Ramblings: How rich is rich?

Our local and national papers have been full of storys of how Australian families are struggling.  Now, this isn't something new . . . many families are indeed finding times tough.  But those families in the articles are earning around $150,000 (AUS/USA) per year.    One side of government say this group is "well-off", the other side refer to them as the "forgotten families" who are certainly not rich and should be receiving tax deductions to help them during these tough economic times. 

This got me wondering . . . when is a family well off? When should governments stop providing welfare (through tax deductions) to families?

Depending on choices that families make . . . eg sending children to private schools, buying an expensive car, trips overseas, latest electronic gadgets OR not doing these things plays a big part on how far a family income will stretch. As a result, some families on $150,000 can make their money go a long way and therefore consider themselves to be comfortable, whilst others have many bills (brought on by their choices) will have not spare money at the end of the week.

One academic puts it very well . . . many families on this type of income live in areas with other families earning a similar amount, they work with people earning the same amount and their friends are also earning the same $$$'s . . .
"Therefore they don't feel rich because they are comparing themselves to the people around them" according to Professor Wooden.  He goes on to say "And because people are aspirational, they look to the person with the best house or the best car in the street, and compare themselves unfavourably. But if they looked beyond, they would see many, many suburbs across the country where people earn nowhere near that amount."
Isn't this called "keeping up with the Jones?"

What it comes down to is basically . . . what one families sees as modest income, other families will see it as well off.  It all depends on the choices families make.  Therefore governments, when deciding on who gets tax deductions and who doesn't, are unlikely to please everyone. And that is when it becomes tricky . . . as government decisions can often be made based on "winning votes" rather than logical economic sense or caring for those most in need.


In case you are wondering . . . it is almost impossible to determine a "typical family income"  - there are many different ways of looking income and many different combinations of "family" - however the the gross (before tax) median income of a couple family with dependent children (those under 15) was $99,222 (in 2007-08) and for all types of households it was $66,999.  



  1. iSn't it good that true happiness does not depend on the pay packet we receive? "Jesus Christ is the same, yesterday, today and forever" - so no matter what the pay packet we can find true joy and happiness in Him, and what could be better?
    Thanks Jo, for your blog! It is often thought provoking - which is good for all of us!

  2. Just read the article you featured Jo. I think those people are amongst the many in today's society who will never be happy no matter how much they get, but also have no idea about prioritising their budgets. Look at the car in their driveway - a far cheaper one would work just as well, and honestly, there must be heaps of other ways they could stretch their money further! Today's youth are NOT being taught to save, or to START FROM THE BOTTOM and work their way up!

  3. I can hardly believe some people - I would be counting my blessings and considering myself very rich if I had that kind of an income!! And I agree that those people have to be "just getting by" because of their own choices. That much money goes a long way!

    The stats are amazing - what income is classed as the poverty-line these days in Australia, Jo? When the average income increases, does that mean the poverty-line increases as all, or does the gap widen?

    I agree with the govt on the $150,000, by the way... Do you, Jo?

  4. Clara-yes I do agree with the govt. People on these incomes should not be getting govt welfare, give more to families and pensioners who really need it. Some people are just greedy for anything the can get. They don't seem to realize how fortunate they are. As you say, they should be counting their blessings, instead they whinge.

    I will check the poverty line $$$ tomorrow. Yes, the gap is widening.

  5. Another side to the middle class welfare issue, is that some of this "welfare" is not just about meeting people's needs, but about vital economic strategies. If you look at birth rate figures in Aust over the last 50 yrs, there has been an alarming decline since the early 1970's. The Baby Bonus, and other govt support parents receive for having/raising children, have helped our birth rate to steady and recover a little over the last 5 years. Children create an enormous number of jobs (education, books, toys, clothes, medical, etc, etc). Our unemployment rate has fallen from 11% in 1993 to about 5% today, and arresting the birth rate's fall is one contributory factor. There are also tremendous social benefits flowing from supporting the raising of children. Aging populations with low birth rates are one of the biggest problems faced by most Western countries today - Stephen W

  6. Birth rates are influences by income and education – the higher these both are, the lower the rate. Therefore birth rates will not increase significantly by high income, highly educated women – these women are focused on careers therefore less likely to have larger families and are delaying childbirth. Freezing the baby bonus $150,000 will make very little differences to birth rates – the baby bonus to not a major incentive to established career-women. The government sees improvements to the economy, not by having more children (even though first world governments would like to have replacement rate), but increasing participation rates in the labour force – getting more people into the workforce, which really means, more women into the workforce as they have a lower participation rate to men. This means – less time at home with baby and returning as quickly as possible to their jobs. A long term stay at home mum is not seen as helping the economy.

    There is some augment among demographers that the peak we have just seen is in fact little more than the actions of one cohort of women (themselves the children of the baby boomers) delaying childbirth (for careers). As this cohort moves through the population, you get the upswing as we’ve seen recently. This probably would have occurred anyway.

    Rates of birth are now declining – and as a result the baby bonus is likely to have little or no effect on the fertility rate. It hasn’t in countries that have very generous child welfare.

    A report by a panel advising Mr Burke on liveability and population trends - part of the government's Sustainable Population Strategy to be completed this year - found the baby bonus ''had little, if any, impact in increasing fertility''.

  7. Just continuing on this:

    According to the current government: “The $5294 bonus is not designed to encourage more babies, but to help parents pay bills.” They are fully aware that it doesn’t increase rates of birth. That was only Peter Costello's belief.

  8. Jo - Reports, surveys, studies and especially government statements all reflect the political, social, economic etc. views/agenda of those who make them. The current govt didn't "design" the baby bonus, their untrue statement about its "design" is just to make their decision less politically damaging.
    Peter Costello's "belief" is reality for our family. The generous support for parents - not just baby bonus which your reply focussed on, but fortnightly "other govt support" (FTBA, FTBB, Parenting Payment) - was a vital issue for Bets and I at every stage moving from being two single people attracted to one another a few years ago to being a family with one + one-in-progress children today. Those on much more comfortable incomes than ourselves tend to spend much more as well and some (many?) take into account govt payments as well (as the article you highlighted showed.

    Govt socioeconomic policy is multi-pronged - increasing workforce participation rates helps some problems but won't help unemployment rates, but many initiatives of the Keating and Costello govts have assisted in reducing unemployment. (The budget papers of the Costello period are fascinating reading - I particularly appreciate the fair way they recognise the contribution of state and federal labour govts) - Stephen

  9. Jo, just continuing...however agree that govt financial support for parenting isn't going to make enough change to birth rates to bring them back up to the levels of 40 yrs ago. Personal and society attitudes/values/priorities etc. are involved and how can govts change them (even if they were willing to try)? Abortion is another major factor - it's the single highest cause of death in Australia now! From a Christian perspective, abortion (except in possibly a few cases to save mother's life etc) should be illegal and punishable by death penalty (Gen 9:6 etc.), but what likelihood is there that that will ever happen in Australia? Our economic and social problems such as aging population/low birth rate etc. flow from our moral and spiritual ones. Really, the Lord's coming and reign are the only answer - Stephen W.

  10. Clara - According to the University of Melbourne (who do the quarterly Henderson Poverty Index) as at December 2010: Family with one adult working + 2 dependent children (including housing costs) = $805 per week. In March quarter 2000 the figure was $487.80

    Heres the link to the Poverty Index:

  11. I agree with the $150,000 cut off too. If a family can't live on that, there is a problem with their life style and budgeting. They shouldn't be getting help from the Government on that amount.


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