Trends in spatial income inequality, 1996 to 2001

AMP.NATSEM Income and Wealth Report Issue 8. September 2004

Money, money, money – is this a rich man’s world? Contents

1 Where are the most affluent areas? 1

2 The good news: Strong growth across all of Australia 4

3 The cities vs the bush 6

4 A profile of difference 7 Work rich: work poor? Profession and industry Educational divides

5 Housing: A nation of homeowners 11

6 Indigenous Australians 12

7 Conclusions 13 Introduction

Many of us empathise with the line in Midnight Oil’s song, This time, the report divides postcodes into ten equal Read about it, where, ‘The rich get richer, the poor get groups according to gross income to reveal: the picture’. Surveys reveal that Australians believe the • where the most affluent and poorest areas of Australia gap between rich and poor is growing. But is this just a are located perception or is it based on fact? • who has benefited from the past few years of strong In this issue of the AMP.NATSEM Income and Wealth Report, economic growth and falling unemployment we compare the income of households by postcode based on figures from the 1996 and 2001 Census to determine • how household incomes in 2001 compare with those who exactly is getting richer, and whether any groups have of 1996 been left behind. • which regions have fared well and which ones haven’t This report follows on from the first AMP.NATSEM Report during the five years between 1996 and 2001, and on ‘Trends in Taxable Income’ which examined taxation • income, education, employment and homeownership statistics by postcode to determine the most affluent and differences between the Top 10% and Bottom 10%, the poorest areas of the nation. with some surprising results! 1. Where are the most affluent areas?

Surveys suggest that Australians believe ‘the gap between rich and poor is growing’.1 At a national level, the latest data from the Australian Bureau of Statistics (ABS) shows that the average weekly income received by the most affluent one-fifth of the population increased by 17% between 1995-96 and 2000-01.2 The average incomes of the least affluent one-fifth of the population increased by 7% over the same period.

Thus, at a national level, the after-tax incomes of the poor have been increasing – but not as rapidly as those of middle and high income families.

But these results are for Australia as a whole and tell us nothing about whether incomes in particular regions of Australia have been rising much more rapidly than in other regions.

The first AMP.NATSEM report – ‘Trends in taxable income’ examined taxation statistics by postcode and reported that the gap between richer and poorer postcodes appeared to have increased between 1994-95 and 1998-99. And earlier work by NATSEM using Census data also suggested growing spatial income inequality between 1991 and 1996.3

But have these trends continued or reversed in the past few years of strong economic growth and falling unemployment?

1 AVERAGE EQUIVALISED DISPOSABLE INCOME DECILE POSTAL AREAS

2 To locate the most affluent and the poorest areas of The highest income areas of are mostly in Australia, we divided all postcodes into 10 equal groups – , predominantly inner west suburbs close to the termed ‘deciles’ – based on their equivalent gross income Brisbane River, such as Kenmore, Red Hill, Toowong and (see Technical Notes). The 10% of Australians living in the Ashgrove. Dysart, a coal mining town in central Queensland, poorest postcodes are in the ‘Bottom 10%’ and the 10% also ranks in the Top 10%. living in the most affluent postcodes are in the ‘Top 10%’. In , the Top 10% suburbs were located The Top 10% are overwhelmingly clustered in the cities mainly in affluent areas of , such as Peppermint Grove – and particularly in and (see Map). and Claremont. Mining regions in the Pilbara also ranked But there are some high income areas outside the cities, highly. such as the mining towns of Mt Tom Price, Roxby Downs, The high income areas of are clustered Newman and Peak Downs Mine. The Top 10% also in North and the inner suburbs. Outside the includes military base areas such as Duntroon, Singleton metropolitan area, the copper and uranium mining and and Bandiana. processing town of Roxby Downs makes the Top 10%. In , the Top 10% cluster in the inner city, There are no postcodes in that scale the peaks north shore and eastern suburbs. For example, Lane Cove, to make it into the Top 10%. Manly, Rose Bay and Mosman are some of the areas that make it into the Top 10%. There are also some high There are a large number of postcodes in the Australian income areas south of Botany Bay, surrounding Cronulla. Capital Territory which rank in the Top 10%. Many of these are in the inner parts of the city, but Top 10%ers In , the Top 10% are mainly in metropolitan also include postcodes within the larger areas of Melbourne and particularly the inner suburbs. The areas Gungahlin, Belconnen, Weston Creek and Tuggeranong. surrounding Port Phillip Bay also have clusters of high Areas surrounding the ACT, such as the Hall region and income postal areas. Postcodes that rank in the Top 10% Jerrabomberra, also climbed into the Top 10% group. include Brighton, Williamstown, Carlton North, Toorak and Canterbury. There is only one postcode in the in the Top 10%, Alyangula. This is a mining area located on Groote Eylandt, off the western coast of Arnhem Land.

