2.08 Income

Key facts

Why is it important?

Adequate and reliable income allows a person to support themselves, their family and their community (AIHW 2019). Income inequality is associated with poor health and social dysfunction, such as psychological distress, poor education performance, substance misuse, crime and violence (Isaacs et al. 2018; Kessels et al. 2020; Wilkinson & Pickett 2009). Low income can limit choices and opportunities for improving health outcomes and may influence other health-related factors, such as dietary choices and access to health care (AIHW 2015).

Aboriginal and Torres Strait Islander people disproportionately receive government cash pension or allowance as their main source of income compared to non-Indigenous Australians.

Disparities in income can help explain both the gaps in the average health status of Indigenous and non-Indigenous Australians, and also the wide variation observed in the health outcomes within the Indigenous population (AIHW 2016). People with lower socioeconomic status bear a significantly higher burden of disease (Vos et al. 2009). The association between health and income is also a key component of the socioeconomic gradient in health status (the link between health outcomes and socioeconomic status) that is observed in Australia and other countries (Marmot 2002; Marmot et al. 2008; Pickett & Wilkinson 2015).

Disparity in income is one aspect of socioeconomic status through which Indigenous Australians face disadvantage. Income is closely linked to other factors (Deaton 2003) but particularly employment status as it provides the person with a source of income (see measure 2.07 Employment), and educational attainment (see measures 2.04 Literacy and numeracy, 2.05 Education outcomes for young people and 2.06 Educational participation and attainment of adults).

Findings

What does the data tell us?

Household income quintiles

The 2016 Census of Population and Housing (Census) found that almost 4 in 10 Indigenous adults (37%) were living in households with the lowest equivalised gross weekly household income (1^st quintile), almost twice the proportion of non-Indigenous adults (20%). One in 10 (10%) Indigenous adults were living in households with the highest income (5^th quintile). Among non-Indigenous adults, there was an even spread across all five income quintiles.

A higher proportion of Indigenous females (39%) lived in households in the lowest income quintile than Indigenous men (33%). This was similar in the non-Indigenous population, with 21% of females compared with 18% of males in households in the lowest income quintile (Table D2.08.14, Figure 2.08.1).

Figure 2.08.1: Proportion of persons aged 18 and over in each equivalised gross weekly household income quintile, by Indigenous status and sex, 2016

Source: Table D2.08.14. AIHW and ABS analysis of Census of Population and Housing 2016.

The proportion of Indigenous adults living in households in the lowest income quintile ranged from 18% in the Australian Capital Territory to 60% in the Northern Territory. The proportion of Indigenous adults living in the highest income quintile ranged from 7% in Tasmania to 29% in the Australian Capital Territory (Table D2.08.15, Figure 2.08.2).

Figure 2.08.2: Proportion of Indigenous adults in each equivalised gross weekly household income quintile, by jurisdiction, 2016

Source: Table D2.08.15. AIHW and ABS analysis of Census of Population and Housing 2016.

When this is disaggregated into the five remoteness categories, the proportion of Indigenous adults with household income in the lowest quintile increased with remoteness, with 27% in Major cities compared with 64% in Very remote areas. The proportion of Indigenous adults with household income in the highest quintile was 14% in Major cities and 3% in Very remote areas (Table D2.08.17, Figure 2.08.3).

Figure 2.08.3: Proportion of persons aged 18 and over in each equivalised gross weekly household income quintile, by Indigenous status and remoteness, 2016

Source: Table D2.08.17. AIHW and ABS analysis of Census of Population and Housing 2016.

The 2016 Census showed that 37% of Indigenous adults lived in households in the lowest income quintile (below the 20^th percentile). However, this had fluctuated since the 1996 Census (36%), with the proportion of Indigenous adults in the lowest income quintile ranging from 31% in 2011 to 40% in 2006.

The proportion of Indigenous adults living in households with an equivalised income below the 50th percentile (in the lower half of the income distribution) declined from 73% in 1996 to 69% in 2016 (Table D2.08.16, Figure 2.08.4).

Figure 2.08.4: Proportion of Indigenous adults who were below the 20th and 50th percentiles of equivalised gross weekly household income, 1996, 2001, 2006, 2011 and 2016

Source: Table D2.08.16. ABS and AIHW analysis of 1996, 2001, 2006, 2011 and 2016 Census data.

