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Art market - best of intentions, worst of realities

By Michael Eather - posted Thursday, 22 July 2010


The arts industry is relatively small. It consists of a plethora of micro-businesses; most of them will be severely compromised by the excessive administrative burden of this new scheme. They will struggle to maintain the middle ground between working artists and buyers. Ultimately, the policy will produce disincentives to buy art at a time when the market is already fragile.

Minister Garret has said: “It’s my expectation that a resale royalty scheme will provide Indigenous artists for the first time with the benefits of a market growth.” No one begrudges this, but it would be naïve to believe that this scheme will be able to place Indigenous artists on the same level as the estates of Fred Williams, Brett Whitley and Arthur Boyd. Distribution to Indigenous estates is always complex, but experience in the field suggests that most living Indigenous artists will be penalised for their desire to seek up front payments for artwork, which will continue regardless of this or any other scheme. We need a policy that begins with these realities, which are far different to France or most conventional art markets.

The public has been told that artists will be better off but they won’t. Minister Garrett continues to use Indigenous artists as a political trophy and proclaims that they, in particular, will thrive under his new policies. Indigenous artists have actually been not been served well by a cliché. In truth Indigenous artists are getting more opportunities in the art world than ever before.

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The Cooper recommendations will make the art market even more precarious. Each year Self Managed Super Funds contribute about $100 million towards art purchases for living Australian artists. These are bona-fide sales undertaken to provide legitimate retirement investments. Many commercial galleries estimate that such sales equate to 15-25 per cent of their annual turnover. This private sector income has had a dramatic impact for all artists. A proposed ban on such investments, on top of the Resale Royalty Scheme would be catastrophic.

The best way for the government to resuscitate the arts industry is to create economic stimulus and incentives for individuals and companies to purchase art, but this policy is doing the exact opposite. One of its most key recommendations from Cooper is that within 10 years all artworks held in Self Managed Super Funds would have to be divested - presumably to be re-sold. This could mean a complete collapse of the art market as millions of dollars worth of artworks flood it - and then only to attract extra costs because of the Resale Royalty Scheme. The government is treating art as a political football and relegating art purchases to the position of a toxic asset.

The pitfalls of this policy are perhaps betrayed by Minister Garrett’s rhetoric, which is particularly cynical of the commercial sector, portraying some as parasites and most as profiteers. He speaks triumphantly of his passion and commitment to assist artists, as if he is alone on this score. Yet artists don’t operate in isolation. All artists, struggling or not, need a dependable industry structure to achieve their goals. In most cases, commercial galleries, art centres and agents provide such an infrastructure.

Certainly, Indigenous artists will not benefit solely from the drip fed royalty cheques at the expense of more sustainable art market structures. It may actually reinforce an unfortunate world view held by some Indigenous families that they live in the shadows, waiting for benefits from afar. Minister Garrett simply needs to assist the business of art. Taxes and royalties don’t do this but sadly this is only game in town he and his colleagues seem to truly understand.

July post script: a perfect storm

In July 2010 was announced that the Cooper Recommendations will be absorbed into Australia’s new laws for Self Managed Super Funds. Clearly, art has been diagnosed in these quarters as a non-“yield asset”. Regardless of its proven capacity to hold its value in the market, it doesn’t make the grade along with stocks and shares, bricks and mortar.

Meanwhile back in the Ministry for Environment Protection, Heritage and the Arts Minister Garrett is busy rolling out and steadfastly defending his Resale Royalty Scheme, which will introduce a 5 per cent levy on commercial galleries and collectors.

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Imposing now a five-year moratorium to divest SMSFs of artworks will penalise thousands of retirees at least 5 per cent of the value of those artworks due to the resale royalties legislation.

What we have is a perfect storm! It is a crunch time for the arts industry.

Rather than simply moan and groan, I propose a solution by providing some simple, direct stimulus measures that can maintain the policies the Minister wishes to advocate, but at the same time stimulate the local visual arts sector:

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About the Author

Michael Eather is a practicing artist and galleriest based in Brisbane.

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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