ESTIMATES OF PERSONAL INCOME FOR SMALL AREAS


Personal Income in Australia

States and Territories - Income

States and Territories - Persons by Income Source


Estimates of income using data from the Australian Taxation Office were released in Estimates of Personal Income for Small Areas (cat. no. 6524.0.55.002) in December 2008. This release contained data for each year from 2001-02 to 2005-06, and included estimates for Local Government Areas and Statistical Local Areas.

These data have been released on the regional boundaries that applied in each year, and so caution should be exercised in making comparisons between years for regions where boundaries have changed. The following provides a summary of the data for Australia and the states and territories.


Personal Income in Australia

From 2001-02 to 2005-06, Australia experienced significant economic prosperity. Gross Domestic Product (GDP) in current price terms rose by 31.5%, from $735,714 million in 2001-02 to $967,454 million in 2005-06 (Australian System of National Accounts, cat. no. 5204.0). The real net national disposable income per capita grew by 4.2% per year (Australian System of National Accounts, cat. no. 5204.0). Further, the average annual national unemployment rate dropped from 6.4% in 2001 to 5.0% in 2006 (Australian Social Trends, 2008, cat. no. 4102.0).

This national economic prosperity is also reflected in the growth of personal income during this period. The sources of personal income included in these data are Wages and salaries, Own unincorporated business (OUB), Investment, Superannuation and annuities and Other, however the data do not include income from Government pensions and allowances. Australia's average annual growth rate for each income source is presented in Table 1. Over the five year period, income from Investments had the highest growth rate (13.2%) followed by Superannuation and annuities (11.3%). However, growth in OUB income was by far the lowest at 2.7%.

Table 1. ESTIMATED PERSONAL INCOME, Average Annual Growth Rate, 2001-02 to 2005-06
	Wages & Salaries	Own Unincorporated Business	Investment	Superannuation & Annuity	Other Income (a)	Total Income (a)
	%	%	%	%	%	%
	6.9	2.7	13.2	11.3	11.0	7.3
(a) excluding Government Pensions & Allowances

Despite the strong growth rate in Investment income, income from Wages and salaries and OUB together accounted for over 86% of income in each year (Table 2).

Table 2. PROPORTION OF TOTAL INCOME BY INCOME SOURCE, 2001-02 to 2005-06
	Wages & Salaries	Own Unincorporated Business	Investment	Superannuation & Annuity	Other Income (a)
	%	%	%	%	%
2001-02	80.3	8.2	7.9	2.8	0.8
2002-03	80.1	7.8	8.6	2.8	0.8
2003-04	79.8	7.7	8.9	2.8	0.8
2004-05	79.5	7.3	9.4	3.0	0.9
2005-06	79.2	6.9	9.8	3.2	0.9
(a) excluding Government Pensions & Allowances

While these data show a gradual decline in the proportion of total income from both Wages and salaries and OUB, it is useful to look at the relationship between these two sources of income, as they can both be thought of as 'earned' income. That is, an individual earns income either from employment (for which they earn a wage or salary) or they earn an income from working in their OUB.

Individuals reporting OUB income are generally operating as sole traders or in partnerships. OUB income includes:

• net income (or loss) from business
• distributions from partnerships
• distributions from trusts (primary production)
• net personal services income

OUB income does not include persons in their own incorporated business who tend to pay themselves a salary, as their income is counted under Wage and salary income.

Table 3 shows that over the period 2001-02 to 2005-06 there was a gradual shift away from income from OUB (as a proportion of total 'earned' income) towards income from Wages and salaries.

Table 3. PROPORTIONAL CHANGE IN SELECTED INCOME SOURCES, 2001-02 to 2005-06
	W&S Income	OUB Income	W&S + OUB	W&S	OUB
	$m	$m	$m	%	%
2001-02	272,378.8	27,773.7	300,152.6	90.7	9.3
2002-03	289,389.0	28,053.2	317,442.2	91.2	8.8
2003-04	310,248.8	29,765.7	340,014.5	91.2	8.8
2004-05	333,399.4	30,481.5	363,880.9	91.6	8.4
2005-06	355,868.0	30,937.3	386,805.4	92.0	8.0

The following sections of this article explore income from Wages and salaries and OUB in more detail, including which states/territories have experienced growth in Wage and salary income, and where income from OUB has decreased. Queensland and Western Australia are shown to have had strong growth in both sources of income, while South Australia has experienced declining income from OUB.
States and Territories - Income

From 2001-02 to 2005-06 income from Wages and salaries increased in all states and territories (Table 4). However there was considerable variation in the amount of growth. For example, in the Northern Territory income from Wages and salaries rose by $816.2 million, compared to New South Wales ($25,448.9 million) where the largest growth was recorded.

Table 4. WAGE AND SALARY INCOME ($m), 2001-02 to 2005-06 (a)
	2001-02	2002-03	2003-04	2004-05	2005-06	Change 2001-02 to 2005-06
	$m	$m	$m	$m	$m	$m
New South Wales	97,288.1	102,488.8	109,329.6	116,531.4	122,737.1	25,448.9
Victoria	69,324.5	73,468.5	77,875.5	82,975.1	87,743.4	18,418.9
Queensland	46,924.1	50,632.5	55,323.2	60,399.7	66,144.4	19,220.3
South Australia	18,729.1	19,903.5	21,241.6	22,608.2	23,868.1	5,139.0
Western Australia	25,840.9	27,719.9	30,194.7	33,246.4	36,749.0	10,908.1
Tasmania	5,305.9	5,644.2	6,073.7	6,497.0	6,935.9	1,629.9
Northern Territory	2,788.4	2,901.4	3,088.9	3,405.4	3,604.6	816.2
Australian Capital Territory	6,114.3	6,524.4	7,000.4	7,624.2	7,988.0	1,873.7
(a) excludes Other Territories and unknown postcodes

In terms of the rate of growth, income in all states grew, with Western Australia (9.2%) and Queensland (9.0%) exhibiting the strongest growth during the period (Figure 1). Despite its large growth in actual dollar terms, New South Wales experienced the lowest average annual growth rate at 6.0%. The national average was 6.9%.

