Click HERE to read the article.

For the rest of this article by Michael Fox, coordinator of 2010’s Save Super Art campaign, go to Australian Art Sales Digest.

Sally Patten also outlines the dire future for investments in artwork as a result of these reforms, citing views by SSA coordinator Tom Lowenstein, in The Australian Financial Review.

To have your say, submissions can still be made to Treasury by June 14:

Manager

Benefits and Regulation Unit

Personal and Retirement Income Division

The Treasury

Langton Crescent

Parkes ACT 2600

Or by email to StrongerSuperSMSFs@treasury.gov.au

A motion moved by The Greens Arts Spokesperson, Christine Milne, in response to your emails and letters over the last week, passed the Senate today. It read as follows.

The Senate:

(a) Notes:

(i) That the Cooper Review into superannuation last year recommended that private investment in art no longer be eligible investments for DIY superannuation schemes;

(ii) That, after a strong campaign by artists concerned that the local art market would be seriously damaged by this move, the government promised during the 2010 election campaign to reject that recommendation; and

(b) Calls on the government to:

(i) Abide by its election promise; and

(ii) Ensure that any conditions do not act as a disincentive for DIY superannuation funds to invest in Australian art.

This is a significant development for the Save Super Art campaign. Tom Lowenstein and The Australian Artists Association will now make formal submission to The Treasury and will seek discussions with the Minister for Superannuation, Bill Shorten to bring finality to the campaign commenced against the Cooper Review last year.

Thank you for making the voice of the Australian arts industry heard.

Regards

Michael Fox

I would urge anyone interested in the continuing health of the Australian art market and the Aboriginal art market in particular to not only make an urgent submission (in fact by 15 February) to the “consultation process” outlined by Bill Shorten but to phone, email and write to their local member about the brazen broken election promise concerning SMSF investment in the arts. This broken promise cannot be about returning the Federal Budget to surplus because according to the ALP any changes to the way SMSFs invest in the art market will “have no cost to the budget”.

Michael Fox

ALP ELECTION PROMISE BROKEN OVER SMSF INVESTMENT IN THE ARTS

Sebastian is a trustee of an SMSF (self-managed super fund). The SMSF holds an artwork as an investment and the artwork is displayed in Sebastian’s house. In order to comply with the regulations, Sebastian enters into a lease arrangement to display the artwork in an art gallery.

Explanatory memo example to the draft SMSF Bill re investment in collectables and personal use assets exposure draft

The above paragraph is nothing more than a broken election promise.

In his media release of  1 February Mr Shorten declared that the draft legislation “delivers on an election commitment by allowing people with self-managed super funds to continue to invest in art and other personal use assets.”

The Save Super Art campaign forced the election commitment from the government in the week of the disastrous Sotheby’s Aboriginal Art sale in late July and just prior to the Melbourne Art Fair. In fact by making this promise the government was spared a protest rally planned by Save Super Art on the last day of the Melbourne Art Fair that was to feature an Aboriginal funereal dance. This was not made public at the time.

A cursory glance at the explanatory memo, however, shows the effect of the planned legislation will result in substantial numbers of SMSFs having to de-accession their collections within a five year period contrary to their understanding of the election commitment.

What was that election commitment? I quote from the ALP Campaign Media Release issued on 30 July last year:

A re-elected Gillard Labor Government will ensure that from 1 July 2011 collectables and personal use assets owned by self-managed super funds (SMSFs) must be stored (my emphasis) according to new rules to prevent them from giving rise to a personal benefit.

So how does an election commitment to allow SMSFs to store artworks transform into draft legislation which requires a lease arrangement?  This subtle turn of phrase will have far-reaching consequences if enacted.

Businesses with artworks on their premises held by their SMSFs will have less than 5 months (as the commencement date will be 1 July 2011) to remove the artworks and enter into suitable lease arrangements. Storing the artworks would cause their SMSF to be in breach of the regulations with serious implications for all of their retirement savings and not just the art. But more to the point a lease arrangement could make the decision to hold artworks in a SMSF uneconomic.

This is because there is an enormous difference between the two sets of requirements.

