|Page tools: Print Page Print All|
APPENDIX 4 SOCIAL TRANSFERS IN KIND
GOVERNMENT BENEFITS AND TAXES ALLOCATED
Of total Commonwealth, state and local government expenditure in 2011-12, the study allocated $271.4 billion in benefits to households ($87.4 billion in social assistance benefits in cash and $184.1 billion in social transfers in kind) or 52% of total government expenditure of $522.0 billion. The unallocated amounts mainly reflect government expenditure that are not conceptually relatable to individual households, but they also reflect the lack of suitable indicators to allocate some benefits. The study allocated $133.7 billion out of $390.0 billion or 34% of total government revenue.
In 2011-12, households received, on average $603 per week in total government benefits, and paid $297 per week in income taxes. Low income households received more social benefits in cash and in kind and paid less income taxes than high income households. Total social assistance benefits also increased with household size. The net effect of government benefits and income taxes was to increase the average income of households in the lower three quintiles, while only marginally increasing average income in the fourth quintile, and decreasing the average income of households in the highest quintile (Graph 1).
Households in the lowest equivalised private income quintile had average private income of $136 per week, including imputed rent. Their average disposable income, including imputed rent and STIK rose to $788 per week. These were respectively 13 percent and 65 percent of the average for all households.
Table 2 shows a range of income distribution measures. Percentile ratios are one measure of the spread of incomes across a population. When STIK were added to equivalised disposable household income including imputed rent, the P90/P10 ratio fell from 3.73 to 2.49.
The Gini coefficient is a single statistic 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. The addition of STIK decreased the Gini coefficient from 0.303 to 0.226 a decrease of 25%.
The income share of households in the lowest quintile increased from 3% of total equivalised private income including imputed rent, to 11% of total equivalised disposable household income including imputed rent and STIK, while that of households in the highest quintile decreased from 46% to 34%.
This equalising effect of including STIK in income analysis is also illustrated in the frequency distribution in Graph 3. Mean weekly equivalised disposable household income including imputed rent, rose from $970 to $1,220 with the addition of STIK.
DIFFERENCES BETWEEN HOUSEHOLD GROUPS
The system of government benefits and taxes in Australia has been designed to assist those in the community who are most in need of financial support. The allocation of benefits and income taxes paid differs between households, reflecting that characteristics such as household composition, life cycle stage, household size and income have an impact on these allocations. One parent families with dependent children, and couple only households where the reference person was 65 years and over received the highest average weekly levels of total social assistance benefits ($1,035 and $934, respectively). Couple only households and lone person households, with reference person under 65 years received the lowest average benefits in both cash and STIK, reflecting their relatively lower use, on average, of education, health, and social security and welfare services (Graph 4).
Graph 5 shows the impact of government benefits and income tax levels on different household types after taking account of household size and composition. One parent households with dependent children and couples and lone person households where the reference person was 65 years and over, had the lowest equivalised private income including imputed rent of all the household groups. However, the net effects of benefits and taxes increased their average equivalised incomes to $1,011, $1,185 and $1,065 per week, respectively.
STATES AND TERRITORIES
The allocation of government benefits and income taxes paid varies across states and territories (Graph 6).
Estimates of STIK by state and territory may not be entirely accurate, since for some components the allocation does not take into account the varying expenditure by state and territory governments. In addition, there may be some inconsistencies in the classification of government expenditure by state governments in the source data, which could impact on comparability.
Average private income including imputed rent was highest in the ACT and WA in 2011-12. In Tasmania, which had the lowest average income, equivalised private income including imputed rent was 22% below the Australian average, however equivalised disposable income including imputed rent and STIK was only 10% below the Australian average, reflecting the net benefits received by Tasmanian households.
CHANGES OVER TIME
In 2011-12, average total social assistance benefits in cash and STIK increased in real terms compared to the previous study in 2009-10 using the HES. Average government cash payments to all households increased by 3% (to $193) while STIK increased by 9% (to $409) in the two year period.
In the 2003-04 and 2009-10 HES studies, the most extensive concept of income used was final income which is equal to household disposable income plus STIK, less taxes on production. Final income is not able to be estimated in 2011-12, but has been included in tables 7 and 8 for comparative purposes.
Between 2009-10 and 2011-12, the distribution of household income became more equal for all measures of household income shown in Table 8. The Gini coefficient for equivalised disposable household income including imputed rent and STIK decreased by 4% between 2009-10 and 2011-12 to 0.226.
DATA SOURCES AND METHODOLOGIES
Information reported in the 2011-12 SIH has been used as the basis for allocating government STIK to households based on the composition of households and the characteristics of their members. ABS Government Finance Statistics (GFS) were the main source for valuing the cost to government of the provision of STIK. The total value of STIK was defined as Commonwealth, state or territory and local government expenses, net of intra-government transfers, minus personal benefit payments paid in cash minus government revenue from the sale of goods and services.