Mean household income

At the 2016 Census, the mean gross weekly equivalised household income for Indigenous adults was $802. After adjusting for inflation, this was a real increase from $544 in 1996. For non-Indigenous adults, there was an increase from $801 to $1,096 over the same period (Table D2.08.13, Figure 2.08.5).

Figure 2.08.5: Mean gross weekly equivalised household income of persons aged 18 and over, by Indigenous status, 1996, 2001, 2006, 2011 and 2016

Note: Data for years prior to 2016 are CPI-adjusted.
Source: Table D2.08.13. ABS and AIHW analysis of 1996, 2001, 2006, 2011 and 2016 Census data.

Mean household income varied by remoteness. The 2016 mean gross weekly equivalised household income for Indigenous adults was highest in Major cities $931 and lowest in Very remote areas $520. For non-Indigenous Australians, the mean income was highest in Very remote areas ($1,210) and lowest in Inner regional areas ($959). The mean income for non-Indigenous adults in Major cities was $1,140, $209 higher than that for Indigenous adults. However, the largest gap between Indigenous and non-Indigenous Australians was in Very remote areas, a difference of $690 per week (Table D2.08.12, Figure 2.08.6).

Figure 2.08.6: Mean gross weekly equivalised household income of persons aged 18 and over, by Indigenous status and remoteness, 2016

Source: Table D2.08.12. AIHW and ABS analysis of Census of Population and Housing 2016.

By jurisdiction, the 2016 mean gross weekly equivalised household income of Indigenous adults was lowest in the Northern Territory ($613) and highest in the Australian Capital Territory ($1,222). The difference between Indigenous and non-Indigenous adults was greatest in the Northern Territory, where Indigenous adults received less than half the amount of non-Indigenous adults (Table D2.08.11, Figure 2.08.7).

Figure 2.08.7: Mean gross weekly equivalised household income of persons aged 18 and over, by Indigenous status and jurisdiction, 2016

Source: Table D2.08.11. AIHW and ABS analysis of Census of Population and Housing 2016.

Individual income

The individual income data from the 2016 Census shows that, similarly to household incomes, Indigenous adults were proportionately over-represented in lower income bands and under-represented in higher income bands. For Indigenous adults, 15% had a gross weekly income of $150–$299 (compared with 7% of non-Indigenous adults), and 1% earned $3,000 or more (compared with 4% for non-Indigenous adults) (Table D2.08.18, Figure 2.08.8).

Figure 2.08.8: Proportion of gross weekly individual income, by Indigenous status, persons aged 18 and over, 2016, by Indigenous status, 2016

Source: Table D2.08.18. AIHW and ABS analysis of Census of Population and Housing 2016.

Biddle (2013) examined 2016 Census personal income data for Indigenous Australians and reported variations in disposable income by age, sex and location (Biddle 2013). Those aged 40–44 had a disposable income 3.9 times as high as those aged 15–19. The income of males was 1.2 times as high as the income of females. South Hedland in Western Australia had the highest median income ($738), and Aputula in the Northern Territory had the lowest ($258).

Source of income

A recent study found that Indigenous Australians had lower total personal incomes than non-Indigenous Australians across all labour force categories, particularly for those who were employed full-time (Howlett et al. 2015). This is partly due to lower wages (around 18% lower for Indigenous men), which can be explained by lower levels of education, poorer access to ’good’ jobs and fewer weeks worked per year on average. This paper found that Indigenous Australians have considerably less income from other private sources (business and investment income) than non-Indigenous Australians. A higher proportion of Indigenous incomes come from government payments.

The 2018–19 National Aboriginal and Torres Strait Islander Health Survey (Health Survey) found that the main sources of income for Indigenous Australians aged 18–64 were employee cash income (44%; 195,700) and government cash pension or allowance (45%; 200,200). Comparisons with non-Indigenous Australians were not available for the 2018–19 Health Survey. However, based on responses from the 2014–15 National Aboriginal and Torres Strait Islander Social Survey, 47% of Indigenous Australians aged 18–64 received a government cash pension or allowance as their main source of income, compared with 14% of non-Indigenous Australians (Table D2.08.4).

