The National Collecting Institutions Legislation Amendment Bill 2020 has been presented by the government as innocuous, a simple tidying-up job that will make the legislation which governs six of the national collecting institutions more consistent and allow them to attract more private philanthropy. But you can forgive me for treating anything this government does in the arts portfolio with a healthy dose of scepticism.
The national institutions have not escaped damage wreaked by this government's years-long campaign to undermine and underfund the arts in Australia. The worst impact on the national institutions came in the 2015-16 financial year, when the government imposed a three per cent efficiency target on some institutions, in addition to the existing efficiency dividend, which resulted in an estimated $20 million loss of funding across the board. It threw many of these institutions into turmoil, including the National Library, which, for a time, had to stop adding new content to its popular online archive service, Trove. Although the situation has slightly improved now, we are still seeing job cuts and a reduction in services at the national collecting institutions.
We've seen this over and again with this government and the arts: they put a wrecking ball through important institutions, as they did with the Australia Council and the Catalyst fund under George Brandis, and then they paper over the damage and pretend that nothing's happened: 'Nothing to see here.' Well, lasting damage has been done. The arts in this country, including the national institutions, were hit hard by COVID, but the truth is that the sector was already very fragile before that, with repeated funding cuts and endless rounds of applications proving too much for many in the sector. Many people who had been in the industry for decades left it. So, when this government tries to say that the arts is in a worse state because of COVID, it's true, but it's not the full story. The damage had already been done by a series of Liberal ministers, and they didn't do enough to help when COVID hit.
This bill, although portrayed by the government as simple, is actually quite complex in terms of the many different changes it makes to the legislation which governs the national collecting institutions. Schedule 1 of this bill contains a major change which affects all of the institutions. It's a change to the investment mandate of the institutions, so that they may invest donated funds in higher-risk, higher-return instruments and assets. Currently, under the Public Governance, Performance and Accountability Act 2013, the institutions can only invest any funds in excess of their operating costs in very conservative ways, which limit the return they can obtain. According to the bill's explanatory memorandum, this is a problem in attracting private philanthropy.
Representatives from all six of the national institutions were called to a short Senate inquiry into this bill and were asked what their views were on this part of the bill. According to those present, this flexibility was at the request of the institutions themselves, many of whom have to kept their donated funds in cash due to the restrictions of the PGPA Act. In the ultra-low interest rate environment that we currently find ourselves in, you can appreciate that this would be a source of frustration both to the institutions and to their donors.
Australia's national collecting institutions have never had the same kind of culture of private philanthropy as their peers in the United States and the United Kingdom, and it is appropriate that they be given the means to attract more donated funds. Labor could never and would never stand in the way of more funding for our national collecting institutions, and we're reassured that the request for this change in investment mandate came from the institutions themselves. Of course, it's important that this flexibility comes with a high level of oversight and prudence in terms of the investments chosen, so it's good to hear that some of the institutions have already started putting together investment plans to be approved by their boards.
I do, however, want to strike one note of caution. This line from the explanatory memorandum, explaining why the government wants this change to happen, should give us pause:
This focus of actively seeking philanthropic support aligns with the Government’s broader position of encouraging NCIs to increase their financial sustainability through non-government sources of funding.
Now, let me tell you what that sounds like to me. The government wants the institutions to attract more private money so it can give them even less. That's the first I've heard of this government's 'broader position', and it doesn't give me any confidence that this government won't use the bill, once passed, to say to the institutions, 'Oh, well, you can go and attract more private philanthropy now, so don't come to us asking for more public funds.' To me, that sounds like exactly the kind of thing this government would do.
