REGIONAL VARIATIONS IN INCOME (OVERVIEW)

INTRODUCTION

The information in this release has been sourced from the Australian Tax Office (ATO). It presents regional data on the number of income earners and amounts they received in the 2012-13 financial year for the following categories; employee income, own unincorporated business income, investment income, superannuation and annuities, other income (excluding Government pensions and allowances) and total income.

These statistics enable users to analyse the level, composition and distribution of personal income in regions. They provide insights into the nature of regional economies and the economic well-being of the people who live there. Questions such as 'What is the median total income in my area?' or 'How does my region compare with a neighbouring area?' can be answered by using these data. Further analysis of regional income data can be undertaken by accessing the spreadsheets (or data cubes) attached to this article.

Information is presented for a variety of geographies, including Local Government Areas (LGAs), Statistical Area Level 2s (SA2) and Greater Capital City Statistical Areas (GCCSA), reflecting regions from the Australian Statistical Geography Standard (ASGS).

The Australian Bureau of Statistics (ABS) wishes to acknowledge the invaluable support of the ATO in compiling these statistics.

When interpreting these results, it should be noted that some low income earners, for example those receiving Government pensions and allowances, or those who earned below the tax free threshold, may not be present in the data, as they may not be required to lodge personal tax forms. More regional information on the number of people receiving Government pensions and allowances can be obtained from Data by Region.

Persons with income which was completely tax free or completely tax exempt are also excluded from the data. For example, a change to legislation relating to superannuation, taking effect from 1 July 2007, meant that 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, receive that income tax free. 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, then this person may not be required to lodge a tax return. As a result the national estimate of superannuation and annuities income ($10.3b) is understated. An alternative data source with fuller data coverage, the ABS Survey of Income and Housing, estimates a level of $28.1b for superannuation pension stream income (excluding lump sum superannuation payments). For more information, please view the data cubes in Survey of Income and Housing, User Guide, Australia, 2013-14.

The ABS is currently investigating ways of achieving a fuller personal income account for regions, by incorporating other administrative data sources and statistical techniques. However, after taking into account the current limitations of the data, there is no doubt that the data set provides a rich source of relevant statistical information about personal income for regions across Australia. The ABS looks forward to further enhancing this data set in future editions.

NATIONAL SUMMARY

Total income (from all sources excluding Government pensions and allowances) for persons who submitted a tax return for the 2012-13 financial year was $739.0 billion, with employee income contributing 77.9% of total income, followed by investment income (12.4%) and own unincorporated business income (7.5%).

As Table 1 shows the median total income for Australia in 2012-13 was $44,940, while the mean was somewhat higher at $58,389. The medians for employee, own unincorportated business, investment, superannuation & annuities, other and total income are all less than their means, reflecting positively skewed earnings distributions; that is, the income values tend to cluster towards the lower end of the scale - with a small number of high (or very high) incomes at the upper end of the scale. The median (i.e. the midpoint when all people are ranked in ascending order of income) is used throughout this section, as it is less impacted by extreme values and therefore more reflective of typical incomes.

Sources of Income	Number of earners (a)	Median age of earners	Income	Median income per earner (b)	Mean income per earner (b)	Source of income as % of Total income
	no.	years	$b	$	$	%
Employee	10,279,468	39	605.4	48,030	58,893	77.9
Own unincorporated business	1,859,448	47	43.4	10,268	23,342	7.5
Investment	8,664,361	45	76.2	364	8,797	12.4
Superannuation & annuities (c)	408,401	59	10.3	18,079	25,105	1.6
Other (d)	1,516,403	50	3.8	112	2,474	0.5
Total income (d) (e)	12,656,797	42	739.0	44,940	58,389	100.0
(a) Persons may have more than one source of income. (b) Means and medians are calculated using non-zero income earners for each source of income. See Explanatory Notes paragraphs 20 and 31 for more information. (c) Data for Superannuation and annuities are understated. See Explanatory Notes, paragraphs 38 and 39, for more information. (d) Excludes Government pensions and allowances. (e) Totals may not exactly match the sum of components due to rounding.

INCOME DISTRIBUTIONS

There are many ways to describe the income distribution of individuals across Australia. A selection of income indicators is presented below as well as in the data cubes attached to this publication. It is important to note that the story of income distribution provided may be imperfect for those regions with higher levels of low income earners, superannuated retirees or people living on pension benefits; these people may not be required to report part of their income or lodge tax returns at all. Hence their details may be excluded from the estimates. While there are limitations in the data presented, the data is unique in providing small area data and indicative estimates of the way personal income is distributed across Australia. For more information, please see the Explanatory Notes.

Percentile ratios provide one way of describing the spread of incomes. For Australia in 2012–13, the personal income of individuals at the top of the 80th percentile was 4.80 times higher than that of individuals at the top of the 20th percentile. This statistic varied in size across the states and territories, for example from 3.84 in the Northern Territory to 4.99 in Western Australia.

Another perspective is provided by considering the income share held at the top of the income distribution. For Australia, the per cent of total income held by the top 1% of earners was 9.3%, while the income held by the top 5% of earners was 22.6% and the top 10% held 33.7%. This also varied across the states and territories, for example from 6.4% held in the top 1% in the ACT, to 10.5% held by the top 1% in NSW.

There are other useful summary indicators which can reflect the distribution of income across the population. For example, the Gini coefficient summarises the distribution of total income in a single number which lies between 0 and 1, where values closer to 1 represent greater inequality. For this publication, the Gini coefficient has been calculated on gross individual income for people who submitted a tax return; the resultant value for Australia in 2012-13 was 0.480. For the states and territories the Gini coefficient ranged from 0.411 in the Northern Territory, up to 0.491 in New South Wales. Readers should note that the coefficients included in this publication are indicative only; they should be interpreted with care due to under-coverage issues associated with some types of income, for example superannuation. Also Government pensions and allowances data are excluded. See the Explanatory Notes, paragraphs 15 and 16, for more details.

