CHAPTER 2 — ANALYSIS AND COMMENTS: INCOME AND WEALTH QUINTILES


This chapter presents graphs and tables with accompanying text for the distributions of the ASNA household income, consumption and wealth estimates by household distributional indicators, equivalised household income and net worth quintiles. The chapter uses the ASNA term 'total household' throughout the text, total household has an equivalent term in the ABS micro publications, which is 'all households'. Included in the chapter are ratios of the total value of the highest to the lowest quintile, the ratios are a measure of the spread of income, consumption and wealth across the population. The ratios are a summary indicator of inequality.


INCOME

Table 2.1 below presents the 2009-10 values of the ASNA total household income components that were distributed into equivalised income and wealth quintiles. The income graphs below are based on the detail distributional information published in electronic tables 1, 2 and 8.

Table 2.1, ASNA total household income (excluding NPISH), 2009-10
Income	$m
Compensation of employees	614 582
Gross mixed income	99 862
Gross operating surplus - dwellings owned by persons	91 215
Property income receivable	124 354
Social Assistance benefits	100 841
Interest payable	74 857
Income tax payable	130 100
Social transfers in kind	178 864
Superannuation benefits received (memorandum item)	62 186
Gross disposable income	822 069
Adjusted disposable income	1 000 933

(a) Compensation of Employees

The total remuneration, in cash or in kind, payable by an enterprise to an employee in return for work done by the employee during the accounting period. It is further classified into two sub-components: wages and salaries; and employers’ social contributions (payments by employers which are intended to secure for their employees the entitlement to social benefits, such as employer superannuation contributions).

In 2009-10, total household compensation of employees (COE) was $614,582m . COE for households in the highest income and net worth quintile was 47% and 26% of total household COE, by comparison for households in the lowest income and net worth quintile it was 3% and 11% of total household COE. There was an increase in the share of total household COE by households in each income quintile from the lowest to the highest. The ratio of the value of the highest to lowest quintile was 16.3 and 2.3 for income and net worth for COE.


(b) Gross Mixed Income

The surplus or deficit accruing from production by unincorporated enterprises. It includes elements of both compensation of employees and operating surplus (returns on capital inputs).

In 2009-10, total household gross mixed income (GMI) was $99,862m. GMI for households in the highest income and net worth quintile was 54% and 59% of total household GMI, by comparison for households in the lowest income and net worth quintile it was 7% and 6% of total household GMI. There was an increase in the share of total household GMI by households in each quintile from the lowest to the highest for both income and net worth quintiles. The ratio of the value of the highest to lowest quintile was 7.7 and 9.7 for income and net worth for GMI.


(c) Gross Operating Surplus - Dwellings Owned by Persons

Dwelling "GOS" is the surplus resulting from deduction of intermediate inputs from output. Output is the sum of actual and imputed rent on dwellings owned by households. Intermediate inputs are the goods and services consumed in the process of production (for example maintenance costs and body corporate fees). These inputs exclude property income payments such as interest.

In 2009-10, total household gross operating surplus, dwellings owned by persons (GOS Dwellings) was $91,215m. GOS Dwellings for households in the highest income and net worth quintile was 33% of total household GOS Dwellings in both the highest income and net worth quintiles. By comparison for households in the lowest income and net worth quintiles it was 10% and 6% of total household GOS dwellings. There was an increase in the share of total household GOS Dwellings by households in each quintile from the lowest to the highest, for both income and net worth quintiles. The ratio of the value of the highest to lowest quintile was 3.2 and 5.6 for income and net worth for GOS Dwellings.
(d) Property Income Receivable

Property income receivable is the income receivable by the owners of a financial asset or a tangible non-produced asset in return for providing funds. Household property income mainly consists of dividend and interest income earned directly and through superannuation and insurance reserves.

In 2009-10, total household property income was $124,354m. Property income for households in the highest income and net worth quintile was 54% and 67% of total household property income, by comparison for households in the lowest income and net worth quintile it was 5% and 2% of total household property income. There was an increase in the share of total household property income by households in each quintile from the lowest to the highest for both income and net worth quintiles, with the increase being particular steep from the fourth to the highest quintile. The ratio of the value of the highest to lowest quintile was 10.5 and 31.2 for income and net worth quintiles for property income receivable.


(e) Social Assistance Benefits

Includes current transfers to persons from general government in return for which no services are rendered or goods supplied. Principal components include: scholarships; maternity, sickness and unemployment benefits; family allowances; and widows', age, invalid and repatriation pensions.