At the Senate inquiry hearing, the Office for the Arts denied that this was an objective of the bill and said no modelling had been done to predict what the private-public funding mix would look like once this bill was passed. But it remains a concern to me. Why do I worry about this? Because we've already seen it happen in other parts of the arts sector. As we see a systemic withdrawal of public funds for the arts by the federal government, private philanthropists are asked again and again to step into the breach—and they do. I expect they will continue to do so, but it is not their role to support the entire national arts ecosystem; nor could they afford to do that. That's the government's role, and never more so than when it comes to our national collecting institutions. These institutions—the Australian National Maritime Museum, the National Film and Sound Archive of Australia, the National Gallery of Australia, the National Library of Australia, the National Museum of Australia and the National Portrait Gallery of Australia—are the keepers and promoters of Australian stories. With the exception of the Maritime Museum, they're based in Canberra, the home of our federal parliament. They're a big part of Canberra's tourism economy and local employment. The role for the federal government in supporting these institutions is clear, and the passage of this bill must not be seen as a green light to the government to withdraw even more public funding.
Schedule 2 of the bill is where things get pretty complex. Its stated intent is to standardise the legislation that governs the national collecting institutions so that everyone has the same legislative framework. It makes sense—except it means that some of the institutions will be subject to rules and ministerial powers they've never had before. I'm going to pull out the most important of these and then discuss them in turn. The biggest example is in the case of the National Gallery and the National Library. For the first time, these two institutions will be subject to ministerial direction. While it is true that all the other collecting institutions are already subject to ministerial directions, this expansion is not a small thing. Consider the National Gallery, for example. We all remember Blue Poles, which caused tremendous controversy when purchased in 1973 for A$1.3 million. That purchase, which had to be ticked off by then Prime Minister Gough Whitlam, was seen as outlandish and overpriced. That painting, considered a master work of American abstract expressionism, is now worth up to $350 million—a pretty good return for the taxpayer.
Art is meant to challenge us, and that's not always popular. Sometimes, in fact, it can be very unpopular. That's why we should always tread carefully when talking about politicians having a say in deciding what is and what is not good art and how galleries or indeed libraries should run. Importantly, this bill states that these ministerial directions must be of a general nature only. This is an important safeguard, ensuring that the minister cannot issue a direction—for example, that this or that artist should not be in the national collection. Nevertheless, the ministerial direction power should be used very infrequently and with extreme caution.
Labor is reassured somewhat by evidence given by Stephen Arnott, First Assistant Secretary of the Office of the Arts, that not a single ministerial direction has been issued to any national collecting institution since the current government came to power in 2013. It is worth noting, though, that such a direction would not be disallowable by parliament were one to be made. That gives the minister quite a lot of power, and it should be used very, very sparingly.
The second part of this schedule worth drawing attention to is the financial thresholds for acquisitions that trigger a need for ministerial approval. Such thresholds already exist—for example, for the National Gallery it's $10 million—so that in itself is not controversial. What this bill does though is shift the thresholds that apply to each of the institutions from legislation to regulation. This lowers the bar for changes to be made to the thresholds, as they do not have to be passed through parliament. It was welcome though, as part of the Senate inquiry process, to have confirmation from the department that such regulations would be disallowable by the parliament should they be remade—for example, if the $10 million threshold for the National Gallery were reduced to an unacceptably low level as a way of increasing ministerial oversight of purchases.
The third part, which will be of interest to some of my Canberra colleagues, is that for the first time the National Gallery will be allowed to store its collection outside the ACT. It is the only institution that does not currently have this flexibility. The department gave evidence that this was purely to save on costs, as the availability of large storage facilities in the ACT is limited. As the legislation is written, it should not mean that there will be any change to the works on display at the Gallery's home in Canberra.
In the sum, after examining this legislation through the committee process, Labor is satisfied that it has been drafted with sufficient input from the institutions and is heartened that there are no parts of the bill that the institutions object to. Labor will be supporting this bill. In doing so, however, it's important to note that no amount of legislation can fix the longer term structural underfunding of our national collecting institutions that has been a feature of this current government. If you really want to make a difference, that's where you need to start. With that in mind, I move the second reading amendment circulated in my name:
That all words after "That" be omitted with a view to substituting the following words:
"whilst not declining to give the bill a second reading, the House calls on the Government to address the structural underfunding of our national collecting institutions."
