WHAT TO DO ABOUT THE RESALE ROYALTY REVIEW?
Once again the issue of the problematic Resale Royalty has reared its ugly head, seeking revision three years since its implementation. With good intentions it was heralded as the balancing scale that was to bring economic ease to Indigenous artists and their families and added income to all practising artists. Despite some revisions to the scheme it has yet to find a structure that is beneficial to all involved. In June this year, through the Office for Best Practice Regulation, the Resale Royalty Act began the process of a post-implementation review that allowed all stakeholders the chance to comment on the scheme and suggest further ways of achieving its objectives. Many have had their say. Some offer comprehensive arguments and others brief dismissals. What remains consistent is the consensus that the system in operation is in dire need of change.
In late November 2008, finally delivering on an election promise, the then Federal Minister for the Arts Peter Garrett, announced the introduction of the Australian Resale Royalty Scheme to begin in July 2009. Its reception was mixed. Artists and Indigenous groups generally embraced it but galleries and auction houses were dubious. Sotheby’s predicted a less than beneficial impact fearing there would be difficulty in the administration and regulation of such a scheme and cautioned it would hinder both the primary and secondary markets. This view was shared by most of the commercially driven sectors of the art world. Although some were in favour of the scheme they feared that in its proposed state the potential benefits would be outweighed by the negative impact.
Gallantly the Resale Royalty Act marched hand in hand with the revisions to private superannuation funds, the GFC and the inflated dollar and like toddlers left to their own devices, managed to upset the buoyant art market leaving it sitting slumped and depressed in the corner. Driving all the confidence out of the market it would be hard to single out any one aspect that forced such a damaging impact but the poor timing could not have been beneficial.
The submissions to the review of the scheme have been telling of the aspects that have caused such distaste. Despite some requesting total abolition of the Resale Royalty Scheme, most have offered suggestions that would result in a more viable version of what already exists. The submissions evidence the great divide of the needs of the artists and the agents that are in place to support them. There also exists a major difference in the needs of Indigenous and non-Indigenous artists that does not appear to have been factored into the initial form of the scheme. Education is key in allowing the Government to assist the artists it was intended to benefit.
The main beneficiaries for the Resale Royalty to date have been the widows and estates of already successful artists. Some in the Indigenous community have seen small gains but these have been offset by a greater loss of income and loss of confidence that some would argue has come as a result of the legislation. In the first three years of its existence the scheme generated $1.5 million for 650 artists of whom 68% were Indigenous and who received 51% of the royalties paid. The reporting of such figures hides behind the true amounts received given as percentages not true dollar figures. It appears that many have profited however most have only received nominal sums, the larger royalties paid to a smaller percentage of already successful non-Indigenous artists. The problems extend to the administration of the scheme that initially was intended to be self-supporting but that has in the last three years cost the government $2.2million and will cost an additional $47,000 a year to just break even.
Amidst the negatives there have been advantages to the scheme. The process has made way for the creation of an extensive database that allows for provenance and authenticity. In turn this has forced a regulation of sorts within the visual art industry with more transparency of commercial practice.
The submissions bring to light the impact of the scheme on the different aspects of the art world. The artists are divided in its support dependent on its relevance to their own practice. Ben Quilty voiced his opposition to a scheme that only provided substantial benefits to the wealthiest of artists. Some are suspicious of the way the royalty is policed and monitored claiming to have knowledge of personal resales that have yet to return any benefits. While others are excited about the potential to earn money on their hard work down the track, seeing it as an insurance policy of sorts.
The government agencies such as Viscopy and Copyright Agency , the collecting agency for the Resale Royalty appear to take a positive slant to their submissions. The glass is definitely half full from their perspective as enforcers of the Act. They believe the scheme, while still in its infancy has provided artists with recognition of rights and additional income, achieving its main objectives. The suggestions for change become a little sinister when the need to have greater ‘power’ to gain information on commercial sales, upending all sorts of privacy laws is taken into consideration. The need for this is reconciled with the case for greater transparency in the art market. The other issue is the ‘opt out’ clause in which an artist is allowed to opt out of the collecting agency obtaining money on their behalf. They propose that artists only be allowed to forego the payment and not be allowed to collect the money themselves. This decision is based primarily on the fact that the agency relies on the commissions of these payments to continue to financially support and sustain itself.
