‘A CREATIVE NATION IS A PRODUCTIVE NATION’: A THEORETICAL AND CONTEXTUAL EXPLORATION OF TASMANIA’S COLLECT ART LOAN SCHEME

A thesis presented by Caroline Buckley 552999

to The School of Culture and Communication in partial fulfilment of the requirements

for the degree of Master of Arts and Cultural Management

in the field of Arts Management - AMGT90019

in the School of Culture and Communication The University of Melbourne

Supervisor: Dr Meaghan Wilson-Anastasios

October 2015

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Abstract

Tasmania’s Collect Art loan scheme enables eligible consumers to take out an interest free loan from the Tasmanian Government in order to purchase works of art. As the first scheme of its kind in Australia, Collect Art presents an interesting and real life case study of a market facilitating instrument of government subvention.

With the aim to explore and establish its significance as such, this thesis discusses the Collect Art loan scheme within relevant theoretical and contextual frameworks. It explores the implications of Collect Art with respect to its impact on artists, government and consumers, and under these circumstances, assesses its efficacy.

I have determined that the efficacy of Collect Art is located predominantly in its economic outcomes. To this end, I have concluded that the scheme’s significance lies in its orientation toward the consumer, and in its establishment as a consequence of the economic paradigm that permeates the contemporary arts ecosystem.

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Contents

Abstract ...... 2 Acknowledgments ...... 4 Chapter One: Introduction and Theoretical Context ...... 5 1.1 Project Background ...... 5 1.2 Thesis Question, Scope and Structure ...... 5 1.3 Collect Art: An Overview...... 8 1.4 Literature Review | Theoretical Background ...... 11 1.4.1 Government Subvention of the Arts ...... 11 1.4.2 Government Policy and the Economisation of the Arts ...... 15 1.5 Chapter One Conclusion ...... 17 Chapter Two: Theoretical Analysis of Collect Art ...... 18 2.1 Collect Art and Consumers ...... 18 2.2 Collect Art and Government ...... 25 2.3 Collect Art and Artists ...... 27 2.4 Chapter Two Conclusion ...... 29 Chapter Three: Implications, Assessment and Conclusion ...... 31 3.1 Implications for Consumers ...... 31 3.2 Implications for Government ...... 33 3.3 Implications for Artists ...... 36 3.4 Assessing the Efficacy of Collect Art ...... 38 3.5 The Significance of Collect Art | Answering the Research Question ...... 41 3.6 Conclusion ...... 41 Appendix One ...... 45 Appendix Two...... 46 Bibliography ...... 47

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Acknowledgments

I wish to thank my supervisor Dr Meaghan Wilson-Anastasios for her generous support. She provided insightful guidance and patiently dealt with my doubts and questions. Before this project, Meaghan had reignited my interest in economics and it was a delight to explore this area further in my thesis.

I am also very grateful to my parents for their assistance during the editing process. Their encouragement and optimism gave me the necessary energy to push on to the end.

Most importantly I wish to thank my loving husband without whose unwavering emotional support, unbridled confidence in my abilities, and magnificent cooking would not have seen me complete this task.

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Chapter One: Introduction and Theoretical Context

1.1 Project Background In spring 2014, my husband and I holidayed in Tasmania over a long weekend. After spending a full day at the Museum of Old and New Art (‘MONA’) we wandered around Hobart, popping in and out of galleries and shops. We were on an art high! We came across a series of landscape paintings and were immediately drawn to one that we felt perfectly captured our Tasmanian experience.

Our chosen painting was a few thousand dollars; money that in theory we could have put on a credit card but in reality, was just too much. Prior to visiting Tasmania however, I had heard about the government-operated Collect Art loan scheme. I noticed that the gallery selling ‘our’ painting was a participant in Collect Art. Through an interest free loan paid off over twelve months the painting immediately became affordable. Collect Art removed the financial barrier and swiftly sealed the deal. The scheme enabled us to enter the market, and without it, we would not have been in a position to purchase our artwork.

Through research, I was intrigued to learn that Tasmania is the only State or Territory government in Australia to run such a scheme. This fact, along with our empowering experience, prompted a desire in me to learn more about art loan schemes and explore them as a means of government support for the arts.

1.2 Thesis Question, Scope and Structure As a seminal statement regarding the establishment of Collect Art, shortly after its commencement in 2008 the Tasmanian Government described it as an instrument designed to:

Stimulate the economy and the export of Tasmanian art off the island, to encourage new art collectors and to support the career development of Tasmania’s visual artists (Government of Tasmania, 2009a; 53).

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This thesis aims to explore the theoretical and contextual circumstances surrounding Collect Art and in doing so, come to an assessment of the scheme’s efficacy. To do this, the following research question has been developed:

What is the significance of Collect Art as an instrument of government subvention?

Government subvention of the arts is one of the prevailing areas of discussion and debate within the field of cultural economics. However, this thesis aims to move away from the normative discourse and add value by employing a case study framework (Blaug, 2001; 132).1 This methodological approach will enable the application of ideas and will yield a revealing inquiry into an instrument of government subvention (Baxter & Jack, 2008; 549).

An exploration and assessment of Collect Art is both relevant and timely. During the course of writing a similar scheme called Art Money was launched in Sydney.2 While there are minor operational differences, such as the minimum and maximum loan amounts and the loan duration, Art Money is administered through a private firm. This means that Collect Art is still the only government-operated scheme of its type in Australia. My research suggests it is also one of only a handful of examples internationally.

The Collect Art model is based on the United Kingdom’s Own Art scheme.3 Interestingly in 2002, Own Art’s predecessor (Art Cred) was referred to in the Australian Federal Government’s Report of the Contemporary Visuals Arts and Craft Inquiry. When considering the implementation of an analogous scheme in Australia, the Inquiry proposed that ‘relevant sector participants [should] continue to examine

1 Cultural economist Mark Blaug suggests that it is necessary to ‘abandon normative arguments for public subsidies… and instead to study the positive consequences of public subsidies, including the rhetoric of public bodies subsidising the arts’ (Blaug, 2001; 132). 2 See Appendix One for a brief description of this and other art loan schemes referenced throughout this thesis. 3 Confirmed by a Collect Art spokesperson (March, 2015). 6 options for their introduction in Australia’ (Commonwealth Department of Communications Information Technology and the Arts, 2002).

Investigation yields only one instance of academic literature focussing on art loan schemes. Chen Wan-Hsuan’s Master’s thesis on an equivalent scheme in the Netherlands, the KunstKoopregeling or KKR, was presented in 2010. The KKR was established in 1997 and it is the current incarnation of a number of similar schemes that have operated in the Netherlands since the 1960s (Chen, 2010; 55). Of the KKR, Chen poses the question: ‘does it work?’ (Chen, 2010; 16). Using secondary quantitative data such as government reports and primary qualitative data derived from interviews with gallerists Chen concludes that with respect to its objective to stimulate demand in the primary art market, the KKR’s impact has been minimal. Other than Chen’s thesis and its conclusions it appears that little academic attention has been paid to this model of government subvention, particularly through the study of real life examples.

The remainder of Chapter One is divided into two sections. First, I provide an overview of Collect Art concentrating on its establishment and operation. Using a range of eclectic materials such as government publications and Hansard, I describe its parameters, rationale for creation, and articulated objectives. Secondly, a literature review will investigate the predominant theories in this area of research and discourse. In this, I present a brief survey of the types and justifications for government subvention of the arts.4 An examination of the current environment in which we find government support for the arts, that is, one that has been described as having an economic agenda, will follow.

Chapter Two explores Collect Art by analysing the qualitative and quantitative outcomes pertaining to each of the key stakeholders – consumers, government and artists. It must be noted at this point that a full empirical analysis is not possible due to a distinct lack of Collect Art data. Therefore, an economic-based ethnological approach has been employed to enable the application of theory to the real-life

4 Throughout this thesis, ‘subvention’ and ‘support’ are used interchangeably. 7 outcomes of the Collect Art case study and its international counterparts, predominantly, the UK’s Own Art. These real-life reactions are primarily sourced from journalistic accounts, providing a unique narrative voice to the analysis.

With the qualitative and quantitative outcomes of Collect Art and art loan schemes analysed, the third and final chapter will discuss implications relating to the scheme’s key stakeholders. By identifying the most compelling issues and questions relating to this model of government subvention, its efficacy will be revealed. This thesis will conclude by answering the research question, revealing the significance of Collect Art as an instrument of government subvention of the arts, and proffer concluding remarks regarding the particular characteristics of these schemes.

1.3 Collect Art: An Overview The Collect Art loan scheme was established by the Bartlett Labor Government in Tasmania in 2008.5 Collect Art provides interest free loans to customers to purchase contemporary art by living Tasmanian artists. Artworks must be purchased from a participating ‘arts business’ and can include textiles, glasswork, ceramics, paintings, photographs, sculpture, jewellery, new media, and works-on-paper (Arts Tasmania, n.d.). Loans apply only to the primary art market, that is, the first sale of an original artwork (Heilbrun & Gray, 2001; 152). Artworks can be purchased ‘off the shelf’ or commissioned from an artist through a gallery. Collect Art loans a minimum of $750 and a maximum of $7,875 and approved customers must pay the loan back in 12 equal monthly instalments (Arts Tasmania, n.d.). In 2011 it was reported that the average loan was approximately $3,000 (Martin, 2011).

