide insights into the income in regional economies, wealth is also important to economic well-being, 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, but income alone does not necessarily equate with overall economic well-being.

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.

INCOME CHANGE IN AUSTRALIA, 2003-04 TO 2007-08
Total Income

Total income (excluding Government pensions and allowances) grew by an average of 8.7% per annum from 2003-04 to 2007-08, and while most sources of income grew in absolute terms over this period, the average annual growth rates for each income source varied considerably (Table 1).


Table 1. TOTAL INCOME, By Source - Australia
2003-04
2004-05
2005-06
2006-07
2007-08
Average Annual
Growth Rate,
2003-04 to 2007-08
Sources
$m
$m
$m
$m
$m
%

Wages & salaries
316 925
340 571
364 505
392 097
442 429
8.7
Own unincorporated business
29 766
30 485
31 028
33 083
36 983
5.6
Investment
34 690
39 352
43 993
53 486
58 627
14.0
Superannuation and annuities (a)
11 002
12 515
14 501
16 577
8 924
n.a.
Other (b)
3 106
3 631
4 274
5 058
5 409
14.9
Total income (b)
395 489
426 552
458 300
500 300
552 373
8.7

(a) Average Annual Growth Rate can not be calculated due to break in series
(b) excludes Government pensions and allowances


Of the three largest sources of income, Investments had the largest average annual growth rate (14.0%). Wages and salaries (the largest income source) grew at 8.7%, while income from Own unincorporated Business (OUB) increased on average by 5.6% per annum between 2003-04 and 2007-08.

A change to taxation legislation, which took effect from 1 July 2007, has resulted in a break in the series in Superannuation income. People aged 60 years and over who receive superannuation income in the form of a lump sum or income stream (such as a pension) from a taxed source, will now receive that income tax free. This means that, if a person has no other income, or their total income is below the tax-free threshold, or any tax payable is mitigated by a tax offset (such as Senior Australian Tax Offset), they will not be required to lodge a tax return. Further information, including comparison with estimates from the ABS Survey of Income and Housing, is contained in the Explanatory Notes of this issue.

Table 2 shows that the three largest sources of income in each year have been Wages and salaries, Investment and income from Own unincorporated business, with Wages and salaries contributing to around 80% of total income.

Table 2. PROPORTION OF TOTAL INCOME, By Source - Australia
Wages & salaries
Own unincorporated
business
Investment
Superannuation
& annuities
Other
Financial Year
%
%
%
%
%

2003-04
80.1
7.5
8.8
2.8
0.8
2004-05
79.8
7.1
9.2
2.9
0.9
2005-06
79.5
6.8
9.6
3.2
0.9
2006-07
78.4
6.6
10.7
3.3
1.0
2007-08 (a)
80.1
6.7
10.6
1.6
1.0

(a) Break in series in Superannuation income in 2007-08
Average Income
Graph 1 presents the average income for each personal income source in Australia, 2003-04 to 2007-08.

Graph 1. AVERAGE INCOME, By source – Australia

Graph showing Average income by source, Australia

a) Break in series in Superannuation income in 2007-08


Average Wages and salaries grew each year from 2003-04 to 2007-08, increasing from $36,889 to $43,921. Average Own unincorporated business (OUB) income also increased, from $16,538 in 2003-04 to $18,962 in 2007-08. However, average Investment income rose from 2003-04 to 2006-07, then fell from $8,139 in 2006-07 to $7,781 in 2007-08. During this period the number of taxpayers reporting investment income increased by 15%.


REGIONAL VARIATIONS IN AVERAGE INCOME, 2007-08

Table 3 presents average income data for 2007-08 for all sources of income, by State and Territory. The Australian Capital Territory recorded the highest average total income of all States and Territories ($52,330), followed by Western Australia ($47,488) and New South Wales ($46,480). In general, capital city Statistical Divisions recorded substantially higher average total incomes than regions outside of capital cities.

Average Wage and salary incomes were highest in the Australian Capital Territory, New South Wales and Western Australia, and like average total income there were marked variations between capital cities and regions outside capital cities. Average income from Own unincorporated business was highest in Western Australia ($24,060), Australian Capital Territory ($22,542) and South Australia ($19,331), with capital city Statistical Divisions recording considerably higher average incomes from this source. Victoria recorded the highest average Investment income in 2007-08, followed by Western Australia and New South Wales. In all cases except Queensland, average income from Investments was higher in capital city regions compared with regions outside of capital cities.