In 2018–19, Indigenous females were more likely to receive a government cash payment or allowance than Indigenous males (63% compared with 44%) (Table D2.08.5).

Financial stress

The 2018–19 Health Survey found that 40% (153,700) of Indigenous adults were living in households that had experienced days without the money for basic living expenses, such as for food, clothing and bills, in the previous 12 months (Table D2.08.7).

Additionally, 54% (164,170) of Indigenous Australians were living in households that reported they would not be able to raise $2,000 within a week for an emergency (an indicator of financial stress). This was more likely for households in Remote areas (75%) than for those in Non-remote areas (49%) (Table D2.08.6).

Income and health

The 2018–19 Health Survey showed an association between low income and poorer health. Indigenous adults living in households in the lowest income quintile (1^st), when compared with those in households in the two highest income quintiles (4^th and 5^th), were more likely to report:

• being a current smoker (57% compared with 23%, respectively)
• having fair or poor health (32% compared with 13%, respectively) (see measure 1.17 Perceived health status)
• high psychological distress (44% compared with 18%, respectively)
• having three or more long-term health conditions (56% compared with 45%, respectively) (Table D2.08.8, Table D2.08.9).

Income, education and employment

The 2018–19 Health Survey showed associations of income with educational attainment and employment. Indigenous adults living in households in the lowest income quintile, when compared with those in households in the two highest income quintiles, were less likely to:

• have completed Year 12 (21% compared with 53%, respectively)
• have a non-school qualification (42% compared with 72%, respectively)
• be employed (16% compared with 91%, respectively) (Table D2.08.7).

What do research and evaluations tell us?

Many factors can be attributed to explaining how income affects socioeconomic status and the reason why low income contributes to poor health. Examples include the capacity to afford nutritious food and quality housing; cost barriers to accessing health care, including health insurance; risk behaviours, including substance use and social participation; and access to education and employment (Marmot 2016; World Health Organization 2017).

However, the relationship between health and income is complex and intertwined. Both aspects of health and income can be an outcome or a determinant (Bhattacharya et al. 2013; World Health Organisation 2014). For example, people with higher incomes may have better health outcomes because they have better access to health services, while people with poorer health may have lower incomes due to work limitations caused by their health conditions (AIHW 2015).

Socioeconomic variables (such as weekly cash income, source of cash income, and years of schooling) can explain between one-third and one-half of the gap in self-assessed health status between Indigenous Australians and non-Indigenous Australians (Booth & Carroll 2008). However, several studies that examined health status found a positive relationship with education, labour force status and home ownership, but the evidence for household income was weaker (Chikritzhs & Brady 2006; Cunningham et al. 1997; Gray et al. 2004; Shepherd et al. 2012; Trewin 2006)

International research has shown the level of income inequality within a society is associated with social function (for example, levels of violence, imprisonment, levels of trust, exclusion, insecurity, stress and educational performance), which mediate the relationship between income inequality and health outcomes (Marmot 2016; Wilkinson & Pickett 2009; Wolfson et al. 1999).

Children’s health is affected by household income from a young age, and the effects accumulate as they age—the older the child, the more profound the effect (Case et al. 2002). There is, however, limited direct evidence for Indigenous children, although one proxy indicator—low birthweight (see measure 1.01 Birthweight)—highlights the early impact socioeconomic disadvantage can have on health for many Indigenous children (AIHW 2016).

There is an association between income inequality and perceptions of wellbeing (Cooper et al. 2013). Biddle (2015) found a correlation between income and measures of happiness and sadness for Indigenous males living in non-remote areas (Biddle 2015). However, relationships were weaker for females and those living in remote areas.

In 2006 the Senate Standing Committee on Legal and Constitutional Affairs found compelling evidence that governments in several jurisdictions systematically withheld and mismanaged wages and entitlements for Indigenous Australians over many decades from the late 19^th Century through to the 1980s. In addition, there is evidence of Indigenous Australians being underpaid or not paid at all for their work, a practice now referred to as ‘stolen wages’. The ‘stolen wages’ has had intergenerational effects that relates directly to the poverty conditions many Indigenous Australians live in today (Senate Standing Committee on Legal and Constitutional Affairs 2006). Some governments have since put in place reparation schemes, although the lack of records have made it very difficult to determine the full impact of stolen wages (Stolen Wages Taskforce 2008).

