Crikey spent two hours in a small room with a bunch of Aboriginal ‘art market professionals’ last week listening to two staffers from the Copyright Agency Limited (CAL) set out the immediate future for the Aboriginal art market under Peter Garrett’s arts resale royalty scheme.

Garrett’s scheme under the Resale Royalty Right for Visual Artists Act 2009 commenced on Wednesday last week and requires that anyone selling visual artwork provide information — photos, unique identifiers (internal identification codes, etc), details of the artist and the work, etc — to CAL, even if that artwork will, at the first sale, sell for less than the $1,000 that would trigger the payment of a 5% royalty to the artist.

I’ve examined this scheme in the past here and here and those at the pointy end of the Aboriginal art market — the managers of the remote art centres, the small dealers and galleries and the auction houses and big-city galleries that deal in the fine-art end of the market — are still saying that the scheme will prove to be an administrative nightmare and a financial disaster.

And what about the Aboriginal artists whose artistic and commercial welfare Garrett trumpets as a primary justification for the scheme? Well, according to the consensus in the meeting and industry members that I’ve spoken to over the past weeks and months, few of the artists know anything about the scheme and its supposed benefits, and even fewer of them will ever receive any substantial benefits from the scheme.

The two staffers from CAL giving the presentation in Alice Springs appeared just as confused about many of the finer elements of the scheme as the 50 or so ‘art market professionals’ listening to them.

The CAL staffers opened with a couple of firm reminders to their audience that the resale royalty scheme was now the “law of the land” and that they would not enter into discussions on the policy behind the legislation — they were there to talk about the mechanics and administration of the scheme.

But many in the audience were confused and angry about the lack of consultation with them by Garrett and the sparse, and very late, information about what is a very complex scheme — and the effects that it would have on their businesses and the artists that they work with.

Confusion and anger in the Aboriginal arts industry about this scheme runs far beyond the small group of industry insiders in Alice Springs — the small dealers, “carpetbaggers”, flash downtown galleries and the remote Aboriginal arts centres that I’ve spoken to say the resale royalty scheme could knock the stuffing out of their businesses at precisely the wrong time.

The Aboriginal art market — and the many small arts centres at its core — has been doing it tough for some time.

Cecilia Alfonso, manager of the Warlukurlangu Arts centre at Yuendumu, 300 kilometres north-west of Alice Springs, told Crikey: “Peter Garrett has recently announced increased support and funding for arts centres across the NT and for that he should be applauded. But for Warlukurlangu and all the other small arts centres the resale royalty scheme will add another layer of meaningless bureaucratic bullsh-t that couldn’t come at a worse time.

“The Aboriginal art market has been flat for the past two years because of the global financial crisis, and our communities have been shattered by the double-whammy effect of the federal government intervention and the shires amalgamations by the NT government. If Peter Garrett thinks this will help Aboriginal artists then he couldn’t be more wrong, and this scheme will do nothing to address the very real problems created by the carpetbaggers and other scumbags that prey on Aboriginal artists right across the Northern Territory.”

And the storm created by the resale royalty scheme could soon link up with another “super cell” looming on the horizon.

In late April the federal government released part 3 of the Cooper Review into Self-managed Superannuation Funds (SMSFs), the latest in a series of papers commissioned by Attorney-General Robert McClelland. Jeremy Cooper was briefed to examine the governance, efficiency, structure and operation of Australia’s superannuation system.

Page 33 of the third Cooper report contains the following “preliminary recommendation”:

The Panel recommends that:

  • a) the acquisition of collectables and personal use assets by SMSF trustees be prohibited;
  • b) SMSFs that own collectables or personal use assets be provided a transitional period up to 30 June 2020, in which to dispose of those assets; and
  • c) APRA‐regulated funds be exempted from these changes.

There is limited discussion in the Cooper report of the rationale behind the proposed exclusion of these “collectables and personal use assets” that wouldn’t make much sense to anyone not versed in the arcane language of superannuation and its regulation, but Cooper notes that they include items such as “paintings, jewellery, antiques and stamp collections and wine, exotic cars, golf club memberships, race horses and boats”.

It is the reference to these so-called ‘passion assets’ that has caught the eye of more than a few in the fine art end of the Aboriginal arts industry.

Susan McCulloch is the co-author of the Australian arts industry ‘bible’ McCulloch’s Encyclopeadia of Australian Art and, as reported in an editorial on the Artabase site last week, she says Cooper’s recommendations will be devastating for the Aboriginal art industry:

“Take $100 million a year away from the Australian art market, and the effects will be devastating for visual artists, suppliers, indigenous communities, and small businesses. The most significant impact is likely to be on Aboriginal artists and their communities whose livelihood will be severely and immediately affected.”

And there may be all manner of other unintended consequences if Cooper’s recommendations are implemented. Suzie Spira is a director of a Sydney gallery and committee member of the Shalom Gamarada Indigenous Scholarship Program that runs an annual selling exhibition of Aboriginal art at the University of New South Wales, the proceeds of which fund scholarships for indigenous medical students in 2009.

“The annual Shalom Gamarada Ngiyana Yana Aboriginal Art Exhibition has, since it began in 2005, supported around 24 indigenous students to study medicine, optometry and medical science at UNSW.” she said. “Around 30% of the sales from the exhibition have come from self-managed super funds and if the Cooper recommendations are implemented it may seriously threaten the ongoing and essential support we provide to these students.”

Spira told Crikey of the unintended, but very foreseeable, effects of Cooper’s recommendation that SMSFs with a portfolio of Aboriginal art dispose of those artworks within 10 years:

“This will be absolutely disastrous for the broader market in Aboriginal fine art. This would lead to the dumping of a large number of high-quality works into a depressed market in a very short time — that would drive down the value of those works and also affect the production of new art. And anyway, what business is it of the government to tell people what is — or what is not — a good investment?”

And as this super industry ‘roundtable’ discussion moderated by Ian Glenister of industry legal advisers Glenister & Co illustrates, the Cooper recommendations may be a very big hammer to crack a very small nut, with art holdings by SMSFs representing about 0.01% of their total holdings.

Crikey contacted the Association of Northern, Kimberley and Arnhem Aboriginal Artists Inc for comment but they didn’t get back before deadline.