tag:theconversation.com,2011:/us/topics/efficiency-dividend-11284/articlesEfficiency dividend – The Conversation2023-03-29T03:00:01Ztag:theconversation.com,2011:article/2027272023-03-29T03:00:01Z2023-03-29T03:00:01ZAustralia’s cultural institutions are especially vulnerable to efficiency dividends: looking back at 35 years of cuts<figure><img src="https://images.theconversation.com/files/518059/original/file-20230328-29-56c55m.jpg?ixlib=rb-1.1.0&rect=35%2C0%2C5919%2C3937&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>In January the Albanese government launched a new arts policy, <a href="https://www.arts.gov.au/publications/national-cultural-policy-revive-place-every-story-story-every-place">Revive</a>. Among its measures was a commitment to exempt Australia’s seven national performing arts training organisations from the efficiency dividend.</p>
<p>The directors of Australia’s national cultural organisations in the galleries, libraries, archives and museums (GLAM) sector might well have looked on in envy, but also in hope. Revive did not deal with their problems, but Arts Minister Tony Burke does recognise they are in <a href="https://parlinfo.aph.gov.au/parlInfo/genpdf/chamber/hansardr/26433/0175/hansard_frag.pdf;fileType=application%2Fpdf">deep trouble</a>. </p>
<p>Staff at the National Gallery of Australia, for example, are working in mouldy rooms and using towels and buckets to mitigate a “<a href="https://www.smh.com.au/culture/art-and-design/a-national-disgrace-gallery-uses-buckets-as-building-falls-into-disrepair-20230327-p5cvjo.html">national disgrace</a>”. This week, Burke gave assurances the cultural institutions will receive <a href="https://www.watoday.com.au/politics/federal/budget-will-contain-some-relief-for-national-gallery-cultural-institutions-but-government-won-t-say-how-much-20230327-p5cvmx.html">increased funding</a> in the May budget, but it is not yet clear how much, or for how long.</p>
<p>And for many of the sector’s ills, the efficiency dividend is to blame.</p>
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Read more:
<a href="https://theconversation.com/arts-are-meant-to-be-at-the-heart-of-our-life-what-the-new-national-cultural-policy-could-mean-for-australia-if-it-all-comes-together-198786">'Arts are meant to be at the heart of our life': what the new national cultural policy could mean for Australia – if it all comes together</a>
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<h2>Making cultural institutions ‘efficient’</h2>
<p>The Hawke Government introduced the efficiency dividend – an annual decrease in government organisations’ funding – in 1987, levied at 1.25% annually. </p>
<p>While there was much window-dressing about greater efficiency and value for taxpayers, the overriding aim was budget savings. State governments have also levied efficiency dividends for the same reason.</p>
<p>The efficiency dividend has undermined the cultural institutions ever since. Senior public servants considered if big government departments were taking a hit, GLAM should not be treated differently. </p>
<p>But these institutions are not like other government agencies. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/518062/original/file-20230328-16-25v4zp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="The war memorial" src="https://images.theconversation.com/files/518062/original/file-20230328-16-25v4zp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/518062/original/file-20230328-16-25v4zp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/518062/original/file-20230328-16-25v4zp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/518062/original/file-20230328-16-25v4zp.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/518062/original/file-20230328-16-25v4zp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/518062/original/file-20230328-16-25v4zp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/518062/original/file-20230328-16-25v4zp.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Entry charges were briefly levied at the Australian War Memorial.</span>
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<p>While small and specialised – and therefore poorly placed to absorb continuing cuts – they are legally mandated to grow. But these institutions, required by law to “develop their collections”, can barely afford to preserve their existing materials. </p>
<p>The only place where economies could reasonably be made was in employment. As staff numbers and organisational capacity declined, successive governments told the agencies to find new funding sources, such as philanthropy or user charges. </p>
<p>Entry charges were previously levied at the <a href="https://recordsearch.naa.gov.au/SearchNRetrieve/Interface/ViewImage.aspx?B=31405793">National Gallery</a>, and even briefly at the <a href="https://trove.nla.gov.au/newspaper/article/122334513">Australian War Memorial</a>. </p>
<p>Both generated animosity among visitors, who rightly felt that, as taxpayers, they should not have to pay to see the collections maintained on their behalf.</p>
<h2>Not neglecting, strangling</h2>
<p>In the end, institutions were in the invidious position of maintaining some core functions while neglecting or abandoning others. </p>
<p>When the efficiency dividend took effect in the late 1980s, the newly established National Film and Sound Archive was forced to suspend acquisition to <a href="https://recordsearch.naa.gov.au/SearchNRetrieve/Interface/ViewImage.aspx?B=32176885">save deteriorating records</a>. </p>
<p>By 2008 similar effects were evident across the board. Required to produce efficiencies each year, the Australian National Maritime Museum found itself cancelling some exhibitions while deferring or scaling back others. </p>