In 2009-10, total household social assistance benefits received was $100,841m. Social assistance benefits received by households in the lowest income and net worth quintile was 37% and 30% of total household social assistance benefits, by comparison for households in the highest income and net worth quintile it was 4% and 14% of total household social assistance benefits. There was a decrease in the share of total household social assistance benefits received by households in each income quintile from the lowest to the highest, the pattern for the net worth quintiles is not as clear. For example, households in the lowest net worth quintile received the highest share of total household social assistance benefits, and the fourth net worth quintile received the next highest share of the total, 22%. The ratio of the value of the highest to lowest quintile was 0.1 and 0.5 for income and net worth quintiles for social assistance benefits.


(f) Interest Payable

Household interest payable mainly consists of interest payable on loans on dwellings (mortgages).

In 2009-10, total household interest payable was $74,857m. Household interest payable in the highest income and net worth quintile was 40% and 31% of total household interest payable, by comparison for households in the lowest income and net worth quintile it was 10% and 4% of total household interest payable. There was an increase in the share of total household interest payable by households in each income quintile from the lowest to the highest, the pattern for the net worth quintiles is not as clear. The ratio of the value of the highest to lowest quintile was 4.1 and 7.2 for income and net worth quintiles for interest payable.


(g) Income Tax Payable


In 2009-10, total household income tax payable was $130,100m. Household income tax payable in the highest income and net worth quintile was 58% and 34% of total household income tax payable, by comparison for households in the lowest income and net worth quintile it was 1% and 8% of total household income tax payable. There was an increase in the share of total household income tax payable by households in each income quintile from the lowest to the highest, with the increase being particular steep from the fourth to the highest quintile. The pattern is not as clear for the net worth quintiles, for example households in the second and third net worth quintiles each paid 18% of total household income tax payable. The ratio of the value of the highest to lowest quintile was 44.1 and 4.0 for income and net worth quintiles for income tax payable.
(h) Social Transfers in Kind

Social transfers in kind are individual goods and services provided to individual households by general government units and non-profit institutions either free or at prices that are not economically significant, examples are education and health services.

In 2009-10, total household social transfers in kind (STiK) was $178,864m. STiK for households in the lowest income and net worth quintile was 28% and 24% of total household STiK, by comparison for households in the highest income and net worth quintile it was 12% and 18% of total household STiK. There was a decrease in the share of total household STiK by households in each income quintile from the lowest to the highest, the pattern for the net worth quintiles is not as clear. For example, households in the lowest net worth quintile received the highest share of total household STiK and households in the fourth net worth quintile received the next highest share of the total, 21%. The ratio of the value of the highest to lowest quintile was 0.4 and 0.7 for income and net worth quintiles for social transfers in kind.


(i) Superannuation Benefits Received (memorandum item)

Superannuation benefits received are recorded in this information paper as a memorandum item of the household income account. Superannuation benefits received in the ASNA are treated as financial transactions of households and are not recorded as income, instead they are recorded in the financial account and balance sheet.

In 2009-10, total household superannuation benefits received was $62,186m. Households in the highest income and net worth quintile received 47% and 78% of total household superannuation benefits, by comparison households in the lowest income and net worth quintile received 3% and 2% of total household superannuation benefits. There was an increase in the share of total household superannuation benefits received by households in each quintile from the lowest to the highest for both income and net worth quintiles, with the increase being particularly steep from the fourth to the highest net worth quintile. The ratio of the value of the highest to lowest quintile was 16.8 and 34.8 for income and net worth quintiles for superannuation benefits received.


(j) Disposable Income



In 2009-10, total household gross and adjusted disposable income was $822,069m and $1,000,933m respectively. The difference between the two income measures is that adjusted disposable income includes social transfers in kind and gross disposable income excludes these transfers. Gross and adjusted disposable income in the highest income quintile was 41% and 36% of total household gross and adjusted disposable income respectively, by comparison for households in the lowest income quintile it was 8% and 12% of the total household gross and adjusted disposable income. There was an increase in the share of total household gross and adjusted disposable income by households in each income quintile from the lowest to the highest quintiles. The ratio of the value of the highest to lowest income quintiles was 4.9 and 3.0 for gross and adjusted disposable income respectively.

