Insights into household income
Household gross disposable income increased 3.8% through the year in the March quarter 2020, below the 20-year average of 5.8%, reflecting:
Figure 1: Household gross disposable income, contribution to growth, through the year, current prices: seasonally adjusted
Source: 5206.0 Table 20
Quarterly composition of household income
- Sustained low wage growth over recent years that has been reflected in subdued compensation of employees (COE) which increased 4.4% through the year.
- Steady growth in social assistance benefits, prior to the COVID-19 outbreak, due to the stable labour market, low unemployment and increased retirement income streams from superannuation accounts.
- Individuals' tax payable driving a rise in income payable in recent years with tax outpacing income growth as a result of Australia’s progressive tax system. Growth in tax payable by individuals slowed through the year with the introduction of the low to middle income tax offset in September quarter 2019.
- Other non-labour income (consisting of investment income and earnings from unincorporated businesses) experiencing weak growth in recent years.
Household gross disposable income rose 1.4% in March quarter 2020. Social assistance benefits contributed 0.6 percentage points to growth, recording its largest contribution since June 2012. The increase in both the number of recipients and COVID-19 government support payments drove the rise.
At the same time, growth in compensation of employees slowed with reduced economic activity as economic restrictions were imposed to contain the COVID-19 pandemic.
Figure 2: Household gross disposable income, contribution to quarterly growth. current prices: seasonally adjusted
Source: 5206.0 Table 20
Social assistance benefits are expected to rise after the March quarter, with an increased number of recipients (figure 3) and further commitments by Government to provide support during the COVID-19 pandemic (figure 4).
Figure 3: Social assistance benefits payments and recipients
Source: ABS, Department of Social Services Department of Social Services:
Figure 4: Government commitments to COVID-19 support
Source: ABS, Australian Parliament House Australian Parliament House:
Government support payments in response to COVID-19 will contribute to household income beyond the March quarter with, for example, an additional 470,000 people received social benefit payments in April 2020.