To participate, galleries are required to meet specific eligibility criteria and comply with the National Association of Visual Arts (‘NAVA’) Code of Practice for Commercial Galleries (Government of Tasmania, 2009a). Of the 20 galleries now participating, the current Tasmanian Liberal Arts Minister, Dr Vanessa Goodwin,

5 Personal communication with a Collect Art spokesperson indicated that the Tasmanian Government was initially hesitant to pursue the scheme, being put to three Arts Ministers before it was accepted (March, 2015). 8 said that the criteria to participate ‘puts the gallery operators under a great deal of scrutiny, which is good because buyers can be confident of buying genuine art’ (Machen, 2014). Participating galleries pay the Tasmanian Government 1.5% of the sale price of the artwork which contributes towards the cost of the scheme.6 As part of my research I calculated that there are approximately 500 artists represented by the 20 galleries participating in Collect Art.7

In 2009 it was reported that Collect Art met its fourth year target for loan funding within the first ten months of operation (Government of Tasmania, 2009a; 53).8 Since its establishment, Collect Art has seen an average growth of approximately 30% each year representing an increase in both the number and value of loans approved.9 To illustrate this growth, in 2008 28 loans to the value of $100,000 were approved. In 2015, just under 500 loans equating to approximately $1.55 million were approved (Arts Tasmania, 2015). Collect Art’s positive performance has been acknowledged throughout its life, irrespective of which government was in power. At the end of 2014, Dr Goodwin, noted:

The Collect Art Purchase Scheme has been an outstanding success in supporting the sale and export of Tasmanian artwork. In just under six years the scheme has approved 1,893 loans valued at $5.7 million. This has enabled the purchase of 2,238 artworks from 344 Tasmanian artists through 17 galleries across the state. Importantly, the scheme has not incurred one cent of bad debt. Of the approved Collect Art loans, just under a third have been to interstate residents (Government of Tasmania, 2014).

6 Personal communication with Collect Art spokesperson (March, 2015). 7 A result of counting the artists on each participating gallery’s website. 8 The report however does not specify what the target was. 9 Personal communication with Collect Art spokesperson (March, 2015). See also Appendix Two for graphical representations of the growth of the scheme. 9

Collect Art is administered through the industry development program at Arts Tasmania, which itself is a business unit situated within the Tasmanian Government’s Department of State Growth. To understand the context of Collect Art it is important to understand some aspects of Tasmania and its economy.

Tasmania’s economy has long been identified with forestry, manufacturing and mining activity. The downturn of these ‘traditional’ sectors (Honeywill, n.d.; para 8), coupled with a high level of welfare dependence and unemployment has led to it being described as ‘economically fragile’ (Cica, 2012; 2). In order for Tasmania to be active and relevant in the 21st century, Dr Ross Honeywill from the Tasmanian School of Business and Economics at the University of Tasmania suggests that the State needs to embrace the ‘neo-economy’ (Honeywill, n.d.; para 13). In a style similar to Richard Florida’s creative class (Florida, 2002), Dr Honeywill’s neo- economy refers to an orientation of the market toward creativity, imagination and design (Honeywill, n.d.; para 1). Indeed, Tasmania has a high level of arts engagement with a 32% participation rate compared with the national average of 27% (Australian Bureau of Statistics, 2012b).

It is almost impossible to discuss the cultural life of Tasmania without referring to the Museum of Old and New Art (‘MONA’), which after Salamanca Market, is Tasmania’s second most visited tourist attraction (Tourism Tasmania, n.d.). Established in 2011, MONA has drawn much attention not only for its unique collection and alternative museological approach, but also for its impact on other cultural and creative areas. This is known as the ‘MONA Effect’ and is the focus of an Australian Research Council Linkage Grant led by Professor Justin O’Connor at Monash University. MONA has been credited with the cultural regeneration of Hobart and as a contributing factor in the upswing in box office sales for the Tasmanian Symphony Orchestra (O'Connor, 2013 and Hunt, 2015). It has been described as having put Tasmania on the ‘world art map’ (Shannon, 2012). The MONA Effect has also been cited as a reason for the increased promotion of Collect Art (Martin, 2011).

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For a state the size of Tasmania, Collect Art represents a meaningful proportion of arts-related expenditure. In 2011-2012 total government expenditure on visual arts and crafts was $1.7 million (Australian Bureau of Statistics, 2012a). The value of Collect Art loans approved in the same period was $467,398 (Government of Tasmania, 2012a). This is almost one third of government expenditure which, in the unique case of Collect Art, is eventually paid back.

1.4 Literature Review | Theoretical Background This literature review is divided into two sections. The first examines government subvention of the arts and positions this case study within the theoretical context of cultural economics. The second considers the political loci of the arts - that which has been described as operating within an economic paradigm. While the theoretical exploration begins at this point, I will continue to engage with relevant academic discourse throughout this thesis to ensure a thorough analysis of Collect Art.

1.4.1 Government Subvention of the Arts In The Production and Consumption of the Arts: A View of Cultural Economics, Australian economist David Throsby states that with respect to cultural economic discourse, ‘few theoretical stones [have been] left unturned’ (Throsby, 1994; 24). With this in mind, the following passages will cover a very brief digest of the salient theories pertaining to government subvention of the arts.

Justifications for and arguments against government subvention When considering the conventional rationale for government involvement in the arts, there are two aspects to evaluate. The first is the notion of ‘market failure’ and the second is the ‘merit good’ argument. While other justifications for government support abound10, I have identified these two concepts due to their relevance to the Collect Art model.

10 Such as those relating to organisational / institutional subvention. 11

Market failure is described as a circumstance whereby the market does not fully realise the value of a good (or service) and therefore its existence is deemed ‘lower than the social optimum’ (Pommerehne & Frey, 1990; 76). To correct the imbalance, a government intervenes through different methods of subvention. Failure of the market may occur when a meritorious value (discussed henceforth) is attached to goods that the market price does not or cannot capture; where the cost of production is too high; or, where certain consumer segments cannot afford to participate (Fullerton, 1991; 72).11 Market failure may also result due to lack of information about the marketplace on behalf of consumers, or through lack of early-years arts education and engagement (Cwi, 1980; 54).

Art has the ability to command prices much higher than the sum of its materials and manufacturing time; it contains value over and above its production costs (Feinberg, 1994; 114). This attribute denotes art as a merit good. Merit goods are those deemed to have two inherent qualities which for the good of society should be subsidised by government, irrespective of one’s ability or willingness to pay for them (Van Der Ploeg, 2002; 350).12 These two qualities are known as intrinsic benefits and instrumental benefits (or ‘externalities’). Intrinsic benefits relate specifically to the art being considered, for example, its beauty or ability to engage with ‘profound human concerns’ (Schwartz, 1995; 332-338). Instrumental benefits on the other hand, are outcomes that benefit society. These include economic impact and community prestige; a contribution to creative and social capital; the education and welfare of citizens; the ability to attract tourism and business; the ability to enhance civic vitality; and, the value to future generations (Cwi, 1980; 41, Pommerehne & Frey, 1990; 19 and Schwartz, 1995; 331). Interestingly, research has empirically demonstrated that intrinsic benefits are the predominant driver behind community support of government involvement in the arts (Withers, 1979 and Throsby & Withers, 1984). In Chapter Two I will illustrate that the rhetoric

11 This implies that the less well to do should participate due to the meritorious nature of the goods (Cwi, 1980; 54). 12 Health and education are other industries for which this argument is used to justify government subvention. 12 employed by the Tasmanian Government in support of Collect Art predominantly highlights its economic (extrinsic) outcomes.

While many authors argue the benefits of government subvention, some take a different stance. Critics claim that the market failure argument lacks empirical evidence and that it does not say enough about the nature and extent of government support required (Pommerehne & Frey, 1990; 78). Subvention has also been criticised as paternalistic, suggesting that government should not be determining what is good (or not good) for its citizens, nor should it promote one form of art over another (Fullerton, 1991; 73 and Van Der Ploeg, 2002; 350). Critics state that the merit goods-approach does not create a strong enough claim for supporting the arts because many other non-arts goods similarly provide a range of intrinsic and instrumental benefits, such as access to education and housing (Grampp, 1986; 41). Scrutiny is also applied to government subvention in circumstances where beneficiaries are those who are deemed less likely to need assistance to access the arts, such as for example, middle class audiences obtaining subsidised tickets to theatrical performances (Cwi, 1980; 52).

