• Lack of proper Consultation with private sector of the Indigenous Fine Art Industry
  • Galleries/Dealers required to send full details and even images to CAL (Copyright Agency Limited) of all original artworks/artefact sold even if they sell for just $100
  • Resale Royalty takes no account of Indigenous Art structure with its unique wholesale/dealer framework
  • Indigenous Artists to lose work and their main form of independent income
  • Counter to the reasoning behind the Resale Royalty Scheme, the majority of Indigenous Artists and Craftspeople will be adversely affected.
  • Rushed and botched Legislation and implementation mean CAL Information Seminars actually take place some two weeks after its implementation “ most unaware of their new obligations
  • Draconian fine of $110,000 for a single breach, even though most are still unaware of their obligations due to lack of and patchy Industry promotion
  • Galleries forced to pay a royalty on their framing costs and on GST
  • Commercial in confidence information could be available to all and sundry under Freedom of Information

Unfortunately, it would appear that the Rudd Government has botched a very important piece of legislation in part due to its erstwhile rush to provide an equitable system where Artists benefit from the appreciation of their original artworks over time. The peak body for all sectors of the Indigenous Fine Art sector, the Australian Indigenous Art Trade Association (ART.TRADE) has long supported the concept of a secondary resale royalty programme and indeed it is part of our Constitution. However, in stark contrast to the new Indigenous Art Code of Conduct (COC) (which is voluntary), this compulsory Resale Royalty scheme is severely flawed due to its lack of consultation with the very people and businesses who will have to implement and administer the scheme.

The voluntary COC was extensively discussed and workshopped throughout Australia which enabled a system that the vast majority of the Indigenous Fine Art Industry would feel comfortable in subscribing to as most of the problems and impracticalities had been identified and addressed. However, with regard to the compulsory Resale Royalty, not only has there been no consultation with the majority of the private sector of the Indigenous Fine Art Industry, but most are still unaware of its impending implementation.

This flawed legislation takes no account of the unique structure of the Indigenous Fine Art market. With its contentious First Sale Trigger Point, this legislation means that a resale royalty becomes payable if there is an agent or dealer between the Artist and the selling Gallery or even where the Artist sells directly to a Gallery. This is usually the case given that most Artists reside in very remote areas. In effect, this could well mean that a royalty could be triggered twice before it even reaches the Exhibiting gallery.

The private sector comprises at least 60% of the Indigenous Fine Art Market and is often the preferred route for Indigenous Artists to promote and sell their artworks. This may be due in part to the relationship that they have with their Agent/Dealer and their good contacts, but it is also due to the fact that the private sector invariably pays for artworks upfront (these transactions are governed by best practice under the COC). However, the new legislation means that Agents will be disadvantaged if they choose to pay up front for an art work. Nearly all Indigenous Artists prefer to paid up front for their paintings/artefacts, but the clumsy legislation means that many Agents/dealers will have no choice but to obtain these artworks on a consignment only basis if they are to compete on an even playing field. Clearly, this drying up of cash flow to Indigenous Artists will have a deleterious effect upon Artists and their often extensive dependents.

As it stands, Agents already take a big risk in purchasing artworks up front as there may be no ready buyer and thus no return on their investment and as Artists are aware, money up front is worth more than a promise to pay once or if the painting is sold. Both Artists, Agents and galleries stand to lose with the current structure of this poorly conceived legislation. These up-front payments are an integral part of the Indigenous Art economy and this valuable income forms the vast majority of their independent income.

One of the more onerous requirements of this ill conceived legislation, is the requirement to notify, list all details and to provide an image of all sales of all artworks to CAL even if the artwork/artefact falls beneath the $1,000 qualification limit. Several ART.TRADE members have complained strongly about this requirement due to the incredible amount of time, resources and administration that this unprecedented demand will place upon their businesses. As an specific example, one of our members based in Alice Springs sells on average 13,000 paintings per year of which, 11,000 paintings sell beneath the $1,000 resale royalty threshold at an average price of around $100 – $200. Unbelievably, this member is expected to report all of these 11,0000 sales and submit photographs, Artist details and description for each and every one of these works even though conceivably they will never reach the $1,000 resale royalty threshold. Currently, this Gallery does not even photograph these artworks as it isn’t economically viable to do so.

Clearly, these artworks will become completely unviable to this and every other gallery on June 9th when the resale royalty requirements come into effect due to the onerous reporting requirements costing more than the paintings value. Many of these paintings are tourist pieces often by lesser known Artists and this income is their only independent income. These Artists will be adversely affected and put out of work by this ridiculous and unnecessary reporting requirement. This onerous and cumbersome reporting requirement needs to be abolished immediately as a matter of urgency before Indigenous Artists lose their jobs and their income.

Whilst the Government has partly avoided a retrospective element to the legislation by stipulating that works purchased before 9th June, 2010 are allowed to be sold once before triggering a resale royalty, this again ignores the unique structure of Indigenous Fine Art where many original artworks have already been purchased by Agents/distributors and dealers (essentially wholesalers), as the selling gallery or the next person in the chain will incur the royalty.

The Government needs to acknowledge the very real and relevant differences between the Western and the Indigenous Art markets. Whilst a western Artist may be liable for framing, invitations, exhibition expenses and refreshment costs, traditionally all of these expenses are borne by the Exhibiting gallery with regard to Indigenous Exhibitions. However, this approach means that the exhibiting Gallery will have to pay a royalty to the Government for their framing costs! Unlike the general retail industry, most galleries and businesses within the Indigenous Industry are very small enterprises of just one to two people operating on a commission basis of between 20% – 40% from which all costs such as wages, rent, rates, utilities advertising invitations and Exhibition cost must be met.

I urge the Government to push the pause button on the implementation of this flawed legislation (with regard to the Indigenous sector) before incredible damage is done to this fragile Industry and to the very Artists that the Government is seeking to enfranchise and for the Government to immediately consult widely so that a workable framework can be established and embraced by all within the Indigenous Fine Art Industry.

This ad hoc approach of one size fits all to an important Industry reform displays a complete lack of knowledge regarding the Indigenous Fine Art Industry and will inevitably do irreparable damage to the livelihoods and income of Indigenous Artists and their representatives alike.

The Fine Art Industry does not have the resources of the Mining Industry to combat this mistake nor does it have the resources to implement this scheme and its onerous reporting requirements, but just as many careers and livelihoods are on the line.

Please feel free to contact me on this email address or the following phone number to discuss the implications of this ill conceived legislation further.

Regards,

Ian Plunkett
ART.TRADE President
(08) 9335 8265