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CHAPTER 1 - INTRODUCTION

Widely used macro-economic measures of the economy such as the National Accounts provide vital information on the size and structure of the economy. However they do not provide information on the distribution of income and wealth or of individual access to goods and services. These issues are widely recognised as important in understanding material living standards, and have been of increasing focus over recent years. Issues of distribution and access are also central to targeting, and improving the efficiency of both social and economic policies.

The Australian Bureau of Statistics (ABS) publishes high quality aggregate (macro) and distributional measures (micro) of household economic well-being. The macro estimates are published in the Australian System of National Accounts. The national accounts provides up-to-date estimates for total household income and wealth, however metrics produced from the national accounts such as household income per capita do not give any information about how available resources are distributed. The ABS household distributional estimates are published in the suite of ABS publications derived from the ABS Survey of Income and Housing and Household Expenditure Survey (micro data).

Due to differences in concepts, definitions and statistical practices, micro data may yield results that diverge from national accounts aggregates, and therefore distributional measures created using micro data sources alone may not be consistent with the aggregate figures in the national accounts (macro data). This publication contains results that integrate the ABS micro and macro sources and produce distributional information of household income, consumption and wealth, consistent with the Australian System of National Accounts (ASNA) concepts and aggregates.


INTERNATIONAL AND DOMESTIC DRIVERS

The report of the Commission on the Measurement of Economic Performance and Social Progress (September 2009), the “Stiglitz-Sen-Fitoussi Commission”, stressed the importance of a greater focus on the household to provide better measures of people’s well-being. The report emphasised the importance of formulating metrics that presented the distributional aspects of households such as median income and income quintiles consistent with the System of National Accounts. Further, in response to the 2008-09 global financial crisis, the Group of Twenty (G-20) Finance Ministers and Central Bank Governors reiterated the importance of providing distributional information alongside aggregate figures. In Australia, the importance of distributional analysis of household aggregates such as saving and wealth for economic and social policy has been recognised in addresses made by the Reserve Bank of Australia (RBA).

In early 2011, Australia, along with 25 other countries, took part in the Organisation for Economic Cooperation and Development (OECD) and Eurostat (European Union statistical commission) expert group for measuring disparities in a national accounts framework. The role of the expert group was to devise robust and internationally comparable methodology to allow the integration of distributional information using existing micro information on different household groups that are consistent with the System of National Accounts (SNA) concepts and aggregates.

In August 2013, the ABS released an Information Paper: Australian National Accounts, Distribution of Household Income, Consumption and Wealth, 2009-10 (cat. no. 5204.0.55.009) based on (and expanding upon) the work undertaken by the ABS with the OECD-Eurostat Expert Group. This publication distributed estimates for income, consumption and wealth from the Australian System of National Accounts (ASNA), 2011-12 (cat. no. 5204.0) for the year 2009-10 for five household distributional indicators using data from the ABS Survey of Income and Housing (SIH) and the ABS Household Expenditure Survey (HES).

In October 2014, the ABS released the first issue of the Australian National Accounts, Distribution of Household Income, Consumption and Wealth, 2003-04 to 2011-12 (cat. no. 5204.0.55.011).The publication was an extension of the August 2013 information paper in that it included a biennial time series from 2003-04 to 2010-12 of the household distributional data set based on the Australian System of National Accounts, 2012-13 (cat. no. 5204.0). The current publication is the second issue of cat. no. 5204.0.55.011, it contains a biennial time series from 2003-04 to 2013-14 plus an estimate for 2014-15 of the household distributional data set based on the Australian System of National Accounts, 2014-15 (cat. no. 5204.0).


RESULTS

Current price household estimates for income, consumption and wealth from the Australian System of National Accounts, 2014-15 (cat. no. 5204.0), for biennial years starting from 2003-04 to 2013-14 and 2014-15, were distributed for five household distributional indicators using data from the ABS Survey of Income and Housing and ABS Household Expenditure Survey. Estimates for non-profit institutions serving households (NPISH) included in the household sector in the 5204.0 estimates were removed from the household national accounts in this release.

Tables produced in this release are:

• Distribution of the Australian System of National Accounts (ASNA) household income, consumption and wealth components based on household distributional indicators derived from ABS household surveys. The household distributional indicators presented are main source of income; equivalised income quintiles; household composition; age of reference person in household; and equivalised net worth quintiles, for biennial years starting from 2003-04 to 2013-14 and 2014-15 (electronic table 1).

• Analysis of the ASNA household distributions, for individual years:
  • income, consumption and wealth components, share of total household, by household distributional indicator (electronic table 2);
  • income, consumption and wealth components, per household, by household distributional indicator (electronic table 3); and
  • income, consumption and wealth components, ratio of the average of all households, by household distributional indicator (electronic table 4).

• Analysis of the ASNA household distributions, time series:
  • change of household gross disposable income, contribution of income items, per household, by household distributional indicator (electronic table 5);
  • change of household total final consumption expenditure, contribution of consumption items, per household, by household distributional indicator (electronic table 6);
  • change of household actual individual consumption, contribution of final consumption items and social transfers in kind, per household, by household distributional indicator (electronic table 7);
  • change of household net worth, contribution of wealth items, per household, by household distributional indicator (electronic table 8);
  • household income, consumption and wealth, contribution to growth, by household distributional indicator (electronic table 9); and
  • household income, consumption and wealth, growth per household, by household distributional indicator (electronic table 10).

• Impact of redistribution measures by government and non-profit institutions serving households, by household distributional indicator (electronic table 11).

• Chapter 1 : Introduction.
• Chapter 2: Analysis, Income and Net Worth Quintiles, 2014-15 - this chapter provides graphical presentation and some commentary of the 2014-15 components and aggregates of the ASNA income, consumption and wealth by equivalised household income and net worth quintiles.
• Chapter 3: Time Series Analysis - this chapter provides analysis of the time series (2003-04 to 2014-15) of the ASNA household distributional data set. The analysis is broken into the five broad categories of income; redistribution measures by government and non-profit institutions serving households; consumption; gross saving; and wealth.
• Chapter 4: Methodology - this chapter presents summary of the methodology used to create individual data points and some improvements to this methodology; summary of the steps undertaken to enable the presentation of the data points in a time series, including a discussion on demographic shifts; and the strengths and weaknesses of the data presented in the publication.
• Chapter 5: Feasibility Study, Income and Wealth, 2013-14 - this chapter presents the results of the feasibility study comparing 2013-14 distributional data for income, wealth and social transfers in kind using actual Survey of Income and Housing data for 2013-14 versus modelled micro distributional data using linear interpolation (extrapolation). The study was undertaken to determine the robustness of the methodology used to extrapolate the 2014-15 estimates of the distributional data.
• Chapter 6: Conclusion.