Household income statistics compiled from the household level are critical to the analysis and modelling that supports the understanding of the socio-economic circumstances of different household types. They are also important in developing and evaluating policies on income support, income distribution and income taxation.
The ABS regularly collects detailed information on household income, expenditure and wealth in its Survey of Income and Housing (SIH) and Household Expenditure Survey (HES). SIH is now conducted on a two yearly basis, with the latest published results relating to 2005-06. HES is now conducted on a six yearly basis, with the latest published results relating to 2003-04. SIH and HES were conducted on an integrated basis for 2003-04 and will be again for future HES cycles, the next being conducted in respect of 2009-10.
The ABS releases summary statistics on household income in Household Income and Income Distribution, Australia (cat. no. 6523.0), with more detailed tables released in cat. no. 6523.0.55.001. Confidentialised Unit Record Files (CURFs) from the surveys are also released, to support comprehensive and detailed analyses by users.
The most restricted concept of income used in income analysis is gross private individual income. While this measure is useful for certain purposes, it is generally of limited use when trying to understand the economic wellbeing of individuals. Published ABS household income analysis, in accordance with international statistical standards, extends the income measure in various ways to include income transfers in cash and in kind, deducts direct and indirect taxes, and looks at equivalised (household size adjusted) household incomes to take account of the economies of scale in shelter and the effects of income sharing on the economic wellbeing of individuals.
This paper further extends the analysis of income to include the rental incomes that can be imputed to flow to people living in homes owned by the occupants and to those people paying subsidised rents. Such imputations are recommended in international statistical standards to allow for more meaningful comparisons of the income circumstances of people living in different tenure circumstances, and to understand changes over time in income levels and income distribution when tenures may be changing over time.
While household sector level estimates of imputed rent have been included in the Australian System of National Accounts (ASNA) for many years, this information paper includes the experimental results of the first study undertaken by the ABS to produce imputed rent estimates at the household level.
The international standards for household income and expenditure statistics account for imputed rent for owner-occupied dwellings in the definitions of household income and expenditure. The standards also recommend that the estimates be separately provided to support different types of analyses.
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 a landlord. Gross imputed rent is added to expenditure, and any housing costs generally borne by a landlord are deducted.
Experimental estimates of the imputed rent for owner-occupied dwellings among private households in Australia are presented in this paper for 2003-04 and 2005-06. Estimates of the imputed benefit to tenants paying subsidised rent and for households occupying their dwelling rent-free are also presented, along with an analysis of the effect of the inclusion of imputed rent on the distribution of income among private households in Australia.