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Effects of the ongoing dividend on smaller public sector agencies

Ms Williams —Thank you. We are grateful for the opportunity to come forward with some suggestions and a response on the issue of the efficiency dividend. We are a very small agency. We are the only Commonwealth cultural institution in a capital city outside Canberra. We are on a very high profile site in Sydney Harbour. We are 20 years old now and so a lot of our services are beginning to need replacement. We have 700 volunteers, which I think is a record in Australia. We have 500 of those on site at the museum and about 250 out-of-port volunteers. As it is, those people really do save the Commonwealth a lot of money because they perform a lot of very important services to interpret the collection to people who visit. This year we had about 460,000 people through the museum. That was our third highest number of people on site. For three months out of the year we actually beat most of our Sydney competitors, some of whom are about three times as big as we are and better resourced than us.

So I think it is fair to say that we are an efficient organisation. Because we are reasonably new we were brought up on the theory of really being commercially aware and business savvy, and we are. We raise about $6.2 million a year in non-government funds. Again, I think that is probably very high compared with a lot of agencies of a similar size.

CHAIR —What percentage is that?

Ms Williams —It is about 33 per cent. In real terms the efficiency dividend to us is really the thin end of the wedge because like other agencies we suffer from a four per cent increase in costs of services. Similarly, we have a four per cent a year increase in costs for salary expenses. We are already suffering from the 1.25 per cent dividend that we have had for years, so the two per cent is very difficult to bear as a small agency.

I think it is true to say that in the past we were held up as a benchmark internationally for our exhibitions and programs. We were a new sort of maritime museum and people throughout the world looked to us for leadership in many areas. Now I can see us running the peril of falling behind, particularly in the areas of outreach as that becomes more expensive. And we do have a national role and that is really a behind-the-scenes role that we play, not just front-of-house services. We are also falling behind in our ICT strategy. There is the new media now; there are new ways of connecting with universities, colleges, the museums, libraries—

Senator LUNDY —Web 2.0 strategy.

Ms Williams —It is a better, more efficient and more exciting way of Australia maintaining a reputation internationally for its cultural services. I do not want us to go back to the days of dusty showcases where we really cannot provide decent exhibitions, let alone new services through new media.

CHAIR —I know something of your outreach services. Newcastle is hoping to open its maritime centre soon. I know that we have had support from you. I know how difficult it is for you to provide those sorts of services. You say that, with the efficiency dividend, this year when you take out the non-discretionary funds and you apply it only to the discretionary funds it represents an 11 per cent impost or decrease in your funds at a time when costs are not exactly minimised. How are you making allowances for that in this 12-month period? In this one 12-month period, what sorts of changes will you make to your resource level or operations?

Ms Williams —We had to cancel a major program we were doing in conjunction with Musee de la Marine in Paris which was a major exhibition on La Perouse.

CHAIR —Did that have timeliness? Was it important for it to be this year or is it something that could be held another time?

Ms Williams —It could be. Maybe there is a magic donor out there who is going to come forward. But we cannot rely on them and they are hard to find. We certainly could not do it this year, and we have scaled down another project as well and made it less challenging and less adventurous.

CHAIR —Had you committed resources to the La Perouse exhibition?

Ms Williams —Yes, we had.

CHAIR —You had not signed any contract, though?

Ms Williams —No, we had not. We estimated that it would cost about $750,000, which is about the cost of the efficiency dividend difference. But that was a guesstimate, without looking for sponsorship, for example.

CHAIR —I imagine that the story will travel internationally that you have cut or delayed that.

Ms Williams —It is a small world.

CHAIR —It is a small world, and therefore it will impact on the reputation of the Maritime Museum. You must have also over time put in place some productivity improvements. Can you tell us some of the best ones? I know it hurts, but can you tell us some of the best productivity improvements you have been able to achieve, if there have been any?

Ms Williams —We are training our staff on good project management, for example, and ways in which we can save money on each of the projects. Without major incoming exhibitions—apart from our core exhibitions—we also scale them down and cut the cloth according to what we have. What other efficiencies have we done over the years, Peter?

Mr Rout —The museum system was something that we introduced. It is a computerised management system for the museum, which was introduced at the time of the last agreement or the agreement before. It essentially enables us to manage the collection a whole lot better than what we were doing.

CHAIR —And you think at this stage there will be no further advances except things like scaling back operations?

Ms Williams —On the discretionary funds, yes. That is the only option we really have.