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<a href="https://images.theconversation.com/files/518060/original/file-20230328-28-ggo9cz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A glass museum on Darling Harbour." src="https://images.theconversation.com/files/518060/original/file-20230328-28-ggo9cz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/518060/original/file-20230328-28-ggo9cz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=332&fit=crop&dpr=1 600w, https://images.theconversation.com/files/518060/original/file-20230328-28-ggo9cz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=332&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/518060/original/file-20230328-28-ggo9cz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=332&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/518060/original/file-20230328-28-ggo9cz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=417&fit=crop&dpr=1 754w, https://images.theconversation.com/files/518060/original/file-20230328-28-ggo9cz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=417&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/518060/original/file-20230328-28-ggo9cz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=417&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">The Australian National Maritime Museum was forced to cancel exhibitions.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
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<p>The Australian Institute of Aboriginal and Torres Strait Islander Studies told a <a href="https://www.aph.gov.au/parliamentary_business/committees/house_of_representatives_committees?url=jcpaa/efficdiv/report.htm">parliamentary inquiry</a> staff were “racing against time” to preserve materials that would be “lost forever” in the face of staffing cuts. </p>
<p>The institute even reported the likelihood of having to “compromise” its repatriation program to adhere to the efficiency dividend in 2008, the year of the Apology. The hypocrisies involved here were boundless.</p>
<p>The agencies have often been told to do additional work, even as funding disappeared. </p>
<p>The Rudd government <a href="https://www.smh.com.au/national/rudd-govt-reveals-plans-for-foi-reform-20090324-983d.html">reduced the closed period</a> of most Commonwealth records from 30 years to 20 in 2010. The National Archives would have to release two years of cabinet records annually for ten years. Meanwhile, the archives was failing to meet <a href="https://www.ag.gov.au/sites/default/files/2021-03/functional-efficiency-review-national-archives-of-australia.PDF">basic statutory obligations</a> for ensuring timely public access to open period records. </p>
<p>In a <a href="https://www.ag.gov.au/sites/default/files/2021-03/functional-efficiency-review-national-archives-of-australia.PDF">2020 review</a>, David Tune reported the timeframe for examining and clearing records was “unachievable because of resource constraints”.</p>
<p>Governments have nonetheless continued to cut funding to these institutions. The Rudd government <a href="https://www.aph.gov.au/parliamentary_business/committees/house_of_representatives_committees?url=jcpaa/efficdiv/report.htm">increased the efficiency dividend</a> by 2% to a total of 3.25% for one year. In December 2015 the Turnbull government <a href="https://archive.budget.gov.au/2015-16/myefo/MYEFO_2015-16_Final.pdf">imposed another 3% hike</a> with a view to saving A$36.8 million.</p>
<p><a href="https://www.abc.net.au/news/2016-12-20/national-library-of-australia-gets-funding-for-trove-in-myefo/8136738">Emergency funding</a> was soon required to keep Trove, the National Library’s popular database, operational. That was a more sensitive issue for nervous politicians: there are Trove users in every electorate around the country and they love it passionately. But a leaky roof in the building that houses Trove, the National Library, is harder to see – even from Capital Hill.</p>
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Read more:
<a href="https://theconversation.com/troves-funding-runs-out-in-july-2023-and-the-national-library-is-threatening-to-pull-the-plug-its-time-for-a-radical-overhaul-197025">Trove's funding runs out in July 2023 – and the National Library is threatening to pull the plug. It's time for a radical overhaul</a>
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<h2>Where to?</h2>
<p>In 2018 the Coalition government, supported by Labor, was able to find $500 million for <a href="https://www.canberratimes.com.au/story/6000852/500m-australian-war-memorial-expansion-to-honour-recent-conflicts/">massive renovations</a> at the Australian War Memorial. But it took concerted national action by <a href="https://honesthistory.net.au/wp/wp-content/uploads/SavingtheNationsMemoryBank.pdf">150 writers</a>, an intense media campaign and the treasurer’s personal intervention to secure <a href="https://www.abc.net.au/news/2021-07-01/national-archives-of-australia-receives-urgent-federal-funding/100257692">$67 million in 2021</a> to save vital records at the National Archives from disintegrating before they could be digitised. </p>
<p>If the Albanese government really cares about the future of Australia’s national cultural institutions, the government will exempt them from the efficiency dividend. Revive sets a precedent in relation to performing arts institutions. The National Cultural Policy Advisory Group Burke established has <a href="https://www.arts.gov.au/sites/default/files/documents/national-cultural-policy-advisory-group-independent-advice.pdf">advised dropping the efficiency dividend</a> for cultural institutions.</p>
<p>The unpalatable alternative is continuing the cycle of fiscal suffocation and emergency funding we have seen for decades. A government that creates emergencies for itself to solve can never be called efficient. And for citizens, there is no dividend.</p>
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Read more:
<a href="https://theconversation.com/getting-more-bang-for-public-bucks-is-the-efficiency-dividend-efficient-24803">Getting more bang for public bucks: is the 'efficiency dividend' efficient?</a>