Instruments of government subvention The literature reveals somewhat of a broad consensus with respect to defining the various types of government subvention. For example, Globerman (1980) describes support as either direct or indirect, yet Pommerehne and Frey (1990) include a third category – market facilitation – which I have adopted for this paper. As an aside, I submit that the definitional differences are more to do with the period in which each paper was written, rather than differences of opinion; a point which I will return to shortly. Regardless of what they are labelled, governments often develop and deploy a combination of instruments in order to target different beneficiaries in a variety of ways (Feinberg, 1994; 105).

Direct aid is the simplest instrument of support and primarily takes the form of recurring or one-off grants, whereby a government provides a lump sum payment directly to an artist or institution. This form of subvention is characterised by its

13 supply-side orientation and despite being straightforward in its architecture, the implications of its use are less so. Direct funding can be very targeted yet through their role as decision-maker, a funding body such as a government or its agencies, is inevitably required to make artistic judgements (Frey & Pommerehne, 1989; 181). Artistic assessment by public servants has been criticised for its ability to be impacted by the negative outcomes of political lobbying, such as wasted time and resources (Van Der Ploeg, 2002; 355). Direct aid is also often considered inefficient and costly due to the complex process of the selection and evaluation of grant recipients (Cwi, 1980; 57). Further, direct instruments are paid for through taxing consumers, who therefore do not have a say in where their monies are designated.

Indirect instruments include mechanisms such as tax relief for organisations and tax rebates for individuals (via donations). Indirect support does not require a government, or its agencies, to partake in artistic decision-making and therefore can utilise government resources more efficiently (Globerman, 1980; 18). Indirect instruments have also been identified as having a greater impact on suppliers than consumers (Frey & Pommerehne, 1989; 182). When granting a not-for-profit organisation the ability to collect donations, the income which then goes towards the supply of artistic products, a government provides support without imposing its artistic preferences.

Market facilitating instruments on the other hand, aim to ‘improv[e] production and sales conditions for artistic creators, and... [facilitate] access by demanders of art’ (Pommerehne & Frey, 1990; 80). Instruments include regulation (for example, television content laws), copyright legislation, voucher and matched funding schemes, public-private partnerships, and interest-free loans such as Collect Art. Market facilitating instruments devolve decision making to consumers, therefore stimulating demand for goods and services (West, 1986; 9). They are less prone to any bias of government decision-making compared with other forms of subvention (Pommerehne & Frey, 1990; 83). It has been suggested however, that market facilitating instruments may produce commercial or ‘middle of the road’ art (Van Der Ploeg, 2002; 357); a concern which is vehemently rejected by a number of pro-

14 market advocates such as economists William Grampp (1986) and Tyler Cowen (1998).

Direct grants have traditionally been the predominant way for government to support visual artists and the visual arts industry (Zakaras & Lowell, 2008; 97). Collect Art however, would be classified as a market facilitating instrument of government subvention as it is orientated toward consumers and precipitates sales.

Earlier I made the point that definitional issues are a result of the passing of time and not differences of opinion. I advance the notion that market facilitating instruments of government support have emerged alongside the development of what is referred to as the ‘economisation’ of the arts. This now leads us to an examination of the politics involved in government subvention of the arts and specifically, the purported ‘economic paradigm’ dominating the current arts climate (Caust, 2003; 52).

1.4.2 Government Policy and the Economisation of the Arts In his book What’s Wrong with Contemporary Art? social historian Peter Timms draws attention to the various contextual circumstances through which the art world has evolved. He argues that today, the arts are at the mercy of the ‘institution of the market’ (Timms, 2004; 48). Similarly, Australian academic Jo Caust suggests that the economic contribution of the arts has become the dominant justification for government subvention (Caust, 2003; 53).

Authors, including Caust, have diachronically traced this economisation within the rhetoric of government policy. In the mid-eighties the Australia Council began to prioritise market and economic outcomes within policy statements as a way to ensure sector sustainability.13 As a market-orientated approach developed, government support became thought of as ‘investment’, and economic returns

13 For example, one of the opening lines from Creative Nation, Australia’s first national cultural policy strategy is: ‘This cultural policy is also an economic policy’ (Office for the Arts, 1994). The title of this thesis is also drawn from the second iteration of this national cultural policy, Creative Australia (Ministry for the Arts, 2013). 15 were expected (Radbourne, 2002; 55). It is argued that contemporary arts policy now concentrates on enhancing market-focused practices such as audience development strategies, and creating a sales environment through market facilitating instruments (Radbourne, 2002; 55). Collect Art is a clear example of this. Contemporary policy has also begun to proactively shift some of the funding liability to the private sector. This is evident in government-backed reports and programs designed to stimulate private sector activity, particularly philanthropy. The 2011 Report of the Review of Private Sector Support for the Arts in Australia acknowledges that support of the arts is the responsibility of government, but that the private sector also has a role to play to ‘improve the manner in which the arts are funded as a whole’ (Ministry for the Arts, 2011; 14).

These developments have led to economic outcomes becoming a key lens through which the arts sector is commonly assessed. Often assessment comes in the form of economic impact statements which, due to their easily quantifiable nature, have become the tool of choice for governments justifying their arts expenditure (Mulcahy, 1986; 35). While this may assist with program reporting, figures often do not say anything about the intrinsic value of the arts and they render artistic performance subject to non-artistic assessment (Mulcahy, 1986; 41). Indeed, this is highlighted in the tension between art and economics where one is valued by its qualitative outcomes and the other by its quantitative (Velthuis, 2005; 24).

Interestingly, there are economists who argue in favour of the economisation of the arts. Tyler Cowen’s In Praise of Commercial Culture suggests that with more platforms for commercialisation the market will educate audiences, increase artistic diversity, provide more opportunities for niche art, and assist audiences to refine their tastes (Cowen, 1998). Likewise, Pommerehne and Frey suggest there are numerous examples of the market producing high quality and innovative artistic outcomes (Frey & Pommerehne, 1989; 181).

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1.5 Chapter One Conclusion Divided into four parts, Chapter One began by identifying the genesis of the thesis topic stemming from a personal experience and interest in Collect Art specifically, and art loan schemes generally. I have provided a comprehensive introduction to Collect Art describing the scheme’s structure, rationale for creation and parameters. Through the literature review I identified the theoretical area in which this area of study is located, situating art loan schemes within the field cultural economics. I have also revealed a lack of commentary on this form of government subvention and through employing a case study approach, I have illuminated an opportunity for this thesis to therefore contribute to the discourse.

Ultimately, this chapter acquainted us with government subvention and positioned Collect Art as a mechanism to stimulate the market and support sector sustainability. Furthermore, I conveyed that the economisation of the arts reveals itself in the design, government rhetoric, and assessment of instruments of government subvention such as Collect Art. As glimpsed in this chapter, and as will be illustrated henceforth, there is a distinct focus on the quantitative reporting of Collect Art. The subsequent chapters will explore in more detail the most cogent theories, issues and implications of this form of government subvention and its locus within the economisation of the arts paradigm.

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Chapter Two: Theoretical Analysis of Collect Art

Chapter Two draws the information in Chapter One into a contextual setting by probing the relationship between theory and real-life accounts attributed to art loan schemes. Primarily acquired from journalistic sources from Australia and the United Kingdom, these ethnographic accounts form the basis of what is a narrative inquiry into art loan schemes. To add empirical weight to the findings, some evidence sourced from an evaluation of the UK’s Own Art loan scheme has also been included. Having predominantly employed secondary evidence for this analysis, it is important to bear in mind the possible lack of objectivity in these extracts. Direct quotes, while providing narrative ‘texture’ to the analysis, require cautious interpretation. This analysis is therefore somewhat limited by lack of abundant empirical evidence.

To ensure a balanced investigation of Collect Art in order to eventually demonstrate its efficacy and significance, all stakeholders need to be considered. This chapter thus analyses central themes relating to each of the scheme’s key stakeholders, that is, consumers, government and artists.14

2.1 Collect Art and Consumers New markets At the Collect Art launch, former Tasmanian Labor Arts Minister Michelle O’Byrne stated, ‘we want to encourage a lot more people to buy Tasmanian art… we want to grow a new market of people who are purchasing art’ (Glaetzer, 2008). The 2008- 2009 Department of Parks, Heritage and the Arts (DEPHA) annual report also identified one of the scheme’s priorities as market stimulation by ‘encourag[ing] new collectors’ (Government of Tasmania, 2009a). Sources reveal that, to some degree, this occurs.

14 I also consider galleries to be a stakeholder of Collect Art, however Chen’s thesis on the KKR includes a lengthy discussion on galleries, so in order to complement his research, I have elected not to include them in this thesis. 18

Three years after Collect Art’s launch one gallery owner stated that ‘it’s really opened up the market’ (Howard, 2011). Tasmanian artist, Luke Wagner, who has had ‘numerous paintings bought through the scheme’, commented that ‘a whole new market, often comprising younger and first-time collectors has been opened up to us’ (Fitzgibbon, 2011). The data supports this narrative with Collect Art recording a 30% increase in the value of loans each year.15 Empirical data from the UK also suggests that art loan schemes encourage new people to enter the market. The 2014 Own Art evaluation report indicated that for 82% of participants, the scheme enabled them to make their purchase suggesting that had it not been for Own Art, these buyers would not have been in the market to purchase a work of art (Own Art, 2014; 18). This was certainly the case for my husband and me.

