INCOME COMPARISON
The data cube ‘SIH-ASNA income comparison’ which is available in the 'Downloads' tab of this publication, provides the detailed comparison tables between the Survey of Income and Housing (SIH) and the Australian System of National Accounts (ASNA) estimates for the period 2003–04 to 2015–16.
SCOPE AND MEASUREMENT DIFFERENCES
There are a number of scope and measurement differences that can be quantified between the SIH and ASNA household income systems. After adjusting for these differences, the alignment of the two estimates is improved. For example, in 2015-16, the adjusted SIH income was 94% of the adjusted ASNA income ($1,009 billion and $1,068 billion, respectively).
Graph 1 - COMPARISON OF SIH AND ASNA HOUSEHOLD INCOME AFTER ADJUSTMENT FOR SCOPE AND MEASUREMENT DIFFERENCES
Source(s): SIH, ASNA
The main quantifiable differences, with estimates for 2015-16, are:
- SIH includes superannuation and life insurance pensions received as regular income by households ($41 billion) whereas ASNA does not consider these pensions as income but as transactions in the financial account, and therefore a reduction of household assets captured in the balance sheet. However, ASNA includes as income the imputed interest measures, which includes the investment income of insurance enterprises, superannuation funds and investment funds attributable to policyholders, as well as imputed interest on government unfunded superannuation arrangements ($98 billion);
- SIH deducts a much broader range of housing and business expenses than the ASNA, resulting in differences in the measurement of income from housing and operations of unincorporated enterprises ($114 billion in total);
- SIH includes financial support from persons not living in the household ($9 billion), which are measured on a net basis within each sector in the ASNA, thus assumed to net out to zero across all households;
- ASNA includes income not collected in SIH, such as employers' social contributions, i.e. the compulsory contributions payable by employers to secure social benefits, such as superannuation and workers' compensation premiums ($86 billion), non-life insurance claims ($40 billion) and financial intermediation services indirectly measured (FISIM) on interest received ($19 billion);
- ASNA includes income received by non-profit institutions serving households (NPISHs) such as churches and charities. Government transfers to NPISHs can be quantified ($35 billion), but other income received such as transfers from the corporate sector, investment income and income from the sale of goods and services cannot be separately identified. NPISHs are estimated to contribute up to 4% to total ASNA household sector income; and
- Some government benefits are treated as social transfers in kind in the SIH, but as a social assistance benefits (i.e. cash payments) in the ASNA ($10 billion).
After all adjustments, some scope differences remain which cannot be easily quantified. SIH excludes people living in non-private dwellings, and in very remote regions of Australia. It is estimated that this excludes approximately 3% of people living in Australia. Additionally, ASNA estimates include some benefits not relatable to the private households in scope of SIH, such as expenditure on institutional aged care.
COMPARISON OF INCOME DATA ITEMS
This section compares selected individual sources of income collected in SIH with items published in the ASNA, or source data available for those items. The underlying data and adjustments made to improve alignment between the two data sources are available in the SIH-ASNA Income comparison data cube available from the 'Downloads' tab of this publication.
Graph 2 - SIH AS A PERCENTAGE OF ASNA FOR SELECTED INCOME DATA ITEMS
Source(s): SIH, ASNA
Employee income
The largest component of household income is employee income. To align with ASNA measurements, an adjustment of $8 billion was applied to SIH data to remove workers' compensation received directly through the payroll. After this adjustment SIH and ASNA results were almost the same (both just over $720 billion).
Government pensions and allowances income
In 2015-16, Australian government pensions and allowances in the SIH were $100 billion, which was lower (82%) than the equivalent ASNA estimate ($123 billion).
SIH collects detailed government pensions and allowances paid to Australian residents in private dwellings by type of payment. The SIH estimates do not include pensions and allowances received by people living in non-private dwellings (e.g. nursing homes), nor by people living in very remote areas of Australia.
The related item in the ASNA is 'social assistance benefits' sourced from ABS government finance statistics which are compiled from data provided by individual government agencies to the Australian Government Department of Finance, and state government treasuries. The scope of these payments is broader than those collected in the SIH.
To better align with SIH, an adjustment has been made to the ASNA data to remove the Private Health Insurance Rebate and the Child Care Rebate which are treated as social transfers in kind in the SIH. However, adjustments have not been made for the inclusion of some education related payments made to parents to offset the cost of educating their children, or any one-off or irregular payments made by state and Commonwealth agencies that are included in ASNA but unlikely to be captured in the SIH.
Net business income
The SIH collects the profit or loss from unincorporated businesses from working sole proprietors and partners. The income earned by silent partners and non-working beneficiaries of businesses and other trusts is collected separately and included in investment income. To align with the ASNA concept of unincorporated business income, these sources of income, along with non-residential property income and royalties have been included in net business income for comparison purposes.
In the ASNA, income from production by unincorporated enterprises is referred to as gross mixed income (GMI), and is measured as income from production less intermediate consumption. Intermediate consumption consists of the value of the goods and services consumed as inputs to the production process. Other costs normally expensed in business accounts, such as interest payable on loans and depreciation are not deducted. The ASNA estimates of GMI are compiled mainly from the business tax returns of sole proprietors, partnerships and private trusts. Royalties and income from non-residential property are included in GMI.