3 Perhaps this dollar gap increase underlies the perception among Australians that the gap between rich and poor is growing.

2. The good news: Strong growth across all of Australia

The years from 1996 to 2001 saw strong economic growth Figure 1 Percentage increases in average household and falling unemployment – and this translated into major income between 1996 and 2001, by postcode income income increases for the average Australian household of decile 26.1% during the five year period.4 30 29 Did average incomes in the more affluent areas increase 28.9 more rapidly than in less affluent areas? 28 28.4 27 27.3 The Bottom 10% enjoyed a 23.2% increase in their average 26 26.3 26.1 26.2 household incomes over the five years. This was only 25 25.6 24 marginally less than the 24.2% growth experienced by the 24.2 23.8 23 Top 10% (see Figure 1). 23.2 22 The strongest income growth, however, was experienced 21 by the next 30% of postcodes just below the Top 10%. Average household income percentage increase 20 Bottom Decile 2 Decile 3 Decile 4 Decile 5 Decile 6 Decile 7 Decile 8 Decile 9Top 10% Income growth for postcodes in deciles 7, 8 and 9 ranged 10% from 27.3% to 28.9%. Overall, income grew by about Note: These are increases in equivalent household gross income, 27% for the most affluent half of postcodes and slightly with each postal area allocated to one of the deciles as described less than this, at about 25%, for the least affluent half of in Technical Notes. postcodes. The dollar increases in average income, however, were There thus seems to have been growing income inequality much greater in the higher income areas. The Bottom 10% between rich and poor areas of Australia during the five received average gross household incomes of $840 a week years between 1996 and 2001. However, the differences by 2001, up by $158 a week on the $682 received in 1996 in growth rates between more and less affluent areas (see Figure 2). Average incomes in the Top 10% in 2001 were not large, and on average all of the deciles enjoyed were more than double this, at $1,848 a week. This was significant income increases. an increase of $360 a week on the $1,488 received by the Top 10% in 1996.

In both 1996 and 2001, average incomes in the Top 10% were 2.2 times those of the Bottom 10%, so the proportionate gap between the richest and poorest areas did not grow. But the dollar gap between the average incomes of the Bottom 10% and Top 10% increased from $806 to $1,008. Perhaps this dollar gap increase underlies the perception among Australians that the gap between rich and poor is growing.

4 Figure 2 Average household incomes by postcode Figure 3 Proportion of households in selected gross income decile in 1996 and 2001 income ranges in Top 10% and Bottom 10% postcodes

$2,000 The Top 10% < $15,600 10% $1,800 1996 2001 1848 $1,600

$1,400 1544 1488 $104,000 + 23% 1386 $1,200 1288 1202 1213 1141 $1,000 1078 1075 1010 1003 942 952 $800 905 840 853 $15,600-$51,999 31% 761 804 $600 682 $52,000-$103,999 36%

Average weekly household income $400

$200

$0 The Bottom 10% Bottom Decile Decile Decile Decile Decile Decile Decile Decile Top 10% 2 3 4 5 6 7 8 9 10% < $15,600 20% $104,000 + 3% Note: These are levels of equivalent household gross income, with each postal area allocated to one of the deciles as described in Technical Notes. $52,000-$103,999 18%

One of the factors producing the much higher incomes of

the Top 10% is that almost one-quarter of the households $15,600-$51,999 59% in these postcodes had gross incomes above $104,000 a year (see Figure 3). And the Top 10% postcodes also had a very low proportion of low income households, with only one-tenth of households receiving less than $15,600 a year.

In contrast, only three in every 100 households living within the Bottom 10% postcodes enjoyed incomes above $104,000 a year. One-fifth received low incomes of less than $15,600 a year.

5 Farmers also did well, with even higher increases recorded for rural areas in New South Wales, Victoria, and South Australia.

