Tony Zappia (Makin, Australian Labor Party) Share this | Hansard source

I too rise to speak in support of the Tax Laws Amendment (Resale Royalty Right for Visual Artists) Bill 2009. Before I get to the substance of my remarks, can I respond to some of the comments made by the member for Moncrieff earlier, when he accused the minister of not getting on with this bill and made comments about how long it has taken for the matter to come before the parliament. To state the facts and put everything into context, the question of resale royalty in fact dates right back to 1971, when the Berne convention was established. Australia acceded to and became a party to the Berne convention in 1977, and its formal entry to the convention was in 1978. It is interesting that since the convention some 54 countries of the 160 signatories to the convention have implemented a resale royalty scheme of one kind or another. Most of them are pretty similar in nature, but there are clearly some differences between then if you go through the list of each of the individual countries.

What is perhaps more pertinent to the debate, however, is that in 2002 there was the Contemporary Visual Arts and Crafts Inquiry conducted by Mr Myer, which is often referred to by people as the Myer inquiry. The report of that inquiry under the previous Howard government recommended that a resale royalty scheme be put in place. In 2006 the Howard government of the day decided it would not adopt the recommendations of that report. A press release issued at the time by the then Attorney-General, the Hon. Philip Ruddock MP, and the then Minister for the Arts and Sport, Senator the Hon. Rod Kemp, said:

It would bring little advantage to the majority of Australian artists whose work rarely reaches the secondary art market and would also adversely affect commercial galleries, art dealers, auction houses and investors.

The first point I make about that press release is: here is the member for Moncrieff criticising this government for getting on with introducing a resale royalty scheme when the previous government, of which he was a member, had received the Myer report that recommended that a resale royalty scheme be brought in yet it refused to do so. It refused to do so because it would:

… adversely affect commercial galleries, art dealers, auction houses and investors.

In other words, there was little regard for the artists, whom the member for Moncrieff comes into this chamber and pretends he stands for. They were only concerned about the auction houses, the investors, the art dealers and the galleries—the people who profit from the work of the artists, who this bill is trying to bring some fairness to.

It is worse than that. In 2004 Senator Kate Lundy, a member of the current Rudd government, introduced a private member’s bill because the Howard government did not act on this matter. Did the coalition support that bill? No, they did not; they voted against it. They had an opportunity to introduce their own bill into parliament as a result of a recommendation of an inquiry which they instigated. They did not do that and they also refused to support the bill introduced by Kate Lundy. In other words, for 12 years in government they did nothing. The member for Moncrieff comes in and criticises the current minister, who once he was elected got on with drafting the necessary legislation and introducing it into parliament in the first year of this parliament.

Yes, it has taken some time. It has taken some time for good reason. Part of that good reason is that, when the bill was drafted, it was clear that there was going to be an issue about whether the legislation could be retrospective or had to be prospective. In other words, would it commence after the legislation came into effect—when the first piece of artwork was acquired after the legislation came into effect—or would it come into effect as soon as the legislation passed, so any sale or acquisition from that point would attract a resale royalty? That was a contentious issue on which the government sought advice. The advice was that, in respect of section 51(xxxiii) of the Constitution, there was an argument that it might fall foul of the general legal opinion on acquisition of property on just terms.

The minister was aware that there was some unhappiness with the legislation in its current form, so he, quite rightly, referred it to the House of Representatives Standing Committee on Climate Change, Water, Environment and the Arts. It was referred to the standing committee on 28 November 2008 and the committee convened a public hearing on 6 February 2009. Bearing in mind that at the end of November parliament goes into recess, convening a meeting in February is about as quick as you can act to deal with the issue at hand. If I recall correctly, some 40 people came along and gave submissions. As a member of that committee, I attended the public hearings. We listened to the points of views expressed.

Some 10 recommendations arose as a result of that public hearing. Of those 10 recommendations, most were not controversial and my recollection is that the minister has acceded to the implementation of most of them in some form or another. The critical one, in respect of section 51 of the Constitution and reflected in clause 11 of the bill, was not agreed to. Having gone through that process, all in the interests of the artists of this country so as to ensure that we can provide them with the best possible legislation, I think it is unjustified for the member for Moncrieff to suggest that the minister is not acting on this matter fast enough. He is acting on it as quickly as possible given the circumstances.