Barriers, accessibility and engagement The Tasmanian Government has claimed that Collect Art reduces barriers to engagement with art when in 2010 former Labor Arts Minister David O’Byrne stated that the scheme ‘[makes] Tasmanian art more accessible to all Tasmanians’ (Government of Tasmania, 2010). Gallery owners appear to concur with this sentiment. The owner-director of Hobart’s Handmark Gallery, Allanah Dopson, stated that ‘it’s really breaking down the barriers and [is proving] that art is available for everyone to enjoy’ (Unreich, 2009). Customers of Collect Art also commented:

We looked at the price tag and thought it was an imprudent amount of money to spend on a painting… But when we heard about the scheme, $375 a month seemed far different than putting the total amount down at once (Unreich, 2009).

[Collect Art] was enough to make me buy it... I didn't have that much to spend upfront, but if I can pay it back over 12 months, it's a breeze (Schwartzkoff, 2009).

15 Personal communication with Collect Art spokesperson (March, 2015). See also Appendix Two. 19

With respect to the beneficiaries of these lowered barriers, the Minister’s statement of ‘all Tasmanians’ is very general (Government of Tasmania, 2010). Figures are not (yet) available for Collect Art, so I will consider the UK’s Own Art findings. Their survey data revealed that one quarter of scheme users were from a low income background (Own Art, 2014; 21). However, this evaluation also revealed that 96% of customers identify as ‘white’ therefore indicating that while the scheme enabled a somewhat diverse economic profile of participants, it perhaps did not necessarily lend itself to use by an ethnically diverse population (Own Art, 2014; 19).16

This curious representation of customers may be equated to a number of factors that influence engagement with, and consumption of, art. These factors include financial well-being, education levels, and one’s own cultural capital, defined as accumulated knowledge, understanding and experience of the arts (Throsby, 1994; 8, Heilbrun & Gray, 2001; 160 and Craik, 2007; 34).17 Interestingly, it has been proposed that lowering prices of artistic goods and services has a minor effect on people who do not have cultural capital (Throsby, 1994; 8). Indeed, Own Art’s empirical data points to the predominant groups of scheme users being those with a ‘medium’ to ‘high’ degree of arts engagement (Own Art, 2014; 31). This empirical data therefore suggests that those who use Own Art, and possibly these schemes more generally, represent communities predisposed to cultural participation.18

This evidence may also suggest that those who use the scheme have a degree of financial security. This issue was touched on in the UK with an article entitled That’s Rich: Well-Off Snap Up Art Loans Aimed at the Poor (Woolcock, 2006). It suggested that those with a low income are not likely to have their loan application approved, therefore leaving only those more financially secure able to access the program

16 The Own Art report concedes that questions relating to ethnicity were not compulsory and were only answered by 23% of survey respondents. 17 Studies have shown that education appears to be the dominant factor relating to arts participation and that the ‘effects of education become progressively stronger the higher the level of education attained’ (McCarthy, 2005; 26). 18 Regarding art loan schemes, a number of newspaper articles from Australia and internationally remark on ‘art lovers’ suggesting that they attract arts-engaged consumers. 20

(Woolcock, 2006). This corresponds with the empirical evidence from Own Art. Using a classification method called A Classification of Residential Neighbourhoods (‘ACORN’) to identify customer behaviour and lifestyles, the Own Art research revealed that the scheme’s predominant users were lower to upper middle class. The ACORN classifications described Own Art users as ‘wealthy executives’, ‘affluent greys’, ‘prosperous professionals’, and ‘educated urbanites’ (Own Art, 2014; 24-25). These findings accord with the issue noted in the literature review whereby the actual beneficiaries of government subvention appear to be those that may least require it.

While this evidence points towards the practical barrier of cost, regard also needs to be given to commentary regarding art loan schemes addressing perceptual barriers to engagement. Upon the establishment of Own Art in the UK, a representative from Arts Council England noted that ‘people are nervous about entering galleries… We are trying to break down these barriers’ (Miller, 2004). Another Arts Council England representative said that ‘part of the point is to get people to shed their inhibitions; galleries can be a bit scary and daunting’ (Higgins, 2004). Similarly, a consumer who used Own Art commented that the scheme ‘would appeal to a lot of people who may not usually think about buying art or entering a gallery’ (Miller, 2006). The empirical evidence also suggests that, in the instance of Own Art, art loan schemes do go some way to break down perceptual barriers with 26% of survey respondents indicating that they purchased their first piece of contemporary art with the scheme (Own Art, 2014; 23).

Consumer economics When analysing the scheme through an economic lens, it is evident that Collect Art has an interesting relationship with the price elasticity of demand. This refers to the sensitivity of demand to changes in price (Heilbrun & Gray, 2001; 77). For example, if a good has high price elasticity, a change in its price can have a significant impact on its demand. Often these goods are considered non-essential and generally have

21 many substitutes (such as luxury items).19 Empirical research on the price elasticity of demand in the arts has yielded evidence for both elasticity and inelasticity. However with respect to the primary art market, Velthuis notes that price elasticity often ‘plays a subordinate role’ (Velthuis, 2003; 192). By this he means that in some cases, a high price can actually increase demand for an artwork due to price signalling certain factors about quality.20

Collect Art and art loan schemes illustrate a clear case of price elasticity where a reduced price barrier (via no interest loans) stimulates demand. This is evidenced by comments made about the scheme from government representatives, gallerists and consumers. Not long after its commencement, Fiona Barber, Manager – Industry Development at Arts Tasmania was quoted as saying that Collect Art ‘[gets] people over the line’ (Unreich, 2009). Similarly, a representative from Art Tasmania also indicated that Collect Art often ‘clinches the sale’.21 Launceston’s Design Centre manager, Rye Dunsmuir, concurred with this sentiment, stating that ‘[customers] wouldn’t have bought it… if they’d had to pay up front. It’s creating sales that otherwise wouldn’t have existed’ (Schwartzkoff, 2009). Mark Bishop of Stanley Artworks (southern Tasmania) cites a similar experience, stating that:

Getting people to commit to the sale has become difficult… When you tell people about [Collect Art], it pushes people over the edge and allows them to commit to purchasing larger things (Schwartzkoff, 2009).

This final comment about purchasing larger, that is, more expensive things, is intriguing to note. In addition to stimulating demand, art loan schemes also have an interesting theoretical relationship with the area of consumer credit. Psychologist Howard Tokunaga described those who predominantly use credit (cards) as young, well-educated, fashion-conscious, and with high incomes (Tokunaga, 1993; 287).

19 Goods with low price elasticity generally do not experience a change in demand with fluctuations of price. These goods are described as essential to everyday living where demand will be the same even if the price goes up. 20 Conversely, lowering of the price of an artwork may generate negative signals about an artist and the quality of their work. This is also the case with luxury goods. 21 Personal communication with Collect Art spokesperson (March, 2015). 22

This is similar to the earlier description of people who have been found to use Own Art. Importantly, he explained that using credit has the ability to increase the number of purchases made, the amount spent, and can lead to the purchase of higher priced items (Tokunaga, 1993; 289).

Collect Art and analogous schemes illustrate these outcomes. Fiona Barber from Arts Tasmania noted that the scheme has ‘increased the amount people are prepared to pay’ (Schwartzkoff, 2009). Internationally, there is qualitative evidence which suggests that art loan schemes behave similarly to that of credit cards by encouraging people to spend more. David Falconer at Millennium Gallery (Cornwall) noted that ‘people using the scheme often spend significantly more than they would have done without it’ (Unknown, 1998). Josie Reed at Chapel Row Gallery (Bath) commented that Own Art ‘helps people to buy more expensive pieces than they would otherwise’ (Morgan, 1999).

Empirically, the evaluation of Own Art illustrated that 80% of customers bought a more expensive artwork than they originally intended to purchase, indicating a correlation between these schemes and the theories surrounding credit card use (Own Art, 2014; 56). Based on survey responses, Own Art’s evaluation report acknowledged this occurrence and recommended that a ‘shoulder scheme’ for higher priced artworks should be developed in the future (Own Art, 2014; 64). This further illustrates that the Own Art scheme encourages customers to purchase higher priced items.

To continue the focus on the use of credit, Tokunaga’s research also drew parallels between the perspectives and behaviours of those that use credit and those with substance addictions (Tokunaga, 1993; 311). Art is an ‘experience good’ whereby the more one engages with it, the more it is desired (Van Der Ploeg, 2002; 339). Considering this, it is compelling to contemplate the notion of ‘addiction’ in relation to art loan schemes. In 2012, then Tasmanian Labor Minister for the Arts, Lara Giddings, reported that:

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Fifty-seven customers have taken out a second loan once they have paid off their original one to enable them to buy more art, and 10 customers are on their third loan with one customer on their fourth loan (Government of Tasmania, 2012b).