3. The cities vs the bush

The five years to 2001 were particularly good years for The lowest increases in incomes among the states and those living in New South Wales and Victoria, with average territories were in the Northern Territory and Tasmania. household incomes increasing by more than 26% in these Regions with the smallest change in average income were states. Not far behind was the Australian Capital Territory, in regional and rural Western Australia, rural areas in the recovering from the downturn in the mid 1990s and notching Northern Territory and and Darwin. up a 24.4% increase in average incomes. And South The final row in Table 1 shows the results for all of Australia, Australia also picked up from its performance in previous and suggests that both the capital cities and rural areas did years, recording a 24.3% growth in average incomes. The particularly well during the five years to 2001. other four states and territories lagged the national average, with Queenslanders’ average incomes growing by 21.8% and the other three coming in at between 18.1% and 19.5%. Was the boom confined to the cities or more widely based? In the cities, Sydneysiders and Melbournians did particularly well, experiencing growth rates of 26% plus. But some farmers and miners also did well, with even higher increases recorded for rural areas in New South Wales, Victoria, and South Australia.

Table 1 Estimated percentage change in average household income, by state and region, 1996 to 2001

Capital Major urban Regional Rural Rural All cities areas towns towns areas regions

%%%%%%

New South Wales 26.9 25.6 21.1 23.1 27.8 26.2 Victoria 26.4 24.4 26.2 27.6 28.5 26.7 Queensland 22.8 19.8 18.3 19.5 19.2 21.8 South Australia 24.1 23.1 28.3 28.3 24.3 Western Australia 21.2 14.8 15.9 10.2 19.5 Tasmania 18.5 16.6 18.4 20.8 18.3 Northern Territory 14.9 18.2 28.3 16.4 18.1 Australian Capital Territory 24.4 24.4

Australia 25.0 22.5 20.1 22.8 23.9 24.5

Note: These are changes in nominal household gross income (not equivalent gross household income as in other tables). A very small number of the residents of the ACT live outside the capital city: we have included this group in the ‘all regions’ column but not in the other columns.

6 4. A profile of difference

What are some of the factors underlying Work rich: Work poor? the very different income profiles of rich This difference in age structures is one of the many factors and poor areas? underlying the very different labour force profiles of the Top 10% and Bottom 10% postcodes – but it does not Favourable demographics are one explanation: Top 10% appear to be a major cause of the differences in labour postcodes contained fewer children and older Australians. force profiles. In Top 10% postcodes, only 30% of all those Consequently, proportionately more people in the Top 10% aged 15 years and over were out of the labour force and postcodes were of prime working age and thus potentially only 3% were unemployed (see Figure 5). In Bottom 10% able to work in highly paid jobs. While 33% of all people postcodes, a striking 48% were out of the labour force in the Top 10% postcodes were aged 25-44 years. This and 6% were unemployed. On average, therefore, in compared with only 26% in the Bottom 10% postcodes Bottom 10% postcodes more than half of all adults did not (figure 4). have a job – compared with only one-third of all adults in Figure 4 Age distribution by postcode income decile Top 10% postcodes. in 2001 Figure 5 Labour force status of persons aged 15 years

Top 10% 17 14 33 23 12 and over by postcode income decile in 2001

Decile 9 19 15 31 23 12 Top 10% 67 3 30

Decile 8 20 14 31 23 11 Decile 9 64 4 32

Decile 7 21 14 31 22 11 Decile 8 64 4 33

Decile 6 22 15 30 22 11 Decile 7 62 4 34

Decile 5 22 14 30 23 12 Decile 6 60 5 35

Decile 5 59 5 36 Decile 4 22 14 29 23 13

Decile 4 57 5 38 Decile 3 22 13 28 23 14 Decile 3 53 5 41 Decile 2 22 13 27 24 15 Decile 2 50 6 44 Bottom 10% 22 12 26 25 15 Bottom 10% 46 6 48 0% 20% 40% 60% 80% 100% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% < 15 years 15-24 years 25-44 years 45-64 years 65 yrs and over Employed Unemployed Not in the Labour Force

7 The fall in unemployment was greater among the lower income postcodes.

One key issue for many Australians is whether the fall in So, Australia as a whole was working harder by 2001, with unemployment between 1996 and 2001 was concentrated the percentage of Australians aged 15 years and over who in higher or lower income postcodes. were out of the labour force dropping from about 38% to 37% between 1996 and 2001. Unemployment is clearly linked to income, as shown in Figure 6, with the rate of unemployment among adults The final and surprising outcome was that, on some aged 15 years and over falling steadily from 6.3% for measures, the division of Australia into work-rich areas the Bottom 10% postcodes to 3.1% for the Top 10% and work-poor areas intensified slightly, despite the positive postcodes in 2001. Figure 6 suggests that the fall in impact of the fall in unemployment. Thus, in 1996 about unemployment was greater among the lower income 44 in every 100 adults living in a Bottom 10% postcode postcodes, with the unemployment rate for the Bottom had a job – and by 2001 this had increased to 46 in every 10% postcodes falling by a substantial 1.5 percentage 100. But for Top 10% postcodes, about 64 in every 100 points from 7.8% in 1996 to 6.3% in 2001. adults had a job in 1996 and by 2001 this had increased to about 67 in every 100. This meant that by 2001, the number of unemployed Australians living in Bottom 10% postcodes had fallen from Figure 7 Employment rates by postcode income decile 102,000 to 88,000. in 1996 and 2001