Mr Rout —We have had three enterprise or collective agreements which have involved extensive negotiations. Our last one, in particular, took an extended period of time, trying to identify productivity improvements. We are getting to the stage where there is nothing easy with respect to—

Ms Williams —We have also instituted a system of continuous improvement in the museum, and we do this on a regular basis to take stock of how we operate and how we can make savings. That helps us with the next agreement.

Mr Rout —One of the problems, of course, is that we may institute or implement new procedures or methods for, say, putting on an exhibition but the end result is that it does not deliver one extra dollar. We will have a better exhibition or we will have it in quicker time but it does not actually save us any money.

CHAIR —You are, as you said, on a key site on Sydney Harbour. Do you have any interaction with the Sydney Harbour Authority?

Ms Williams —Yes, we run joint public programs with them on special events around Darling Harbour.

CHAIR —Do they fund any of those? Is there any cash flow there for you?

Ms Williams —Not much, no.

CHAIR —Very small, is it?

Ms Williams —I spend a lot of my time trying to attract sponsors and cash donations for the museum. Interestingly enough, one of the areas that a lot of museums face an increase in cost is through international freight. Before terrorism, it used to be a lot cheaper and freight companies were more generous. I am afraid they are now very strict and less charitable and generous—understandably so, because they have to meet certain criteria.

CHAIR —So you have the full cost of moving things from overseas?

Ms Williams —That is right.

CHAIR —Do you add to your collection?

Ms Williams —Yes, we do; indeed we do.

CHAIR —How is that going at the moment?

Ms Williams —I would like to add more to it than we do, I might add, but we have a modest acquisitions budget of about $200,000 a year.

CHAIR —Has it stayed fixed over a period of time?

Ms Williams —No, there is a special emergency fund that we have. If something really—

CHAIR —A special emergency fund? I have not seen that in any of our papers. What is this special emergency fund?

Ms Williams —It is rarely used. It is only used on the occasions when there is an absolutely significant object that comes up and is at risk of either going into private hands—

CHAIR —For collections?

Ms Williams —Yes, for collections.

CHAIR —What would be an example of something that just cannot be resisted?

Ms Williams —About a month ago we were aware of the Charlotte Medal, which was a medal engraved on the ship Charlotte—one of the First Fleet vessels that came out to Australia. It is absolutely unique. There is nothing like it. There is very, very little material that remains from the First Fleet history. So this was absolutely unique.

CHAIR —What was the acquisition cost of that?

Ms Williams —In this case, we had $200,000 that was given to us by the National Cultural Fund. That enabled us to purchase the object.

CHAIR —For that cost?

Mr Rout —The price was $750,000 plus the seller’s commission.

CHAIR —So you put in the rest—

Mr Rout —Yes.

CHAIR —and you needed a top-up for that.

Mr Rout —Yes.

CHAIR —Do you have any benefactors?

Ms Williams —We have had, but they are harder to come by now. We do have a handful who support us and who donate material to us as well.

CHAIR —Is that a problem—people wanting to give you things that you, one, do not want and, two, do not need the cost of restoring or exhibiting—

Ms Williams —Indeed. I have been offered a number of ships that I have attempted to subtly reject.

CHAIR —I know that often people purchase these with their superannuation funds, but the condition of doing that is that you cannot have them on your property. So you have to put them somewhere. Do people do that as well?

Ms Williams —We discourage that and very rarely do it. Our collection probably is different from most other collections. We have works of art in the collection, and we have bikinis and we have a destroyer. It is a very wide-ranging collection.

Senator LUNDY —In terms of your capacity as an organisation to grow and develop, I know—being reasonably familiar with the work that you do, which is wonderful—that there are always new ideas and new opportunities presenting themselves. How does the impact of the efficiency dividend affect that outlook of the museum?

Ms Williams —I think that is an important question, because we could go along and struggle harder to find sponsorship, et cetera, for exhibitions, but there is a whole new area of web technology and new media which, I think, opens up a whole new range of possibilities about connecting and communicating with communities big and small. If we do not take that challenge and accept the need to update, upgrade and embark on those collaborative projects, we quickly become very old fashioned. I think this is a very exciting time.

Senator LUNDY —It is, isn’t it? I mentioned before that we have 2.0, which is that whole collection of interactive and social applications online. Are you doing anything in that space at the moment?