Addiction is also referred to internationally in newspaper commentary (no Australian examples have been found to date). Andy Bellman at the Biscuit Factory (Newcastle upon Tyne) stated that ‘you find that people who buy one piece then become addicted to buying more and more’ (Higgins, 2004). Likewise, Guy People at the Scottish Gallery noted that Own Art ‘encourage[s] young customers to get involved [because] buying art is addictive’ (Cornwell, 2004). Of course, the name ‘Collect Art’ clearly reveals the desire for the scheme to encourage repeat sales.

The afore-quoted gallery owner made a telling comment about young people and art loan schemes. Although Collect Art is not implicitly geared towards young people, it has been alluded to throughout the scheme’s life. The 2008-2009 DEPHA annual report published a quote from gallery owner Allanah Dopson noting the participation of young people: ‘It has also meant that young people starting their art collection have been able to get involved’ (Government of Tasmania, 2009a; 53). Rye Dunsmuir (Launceston) commented that ‘[younger buyers] wouldn’t have bought it at their stage in life if they’d had to pay upfront’ (Schwartzkoff, 2009). Another gallerist said that Collect Art is ‘attracting quite a number of buyers in their thirties’ (Machen, 2014).

In the case of Own Art, the evaluation revealed that the majority (66%) of scheme participants were aged between 31-55 years and that one quarter of participants were under the age of 35 (Own Art, 2014; 20). Given the loan nature of Collect Art, the participation of young people is not surprising and accords with Tokunaga’s earlier description of credit users and what appears to be a noticeable use of art loan schemes among this demographic.

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2.2 Collect Art and Government The economic paradigm The literature review observed that government subvention takes place for a variety of reasons. These include the desire to reduce costs of production or to ensure participation from under-represented consumer segments. Given the economic paradigm within which we find the current approach to subvention of the arts, I suggest that the ‘social optimum’22 desired by the Tasmanian Government is not centred around equity of access, or enhancing the intrinsic benefits of the arts, but rather to improve a perceived underperformance of the market.

There is clear evidence to support this. In 2013, the Tasmanian Arts Advisory Board (TAAB) released New Arts Investment Models in which it suggested a change in the language of government funding from that of ‘subsidy’ to that of ‘investment’ (Government of Tasmania, 2013b). By assisting rather than supporting the sector, this report proposed a de-emphasis on grants and an accentuation on investment, thus ‘shift[ing] the focus to outcomes’ (Government of Tasmania, 2013b; 3).

The economic benefits of Collect Art are certainly predominant within the commentary surrounding it. Collect Art commenced around the time of the Global Financial Crisis and some commentators credit it with sustaining the Tasmania art market during this period of economic downturn. Gallery owner Mark Bishop (in north-west Tasmania) stated that Collect Art ‘[bridged] the gap between what we would normally sell and what we can sell in the downturn’ (Schwartzkoff, 2009). Tasmanian artist Mandy Rennard also commented that Tasmania ‘suffered less from the economic crisis’ because of Collect Art (Glaetzer, 2009). In 2013, then Arts Minister Lara Giddings stated in Parliament that Collect Art:

Has been really valuable and has helped stimulate the purchase of art at a time when people have been a lot less willing to part with their dollars following the global financial crisis (Government of Tasmania, 2013a).

22 As referred to by Pommerehne and Frey (Pommerehne & Frey, 1990; 76). 25

More often than not, Collect Art communique includes quantitative figures such the value of loans approved, number of artists who have sold artwork, the percentage of interstate buyers, and the number of artworks sold (Dr Goodwin’s 2014 speech noted earlier in this thesis attests to this). This approach could be considered representative of Caust’s ‘economic paradigm’, where the economic contribution of the arts ‘dominates the discourse about arts funding’ (Caust, 2007; 227). Of course, this is not surprising given that Collect Art is a market facilitating instrument of government subvention and may indeed ensure that the scheme has long term government support.

Non-arts objectives An economic approach to Collect Art is also exemplified in the placement of the Ministry of Arts within the Tasmanian Government. When Collect Art first began in 2008, the Ministry of Arts was located in the Department of Parks, Heritage and the Arts. It is now situated within the Department of State Growth, which also includes portfolios such as Energy, Racing, Tourism, Infrastructure, and Resources. Whereas once they were seen as a unique asset, similar to an historical landmark, the arts now represent a sector that creates jobs, contributes to the economy and delivers a return on investment. This change in perspective is found in comments by former Tasmanian Labor Minister for Tourism and the Arts, Michelle O’Byrne:23

The involvement of governments in the arts in Australia has traditionally been through the awarding of grants, and with the instigation of Collect [Art], we have created a new program that takes this government's support for the arts in a new exciting and economically beneficial direction (Government of Tasmania, 2009b).

The expectation that the arts can and should address non-arts objectives is particularly relevant to Tasmania. It is not surprising that the State’s worrying employment statistics and dependence on welfare has resulted in government activity geared toward the enhancement of economic outcomes. Tasmania has

23 Granted, while the arts portfolio was still in DEPHA. 26 experienced decline in its traditional industries and the appearance of growth using quantifiable data in other areas is an important way to amplify its competitive advantage (Pratt, 2008; 109). Furthermore, when Collect Art was launched, one of its priorities was to ‘support the career development of Tasmania’s visual artists’ (Government of Tasmania, 2009a; 53). While we will turn shortly to the position of artists, this statement coupled with Tasmania’s precarious employment situation, suggests that Collect Art also aims to address social-welfare goals. The implications of this will be discussed in Chapter Three.

2.3 Collect Art and Artists Financial wellbeing In Australia, a number of studies have examined the social and economic position of artists. Led predominantly by David Throsby, data reveals that while artists are generally well trained and educated, income from their artistic practice is often very low and does not provide adequate financial return (Throsby & Hollister, 2003). For example, a 2001 report revealed that half of the surveyed artists had a creative income of less than $7,300 (Throsby & Hollister, 2003; 45). In order to overcome this, 63% of artists reported working more than one job, resulting in less time dedicated to exploring and refining their art (Throsby & Hollister, 2003; 37). Financial concerns therefore play an important role in an artist’s pursuit and success in their creative practice.

With the depressed nature of employment in Tasmania and the often delicate nature of artistic employment generally, the importance of earning a living from an artist’s endeavours is of particular note in the case of Collect Art. Indeed, one of the reasons cited by the government for the establishment of the scheme was to ‘support the career development of Tasmania’s visual artists’ and particularly, early to mid-career artists.24 Mandy Rennard, a Tasmanian artist represented by a Collect Art gallery commented that she had ‘sold a lot of work through [Collect Art] and it has significantly supported [her] career’ (Glaetzer, 2009). In this instance Collect Art provides a direct financial reward for artistic performance.

24 Personal communication with Collect Art spokesperson (March, 2015). 27

As noted earlier in a speech by current Tasmanian Liberal Arts Minister Dr Goodwin, by the end of 2014 Collect Art had approved loans to the value of $5.7 million, enabling the purchase of 2,238 artworks from 344 Tasmanian artists (Government of Tasmania, 2014). Supposing for example, all participating galleries took a 40% commission,25 this would mean that over the six year life of the scheme to 2014, approximately $3.42 million would have flowed to artists. If distributed evenly across the 344 artists, approximately $1,656 per annum per artist is generated through Collect Art. When considering that a significant number of artists have a creative income of less than $7,300, by way of this simplistic example, it represents a contribution of approximately 23% or roughly a quarter of yearly income.

Creative motivation In addition to the financial welfare of artists, the impact of Collect Art can also be viewed in light of their creative motivation. Much has been written on this topic and the overall consensus is that motivation generally falls into two categories; that which comes from within an artist (intrinsic) and that which is generated externally (extrinsic)26.

When commenting on the various influences on intrinsic and extrinsic motivation, Teresa Amabile from Harvard Business School asserted that ‘intrinsic motivation is conducive[…] but extrinsic motivation is detrimental’ to artistic production (Amabile, 1988; 154). Further, economists Frey and Jegen use the crowding theory to describe circumstances in which certain motivations can be crowded in or out by other forces (Frey & Jegen, 2001; 1). In the case of Collect Art, policy instruments of government subvention can crowd in (enhance) artistic motivation. This is particularly so when the autonomy of the artist is supported and when the market accommodates artists through market facilitating initiatives (Frey, 1999; 79).

