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Art market - best of intentions, worst of realities

By Michael Eather - posted Thursday, 22 July 2010

The Minister for Environment Protection, Heritage and the Arts, Peter Garrett launched a new Arts Policy on June 8, 2010, introducing a Resale Royalty Scheme for artists on secondary sales. This comes at a crucial time for the arts industry. On June 30 the government also considered the implementation of the Cooper Panel’s recommendation that would disallow the purchase of artwork from Self Managed Super Funds.

Minister Garrett has been trumpeting the Resale Royalty Scheme as a key plank in his new arts reform policy. I’m guessing that for many middle Australians, a resale royalty for artists “sounds like” it will help to support artists and their families. Sadly it won’t because it’s poorly designed. This scheme will adversely affect all artists even though much of the flag waving blurs this by focusing on the assistance it will purportedly provide to Indigenous artists. Provisions such as this will actually harm most Australian artists, and cripple their key support structures - the commercial gallery system.

This particular proposal emanates from the Myer Report in 2002 and more recently from the 2007 Senate report Indigenous Art - Securing the Future, which received many public submissions. The 2007 Senate Report researched various models and applications for the introduction of a Resale Royalty Scheme. Yet, informed opinion has always been divided on its merits and undecided whether it would achieve its aims. Indeed, there was a strong suspicion that the huge administrative costs would drown out any real benefits to artists. In fact, if one looks into the report, one can find that the Senate committee weighed up opinion and concluded against such a scheme. Hence, Recommendation 26 states:


The majority of the committee recommends that resale royalty scheme not be introduced because of the lack of benefits to most artists, and in particular Indigenous artists, and the lack of new evidence to the contrary.

Despite this recommendation, Minister Garrett went ahead with it when he announced the policy on June 8:

When the scheme commences a resale royalty of five per cent of the sale price will be payable to the artist on the second commercial sale of an artwork valued at $1,000 or more … They have formed an art trade advisory panel, and talked with artists, gallery owners, auction houses and dealers to set up systems to make the provision of information as straightforward as possible for artists and arts professionals.

It is time for artists, dealers, gallery owners and other arts professionals to get behind this important scheme for Australian visual artists by registering for the resale royalty with Copyright Agency Limited (CAL), Under the Resale Royalty Right for Visual Artists Act 2009, artists, buyers and sellers must provide information about the sale of artworks to ensure that the scheme can be delivered successfully for the sector.

Despite the grand rhetoric, there are significant problems with the Resale Royalty Scheme (RRS). I would suggest the following amendments to rectify the current design flaws of the new policy:

  • currently at $1,000 the base threshold should be at least $3,000, perhaps $5,000;
  • the secondary sale of an artwork should not include wholesale purchases from artists from their direct agencies, such as Indigenous community art centres;
  • the RRS should not apply to artwork sold at a loss, or gifted under the Cultural Gifts program;
  • the RRS should be capped at a reasonable amount (other countries suggest $25,000);
  • galleries and agencies should be compensated for the administrative impost on their business; and
  • the government should delay implementation of this scheme for 12 months until there has been further consultation with the sector they plan to work with. There also needs to be a process of intensive scrutiny to gauge whether the new policy will be effective in achieving its desired outcomes. Clearly this has not been the case to date - and it may prove counterproductive. The Minister also needs to explain why he has felt the need to go against the broad advice of the Senate committee submissions.

The RRS, in its current form, essentially rewards those who don’t really need it at the cost of the industry as a whole. Lacking any in-depth, practical examination of the diverse, cross section of small businesses supporting artists, it seems based on “prejudices” formed against the entire commercial art sector in the wake of incidents relating to the exploitation of Indigenous art. While commendably seeking to address rogue elements in the Indigenous arts sector, the Ministry for Environment Protection, Heritage and the Arts clearly doesn’t comprehend the repercussions for the sector as a whole.


Designed to provide equity, it may actually unwittingly exacerbate an un-level playing field by blurring lines (and in the process commercial confidence) between the wholesale, the primary and the secondary markets. An example of its bad design is that Auction House “buyers premiums” of 20 per cent are exempt from the scheme, yet Aboriginal artists who sell their newly made works to community art centres - which are then consigned to galleries - will be now deemed resales. This standard practice of distribution now becomes reclassified and directly hurts Indigenous artists.

This is a good example of how this scheme - which may have been dreamt up with the best of intentions - will in reality hamper the very people it is designed to support. Well over 80 per cent of the income derived will go to precious few artists and estates. Rich artists and estates that are earning well now will continue to do so. The majority of struggling, emerging and mid-career artists will receive very little additional support from these proposals.

Estimates suggest that based on current recommendations approximately 218 Aboriginal artists would receive average royalties of $1,800 and 21 per cent of these artists would receive less than $100.86. This is based on figures of all income from a resale royalty on secondary market sales of Indigenous art since 1994, which would have resulted in 86 per cent of the money going to the estates of seven dead artists. (In France 76 per cent of the money generated goes in to the estates of just six dead, white, male artists.)

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About the Author

Michael Eather is a practicing artist and galleriest based in Brisbane.

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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