65

Figure 6 Unemployment rates by postcode income 66.8 1996 2001 64.5

decile in 1996 and 2001 63.9 63.5

60 62.2 61.8

8 60.7 59.9 59.2 58.9

1996 2001 58.4 7.8 55 56.5 56.3 7 7.4 54.5 6.9 53.5 6 50 6.3 50.5 50.3 6.1 6.0 5.9 49.0 5.8 45 5 5.3 46.1 5.2 5.0 5.0 44.1 4.7 4.7 4 % of persons aged 15+ who are employed 4.3 40 4.1 Bottom Decile 2 Decile 3 Decile 4 Decile 5 Decile 6 Decile 7 Decile 8 Decile 9 Top 3.8 3.6

3.5 10% 10% 3 3.1 % of persons aged 15+ who are unemployed 2 Bottom Decile 2 Decile 3 Decile 4 Decile 5 Decile 6 Decile 7 Decile 8 Decile 9 Top Profession and industry 10% 10% Given that a much higher proportion of the population in Note: Unemployment rate refers to the ‘percentage of all persons high income postcodes have a job, it is not surprising that aged 15 years and over who are unemployed’. their incomes are on average higher. But there is also a It might have been expected that these larger falls in difference in the type of job held in different postcodes unemployment among lower income areas would have within Australia. produced above average increases in income for these areas during the five years to 2001. But this did not happen In Top 10% postcodes in 2001, 59% of those holding because, for middle to high income postcodes, the proportion down a job were managers and professionals – roughly of people who were not in the labour force dropped very double the 33% prevailing in Bottom 10% postcodes. rapidly. Australians who are not employed or unemployed Conversely, only 13% of those in Top 10% postcodes were are counted as ‘not in the labour force’. They might blue-collar workers, in comparison with 40% of those in include, for example, mothers of young children who Bottom 10% postcodes (see Figure 8). are not in paid work or early retirees.

For Bottom 10% postcodes the percentage of adults aged 15 years and over who were out of the labour force declined from 48.1% to 47.6% over the five years – while for Top 10% postcodes the proportion declined more sharply from 32.4% to 30.1%. 8 The professional divide between richer and poorer postcodes appeared to increase between 1996 and 2001.

The professional divide between richer and poorer The industrial structure of Australia also continued to postcodes appeared to increase between 1996 and 2001. change during the five years to 2001, with the on-going The proportion of adults aged 15 years and over who were decline in agriculture, mining and manufacturing and the managers or professionals fell by two percentage points in expansion of the services sector. The industry structures the Bottom 10% postcodes, to 33.4% by 2001. The varied greatly between different regions, with Top 10% proportion was stable for the second bottom decile postcodes having almost no agricultural workers and postcodes. For most of the other postcode deciles, the relatively few manufacturing workers (see Figure 10). proportion increased. For example, for both the Top 10% Roughly one-third of those employed in Top 10% postcodes and the next Decile 9 postcodes, the proportion postcodes were in finance, property, communication and who were managers and professionals increased by more business services and a further one-third were in other than three percentage points, to reach 59.1% for Top 10% services and public administration. postcodes. In Bottom 10% postcodes, about 12% were employed in Figure 8 Profession of those employed in 2001, agriculture and 13% in manufacturing. Only 10% were by postcode income decile employed in the more lucrative finance, property, communication and business services. Top 10% 59 27 13 Decile 9 50 31 19 Figure 10 Industry of employment by postcode Decile 8 43 32 25 income decile in 2001 Decile 7 37 33 30 Top 10% 2 8 17 29 36 9 Decile 6 34 33 33 Decile 9 2 9 19 22 37 10 Decile 5 35 31 34 Decile 8 2 12 20 19 34 12 Decile 4 33 31 36 Decile 7 2 14 21 18 32 13 Decile 3 34 30 37 Decile 6 3 15 22 16 31 14 Decile 2 32 29 39 Decile 5 5 14 22 14 32 13 Bottom 10% 33 27 40 Decile 4 7 14 22 13 32 13 0% 20% 40% 60% 80% 100% Decile 3 9 14 21 12 31 13 Managers and professionals Grey collar Blue collar Decile 2 11 15 21 11 30 12 Bottom 10% 13 13 19 10 34 12 Note: ‘Managers and professionals’ includes managers, professionals 0% 20% 40% 60% 80% 100% and associate professionals. ‘Grey collar’ means advanced, intermediate Agriculture and mining Manufacturing and elementary clerical, and ‘blue collar’ means tradespeople, Retail and wholesale Finance & Commn's elementary production and construction. The estimates only relate Services Other to those who declared a profession in the Census. Note: These proportions are for those who are employed and who Figure 9 Proportion of employed adults classed as stated an industry of employment. ‘Services’ here includes private and government services and public administration. ‘Other’ professionals by postcode income decile in 1996 and includes electricity, gas and water, construction and transport. 2001 ‘Finance and Communications’ includes financial, property and business services as well as communications.

