Steven Ciobo (Moncrieff, Liberal Party, Shadow Minister for Small Business, Independent Contractors, Tourism and the Arts) Share this | Hansard source

We are here in the chamber to talk about the government’s Tax Laws Amendment (Resale Royalty Right for Visual Artists) Bill 2009. This is an additional piece of legislation as part of the package of bills being put forward to the parliament by the Minister for the Environment, Heritage and the Arts, Peter Garrett, who is the member for Kingsford Smith, as part of the federal government’s ongoing—as it claims—commitment to Australia’s arts sector. This includes in particular the instrument of resale royalty right for visual artists that the federal Labor government introduced with the support in some respects—and certainly as a matter of principle—of the opposition. To go back to the beginning, the Labor Party took to the last election a commitment that if elected they would seek to introduce a resale royalty right, a right that has been recommended on and off over the years by a number of inquiries into Australia’s visual arts sector. In principle, it is a right of which the coalition is supportive. At the outset of this journey we commenced on the pathway to where we are today—and ultimately to what we hope is the end point—that is, the establishment of the resale royalty right at law, its assent being received by the Crown and the legislation being put into practical effect.

At the outset, the vision espoused by the minister was that, after the resale royalty right came into effect, artists would receive five per cent of the sale price when artworks were resold for $1,000 or more. A collecting society on behalf of artists and at the specific request of artists would move to collect the fee and subsequently disperse it to the artists. This has been an issue of some controversy over the years. Historically, the opposition did not support the notion of a resale royalty right, but I was pleased to play a role in arguing that there was merit and scope for the opposition to support this as a matter of principle. Fundamentally, what has transpired in the months and years since the resale royalty right was first advocated by the Labor Party can only be described as a debacle. The fact is that the minister responsible for this legislation—this enabling Tax Laws Amendment (Resale Royalty Right for Visual Artists) Bill 2009 and the main instrument, the Resale Royalty Right for Visual Artists Bill 2009—has handled it poorly.

At the outset, the minister said that the legislation would provide a raft of benefits for visual artists. The situation now is that there are so many caveats, compromises and concerns that, in large measure, this legislation has effectively become unworkable. The opposition will not frustrate the passage of this legislation because we believe it is better to have something than to have nothing. But, time and time again, the minister responsible for the carriage of the legislation that introduces the resale royalty right has demonstrated his inability to remain abreast of the issues and to keep this legislative package moving forward with appropriate speed.

I will run through in chronological order what has transpired. On 3 October 2008, the minister put out a media release entitled ‘Artists to benefit from resale royalty right’, which outlined the vision the minister had about what the resale royalty right would mean for visual artists. Understandably, at the time artists in Australia’s visual art sector were excited about the proposal. On 21 October 2008, 19 days later, the minister provided a ministerial statement to the parliament, and I was able to outline the opposition’s response to that ministerial statement and highlight the opposition’s views and concerns about how the resale royalty right would operate. On 27 November 2008, the minister introduced the legislation and immediately referred the legislation to a committee for investigation and report. That was the first unusual step taken.

On 20 February 2009, 140 days after the announcement of the resale royalty right, the committee tabled its report. I know some Labor members speaking in the parliament today were part of the committee that undertook that report. They recommended a raft of amendments to the initial legislation, which had its genesis in a thought bubble from the Minister for the Environment, Heritage and the Arts. On 19 March 2009, 168 days later, I spoke on the bill which had been amended by the government—the minister amended his own legislation to take into account some of the recommendations put forward by the committee.

On 28 May, the government tabled its response to the committee’s report. Bear in mind that, as shadow arts minister, I had already spoken on the legislation that was being amended, 168 days after the announcement, and then 238 days after the announcement the government actually tabled its response to the committee’s recommendations. Most people who observe the flow of legislation through this building would recognise how completely back to front this whole process has been.

I have spoken previously about how the minister assured me only 10 minutes prior to my speaking on the bill that I would not in fact need to speak on it because the bill would not be before parliament, although only 10 minutes later it was brought on. To me, that really demonstrates how little knowledge the minister has of the process of this legislation and what has been happening with it. Debate on the bill resumed 321 days after the announcement of the resale royalty right on 19 August this year. This was after I agreed to refer the legislation to the Main Committee to assist the minister in delivering on his commitment.

