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Change in household income (as a % of after-tax income in June 2019)

COVID-19Income inequalityInequality

Source: Australian Bureau of Statistics, Australian National Accounts.
Note: Shows growth in different components of household income from June 2019 (before COVID) to June 2020 (recession), and from June 2020 to June 2021 (recovery), as a percentage of average after-tax household income in June 2019. Income tax is expressed in negative values (so a positive value means a reduction in tax). Note that the value of some components fell. Yellow = an increase would be expected to reduce inequality (more so if darker); Blue = an increase would be expected to increase inequality (more so if darker). Grey = an increase has an indeterminant impact on inequality.

This graph compares changes in the main components of household incomes in the financial year of the recession (from June quarter 2019 to June quarter 2020), and the first year of recovery (from June 2020 to June 2021). Changes in the overall value of each income component through each of these years are expressed as a proportion of total household after-tax incomes before the recession in June 2019.

Both the recession and the recovery had large and uneven impacts on different income components. Through the year up to and including the recession (from June 2019 to June 2020 – left column):
* Changes in wages (supported by JobKeeper) increased incomes by 0.5% (in proportion to previous overall after-tax income), earnings from self-employment (also supported by JobKeeper) rose by 2.5%, while investment income fell by 3.1%. Income from social security (including * Coronavirus Supplement) rose by 5.1%, while income tax increases (due to tax ‘bracket creep’) reduced incomes by 0.4%.

Based on the typical distribution of each of these components among income groups, we would expect these changes to reduce income inequality. This is supported by the evidence presented earlier.

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