Ms Williams —Yes. We have just begun to do it—MySpace, blogs et cetera, and we are getting a whole new response from an audience that is notoriously hard to reach, which is the teenagers. We are getting stronger feedback from them through our online blogs, MySpace, chat rooms, and all that stuff.

Senator LUNDY —That is interesting. What about developments overseas in that area? Are you feeling like you are still trying to push the boundaries here, or are you now looking at what other people are doing and trying to catch up?

Ms Williams —We have always stood our ground pretty well, considering our resources. We have one of the most significant collections of Aboriginal art, which is called Saltwater, from Yirrkala in Arnhem Land. I would really like to get that collection overseas and show it. It is so significant, from a range of perspectives—artistic and cultural. And of course we have to pull back. If we just did not have those funds to explore possibilities for sending that collection—

CHAIR —And given the success of the Emily exhibition in Japan, you would think it would be an opportune time. There is a real interest overseas in Indigenous culture and history.

Senator LUNDY —What about funding the capital that you need to maintain the museum? You mentioned it is 20 years old, there is obviously some pressure for renewals, updating and refurbishments. How are you managing that?

Ms Williams —We rely on depreciation funding, of course, to maintain that asset, and we are 20 years old. Remember that we make close to $2 million through commercial services at the museum, and they demand a certain standard. We make about $1 million with venue hire and catering, and it is such a fantastic site—if anyone is interested, they are good rates.

Senator LUNDY —I think I have hired a room there at some point. It is very good.

Ms Williams —That requires, for example, kitchen equipment that meets standards, let alone that is good for the job—and that needs to be upgraded. We have a plan for site improvement, most of which is because we have to maintain certain safety standards and improve and extend services. We had no idea when we opened that we were going to have 700 volunteers. We have a tea room that would be half the size of this room. They like their cups of tea, and there is not much else we can offer these people who give so much of their time. We need to give them better facilities, so that needs to be upgraded.

We did not have Endeavour when we opened. It is a national icon. It is a seagoing vessel, and it is hugely popular. It was in Brisbane last week. It is a little ship that took 1,500 people a day. That is an incredible number of people on board. People love that ship.

Senator LUNDY —It is very beautiful.

Ms Williams —It is lovely, and we need to keep that and make sure that it can travel and reach those remote communities. That is where we spend a lot of time trying to raise money to help us. We are now trying to work out a circumnavigation of Australia—Broome, Cape York and everything—so that will be very expensive to fund.

Senator LUNDY —Yes.

Ms Williams —But important.

CHAIR —The Endeavour gives a real buzz when it comes into other communities. It really does.

Ms Williams —It does.

CHAIR —I have to say that my niece was an events manager there for some communications for some time, and it was a truly wonderful experience for the young people, who seemed to be so strongly attracted to it. Does anything else travel from your museum?

Ms Williams —Yes, we have two sorts of exhibitions that travel throughout Australia. One consists of the smaller and perhaps more robust exhibitions that go to little country museums and community museums around Australia. We have slightly bigger exhibitions with more sensitive material that goes to regional museums and those museums that can take museum material. That is often with the support of Visions of Australia, which is a fabulous fund to help exhibitions move around Australia.

CHAIR —Does that vary or do you keep it fairly static?

Ms Williams —We usually have about eight on the road at any one time, so it is quite a big program.

CHAIR —Are travelling exhibitions an area that you are having to cut?

Ms Williams —In the future they will have to be if this continues, because our pie, you see, is decreasing. The government appropriations over time are really decreasing each year. We have done very well commercially, and that has helped us keep our head above water.

CHAIR —Are there other areas that you could do commercially? Are you at a point where you could do more fee-for-service through entrepreneurial approaches? Are there opportunities there that you are not taking advantage of? If there are, what are the reasons for that? Is it because of your limited resources or the economic conditions? What is holding it back?

Ms Williams —There are two pressures put on us by our masters. Understandably, they are both to get people into the museum—

CHAIR —Core business.

Ms Williams —and to raise non-government funds. To do that we established a strategy—I think it was in 2002—to actually take away the admission charge to galleries, and our admissions dollars have gone up as a result. I challenge anyone to find another museum that has actually gone free and not asked for money to supplement that difference in income.

CHAIR —So you would never like to see an entry fee at the museum?

Ms Williams —I would not, because without a charge more people come to the museum and choose to go on the ships. We have a charge to go on the vessels.

Mr Rout —Yes, we do charge for the vessels.

