Resale royalties and new directions for the arts

Author: Peter Anderson
Date published: 11 March, 2008

The recent Australian federal arts policy revived interest in the resale royalty rights for visual artists. This article outlines the pros and cons of such a scheme raising questions effecting visual artists, their descendants, auction houses, galleries and the administration of such a scheme.

In reviewing the arts policy debate during last year's election campaign, one element that clearly distinguished the Labor campaign was their emphasis on the individual artist. Two key measures that mark this difference are the ArtStart proposal, which focuses on improving artist's incomes and their intersection with the welfare system, and the commitment to "implement a resale royalty scheme for visual artists". While ArtStart is primarily focused on emerging artists, the introduction of visual arts resale royalties will primarily be of benefit to those who are more established.

The debate over the introduction of resale royalties in Australia has been going on for about twenty five years. Initially this issue was linked to the campaign for the introduction of artists' Moral Rights legislation and the establishment of a visual arts copyright collecting society. With VISCOPY established in the mid-1990s and Moral Rights legislation passed in 2000 the focus on Resale Royalties intensified. Most recently, the 2002 Contemporary Visual Arts and Crafts Inquiry recommended that resale royalties be introduced, and this was followed up with the release of a Government discussion paper on the issue in mid 2004. As might have been expected, submissions in response to the discussion paper were mixed. While artists' organisations like the National Association for the Visual Arts and VISCOPY argued strongly for the introduction of a Resale Royalties scheme, many commercial galleries and auction houses argued strongly against such a course of action.

After what could only be called an inconclusive debate over the benefits and potential negative impact of such a scheme, in May 2006 the Coalition Government decided against the introduction of resale royalties. Resale Royalties, they argued, "would not provide a meaningful source of income for the majority of Australia's artists". Instead, they argued, "research shows that resale royalty schemes bring most benefit to successful late career artists and the estates of deceased artists". Such a scheme, they said, "would also adversely affect commercial galleries, art dealers, auction houses and investors", and "would not end disadvantage for Indigenous artists". As an alternative they introduced a four year package allocating $0.5m per year to business training for artists and an additional $1m per year for the Indigenous arts industry through the National Arts and Crafts Industry Support (NACIS) program.

In contrast to the Coalition's position, Labor has advocated for the introduction of resale royalties for some years, with Senator Kate Lundy introducing a private members' bill in March 2004, before the release of the discussion paper. While ultimately unsuccessful, that proposal called for the artist to be paid 5 percent of the sale price when their works were resold.

In the lead up to the 2007 poll, the particular relevance of resale royalties to Indigenous art was brought into focus with the $2.4 million sale of Clifford Possum Tjapaltjarri's painting "Warlugulong" at a Sotheby's auction. Acquired by the National Gallery of Australia, the painting had originally been sold in 1977 for just $1200. In light of this, it is worth noting that in addition to the introduction of resale royalties, Labor has also committed an additional $7.6 million over four years to Indigenous Arts Centres through the NACIS program. 

The underlying principle of resale royalties law is that artists benefit in the increase in the value of their work between first and subsequent sales. This is usually achieved by allocating a percentage of the resale price to the artist. While the 2004 discussion paper examined a variety of models, which included different sales thresholds and percentages for royalties, it is not yet clear what model Labor will follow. In most cases resale royalty legislation applies to all public secondary art sales, although in some cases it is restricted to auction sales. As with copyright law more generally, the resale royalty right extends for a period after the death of the artist (usually 70 years), so that the benefits continue to flow to estates of artists.

Advocates of resale royalties argue that such schemes provide substantial benefits to artists, with some suggesting that they function a little like a special form of artists' superannuation. They point out that it is only fair that artists are allocated some share of the increase in the value of their work, with some advocates arguing that the increased value is already latent in the work at the time of first sale.

However, critics point out that in many cases more than half the royalties collected are paid to the estates of artists, and that benefits to living artists are very unevenly distributed, with most of the funds going to those that are already established and successful. In France, where resale royalties were first developed, around seventy percent of the royalties are distributed to the estates of fewer than ten artists, including Picasso and Matisse. While the situation in Australia might not be quite so extreme, it is clear that the distribution of royalties will be similarly uneven, driven as they are by existing secondary market forces which see artworks by some artists selling for very high prices, while works by other artists remain unsold. Of course, many artists’ works do not ever enter the secondary market, as is usually the case with works that are initially purchased for public collections. In addition, because of the complexity of explicitly monitoring increases in the sales price of work, or clearly identifying the profit margins from such sales, the royalty is usually calculated simply on the sale price. This means that the royalty is paid even when a work is sold at a loss.

While arts and cultural policy has been conspicuous by its absence on both sides of politics in recent election campaigns, in the lead up to the November 2007 poll issues such as Resale Royalties and ArtStart did gain some wider attention - with the latter being characterised by some conservative commentators as little more than a 'paint for the dole' scheme.

But in the wash up after the election the cut and thrust of the campaign quickly slides into the background, and what matters are the details of policy proposals and the plans for their implementation. In the light of this, Labor's "New Directions for the Arts" policy now carries a weight that it might not have if the result of the election had been different. In comparison to the big vision of Labor's 1994 cultural policy, "Creative Nation", it is a fairly limited document, with a primary focus on the arts, rather than the cultural sector as a whole.
This shift to a focus on arts policy rather than cultural policy is also reflected in the way that Prime Minister Kevin Rudd has positioned the portfolio, appointing Peter Garrett as Minister for the Environment, Heritage and the Arts. This new arrangement disengages the arts from communications and information technology, a link that was first made under Keating that continued in some form right through the Howard years - although in more recent years the arts have primarily been the responsibility of a junior Minister for Arts and Sport. While this new portfolio arrangement could be seen as a promotion for the arts, it does open up the question of how the intersection between the arts and the creative industries will be managed. Although Labor's "New Directions" policy includes creative industries elements, some of these - such as the commitment to establish a "National Broadband Network" - seem tied to the old departmental structure.

While the "New Directions" policy is clear about its support for the arts and agencies such as the Australia Council, it also foreshadows a significant review of current structures, programs and priorities. In short, it is a policy that calls for consolidation and streamlining of funding and support programs, with a possibility that the Australian Business Arts Foundation and the current Departmental programs (such as Visions and Playing Australia) may be brought under the umbrella of the Australia Council. The Australia Council itself looks like it will be the subject of a quite detailed review that examines everything from "investment application processes" to the "system of fellowships and grants". Specific policy proposals also suggest that this government may take a more interventionist approach, with a plan to "implement a program of mandatory presentation by major performing companies of work created by and featuring young and emerging Australian artists".

Reading between the lines, and taking into consideration some of Peter Garrett's remarks made in launching Labor's policy, it is clear that the perception is that the funding process - and the Australia Council in particular - is too bureaucratic and does not give sufficient priority to "the development of art at the community level", to smaller arts organisations, or individual artists. There is also a strong focus on the development of regional arts, with a new Creative Communities program to be developed by the Australia Council funded to the tune of $10m over four years. Other areas to be given attention include arts education, the contemporary music industry, and the film and television industry. In this latter area there is a commitment to "review the effect of free trade agreements" on Australian content. There is also a strong emphasis on developing the contemporary music industry, which is perhaps not surprising, given the Minister's background in this area.

Peter Anderson has worked in the Australian arts and cultural sector for over thirty years. His current independent practice incorporates journalism and professional writing curatorial projects and cultural policy research. Over the last twenty years he has written regularly on the arts and cultural policy for both academic journals and visual art magazines. He is a former editor of the journal Culture and Policy.

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