60 1996 2001 55 59.1 55.8 50 50.0 45 46.2

40 42.8 40.4 35 37.3 35 36.0 35.4 34.1 33.6 33.4 33.4 33.4 33.3 32.8

30 32.9 32.6 32.3 32.3

25 Bottom Decile 2 Decile 3 Decile 4 Decile 5 Decile 6 Decile 7 Decile 8 Decile 9 Top % of employed persons classed as managers & professionals 10% 10% 9 Recent research has demonstrated a positive relationship between higher proportions of university- educated residents and regional income growth.

The educational gap Figure 11 Education qualifications by postcode income decile in 2001 These differences are partly a product of the variations in education in different postcodes. In Top 10% postcodes, Top 10% 29 9 12 51 29% of adults had a tertiary qualification while 51% had Decile 9 22 8 14 56 no post-school qualification. In the Bottom 10% postcodes, Decile 8 16 7 16 61 only 6% of adults had a tertiary qualification, while 75% Decile 7 13 6 17 64 had no post-school qualification (see Figure 11). This division Decile 6 10 6 17 67 is important, because recent research has demonstrated Decile 5 10 6 17 68 a positive relationship between higher proportions of Decile 4 8 5 17 70 university-educated residents and regional income growth.5 Decile 3 7 5 16 71 Decile 2 7 4 15 74 Was there a growing educational divide between Bottom 10% 6 4 15 75 richer and poorer postcodes by 2001? 0% 20% 40% 60% 80% 100%

The proportion of adults with no post-school qualifications Tertiary Diploma Vocational No post school quals fell more rapidly in the richer postcodes than in the poorer postcodes. For example, in Bottom 10% postcodes the Note: This is percentage of adults aged 15+ excluding overseas visitors but adding ‘not stated’ to the ‘no post school qualifications’ proportion of adults with no post-school qualifications group because they are not separately identified in 1996. fell from 78.2% in 1996, to 74.6% in 2001 – down 4.2 percentage points. In Top 10% postcodes, the comparable Figure 12 Proportion of adults with tertiary figures were 56.5% in 1996 and 50.8% in 2001 – a fall qualifications by postcode income decile, in 1996 and of 5.7 percentage points. 2001

35 In addition, much of the growth in qualifications in 1996 2001 lower and middle income postcodes was in vocational 30

qualifications rather than tertiary qualifications. For 25 28.8 example, in Bottom 10% postcodes, the percentage 20 24.1 of adults with vocational qualifications increased from 21.6 15 16.7 12.8% to 15.1% in the five years to 2001. In Top 10% 16.1

10 12.7 postcodes, the comparable increase was smaller, from 12.6 9.9 9.7 10.2 7.9 7.7 7.3 5 7.3 6.7 10.7% to 11.9%. The proportion of adults who held 6.5 6.1 6.0 5.2 4.6 a tertiary qualification increased rapidly in Top 10% 0 % of persons aged 15+ with tertiary qualifications Bottom Decile 2 Decile 3 Decile 4 Decile 5 Decile 6 Decile 7 Decile 8 Decile 9 Top postcodes, from 24.1% in 1996 to 28.8% by 2001 10% 10% (see Figure 11). But there were also across-the-board increases for all the deciles in the proportion of adults with tertiary qualifications.

10 Households in Bottom 10% postcodes are somewhat more likely than those in Top 10% postcodes to own their homes outright.