The Australian Government provides long- and short-term income support payments to people who cannot fully support themselves. For many disadvantaged Australians, including Indigenous Australians, income assistance is key in ensuring economic and social wellbeing.

Venn and others (2020) examined trends in income support payments and Community Development Employment Project (CDEP) income among Indigenous Australians between 1994 and 2014–15 (Venn et al. 2020). In Non-remote areas, receipt of social security payments among Indigenous Australians fell between 1994 and 2008. During this period, falls in receipt of social security and CDEP wages were offset by increases in the proportion of people with non-CDEP wages as their main source of income. From 2008 to 2014–15, the level of social security payments in Non-remote areas did not change significantly. In Remote areas, trends in social security payments have been greatly influenced by the decline of the CDEP scheme. Overall, the proportion of Indigenous Australians on CDEP wages was lower in 2014–15 than in 1994.

There was strong income growth between 2002 and 2008; however, income was stagnating and falling between 2008 and 2014–15 (Venn et al. 2020). The income growth between 2002 and 2008 may be due to the shift in Indigenous Australian’s primary source of income from CDEP wages to non-CDEP jobs. In contrast, the fall in income growth between 2008 and 2014–15 may be due to the stagnating labour market and the demise of the CDEP.

Venn and others (2020) also observed that there was an increase in the proportion of Indigenous Australians without any source of income (Venn et al. 2020). However, the authors noted that without longitudinal data, they could not definitely say what has happened to former income support recipients once they have moved off benefits and whether their incomes and welfare have increased as a result. Nor could they conclude whether moving from one type to another payment may have resulted in stagnating average income.

There are multiple models of welfare quarantining, where a proportion of a person’s welfare payment is income managed and directed towards meeting basic needs such as food, clothing, housing and utilities.

The model in Cape York is based on the Queensland Family Responsibilities Commission Income Management model. The Commission receives notices from courts and other state authorities when people within its jurisdiction breach social norms (school attendance breaches, domestic violence orders etc.). The Commission can compel those within the jurisdiction to attend conferences, refer clients to support services and order welfare payments to be subject to income management orders. A recent review of the Cape York Welfare Reform income management model found that there is some evidence that income management has contributed to a reduction in alcohol consumption and drug use (Scott et al. 2018). The review also suggests that children’s overall health and wellbeing, and engagement in school outcomes have improved. The BasicsCard (a card that gives participants access to their income managed money at approved stores and businesses) has been a helpful tool for assisting some community members to manage household budgets, provide for their families and reduce opportunities for ‘humbugging’ (unreasonable or excessive demands from family).

Implications

The disparity in incomes between Indigenous and non-Indigenous Australians has important implications for health. These implications include reduced capacity to access goods and services required to lead a healthy lifestyle, such as adequate nutritious food, housing, transport and health care.

Other factors that may exacerbate the situation faced by low income households include resource commitments to extended families and visitors (SCRGSP 2007). Income discrepancies may reflect uneven access to education and employment opportunities. There is evidence that labour market discrimination against Indigenous Australians exists, that is, wage and employment differentials, which cannot be explained by educational gaps or other factors (Committee for Economic Development of Australia 2015).

More detailed longitudinal analysis is required. Previous analyses mainly sought to explain the health gaps between Indigenous and non-Indigenous Australians. Less is known about the role of socioeconomic factors in explaining differences in the health status among Indigenous Australians, including the health status of specific subgroups, such as Indigenous Australians with a disability (AIHW 2016).

There exists a large gap in understanding the implications of income support and its association with health, despite 45% of Indigenous Australians aged 18–64 receiving income support as their primary source of income in 2018–19. Further research is required to understand: the level and adequacy of income support; the characteristics of recipients who leave or remain on income support and their reasons for transitioning out of income support; other sources of income when recipients leave income support; and intergenerational effects (AIHW 2019; Venn et al. 2020).

The policy context is at Policies and strategies.

References

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