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 2000-01 to 2010-11, Australia's real net national disposable income grew from $38,500 per person to $49,100 per person in 2009-10 dollars. Year-on-year growth of around 2-3% was consistent for most of the decade, until real net national disposable income peaked in 2008-09 at $47,400 per person. This was followed by a 1.3% decline in 2009-10. Australia's real net national disposable income per capita has since recovered, with growth of 4.8% between 2009-10 and 2010-11.

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