25 Based on the Visual Arts Code of Practice (Australian Commercial Galleries Association, n.d.). 26 Intrinsic motivation includes factors that drive an artist to create, such as the search for beauty; personal satisfaction; to have a voice and to be heard; and other ‘inner compulsions’ (Cowen, 1998; 15). Meanwhile, ‘external forces’ includes artistic materials and supplies, and opportunities for earning income (Cowen, 1998; 15-16). 28

Despite the abundance of literature about creative motivation generally, unfortunately only a little narrative evidence has been collected that can illustrate the effects of Collect Art on the creative motivation and artistic output of artists. In the context of Collect Art Tasmanian artist Luke Wagner was paraphrased as stating that ‘selling new work promoted a sense of achievement, affirmation and self- belief, driving him on to create with more confidence’ (Fitzgibbon, 2011). This comment suggests that rather than being detrimental to an artist’s creativity (as Amabile contends) extrinsic factors such as the sale of a work through Collect Art can intrinsically motivate artists.

In the example of Luke Wagner, the confidence gained from having market exposure appears to have developed a sense of artistic energy and drive. This is congruent with Professor of Economics, David Galenson’s research on the impact of market demand on artists. When he studied the careers of modern artists, Galenson concluded that a strong market with adequate demand enabled artists to focus their time on their practice and develop innovative work for which they were financially rewarded (Galenson, 2000; 100).

2.4 Chapter Two Conclusion Chapter Two began by providing a methodological context for the subsequent analysis of Collect Art. A combination of primary data sourced from the UK’s Own Art scheme and secondary qualitative accounts from Australia and the UK provided a narrative-driven foundation for exploring Collect Art and art loan schemes. In order to ensure a thorough discussion the chapter was divided into three sections focussing on Collect Art’s primary stakeholders – consumers, government and artists. Each section spot lit compelling themes that I consider pertinent to the relevant stakeholders and their relationship with Collect Art.

With reference to consumers, I found that Collect Art stimulates the market by encouraging people to purchase art. While it appears that the scheme may only appeal to those already engaged with the arts, there is some qualitative evidence to

29 suggest that art loan schemes lower perceptual barriers to accessing and purchasing art. I illustrated that there is a similarity of outcome with that of credit use. In this instance, art loan schemes can encourage consumers to purchase higher priced items and/or go back to purchase again. I also revealed an interesting connection between these schemes and young buyers. Evidence points to them being a high proportion of customers and accords with the description of credit users.

Observing the scheme from a (Tasmanian) government perspective, I demonstrated that it is reflective of an orientation toward an ‘investment’ form of subvention. With this comes an apparent expectation for Collect Art to deliver a broad range of outcomes, particularly, economic. While it is a concern that government is strongly orientated towards economic measurement of the arts, in the case of Collect Art an economic imperative may ensure its place as a government program in the long- term.

Finally, this analysis revealed that for artists, market activity stimulated by art loan schemes can have positive financial and artistic outcomes. With the typically low amount of income generated from artistic pursuits, a scheme which has the ability to enhance the financial position of artists can have a significant impact on an artist’s career. Furthermore, the rewards from selling work can not only heighten an artist’s profile and reach, but also have a positive impact on their confidence and motivation for creating and experimenting with art.

By exploring these areas, I have illustrated the impact of Collect Art as an instrument of government subvention. I turn now to a discussion of the implications of this analysis.

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Chapter Three: Implications, Assessment and Conclusion

With a view to ultimately understand the significance of Collect Art and reach a conclusion about the scheme’s efficacy, this chapter presents a broader exploration of the case study. Elaborating on the literature review in Chapter One and the qualitative and quantitative analysis of the case study in Chapter Two, Chapter Three discusses possible outcomes and implications of Collect Art and the art loan scheme model. Without strong empirical data readily available, the issues raised take on a theoretical orientation and will once again place a spotlight on the scheme’s key stakeholders – consumers, government and artists.

Some of the implications presented are micro in their perspective, concentrating on the ramifications on individuals, while others take a more macro view, encompassing the arts ecology as a whole. The suppositions and assertions raised in this chapter are necessary for exploring the case study and for developing future research directions.

3.1 Implications for Consumers Compared with other forms of government subvention such as grants, Collect Art enables consumers to direct their finances to their preferred artist, a concept known as consumer sovereignty. This is demonstrated in sales by 344 artists represented in 17 galleries (to the end of 2014). Collect Art can contribute to one’s interest in art by enabling a first purchase of art and/or encouraging the purchase of more art (Van Der Ploeg, 2002; 339). Being an experience good, a consumer engaging with art through the scheme would also develop their connoisseurship and ongoing relationship with art more generally (McCarthy, 2005; 30). Over time and as their wealth increases, these consumers may begin to consider art at a higher price point, pushing them into more expensive art markets (McCarthy, 2005; 30); a notion taken up by the operators of Own Art who are planning to extend the scheme into higher price brackets.

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Collect Art provides a platform for consumers to interact with art, thus enabling them to experience the associated intrinsic benefits of arts engagement, such as emotional satisfaction and intellectual stimulation. A scheme that facilitates the direct purchase of art and indeed, the emotional and financial commitment attached to purchasing an artwork, may also engender an affiliation between consumer and artist. This is particularly pertinent in today’s climate, where it is vital for artists and arts organisations to develop value-based relationships with consumers and audiences (Radbourne, 2002; 57). Empirical evidence not yet available would assist in determining if Collect Art engenders a connection between artist and consumer, or if the impact of the scheme is merely transactional.

Collect Art could also make the act of purchasing art more accessible and commonplace. Social scientist Kevin McCarthy conceives that an expansion in the range of what is considered ‘art’ to include less expensive items, has these days enabled the purchase of art by a much wider audience (McCarthy, 2005; 42). This, coupled with a scheme such as Collect Art, could invite the concept of purchasing art as a pastime or hobby (McCarthy, 2005; 42). As revealed, Collect Art is promoted as a scheme designed to ‘encourage new art collectors’ (Government of Tasmania, 2009a) and significantly, the figures noted in Chapter One illustrate that consumers return to the scheme to make second and third purchases. These factors indicate that Collect Art has an important role to play in developing an appreciation for art and encouraging initial and ongoing participation in the art market.

Collect Art and the implications of purchase price are also worth considering. On account of the positive (and increasing) use of the scheme, we can reasonably contend that price is a primary factor in the purchase of art. As discussed in Chapter Two, schemes such as Collect Art are the impetus behind many consumers purchasing art they would not have otherwise. One must then question the motivation for someone to buy an ‘expensive’ work of art when the price barrier is removed. One answer may be found in economist George Akerlof’s ‘price of

32 lemons’.27 Akerlof postulates that when information about a market is lacking, price can be used as an indication of quality (Akerlof, 1970; 488). For Collect Art, this could mean that consumers who do not know much about art are willing to pay a higher price because they believe that original art is of more value, of a higher quality, and/or there is perceived to be less risk involved through the payment of monthly instalments. Furthermore, Akerlof interestingly suggests that ‘institutional’ arrangements may also signal quality to those who are not familiar with the market. When applying his theory, this means that by virtue of a gallery being part of Collect Art (and therefore having Government ‘approval’ to participate) an endorsement of quality is conveyed (Akerlof, 1970; 499). This may also have implications for participating artists and as such, will be discussed subsequently.

When an incentive is in place that increases the affordability of an artwork (without decreasing its price), one could wonder if the Collect Art model actually leads to the inflation of artwork prices. Although no evidence of this could be found with respect to Collect Art (nor the international examples), evidence of this has been found with the use of vouchers in the private housing rental market in the United States (Susin, 2002).28 In this instance, it was found that in low-income neighbourhoods, a high presence of rental vouchers yielded faster rent increases than areas with fewer vouchers (Susin, 2002; 2). For Collect Art, one could intimate that the presence of a mechanism that makes art more affordable may actually inflate artwork prices. A longitudinal empirical study of Collect Art sale prices would reveal whether or not this could occur.29

3.2 Implications for Government As discussed in the literature review, a market facilitating instrument of government subvention such as Collect Art devolves decisions to consumers, therefore avoiding artistic judgements by public servants (Frey & Pommerehne,

27 Also Velthuis’ price signalling noted in Chapter Two. 28 While Collect Art is not a voucher scheme, a similarity of outcome exists whereby a voucher makes a good or service more affordable. 29 It would also be of interest to see whether gallery commissions increase to counter the new 1.5% fee charged by Arts Tasmania on each sale. 33

1989; 181). Without the need for artistic review panels or boards, it would be reasonable to conclude that the Collect Art model is cheaper to administer than a system that designates grants. Although the costs associated with granting loans versus the cost of administration and interest rate fees associated with Collect Art still need to be evaluated, the net result once loans are repaid could render Collect Art a more cost effective program than other forms of government subvention.

Contemplation of Collect Art’s administrative costs leads us to the issue of program return on investment and its measurement. The Tasmanian Government often includes financial and quantitative statements in its reporting of Collect Art. Certainly, the growth in the number and value of approved loans has been significant.30 As with most of the implications noted in this chapter, this can be viewed in a number of different and sometimes opposing lights.

