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Costs outperform higher earnings in the arts

New figures show 2010 was a good year for major performing arts companies, but costs and inflation are outrunning earnings gains, one reason a confidential government proposal that would mean static funding for at least six years is generating anxiety behind the scenes.

Analysis by the Australian Major Performing Arts Group (AMPAG) shows the total income of the 28 national and state opera, theatre and dance companies and orchestras rose $7.8 million to $400 million in 2010.

That confirms the generally positive individual results reported recently for last calendar year, including a $1.17 million contribution to reserves for the Australian Chamber Orchestra and a $920,000 operating profit for the Sydney Theatre Company.

Earned income was up $3.6 million or 1.5 per cent to $252.4 million, but the earnings increase was outstripped by an overall expenditure rise for the companies of $9.6 million or 2.5 per cent to $387 million, and inflation of 4.5 per cent, according to analysis.

“The point is that costs are still going up significantly more than income, which indicates that there’s a ceiling on ticket prices and what companies can earn at the box office,” AMPAG executive director Sue Donnelly said yesterday.

“At the same time, thresholds on sponsorship have been reached, certainly in Sydney and Melbourne. It makes it hard to plan and move forward if funding remains static.”

The latter refers to a confidential draft national framework for the companies agreed by state and federal governments and circulated in April. The discussion paper notes the funding structure resulting from the 1999 Nugent inquiry had resulted in improved finances, reserves and audience numbers, but that it was “time to update the framework”.

It provides for the maintenance of base funding at historic levels, plus partial indexation, but “no increase to any MPA company above this”.

It also mandates “a clear and measurable performance framework” aligned with governmental priorities of increasing regional access, audience numbers, the “nurturing of young talent” and “securing revenue from a range of sources”.

“It’s great that they have secured multi-year, state-and-federal funding,” Ms Donnelly said. “But it’s very clearly stated that there’s to be less reliance on government funding.

“This isn’t about government withdrawing; there’s just a question of the extent of that support.

“The concern is the government expectation that companies will continue to grow and improve and maybe do other things like more regional access programs, on static funding. They will have to find other revenue to do so, and many of these companies are really well-oiled machines by now, they’ve maximised their income from sources ranging from box office to sponsorship.”

The framework is part of a matrix of federal reviews, including the recently established philanthropy review chaired by Harold Mitchell and a broader cultural policy review, the discussion paper on which is due by the end of the year, Labor’s first broad foray into the area since the 1994 Creative Nation Statement.

Brook Turner
Australian Financil Review
29/6/2011