Table 3. AVERAGE INCOME, By source - State and Territory, 2007-08
SLA Name
Wages
& salaries
Own unincorporated
business
Investment
Superannuation
& annuities
Other Income (excl. Government pensions & allowances)
Total Income from all sources (excl. Government pensions & allowances)
$
$
$
$
$
$

New South Wales
46 513
18 594
7 807
23 347
5 522
46 480
Sydney
50 136
22 909
8 686
23 933
6 745
51 121
Balance of NSW
39 114
12 848
6 125
22 632
3 063
37 674
Victoria
42 782
18 355
8 584
21 794
3 822
43 704
Melbourne
44 837
19 979
9 112
22 457
4 405
46 187
Balance of Vic
36 478
15 401
7 039
20 193
2 121
36 556
Queensland
41 687
17 482
7 113
21 844
3 336
41 911
Brisbane
43 893
21 869
6 997
22 083
3 492
44 768
Balance of QLD
39 586
14 865
7 222
21 623
3 194
39 348
South Australia
39 492
19 331
7 459
24 048
3 010
40 488
Adelaide
40 546
21 864
7 774
24 665
3 218
41 914
Balance of SA
36 302
15 419
6 582
21 826
2 389
36 451
Western Australia
46 199
24 060
8 417
23 388
5 050
47 488
Perth
46 804
26 201
8 742
23 733
5 540
48 588
Balance of WA
44 266
19 633
7 388
22 129
3 299
44 113
Tasmania
36 874
16 675
7 045
20 172
2 860
37 718
Hobart
38 563
19 581
7 610
21 141
2 912
40 022
Balance of Tas
35 541
14 916
6 596
19 020
2 813
35 928
Northern Territory
45 216
19 065
3 120
26 041
2 567
45 848
Darwin
47 298
21 713
3 394
26 885
2 746
48 088
Balance of NT
41 251
12 068
2 452
22 914
2 095
41 393
Australian Capital Territory
51 387
22 542
4 816
30 737
2 639
52 330
Australia
43 921
18 962
7 781
23 191
4 265
44 402

(a) excludes Government pensions and allowances



Map 1 illustrates average total income data for 2007-08 by Statistical Local Area (SLA). Over two-thirds of SLAs in Australia recorded average total incomes lower than the national average ($44,402). The highest average total incomes were recorded in the SLAs surrounding Sydney Harbour (Mosman, Woollahra, Hunters Hill, North Sydney), in Peppermint Grove and Cottesloe in Perth, Ascot and Hamilton in Brisbane and Stonnington - Prahran and Bayside - Brighton in Melbourne. Outside the capital city Statistical Divisions, the SLAs with the highest average total incomes were located in the mining regions of Western Australia (Roebourne, Ashburton, East Pilbara, Port Hedland), in Queensland (Issac - Belyando and Broadsound) and in South Australia (Roxby Downs).

Map 1. AVERAGE TOTAL INCOME, By Statistical Local Area - Australia, 2007-08
Map showing Average Total Income by SLA 2007-08


REGIONAL VARIATIONS IN INCOME 'MIX', 2007-08

While many areas share similar average total incomes, the income 'mix' (i.e. the proportion that each income source contributes to total income) may vary substantially between regions. This section of the article explores examples of such variations, using Victoria as a case study.

Table 4 presents the ten Statistical Local Areas (SLAs) in Victoria with the highest average total incomes in 2007-08. As shown in this table, there is variation in the proportions of income from each source, and particularly in the three largest sources; Wages and salaries, Investments, and Own unincorporated business. In the top four SLAs - incorporating the eastern and south-eastern Melbourne suburbs of Prahran, Toorak, Malvern, Kew and Brighton - Wages and salaries constitute less than 60% of total income (this is substantially lower than for both Victoria and Australia). Income from Investments make up between 26% and 31% of total income in these SLAs (compared to 12% for Victoria and 10.6% for Australia). In contrast, the SLA of Port Phillip - West (incorporating the suburbs of Port Melbourne, South Melbourne and Albert Park) has a comparatively lower proportion of total income made up of investment and business income with almost 75% from Wages and salaries. Similarly, the newly developed high density residential area of Southbank-Docklands has over 80% of total income derived from Wages and salaries and less than 2% from Own unincorporated business income.