First, the emphasis on economic outcomes could assist in justifying a sector for which intrinsic benefits (such as the aesthetic value of a work of art) have traditionally been difficult to measure (Throsby & Zednik, 2014; 81). Extrinsic benefits, such as the contribution to the economy, are easier to measure (and communicate). In this case study, the Tasmanian government has clearly communicated that Collect Art has quantitatively contributed to the economy. Second, the increasing number of loans approved illustrates growing support from the public; an important aspect for ongoing government endorsement of the scheme. From a political perspective, evidence of good economic outcomes and public support (plus the fact these loans are repaid) makes compelling reportage of the scheme. This is particularly valuable when seeking ongoing parliamentary support (Mulcahy, 1986; 35). Succinct, successful outcomes can ensure support for Collect Art (and possibly the arts in general) from a bipartisan government, sector participants and the general public.

It is feasible to suggest downsides to these economic ramifications. By their very nature, commercial ventures that have the ability to attract earned income, such as

30 See Appendix Two. There has been a 30% increase in the value of approved loans each year. 34 galleries, could be viewed as a reason not to use public money (Seaman in Towse, 2011; 226). However, there are numerous other commercial enterprises, such as the automotive industry and particularly relevant to Tasmania, the forestry industry, where government subvention is common practice.31 In this instance the commercial arts industry should be considered no differently from any other industry that receives government support. This of course also means that the arts industry could be expected to behave no differently to industries that receive government support, particularly with respect to lobbying. Those who have the strongest vested interest in the scheme (arguably artists and galleries) could engage in time consuming and costly political lobbying if changes were made that negatively impacted the valuable outcomes of Collect Art.

Returning now to measurement and assuming a critical and somewhat philosophical stance, if an industry is measured primarily on its economic value, we must question what this means for other value and benefits generated. Referring to the literature review, these include benefits such as the pleasure in viewing a work of art and the community prestige from a vibrant arts industry. These are benefits that can have profound outcomes on individuals and society. Caution therefore must be taken when relying solely or too heavily on economic measurement as an indicator of value. In this instance, the creation and measurement of goals based on economic (and non-arts) outcomes renders artistic achievement subject to non-arts assessment. This undermines art’s intrinsic benefits and misplaces their genuine value; value that has been shown to have the most meaning for people who support government subvention.

Through its measurement and reporting, it is clear that in the case of Collect Art the government’s frame of reference has a foundation in an economic paradigm. If the political selling point for Collect Art has been its economic achievement, it could become dependent on econometric measurement to argue the legitimacy of

31 For other industries, often economic and employment impact is highlighted as the main reason for government subvention. For an interesting article on Tasmania’s forestry industry and government subvention see (Macintosh & Denniss, 2012). 35 program expenditure (Caust, 2007; 229). To take this implication to its logical conclusion, a plateauing or decline in use of Collect Art could see it subject to criticism and abolishment.

3.3 Implications for Artists Throsby’s economic research on professional artists demonstrates that income can impact an artist’s ability to dedicate time and resources to their creative practice (Throsby & Hollister, 2003; 44). The income generated from Collect Art therefore has a significant bearing on an artist’s creative production, possibly enhancing quality, quantity, and/or innovation (Cowen, 1998; 16).32 As Galenson’s research findings outlined in Chapter Two illustrated, this feedback loop of creative production and income could have a multiplier effect on an artist’s financial and creative position, thus ensuring both financial sustainability and creative freedom (Galenson, 2000; 100). Considering this further, Collect Art also clearly supports the commercial gallery sector. The promotion of artists and the strengthening of artistic practice are vital to a healthy commercial gallery sector. Despite this outcome, the reality for many artists is that lack of adequate and sustainable income constrains their artistic practice, generally resulting in low earnings from their creative endeavours (Throsby & Hollister, 2003; 45).

An analysis of Collect Art reveals non-financial implications for artists. When compared with other forms of income, that which is generated from the market may not carry with it the stigma of income drawn from other sources such as government subsidies and welfare payments (Globerman, 1980; 20). Earning income through Collect Art sales would instil a sense of worth in an artist that could contribute to their emotional satisfaction and motivate them to continue to pursue their creative practice, even when the financial return is low (Velthuis, 2003; 206 and Frey, 1999; 79).

32 Further, artists will often use any increase in their income to invest more time and money in their practice, such as the purchase of supplies and reducing the hours of their non-artistic work (Cowen, 1998; 16-19). 36

As noted earlier, the price of an artwork can convey meaning about quality and the status of the artist (Akerlof, 1970; 488 and Velthuis, 2003; 181). Representation through a commercial gallery and making sales (including to interstate customers), regardless of amount of income generated, conveys a level of artistic achievement and quality to market participants, such as consumers, galleries and dealers, other artists, and critics (Velthuis, 2003; 206). For a Collect Art artist, this perception of quality could enhance their profile, increase their market activity, and enable them to command higher prices (Van Der Ploeg, 2002; 354). Interestingly, Chen’s thesis on the Dutch art loan scheme, the KKR, devotes an entire chapter to the ‘quality stamp’ upon which the KKR bestows on participating galleries. He suggests that this seal of approval signals a high quality gallery to consumers and other arts industry participants. Although his focus is on galleries rather than artists, with these findings Chen questions the free-market notion of the scheme. He argues that the ‘quality stamp’ places non-participating galleries at a competitive disadvantage (Chen, 2010; 131).

In the same way Chen deliberated the issue of competitive disadvantage for non- participating galleries, research on the financial and artistic well-being of Collect Art artists compared with those not represented by the scheme may yield interesting insight into the impact of market-facilitating instruments of government subvention. Presumably, most participating artists are already marketable by virtue of their representation by a gallery. It is therefore reasonable to contend that the benefits of the scheme are not going to those who may be most in need of government support, that is, artists who are not represented by a gallery. Of course, this argument assumes that government subvention should be directed to those who are in ‘need’. With the change in focus from ‘support’ to ‘assistance’ and by targeting marketable artists through Collect Art, it is clear that for government, the economic outcomes of the scheme are more highly valued than non-economic outcomes.

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3.4 Assessing the Efficacy of Collect Art In pursuance of the discussion that illustrates the significance of Collect Art as an instrument of government support, this section will assess Collect Art’s efficacy. To do this, the scheme’s objectives will be considered. To reiterate, the 2008-2009 DEPHA annual report stated that Collect Art was established to:

Stimulate the economy and the export of Tasmanian art off the island, to encourage new art collectors and to support the career development of Tasmania’s visual artists (Government of Tasmania, 2009a).

Stimulate the economy and the export of Tasmanian art off the island Reports on Collect Art in government publications demonstrate that the scheme has had a measurable and exciting economic impact. Over $5.7 million in loans have been approved since the scheme’s inception. It is documented that Collect Art reduces the barrier of unaffordability and ‘gets people over the line’ (Unreich, 2009). With Tasmania’s economy described as ‘fragile’ it is not surprising that even the arts sector is geared toward the stimulation of private sector spending. However, accurately measuring this objective is limited by its lack of clarity. To what extent Collect Art should or could stimulate the economy is not specified. Without specificity, it is difficult to determine exactly what has been achieved. Despite this, the fact that Collect Art attained its fourth year goal within its first year, and the increasing value of loans approved each year, a very convincing case for stimulating the economy can be made.

Reports also reveal that on average, 30% of Collect Art loans are taken up by interstate residents. While not representative of the majority of loan approvals, it is not an insignificant result. From a non-economic perspective, exposure to markets further afield must benefit an artist, particularly in terms of their self-esteem, confidence and profile. It enhances the legitimacy and appreciation of artists (and galleries) when artworks are sold to interstate buyers and move to locales outside of where they were produced. However, because there is no detail of why interstate custom is desired, a critical view of this objective could suggest that the

38 economic benefits of increased interstate investment in Tasmania are of more importance than these intrinsic benefits.

Overall, this first objective is hampered by its lack of specificity – it does not state by how much Collect Art intends to stimulate the economy and the extent to which it seeks to export art out of Tasmania and why. In this respect it is difficult to assess the efficacy of the scheme. However, the outcomes that have been quantified all indicate that Collect Art has surpassed all expectations of the Tasmanian Government. I therefore assess in favour of the efficacy of this objective.

Encourage new art collectors Despite not clarifying what is meant by ‘collector’, the discussion in Chapter Two relating to consumers demonstrates that Collect Art has encouraged people to purchase art when perhaps they would not have in the past. This certainly is the case with my husband and me. Statistics have revealed that consumers have returned to the scheme with some on their second, third and even fourth loan. However, compared with the total number of loans taken out (1,893 in the first five years), the number of people reported to have taken out subsequent loans (approximately 68) is quite low (3.5%) (Government of Tasmania, 2014 and Government of Tasmania, 2012b). Although only currently a small percentage of the whole, this is an encouraging aspect of the scheme.

While it is possible that customers go on to purchase artworks from non- participating galleries as a result of their use of Collect Art, there is not enough evidence to suggest this has occurred. At this point in time it is impossible to conclude whether the scheme has encouraged new art collectors. Only empirical studies and future statistical analysis could demonstrate whether this is happening.

