Wednesday - 23 July 2014

If you think you have it bad in the UK…

31 October 2012Written by ATG Reporter

PERSONAL VIEW: Jolyon Warwick James, President of the Australian Antique and Art Dealers’ Association (AAADA, NSW Chapter) and chairman of the Australian Antiques and Art Market Federation (AAAMF), examines the problems with the Artist’s Resale Right in Australia.

2064BP01C-12-10-31.jpg

 

Pablo Picasso (1881-1973) is credited with saying: "Good artists copy, great artists steal." We can assume he was referring to what people do on canvas, in metalwork, with dead sharks, and used underwear etc. But would he have been aware how applicable his words might be, not just to artists, but to politicians as "art sale regulators"?

Are Australian politicians, in this regard, good or great? Did they copy or steal Artist's Resale Right (ARR) - a term most find easier to pronounce than 'droit de suite'. Is the Australian model of ARR effective or not?

Given that the Australian government has already embraced ARR - it has been in place since 2010 - let us look at how successfully it has been adapted to local circumstances. These certainly differ from those in Europe, in particular Britain, in a number of ways. Firstly, artworks do not reach the intergalactic price levels found in Europe, the US and, increasingly, China.

Secondly, Australia is not competing with other centres as a world clearing house for works of art. Thirdly, ARR was introduced largely on the back of the belief that indigenous artists did not receive a fair share of the benefits of the work they created, and more generally that many artists, often described as "struggling" to make a living, were inadequately rewarded.

The rewards (profits) accruing to the art dealers, traders and auction houses were often touted as disproportionate to the returns made by the creator of the artworks.

Comparison with UK

In a couple of ways, the rules governing ARR in Australia match those in the UK: it is paid to living artists and to the heirs up to 70 years after an artist's death. It is only levied from the second sale. It is not charged on the first transaction which takes the work out of the hands of the artist.

In the UK, ARR applies to immediate resales of €10,000 and over, but there is a three-year grace period to qualifying works whose first resale is over €1000 but under €10,000. The UK cap for ARR is set at €12,500 and there is a sliding scale of rates: 4% on works up to €50,000, 3% from there up to €200,000 and so on.

In Australia, there is no cap or sliding scale on the royalties, which run at 5% of the sale price, the collection agency taking 10% of what is collected. This only applies to sales where an art market professional (dealer, auctioneer etc) is involved. As in Europe, sales between two private individuals do not attract ARR.

As artworks in Australia do not regularly go for more than €1m (approximately A$1.25m), royalties applicable would rarely exceed €45,000 (a bit over A$56,000). The Australian Government does not have to ponder a heady "Picasso situation" where, say, an €80m work would reap the heirs a €3.6m windfall. No doubt the Picasso heirs would wish they lived under an Australian model of ARR. Thus the "moderating factor" of a cap and a sliding scale on ARR, deemed appropriate in Europe, appears less necessary under current circumstances in Australia.

It is a country that accepts the notion of inheritances so, it is argued, why not get something out of the artistic labours of grandad or grandma? In this regard the Australian model of ARR is "fit for purpose", you might argue (at least for the present).

The second difference Australia experiences is that it is not competing with other centres as a world clearing house for artworks. Theoretically business is not, therefore, driven elsewhere or lost to others not applying ARR. However, it has been noted that some artworks were shipped from Australia to New Zealand for a while (and this may still be going on) in order to somehow avoid ARR which has yet to be implemented in New Zealand. This activity is unlikely to have a major economic impact or create ripples on the clearing of artworks around the world.

Compulsory Collection

It is the third issue that presents problems. Collection and distribution in Australia is by a single agency, CAL - a "not for profit company limited by guarantee". The company tendered for the five-year contract which will be reviewed in due course. Collection is effectively compulsory. It is possible for beneficiaries to "opt out" on a case-by-case basis provided they know that a relevant artwork has been sold somewhere.

Herein lies the first problem. An artwork is sold and ARR collected, then the agency has to find to whom it is to be paid. Apart from the problem of unsigned works there is the issue of the indigenous artist. He or she is often on a reserve or in a community, frequently with a very different demographic to other artists who leave a much larger footprint for being traced (telephone numbers, street addresses, business registration etc). In the case of heirs this is further complicated by very different indigenous family and community social structures. It is to be remembered that these were the very people for whom ARR was primarily introduced to benefit.

Clearly making ARR an "opt in" scheme vastly reduces costly and time-consuming search-and-locate missions by the collection agency. Government money would be well spent encouraging artists to register ("opt in") rather than its agency using resources often chasing shadows.

What happens when an artist cannot be traced and collected funds are undistributable? After six years of diligent searching by the agency, the money is returned to the payer less the 10% administration fee but, interestingly, with interest (another difference from Britain)! One hopes the money is keenly invested and the interest is compound. If the original payer of six years ago is then not found the money may be retained by the agency for administration purposes. It seems most likely that this will be an undesirably and unnecessarily large sum, for reasons outlined above. It would be almost zero if the scheme were "opt in". This seriously questions the existing system's efficiency.

Payment Threshold

Finally there is the issue of the threshold for payment. This stands at sales of A$1000 or more. This means sums as low as around €36 will be payable to beneficiaries (agency commission €4). This is hardly an economic proposition or good business practice in terms of collection costs. With regard to an A$1000 threshold, it would seem the system is not efficient or effective.

The Australian Antiques and Art Market Federation (AAAMF) has lobbied on both issues. It seeks an "opt in" system and a threshold of $10,000 (approx €8000, commission €40). It remains to be seen if the Australian government's review in mid 2013 will take this on board. One thing claimed is that because the Australian collection agency is accountable to government, there will be more transparency than there apparently is in Britain. We are promised all facts and figures. We await with interest - compound of course.

What might Picasso have thought about all this? He is also quoted as saying: "I'd like to live as a poor man with lots of money." So would he have cared about ARR? Presumably his heirs do - very much.

 

• Jolyon Warwick James runs an antique silver business in Australia and is President of the AAADA (NSW Chapter), Board member of CINOA and Chairman of AAAMF. Tel: +61 2 93261319 or email jolyonwjames@gmail.com

Antiques Trade Gazette is the weekly bible of the fine art and antiques industry. Read articles like this every week in the Antiques Trade Gazette or ATG app. Click here to subscribe today.

Back to top