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1301.0 - Year Book Australia, 2002  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 25/01/2002   
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Contents >> Income and Welfare >> Household income

Regular income is the means by which most individuals and families finance current consumption and make provision for the future through saving and investment. The level of cash income can be used as an indicator of the standard of living for most of the population. From a social welfare perspective, analyses of cash income distribution indicate which groups in the population are most disadvantaged, and provide information on the number and characteristics of those needing access to government services.

While income is usually received by individuals, analyses of the distribution of income are traditionally based on incomes of families or groups of individuals, which reflects the sharing of income that takes place within families. The following analysis is based on the income of a restricted family grouping called an 'income unit', which assumes that income is shared between partners in couple families and between parents and dependent children. Other family members such as non-dependent children are treated as separate income units. Analyses of income distribution using different units, such as families and households, provide different results.

The ABS conducted six income distribution surveys between 1968 and 1990. In July 1994, the ABS started collecting income data on a continuous basis in the Survey of Income and Housing Costs. These surveys have provided information on the current and annual income of individuals and family units as well as on their characteristics such as age, education, labour force participation, source of income, and the size and composition of income units.

The most recent information on current income distribution on an income unit basis is available from the 1999-2000 Survey of Income and Housing Costs. Income refers to gross receipts of recurring and usually regular cash flows at the time of interview. It comprises cash receipts from wage or salary, profit or loss from own unincorporated business, property income in the form of interest, rent and dividends, private cash transfers such as superannuation pensions and child support, and cash transfers from government in the form of benefits and allowances.


Income distribution

As table 7.6 shows, in 1999-2000 the average (mean) gross weekly income for all income units was $726. The median gross weekly income (i.e. the midpoint when all units are ranked in order of income) was considerably lower at $538. This difference reflects the typically asymmetric distribution of income where a large number of units have very low incomes and a smaller number have very high incomes.

Income units cover a wide variety of individuals and family types, and include varying numbers of people. These range from young single people just out of school, to couples with dependent children, through to elderly retired couples or single people, i.e. units at various stages of the life cycle and working career. It is therefore not surprising that income is distributed unevenly across all income units. In 1999-2000 the median gross weekly income for income units in the lowest quintile (i.e. the lowest 20% of units when ranked according to income) was $177, compared to $1,524 received by those in the highest quintile (i.e. the highest 20% of units when ranked according to income).

Income units in the lowest quintile were mainly single people. Few people were employed and most relied on government pensions and allowances as their principal source of income.

In comparison, income units in the highest quintile were usually couples, and most had two earners. Their principal source of income was mainly wage or salary.


7.6 ALL INCOME UNITS, Selected Characteristics by Gross Weekly Income Quintile Groups - 1999-2000

Units
Lowest
20%
Second
quintile
Third
quintile
Fourth
quintile
Highest
20%
All
income
units

Upper boundary of quintile group
$
231
421
673
1,103
. .
. .
Mean income
$
136
327
541
866
1,765
726
Median income
$
177
322
536
856
1,524
538
Principal source of income (% of income units)
- Wage or salary
%
8.3
31.2
71.8
86.2
86.3
56.7
- Own unincorporated business
%
2.1
3.3
7.6
7.9
9.1
6.0
- Government pensions and allowances
%
68.5
57.5
12.3
1.2
**0.0
28.0
- Other income
%
10.3
8.0
8.3
4.8
4.5
7.2
- Total(a)
%
100.0
100.0
100.0
100.0
100.0
100.0
Income unit type (% of income units)
- Couple with dependent children
%
4.3
7.2
17.3
34.6
48.8
22.4
- Couple without dependent children
%
5.4
35.0
19.7
24.0
38.4
24.5
- One parent
%
1.9
12.1
7.8
4.8
1.4
5.6
- Lone person
%
88.4
45.7
55.2
36.6
11.4
47.5
- Total
%
100.0
100.0
100.0
100.0
100.0
100.0
Earners
- None
%
84.1
59.4
15.6
4.9
2.9
33.4
- One
%
14.3
38.3
75.5
64.9
26.2
43.8
- Two
%
1.7
2.4
8.9
30.3
70.9
22.8
- Total
%
100.0
100.0
100.0
100.0
100.0
100.0
Tenure and landlord type (% of income units)
- Owners without a mortgage
%
32.4
41.3
23.5
23.8
28.0
29.8
- Owners with a mortgage
%
6.4
9.8
19.2
36.8
53.0
25.0
- Renters -
- State housing authority
%
9.2
6.7
4.1
1.8
*0.3
4.4
- Private landlord
%
16.6
18.8
25.3
23.2
13.5
19.5
- Other landlord type
%
12.2
11.2
13.1
7.0
2.3
9.1
- Total renters
%
38.0
36.7
42.5
31.9
16.2
33.1
- Other tenure type
%
23.2
12.2
14.7
7.6
2.8
12.1
- Total
%
100.0
100.0
100.0
100.0
100.0
100.0
Estimated number of income units
- Capital city
’000
1,137.8
1,119.6
1,263.8
1,264.0
1,373.4
6,158.6
- Balance of State
’000
738.8
752.0
612.4
600.6
492.0
3,195.7
- Total
’000
1,876.5
1,871.6
1,876.2
1,864.6
1,865.3
9,354.3

(a) Includes income units with nil or negative total income.

Source: ABS data available on request, 1999-2000 Survey of Income and Housing Costs.