Estimates for household private income including imputed rent, gross income and disposable income were compiled from either reported or modelled estimates routinely derived from the SIH. Estimates for STIK in this study have been modelled, where possible, using the same methodologies as used for the 2009-10 fiscal incidence study. The results of the 2009-10 study are published in Government Benefits, Taxes and Household Income, Australia 2009-10 (cat. no. 6537.0). Appendix 4 in that publication explains the detailed methodologies used to allocate STIK to specific households. Comparable methods were used in respect of the 2011-12 SIH data for all items except the allocation of some health and education benefits as outlined in the summary below.
Social transfers in kind
Government STIK were imputed for the provision of education, health, housing, child care, electricity concessions and other social security and welfare services.
STIK were allocated for school education, tertiary education and other education benefits. Data on average expenditure by type of student were obtained from the Report on Government Services (ROGS) or the Department of Education, Employment and Workplace Relations. The value of education benefits received by members of individual households was allocated based on reported characteristics and summed to the household level. In the 2011-12 SIH, attendance at educational institutions was collected only for members of households aged 15 years and over. This included the type of institution attended, e.g. secondary school or university as well as whether the institution was a public or private institution such as schools run by the Catholic church or other private organisations. Unlike the HES 2009-10 study, no information was collected on the type of educational institution attended by children under 15 years. Therefore, it was only possible to allocate average benefits based on the level of school attended from the SIH (preschool, primary or secondary school), for children under 15. Data was available on whether children attended preschool. Children aged 5 to 12 years (excluding 5 year olds who were attending preschool) were assumed to attend primary school and those 13 or 14 years were assumed to attend secondary school.
Of the $58.0 billion expenditure on education available for allocation to households, $57.0 billion (98%) was allocated.
Health benefits were allocated for acute care institutions, community health services, pharmaceuticals, the Private Health Insurance Rebate (PHIR) and other health benefits (public health services, health research and health administration n.e.c.). Except for the PHIR, these benefits were, in general, allocated to households according to an insurance premium approach. Instead of allocating benefits according to actual use of health services over a relatively short period of time (which implies that benefits increase with short term ill health), members of the SIH population were allocated benefits according to the average utilisation rates for their age, sex and state or territory of residence groups. A higher utilisation rate was applied for people with a disability or long term health condition. This higher utilisation rate was estimated using data on the frequency of general practitioner visits collected in the ABS 2007-08 National Health Survey. In the HES 2009-10 study, all persons aged 15 years and over were asked whether they had a disability or long term health condition. In the 2011-12 study, this information was not available and only persons receiving a disability support pension were allocated the higher utilisation rate.
The PHIR is a rebate on private health insurance costs for members of a registered health fund. In the HES 2009-10 study, the PHIR was allocated to households that recorded expenditure on private health insurance. In the 2011-12 study, amount of expenditure was not available. The PHIR was therefore modelled based on the number of persons in the household that reported having private hospital cover. No information was available on whether households had 'extras only' private health cover. To account for this possibility, a small amount of PHIR was allocated in the 2011-12 study to all households that reported having no private hospital cover.
Another difference between the 2009-10 and 2011-12 studies was use of concession card information to allocate higher pharmaceutical benefits to concession card holders. In the 2009-10 HES study, data was collected on whether any household member, including children, held a concession card. In the 2011-12 study, concession cards were allocated to persons 15 years and over based on the eligibility criteria for government pensions or allowances received. Children under 15 years were allocated a concession card if a person 15 years or over in the income unit had a concession card.
Of $93.0 billion of health expenditure available for allocation to households, $92.3 billion (99%) was allocated.
Social security and welfare benefits
Government benefits were allocated for child care assistance and for all other social security and welfare benefits in kind. Child care assistance was modelled at the income unit level depending on the number of children in formal care, the reported hours of care and the relevant income thresholds and tapers that are applied.
Government expenses relating to other social security and welfare programs, other than expenditure on direct cash payments, child care and residential aged care, were allocated to persons who received social security and welfare benefits. Average STIK for different types of benefit recipients (such as family and child related recipients, age related recipients and disability support recipients) were calculated by dividing the GFS expenses for each category of expenditure by the number of recipients.
Of $33.6 billion of child care and other social security and welfare expenditure available for allocation to households, $31.9 billion (95%) was allocated. Expenditure on residential aged care has been excluded from these totals.
Housing benefits were allocated to households in government rental accommodation according to the estimated value of rental subsidy that they received. The value of the subsidy was calculated as the difference between the estimated market rent for their dwelling if it were to be privately rented, less the actual rent paid by households. In total, $2.3 billion was allocated.
A substantial government expense for housing relates to the purchase of new dwellings for future subsidised rental. These expenses were not allocated amongst SIH households since the study is focussed on STIK received during the reference period.
All state and territory governments provide concessions or rebates on electricity bills to certain households, typically those receiving some government cash benefits or allowances, or holders of some concession cards. In this study, government expenses for electricity concessions were allocated to eligible households according to the value of the concession in their state or territory of residence. In total, $643 million was allocated.
These documents will be presented in a new window.