More money for the big companies: governments back Nugent

The big news in the Federal arts budget is the Government’s increase in funding to the 31 major organisations investigated by the "Nugent Inquiry". The Government announced an increase in Federal funding to the companies of $43.3M over the next four years, and let it be known that this is $10M more than had been recommended by Nugent. It imposed a condition: the State governments must throw in their share, $25.2 million.

Minister Alston’s office announced the specific contributions from each government. Music Forum is informed that these were based on the recommendations by Nugent: formulae for determining the funding needs for each of a number of categories of company, along with consideration of its geographical and other context; and formulae for the share of funding responsibility to be accepted by the states and commonwealth based on company classifications as ‘global’, ‘flagship’, ‘niche’ and ‘regional’.

Terry O’Connor, spokesperson for the Minister, told Music Forum that the stipulated amounts have already been agreed by the Governments. While the additional funding to/from each state has been published, the subsidy to each company is not yet public:

You will note that the commonwealth contribution is greater than that announced by the Minister. O’Connor tells us that the additional $1.7M actually has been drawn from the Department of the Arts’ administrative budget!!! That’s a blow to cynicism.

The increase in federal funding (to $43.3M) is comprised of $31.2M for continuing subsidies and $12.1M for a one-off industry adjustment package. Allocations from the $43.3M over the four years are $9.1M, $11.7M, $12.3M, and $10.2M.

Music Forum readers may recall from the accounts of the Nugent recommendations in previous issues that the Commonwealth share of funding was to be highest for ‘global’ companies, diminishing for 'flagship', ‘niche’ and ‘regional’ companies. This explains the somewhat high share to NSW (43% cf. state population share of 36%), host to a number of global and flagship companies. However, the ratio of the total commonwealth subsidy to state subsidy is highest for Victoria, at about $3.60 to every Victorian dollar. The smaller states do not do nearly as well: the ratios are about a third of that. Nevertheless, we are told that the arts communities in all states receive more commonwealth funds than previously.

The additional contributions by the states depend upon their relative present contributions. For instance, Queensland government subsidies to its companies are already higher, relatively, than those of most other states, and so it needs to put up only a tiny $1.36M over four years in additional funds. NSW is contributing 42% of the total state funding, and given the benefits, so it should. Tasmania doesn’t receive much additional federal funding and has to contribute most of the additional funding itself. But given the per-capita benefit of existing federal funding to the Tasmanian Symphony, perhaps that’s fair enough.

Where is the money coming from?

The Minister claims that these are new funds, and that the increased subsidies have not been made at the expense of any other arts clients. In the department’s cultural budget there are a number of cuts, a number of increases, adding to a small total decrease. It would be of course speculative to line up the increase for Nugent against other specific cuts. Indeed, given that one large cut could be from capital funding, the claim of new operational funding seems credible.

The Cultural Development Assistance Program, which takes in organisations such as Opera Australia, the two opera/ballet orchestras, Youth Music Australia, NIDA gets $2.6M less (-3%). The budget provides no detail, but presumably the cuts will not be against the ‘Nugent’ organisations; they may or may not be the result of moving some expenditure or other to another category. We await further information.

As noted, the commonwealth claims that it is giving $10M more than recommended by Nugent. However, its funding covers four years rather than Nugent’s three, and an average of $8M a year is going to continuing subsidy. Presumably, it therefore already is committing itself to providing this continuing funding in year 4, and in years 5, 6 and onwards. So there you have $8M of the $10M.

It would be prudent to be alert to state methods for funding the Nugent increases. They also should not be to the cost of other smaller arts organisations. Over four years, for three of the six states, the annual cost is piffling, and for none of them is it onerous.

Nevertheless, it is very pleasing that the commonwealth and states have responded so well to the Nugent recommendations.

A note on Nugent’s proposed mergers. Music Forum is informed that the merger between the Melbourne Symphony and the State Orchestra of Victoria will not proceed: neither organisation wanted it. The financial problems of the SOVA therefore have to be solved by other means. The Queensland Philharmonic will merge with the Queensland Symphony. The concept is that there will be a single management but that the orchestras will retain their separate identities. That will be a challenge. The proposed merger between the Australian Chamber Orchestra and Musica Viva is under discussion by the two organisations. Now that the funding is known, it becomes feasible financially. The question is whether it is desirable. It would be a pity if the very strong identity established by the ACO were undervalued or compromised.

The total allocation to the Australia Council increases 4.7%, from $74.9M to $78.4M. $2.0M of the increase comes from a specific allocation for Council administration of a part of the new Book Industry Assistance Program. If this is subtracted from the 78.4m, we have $76.4M supporting the artistic production for which the Australia Council already was responsible. If we allow for say 6% inflation in the year of the GST, the purchasing power of the $76.4M is $72.1M (76.4/1.06).

In other words, the value of the government funding to the arts for which the Australia Council was already responsible will diminish by something like $2.8M. (74.9 - 72.1). As is not uncommon, an apparent small increase of funding to the Australia Council conceals the critical issue that the budget for core funding to its clients is diminished in real terms. This indeed is the issue, state and federal, which was found by the Nugent Inquiry to be a major contributor to the imminent disasters in the major performing arts sector.

It should be noted that there have been multiple submissions to the Government informing it that the difficulties faced by the companies in the major performing arts sector are faced also, and probably more urgently, by the smaller organisations funded by the Australia Council. In addition, these organisations will face more stress due to the introduction of the GST, with increased administrative costs and probably lower box office due to price rises to cover the tax impost.

Given its positive response in this budget to the problems of the major performing companies, it perhaps was not to be expected that the Government would also move to bolster the rest of the arts sector. Let us hope therefore that this is its focus for the 2001 budget. Perhaps the funds from any discontinued programs at that time could be applied to core funding for the arts through the Australia Council.

Some other cultural funding

Funding to the major cultural agencies generally has not been reduced. The ABC and SBS for once have not been hacked about, receiving what might be a CPI increase and even some additional funding to set up digital transmission services and, for SBS, to purchase programs. The Film Finance Corporation was not cut this year, and its base funding will be increased a nominal 3% for the triennium beginning 2001-02. The Australian Film Commission receives a small increase.

Self-help groups in regional and remote Australia will be able to access a new $5m fund to provide and operate equipment to retransmit ABC, SBS and commercial television broadcasts to smaller communities.