NATIONAL DISPOSABLE INCOME

Real net national disposable income is a key measure of national 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.

Australia experienced real per capita income growth throughout the past two decades (with the exception of the period of economic downturn in the early 1990s), averaging 2.1% growth per year in real net national disposable income per capita over the 20-year period to 2008-09. Between 1998-99 and 2008-09, growth averaged 2.6% per year, considerably higher than the average growth experienced over the previous decade (1.5%). The lower growth rate in the earlier period was partly the result of negative growth during the recession of 1990-1992.