Table 4. PROPORTION OF TOTAL INCOME, By source - selected SLAs, Victoria, 2007-08
SLA
Average Total
Income
Wages
& salaries
Own unincorporated
business
Superannuation
& annuities
Investment
Other
$
%
%
%
%
%

Stonnington (C) - Prahan
82 910
57.6
7.5
0.9
31.3
2.7
Bayside (C) - Brighton
80 948
57.4
8.3
1.5
30.2
2.5
Stonnington (C) - Malvern
77 316
58.8
9.5
1.3
28.3
2.1
Boroondara (C) - Kew
75 385
59.9
10.2
1.6
26.6
1.8
Port Phillip (C) - West
73 187
74.3
5.8
1.2
16.6
2.1
Boroondara (C) - Hawthorn
71 965
63.5
11.0
1.1
22.4
1.9
Boroondara (C) - Camberwell S.
67 306
66.2
8.6
1.5
21.5
2.2
Melbourne (C) - S'bank - D'lands
62 790
81.2
1.4
0.7
13.7
3.1
Boroondara (C) - Camberwell N.
62 523
63.1
8.3
1.7
25.3
1.7
Bayside (C) - South
61 006
70.6
6.1
1.8
20.0
1.5
Victoria
43 704
79.3
6.4
1.4
12.0
0.9
Australia
44 402
80.1
6.7
1.6
10.6
1.0

Variations in the proportion of income from Wages and salaries, as shown in the top ten high average income SLAs, can also be seen across all SLAs in Victoria (Map 2). Those SLAs where Wages and salaries constituted over 90% of total income in 2007-08 were located in three regions of the Melbourne Statistical Division:

  • SLAs on the western and south-western fringes of Melbourne (including Wyndham, Melton). These SLAs incorporate newly developed suburbs experiencing high population growth. For example, the Estimated Resident Population (ERP) of Wyndham - South almost doubled between 30 June 2004 and 30 June 2008, from 11,160 to 22,261. The ERP of Melton - East rose by 50% over the same period, compared with a 6.7% increase for Victoria as a whole (Population by Age and Sex, Regions of Australia, 2007, 2008, cat. no.3235.0). Average total incomes for 2007-08 in these SLAs were generally below the national average of $44,402, ranging from $36,497 in Brimbank - Sunshine to $44,414 in Wyndham - South. Income from Own unincorporated business generally constituted less than 4% of total income in these areas; with Investment income between 3% and 4%;
  • SLAs to the north-west of Melbourne, including Whittlesea - South-West and Hume - Broadmeadows, where average total incomes ranged from $35,155 to $38,446 in 2007-08;
  • SLAs to the south-east of the Melbourne CBD, including Casey - Cranbourne. This SLA recorded an average total income of $38,180 in 2007-08. Investment income constituted less than 3% of total income; business income less than 5%.
Map 2. PROPORTION OF TOTAL INCOME DERIVED FROM WAGES AND SALARIES, By Statistical Local Area - Victoria, 2007-08



Conversely, those SLAs where Wage and salary income constitute a lower proportion of total income (less than 70%) can be broadly grouped into the following categories:
  • inner city SLAs with high average total incomes and a high proportion of Investment income. These include the SLAs within the Cities of Stonnington and Boroondara (incorporating the suburbs of Prahran, Malvern, Kew, Hawthorn and Camberwell). Investment income constitutes between 22% and 31% of total income in these SLAs.
  • rural areas in the State's north-west. These include the SLAs of West Wimmera, Yarriamblack - North and Loddon - North. Average total incomes in these SLAs ranged between $32,361 and $39,450 (compared to $43,704 for Victoria as a whole). Income from Own unincorporated business constituted between 31% and 46% of total income in these areas (compared with 6.4% for the State).
  • rural areas in the State's south-west, including the SLAs of Corangamite (North, South), Moyne (South, North-East, North-West) and Colac-Ottway (North, South). Average total incomes in these SLAs ranged between $31,542 and $40,906. Income from Own unincorporated business constituted between 16% and 41% of total income in these areas. Investment income contributed between 7% and 18% of total income in these SLAs (compared to 12% for Victoria as a whole).

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