MAIN FEATURES


Introduction
Income change in Australia, 2003-04 to 2007-08
Regional Variations in Average Income, 2007-08
Regional Variations in Income 'Mix', 2007-08

INTRODUCTION This article presents selected data on estimates of personal income for the years 2003-04 to 2007-08, at a range of geographic levels. From 2003-04 to 2007-08 personal income in Australia grew at an average annual rate of 8.7%. Analysing change in sources of personal income over time can provide valuable insight into the nature of regional economies and aspects of the economic well-being of the people who live there. This article begins with an overview of the sources of personal income for Australia, highlighting variations in average annual growth rates between 2003-04 and 2007-08 by source of income. It then analyses regional variations in average income from all sources at the State/Territory and Statistical Division level for 2007-08. The final section of the article examines variations in the 'income mix' between regions (i.e. the proportion each income source contributes to total income) using a number of Statistical Local Areas in Victoria as case studies. While personal income data provide insights into the income in regional economies, wealth is also important to economic well-being, since some people on low incomes may have wealth to draw on such as property and business assets (Australian Social Trends, 2006, cat. no. 4102.0). Conversely, some people on high incomes may also have high levels of debt. This article has a focus on income, but income alone does not necessarily equate with overall economic well-being. Further analysis of regional incomes, including other sources of income (Wages and salary, Investments and Superannuation and annuities) can be undertaken using the data contained in the spreadsheets attached to this article. For more detailed data on persons earning Wage and salary incomes please refer to Wage and Salary Earner Statistics for Small Areas (cat. no. 5673.0.55.003). These income estimates have been compiled using aggregated individual income tax data from the Australian Taxation Office (ATO). The Australian Bureau of Statistics (ABS) wishes to acknowledge the invaluable support of the ATO in compiling these statistics.

INCOME CHANGE IN AUSTRALIA, 2003-04 TO 2007-08

Total Income

Total income (excluding Government pensions and allowances) grew by an average of 8.7% per annum from 2003-04 to 2007-08, and while most sources of income grew in absolute terms over this period, the average annual growth rates for each income source varied considerably (Table 1).

Table 1. TOTAL INCOME, By Source - Australia
	2003-04	2004-05	2005-06	2006-07	2007-08	Average Annual Growth Rate, 2003-04 to 2007-08
Sources	$m	$m	$m	$m	$m	%
Wages & salaries	316 925	340 571	364 505	392 097	442 429	8.7
Own unincorporated business	29 766	30 485	31 028	33 083	36 983	5.6
Investment	34 690	39 352	43 993	53 486	58 627	14.0
Superannuation and annuities (a)	11 002	12 515	14 501	16 577	8 924	n.a.
Other (b)	3 106	3 631	4 274	5 058	5 409	14.9
Total income (b)	395 489	426 552	458 300	500 300	552 373	8.7

(a) Average Annual Growth Rate can not be calculated due to break in series
(b) excludes Government pensions and allowances


Of the three largest sources of income, Investments had the largest average annual growth rate (14.0%). Wages and salaries (the largest income source) grew at 8.7%, while income from Own unincorporated Business (OUB) increased on average by 5.6% per annum between 2003-04 and 2007-08.

A change to taxation legislation, which took effect from 1 July 2007, has resulted in a break in the series in Superannuation income. People aged 60 years and over who receive superannuation income in the form of a lump sum or income stream (such as a pension) from a taxed source, will now receive that income tax free. This means that, if a person has no other income, or their total income is below the tax-free threshold, or any tax payable is mitigated by a tax offset (such as Senior Australian Tax Offset), they will not be required to lodge a tax return. Further information, including comparison with estimates from the ABS Survey of Income and Housing, is contained in the Explanatory Notes of this issue.

Table 2 shows that the three largest sources of income in each year have been Wages and salaries, Investment and income from Own unincorporated business, with Wages and salaries contributing to around 80% of total income.

Table 2. PROPORTION OF TOTAL INCOME, By Source - Australia
	Wages & salaries	Own unincorporated business	Investment	Superannuation & annuities	Other
Financial Year	%	%	%	%	%
2003-04	80.1	7.5	8.8	2.8	0.8
2004-05	79.8	7.1	9.2	2.9	0.9
2005-06	79.5	6.8	9.6	3.2	0.9
2006-07	78.4	6.6	10.7	3.3	1.0
2007-08 (a)	80.1	6.7	10.6	1.6	1.0

(a) Break in series in Superannuation income in 2007-08
Average Income
Graph 1 presents the average income for each personal income source in Australia, 2003-04 to 2007-08.




