CHAPTER 1 — INTRODUCTION
Widely used macroeconomic measures of the economy such as the National Accounts provide vital information on the size and structure of the economy. However they do not provide information on the distribution of income and wealth or the individual access to goods and services. These issues of equity are widely recognised as crucial to an understanding of material well-being, and have been of increasing focus over recent years. Issues of distribution and access are also central to targeting, and improving the efficiency of, economic policies.
The Australian Bureau of Statistics (ABS) publish high quality aggregate (macro) and distributional measures (micro) of household economic well-being. The macro estimates are published in the Australian System of National Accounts. The national accounts estimates present estimates for total household, and metrics produced from the national accounts such as household income per capita do not give any information about how available resources are distributed. The ABS household distributional estimates are published in the suite of ABS publications derived from the ABS Survey of Income and Housing and Household Expenditure Survey (micro data).
Due to differences in concepts, definitions and statistical practices, micro data may yield results that diverge from national accounts aggregates, and therefore distributional measures created using micro data sources may not be consistent with the aggregate figures in the national accounts (macro data). This information paper contains results that integrate the ABS micro and macro sources and produce distributional information of household income, consumption and wealth, consistent with the Australian System of National Accounts (ASNA) concepts and aggregates.
INTERNATIONAL AND DOMESTIC DRIVERS
The report of the Commission on the Measurement of Economic Performance and Social Progress (September 2009), the “Stiglitz-Sen-Fitoussi Commission”, stressed the importance of a greater focus on the household to provide better measures of people’s well-being. The report stressed the importance of formulating metrics that presented the distributional aspects of households such as median income and income quintiles consistent with the System of National Accounts. The report recognised the complexity in formulating such metrics but encouraged countries to do so to obtain the complete picture of what is happening to individuals in our society.
In November 2009, the Group of Twenty (G-20) Finance Ministers and Central Bank Governors played a key role in responding to the global financial crisis of 2008-09 by devising a list of 20 recommendations, as part of the group's Data Gaps Initiative (DGI). Recommendation 16 of the DGI states "As the recommended improvements to data sources and categories are implemented, statistical experts to seek to compile distributional information (such as ranges and quartile information) alongside aggregate figures, wherever this is relevant".
In Australia, the importance of distributional analysis of household aggregates such as saving and wealth for economic and social policy has been recognised in addresses made by the Reserve Bank of Australia (RBA). In 2005, then assistant RBA Governor, Glenn Stevens addressed the Irving Fisher Committee for Financial Statistics of the International Statistical Institute, on "The Changing Statistical Needs of Central Banks" and asked the following, "how are debt and wealth distributed across the population by income or by age or by region?". A 2011 address to the Australian Economic Forum by assistant governor Philip Lowe, titled " Changing Patterns in Household Saving and Spending" utilised aggregate ABS national accounts data and micro data from the Melbourne Institute survey of "Household Income and Labour Dynamics in Australia" (HILDA), to produce analysis such as change in median saving ratios by income quintile for the period 2006-2009.
In early 2011, Australia along with 25 other countries took part in the Organisation for Economic Cooperation and Development (OECD) and Eurostat (European Union statistical commission) expert group, measuring disparities in a national accounts framework. The role of the expert group was to devise robust and internationally comparable methodology to allow the integration of distributional information using existing micro information on different household groups that are consistent with the System of National Accounts (SNA) concepts and aggregates. The results produced in this information paper are based on (and expand upon) the work undertaken by the ABS with the OECD-Eurostat Expert Group.
Current price household estimates for income, consumption and wealth from the Australian System of National Accounts, 2011-12 (cat. no. 5204.0), for the year 2009-10 were distributed for five household distributional indicators using data from the ABS Survey of Income and Housing and ABS Household Expenditure Survey. Estimates for non-profit institutions serving households (NPISH) included in the household sector in the 5204.0 estimates were removed from the household national accounts in this information paper.
Tables produced in the information paper are:
STRUCTURE OF THE INFORMATION PAPER
- Distribution of the Australian System of National Accounts (ASNA) household income, consumption and wealth components based on household distributional indicators derived from ABS household surveys. The household distributional indicators presented are main source of income; equivalised income quintiles; household composition; age of reference person in household; and equivalised net worth quintiles (electronic table 1).
- Analysis of the ASNA household distributions:
- income, consumption and wealth components, share of total household, by household distributional indicator (electronic table 2);
- income, consumption and wealth components, per household, by household distributional indicator (electronic table 3);
- income, consumption and wealth components, ratio of the average of all households, by household distributional indicator (electronic table 4);
- income and consumption components, share of gross disposable income, by household distributional indicator (electronic table 5);
- consumption components, share of actual individual consumption, by household distributional indicator (electronic table 6);
- wealth components, share of total assets, by household distributional indicator (electronic table 7); and
- impact of redistribution measures by government and non-profit institutions serving households (NPISH), by household distributional indicator (electronic table 8).
- Coverage ratios: ratios of micro (ABS surveys) and macro (ASNA) aggregates of household income, consumption and wealth components. Where applicable, ratios for the adjusted macro and or micro components (to enable the most relevant common scope for comparison) are presented (electronic table 9).
The paper contains graphical presentations of the main components of ASNA household income, consumption and wealth by equivalised household income and net worth quintiles (chapter 2); and by main source of income, household composition, and age of household reference person (chapter 3). Chapter 4 outlines the data sources and methodology used in the distribution of the ASNA estimates. Chapter 5 provides some conclusions from the current study and Chapter 6 discusses the future directions of the analysis presented.