Australian federal budget 2011: wrap-up of arts and cultural funding

The following article appeared in Crikey on Friday May 13th 2011. 

The 2011 federal budget contained some modest announcements for the arts and culture.

In the Arts portfolio, the government delivered on its 2010 election promise for $10 million over five years in new grants for artists to create work. The funding will support “up to 150 additional artistic works, presentations and fellowships over the next five years through the New Support for the Arts program.”

As well, $400,000 has been found for the federal government’s Contemporary Music Touring Program, a successful program which supports popular mid-level contemporary music acts to tour regional areas.

In broadcasting, $12.5 million has been provided for the proverbially penurious community radio sector, an increase of 25% for a critical area of broadcasting that generally receives very little government support

There was also a package for the screen industry, with a headline figure of $66 million (as we will see, it is actually less than this). Much of the extra money goes to production subsidies through the tax system in the form of lower qualifying thresholds for the Screen Production Incentive. According to Screen Australia, the changes include:

  • Lowering the threshold for Producer Offset eligibility from $1 million to $500,000, for features, TV and online programs

  • Replacing the Producer Offset for low-budget docos with a Producer Equity payment

  • Converting the 65 episode cap to 65 commercial hours for TV

  • Exempting documentaries from the 20% above-the-line cap

  • A reduction in qualifying Australian production expenditure thresholds, and allowances for a broader range of expenses to be eligible for QAPE.

Some really good news is the restoration of the Australian Bureau of Statistics’ screen industry survey, which provided gold-standard data on the state of the industry and which hasn’t been performed since 2007-08 (shortly before the Rudd government slashed funding to the ABS in its first budget).

But how much new money for screen is really here? Go to Budget Paper 2 and you will find that the total extra funding is only $8 million. This is because, quoting from the budget papers, “these changes will be partly offset by $48 million in savings over four years from 2011-12 by removing the Goods and Services Tax (GST) amounts from [qualifying production expenditure] for the film tax offsets and increasing the minimum expenditure thresholds for documentaries to $500,000 in production (from the current threshold of $250,000).”

Money is also being clawed back from cultural agencies through the increased efficiency dividend. Rising to 1.5% in future years, the efficiency dividend hits smaller agencies much harder than big ones. And everything in the arts is small.

The efficiency dividend measures mean the Australia Council is being asked to save $3.3 million over the forward estimates, the Australian Film Television and Radio School will have to find $1 million, the National Film and Sound Archive $1.1 million, the National Gallery $1.4 million, the National Library $2.1 million, the National Museum $1.7, and Screen Australia $759,000. That’s more than $12 million in funding cuts for cultural agencies over the forward estimates.

If we look a little closer at the portfolio budget statements, for instance from the Australia Council, we can see the effects of the efficiency dividend in falling support for artists and cultural organisations. This year there will be “a decrease of approximately $2.5 million in forecast grants expenses compared with 2010-11.” Australia Council grants funding will be only 2% above 2010 levels in 2014-15. But CPI is forecast to run at 3% annually, meaning Australia Council support for artists and organisations will fall in real terms — by perhaps as much as 10%.

In other words, the “New Funding for the Arts” money announced in this budget will be almost completely clawed back by the effects of static funding and the increased efficiency dividend on the Australia Council.

The one really big-ticket spending item in culture was of dubious policy value: the $376 million spend on helping pensioners and senior Australians to make the switch to digital TV. Opposition leader Tony Abbott has already pilloried the program as “Building the Entertainment Revolution”, while our own Bernard Keane and Glenn Dyer have pointed out “the political imperative of ensuring pensioners aren’t left without television as analog signals switch off”.

Personally, I’m sympathetic to the argument that television represents an important human service that allows older Australians to stay connected with the broader community. But the spending program should also be seen in the context of the broader budget, in which $211 million in spending is being “saved” from aged care itself. The government appears to be prioritising access to daytime television over places in aged-care facilities.

Money for art and culture is often spuriously disparaged by critics as diverting resources away from the critical services that governments provide. In reality, of course, the numbers are tiny compared to the investments annually in roads, schools and hospitals. But in this case it really does seem as though the owners of television networks are getting a subsidy at the expense of much-needed investment in aged care infrastructure.

Can governments pick cultural winners? The FFC’s 20 years of “commercial” film funding in Australia

Film Finance Corporation of Australia, total investment versus recoupment, 1988-2008. Source: FFC 2007-08 Annual Report

One of the key themes  of Richard Caves’ 2000 cultural economics monograph, Creative Industries: Contracts between art and commerce is his detailed exploration of the idea that “nobody knows.”

The quote comes from Hollywood screenwriter William Goldman, who famously opined that when it comes to the entertainment industry, “Nobody knows anything.”  (Goldman, by the way, also penned the line “Follow the money” in All The President’s Men – a phrase that doesn’t appear in Carl Bernstein or Bob Woodward’s notes or articles).

If high-powered Hollywood moguls struggle to predict the successes and failures of the films they finance and produce, how well do Australian screen bureaucrats do?

Not very well, if figures from Australia’s Film Finance Corporation are any guide. The FFC, an Australian government film agency, existed for 20 years between 1988 and 2008 before being amalgamated into Screen Australia last year. Unlike arts funding bodies in this country, the FFC was specifically set up to finance film and telelvision projects along commercial lines. As film critic Lynden Barber points out, “FFC production funding was triggered when a project reached a minimum level of pre-sales from mostly private sources.”

The FFC acted as a kind of automatic co-investor. If a producer could arrange seed capital for a promising screen project, the FFC would then top up this private investment with government funding. This meant it acted as a public-sector but commercial investor, taking a cut of the intellectual property and box office returns of projects it financed. In other words, the agency didn’t just hand out money: it actually recouped returns on its investments.

The problem was, these returns were meagre. Over two decades, the agency supported 1165 productions and spent $1.345 billion (these figures are from the FFC’s final Annual Report in 2007-08). Many were critical successes and some of them even won Oscars.  But only a few made money. The FFC states in its “20 years” brochure that this investment translated into a total screen production value of $2.872 billion, a multiplier of roughly two. But total recoupment to the FFC was a paltry $274.2 million. That’s an astonishing cumulative return of -80%.

No wonder Barber points out that “many of the failures of the local industry have been the result of commercial misjudgments — not only by the federal and state funding agencies, but also by private investors, distributors and filmmakers.”

Australian cultural policy: an essay by me at

Over the 2008-09 summer break, my colleagues at ran a special series on the state of Australian culture. It’s one of the best short courses you can find online on the Australian cultural sector, including some fascinating pieces by noteworthy writes such as Andrew Frost, Ben Gook, Robert Miller, Jeremy Fisher and Scott Rankin.

At the end of the series, I was able to write a long essay drawing some of the threads together with a particular view on cultural policy.  You can find the essay here:

In this essay, I argue that cultural policy in Australia is about bureaucratic fashion, and history, and tradition — but not evidence. Absurd inconsistencies in who we fund and how we regulate cultural expression are not the exception, but the norm.

So, for instance, we fund large companies of professional musicians to play the musical treasures of the European world — but not of the Islamic, Pacific or Chinese traditions. We spend hundreds of millions a year supporting Australian films, but not Australian games. We have exhibited contemporary graffiti and street art in the hallowed halls of our key public art galleries, while vigorously prosecuting and even jailing graffiti artists. We enforce some of the most stringent and punitive copyright laws in the world, without examining the costs of these special industry protections to consumers, schools, libraries and the public sphere.