• First, incidental costs are increased because a lease agreement is a legal document and it will not be entered into just once – each time a new work is purchased a new or amended agreement will have to be made and of course the more works involved the greater the expense of maintaining these arrangements.
• Second, the risk of maintaining the artwork rises because it has to be held by an “art gallery” whose physical premises you have no control over. Remember Ron Cole?
• Third, a lease arrangement implies that rental income must be derived in order for a SMSF to hold artwork which is contrary to the way that most art professionals would advise their clients to maximise returns on this particular asset class. That is, artwork gains are typically made on capital account.

Mr Shorten has provided a little more than a week from the date of writing for submissions to be made to what is described on his media release as a “consultation process”. For those interested in making such a submission they may be lodged electronically or by post by 15 February to:

Manager

Benefits and Regulation Unit

Personal and Retirement Income Division

The Treasury

Langton Crescent

Parkes ACT 2600

Email: strongersuper@treasury.gov.au

The above discussion concerns artworks only, however from reading the explanatory memo it would appear that SMSFs investing in other classes of “collectables” will be in an even worse position because they simply will not be able to comply with the requirement to lease and not store. One example from the explanatory memo states that SMSFs holding stamp collections after 1 July will not comply with the new laws without giving a reason.

To quote from the explanatory memo:

It is extremely difficult for the ATO to determine the true purpose for which an investment in a collectable or personal use asset is made, particularly where the asset is stored (my emphasis) in premises owned by the SMSF trustee.

It might not just be the arts industry wishing to bring back the death ceremony.

Michael Fox

February 2011

Michael Fox ran the Save Super Art campaign against the Cooper Report recommendations to ban artworks from SMSFs in 2010. For more information about this campaign visit www.savesuperart.org.au. He is a Consultant, Australian Art Market to Lowensteins Arts Management and an Associate Member of the Auctioneers and Valuers Association of Australia. He was previously the Queensland Curator for Joel Fine Art and operated Fox Galleries in Brisbane from 1998 to 2006. Michael may be contacted via email to foxgalleries@powerup.com.au

Please find below a Campaign Media Release from the ALP. We are pleased to announce that all three major political parties in Australia have now reached a consensus position to rule out the Cooper Report proposals to ban artworks from SMSFs.

As such the Australian art market can return to a state of certainty for the first time since these recommendations were made public on April 29. The audit guidelines drawn up by the Australian Artists Association in conjunction with SPAA have been accepted and we look forward to further development of these guidelines with whoever holds office following the Federal election of 21 August.

The Public Rally called for yesterday will no longer be necessary. The Melbourne Art Fair can look forward to a week of celebrations of the best Australian art without these uncertainties hanging over its head.

We wish to thank all the organisations and individuals who have assisted the campaign since May – including a big thank you to Jonathan and Katrina from MediaLink. A particular note of thanks to Lisa Gluck for keeping the website, Facebook and twitter up to date over the past month. And of course I cannot think of another individual who would have been able to bring all sides of the Australian arts industry together for this cause except Tom Lowenstein.

This is not necessarily the end of the campaign. Some supporters have called for a peak lobbying group to emerge from the chrysallis of Save Super Art. That would be great. For the time being there is an election to be decided and some accountancy work that I must now attend to!

Warm regards

Michael Fox

Campaign Co-ordinator

Save Super Art

www.savesuperart.org.au

To read the ALP Campaign Media Release, click HERE

SSA thanks you all for the great support and urges supporters to continue emailing the politicians at www.savesuperart.org.au and to write directly to Prime Minister Gillard.

Attached is a letter that you can add comments to, print off and post to the Prime Minister. You can address your letter to one or both of these addresses:

1. Office of the Prime Minister 
    Parliament House
    Canberra ACT 2600

2. ALP National Secretariat
    Unit 5, 9 Sydney Avenue
    Barton ACT 2600

You can also email any comments about this issue to laborconnect@australianlabor.com.au or to info@cbr.alp.org.au.

Template letter, HERE

To read his letter, click HERE

Sydney gallery owner Kate Owen has also written to Julia Gillard.

To read her letter, click HERE

Let us hope that the PM’s reply actually comes from an identified person and a little higher in the Labor Party ranks than our masked respondent.

WILL YOU PLEASE ALLOW THE AUSTRALIAN ARTS INDUSTRY TO MOVE FORWARD

The Australian Greens have now publicly stated their opposition to the Cooper recommendations to ban artworks from self-managed superannuation funds. Deputy Leader Christine Milne has made this statement:

The Greens totally oppose the Cooper Review’s recommendation to remove art from DIY superannuation. Such a move would undermine the art market and the creative culture in Australia, especially for new and emerging and indigenous artists. The question has to be asked, why is it OK to invest in high risk shares but not in artists?  