Table 5 shows changes in OUB income between 2001-02 and 2005-06 for each state and territory. Unlike in Wages and salaries, there was a decline in OUB in one state.

While OUB income was higher in 2005-06 than 2001-02 in all states and territories except South Australia, there was some year to year variation in several other states. In South Australia, OUB income fell during the period by -$398 million (Table 5).

Table 5. OWN UNINCORPORATED BUSINESS INCOME ($m), 2001-02 to 2005-06 (a)
	2001-02	2002-03	2003-04	2004-05	2005-06	Change 2001-02 to 2005-06
	$m	$m	$m	$m	$m	$m
New South Wales	9,244.7	9,315.9	9,961.6	9,989.3	10,021.2	776.5
Victoria	6,529.5	6,119.7	6,548.3	6,775.3	6,816.0	286.5
Queensland	4,945.5	5,096.5	5,684.5	5,988.3	6,305.7	1,360.2
South Australia	2,758.3	2,790.1	2,589.6	2,485.1	2,360.2	-398.0
Western Australia	3,145.8	3,532.3	3,713.3	3,937.4	4,139.4	993.6
Tasmania	624.7	636.8	681.4	706.1	664.5	39.9
Northern Territory	157.1	159.6	172.1	190.5	196.3	39.2
Australian Capital Territory	363.9	395.2	409.3	405.2	429.3	65.4
(a) excludes Other Territories and unknown postcodes

Figure 2 shows that the fastest growing states in OUB income were Queensland and Western Australia, with average annual growth rates of 6.3% and 7.1% respectively. In contrast, South Australia's growth rate was -3.8%.

States and Territories - Persons by Income Source

It has already been identified that there has been a shift in the proportion of income received from OUB to Wages and salaries. One of the advantages of these data are that we can examine the number of persons reporting each source of income. This can help us to determine if the shift is also evident in the labour force.

Table 6 shows that the states recording large increases in the value of Wage and salary income also had strong growth in the number of persons reporting income from Wages and salaries (Queensland 3.9% and Western Australia 3.5%).

Table 6. PERSONS REPORTING INCOME FROM WAGES AND SALARIES, 2001-02 to 2005-06 (a)
	2001-02	2002-03	2003-04	2004-05	2005-06	Change 2001-02 to 2005-06	Average annual growth rate
	psns	psns	psns	psns	psns	psns	%
New South Wales	2,693,112	2,736,316	2,795,862	2,850,850	2,889,743	196,631	1.8
Victoria	2,051,940	2,097,823	2,136,804	2,184,505	2,230,569	178,629	2.1
Queensland	1,521,601	1,574,888	1,644,951	1,711,519	1,772,041	250,440	3.9
South Australia	612,747	625,354	638,050	651,329	663,196	50,449	2.0
Western Australia	796,977	816,887	845,608	878,270	913,953	116,976	3.5
Tasmania	184,575	189,164	195,235	201,578	205,904	21,329	2.8
Northern Territory	81,364	81,246	82,531	85,765	87,628	6,264	1.9
Australian Capital Territory	158,054	161,368	165,300	168,228	172,566	14,512	2.2

(a) excludes Other Territories and unknown postcodes


On the other hand, South Australia (which had a negative growth rate in OUB income) had a significant fall in the number of persons receiving income from OUB (Table 7).

Table 7. PERSONS REPORTING INCOME FROM OWN UNINCORPORATED BUSINESS, 2001-02 to 2005-06 (a)
	2001-02	2002-03	2003-04	2004-05	2005-06	Change 2001-02 to 2005-06	Average annual growth rate
	psns	psns	psns	psns	psns	psns	%
New South Wales	437,535	439,079	448,657	444,188	440,839	3,304	0.2
Victoria	324,712	322,882	331,012	330,469	330,626	5,914	0.5
Queensland	271,475	273,920	283,396	284,205	283,100	11,625	1.1
South Australia	115,840	115,846	116,035	112,486	109,763	-6,077	-1.3
Western Australia	151,700	154,357	156,499	155,164	155,499	3,799	0.6
Tasmania	33,007	33,136	34,284	33,772	32,974	-33	0.0
Northern Territory	9,536	9,377	9,542	9,578	9,606	70	0.2
Australian Capital Territory	17,098	17,390	17,405	16,899	16,954	-144	-0.2

(a) excludes Other Territories and unknown postcodes

Data from the Labour Force Survey showed a loss of Own account workers (workers who operate their own economic enterprise and hire no employees) in South Australia during this period, most of whom were employed in the agriculture industry. The number of Own account workers in the agricultural industry in South Australia fell from 17,400 in 2001-02 to 9,500 in 2005-06 (Labour Force, Australia, Detailed, Quarterly, cat. no. 6291.0.55.003).