Ms Williams —We charge for the vessels.

CHAIR —So there is that embellishment of the experience if you wish to pay for it.

Ms Williams —That is right.

CHAIR —But everyone is entitled to the core experience.

Ms Williams —That is right.

CHAIR —It seems a good model.

Ms Williams —That was our judgement when we went free. We thought, ‘We need more people on site to buy the tickets to go on the ships,’ and that has happened.

CHAIR —And that has been a successful strategy.

Ms Williams —It has. As far as other income-raising activities are concerned, as I said, we are pretty savvy. We really are. We do try to find as many sponsors and supporters as we can for acquisitions and for programs. We have some premises at the museum that we lease out, and there is some income that we have from that. We are on a prime—

CHAIR —Are they leased permanently?

Mr Rout —They are on a five-year lease.

CHAIR —How about revisitations? Do you collect data on people who are coming back—not just new visits all the time?

Ms Williams —We do.

CHAIR —What is the trend?

Ms Williams —With every main temporary exhibition we do some tracking on visitors. I am trying to remember the last one off the top of my head. I think about 40 per cent of people came to see the exhibition because that was the subject of their interest and 60 per cent were return visitors. That proportion stays reasonably similar. There might be slight variations according to the subject of the exhibition, but it is generally about that, so that is why it is important to have—

CHAIR —New exhibitions.

Ms Williams —new and good exhibitions.

CHAIR —How many new exhibitions a year would you stage?

Ms Williams —We try to have two. We have the main one at Christmas because that is our big season—we have our really busy season in January, February and March. We tend to make that more family engaging and fun—a little bit of entertainment. Then the winter show is generally slightly more specialist oriented.

CHAIR —So two a year is what you aim for, and you have maintained that all the time?

Ms Williams —Yes, we have.

CHAIR —Would it be right to say that, if you cannot go ahead with something like La Perouse, then you will be doing lower cost or less ambitious exhibitions?

Ms Williams —It just will not be as good. We just would not be able to maintain the standard that we have been able to in the past—and Australia has a very, very good reputation overseas for what we call display technology and the way in which we interpret material in our collection. That is the stuff that costs money.

CHAIR —Do you have relationships with universities or research institutions as well?

Ms Williams —Yes. We have got collaborative programs with several universities, one of which is with the ANU to develop an online research database in relation to the saltwater collection. The more we do, the more contacts we have and the more possibilities we can see are out there on the horizon. So I think that we could do some wonderful stuff if we were able to maintain that ICT resource at the museum.

CHAIR —So ICT resources are really behind, you think?

Ms Williams —Yes, for us they are.

CHAIR —If you wanted to bring them up to the standard to allow you to keep that expansion and enrichment, how much money would be required?

Ms Williams —We are actually doing a strategy at this very moment to come up with that dollar figure, so I cannot give it to you because we have not had the recommendations, but it will mean a pretty clever use of resources.

CHAIR —Other cultural organisations that have presented to us said that they were all behind on the digitisation of their collections. Is that the same with you?

Ms Williams —Probably not to the same extent, if you are looking at the National Library and other older, more established—in this case paper based—collections. At the moment, we have a younger collection than some of the national collections, so we have been able to absorb the digitisation costs within our annual operating budget.

CHAIR —So you have scanned and photographed everything?

Ms Williams —I would not say everything, but we have got our heads above the digitisation waters and we continue to put moneys aside each year for that.

CHAIR —If you have just bought the Charlotte medal, that has expended a lot of your reserve, I would have thought—but it is very precious. How do you build it up again? Do you just have to wait? What if another similar item of worth came up next year? What would you do?

Ms Williams —We have not got much left in the coffers for this financial year. If we had more time, we would be able to go out to a sponsor or a supporter. Museums are starting to collect collaboratively too, which I think is a reasonably good move. Some of that material is highly collectible and collectors would keep it in their private collections. The idea is to get it into public hands—so whatever it takes. Museums can get together and share resources in that sense, and we need to promote the organisations to make them worth sponsoring, I suppose.

CHAIR —How do we build a benefactors culture? It is lacking in this country. There are many agencies that have told us that. Surely you can all put your heads together with a great strategy. I know you are all competing for those benefactors, but there must be better ways. What would you say is the best way—probably incentives?

Ms Williams —I wish I had the answer to that, but we need government help to do that. In Australia, people would wonder why they should support a government program. That is changing in the UK. It is certainly not the same case in the States.