The SIH income from the selected items that relate to net business income was $59 billion in 2015-16, compared to the ASNA estimate of $99 billion after adjusting GMI to remove business expenses not deducted. The higher income in ASNA may be partly due to the different classification between the ASNA and the SIH of some businesses that have a trust underlying their business operations, with the trustee listed as an incorporated entity. In the ASNA, these businesses would be classified as unincorporated enterprises whereas in the SIH, the business owners may report these businesses as incorporated enterprises (and their income included in dividend income).
Interest income
In the SIH, interest income from a range of financial accounts is collected. For the 'current' year, respondents are asked to estimate their expected interest income in the financial year. For the 'previous' year, respondents are asked to report actual interest earned.
In the ASNA, interest estimates are derived from a large number of data sources by constructing matrices of the flows of interest receivable and payable between the various sectors and subsectors of the economy. However, in the ASNA, interest receivable by financial institutions excludes payments by borrowers for the services provided by the financial institutions, and interest payable by financial institutions is lower than it would otherwise be to cover the costs of financial services provided to depositors. This service component is referred to as financial intermediation services indirectly measured (FISIM) and has been deducted from the ASNA interest income from deposits for comparison with SIH data.
The ASNA estimate of interest income, less FISIM, is substantially higher than the SIH ($17 billion compared to $12 billion in 2015-16). The higher ASNA estimate of interest can be partly explained by the inclusion of interest received by unincorporated enterprises and NPISHs, and the possible over estimation of interest received by ASNA including interest linked to mortgage offset accounts.
Personal taxation data published by the ATO provide another measure of interest earned by persons in Australia. This information is the aggregated total of gross interest income reported on individual tax returns. Like the SIH interest item, income from cash management trusts and interest earned by unincorporated businesses are reported separately. The ATO interest statistic does not include interest received by persons not required to complete an individual tax return.
As shown in Graph 3, the SIH and ATO estimates align relatively closely. SIH estimates based on 'previous' year reporting (2004–05, 2006–07, 2008–09, 2010–11 and 2012-13) are closer to the ATO estimates than the estimates based on 'current' year reporting. This suggests that survey respondents provide a conservative estimate of expected interest in the SIH for the 'current' year, but a more accurate reporting of this income when actual interest earned is known.
Graph 3 - INTEREST
Source(s): SIH, ASNA, ATO
Dividend income
In 2015-16, SIH dividends were 86% of the ASNA estimate ($28 billion and $33 billion, respectively). SIH dividends include dividends from publicly listed companies and public unit trusts (such as equity, cash management and property trusts), as well as dividends paid to households from their own incorporated companies. In SIH 2007–08, improvements were made to the questionnaire to separately collect information about public unit trusts and other trusts. From SIH 2013–14 onwards, franking information was imputed from ATO data rather than being collected from respondents for publicly listed companies. Both of these changes significantly improved the coverage of dividend income.
The ASNA estimates of dividends are based on data provided by the ATO. These differ from the SIH estimates as they do not include franking credits. Some of the difference can also be attributed to the scope exclusions in SIH and the inclusion of dividends received by NPISHs in the ASNA estimate.
Residential rental income
SIH income from residential property is consistently higher than the ASNA estimate ($77 billion and $58 billion, respectively in 2015-16). In the SIH, net profit or loss from investment properties is collected from respondents and the value of housing services accruing to owner-occupiers is imputed for the primary residence. Both estimates exclude all costs that would be borne by a landlord.
In 2015–16, a new methodology for imputing the housing value for owner-occupied dwellings was implemented in the SIH with estimates from 2003–04 recompiled using the new methodology. The new methodology for household level imputed rent estimates are explained in Estimates of Imputed Rent, Australia, 2015–16 (cat. no. 6525.0). The information paper also quantifies the impact of the new methodology compared to the experimental method implemented for 2013-14 SIH.
In the ASNA, income from residential property is presented as gross operating surplus (GOS) on dwellings owned by persons. This income includes actual rental income as well as an imputed value of housing services accruing to owner-occupiers from both their principal residence and any additional residences such as holiday homes. GOS is calculated net of intermediate consumption costs, e.g. repairs and maintenance, the imputed service charges on finance and insurance, and body corporate fees.
To align with the SIH measurement of income from residential property, interest payable, water and sewerage costs and part of house insurance premiums have been deducted from the ASNA estimate of GOS. However, no estimate of depreciation has been deducted from the ASNA estimates.
Social transfers in kind
Social transfers in kind (STIK) have been modelled in the SIH since 2011–12. They are also available for the years that fiscal incidence studies are conducted using data from the Household Expenditure Survey (2003–04, 2009–10 and 2015-16). The SIH and ASNA estimates of STIK both use ABS Government Finance Statistics (GFS) as the main source for valuing the cost to government of the provision of STIK.
The SIH STIK allocations have been between 2% and 6% higher than those published in the ASNA in each of the years that have been compared.
REFERENCES
Australian Bureau of Statistics (ABS) 2017, Australian System of National Accounts, 2016-17, cat. no. 5204.0
ABS 2016, Australian System of National Accounts: Concepts, Sources and Methods, cat. no. 5216.0
ATO (Australian Taxation Office) 2018, Taxation Statistics 2015-16: Individuals
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