National income is an indicator of Australians' capacity to purchase goods and services for consumption. It is a determinant of material living standards and is also important for other aspects of progress. A rise in real income means not only a rise in the capacity for current consumption, but also increased ability to accumulate wealth (e.g. houses, machinery, financial assets), which may be used to generate future income and support future consumption.

Real net national disposable income is a key measure of Australia's economic wellbeing. It adjusts gross domestic product (GDP) for income flows between Australia and overseas, for changes in the relative prices of our exports and imports (the terms of trade) and for depreciation of fixed capital used in the production process, as these influences can increase or decrease the capacity of Australia and Australians to buy goods and services. These goods and services include food, clothing, housing, electricity, fuel, health care, transport, communications, recreation, social welfare and culture and education.

During the decade 1999-2000 to 2009-10, Australia's real net national disposable income per capita grew from $37,400 to $45,600, in 2008-09 dollars. Between 1999-2000 and 2008-09, there was an average annual increase in real net national disposable income of 2.4% (peaking at $46,500 in 2008-09), followed by a decrease of 1.9% in to the final year of the decade. The 2009-10 decrease in real net national disposable income mainly reflects the first decline in the terms of trade since 1998-99 (down 4.8%).

For a more in-depth discussion about how national income relates to progress and whether it is improving in Australia, please see the National income chapter in Measures of Australia’s Progress, 2010 (cat. no. 1370.0).