6530.0 - Household Expenditure Survey, Australia: Summary of Results, 2015-16 Quality Declaration 
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 13/09/2017   
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INCOME AND SPENDING


Income, wealth and consumption are key factors that underpin Australians' material standard of living. Considering these factors together gives a more complete picture of economic wellbeing.



DEFINING LOW, MIDDLE AND HIGH INCOME HOUSEHOLDS

Income includes both money and in kind receipts to a household. In this publication:
  • Gross household income means income from all sources before income tax, the Medicare levy and the Medicare levy surcharge are deducted.
  • Disposable income means household income after income tax, the Medicare levy and the Medicare levy surcharge are deducted.
  • Equivalised disposable household income (EDHI) estimates are adjusted by equivalence factors to standardise them for variations in household size and composition, while taking into account the economies of scale that arise from the sharing of dwellings.

Income is not the only resource available to households to support consumption. Households can also draw down on their wealth by using their savings, or increase their debt, such as by using credit cards. In particular, the 1st and 2nd percentiles of the income distribution generally have high wealth and expenditure levels that are not common in the rest of the low income group.

In this section, the spending patterns of households with different income are compared. For this comparison:
  • High income households refers to the 20% of households in the highest equivalised disposable household income quintile.
  • Middle income households refers to the 20% of households in the third equivalised disposable household income quintile.
  • Low income households refers to the 20% of households in the lowest gross income or 18% of households in the lowest equivalised disposable household income quintile, excluding the 1st and 2nd percentiles.

This adjusted low income measure captures genuinely low income households by excluding those with nil or negative income, or income significantly below government pension rates. Such households may be experiencing a temporary economic setback, or have high levels of wealth to support their consumption expenditure compared to other households in the lowest income quintile. This measure is used in the analysis by equivalised disposable household income quintile below.




GROSS HOUSEHOLD INCOME QUINTILES

In 2015-16, low income households spent on average $632 per week on goods and services, compared with $1,302 for middle income households and $2,589 in high income households. This difference in expenditure is partly due to household size: low income households contained, on average 1.5 persons, compared to an average of 2.7 persons in middle income households and 3.4 in high income households. Lone person households made up two thirds of the low income households.


EQUIVALISED DISPOSABLE HOUSEHOLD INCOME QUINTILES

The proportion of spending on various goods and services differs between low, middle and high income groups. For example, food and non-alcoholic beverages accounted for 19% and 18% of household spending on goods and services of low and middle income households, compared to 14% for high income households. In general, the proportion of household income spent on housing, domestic fuel and power, tobacco and communication was also lower for the middle and higher income groups. However, the proportion spent on transport and recreation was higher for the middle and high income groups.


Graph 1 - PROPORTION OF WEEKLY HOUSEHOLD SPENDING ON GOODS AND SERVICES, by adjusted low(a), middle and high EDHI quintiles, 2015-16
Graph - Proportion of weekly household spending on goods and services in Australia by expenditure category by adjusted low, middle and high equivalised disposable household income quintiles in 2015-16
Footnote(s): (a) Excludes the first and second percentiles
Source(s): Household Expenditure Survey, 2015-16