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Cash-starved company the canary in the orchestral coalmine

Lack of funds may force Orchestra Victoria to close, with repercussions for opera and ballet

STRIKE down the band? Orchestra Victoria's management has lurched from crisis to crisis this year and now it is poised to crown its annus horribilis by posting yet another operating deficit that will come close to eroding its cash reserves completely.

The threat of financial ruin could spell the end for Melbourne's second full-time orchestra but management and players are engaged in new enterprise bargaining that both parties hope will enable them to play on.

OV spends 40 weeks a year, about 80 per cent of its time, in the pit of Melbourne's State Theatre accompanying performances by the Australian Ballet and Opera Australia. Without it, or an orchestra of its scale and ability, those performances would be compromised and so a solution must be found.

"Orchestra Victoria is 42 years old and it's a great success but it's also facing up to new realities," says Rob Robertson, who was installed as acting managing director in October following the sudden departure of Elizabeth Tupper after less than two years in the role.

The ensemble of 69 players is funded by the federal and Victorian governments for its work with the opera and ballet but annual wage increases of between 4 per cent and 5 per cent have outstripped the government's annual 1.8 per cent rise.

OV used to make up the difference with philanthropic funds and grants for its tours to regional Victoria, which it undertook during downtime from the opera and ballet. But the global financial crisis decimated those funding sources and now the debts are mounting.

OV chairwoman Mary Delahunty, a former ABC journalist and the Bracks Labor government's first arts minister, says: "The orchestra is facing a very severe budget as presented to me in May and June; the board did not accept that and asked for a review of all spending." Management has been cut back and tours cancelled. Negotiations are under way with players to wind back wages.

Delahunty was appointed chairwoman in May and told The Australian this week she joined the board a year beforehand. However, OV's annual report last year reveals Delahunty joined the board in 2007.

Both the 2008 and 2009 annual reports show the orchestra posted deficits. Last year, current assets were eroded by almost $1 million to $931,034. A similar result this year would see the company trading insolvent.

Robertson denies insolvency is imminent because of changes that have taken effect already, but he could not say how many losses OV has posted. The Australian understands this year it will post its fourth successive deficit.

OV's high level of dependence on government funding is unique, but in many ways its predicament is shared by other orchestras to varying extents. It is the metaphoric canary in the coalmine.

As Opera Australia chief executive Adrian Collette says: "OV's financial situation in particular is so parlous."

The union that covers the orchestra's musicians, the Media Entertainment and Arts Alliance, which is locked in triennial enterprise bargaining with OV at the moment, sheets home OV's malaise to federal and Victorian government funding lagging behind the cost of living.

Collette agrees: "What we're [Opera Australia] grappling with longer term is for them mission-critical right now."

In Sydney the Australian Opera and Ballet Orchestra is wholly employed to support the Opera Australia and the Australian Ballet in the Sydney Opera House pit, so government funding shortfalls have been felt even more acutely there. But the AOBO resides under the umbrella of OA, which is picking up the shortfall to the tune of about $1m a year.

OA is itself under pressure, largely because of the decline in tourism, which has cut its earnings from its Sydney summer season by 12 per cent, or $3.7m.

"As box office has come under increasing pressure the last few years it has become increasingly difficult to subsidise that operating deficit," Collette says.

The MEAA's Howard Manley says the state and federal cultural ministers must resolve the issue of funding to major performing arts groups, including the orchestras, that was held over from its meeting in October last year.

The relevant cultural ministers didn't meet this year due to the delayed federal election result and will not meet until early next year in NSW.

A spokesman for Arts Minister Simon Crean says his office is negotiating new funding levels with state arts ministers, including the new Victorian government.

Funding is indexed at 1.8 per cent, but "at a time of very tight budgetary constraints all organisations are expected to find efficiencies", the spokesman said.

Orchestras are not efficient by definition, however. Orchestral instruments were not designed to be ergonomic or even comfortable. Performers cannot play for prolonged periods and performances are usually held outside normal working hours. The real cost of a symphony orchestra ticket is often four times what people can and will pay for them.

OV players each week have eight three-hour calls and they receive penalties for travel, additional shifts and the like. New pieces must be practised outside these hours.

Rank and file player salaries are $66,000 to $70,000 and principals receive up to $75,000. Tenure is a legacy of the public service, in which most orchestras were ensconced until they were divested from the ABC early this decade. Secure conditions have prevailed despite the broader economy changing rapidly.

Players argue that full-time secure employment is integral to an orchestra's excellence but economic reality is forcing management to consider all alternatives. The flexible workforce is the elephant in the room.

Robertson says player salaries have been increasing by between 4 per cent and 5 per cent a year, which is CPI plus increments for years worked.

The union says players have agreed to a wage freeze next year but management is angling for an additional 10 per cent pay cut.

Robertson will not confirm this but admits management "has identified a whole range of cost savings". "The board has to look at part-time [employment] rather than full-time," he says, by way of example.

OV cellist Tania Hardy-Smith, who joined the orchestra in 1989, says: "There is no question we would be going down the path of considering the part-time orchestra."

Susan Donnelly, executive director of the Australian Major Performing Arts Group, which represents the interests of the orchestras and other big companies, says OV is under threat because it is unique.

As a pit orchestra it cannot generate much additional income from box office or philanthropy, whereas other orchestras are increasing their income by doing just that.

"The only thing [these orchestras] have in common [with OV] is high standing costs," she says.

"Some of the international orchestras have put people on part-time wages in order to survive."

Michaela Boland, National arts writer - The Australian, 11 December 2010