CHAIR —It is hard to get people to donate their organs, let alone be benefactors of great works and worthy activities.

Ms Williams —But we have boards and we spend a lot of time and effort in talking with communities and individuals about the work of the museum.

CHAIR —So what do benefactors need? Do they need a whole experience? Do they need their name up in lights? What do they need?

Ms Williams —There are two main sorts. One likes to see it as a business transaction, as we do—

CHAIR —So that is incentives, tax relief and all sorts of things.

Ms Williams —We have a contract with them and we say, ‘Okay, you give us that amount of money and we will give you these services.’ We can do that through venue hire, for example. We give special rates, special access to the vessels, for example, that ordinary people cannot have access to. So we try to give them value for money. Then there is the other sort of sponsor or supporter, who has a passionate love of history or maritime history and wants to support the museum. There are a number of those around, I am pleased to say, but we would like some more of them.

CHAIR —We all wish we had the answers to that.

Senator LUNDY —I wanted to pick up on a point that has been a bit of a theme in your presentation, and that is that the government has applied the two per cent efficiency dividend equally to organisations that are demonstrably efficient and commercial in their function and operation and to organisations that have not evolved to that state. Can you elaborate a little more on that point? I think the question really goes to the heart of what is different about you as a collecting institution in the way that you run your business and present and innovate as far as your budget goes.

Ms Williams —I think I understand your question and I can say that we are different in the sense that our collection is a bit different to most in that we have a submarine and a destroyer out in the water near a very busy area—

CHAIR —Skiter!

Ms Williams —Yes! And we have Endeavour, of which we are hugely proud. Now, they are outside the museum, and there are a proportion of people who may not be that interested in museums, I might say, who would come along and classify those vessels as their own, and I am very pleased about that. We have the Welcome Wall as well, and we have nearly 20,000 names on that wall, which is a celebration of migration to Australia by sea. And we now have inadvertently, I have to confess, a fantastically valuable folk database of migration history in Australia because of the Welcome Wall—and it is a connection with the museum for people who, again, perhaps would not necessarily consider the National Maritime Museum to be their sort of place. We have 5,000 people twice a year who come to celebrate the Welcome Wall. It is phenomenal.

Senator LUNDY —Wow.

Ms Williams —We are aware of our other communities and we do have a good nose for business, I think. We do believe in good business practice. We are always looking for ways in which we can do something more cheaply or better or more efficiently. I do not know whether this answers your question, but we are very community oriented. We face the community; we do not put our backs to the community and we work very hard with them. We had Peruvian Day there a few weeks ago and we had, on Sunday, nearly 8,000 people and three llamas at the museum, and it was just fantastic. That is not a traditional museum-going community. So we do try to extend beyond what is imagined to be the museum community. Is that answering your question?

Senator LUNDY —Yes, it is. I just wanted you to elaborate on the things that you do that are, as I said, innovative and different for a museum, because museums do have a very stereotypical image, which all of our fantastic museums in Australia shatter regularly. I just wanted to get more on the record about the things that you are doing, so that is fine. Thank you.

CHAIR —Do you have discussions with Tourism Australia in terms of how Commonwealth government activities can maximise your presence or turnover?

Ms Williams —We have a marketing team at the museum, and they connect with Tourism New South Wales.

CHAIR —Because we cannot have the America’s Cup very often, and I imagine that when those sorts of events occur you get a spin-off. Are there other events that you get a spin-off from?

Ms Williams —Yes. We were very fortunate when it came to the Olympic Games a few years ago in Sydney. We made a handsome little profit out of that because we are on such a fantastic site. So we take advantage of such events. If there are any round-the-world yacht races, for example, we make a point of going in and bidding to have them at least visit the museum.

CHAIR —Do you think the agendas of Tourism New South Wales and Tourism Australia dovetail enough, or do they integrate well?

Ms Williams —I think Sydney Harbour is one of the most unique parts of Australia, and we could probably take better advantage of it than we do. But that is a personal opinion.

CHAIR —Yes, I would probably agree with you on that. That concludes questions from Senator Lundy and me. Thank you very much for coming along today and presenting to our inquiry. It has been our pleasure, I think, to learn so much about many of the small government agencies and the contribution they are making—in spite of efficiency dividends or because of them, I am not sure. So thank you very much.

Ms Williams —Thank you very much.

Committee adjourned at 2.44 pm