HOUSEHOLD ECONOMIC RESOURCES


INTRODUCTION

The economic wellbeing and material living standards of individuals and families is largely determined by their command over economic resources. People's income and reserves of wealth provide access to many of the goods and services consumed in daily life. This chapter provides indicators of the level and distribution of household economic resources.


INCOME AND INCOME DISTRIBUTION

In November 2008 average weekly total earnings (trend series) for all persons in NSW were $915.40, similar to the 2007 figure, $913.20. For males the November 2008 figure was $1092.20, and for females the corresponding figure was $740.10. Some of this discrepancy can be explained in terms of the higher incidence of women working part-time.

Household income and wealth are major determinants of household economic resources. A frequently used measure of income is equivalised disposable household income, which is disposable household income adjusted for household size. Equivalised income takes into account the greater income needs of larger households and the economies of scale achieved when people live together, and enables comparisons to be made between different types of households.

While the mean equivalised disposable household income in NSW in 2005-06 was $660 per week, the median (i.e. the midpoint when all people are ranked in ascending order of household income) was lower at $565. The distribution of income is skewed; a relatively small number of people have very high household incomes and a large number of people have relatively lower household incomes. This is illustrated in the graph below.

WEALTH DISTRIBUTION

Wealth is a net concept and measures the extent to which the value of household assets exceeds the value of their liabilities. In 2005-06, the average value of household assets in NSW was $741,700. The corresponding value of average household liabilities was $109,300, resulting in mean household net worth of $632,400.

While the mean household net worth in NSW in 2005-06 was $632,400, the median was substantially lower at $381,000. As with income, this difference reflects the asymmetric distribution of wealth between households, where a relatively small proportion of households have high net worth and a relatively large number of households have lower net worth.

In 2005-06 property assets were the largest household asset and accounted for nearly 60% of total average household assets in NSW. Owner occupied dwellings accounted for 46% ($340,500) of total average household assets and 55% ($59,900) of total average household liabilities.

Other property (eg. motor vehicles, household goods) accounted for 13% ($99,300) of total average household assets and had a net value of $64,500. Balances in superannuation averaged $83,600 per household across all households in NSW and made up 11% of total average household assets.

HOUSEHOLD INCOME

Low, middle and high income groups are formed by ranking people according to their equivalised disposable household income and then dividing them into ten equally sized groups or deciles. The low income group is then made up of people with equivalised disposable household incomes in the second and third deciles; the middle income group is people in the fifth and sixth deciles; and the high income group is people in the ninth and tenth deciles.

After converting mean equivalised disposable household income into 2005-06 dollars, the average income of the low and middle income groups increased by $69 and $114 respectively (about 25% in each case) from 1997-98 to 2005-06, while the high income groups' income increased by $293 (29%).

DATA SOURCES

Australian National Accounts, State Accounts (cat. no. 5220.0)

Average Weekly Earnings, Australia (cat. no. 6302.0)

Consumer Price Index, Australia (cat. no. 6401.0)

Household Expenditure Survey, Australia (cat. no. 6530.0)

Household Income and Income Distribution, Australia, Detailed Tables (cat. no. 6523.0)

Household Wealth and Wealth Distribution, Australia (cat. no. 6554.0)

Labour Price Index, Australia (cat. no. 6345.0)

Retirement and Retirement Intentions, Australia (cat. no. 6238.0)