Australian Bureau of Statistics

Rate the ABS website
ABS Home > Statistics > By Catalogue Number
6523.0 - Household Income and Income Distribution, Australia, 2011-12  
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 16/08/2013   
   Page tools: Print Print Page Print all pages in this productPrint All RSS Feed RSS Bookmark and Share Search this Product

SUMMARY OF FINDINGS


INTRODUCTION

The economic wellbeing of individuals is largely determined by their command over economic resources. Income and wealth are the economic resources that households use to support their consumption of goods and services. This publication provides indicators of the level and distribution of after tax (disposable) household income, after adjusting for household size and composition.

The estimates of disposable income in this publication are derived by deducting estimates of income tax liability, the Medicare levy and Medicare levy surcharge from the gross income data collected in the Survey of Income and Housing (SIH). Gross income is defined as income available for, or intended to support, current consumption, and are collected in respect of employment income (including non-cash benefits, bonuses, termination payments and irregular overtime), profit/loss from own unincorporated business, investment income (including interest, rent and dividends), lump sum workers' compensation receipts, private transfers (including superannuation, child support), other transfers from other households and cash transfers from government pensions and allowances. Some limits have been placed on items included as income, where the magnitude of individual amounts received exceeds that likely to be used to support current consumption (e.g. termination payments, workers compensation payments).

While income is usually received by individuals, it is normally shared between partners in a couple relationship and with dependent children. To a lesser degree, there may be sharing with other members of the household. Even when there is no transfer of income between members of a household, nor provision of free or cheap accommodation, household members are still likely to benefit from the economies of scale that arise from the sharing of dwellings. The income measures shown in this publication therefore relate to household income.

Larger households normally require a greater level of income to maintain the same material standard of living as smaller households, and the needs of adults are normally greater than the needs of children. The income estimates are therefore adjusted by equivalence factors to standardise the income estimates with respect to household size and composition, while taking into account the economies of scale that arise from the sharing of dwellings. The equivalised disposable income estimate for any household in this publication is expressed as the amount of disposable cash income that a single person household would require to maintain the same standard of living as the household in question, regardless of the size or composition of the latter.

Appendix 3 provides a more detailed explanation of equivalised disposable household income. It shows the differences in income measures when calculated from data at different stages in progression from gross household income, through disposable household income, to person weighted equivalised disposable household income.

The ABS has revised its standards for household income statistics following the adoption of new international standards in 2004 and review of aspects of the collection and dissemination of income data. These new standards were introduced for the first time in the 2007-08 reference period. Income estimates presented in this publication from 2007-08 onwards apply the new income standards.


KEY RESULTS

Some of the key income results from the 2011-12 SIH are:

  • in real terms, average weekly equivalised disposable household income for low income households rose by 5% (from $452 to $475) between 2009-10 and 2011-12, and those for middle income households rose by 4% (from $760 to $793) (Table 1)
  • there were no significant changes in income between 2009-10 and 2011-12 for high income households (from $1,797 to $1,814), or for all households in total (from $894 to $918) (Table 1)
  • the share of total household income received by low and middle income households increased between 2007-08 and 2011-12, while the share received by high income households decreased (Table 1)
  • for households with middle and high income levels, wages and salaries were the main source of income for 79% and 88% of households respectively, while for low income households (i.e. those people with household income in the second and third deciles) government pensions and allowances were the main income source for more than 60% of households (Table 6)
  • people living in older households (households where the reference person was aged 65 and over) had the lowest average weekly equivalised disposable household income at $660, and those living alone were more likely than those living in couple households to have government pensions and allowances as their main source of income (76% compared to 61%) (Tables 13 and 14)
  • couples with dependent children only, where the oldest child was under five, had an average weekly equivalised disposable household income of $960 (29% lower than for young couples without children) (Table 13)
  • average equivalised disposable household incomes in the capital cities in Australia were 21% above those outside the capital cities (Tables 15 and 16)
  • average equivalised disposable household incomes in the Australian Capital Territory ($1,144), Western Australia ($1,017), and the not very remote parts of the Northern Territory ($1,012) were above the national average ($918) (Table 17)
  • average equivalised disposable household incomes in Tasmania, South Australia and Victoria were below the national average by 15%, 8% and 4% respectively (Table 17).

Some of the key net worth results from the 2011-12 SIH are:
  • 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 (Table 7)
  • the poorest 20% of households account for 1% of total household net worth, with an average net worth of $31,205 per household (Table 7)
  • 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 equivalised household income quintiles (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).


HOUSEHOLD INCOME

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.

S1 CHANGES IN MEAN REAL EQUIVALISED DISPOSABLE HOUSEHOLD INCOME (a)
Graph: S1 CHANGES IN MEAN REAL EQUIVALISED DISPOSABLE HOUSEHOLD INCOME (a)



Household characteristics

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.

