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1287.0 - Standards for Income Variables, 2010  
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 15/03/2010   
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1. The income standards documentation provides a reference for the use of income variables as well as the associated conceptual definitions and related issues. It presents statistical standards for the following variables: 'Total income', 'Equivalised total household income', 'Sources of income' and 'Main source of income'. The standards include the endorsed concepts, definitions, income measures, classifications, question modules and outputs. Government, academic and private sector organisations are encouraged to implement these standards in their own collections, thereby improving the comparability of data from different sources.

2. These standards replace Standards for Cash income statistics (cat. no. 1287.0) published in 1997.


MEASURES OF ECONOMIC WELLBEING

3. For most people, household income is the most important determinant of their economic wellbeing. People living in low income households are more likely to have insufficient economic resources to support a minimum material standard of living. However income is not the only economic resource available to people. Households with substantial reserves of wealth can use them to finance a higher standard of living, at least for a period of time, by running down bank balances, selling assets or borrowing against assets.

4. The financial needs of a household can also influence its economic wellbeing. The financial needs of a household are directly affected by the size and composition of the household, and a range of other factors. For example, some households have more expensive medical needs than others. Some are in regions with higher prices than others, such as housing costs; but on the other hand, regions with higher housing costs may be closer to employment opportunities or to medical, educational and other services.


HOUSEHOLD INCOME STATISTICS

5. Household income statistics produced from specialised income surveys are critical to the analysis and modelling that supports the understanding of the socioeconomic circumstances of different household types, as well as changes in income distribution over time and differences between countries. They are also essential in developing and evaluating government policies on income support, income distribution and income taxation.

6. Income is an important explanatory variable in the Census of Population and Housing and in other household collections concerned with social wellbeing such as health, education and working life. Information on income can contribute to the understanding of a wide range of social issues by enabling an examination of the relationships between economic wellbeing and the outcomes in other aspects of people's lives.


INCOME DATA SOURCES

7. The ABS regularly conducts specialised income surveys, such as the Survey of Income and Housing and the Household Expenditure Survey, that serve to provide detailed data on the type and value of economic resources acquired and consumed by people. In recent years, the collection of wealth and financial stress data have been integrated into this program.

8. Many of the other household collections conducted by the ABS provide measures of income and main source of income, as indicators of a person's or household's economic wellbeing. Employee earnings, a component of income for employed wage and salary earners, is also collected in the ABS Surveys of 'Employee Earnings, Benefits and Trade Union Membership' and 'Average Weekly Earnings'.

9. The five yearly Census of Population and Housing provides information on the distribution of income among individuals, families and households in Australia. Because of its complete coverage of the population, Census income data can be useful in assessing income levels of people in small geographic areas or small groups that may be of special interest e.g. one-parent families or recent immigrants to Australia. However income data in the Census is currently collected in ranges using a single question, limiting the usefulness of the data and the extent of analysis possible.

10. Australian income data is also available from the:

  • Household, Income and Labour Dynamics (HILDA) survey. A longitudinal survey, sponsored by the Department of Families, Housing, Community Services and Indigenous Affairs, that aims to describe how household income and patterns of engagement in paid work of household members change over time.
  • Australian Taxation Office (ATO). Statistical data on the numbers of taxpayers by levels of taxable income are published in the annual ATO publication 'Taxation Statistics'. The ATO also produces a 1% sample file of confidentialised individual tax records. Personal income tax data is used by the ABS to present an annual series of wage and salary earners by Statistical Local Areas (<abs.gov.au> see ABS Home, Themes, Regional).
  • Other administrative data collections. Administrative data collections within the Departments of Families, Housing, Community Services and Indigenous Affairs; Education, Employment and Workplace Relations; and Veterans' Affairs include both official statistics, including those published in annual reports and statistical publications, and internal analytical and research collections. Administrative data collections only contain sufficient data to administer payments, and as such, limited data are available on the specific characteristics and circumstances or total resources available to income support recipients.
  • Australian System of National Accounts (ASNA). The ASNA incorporates a wide range of information about the Australian economy and its components, including statistics on the total income accruing to the household sector and its major elements (ABS cat. no 5204.0).

INTERNATIONAL STANDARDS

11. The international standards for micro level statistics on household income are provided in Resolution I of the Seventeenth International Conference of Labour Statisticians (ICLS): Household Income and Expenditure Statistics (2004). The ICLS definition has been used as the starting point for developing the Australian conceptual definition of income set out in these standards.

12. There is no standard international classification for types of income. However the ICLS stated that:
    "Income should be classified by types of source, at as detailed a level as relevant and, to the extent possible, by means of payment so that users would have the option of including or excluding in-kind receipts e.g. to facilitate international comparisons. Wages and salaries packaging that is negotiated at the discretion of the employee and is to be delivered as goods and services should be considered as monetary income and not in-kind income" (ICLS Resolution I, para 87).
13. Income estimates are also compiled at the macro level, such as the ASNA. The objective of macro level statistics is to measure the economic wellbeing of the nation as a whole through flows such as production, income, consumption, expenditures, investment, savings etc between sectors. The household sector is one such sector and the total income accruing to households is described in relation to other aggregate components of this system. At the macro level, the main framework developed for compilation and analysis of income estimates is the United Nations System of National Accounts (SNA). The SNA is a comprehensive system for expressing in statistical terms most elements of a country's economy, including the total income accruing to households. In SNA 2008, disposable household income is described conceptually as:
    "... the maximum amount that a household or other unit can afford to spend on consumption goods or services during the accounting period without having to finance its expenditures by reducing its cash, by disposing of other financial or non-financial assets or by increasing its liabilities" (SNA 2008, 8.25).

STRUCTURE OF STANDARDS DOCUMENTATION

14. The documentation for the ABS income standards is organised as follows:

Conceptual framework for income
Standard variable - Total income
Standard variable - Equivalised total household income
Standard variable - Sources of income
Standard variable - Main source of income

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