Gross and adjusted disposable income in the highest net worth quintile was 34% and 31% of total household gross and adjusted disposable income respectively, by comparison for households in the lowest income quintile it was 12% and 14% of the total household gross and adjusted disposable income. There was an increase in the share of total household gross and adjusted disposable income by households in each net worth quintile from the lowest to the highest quintiles. The ratio of the value of the highest to lowest net worth quintile was 2.8 and 2.2 for gross and adjusted disposable income respectively.
(k) Impact of redistribution measures by government and non-profit institution serving household (NPISH)

Table 2.2 and the graphs below presents total household gross disposable income (GDI) and the share of total household GDI in a step by step format, each step includes an income receivable or payable component that illustrate the impact of the redistribution of income by government and NPISH. The graphs below are based on the detail distributional information published in electronic table 8.

• Step 1: gross disposable income (GDI) before the addition of income from government social assistance benefits (cash) and the payment of income tax;
• Step 2: step 1 GDI less income taxes payable;
• Step 3: step 2 GDI plus income from government social assistance benefits (cash);
• Step 4: step 3 GDI plus government and NPISH payments to household from social transfers in kind (STiK).

Table 2.2, ASNA total household gross disposable income, impact of government and NPISH redistribution - 2009-10
Steps	$m
GDI (before tax and social assistance benefits)	855 298
GDI (after tax and before social assistance benefits)	721 228
GDI (after tax and social assistance benefits)	822 069
GDI (after tax, social assistance benefits and social transfers in kind)	1 000 933

For households in the lowest, second and third income quintiles, the share of total household income increased with each step. For households in the highest income quintile, the share of total household income decreased in each step. For households in the fourth income quintile, the share of total household income increased by step 2 (payment of income taxes), and declined in step 3 and 4 (transfer payments in cash and kind).

For households in the lowest net worth quintile, the share of total household income increased with each step. For households in the highest net worth quintile, the total share of total household income increased by step 2 (payment of income taxes), and declined in step 3 and 4 (transfer payments in cash and kind). For households in the fourth net worth quintile, the share of total household income decreased by step 2 (payment of income taxes), and increased in step 3 and 4 (transfer payments in cash and kind).
CONSUMPTION AND SAVING

Table 2.3 below presents the 2009-10 values of the ASNA income and consumption components, and gross saving, by income and net worth quintiles, to assist the interpretability of the equivalised income and net worth quintile graphs presented below. The consumption and gross saving graphs below are based on the detail distributional information published in electronic tables 1, 2 and 5.

Table 2.3, ASNA household income and consumption (excluding NPISH) - 2009-10
Income and Consumption, $m			Lowest	Second	Third	Fourth	Highest	Total
Income quintiles
	Gross disposable income		68 286	102 205	134 438	182 582	334 559	822 069
	Household final consumption expenditure		85 926	101 911	121 424	149 728	217 428	676 416
		Health	4 365	7 098	5 540	7 143	8 777	32 922
	Social transfers in kind		49 858	45 589	34 310	26 854	22 253	178 864
		Health	18 593	20 472	15 230	13 209	12 453	79 958
	Adjusted disposable income		118 144	147 794	168 748	209 436	356 812	1 000 933
	Gross saving		-17 639	294	13 014	32 853	117 131	145 654
Net worth quintiles
	Gross disposable income		100 158	135 935	140 823	165 196	279 957	822 069
	Household final consumption expenditure		92 478	107 704	128 394	143 529	204 311	676 416
		Health	3 461	4 714	8 206	7 131	9 411	32 922
	Social transfers in kind		43 257	30 891	35 479	37 427	31 810	178 864
		Health	13 756	11 734	15 694	19 430	19 344	79 958
	Adjusted disposable income		143 415	166 826	176 302	202 622	311 766	1 000 933
	Gross saving		7 681	28 231	12 429	21 667	75 646	145 654

(a) Consumption

In 2009-10, total household final consumption expenditure (HFCE) was $676,416m. HFCE for households in the highest income and net worth quintile was 32% and 30% of total HFCE, by comparison for households in the lowest income and net worth quintile it was 13% and 14% of total HFCE. There was an increase in the share of total HFCE by in each quintile from the lowest to the highest for both income and net worth quintiles. The ratio of the value of the highest to lowest quintile was 2.5 and 2.2 for income and net worth quintiles for HFCE.


In 2009-10, gross disposable income (GDI) of households in the lowest and highest income quintile was $68,286m and $334,559m respectively. Households in the lowest income quintile consumed approximately 60% of their GDI, $40,869, on key expenditure components, while households in the highest income quintile consumed 25%, $84,420, of their GDI on the same key expenditure components. The key expenditure components included: rent and other dwelling services, 30% and 12%, food 19% and 5%, and transport 11% and 8%, respectively, for the lowest and highest income quintiles.

