The Governments Review of the Artists Resale Royalty scheme: ‘on Bullshit’ Part I

Someone who lies and someone who tells the truth are playing on opposite sides, so to speak, in the same game. Each responds to the facts as he understands them, although the response of the one is guided by the authority of the truth, while the response of the other defies that authority and refuses to meet its demands. The bullshitter ignores these
demands altogether. He does not reject the authority of the truth,as the liar does, and oppose himself to it. He pays no attention to it at all. By virtue of this, bullshit is a greater enemy of the truth than lies are.

Harry Frankfurt : “On Bullshit”

The Office Of The Arts (OFTA) is currently conducting a Post Implementation Review (PIR) of its Artists Resale Royalty scheme (ARR). The deadline for submissions to the review is July 12. OFTA’s public discussion paper for this review stinks of ‘ the mushroom treatment’: The discussion paper fudges, omits, and/or attempts to bury information absolutely critical to a proper evaluation of the truth-reality of the ARR scheme and this is not accidental. Any truthful fully informed assessment of the ARR scheme would surely be  –  Fail.

From Our submission to the review :

The Discussion Paper does not disclose the critical fact that the average transaction cost, for CAL, is $30; $30 is the collection fee due on the $300 royalty payment raised on a $6,000 resale. The current minimum resale threshold is $1,000.

The Discussion Paper does not provide nearly enough information on the breakup by total value of the individual royalty payments. It does not provide the total value of royalty payments of $100 or less, and it does not provide the total value of royalty payments of $300 or less (to $101). The current economic-to-collect-and-deliver royalty payment is $300. The total number of payments below $300 is critical for the evaluation of exactly what percentage of the scheme is operating at below an economic-to-collect-and-deliver threshold.

The Discussion Paper does not explicitly state the median value for royalty payments. It is apparent from the Discussion Paper and the answers to the questions on notice that the median payment value is just above $100. This implies that 50% of the individual payments of the current scheme are well below the economic-to-collect-and-deliver threshold. [the link to Senator  Gary Humphries questions on notice is appended below]

The Discussion Paper also does not provide the total value of the top 277 royalties delivered; that is, royalties worth more than $501 each. It is likely that this top 4% of royalty payments will account for much of total value of royalties collected. ARR has wide-ranging effects, is of doubtful viability and its largest benefits in the long run must go to artists who have sold a lot art in the first instance. The ‘why’ of this scheme is questionable.

The gaps in, and inadequacies of, the information contained in the Discussion Paper raise real concerns about the OFTA’s commitment to a transparent and dispassionate evaluation of the scheme. Much critical information needed to undertake a proper evaluation has not been supplied in the Discussion Paper.

 

Hansard of Senator Garry Humphries Questions on notice about the operations of the ARR scheme and  answers as supplied by OFTA, at the end of February this year.

Despite the Office For The Arts  attempts to fudge, confuse and discourage honest evaluations of its ARR scheme (to say nothing of the ‘unfortunate’, rushed, timing of the reviews announcement), 10 submissions have, so far, been publicly made to the review. Not one of these submissions could be called favorable, several are from artists, and many of the submissions are viscerally damming of the reality of the ARR scheme.

Tomorrow, in Part Two of this post ‘on bullshit and ARR’, we will discuss some of the more damning of the submissions to the PIR of the Artists Resale Royalty scheme, so far – as of midnight today there are just 3 days left for submissions.

 

 

 

 

 

 

 

 

 

About john r walker

Have been exhibiting for 30 years . Utopia Art Sydney is my sole outlet. Apart from painting representations I have had a long interest in deep time , history in general and the representation of representation. http://johnrwalker.com.au/
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6 Responses to The Governments Review of the Artists Resale Royalty scheme: ‘on Bullshit’ Part I

  1. Steve X says:

    Fascinating. Thanks for writing up.

    The evaluation of failed policy is something not done nearly enough.

  2. Nicholas Gruen says:

    I hope you know there’s a fine literature on bullshit right here on Troppo.

    • john r walker says:

      Yes!!
      Harry is one of our favorites . Its particularly needed when dealing with ‘culture’ :-)

  3. Paul Frijters says:

    yes, the transaction costs on this scheme are enormous relative to the actual transfer to artists: if your numbers are right, 30% of the actual transfer to an artist is already gobbled up in transaction costs at the ministry. If you’d add the likely costs made by the buyer, seller, and artist in terms of compliance costs (which are likely to be higher for each of those than the cost to a ministry which has some economies of scale), we could easily be talking well over 100% transactions costs. ‘Fail’ indeed.

    • john r walker says:

      The advocates of the ARR were never interested in anything but the compulsory management cross-subsidy, ‘fee’.

      There are aspects of the numbers as supplied by gov that are ‘odd’- the figures supplied in Parliament, at the very end of February gave total royalties as of December 2012, as $800,000. The discussion paper released on 5 June gives total royalties as of December 2012, as $127,000,000. %50 discrepancy is fairly large, no?
      And the total number of royalty payments in YTD is well down on last years figures (and last years number were down on the previous years figures).

      However the average transaction cost for CAL was given in parliament as $30 and it is creditable. The costs of finding obscure remote unknown artists so as to deliver a very occasional $50-100 payment will always be very high.

      As for industry costs- In the UK the estimates for cost to the industry for their resale royalty payments range from about twenty pounds to over fifty pounds per transaction.

      Our system actually requires that all art resales over $1000, regardless of whether the ARR applies, be reported to CAL. The costs of this requirement must also be added to the cost side of the ledger.
      I am told that some are sending in their returns in ‘longhand , on sheets of Masonite.’

      Finally the ARR is adversely affecting first sales .
      A collector friend put it well:
      ” when buying a picture for more than about $25,000, you do think about : ‘what if I had to re-sell it for some reason?”

      Since the introduction of the scheme sales of my pics for more than about $30,000 have dropped by about %60-70. Fortunately sales of cheaper smaller works have not been affected so we are OK, but Christ… with friends like this….

  4. john r walker says:

    DEWHAS submission to the standing committee hearings into ARR feb 2009.

    On page 7 there is a Access Economics chart :
    EFFECT OF THRESHOLD LEVEL (2007 data)
    This chart shows that raising the collection threshold from “none” to $10,000 would only reduce the total value of the royalty collections from $5.023 million to $4.45 million . However it would reduce the number of recipients of payments (and thus the amount of work done by the scheme) to just 304

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