Labors damaging legacy to the visual arts

The following quote is from an article published in London’s Financial Times on October 4. The article is further confirmation that the previous Labor government’s gratuitous interference in the art market has had a devastating effect on sales and its legacy is continuing to prevent recovery.

The Art Market: Australian art gets thumbs-down   by Georgina Adam

The market for Australian art is small, worth about A$100m (about US$93m) a year at auction, and has “levelled off” at that value, says Mark Fraser, chairman of Bonhams Australia. …..

He says that three factors are dogging the market: the introduction of a resale royalty scheme (which levies 5 per cent on the resale of works of art over A$1,000, with no upper cap) and changes to pension fund rules, which have led some collectors to sell off their holdings. Finally, he says: “The market for Aboriginal art has really taken a huge hammering since export bars were introduced, because the biggest buyers were in the US and Europe.” He concludes: “Psychologically, people here are more reticent to get involved with art, because of this government tinkering. It’s unsettling – they wonder if there will be further regulation.”

It is important to remember that Australia’s art resale royalty scheme is running at a significant net loss to government and that the changes to the rules on art in SMSFs have  trashed the value of a significant number of pre-existing personal super investments for no good reason. All art has been devalued by this process, and a sector of the market has vanished. These policies have created increased costs to government, not just subsidies to the costs of the collection society, but also in the need for increased subsidies to the indigenous art centres to cover the loss of sales income caused by these same policies. And, at the same time they have greatly reduced the size and viability of the independent tax-paying visual arts sector.

It should come as no surprise that when governments enact damaging and pointless regulation of art, a discretionary commodity that is not a health, safety or national security issue, it creates broad anxiety and distrust in the market about what further interferences a government might simply do on a whim.

The net result of these policies is that they have driven many legitimate, committed art businesses to the wall. In the words of long term artist and gallerist Christopher Hodges of Utopia Art Sydney:

“Since the introduction of the resale royalty, there have been more commercial galleries, representing living artists, close their doors, downsize or amalgamate than in my memory… diminishing all our opportunities.”

The real covert purpose of the lobbyists for the artist resale royalty was always compulsory, monopolist, collective representation of artists as well as the creation of subsidies to self-appointed representatives of “art”. In the face of clear evidence that the advocates for the scheme were mired in conflict of interest, that the scheme was intrinsically unviable and that numerous studies, including the Access Economics report, stated that the scheme would not be of net benefit to living artists, Labor’s willingness to even contemplate legislating for such a purpose was and still is deeply troubling.

For background info : With friends like this’: Labor policies and the commercial, independent visual arts sector

The Review of the Resale Royalty Scheme: or A classic case of what Niskanen spoke about.

The Review of Artists resale royalty scheme Part II

The Review of Artists resale royalty scheme Part III

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/
This entry was posted in Art and Architecture, Economics and public policy, Politics - national, Race and indigenous, Uncategorized and tagged , , . Bookmark the permalink.

3 Responses to Labors damaging legacy to the visual arts

  1. Tel says:

    It should come as no surprise that when governments enact damaging and pointless regulation of art, a discretionary commodity that is not a health, safety or national security issue, it creates broad anxiety and distrust in the market about what further interferences a government might simply do on a whim.

    It does not surprise me; but the same thing could be said about the NBN… not a health, safety or national security issue, and any private investor would rightly be nervous about government changing the rules and trashing their ability to continue to do business. For example, the Greenfield Fibre Operators in Australia had a complaint very similar to the above:

    GFOA member companies pioneered advanced broadband networks long before the NBN or NBN Co. Even before 2000, GFOA member companies were designing, building and operating advanced broadband networks in Greenfields and some have even designed optical fibre equipment used in advanced networks around the world.

    GFOA member companies connect or pass over 400,000 homes and businesses and potentially there are another 350,000 premises to connect in Greenfield estates already serviced by their networks or under deployment contracts. GFOA member companies deliver high-speed Internet, Data, Voice, and Free to Air TV, Pay TV and many other digital services (including CCTV, security, power, water, traffic and other utility management services).

    For almost a decade, GFOA member companies have more than demonstrated their capabilities and competence in designing, building and operating FTTP networks in Australia to the world’s best standards. GFOA members continually meet and exceed the high quality of technical and commercial standards required and expected by developers, communities, retail service providers and end-users.

    GFOA member companies have created thousands of jobs while delivering on the Federal Government’s desire for innovation and competition in Australian telecommunications, years ahead of the NBN, but without taxpayer subsidy.

    GFOA member companies and the thousands of Australian workers employed or contracted by them, have been doing their part to assist the Federal Government to deliver on its NBN vision of providing FTTP to 90 per cent of Australian homes and businesses, since the Government’s announcement on 7 April 2009.

    GFOA member companies have actively participated with Government in NBN forums (including the DBCDE Greenfields Stakeholder Reference Group), are members of the Communications Alliance (CA) Early Stage Deployment Working Group and have responded to various requests for submissions relating to the National Broadband Network (NBN).

    Since the early days of NBN, GFOA member companies have participated as unpaid advisors to Government task forces, been voluntary submitters to Government enquiries on the NBN, and more recently, all GFOA member companies were encouraged by the Minister and ultimately invited to provide proposals to be the expert contractors to NBN Co to build FTTP networks in Greenfields over the next few years when NBN Co says it will not have capacity to do so. The GFOA member companies have been the core of the vibrant competitive FTTP network market in Greenfield developments for several years. It is the survival of that competitive Greenfield market that is now threatened by NBN Co offering to provide networks without charge to the developers of Greenfield developments, through higher access charges that must be passed on to residents and end users.

    Opticomm (a different supplier, unrelated to the GFOA complaint above) had somewhat similar things to say, but they decided not to complain so much as just to compete as best as they could. You can read about it here:

    http://mt.tbone.com.au/media/transcripts/transcript-doorstop-interview-launch-of-opticomm-network/

    The real covert purpose of the lobbyists for the artist resale royalty was always compulsory, monopolist, collective representation of artists as well as the creation of subsidies to self-appointed representatives of “art”.

    Again, you could say exactly the same thing about the NBN. We had a monopoly back in the old Telecom days, gradually with Telstra going private, legislation loosening up, and greenfields going over to fiber and with alternative options (e.g. BigAir fixed microwave, 3G, 4G mobile networks, etc) that monopoly was slipping, and the market was getting competitive. The government did a review, they knew perfectly well that there was a growing market in fiber network operators, so they decided to build the NBN and attempt to subsume all of that. Fortunately they failed, in retrospect it looks like Opticomm might have chosen the best approach but time will tell I suppose. No one knows what Turnbull will do and you can’t turn back the clock… once spooked, investors learn their lesson.

    I guess what I’m saying is, while you are feeling sorry for yourself, take a moment to feel sorry for other victims of the same scam. By the way, I agree completely that you have accurately described the problem; it just requires more of a big picture perspective to see how far this problem stretches.

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