In 2009-10, adjusted disposable income (ADI) of households in the lowest and highest income quintile was $118,144m and $356,812m respectively. Households in the lowest income quintile consumed 19% of their ADI in health services, of this 4% was in direct payments and 15% in transfers in kind. In comparison, households in the highest income quintile consumed 6% of their ADI in health services, of this 2% was in direct payments and 4% in transfers in kind. There was a decrease in the consumption of health plus STiK health as a share of ADI by households in each income quintile from the lowest to the highest.

In 2009-10, adjusted disposable income (ADI) of households in the lowest and highest net worth quintile was $143,415m and $311,766m respectively. People in the lowest net worth quintile consumed 12% of their ADI in health services, of this 2% was in direct payments and 10% in transfers in kind. In comparison, households in the highest net worth quintile consumed 9% of their ADI in health services, of this 3% was in direct payments and 6% in transfers in kind. The pattern of health services consumption in the net worth quintiles is not clear, for example, households in the third net worth quintile consumed largest share of health plus STiK health, 14% of ADI, followed by people in the fourth net worth quintile, 13% of ADI.


(b) Gross saving


In 2009-10, total household gross saving was $145,653m. Gross saving for households in the highest income and net worth quintile was 80% and 52% of total household gross saving. The total share of gross savings by households in the second, third and fourth income quintiles was 32% of total household gross saving, in terms of net worth, gross savings by households in the second, third and fourth quintiles was 43% of total household gross saving. By comparison, households in the lowest income quintile were dis-savers, with -12% of total household gross saving, and households in the lowest net worth quintile saved 5% of total household gross saving.


WEALTH

Table 2.4 below presents the 2009-10 values of the ASNA total household wealth components that were distributed into equivalised income and wealth quintiles. The wealth graphs below are based on the detail distributional information published in electronic tables 1 and 2.

Table 2.4, ASNA total household wealth (excluding NPISH) - 2009-10
Wealth		$m
Dwellings and residential land		4 161 271
Financial assets		2 822 905
	Currency and deposits	599 360
	Shares and other equity	610 860
	Superannuation and insurance reserves	1 523 313
Loan liabilities		1 395 554
Net Worth		6 311 373

(a) Residential Dwelling and Land



In 2009-10, the value of total household residential dwelling and land was $4,161,271m. The share of total household residential dwelling and land held by households in the highest income and net worth quintile was 37% and 50%, by comparison 10% and 1% of total household residential dwelling and land was held by households in the lowest income and net worth quintile. There was an increase in the share of total household residential dwelling and land held by households in each quintile from the lowest to the highest for both income and net worth quintiles. The ratio of the value of the highest to lowest quintile was 3.7 and 75.5 for income and net worth quintiles for residential dwelling and land.


(b) Financial Assets- Currency and Deposits, Shares and Other Equity, and Superannuation and Insurance Reserves




In 2009-10, total household holdings of, currency and deposits was $599,360m , shares and other equity was $610,860m, and superannuation and insurance reserve was $1,523,133m, these financial assets accounted for 97% of total household financial assets. Households in the highest income and net worth quintile held 37% and 54% of total household currency and deposits, 71% and 89% of total household shares and other equity, and 50% and 63% of total household superannuation and insurance reserves, respectively. Households in the lowest income and net worth quintile held 11% and 3% of total household currency and deposits, 4% and 0% of total household shares and other equity, and 5% and 2% of total household superannuation and insurance reserves, respectively. The ratio of the value of the highest to lowest quintile was 7.6 and 37.6 for income and net worth quintiles for total financial assets.


(c) Liabilities - Loans

In 2009-10, total household loan liabilities was $1,395,554m, majority of the household loans were mortgage loans. Loan liabilities of households in the highest income and net worth quintile was 39% and 30% of total household loan liabilities, by comparison loan liabilities of households in the lowest income and net worth quintile was 10% and 4% of total household loan liabilities. The ratio of the value of the highest to lowest quintile was 3.9 and 7.2 for income and net worth quintiles for loan liabilities.


(d) Net Worth


In 2009-10, total household net worth was $6,311,373. Net worth of households in the highest income and net worth quintile was 44% and 66% of total household net worth, by comparison net worth of households in the lowest income and net worth quintile was 9% and 0% of total household net worth. There was an increase in the share of total household net worth by households in each quintile from the lowest to the highest for both income and net worth quintiles. The ratio of the value of the highest to lowest quintile was 4.7 and 196.3 for income and net worth quintiles for net worth.


INCOME, CONSUMPTION AND WEALTH - RATIOS

Appendix 1 provides ratios of the highest to lowest income and net worth quintiles for the ASNA income, consumption and wealth components.