Support the career development of Tasmania’s visual artists Similar to the previous objectives this one also suffers from a lack of clarity, particularly what it meant by ‘support’ and ‘career development’. As discussed throughout this thesis, there are a number of positive ways that artists benefit from

39 the sale of their artwork including an enhanced sense of self-worth and confidence in their artistic practice. Their public profile can expand and they can begin to create a ‘name’ for themselves.

Collect Art appears to reach quite a number of artists. In 2006, it was estimated that there were approximately 1,760 ‘employed’ artists in Tasmania (Cunningham & Higgs, 2010; 29). At the end of 2014, 344 artists had sold work through Collect Art representing approximately 20% of Tasmanian artists (by 2006 figures). From my calculations there are also approximately 500 artists represented by the 20 participating galleries. This is not an insignificant number of artists potentially involved with Collect Art (approximately one-third, again by 2006 figures). Generally speaking, the scheme therefore does represent a large proportion of ‘Tasmania’s visual artists’.

At a more granular level, in Chapter Two I scrutinised the most recent figures available for Collect Art and came to the conclusion that the financial return to artists whose works have been sold in the program is on average, approximately $1,656 per year. In light of an artists’ income generated from their practice, this represents a significant contribution. The distribution of funds is surely not uniform however, and it is likely that some artists have seen quite a difference in their income since Collect Art’s inception, while others have not. This then does not constitute ‘support’ for all artists, but certainly must indicate an increase in income for some. While I would argue that Collect Art does go some way in reaching Tasmania’s visual artists, the degree to which the scheme actually supports their career development is still open to analysis and discussion.

With the data available, the outcomes of the Collect Art loan scheme demonstrate a moderate to high degree of efficacy, particularly in respect to the first objective which is to stimulate the market. Ultimately, the scheme’s ability to produce its desired result is determined by how one measures and values its outcomes. For Collect Art, the evidence points to its value being located predominantly in its economic consequences and therefore I assess in favour of its efficacy.

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3.5 The Significance of Collect Art | Answering the Research Question Bearing in mind the assessment above, it is the ability to stimulate the market through an orientation toward the consumer that I first propose is the significance of Collect Art. This scheme and its outcomes lay in stark contrast to traditional forms of government subvention, such as lump sum grants. By devolving decision making to consumers, the scheme shifts the focus from outputs (for example, number of artists who receive grants) to outcomes (quantity and value of sales). For the arts in Australia at least, Collect Art is representative of a new style of subvention centred on investment via no interest loans which are importantly, eventually paid back to the government.

Secondly, I propose that the significance of Collect Art is its creation and embodiment of an investment-focussed rhetoric which is found within the prevailing economic paradigm. Recent years have seen the arts viewed through an economic lens, where programs are measured and praised with reference to their economic contribution. Collect Art appears to be no different. Earlier, I cautioned against entirely using economic contribution to measure the success or failure of a program as it devalues the other benefits generated. Despite this however, when operating in a landscape where arts funding can be political and volatile, economic success may ensure program sustainability. If they are successful, arts programs measured by their economic contribution, such as Collect Art, may have a better chance of being valued and maintained by government.

3.6 Conclusion This thesis set out to explore the theoretical and contextual circumstances of Collect Art and in doing so, come to an assessment of its efficacy. In order to do this, my research question - What is the significance of Collect Art as an instrument of government subvention? - was posed. A case study was used as the basis for my methodological approach and information from a variety of primary and secondary sources was presented.

41

Chapter One provided an overview of Collect Art and revealed that Tasmania is a State undergoing a number of economic and cultural changes. The literature review acquainted us with the theoretical context of government subvention, illustrating the predominant stances. I concluded that Collect Art is a market facilitating instrument designed to stimulate the market by devolving decision making to consumers. Furthermore, I highlighted the economic paradigm that some authors suggest is pervading the arts sector. I asserted that Collect Art is a likely product of this economisation of the arts.

Chapter Two contained an analysis of Collect Art’s outcomes and that of analogous schemes namely, Own Art in the UK. I found that while art loan schemes encourage people to purchase art, the majority of users are already engaged with the arts to some degree. There was a small amount of evidence to suggest that these schemes remove perceptual barriers to engagement with art, thereby making people feel less intimidated about entering a gallery and/or purchasing art once they have become aware of the scheme. I also demonstrated that there was an alignment with the theory of credit use. Art loan schemes encourage people to buy, and buy higher priced items than they would have. In the UK there was a marked usage of Own Art by young people, a demographic comfortable with the use of credit cards. I found that these schemes also encourage consumers to return and make additional purchases.

I established that Collect Art is reflective of government orientation toward investment, where the focus is on industry assistance, rather than support. When we consider that there is an expectation for programs to deliver non-arts outcomes, how a scheme is measured says much about the values of government; in this case, the economic contribution of the arts sector. Finally, Chapter Two illustrated that an artist’s income derived from their artistic practice is generally very low, meaning that market activity can have a profound impact on their financial position. I also posited that creative motivation can be crowded in, particularly when an artist is supported through the market.

42

Chapter Three continued the multifaceted exploration of Collect Art with a discussion of the implications pertinent to the scheme’s stakeholders. I speculated on a number of possible outcomes and scenarios. I reasoned that an art loan scheme, such as Collect Art, can enhance the public’s engagement and appreciation for art and may even make purchasing art more commonplace. Collect Art can remove barriers in a market where there may be little information and price is an indicator of quality. I contemplated that market-orientated instruments of subvention could be cheaper and more straightforward for government to administer. For artists, I advanced that that sales through Collect Art can convey artistic achievement to industry stakeholders while also strengthening their sense of artistic worth.

The final part of this chapter returned to the goals of Collect Art in order to come to an assessment of the scheme’s efficacy. While the ability to produce a desired result is determined by how it is measured, I acknowledged that from an economic perspective, Collect Art could be deemed as having met its objectives. In a political climate that measures the degree of economic contribution, arts schemes that deliver this successfully would be highly regarded and could well experience strong and ongoing government support.

This thesis concluded by answering the research question where I surmised that the significance of Collect Art was twofold. First, Collect Art is a consumer-orientated instrument of government subvention and as such, stimulates the market; it is unique when compared with tradition forms of government subvention. Second, Collect Art is significant because it is a product of the contemporary economic imperative bestowed by government upon the arts and due to this, reveals an interesting tension between intrinsic and extrinsic outcomes, some of which were explored here.

This thesis contributes to the body of cultural economic literature by providing a case study-based and theoretical exploration of a distinctive form of government

43 subvention. As noted in Chapter One, Blaug suggests that progress in cultural economics should be defined by non-normative analysis that also seeks to address the rhetoric of governments who subsidise the arts (Blaug, 2001; 132). This thesis does this by illustrating issues of note between instruments of subvention, government rhetoric, measurement, and the consideration of artistic and non- artistic outcomes. I advance that this information and framework is useful for interrogating and evaluating other programs of government subvention and their implications. I also suggest that this thesis provides a theoretical foundation for further necessary empirical research on these models of government subvention.

Discussion throughout the thesis was limited by a lack of strong empirical evidence and there is scope for much more data to be collected and analysed. Of particular benefit would be longitudinal studies, where results could be strategically utilised as other versions of the scheme emerge around Australia and internationally.

The outcomes of this thesis (and further empirical research) could prove useful for governments and organisations already coordinating these schemes and for those planning to establish their own. The more investigation and analysis of Collect Art and schemes like it, the greater likelihood there is of these programs being designed, managed and promoted with the best possible outcomes for the arts and all its stakeholders.

44

Appendix One

Website

www.mondriaanfonds.nl/activiteiten/kunstkoop

www.creativeunited.org.uk

www.ownart.org.uk

www.collectorplan.org

www.collect-art.com.au

www.10group.com.au

www.artmoney.com.au

£50-£2,000

Loan Range Loan

€450-€7,000

£100-£2,500

$750-$7,875

$750-$20,000

52

20

32

125

250

Galleries

Participating Participating

Operated By Operated

Mondriaan Foundation Mondriaan

AuspicedCreativeby United.

NorthernIreland.

Scotland, Arts CouncilScotland,Arts of

Arts CouncilArts England,Creative

Arts CouncilArts ofWales

Arts Tasmania Arts

Group 10 Group

1997

2004

1983

2008

2015

2000)

(relaunchedin

Date Established Date

Location

Netherlands

Ireland

Northern

Scotland,

England,

Wales

Australia

Tasmania,

Australia

Sydney,

Scheme Name Scheme

KunstKoopregeling

Own Art Own

Collectorplan CollectArt Art Money Art

45

Appendix Two

Figure 1 Number of applications approved (provided by Arts Tasmania (March, 2015).

Figure 2 Value of approved loans (provided by Arts Tasmania, March, 2015).

46

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Title: A creative nation is a productive nation: a theoretical and contextual exploration of Tasmania’s Collect Art loan scheme

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