The galleries, dealers and auction houses have specifically responded to the effect the Act has had on their business. The submissions from the commercial art industry are comprehensive in their criticisms. They also include suggestions to improve the operation of the Act, from those who support the principle but have seen the consequences of poor implementation. With the support and lobbying for the auction houses by Liberal powerbroker, Michael Kroger, the likelihood of the Act being repealed is increasingly likely. The royalty is viewed as cumbersome and time consuming for what most regard as small to medium sized businesses. There is issue with the $1000 threshold being too low to garner any substantial return worth administering suggesting it be lifted to $5000. Some see the Copyright Agency as a ‘distributing’ agency not one that collects, leaving the responsibility in the hands of the dealers who receive no financial benefit for the extensive administration involved, they believe that financial compensation is warranted if they are to be party to a deal. They also consider that the lack of clarity for who is responsible for paying the royalty has caused many a confusing situation. There are problems with issues of privacy and view that paying the royalty after GST as paying tax twice. All of these concerns seem to echo in most of the submissions from this sector.
The Indigenous art industry goes further to suggest that the lack of consultation with the private sector of the Indigenous fine arts industry has resulted in a lack of understanding and adaption of the scheme to the unique wholesale and dealer framework that exists. Some of the art centres have reported benefits for the artists they represent but feel that they have been uneven in their distribution. A major issue for the Indigenous artists has been the methods of payment. In the Nicolas Rothwell article in The Australian, Royalties Scheme Shines Stark Light on a Divided Landscape he highlights the bins in Todd Mall, Alice Spring as the main benefactors of the Resale Royalty cheques, miniscule amounts discarded mistaken for fines or penalty notices or merely not worth cashing in. Many artists unable to cash cheques at their local community store often lose them or throw them away. Some cheques attached to the bottom of letters go unrecognised and are discarded. Suggestions have been made to provide annual statements for the benefit of taxation or other financial management purposes. Other solutions offered are the linking of the payments to bank accounts as is done with social security payments, eliminating any confusion and the need to travel to access the money. Better education is necessary on behalf of both the government in understanding the dynamic of the Indigenous art industry and the art centres in educating their artists about the payments. Central to this however the Indigenous community believes in and strongly supports the underlying notion that all artists should benefit from the resale of their artworks.
The Resale Royalty Act was conceived as being of maximum benefit to the artist. Yet much of the changes offered in the submissions are reflective of the separate areas of the arts sector and ways of protecting their own interests. Auction houses are worried about privacy laws, the collecting agency worried about the ‘opt out’ clause and the dealers concerned over who should pay the 5% royalty claiming no monetary benefit is afforded them should they be party to a deal. It is apparent the scheme has been bulky in administration and vague in the clarity of who pays however the central focus, the artist seems lost in the final result.
In a strange twist of events, the review of the scheme and legislation coincides with a change of Government. When quizzed about Arts Policy in the lead up to the recent election, the Liberal Party had no comment. It is no surprise therefore that in one of the early attempts to have a Resale Royalty Act passed back in May 2006 under a Coalition government it was decided that a royalty scheme for artists would not provide a meaningful source of income for most Australian artists and voted against it.
So it raises the question where to from here? How will the submissions and change of government impact on the iteration of the Resale Royalty Act to come or is it a possibility that it may cease to exist? Will the shortsighted version of the past be intuitive enough to understand the nature of art production in the digital age and take into true consideration the nature of the Indigenous fine arts industry? The thing that appears to be the most problematic is the large divide between the hardworking practicing artists, be they Indigenous or non-Indigenous and the government bodies that represent them. Until now much has been lost in translation in a bid to appear to be extending a hand to the Arts. The toddlers need to be tamed, the Resale Royalty disciplined and a version implemented that is kinder to the depressed Art Market, or it may just be banished to the naughty corner forever!