Average Wages and salaries grew each year from 2003-04 to 2007-08, increasing from $36,889 to $43,921. Average Own unincorporated business (OUB) income also increased, from $16,538 in 2003-04 to $18,962 in 2007-08. However, average Investment income rose from 2003-04 to 2006-07, then fell from $8,139 in 2006-07 to $7,781 in 2007-08. During this period the number of taxpayers reporting investment income increased by 15%.


REGIONAL VARIATIONS IN AVERAGE INCOME, 2007-08

Table 3 presents average income data for 2007-08 for all sources of income, by State and Territory. The Australian Capital Territory recorded the highest average total income of all States and Territories ($52,330), followed by Western Australia ($47,488) and New South Wales ($46,480). In general, capital city Statistical Divisions recorded substantially higher average total incomes than regions outside of capital cities.

Average Wage and salary incomes were highest in the Australian Capital Territory, New South Wales and Western Australia, and like average total income there were marked variations between capital cities and regions outside capital cities. Average income from Own unincorporated business was highest in Western Australia ($24,060), Australian Capital Territory ($22,542) and South Australia ($19,331), with capital city Statistical Divisions recording considerably higher average incomes from this source. Victoria recorded the highest average Investment income in 2007-08, followed by Western Australia and New South Wales. In all cases except Queensland, average income from Investments was higher in capital city regions compared with regions outside of capital cities.

Table 3. AVERAGE INCOME, By source - State and Territory, 2007-08
SLA Name	Wages & salaries	Own unincorporated business	Investment	Superannuation & annuities	Other Income (excl. Government pensions & allowances)	Total Income from all sources (excl. Government pensions & allowances)
	$	$	$	$	$	$
New South Wales	46 513	18 594	7 807	23 347	5 522	46 480
Sydney	50 136	22 909	8 686	23 933	6 745	51 121
Balance of NSW	39 114	12 848	6 125	22 632	3 063	37 674
Victoria	42 782	18 355	8 584	21 794	3 822	43 704
Melbourne	44 837	19 979	9 112	22 457	4 405	46 187
Balance of Vic	36 478	15 401	7 039	20 193	2 121	36 556
Queensland	41 687	17 482	7 113	21 844	3 336	41 911
Brisbane	43 893	21 869	6 997	22 083	3 492	44 768
Balance of QLD	39 586	14 865	7 222	21 623	3 194	39 348
South Australia	39 492	19 331	7 459	24 048	3 010	40 488
Adelaide	40 546	21 864	7 774	24 665	3 218	41 914
Balance of SA	36 302	15 419	6 582	21 826	2 389	36 451
Western Australia	46 199	24 060	8 417	23 388	5 050	47 488
Perth	46 804	26 201	8 742	23 733	5 540	48 588
Balance of WA	44 266	19 633	7 388	22 129	3 299	44 113
Tasmania	36 874	16 675	7 045	20 172	2 860	37 718
Hobart	38 563	19 581	7 610	21 141	2 912	40 022
Balance of Tas	35 541	14 916	6 596	19 020	2 813	35 928
Northern Territory	45 216	19 065	3 120	26 041	2 567	45 848
Darwin	47 298	21 713	3 394	26 885	2 746	48 088
Balance of NT	41 251	12 068	2 452	22 914	2 095	41 393
Australian Capital Territory	51 387	22 542	4 816	30 737	2 639	52 330
Australia	43 921	18 962	7 781	23 191	4 265	44 402

(a) excludes Government pensions and allowances



Map 1 illustrates average total income data for 2007-08 by Statistical Local Area (SLA). Over two-thirds of SLAs in Australia recorded average total incomes lower than the national average ($44,402). The highest average total incomes were recorded in the SLAs surrounding Sydney Harbour (Mosman, Woollahra, Hunters Hill, North Sydney), in Peppermint Grove and Cottesloe in Perth, Ascot and Hamilton in Brisbane and Stonnington - Prahran and Bayside - Brighton in Melbourne. Outside the capital city Statistical Divisions, the SLAs with the highest average total incomes were located in the mining regions of Western Australia (Roebourne, Ashburton, East Pilbara, Port Hedland), in Queensland (Issac - Belyando and Broadsound) and in South Australia (Roxby Downs).



REGIONAL VARIATIONS IN INCOME 'MIX', 2007-08

While many areas share similar average total incomes, the income 'mix' (i.e. the proportion that each income source contributes to total income) may vary substantially between regions. This section of the article explores examples of such variations, using Victoria as a case study.

