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Thursday, 20 September 2001
Page: 31100

Mr NEVILLE (11:06 AM) — On behalf of the Standing Committee on Communications, Transport and the Arts, I present the committee's report entitled Covering your arts: art indemnity in Australia, together with the minutes of proceedings and evidence received by the committee.

Ordered that the report be printed.

Mr NEVILLE —by leave—The report I have just tabled entitled Covering your arts: art indemnity in Australia is a result of an inquiry of the House Standing Committee on Communications, Transport and the Arts into the Commonwealth scheme to indemnify major artworks against loss or damage when touring Australia. The scheme known as Art Indemnity Australia was established in 1979 and has allowed Australians to see first-hand, priceless works of art. Exhibitions such as Gold of the Pharaohs, Monet in Japan, The Book of Kells and Rembrandt would not have been possible without the indemnity provided by the scheme. In essence, Art Indemnity Australia removes the burden from art galleries of having to seek commercial insurance to cover the risk of loss or damage, the premiums for which would be exorbitant.

The success of Art Indemnity Australia is due in no small measure to the professional expertise of the two organisations that manage exhibitions under the scheme—namely, the National Gallery of Australia and Art Exhibitions Australia. The Department of Communications, Information Technology and the Arts and the two managing organisations have developed strict guidelines for the transport, security and safe handling of works of art. These procedures and the manner in which they have been implemented represent world's best practice in exhibition logistics. In more than 20 years of managing major exhibitions of international art there have been only two relatively minor instances of damage, resulting in $380,000 worth of rectification.

Three main issues arose out of our review: access by the state galleries to the indemnity scheme, the geographic distribution of exhibitions covered by indemnity and the government's recent move to seek commercial reinsurance of Art Indemnity Australia. On the first issue, the committee is of the view that it is appropriate for the Commonwealth to manage its exposure under the scheme extremely carefully and to limit access to indemnity to the two current managing organisations. If the state galleries wish to further develop their international ambitions, they can do this either by continuing to enter into partnership with either of the two managing organisations or by continuing to rely on the various state government backed indemnity arrangements, which have supported a number of excellent exhibitions. One recent exhibition at the Art Gallery of New South Wales was Cezanne.

We do, however, agree with those who submit that more should be done to tour Commonwealth indemnified exhibitions beyond the eastern seaboard to venues in the other states. This is a matter that is being considered by the Cultural Ministers Council and we consider that, within the constraints of venue capacity and security and having regard to the availability of borrowed works, the Minister for the Arts and the Centenary of Federation should ensure equitable distribution of exhibitions. We recognise also that there is demand for an increase in the number of one-venue exhibitions to celebrate special events of state significance, perhaps involving Australian cultural treasures.

The third and perhaps most significant issue we canvassed was the appropriateness of new reinsurance arrangements for Art Indemnity Australia. Since 1979, the Commonwealth has self-insured against risk of loss or damage to indemnified works of art. As of July this year, and consistent with the general policy position of the government, commercial insurance has been purchased to cover the risk. The move to purchase insurance means that the Commonwealth will now have to pay premiums estimated at $1.5 million per annum to achieve what has been achieved at no direct cost, other than the prudent management of these exhibitions, over the last 20 years. Looking at it another way, the $380,000 in claims against the scheme, when amortised over the life of the scheme, amount to only $17,300 per year.

In our view, it is very difficult to assert confidently that the new purchased insurance arrangements represent good value for money for the Commonwealth. Moreover, we are gravely concerned that in future an overzealous application of the user-pays principle through the annual budget process will result in the abolition of the current budget supplementation to cover the cost of the premium and pressure to pass on to the managing organisations the cost of the premiums. This would dramatically increase the cost of bringing major international works of art to Australia, undermine the viability of such exhibitions and, ultimately, defeat the original purpose of the scheme, which is to ensure that Australians have access to exhibitions that they might not otherwise have seen.

Accordingly, we strongly recommend that the former self-insurance arrangements be restored and call on the Minister for Finance and Administration to exempt Art Indemnity Australia from the Commonwealth's general policy of taking commercial insurance to cover exposed risk. I commend the report to the House.