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1.8 RELATIONSHIP BETWEEN RECORDED EXPENDITURE AND INCOME


RELATIONSHIP BETWEEN RECORDED EXPENDITURE AND INCOME

The HES provides information about both the income and the expenditure of households, but it would be misleading to regard the difference between average weekly income and the sum of the items of average weekly expenditure as a measure of saving.

First, to be properly understood, the concept of household saving needs to be articulated along with the concept of changes in household wealth or net worth, and all forms of income and expenditure need to be measured and classified consistently with these concepts. The HES does not attempt to do this. For example, the HES and SIH measure of income does not include capital gains or windfall gains such as inheritances. Rather, it focuses on the regular and recurring forms of income; expenditure on current consumption of goods and services; the major component of regular current transfers from households (income tax); and three major items of expenditure which can be regarded as investment expenditure ("mortgage repayments-principal (selected dwelling)", "other capital housing costs" and "superannuation and life insurance"). The three items of investment expenditure are included in the HES because they are a significant regular commitment of many households which have to be financed from regular income.

Second, there are significant timing differences between the different components of income and expenditure collected:

• expenditure does not cover all current payments because expenditure is collected on an acquisitions basis
• income does not cover all current receipts because it is collected on a usual receipts basis
• expenditure does not cover a common reference period because different recall periods are used for different expenditure items
• income does not cover a common reference period because different reference periods are used for different income sources.