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Chapter 1 Background to the inquiry
The Resale Royalty Right for Visual Artists Bill 2008
1.1
The Resale Royalty Right for Visual Artists Bill 2008 (the Bill) is intended to give effect to the Australian Government’s election policy
commitment to introduce a resale royalty right for visual artists. A resale
royalty, also called a droit de suite, entitles an artist to receive a
royalty payment from subsequent sales of his or her artwork. The Bill is intended to create a resale royalty right in Australia and establish a statutory scheme
to enforce the right and collect and distribute royalties.
1.2
The Bill is intended to give effect to article 14ter of the Berne
Convention for the Protection of Literary and Artistic Works (‘the Berne
Convention’).
1.3
Australia acceded to the Berne Convention (as at Paris, 1971) on 28 November 1977, with entry into force on 1 March 1978. To date, 54 countries out of
164 contracting parties to the Berne Convention have introduced a resale
royalty right, including the United Kingdom and other European Union member
states.[1]
1.4
Article 14ter (‘Droit de suite’ in works of art and manuscripts) of the
Berne Convention states:
(1) The author, or after
his death the persons or institutions authorized by national legislation,
shall, with respect to original works of art and original manuscripts of
writers and composers, enjoy the inalienable right to an interest in any sale
of the work subsequent to the first transfer by the author of the work.
(2) The protection
provided by the preceding paragraph may be claimed in a country of the Union only if the legislation in the country to which the author belongs so permits, and to
the extent permitted by the country where this protection is claimed.
(3) The procedure for
collection and the amounts shall be matters for determination by national
legislation.[2]
Recent history
1.5
A resale royalty for visual artists has been under consideration in Australia for many years.
1.6
In 1989, the Australian Copyright Council produced a report entitled Droit
de Suite: the Art Resale Royalty and its Implication for Australia. It recommended that the Copyright Act 1968 be amended to create a
resale royalty.[3]
1.7
In 2001, the Australian Government commissioned Rupert Myer to undertake
an inquiry into the contemporary visual arts and craft sector. The inquiry
received 190 submissions covering a range of issues, including the
establishment of a resale royalty scheme.
1.8
The Myer Inquiry reported in 2002. Its executive summary stated:
A major issue for the Inquiry was whether Australia should introduce a droit de suite or resale royalty scheme that entitles artists
to royalties when a work of art is resold in the market. The Inquiry assessed
the potential benefits for visual artists, the particular issues for Indigenous
artists, and the likely impact the measure would have upon the market for
contemporary art and craft in Australia, having regard to international
experience and local conditions. The Inquiry concluded that a resale royalty arrangement
should be introduced[4] (Recommendation 5).
1.9
In 2004, following the Myer Report, the then Department of
Communications, Information Technology and the Arts released a discussion paper
and sought submissions on whether Australia should introduce such a scheme.
This discussion paper also attracted many submissions canvassing both the
merits and concerns of establishing a resale royalty scheme for visual artists.
1.10
At around the same time, Viscopy Ltd commissioned Access Economics to
undertake a study to evaluate the impact of an Australian resale royalty on
eligible visual artists. It concluded:
The impact of a RRR (resale royalty right) on the Australian
art market is difficult to determine because of a paucity of relevant empirical
data about relevant behavioural responses to its introduction. While the size
and distribution of RRR payments can be estimated, the critical question of who
bears the actual economic cost of the royalty, and, most importantly whether
eligible artists would be net beneficiaries of such an arrangement is not at
all clear.[5]
1.11
The 2008 Federal budget provided for funding of $1.5 million over three
years to support the establishment of a resale royalty scheme in accordance
with the ALP 2007 election commitment.
1.12
Also, in May 2008, the Department of the Environment, Water, Heritage
and the Arts issued a discussion paper entitled Australian Resale Royalty
Scheme for Visual Artists—Framework and Parameters and sought responses
from stakeholders.
1.13
On 27 November 2008, the Minister for the Environment, Heritage and the
Arts, The Hon Peter Garrett AM, MP introduced a Bill for an act to create a
right to resale royalty in relation to artworks, and related purposes. In his
second reading speech the Minister stated:
The introduction of this Bill marks a landmark day for
Australian visual artists, whose right to an ongoing economic interest in the
value of their artistic works will be appropriately recognised in Australia for the first time.[6]
1.14
Following the second reading speech and at the request of the Minister,
the House of Representatives resolved:
That the Resale Royalty Right for Visual Artists Bill 2008 be
referred to the Standing Committee on Climate Change, Water, Environment and
the Arts for consideration and an advisory report by 20 February 2009.
1.15
The Committee received 40 submissions and held public hearings in Canberra on 5 and 6 February 2009 (see appendix A). It took evidence from 20 witnesses,
representing a range of views from stakeholders across the visual arts sector.