Life-cycle stages of income units

Levels of income are related to life-cycle stages such as youth and the forming, maturing and dissolving of families (table 7.7). In 1999-2000, young independent single persons aged under 35 had an average weekly income of $473. However, this group had a wide range of incomes, resulting partly from the differing attachment to the labour force of young people making the transition from full-time education to full-time work.

As young people enter into relationships their income unit income rises, as they often have two income earners contributing to their income unit. Young couples under 35 with no dependent children received an average of $1,327 per week. For most couples in this group (83%) both partners were in employment.

For couples, the birth of the first child and the early years of child rearing are associated with reduced labour force participation and are often accompanied by a fall in income of the unit. The average weekly income of couples with the eldest child under 5 years of age was $1,030. Income rises again as the children and parents grow older. Couples whose eldest dependent child was aged 15 years and over had an average income of $1,407 per week.

The need to provide for dependent children has ended by the time most people reach their mid fifties. These post child-rearing years are accompanied by a decline in income. Couples in the 55-64 age group had an average income of $840 per week. This group had a wide range of incomes resulting from the transition from full-time employment to retirement.

The considerably lower incomes that accompany retirement are evident in the average incomes of those aged 65 years or over. Couples of this age had an average income of $526, while single persons over 65 had an average income of $284. Government pensions formed the main source of income for 68% of the couples and 80% of single people in this age group. About 24% of couples and 16% of single people were living mainly on income from other sources such as superannuation and investments.


7.7 LIFE-CYCLE GROUPS, Selected Characteristics - 1999-2000

Couple with dependent
children and age of
eldest child (years)
Couple without dependent
children, reference
person aged
Unit
Single
person
aged
under 35
Couple without dependent
children,
reference
person
aged under 35
Under 5
15-24
55-64
65 and
over
Single person
aged 65
and over

Mean income
$
473
1,327
1,030
1,407
840
526
284
Median income
$
450
1,207
917
1,238
630
373
200
Principal source of income -
(% of income units)
- Wage or salary
%
75.4
92.5
79.5
78.3
52.1
4.7
*1.6
- Own unincorporated business
%
2.0
*3.7
8.9
9.8
10.8
*2.6
*1.1
- Government pensions and allowances
%
13.5
*1.8
7.4
9.6
24.2
68.0
80.2
- Other income
%
4.4
*1.5
*2.8
*1.9
11.1
23.6
16.3
- Total(a)
%
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Earners -
- None
%
20.0
*3.1
6.4
8.5
32.0
87.0
95.4
- One
%
80.0
14.2
52.9
24.3
31.5
6.9
4.6
- Two
%
. .
82.7
40.7
67.2
36.4
6.2
. .
- Total
%
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Tenure and landlord type (% of income units)
- Owners without a mortgage
%
1.4
7.3
11.5
38.6
68.0
86.1
64.9
- Owners with a mortgage
%
6.0
40.9
58.0
50.3
22.2
4.5
4.9
- Renters
%
- State/Territory housing authority
%
1.1
**0.4
*1.5
*2.3
*2.5
*2.7
7.6
- Private landlord
%
30.8
45.7
21.4
6.9
4.8
3.1
6.9
- Other landlord type
%
26.8
*2.8
*2.8
*1.0
**0.7
*1.2
5.2
- Total renters
%
58.7
49.0
25.6
10.3
8.0
7.0
19.7
- Other tenure type
%
34.0
*2.8
4.9
*0.8
*1.8
*2.4
10.4
- Total
%
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Estimated number of income units
'000
2,257.3
350.7
476.7
644.3
589.2
713.0
878.4

(a) Includes income units with nil or negative total income.

Source: ABS data available on request, 1999-2000 Survey of Income and Housing Costs.


Changes in income, 1994-95 to 1999-2000

From 1994-95 to 1999-2000, the mean (average) gross weekly income for all income units in private dwellings increased by 22% from $596 to $726 (table 7.8). The mean weekly income of those who were mainly dependent on wage or salary income increased by 20% from $801 to $961. The mean income of those relying on government pensions and allowances increased by 16% over this period. Mean incomes for units dependent on their own unincorporated businesses increased by 28%. Mean income of those dependent on other income sources increased by 48% between 1994-95 and 1999-2000.


7.8 ALL INCOME UNITS, Mean Gross Weekly Income by Principal Source of Income

Mean weekly income

1994-95

$
1995-96

$
1996-97

$
1997-98

$
1999-00

$

Principal source of income
Wage or salary
801
816
844
888
961
Own unincorporated business
850
916
908
956
1,085
Government pensions and allowances
231
238
254
256
267
Other income
420
432
507
546
622
All income units(a)
596
609
625
658
726

(a) Includes income units with nil or negative total income.

Source: Income Distribution, Australia (6523.0).


The degree of inequality in the income distribution of all income units appears almost unchanged between 1994-95 and 1999-2000 (table 7.9). Income inequality can be measured by comparing the share of total income received by each quintile group. While the shares of total income received by the income quintile groups changed slightly over the five years, the changes are not statistically significant.


7.9 ALL INCOME UNITS, Income Distribution by Gross Weekly Income Quintile

Percentage share

1994-95

%
1995-96

%
1996-97

%
1997-98

%
1999-00

%

Gross weekly income quintile
Lowest
3.6
3.8
3.9
3.8
3.8
Second
9.3
9.1
9.4
9.0
9.0
Third
15.2
15.0
15.2
15.0
15.0
Fourth
24.0
23.7
24.0
23.9
23.8
Highest
47.9
48.3
47.5
48.3
48.5
All income units
100.0
100.0
100.0
100.0
100.0

Source: Income Distribution, Australia (6523.0).


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