Table 2. SELECTED INCOME DISTRIBUTION INDICATORS, Gross individual income
			NSW	VIC	Qld	SA	WA	TAS	NT	ACT	Aust.
Percentage share of total income received by persons in
	Top 1%	%	10.5	9.4	8.2	8.0	8.7	7.5	6.5	6.4	9.3
	Top 5%	%	24.0	22.5	21.1	20.4	22.0	19.6	17.8	18.1	22.6
	Top 10%	%	34.9	33.4	32.3	31.0	33.4	30.2	28.1	28.4	33.7
Ratio of incomes at top of selected income percentiles
	P80/P20	ratio	4.85	4.64	4.66	4.38	4.99	4.55	3.84	3.97	4.80
	P80/P50	ratio	1.90	1.83	1.86	1.78	1.94	1.79	1.68	1.67	1.87
	P20/P50	ratio	0.39	0.40	0.40	0.41	0.39	0.39	0.44	0.42	0.39
	P10/P50	ratio	0.17	0.18	0.18	0.18	0.19	0.17	0.23	0.21	0.17
Gini coefficient		no.	0.491	0.474	0.468	0.450	0.480	0.450	0.411	0.415	0.480

MEDIAN INCOME - STATE AND TERRITORY

The Australian Capital Territory recorded the highest median total income of all states and territories ($58,613), followed by the Northern Territory ($53,707) and Western Australia ($51,465).

In 2012-13, median employee incomes were highest in the Australian Capital Territory ($61,846), the Northern Territory ($54,445) and Western Australia ($53,446) and lowest in Tasmania ($43,524).

Median individual income from own unincorporated businesses was highest in Western Australia ($13,625), followed by the Northern Territory ($11,283) and New South Wales ($10,981) and lowest in Tasmania ($7,781).

Victoria recorded the highest median investment income ($437) in 2012-13, followed by New South Wales ($413) and South Australia ($348).

GREATER CAPITAL CITY AND REST OF STATE REGIONS

Generally, across all income types, the greater capital city regions recorded higher median incomes than the rest of each state or territory in 2012-13. Some exceptions to this pattern: slightly higher median investment income was recorded by the rest of Victoria, Queensland and South Australia; and other income (excluding pensions and allowances) was slightly higher in the rest of Northern Territory (outside of Greater Darwin).

Region	Employee	Own unincorporated business	Investment	Superannuation & annuities	Other Income (excl. Govt pensions & allowances)	Total income from all sources (excl. Govt pensions & allowances)
	$	$	$	$	$	$
New South Wales	48,322	10,981	413	16,456	113	44,780
Greater Sydney	50,422	13,475	433	14,885	125	47,281
Rest of NSW	44,560	7,473	370	18,318	93	40,702
Victoria	46,644	9,778	437	13,789	105	43,867
Greater Melbourne	48,053	11,141	429	14,261	115	45,533
Rest of Victoria	42,417	6,775	455	12,610	80	39,172
Queensland	47,567	8,792	255	16,800	110	44,574
Greater Brisbane	49,578	10,008	243	17,470	114	46,790
Rest of Queensland	45,600	7,991	263	16,108	105	42,568
South Australia	46,050	10,267	348	22,656	123	43,472
Greater Adelaide	47,196	11,063	340	23,476	134	44,672
Rest of South Australia	41,726	8,788	357	19,371	94	39,317
Western Australia	53,446	13,625	309	18,686	130	51,465
Greater Perth	54,216	14,344	309	19,318	141	52,225
Rest of WA	50,155	11,498	295	15,098	97	48,318
Tasmania	43,524	7,781	308	18,422	109	40,749
Greater Hobart	45,766	9,944	308	20,520	116	42,992
Rest of Tasmania	41,820	6,448	305	15,803	103	39,040
Northern Territory	54,445	11,283	103	23,939	83	53,707
Greater Darwin	57,617	12,476	102	24,964	83	56,621
Rest of NT	50,292	7,852	100	21,123	88	49,782
Australian Capital Territory (b)	61,846	8,677	298	32,319	117	58,613
Australia (c)	48,030	10,268	364	18,079	112	44,940
(a) Medians are calculated using non-zero income earners for each source of income. See Explanatory Notes paragraphs 20 and 31 for more information. (b) The whole of the Australian Capital Territory is one GCCSA. (c) Australia totals include data for the Other Territories and regions unknown or not stated.

STATISTICAL AREA LEVEL 4

SA4 regions usually contain populations of between 100,000-300,000 people, tending towards the lower limit in rural and regional areas.

On the Australian mainland, the SA4s of Inner Perth, the Australian Capital Territory and Western Australia - Outback recorded the highest medians for total income, with values of $59,846, $58,675 and $57,471 respectively. In contrast, the SA4 regions of Mid North Coast and Coffs Harbour - Grafton (both in NSW) had the lowest medians at $34,586 and $35,014 respectively. The map below provides the Australia wide distributions for SA4s.



In median total income terms, the SA4s which most resembled Australia (which recorded a median total income of $44,940) were Ipswich in Queensland with a value of $45,009, followed by the Hunter Valley (excluding Newcastle) with $44,847.

From another perspective, two sets of SA4 regions resembled each other quite closely, namely the Riverina (with a median total income of $41,598) and the Central West ($41,594), both in NSW. Also similar in median total income terms were Cairns ($41,368) in Queensland and the Far West and Orana ($41,364) in NSW.