5. Housing: A nation of homeowners

Many would expect poorer areas of Australia to have a Figure 13 Housing tenure by postcode income decile higher concentration of public housing tenants and renters in 2001 and a lower concentration of homeowners. But the reality Top 10% 40 23 34 3 is quite surprising, with households in Bottom 10% Decile 9 42 27 28 2 postcodes being somewhat more likely than those Decile 8 41 32 25 2 in Top 10% postcodes to own their homes outright Decile 7 41 31 25 2 (see Figure 13). This may in part be due to a lifecycle effect, Decile 6 40 32 26 2 with Figure 4 above showing that adults in Bottom 10% Decile 5 40 31 26 3 Decile 4 41 29 27 3 postcodes are more likely to be aged 45 years and over Decile 3 43 26 28 3 than those in Top 10% postcodes. Decile 2 45 24 27 3 Home purchasers are more likely to be found in the Bottom 10% 45 21 29 4 middle to higher-middle income postcodes, while Top 10% 0% 20% 40% 60% 80% 100% postcodes feature a relatively low proportion of purchaser Owners Purchasers Renters Other households and a high proportion of renting households. Note: ‘Other’ housing includes rent free, rent under life tenure Households in the top and bottom deciles are more likely scheme and not stated. ‘Renters’ includes both private and public housing renters. to be renting than households in the middle deciles.

The division of households into different housing tenures was relatively stable between 1996 and 2001. There were slight falls in the proportion who were outright homeowners or home purchasers and a slight increase in those renting or in other housing.

11 6. Indigenous Australians and immigrants

The relatively poor economic and health status of In the Bottom 10% postcodes, indigenous Australians indigenous Australians has been widely identified in made up 7% of the residents, while in the Top 10% other research.6 Indigenous Australians are two to three postcodes, indigenous Australians made up less than times more likely to be impoverished than non-indigenous 1% of the residents (see Figure 15). Australians.7 How have immigrants to our shores fared? Figure 15 also Comparison between the Censuses of 1996 and 2001 is suggests that those born overseas are relatively more likely difficult, because of the changing likelihood of indigenous to make it into the richer postcodes than those born in Australians identifying themselves as such between 1996 Australia. In Top 10% postcodes, those born overseas and 2001. But it is possible to compare the position of made up 30% of the residents, while the (non-indigenous) those who did and did not declare themselves as indigenous Australian-born made up 69%. In contrast, in Bottom 10% Australians in the 2001 Census. postcodes the overseas born made up only 21% of the residents – while the non-indigenous Australians made up Almost one-third of those who declared themselves as 73% and indigenous Australians the remaining 7%. Aboriginal or Torres Strait Islander in the 2001 Census lived in Bottom 10% postcodes – with another 14% living in Figure 15 Country of birth by postcode income decile the second bottom decile of postcodes. Overall, almost half in 2001 of all indigenous Australians lived in the bottom 20% of Top 10% 69 30 1 postcodes (see Figure 14). Only 2.5% lived in Top 10% Decile 9 72 27 1 postcodes. Decile 8 72 27 1 Decile 7 Figure 14 Proportion of indigenous Australians living 72 27 1 Decile 6 73 25 2 in each postcode income decile in 2001 Decile 5 76 22 2

Decile 9 3.7% Decile 4 78 19 3 Decile 3 76 22 2 Top 10% 2.5% Decile 8 6.3% Decile 2 75 22 3 Bottom 10% 73 21 7 Decile 7 5.6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Decile 6 6.5% Bottom 10% 30.7% Australian born Overseas born Indigenous

Decile 5 9.0% Decile 2 14.3% Note: These results are for all persons, excluding overseas visitors.

