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.