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Editor's Note: Jolyon Warwick James, The Australia Art and Antique Dealers Association President, published on AAD the following "three critical" questions about what Australia's Artist Resale Royalty scheme has really been doing, in September of 2012.

In June of 2013 the previous Australian Government finally launched the much delayed Post Implementation Review (PIR). Nearly a year later, and the taxpayers of Australia, who have paid for virtually all of the operating costs of the scheme to date, are still waiting for Government to deliver detailed, independently verified, and accurate answers to these very reasonable Cost / Benefit questions, questions that Jolyon Warwick James asked 19 months ago.

ARTIST'S RESALE ROYALTIES - WHAT IMPACT? WHAT COST?

The current Australian Federal Government is proposing to review the Artists Resale Royalty scheme (ARR) in the middle of 2013. This is presumably to evaluate the need for appropriate modifications and adjustments to ensure an efficient system that meets the objectives. It may be remembered that ARR was introduced largely on the back of the belief that indigenous artists did not receive a fair share of the benefits of the work they created, and more generally that many artists, often described as “struggling” to make a living, were inadequately rewarded. A flurry of activity in the Sydney Morning Herald has recently served to remind us how little we know of the impact, effectiveness or cost of the scheme. Unless this cloud of obscurity is lifted, it will not be possible to make a valid clear evaluation.

A recent article by John McDonald (“Fair Trade” August 11 – 12) referred to ARR as a “…scheme that has cost more to administer than it has netted, and failed to help anyone but a few wealthy heirs of deceased Australian masters”. In response, a letter to the editor (12th August “Artists royalties”) by Libby Baluch of CAL (the collecting agency) noted that the scheme had generated $ 870,000 in royalties for 440 artists, sixty percent being indigenous. Furthermore she stated “while some royalties have gone to the families of deceased artists, most have gone to living artists”. The response does not cast much light on the statement made by Mr McDonald. For example it was not stated how much the indigenous artists actually received. Did those indigenous artists (the 60 % of recipients) receive in total $5, $5,000 or $ 500,000? Equally, the words “most (of the royalties) have gone to living artists” is totally unquantified. The inception of ARR in 2010 was fairly recent, and it is very understandable that the gathering and processing of appropriate statistics may not yet be completed. However, if this is the sum of information available, then there is clearly a serious gap between the data available and the data required to evaluate ARR by any government and the players in the scheme. We need to give serious thought to what is actually required for a valid review.

Given the background to the adoption of ARR in Australia, there appear to be three critical questions which need to be answered in the review. These are: 1) to what extent does ARR benefit indigenous artists? 2) to what extent does ARR support so called “struggling” (living) artists? and 3) is the ARR scheme efficient and cost effective? Let us look at what we know and don’t know of the answers to these questions and, importantly, what we need to know for there to be an effective review.

In dealing with the first question “To what extent does ARR benefit indigenous artists?”, we need to know a) the total amount of funds collected and b) the actual sum that has gone to the indigenous artists. Whilst we are informed that $ 870,000 has been collected so far, we do not have figures for the amount distributed to indigenous artists.

The second question, “To what extent does ARR support the so called “struggling” (living) artists?”, can be answered by knowing a) how much was received by living artists and b) how much was received by the estates of deceased artists (“heirs”). This information, apparently not presently available, is central to any evaluation of Mr McDonald’s statement. In the current absence of any domestic data we can at least look to overseas experiences for some clues as to the dynamics of this aspect of the ARR scheme - bearing in mind our own Australian ARR model was taken from the EU format.

Commissioned by the European Art Market Coalition, in 2011 Arts Economics produced a summary of its research into the effects or ARR in Europe for 2010. Their findings on page 9 were that 6% or all ARR collected went to living artists and 74% to “heirs” (ie the estates of artists). The remaining 20% went to collecting societies. This corroborates the often cited claims, for example referred to by Australian based Caslon Analytics, firstly that in France 70% of all royalties go to the heirs of just four deceased artists (they cite Picasso, Braque, Matisse and Léger), and secondly that in Germany, heirs receive seven times as much as living artists. If this is mirrored in any way in the Australian situation, it would be worrying for those reviewing the distribution of ARR.

The Arts Economics research also has implications for our third question, which asks to what extent the ARR scheme is efficient and cost effective. As noted, in Europe the collecting agencies (20%) accrue more than living artists (6%). To be certain of Australia’s position, we will need to know how much “in toto” has been both collected and distributed by the collecting agencies (as above) and how much they retained. This will indicate the cost effectiveness of the system of collecting the monies due to recipients of ARR. However there is a further issue which is the cost impost on those who must “administer” the ARR – the dealers, galleries and auction houses who must levy and collect the revenue at source. Apart from the infrastructure and overheads occasioned by these duties there is the issue of time involved. The Antiques Trade Gazette (28th July 2011) , quoting a survey by the London based dealers association LAPADA, noted the British ARR model required on average 68 minutes per transaction. This would appear to be a significant demand on trading requirements and resources. This issue should also form part of the review and be investigated for the Australian ARR purposes.

If the objectives of ARR are as indicated by the government – to generally benefit “struggling (living) artists” and specifically the indigenous artists, we would clearly not wish to see results for Australia such as those found by Arts Economics for ARR in Europe. The only way we will know, is of course, if the figures and data for Australia are made fully available. Adjustments and appropriate modifications to the ARR scheme could then be made. Let us hope that, in the interests of all parties involved, this information is forth coming and that the review can be thorough and informed. Certainly it would clarify the situation in relation to John McDonald’s statement.

Re-published with the kind permission of Jolyon Warwick James. 1st published 12 September 2012.

www.aaada.org.au

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