Table 4 presents the ten Statistical Local Areas (SLAs) in Victoria with the highest average total incomes in 2007-08. As shown in this table, there is variation in the proportions of income from each source, and particularly in the three largest sources; Wages and salaries, Investments, and Own unincorporated business. In the top four SLAs - incorporating the eastern and south-eastern Melbourne suburbs of Prahran, Toorak, Malvern, Kew and Brighton - Wages and salaries constitute less than 60% of total income (this is substantially lower than for both Victoria and Australia). Income from Investments make up between 26% and 31% of total income in these SLAs (compared to 12% for Victoria and 10.6% for Australia). In contrast, the SLA of Port Phillip - West (incorporating the suburbs of Port Melbourne, South Melbourne and Albert Park) has a comparatively lower proportion of total income made up of investment and business income with almost 75% from Wages and salaries. Similarly, the newly developed high density residential area of Southbank-Docklands has over 80% of total income derived from Wages and salaries and less than 2% from Own unincorporated business income.

Table 4. PROPORTION OF TOTAL INCOME, By source - selected SLAs, Victoria, 2007-08
SLA	Average Total Income	Wages & salaries	Own unincorporated business	Superannuation & annuities	Investment	Other
	$	%	%	%	%	%
Stonnington (C) - Prahan	82 910	57.6	7.5	0.9	31.3	2.7
Bayside (C) - Brighton	80 948	57.4	8.3	1.5	30.2	2.5
Stonnington (C) - Malvern	77 316	58.8	9.5	1.3	28.3	2.1
Boroondara (C) - Kew	75 385	59.9	10.2	1.6	26.6	1.8
Port Phillip (C) - West	73 187	74.3	5.8	1.2	16.6	2.1
Boroondara (C) - Hawthorn	71 965	63.5	11.0	1.1	22.4	1.9
Boroondara (C) - Camberwell S.	67 306	66.2	8.6	1.5	21.5	2.2
Melbourne (C) - S'bank - D'lands	62 790	81.2	1.4	0.7	13.7	3.1
Boroondara (C) - Camberwell N.	62 523	63.1	8.3	1.7	25.3	1.7
Bayside (C) - South	61 006	70.6	6.1	1.8	20.0	1.5
Victoria	43 704	79.3	6.4	1.4	12.0	0.9
Australia	44 402	80.1	6.7	1.6	10.6	1.0

Variations in the proportion of income from Wages and salaries, as shown in the top ten high average income SLAs, can also be seen across all SLAs in Victoria (Map 2). Those SLAs where Wages and salaries constituted over 90% of total income in 2007-08 were located in three regions of the Melbourne Statistical Division:

• SLAs on the western and south-western fringes of Melbourne (including Wyndham, Melton). These SLAs incorporate newly developed suburbs experiencing high population growth. For example, the Estimated Resident Population (ERP) of Wyndham - South almost doubled between 30 June 2004 and 30 June 2008, from 11,160 to 22,261. The ERP of Melton - East rose by 50% over the same period, compared with a 6.7% increase for Victoria as a whole (Population by Age and Sex, Regions of Australia, 2007, 2008, cat. no.3235.0). Average total incomes for 2007-08 in these SLAs were generally below the national average of $44,402, ranging from $36,497 in Brimbank - Sunshine to $44,414 in Wyndham - South. Income from Own unincorporated business generally constituted less than 4% of total income in these areas; with Investment income between 3% and 4%;
• SLAs to the north-west of Melbourne, including Whittlesea - South-West and Hume - Broadmeadows, where average total incomes ranged from $35,155 to $38,446 in 2007-08;
• SLAs to the south-east of the Melbourne CBD, including Casey - Cranbourne. This SLA recorded an average total income of $38,180 in 2007-08. Investment income constituted less than 3% of total income; business income less than 5%.

Conversely, those SLAs where Wage and salary income constitute a lower proportion of total income (less than 70%) can be broadly grouped into the following categories:

• inner city SLAs with high average total incomes and a high proportion of Investment income. These include the SLAs within the Cities of Stonnington and Boroondara (incorporating the suburbs of Prahran, Malvern, Kew, Hawthorn and Camberwell). Investment income constitutes between 22% and 31% of total income in these SLAs.
• rural areas in the State's north-west. These include the SLAs of West Wimmera, Yarriamblack - North and Loddon - North. Average total incomes in these SLAs ranged between $32,361 and $39,450 (compared to $43,704 for Victoria as a whole). Income from Own unincorporated business constituted between 31% and 46% of total income in these areas (compared with 6.4% for the State).
• rural areas in the State's south-west, including the SLAs of Corangamite (North, South), Moyne (South, North-East, North-West) and Colac-Ottway (North, South). Average total incomes in these SLAs ranged between $31,542 and $40,906. Income from Own unincorporated business constituted between 16% and 41% of total income in these areas. Investment income contributed between 7% and 18% of total income in these SLAs (compared to 12% for Victoria as a whole).