KEY POINTS:
The Ministry of Culture's Resale Royalty Rights Discussion Paper revives debate in the arts/law field technically known as droit de suite. The paper wants comment on whether artists should receive 5 per cent of the amount realised on the resale of their work.
Dealers and vendors would be liable to pay on all sales of an artist's work subsequent to the first sale. As the word "royalty" suggests, the proposed right likens artworks to books. Unlike writers or composers, visual artists have one main opportunity to engage the market - at the sale of a unique work.
Their lack of direct income from subsequent resales is presented as depriving them of the sort of interest writers receive from the sale of each copy of their book or composers of each broadcast of their music.
Hence a royalty payment is said to redress the differences inherent in diverse modes of creative practice (though artists such as public sculptors, muralists, installation or sound artists whose work does not readily go to auction remain excluded).
Proponents argue this right is either directly or indirectly financially helpful for artists, that it is at best neutral for the market or else marks a redistribution of the wealth generated by "booming" sales.
Opponents claim the amount for most artists is derisory and its effect on the market is so damaging that artists will lose sales.
Impetus for the paper derives from recent developments in European law. The harmonisation of EU law has resulted in the implementation of the right in Britain but only after much debate and stalling.
The principal argument was that if we are first then we advantage our competitors. Certainly the other major centres of the global art market (Switzerland and New York) articulated the same position when their governments reviewed droit de suite in the early 90s without enacting such provisions.
Although it misinterprets some facts, the paper rightly makes much of the European development and notes, too, the policy of Australia's Labor opposition to a similar scheme.
Now, with the right's forced implementation in Britain it is plausible other markets will follow - like dominoes.
The Ministry is putting forward a remarkably blunt version. A calculation of 5 per cent of the hammer or "ticket" price of every portable artwork (painting, photograph, print, sculpture, ceramic, glass) will be made on every sale bar the first - irrespective of whether that sale is at a profit or loss.
Once the gavel falls or contract is signed, the agent and the vendor will be liable for that amount - though it's likely there would be a threshold, perhaps $500. The "royalty" would be payable to living artists or their estates after death for 50 years. This duration parallels that available for copyright protection.
The proposed scheme is easy to understand and comparatively straightforward to administer. Many of the compliance issues for agents are already covered by normal record keeping and the 5 per cent is a simple calculation.
But there is also some inequity. Righting the apparent disadvantage of one group in the market (artists) may well present disadvantages for others (collectors, agents).
This is manifestly a commercial right for individuals, not a socially-oriented scheme. Claims are made that it supports emerging artists but these are without merit. Indeed in the paper's data it is worth noting 4 per cent of the top-selling eligible artists would receive 57 per cent of the resale right payments.
This point is not to criticise the idea of a wealthy few but it does put paid to the notion this is some sort of share the wealth scheme. To its credit, the paper refutes the "social justice" sentiment.
An agency will also be needed to administer the rights and in order that this be self-funding is proposed it takes commission, estimated at between 15-25 per cent on every transaction. Deducting that fee, the after-tax amount to artists is unlikely to be more than half that levied from vendors and agents.
Hence to receive an income after tax of $1000, an artist's resale market would need to generate $40,000 for the year; a significant sum. Using the Ministry's figures, 96 per cent of eligible artists and their estates would be looking at what is essentially a symbolic payment that carries little social benefit or professional encouragement.
It is also plausible that the right will chill the entire market for art, the rationale being that there is only so much money in the market and any disincentive will make collectors less likely to buy works, including at first exhibition. This is because the royalty can be interpreted as a form of sales tax.
Collectors will have to weigh up not only the opportunity cost of buying a work but also the threat that they will automatically lose 5 per cent in any resale.
This might disincline them to support younger artists in particular as there is every likelihood the highest price paid for a work will be at that first sale. Investors will simply find other commodities.
The difficulty with this proposition, however, is its reliance on the idea those engaged in the art market behave identically to those in the share, commodities or futures markets.
Art is quite unlike an investment portfolio, partly because of the qualities inherent in the physical object and the way in which it signals a particular type of support for creativity and speaks of cultural value as much as monetary value. In light of this, 5 per cent may in fact be easily absorbed by the market in the medium term.
Droit de suite is certainly not a panacea for artists but nor is it certain it will presage market collapse. As part of a coherent set of policy initiatives (tax incentives for gifts to public galleries; early career investment) it could signal real support for practitioners. On its own, it's a matter of ambivalence.
* Peter Shand is Associate Head of School at Elam School of Fine Arts in Auckland.
