What Australia should be doing to get financial and cultural benefits from the boom

We Australians like to think of ourselves as a generous people. And in some ways, we are. We have one of the highest rates of volunteering in the world. We give generously to appeals for the victims of natural disasters, both here and abroad. Thousands of Australians sponsor children in developing countries. But our richest citizens, with some very honourable and outstanding exceptions, are not among them.

According to Australian of the Year Simon McKeon (who is one of those exceptions), of about 8,000 Australians reporting taxable incomes of over $1 million in 2008-09, more than one-third did not make a single charitable donation – or at least, not one for which they claimed a tax deduction.

Taxpayers with taxable incomes of more than $1 million in 2008-09 donated 1.71 per cent of their income. This is a considerably higher proportion than that given away by any other income groups (except, curiously those earning $6,000 or less). But affluent Australians are less generous than their counterparts in other countries, who according to the annual Merrill Lynch Cap Gemini World Wealth Survey give away between 3 per cent and 11.8 per cent of their wealth annually. There are now 860 Private Ancillary Funds (PAF) in Australia, foundations which have to give away at least 5 per cent of their assets annually in order to qualify for various tax breaks, with assets of a little over $2 billion. But according to Peter Winneke, Head of Philanthropic Services at the Myer Family Office, given the number of Australians earning over $1 million a year there should be at least 8,000 PAFs.

According to the Australian Business Arts Foundation (ABAF) private sector support for the arts has risen from $112 million in 2001-02 to $221 million in 2009-10. That’s an increase of 98 per cent, and is in large measure a reflection of the efforts of the ABAF in promoting greater private sector financial support for the arts. Within this total, the value of outright giving (as distinct from sponsorship) has risen by more than 161 per cent over the past decade to $123 million or 56 per cent of total private sector support for the arts, up from 42 per cent in 2001-02. Private sector support now accounts for 10.4 per cent of the total income of arts organisations, up from 6.7 per cent in 2001-02.

So the trend is in the right direction. But this has been a decade of extraordinary growth in income and wealth, notwithstanding the impact that the global financial crisis has had on share market values. Aggregate personal disposable income rose by 69 per cent over this period, while household net worth rose by 83 per cent. As a proportion of GDP, which rose by 66 per cent over this period, the increase in private sector support for the arts represents just 0.002 percentage points, from 0.015 per cent to 0.017 per cent.

That figure needs to increase if the arts in Australia are to flourish and thrive – especially given the increasing fiscal constraints under which state governments, in particular, are finding themselves operating.

There may be some merit in suggestions that governments ‘match’, in some proportion, donations by individuals or small businesses to the arts, as happens in South Australia through the Premier’s Fund, and in Tasmania, Western Australia and Britain.

But it would surely be even better if, as an example to their peers, some seriously wealthy Australians made large and well-publicised donations to cultural activities and institutions, and encouraged or challenged others to do likewise (as Bill and Melinda Gates, and Warren Buffett, have encouraged their fellow rich Americans to do).

If those who have been and will be enriched by the greatest resources boom in our history (not, I don’t mean to suggest, without considerable effort and risk-taking on their part, in most cases) don’t want, in the words of Marc Antony in Julius Caesar, ‘the evil which they’ve done to live after them’, then leaving the kind of cultural legacy to future generations of Australians that so many Americans have done in similar circumstances will help to ensure that the good they do is not ‘interred with their bones’.