S2. HOUSEHOLD CHARACTERISTICS 2011-12, by income group

Low income(a)
Middle income(b)
High income(c)

Mean equivalised disposable household income per week $
475
793
1 814
Has MSI of wages and salaries(d) %
26.3
79.1
88.4
Has MSI of government pensions and allowances(d) %
62.7
3.9
-
Owns home without a mortgage %
43.0
26.4
22.9
Owns home with a mortgage %
20.3
41.3
52.6
Rents from state/territory housing authority %
6.8
0.9
*0.2
Rents from private landlord %
25.1
28.4
22.1
Average number of persons in household no.
2.4
2.9
2.5
Average number of employed persons in the household no.
0.6
1.6
1.9

* estimate has a relative standard error of 25% to 50% and should be used with caution
- nil or rounded to zero (including null cells)
(a) Persons in the second and third income deciles
(b) Persons in the middle income quintile
(c) Person in the highest income quintile
(d) Main source of income (MSI)


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.

S3. Income and household characteristics for selected life cycle groups, 2011-12

Number of households
Average number of persons
Average number of employed persons
Average number of dependent children
Proportion with government pensions and allowances as MSI(a)
Mean equivalised household income per week
Proportion owning home without a mortgage
'000
no.
no.
no.
%
$
%

Lone person aged under 35
300.6
1.0
0.8
-
11.2
895
*2.4
Couple only, reference person aged under 35
470.4
2.0
1.8
-
*2.2
1 352
*1.1
Couple with dependent children only
Eldest child under 5
482.2
3.4
1.5
1.4
5.9
960
3.7
Eldest child 5 to 14
859.8
4.2
1.6
2.2
8.7
919
9.4
Eldest child 15 to 24
546.7
4.1
2.3
2.1
8.3
873
23.2
Couple with
Dependent and non-dependent children only
272.5
4.7
3.0
1.5
*5.2
956
23.9
Non-dependent children only
504.8
3.3
2.3
-
11.2
1 085
44.5
Couple only, reference person aged 55 to 64
518.2
2.0
1.2
-
14.9
1 044
55.1
Couple only, reference person aged 65 and over
796.0
2.0
0.2
-
60.7
656
82.1
Lone person aged 65 and over
801.5
1.0
0.1
-
76.1
526
71.9
One parent, one family household with dependent children
503.9
3.1
0.9
1.7
44.1
618
7.3

* estimate has a relative standard error of 25% to 50% and should be used with caution
- nil or rounded to zero (including null cells)
(a) Main source of income (MSI)


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.


INCOME DISTRIBUTION

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.

Diagram: Distribution of Equivalised Disposable Household Income, 2011-12

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.

S5. SELECTED INCOME DISTRIBUTION INDICATORS, Equivalised disposable household income

1994-95
1995-96
1996-97
1997-98
1999-2000
2000-01
2002-03
2003-04(a)
2005-06(a)
2007-08(a)
2009-10(a)
2011-12(a)

Percentage share of total income received by persons with
Low income(b) %
10.8
11.0
11.0
10.8
10.5
10.5
10.6
10.6
10.4
10.0
10.1
10.4
Middle income(c) %
17.7
17.7
17.8
17.7
17.7
17.6
17.6
17.6
17.4
16.9
17.0
17.3
High income(d) %
37.8
37.3
37.1
37.9
38.4
38.5
38.3
38.4
39.2
41.0
40.2
39.5
Ratio of incomes at top of selected income percentiles
P90/P10 ratio
3.78
3.74
3.66
3.77
3.89
3.97
4.00
3.87
4.05
4.35
4.24
4.10
P80/P20 ratio
2.56
2.58
2.54
2.56
2.64
2.63
2.63
2.55
2.58
2.66
2.70
2.61
P80/P50 ratio
1.55
1.57
1.56
1.56
1.57
1.56
1.57
1.53
1.55
1.58
1.60
1.56
P20/P50 ratio
0.61
0.61
0.61
0.61
0.59
0.59
0.60
0.60
0.60
0.59
0.59
0.60
Gini coefficient no.
0.302
0.296
0.292
0.303
0.310
0.311
0.309
0.306
0.314
0.336
0.329
0.320

(a) Estimates presented for 2007-08 onwards are not directly comparable with estimates from previous cycles due to improvements made to measuring income introduced in the 2007-08 cycle. Estimates for 2003-04 and 2005-06 have been recompiled to reflect the new treatments of income, however not all new components introduced in 2007-08 are available for earlier cycles
(b) Persons in the second and third income deciles
(c) Persons in the middle income quintile
(d) Persons in the top income quintile



IMPUTED RENT

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.

Diagram: Impact on Income Distribution

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.


WEALTH 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).


CHILD CARE

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.

Bookmark and Share. Opens in a new window

Commonwealth of Australia 2014

Unless otherwise noted, content on this website is licensed under a Creative Commons Attribution 2.5 Australia Licence together with any terms, conditions and exclusions as set out in the website Copyright notice. For permission to do anything beyond the scope of this licence and copyright terms contact us.