Overseas experience
1.16
A resale royalty scheme has been in place in a number of countries for
many years (see Appendix C). Estimates of the actual number of countries that
have introduced such a scheme range from 30 to over 50.[7]
1.17
These schemes vary in content and coverage. Some countries have opted
for a flat royalty rate (eg France and Germany) while others have chosen a
sliding scale (eg Belgium). A number of countries have introduced thresholds
before the rate takes effect (eg UK) while others have imposed the royalty on
the increased value (capital gain) of the artwork (eg Italy and Brazil). Some schemes only cover living artists (eg UK) while others cover the
estates of artists up to 70 years after their death (eg 70 years France, 50 years Luxembourg).
1.18
The administration of these schemes varies from
state-run/government-owned collecting agencies (eg Belgium) to privately
operated businesses (eg France). Coverage can also vary. Some schemes only
cover the resales through auction houses and commercial galleries and art
houses. Further, some schemes allow artists to opt out, but in the majority of
schemes there is an inalienable right bestowed on artists and that right cannot
be transferred or waived. Coverage can also extend to foreign artists if
reciprocal arrangements have been entered into between countries.
1.19
Resale royalty rights are covered by the Berne Convention and
signatories to this convention can opt to enter into reciprocal arrangements
where similar resale royalty schemes are in place.
1.20
The legal underpinning of the royalty schemes ranges from stand alone
legislation, amendment to existing copyright legislation and statutory
regulation to voluntary schemes.
1.21
The European Union (EU), in 2001, issued a directive (Directive
2001/84/EC) in relation to resale royalty rights for visual artists in an
attempt to bring all member countries into line in order to minimise or
eliminate any likely market distortions between member countries:
The fact that this international market exists, combined with
a lack of resale rights in several Member States and the current disparity as
regards national systems which recognise that right, make it essential to lay
down transitional provisions as regards both entry into force and the
substantive regulation of the right, which will preserve the competitiveness of
the European market.[8]
1.22
The directive sets minimum levels/conditions for a range of matters
relating to the establishment and administration of a resale royalty scheme:
n A minimum threshold
may not under any circumstances exceed €3,000
n A variable rate with
a maximum royalty not exceeding €12,500
Þ 4% for
the portion of the sale price up to €50,000
Þ 3% for
the portion of sale price from €500,001 to €200,000
Þ 1% for
the portion of the sale price from €200,001 to €350,000
Þ 0.5% for
the portion of sale price from €350,001 to €500,000
Þ 0.25% for
the portion of the sale price exceeding €500,000
(Member States have an option to
apply 5% to the first level of sale and if the threshold is less than €3,000 a
rate of no less than 4% is to be applied to that amount.)
n The royalty is
calculated on a sale price net of tax.
n The royalty to
continue during the life of the artist and for 70 years after his/her death
(Directive 93/98/EEC). This entitlement may not be enforced until 2010 where a Member State has not introduced a resale royalty at the time of the 2001 Directive. A
further two year extension to this requirement can be sought by a Member State subject to certain conditions (eg the UK has just sought an extension claiming
uncertain economic conditions).
n Method of collection
to be left to the Member State to determine.
n Third-country
nationals to be entitled to receive royalties subject to their home state
offering similar rights. Subject to residency tests, non-nationals residing in
a member state are entitled to enjoy similar rights.
n Art market
professional must furnish all necessary information to artists entitled to such
a royalty for a period up to 3 years after a resale.
n This directive came
into force on 1 January 2006 (ie Member States had to introduce a scheme into
domestic law subject to the requirements above). For example, the UK introduced the Artists Resale Right Regulations in February 2006.
n Progress of the
uptake of the scheme will be reported to the European parliament no later then 1 January 2009 and every 4 years thereafter.
1.23
In May 2008, the New Zealand government introduced the Copyright
(Artist’s Resale Right) Amendment Bill. Consideration of this bill was deferred
due to the calling of an election in late 2008. The bill has been reinstated
for consideration by the 49th parliament.
1.24
The proposed NZ scheme has the following aspects:
n $NZ500 threshold
n 5% flat rate
n Single collection
agency
n No upper limit
n Will not apply to the
first resale or transfer of artwork following the introduction of the scheme
n Sales between private
individuals will be excluded
n Right will continue
until 50 years following the death of the artist
n Residency
requirements and/or reciprocity must be met before royalty can be claimed
n Resale right may not
be alienated
Conclusion
1.25
There is no one guiding principle underpinning the various schemes in
operation around the world. Most have been established to help redress the
imbalance between the treatment of other artists (eg authors, musicians) by
recognising an ongoing relationship between the visual artist and their work in
accordance with article 14ter of the Berne Convention.
1.26
The debate about the establishment of a similar scheme in Australia has grown over the past decade. In particular, the pressure to have our artists
treated in a similar fashion to artists overseas and the ability of our artists
to benefit from existing schemes through reciprocal agreements has been central
to this debate.
1.27
The income support argument has also been central when considering Indigenous
artists in Australia.
1.28
Ideally, if Australia is to introduce a scheme it should be primarily
for the direct benefit of Australian visual artists but at the same time it
should be similar in design and structure to those already in existence so as
to maximise these benefits through country to country reciprocity agreements
mandated through the Berne Convention.
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