HOUSEHOLD ECONOMIC WELLBEING AND PROGRESS

Household economic wellbeing is largely determined by a household's command over its economic resources and, in turn, its ability to maintain a minimum material standard of living. Household economic resources provide the means through which households fund their consumption of goods and services. It relates to progress by measuring the acquisition of goods and services used for the direct satisfaction of individual or collective wants and needs. The economic resources of income (both in the form of receipts and as the direct provision by government of goods and services, such as free or subsidised healthcare) and wealth, and the availability of both to fund consumption, can be used to measure household economic wellbeing and progress.

While there is no widely accepted single measure of household economic wellbeing, for most people the level of income that they and other family members receive is a major determinant of household economic resources. People living in households with low income may be less likely to have sufficient economic resources to support an acceptable standard of household economic wellbeing. While income is usually received by individuals, it is normally shared between partners in a couple relationship, with dependent children and with other members of the household. Moreover, when people share a dwelling, they enjoy the economies of scale in the provision of that housing, which is usually the largest single cost of living expense incurred by householders.

Therefore, the headline indicator of whether household economic wellbeing in Australia is getting better is average real equivalised disposable (after income tax) household weekly income of low income households. This measure is available every two years. Measures of household income are equivalised to take account of differing household size and composition, the sharing of income between household members and the economies of scale in sharing a dwelling. A more comprehensive 'final' income measure, that takes account of government goods and services provided free or at a subsidised rate, and of indirect taxes such as GST, is only available every six years.

Income is not the only economic resource available to people within a household. Household wealth is also an important economic resource and household net worth is included in this section as a supplementary measure of household economic wellbeing and progress. Like income, household wealth extends consumption possibilities. This is particularly relevant to households which are said to be 'asset rich and income poor.' For example, households with retired members may have low income levels but relatively high levels of wealth through the ownership of their home and other investments.

As both income and wealth are used as proxies for household consumption of goods and services, a more direct measure of household consumption is included in this section. This measure approximates household consumption by using real final consumption expenditure per capita of the household sector in the national accounts. Real final household sector consumption expenditure includes not only the consumption of householders, but also consumption of non-profit institutions serving households, such as churches, social and sporting clubs and associations etc. This measure excludes the free or subsidised consumption of services by households, such as for health and education. For the bottom 40% of the income distribution, these subsidised goods and services increase after tax incomes, and their consumption possibilities, by about 50%.

For a full list of definitions, please see the Household economic wellbeing glossary.