With the Liberal Party also publicly stating their opposition it is incumbent on the Federal Government to also rule out these proposals and bring back certainty to a fragile market.

This issue is now urgent with the Melbourne Art Fair less than two weeks from opening. Does Prime Minister Gillard really want the premiere Australian art fair to be reported as an international flop two weeks before the election date of 21 August? 

Australian galleries and consultants have been left in limbo since 29 April and will be unable to advise their SMSF clients to purchase artworks at the Melbourne Art Fair unless the Cooper proposals are ruled out before then.

The Australian Artists Association presented the Minister for Finance, Chris Bowen, new guidelines to enable SMSFs to hold their artwork collections on 30 June and meet the regulatory concerns of the Cooper Report. We are still awaiting a reply.

We now urge supporters of the campaign to write directly to Julia Gillard by post. Attached is a letter that you can add comments to, print off and post to the Prime Minister. You can address your letter to one or both of these addresses:

1. Office of the Prime Minister 
    Parliament House
    Canberra ACT 2600

2. ALP National Secretariat
    Unit 5, 9 Sydney Avenue
    Barton ACT 2600

You can also email any comments about this issue to laborconnect@australianlabor.com.au or to info@cbr.alp.org.au.

For more information and to send your comments to the Minister for Finance and his junior the Minister for the Arts please visit www.savesuperart.org.au.

Read the Open Letter from Tom Lowenstein to Julia Gillard, HERE 

Write directly to Julia Gillard, HERE. Simply print, comment on and send the letter attached to the above addresses.

Read the ALP’s unidentified response to Michael Fox’s recent campaign letter, HERE

The Minister for the Arts, Peter Garrett during yesterday morning session, made a statement  that he would continue to argue very strongly for measures which will ensure sustainability of the visual arts industry.

At a subsequent meeting with Michael Fox, Evan Lowenstein and myself, he gave an undertaking that he would  arrange a meeting between us and The Minister for Superannuation, Chris Bowen  who effectively was running the Cooper Report, and that he would also be speaking with him to convey the art industry’s concerns,  about  the debacle of the Cooper Report into Superannuation and its recommendations.

I would like to make it clear that despite these undertakings, there remains a policy gulf between the Opposition – which has stated its intent to strike out Cooper – and the Government – which has continued to sit on the fence despite the ongoing damage to the arts industry.

Over the past month, I have stated on a number of occasions, that during my 40 year involvement in the arts, I have not encountered an issue which has united the artworld and arts community to such an extent as the recommendations of the Cooper Report.

Artists, art gallery directors, auction houses, dealers, collectors and members of the arts community, reacted initially with surprise and disbelief, which turned to anger and outrage.    They have all banded together under the umbrella of “Save Super Art” to voice their opposition to these recommendations.

Hundreds of emails have been received expressing their concern and disappointment at the action, or perhaps the lack of it from the Government.

For more, click HERE

He will be addressing the University of Melbourne Symposium at the Elisabeth Murdoch Lecture Theatre at 10.10am. There will be an opportunity for audience questions from 10.40am to 11.00am.

In contrast to Peter Garrett’s undecided stance the Liberal Party have made it very clear that they will rule out the Cooper proposals. Senator Ciobo, Shadow Minister for the Arts last week stated this intent in his media release “For Pete’s sake, save art from Labor’s super axe”, which can be viewed at the below link:

For Petes sake save art from Labors super axe 

If Garrett does not understand how serious the issue of uncertainty created by Cooper is destabillising the arts industry, Sydney dealer Dennis Savill today disclosed that since the recommendations were made public two months ago he has only purchased one artwork. During a normal period at this time of year he would normally have purchased 40 paintings.

Brisbane artist and gallery owner Michael Eather, owner of Fireworks Gallery, has sent us his own thoughts on the double-headed hydra that is resale royalties and Cooper. See below “The Perfect Storm”.

Finally, please keep sending your emails of support to Save Super Art www.savesuperart.org.au. We are also now on Facebook and twitter.

A Perfect Storm – Michael Eather