Review of the Artists Resale Royalty scheme : Part II

The adoption of ARR as policy for governments (in about 2002) was driven by a small cluster of  publicly funded, ‘arts societies’ management representatives, that were/are closely linked to a global network of copyright collection societies managements. The real aim of these lobbyists for ARR, was always compulsory membership/cross-subsidy of their monopoly society. The introduction of ARR in the form of a compulsory, monopoly management right , would have been a ‘exciting’, ground breaking, precedent for these societies. ARR did not quite turn out the way they wanted, but it has none the less created a lot of damage .

(Next post will be on the ‘phantom employes’ that pushed ARR as policy )

In his 1995 report to the Australian government, renowned IP lawyer Shane Simpson analysed the merits of statutory, compulsory collective, management of copyright (and of ‘neighbouring rights’) versus the merits of voluntary collective management. I quote:

“experience shows that statutory licences drafted without appropriate industry consultation are often unworkable and voluntary licences are required to replace them.”

ARR was introduced without proper wide consultation – especially with individual artists directly involved in the making and selling of their art, their representative galleries and their collectors. Further, the legislation was also brought in without a proper Regulatory Impact Statement ¹ as required by the government’s own Office of Best Practice Regulation. The result has been pretty much in line with Shane Simpson’s historical knowledge.

Submissions to the Review of the ARR scheme 

One of the submissions is particularly revealing of  lack of proper consultation, prior to enactment of the scheme. This submission is about a problem that could have very wide ramifications for many exhibiting galleries.  Kick Arts, is a Cairns based, not for profit gallery and its problem is: “Our issue has arisen because of the technicality of the title transfer during a sale or return consignment sale under Australian taxation legislation”

In early 2012, after notification by our auditor, KickArts staff were shocked to discover that we had incurred a RRS ² liability in the order of about $10,000 due to the method of consignment sales we used to make primary sales of artworks through our not-for-profit activities. KickArts had made these sales acting in good faith that we were making primary sales, as all sales we make are for stock that has come directly from the artist, their Art Centre, or out of our own printmaking studio where we work collaboratively with the artists to develop the artworks. All artists in these sales have already been paid their agreed artist’s price for these works by us and we never take on secondary market work….

We are concerned, in light of our situation, that there is a potential explosion of liabilities pending in the industry….

Another of the submissions is revealing of just how much damage  is being done by the scheme, to artists sales and incomes .  
Short St is a Broome WA based Gallery of good reputation.  Prior to ARR (June 2010) despite the GFC, there were about 12 galleries trading in Broome.  Short St is now the only one left, and it is only just holding on. From Its  submission :

It has reduced the number of exhibitions we hold as we can no longer buy works up front that guarantee good enough quality works for shows. Hence it has been very detrimental to the overall marketing and career development of our artists. Also in remote communities some art centres buy works up front then expect the galleries to do the same this means often the painting can incur two lots of resale royalties at its first showing, making it un competitive and forcing artists price of works down. Again harming the very people it was designed to help. The fact it includes GST makes it almost impossible to administer therefore most galleries just no longer do re-sales, this would be for us a reduction of about $250k-500K in sales a year, not including the up front purchases that on average where about $100K so overall for our small business the Re-sale royalty has cost us about $600, 000 a year in lost revenue. It is invasive about our clients details and the $1000 threshold is absolutely ridiculous, as most sales are over $1000 therefore we would need a fulltime staff member to administer and we are struggling to survive. I think the number of galleries in Broome alone has dropped from 12 to one – us, and if the arts legislations that Garrett bought in are not wound back we will close, in fact if this Govt remain, we will cease trading in October, it is no longer worth being in business, and I apologise for ever treating Aboriginal artists as equals it was clearly wrong of me, I should have consulted the Government before I ever did anything for them, and should have realised they were not deserving of independent money and need entire Govt departments to prop them up. I apologise profusely for this oversight……

…There is an awareness and absolute fear amongst the art market and consumers. When it first came out, we received accusatorial and aggressive information implying that we are fundamentally corrupt and that buyers of art are thieves trying to make money on the artists back, and gallerists are such scum that there is no way CAL would ever entrust us to pay our artists the money directly and that they from Sydney are going to develop direct relationships in remote areas with our artists who we have worked with and lived with for 16 years

Last but not least is this submission  from Emeritus Professor Peter Pinson OAM , a very widely respected figure in the visual arts and former Head of the School of Art, University of New South Wales College of Fine Arts. In many ways Peter sums up the toxic bullshit that is ARR :

Introducing distortions into the profession.

The royalty tax discourages dealers from practising in the secondary market while doing absolutely nothing to foster the primary market. I came to gallerist practice from (in part) a background in art history. I proposed to represent painters and sculptors who had established their careers in the 1960s and 1970s. I also planned to exhibit secondary market work from this period. A key objective in this vision was to bring attention and appreciation to an art historical period that was currently little-showcased and under-regarded in Australia. My gallery was to be, in part, educational and didactic. Exhibiting work of the past would hopefully encourage reassessment of the reputations of senior generation artists and bring their contributions to the attention of younger generations. The introduction of this tax has discouraged me from including historic, secondary market work in my program. After all, if work of an earlier period has already fallen somewhat from popularity (albeit unfairly), clients are hardly inclined to pay an additional 5% for it.

The advocates for the compulsory ARR came from the government sector and have little knowledge of, and absolutely no sympathy for, commercial realities. The scheme was enacted without consultation and the results have been predictably awful.

1. RIS[↩]
2. ARR[↩]