On 7 September 2009—340 days after the initial announcement—the bill finally passed the lower house. And here we are on 19 November talking about the establishment of a resale royalty right—a key priority, a key election commitment of the Labor Party—with the legislation still most unlikely even to be debated in the Senate. It took 340 days for the legislation to get through the House of Representatives. Now, another 60 days or so after that, we are still waiting for this minister to provide some influence to get the legislation brought on in the Senate. I am regularly contacted by Australian artists expressing their dismay at how inept this whole process has been and how utterly inept the minister for the arts has been on one of the key platforms that he outlined, espoused and advocated prior to the election of the Rudd Labor government. But we should not be too surprised because, frankly, we have seen not only with respect to resale royalty rights but across the board that this is a government that is very big on talk but very poor when it comes to actual action and delivery.

The legislation that is currently before the chamber seeks to amend the tax laws with respect to the resale royalty right effectively to do three things. The amendments ensure that the resale royalty right collecting agency is not taxed on amounts that it collects on behalf of resale royalty right owners and then holds pending allocation or disbursement to the actual artists themselves. This makes inherent sense, because the second limb of the legislation provides that, when those resale royalty right holders receive the amounts from the resale royalty right collecting society, they are then required to include those amounts as part of their assessable income to the extent that those amounts are not subject to income tax in the hands of the collecting society, which is what this bill provides for.

The third limb of the bill provides that the resale royalty right collecting society is not taxed on other income it derives from other sources, provided that the amount of this other income falls within certain limits which, in broad terms, are $5 million, or five per cent, of its total income in the income year. That is what the bill before the chamber currently deals with. It is non-controversial in that it simply seeks to provide an incentive for the resale royalty right collecting agency to operate. It provides enhanced profitability but, if you actually dig a little deeper beyond the bill that is before the parliament today and consider the enabling framework that has been put in place for the resale royalty right, you will find that although there will be direct funding in the initial start-up years for the resale royalty right collecting agency—as is anticipated not only by the opposition but by independent third parties who know Australia’s visual arts sector well—it is likely to collect so little money that the commercial profitability of the resale royalty right collecting agency is likely not to be there right from the beginning.

Even as funding from government is withdrawn or is anticipated to be withdrawn, I make the prediction that the resale royalty right collecting agency will be placed in a situation where it will need to come to government for additional funding in order to remain viable or, alternatively, will need to seek to cross-subsidise its operations in some way through profit centres that it has in other businesses. To the extent that this particular piece of legislation provides some additional commercial attractiveness to undertaking the role, it is little surprise, frankly, because the enabling legislation for the resale royalty right is so fundamentally flawed with respect to creating a commercial business case for the resale royalty right collecting agency that, without this additional carrot, I doubt there would be much incentive to get into the business of being the resale royalty right collecting agency at all.

I will be interested to hear what Labor members opposite have to say about the complete debacle that this process has become. I would be interested to hear, as Labor members attempt to explain why—and I note that this time the member for Leichhardt is not listed to speak. I wonder why, given that he has historically been a proponent of a resale royalty right. In fact, the member for Leichhardt, when he spoke on the enabling legislation previously before this chamber, said that for too long visual artists had not been recognised and that the legislation needed to be brought on as soon as possible to enable that right to flow to the artists themselves. Given that it has now been well over a year and the minister still has not been able to get the legislation debate brought on in the Senate, it is little wonder that visual artists have such little faith in this minister.

I will confine my comments to those observations on both the operation of the specific tax laws amendment bill that is before the parliament today and, more broadly, the operation of, and flaws within, the resale royalty right. On numerous occasions now I have facilitated this minister’s inability to deal with the legislation in a timely way, and the opposition has worked constructively to help this minister get this legislation through the parliament and has conceded a number of process matters to assist the minister. The fact is this Labor government really needs to pull its socks up when it comes to delivering on the resale royalty right for artists if anybody in the Australian original art sector is going to take this minister seriously when it comes to providing a framework for the resale royalty right in the future.

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