As of Monday 15 July the web page for Office Of The Arts review of its Artists Resale Royalty scheme lists 40 submissions. All but a few of these submissions are unfavorable to the scheme.
In his submission , Ben Quilty, Australian War artist and Archibald Prize winner, focuses on ARR as poor policy :
In 2007 I also voiced my concern to The National Association for the Visual Arts that a Resale Royalty Scheme would risk support for the emerging sector of the Visual Arts. I had spoken to some very serious collectors (including one of this country’s biggest collectors of Indigenous Art – who I have asked to submit to this review) and many showed concern that their purchase of an emerging artist’s work could lead to a resale royalty, on top of the resale commission of galleries and auction houses at the point of resale.
I felt at the time that I would never expect someone who had taken a risk supporting my early career should then, years down the track be penalised for doing so. Those early sales of my work were what allowed me to give up my day job. I am eternally grateful to those people for taking a risk on me at the beginning of my career and in 2007 taking money from them on any resale was the last thing I wanted to do. It seemed to me to be a pretty direct assault on the culture of support for emerging artists. This I feel is also exactly what has happened and particularly in the emerging indigenous scene where artists are represented in culturally and commercially complex relationships. Purchasers are confused by the possibility of future royalties owed by them and therefore it is reasonable to say that those sales have been directly affected in a negative way.
The Resale Royalty Scheme is providing substantial returns for the wealthiest artists or their estates. If that is what the scheme aimed to achieve then it has been successful.
With so many credible submissions detailing the dark side of ARR , its hard to know where to begin: market distortions, compliance costs out of all proportion to benefits, arbitrary and punitive treatments – ARR is payable on the GST component of a resale !, or the very real harm done to artists first sales income ,the list goes on and on. However the submission by Brian Tucker Accounting is a pretty good summary of many of the harmful issues caused by the ARR scheme.
Brian Tucker Accounting has many indigenous art centers and indigenous art businesses as clients, this is from its submission:
Accounting and bookkeeping issues
This has been an absolute nightmare. ……. I know more than one gallery that has gone through up to three bookkeepers, and we have actually had to send in a fully qualified accountant to do bookkeeping work, unpicking and correcting entries. …..
Art Centres have not been helped by the fact that their software has been unable to be modified to allow the invoice to be presented as that of an agency transaction. It’s not as if the Royalty is the only issue here; if the invoice or other sale document is not explicit on this matter sellers who are registered for GST (most) will find themselves having issues with the ATO
…..the scheme has worked to the detriment of artists, and particularly Indigenous artists, in that the previous system of buying works up-front has all but ceased except for minor works. Galleries often purchased work for an exhibition, not because they ‘got a discount for cash’ but because most galleries really wanted to get money into the hands of the artists they represented as soon as they could……..
It has been mentioned that there has been a drop in the value of sales of art since the GFC. Certainly the GFC had an effect on the art market but that effect was magnified by the introduction of the Royalty as buyers’ perceptions were that it was another cost and just all too much.
Tucker also raises: “The ticking time bomb” ( which was also raised by the KickArts submission). There are potentially a lot of ARR affected transactions where: “no-one realised there was a liability, such as a SMSF that didn’t realise it was an Art Market Professional”….He goes on to outline a likely future scenario:
‘oh God, we’ve supposed to have been paying this royalty for the last ten years, we’ve no records of what we sold, who we sold it to, how much we sold it for and who the artist was’. Will that all be pursued – and who’ll pay for that – or will it be ‘all too hard’. In which case, what’s the point?
“what is the point” of ARR, is a big question. For example OFTA has been very coy about the total value of, and distributions of, the top %1.5 (101) of royalty payments ,those worth $1,001 or more each.
This submission by Damian Hackett of Deutcher & Hackett, shows that since ARRs inception, D+H has had 13 ARR affected resales and that these just 13 resales alone, have generated a total of $92,095 in royalties, and none of this money has gone to an indigenous artist.
None of the emerging wide evidence that ARR has caused far more harm than good should be a surprise to government ; in 2004, Access Economics in a report on ARR, warned that the claim of net benefit of ARR to artists was:
“based upon extremely unrealistic assumptions, in particular the assumption that seller and buyer behavior would be completely unaffected by the introduction of RRR [ARR]” and that, “Access Economics considers that the results of this analysis are both unhelpful and potentially misleading”.
And Access is simply one of many credible dispassionate studies that, over several decades has warned that ARR is not a good idea, especially if you are trying to make and sell your art for a living. In the odd paranoid moment I sometimes wonder if the Government has done this all deliberately. However my faith keeps me sane, it tells me that ARR is one of those ‘Book Of Job’ things: a ‘shit happens’ moment.
Many of the submissions make constructive suggestions about what to do about the mess and a precis of these suggestions will be my next post.