Decile 4 11.5% Decile 3 9.9%

12 7. Conclusions

Overall, the five years to 2001 were good years for the Growing work divides were also evident when the types typical Aussie. Average household income, after using an of jobs held by workers living within each postcode were equivalence scale to take account of changes in household examined. The white collar professions have increasingly size, increased by 26.1% over the five years. There was gone to the richer postcodes. For example, the proportion a modest increase in income inequality between the richer of employed adults holding a managerial or professional and poorer . The average incomes job fell in the bottom 20% of postcodes but rose strongly of the top half of postcodes increased by about 27%, in the top 20% of postcodes in the five years to 2001. compared with a 25% increase for the bottom half Educational divides persisted over the five years. of postcodes. But the 23.2% income increase recorded However, there were also across-the-board improvements by Bottom 10% postcodes was only marginally lower in educational qualifications within each postcode decile. than the 24.2% increase achieved by Top 10% postcodes. In Top 10% postcodes in 2001, 29% of adults had a On balance, these five years of economic growth and tertiary qualification and only 51% had no post-school falling unemployment were of benefit to both poorer qualification. In Bottom 10% postcodes, only 6% of adults and richer regions of Australia. had a tertiary qualification while 75% had no post-school The impact of falling unemployment was particularly qualification in 2001. marked for poorer regions, with the proportion of adults The economic disadvantage experienced by indigenous aged 15 and over who were unemployed falling by 1.5 Australians was also highlighted in the report. Just under percentage points to 6.3% for Bottom 10% postcodes half of all those who declared themselves to be Aboriginal in 2001. This compared with a 0.5 percentage point fall or Torres Strait Islanders in the 2001 Census lived in the to 3.1% for Top 10% postcodes. poorest 20% of postcodes. Less than 3% of all indigenous While the fall in unemployment was important for boosting Australians lived in Top 10% postcodes in 2001. incomes in poorer areas, in middle to high income postcodes there was an equally significant fall in the proportion of adults who were not in the labour force and a commensurate increase in the proportion who were employed. By 2001, less than half of all adults aged 15 years and over and living in Bottom 10% postcodes had a job. In contrast, two-thirds of adults living in Top 10% postcodes had a job. Thus, despite the fall in unemployment, the spatial division into work rich and work poor postcodes did not appear to lessen over the five years to 2001.

13 Technical notes

Source data Postal areas

The data source for this analysis is the 1996 and 2001 Average household incomes are analysed by postal areas census CDATA collected by the Australian Bureau of (POA). The ABS created Postal Areas by allocating whole Statistics and the unit for analysis is the household. A Census Districts (CDs) to postcode areas on a household is defined as a group of people who reside in ‘best fit’ basis, using population and not area. As a result, the same dwelling and make common provision for food postal areas only approximate Australia Post postcodes. and other household expenses, or a person living in a This allocation of Postal Areas excludes Australia Post dwelling who makes provision for his/her own food and postcodes which are box, back expenses (ABS Census Dictionary 2001). The census competitions, large volume receivers, and specialist delivery analysis is based on the population on the census night. postcodes.

Average gross household income Throughout the report we have referred to ‘postcodes’, with this being used as a more colloquial reference to ‘ABS Income is the estimated gross annual income from all postal areas’. sources for each household. Income information in the original census data was collected and provided in ranges Equivalent income deciles for both years and therefore we had to estimate average Equivalent income gives a more accurate estimate of income. Average incomes were estimated based on the household resources as it accounts for the different needs average incomes of those households (within each of the of different household types. For example, a single person census income ranges) captured in the most relevant ABS is better off compared with a couple with two children on income surveys (i.e. the Surveys of Income and Housing the same income. Costs (SIHC) 1995/96 and 2000/01). For the analysis using equivalent incomes by deciles, the The average household income from all sources of the SIHC OECD equivalence scale was applied. It gives a value of one 1995/96 and 2000/01 was calculated for households within to the first adult, 0.5 to the second and subsequent adults, each of the respective census income brackets. Everyone and 0.3 to each dependent child. Dependent children are in an income range is assumed to have the average income defined here as children aged 0 – 14 years. To give an for that income bracket. The average household income example, a couple family with two children will have an is then multiplied by the number of households in each equivalence value of 2.1, while a single person household income bracket in the respective census for the year will have an equivalence value of 1. (1996 or 2001). These values are then divided by the total number of households to estimate average household income for the postal area. Those households with ‘partially stated’ income and all ‘income not stated’ households are removed from the analysis. Households with negative income are set to having zero income.

14 To calculate the equivalent income of each postal area, Capital cities are defined as state and territory capital cities we took the average number of adults and children within and surrounding areas. Major urban areas consist of major households in a particular postal area, calculated the non-capital cities with populations of more than 100,000. equivalence value for that postal area, and then divided Towns and cities with populations of 1,000 – 99,999 are the average gross household income for that postal area grouped as regional towns. Rural towns are defined as towns by the equivalence value. with populations of between 200 to 999. Rural areas make up all other areas. The postal areas were divided into ten equally sized groups, with results being weighted by the population living within Other figures each postal area. If we did not weight by population size then we would be ascribing the same importance in the The relevant populations considered in each figure vary, results to postal areas consisting of 20,000 or 1,000 people. in some cases including all persons aged 15 and over As many of the smaller postal areas are outside cities and and in other cases including subsets of the population. have lower average incomes, this approach would have given The relevant groups are generally described in the notes undue emphasis to smaller postcodes. under the figure.