Having completed that process, we now come to very heart of the bill: the taxation arrangements that apply to the collecting agency. Again, without this part of the bill in place, quite frankly, you cannot have the scheme—you must have the whole package. This is a separate part of the bill which, in effect, falls outside the minister’s jurisdiction because it is a Treasury matter dealing with taxation. Quite rightly, whilst this measure was part of the intent of the bill, it has to be drafted, brought to parliament and passed by parliament. Right now the original bill is before the Senate. It makes sense for this part of the bill to be debated in the Senate at the same time so that, when members debate the resale royalty legislation, they are debating the entire package. This part of it deals with the aspect of the bill which effectively says that the collecting agency should not be double-taxed—that is, the collecting agency is there to collect the funds and pass them on to the entitled artist or estate of the artist. It is not there as a profit-making body in the real sense and therefore, once the funds get to the collecting agency, they should not be taxed at that point. That is consistent with other royalty-collecting agencies here in Australia and, I would expect, across the world. The collecting agency will be appointed in accordance with the framework of the bill that we have before us. Once it is in place it will act, in a sense, as a clearing house for the royalty payments that are collected.

Under the bill, royalty will apply to artworks that are sold for in excess of $1,000. It will be a flat five per cent royalty and it will apply for 70 years after the death of the artist. Those provisions—the five per cent, the 70 years and the $1,000 value—are again reasonably consistent with similar resale royalty schemes that are available all around the world and will go a long way towards providing rightful funds to the artist. What we have seen for probably the last 100 years in this country is artists who produce very fine artworks getting very little out of them and yet others in years to come profiting handsomely from the works of those artists. It is only reasonable and fair that the artist, if there is an increase in the value of their works, ought to at least share in that increase in value—because it is their work.

There is another element to this and that is that, as we all know, many of the artworks that are sold in this country are sold to overseas buyers. If we do not have this scheme in place then neither will we have the reciprocal arrangements which allow Australian artists to benefit when their works are sold and onsold overseas. Other countries will not enter into reciprocal arrangements unless we have a scheme in place in Australia. So it is critical that we get on with doing this.

Some work was carried out with respect to the value of resale royalties to Australian artists some years ago. If my memory serves me correctly, it has been suggested that something like $6.75 million of royalties per annum—at least, that was the figure almost a decade ago—would be paid to artists based on the current rate of sales. That is nearly $7 million worth of funds that would go back to the artists, many of whom are struggling to continue to be artists because the funds that they get from the sale of their artworks are simply not sufficient to enable them to focus and commit themselves to being full-time artists, yet these artists are producing some of the best works around the world. In particular, many of these artists are from the Indigenous community—again, people who are certainly very talented, but they are not businesspeople. They do not necessarily have the best understanding of how to secure the best income from their art. It is my view that, over the years, many of those artists have perhaps been the most affected because of the lack of a resale royalty scheme in this country. Once the scheme is in place, the converse will apply. In my view, many of our Indigenous artists will have much to gain from having a scheme in place.

I said a moment ago that, in effect, this is simply the last aspect of trying to get this legislation through parliament. It is the missing link of the legislation and it is a taxation matter. The collecting agency will be appointed in due course. I understand that there are very clear guidelines with respect to how the collecting agency will operate. It will have to report on an annual basis the sales of artworks that it has registered with it. One of the good things about this is that once the collecting agency is appointed there will be a register, and everybody will be able to see and know exactly what works have been sold and for what value.

One of the issues that does arise—and I understand that it was raised in one of the submissions—is: if an artwork is sold and the artist has since passed on and there is no estate to which the royalty payment is to be made, who keeps those funds? That also raises the question of what happens to funds where even those who have paid the royalty cannot be located. Those are interesting questions, and it will be interesting to see, once the scheme has been in place over several years, whether there has been an accumulation of royalty payments that, for very good reason, cannot be passed on to the rightful owners. But certainly it gives both the agency and the government an opportunity to see how that aspect of it works. If there have to be changes made to the legislation with respect to that matter, I am sure that they will be made by the government of the day.

I have spoken on this bill on two other occasions, and I certainly do not want to go through the detail of the rest of it because I have done that on those occasions. I do say, in concluding my remarks, that this is a matter that has now been in discussion for some 30 years. It is time that we introduce a resale loyalty scheme. It was the Rudd Labor government that, on coming to office, immediately brought this legislation into the House. It is the Rudd Labor government that has been listening to the artists and taking their views on board both in the recommendations of the standing committee’s inquiry and in trying to resolve the differences on matters that the artists raised with the minister. Whilst that might have taken some time, at least the legislation is before us, thanks to the current minister. I commend the legislation to the House.

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