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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.
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:
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).
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.
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.
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.
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.
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.
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
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.
Map 2. AVERAGE OWN UNINCORPORATED BUSINESS INCOME, Percentage change, Statistical local areas-2003-04 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.
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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