Our measure of population here included all persons in occupied private dwellings but did not include people in non-private dwellings (for example, those living in boarding house, hotel, motels, childcare institutions, public hospitals and accommodation for the aged).

To divide postal areas into deciles, we ranked every postal area by the equivalent average gross household income of its residents. After establishing how many people lived in that postal area, we then allocated each postal area to a decile grouping. We thus created ten deciles, with each decile containing 10% of the population.

Section of State

Table 1 presents results by Section of State (SOS). Collection Districts (CD) were classified by region based on the ABS Section of State classification. The five Sections of State classifications used by the ABS are capital cities, major urban, other urban, bounded locality and rural balance. Between 1996 and 2001, as populations grew and moved, some CDs may have changed their regional classification. However, these changing CDs have been included in our analysis. The ABS terminology of the SOS classifications has been replaced with less technical terms: ‘other urban’ was replaced with ‘regional towns’, ‘bounded locality’ with ‘rural towns’ and rural balance’ with ‘rural areas’.

15 1 Question: Agree or disagree? "I think the gap between rich and 4 These are nominal dollars and thus do not take out the impact poor is growing." 88 per cent of those questioned agreed and of inflation over the five years. 9 per cent disagreed. Source: Roy Morgan Research data from 5 Bureau of Transport and Regional Economics, Focus on Regions a total national polling of 24,126 people, 2003 No 2: Education, Skills and Qualifications, Information Paper 2 Australian Bureau of Statistics, 2003, Household Income and No 51, Department of Transport and Regional Services, February Income Distribution, Cat No 6523.0, p 13. These estimates are 2004. for the average equivalent disposable household income of 6 For example, see Altman, J. (2000) The economic status of Australians, ranked into quintiles of income on the basis of this Indigenous Australians, CAEPR Working Paper No.193 and Daly, income measure. The equivalent incomes of the top one-fifth A. & Smith, D. (1999) Indigenous household demography and increased from $773 a week in 1995-96 to $903 in 2001-02, socioeconomic status: the policy implications of 1996 Census while the comparable figures for the bottom one-fifth were $168 data, CAEPR Discussion Paper No, 181 and $180 a week. Note that these are equivalent (need-adjusted) incomes that take some account of differences in household size 7 Hunter, B. (1999) Three nations, not one: indigenous and other and composition and are after the payment of income tax. Australian poverty, CAEPR, Australian National University Working Paper No.1 3 Lloyd, R., Harding, A. and Hellwig, O., ‘Regional Divide? A Study of Incomes in Regional Australia’, Australasian Journal of Regional Studies, Vol.6, No. 3, pp 271-292, 2000.

16 AMP.NATSEM Income and Wealth Reports:

• Trends in taxable income (February 2002)

• Live long and prosper? – The income and wealth of those about to retire (May 2002)

• All they need is love…and about $450,000 – The costs of children in Australia today (October 2002)

• Does your wealth depend on good health? – Health and income in Australia (March 2003)

• You can’t rely on the old folks’ money – Wealth and Inheritance (June 2003)

• Generation Xcluded – Income and wealth of Generation X (November 2003)

• The lump sum: Here today, gone tomorrow – Income, superannuation and debt pre and post retirement (March 2004)

All the above reports are available from www.amp.com.au/ampnatsemreports

The full report was written by Ann Harding, Mandy Yap and Rachel Lloyd from the National Centre for Social and Economic Modelling Pty Limited ('NATSEM') and published by AMP Life Limited ABN 84 079 300 379, AFSL 233671. Any advice in this document is provided by AMP Life Limited (‘we/us’). We can be contacted by telephoning 02 9257 5000 or you may send us an e-mail askamp.com.au. The advice is not based on your personal objectives, financial situation or needs. Accordingly you should consider how appropriate the advice is to those objectives, financial situation and needs before acting on the advice and, before buying any financial product, you should read the current product disclosure statement. We are part of the AMP Group of companies. However no remuneration or financial benefits are paid to us or our related companies or associates in relation to the advice provided on this page. Although the information in this report was obtained from sources considered to be reliable, the authors, NATSEM and the AMP Group do not guarantee that it is accurate or complete. Therefore, readers should not rely upon this information for any purpose including when making any investment decision. Except where liability under any statute cannot be excluded, NATSEM, AMP Group and their advisers, employees and officers do not accept any liability (where under contract, tort or otherwise) for any resulting loss or damage suffered by the reader or by any other person. NS1001 09/04