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<img src="https://counter.theconversation.com/content/202727/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Frank Bongiorno is President of the Australian Historical Association.</span></em></p><p class="fine-print"><em><span>Joshua Black is Administrative Officer of the Australian Historical Association. </span></em></p><p class="fine-print"><em><span>Michelle Arrow receives funding from The Australian Research Council. She is Vice-President of the Australian Historical Association. </span></em></p>Years of cost-cutting measures have left Australia’s national galleries, libraries, archives and museums in dire straits.Frank Bongiorno, Professor of History, ANU College of Arts and Social Sciences, Australian National UniversityJoshua Black, PhD Candidate, School of History, National Centre of Biography, Australian National UniversityMichelle Arrow, Professor of History, Macquarie UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1833612022-05-18T07:38:53Z2022-05-18T07:38:53Z‘A lazy cost-saving measure’: the Coalition’s efficiency dividend hike may mean longer wait times and reduced services<p>On the eve of the election, the Coalition has <a href="https://www.abc.net.au/news/2022-05-17/cuts-public-sector-spending-coalition-policy-costings-election/101072270">said</a> it will impose a higher “efficiency dividend” on public service agencies over the next four years in an effort to cut public service spending and address the budget deficit.</p>
<p>An efficiency dividend is a measure, first introduced by Labor in the <a href="https://theconversation.com/getting-more-bang-for-public-bucks-is-the-efficiency-dividend-efficient-24803">late 1980s</a>, that reduces the budgets of public sector agencies by a certain percentage.</p>
<p>The current efficiency dividend is 1.5%, but the Coalition has promised to boost the figure to 2% for the next three years, with Treasurer Josh Frydenberg <a href="https://www.abc.net.au/news/2022-05-17/cuts-public-sector-spending-coalition-policy-costings-election/101072270">saying</a>:</p>
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<p>What we are doing is offsetting that spending with an increase in the efficiency dividend by half a per cent, which will raise more than A$2.3 billion […] The annual departmental bill across the Commonwealth is about $327 billion. What we’re saying is it will be reduced to about $324 billion, as a result of this additional measure.</p>
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<p>Across-the-board cuts to the public service via the so-called efficiency dividend represent a blunt instrument to achieve budgetary savings. </p>
<p>They have been used by both sides of politics over the years. They allow politicians to avoid taking responsibility for cuts on the pretence they are only about efficiency and that the public sector agency heads can manage them with no impact on services to the public.</p>
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Read more:
<a href="https://theconversation.com/elections-used-to-be-about-costings-heres-what-changed-183095">Elections used to be about costings. Here's what changed</a>
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<p>But many reviews, including by <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BN/2012-2013/EfficiencyDividend">parliamentary committees</a>, have revealed the efficiency dividend often does impact the level and quality of services, particularly for smaller agencies and particularly over time.</p>
<p>It can lead to increased charges, reduced services (for example, the Bureau of Statistics’ Year Book no longer comes out annually) and increased waiting times. </p>
<p>While Labor has strongly criticised the Coalition’s proposed increase in the dividend, its criticism is a little hollow as it has <a href="https://www.canberratimes.com.au/story/7742402/labor-vows-no-spending-cuts-to-aps/?cs=14230">said</a> it will retain it.</p>
<p>Labor is also <a href="https://www.themandarin.com.au/187834-election-2022-labor-will-cut-3b-from-aps-consultant-spend-and-hire-more-staff/">proposing</a> an additional cut in spending on administrative expenses through cuts to funding of consultants, contractors and labour hire – only some of which will be redirected to new public service positions.</p>
<h2>The Thodey report</h2>
<p>Of course, taxpayers should expect the public service to pursue efficiencies and increased productivity – administrative expenses should not be automatically increased in line with increases in input costs. In particular, there is scope to use technology better to drive down costs and improve service provision.</p>
<p>But this requires new investments as recommended by an <a href="https://www.apsreview.gov.au/news/final-report-independent-review-released">independent review</a> of the Australian public service, led by David Thodey AO.</p>
<p>Following the Thodey report’s release in 2019, the government agreed to an audit of its current IT investments but we are yet to see that audit. </p>
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Read more:
<a href="https://theconversation.com/sports-rorts-shows-the-government-misunderstands-the-public-service-130796">'Sports rorts' shows the government misunderstands the public service</a>
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<p>Nor has any mention been made of new investments that might deliver the efficiencies the government expects, let alone achieve the improved services Thodey was looking for.</p>
<p>In the absence of a more nuanced and targeted approach to efficiency gains, there a the risk of further reducing the capability of the public service. </p>
<p>It is likely to mean further reducing resources for longer-term research and being less able to enhance public service wages where there is a need to attract key skills (such as in information technology).</p>
<h2>A lazy cost-saving measure</h2>
<p>While Labor and the unions are highlighting the likely impact on public service numbers, I would be less concerned on that score if the measure was genuinely about efficiency.</p>
<p>The concern I have is that this is not only a lazy cost-saving measure: it also reflects antipathy towards the public service as an institution.</p>
<p>We have seen this before with the <a href="https://www.pmc.gov.au/sites/default/files/publications/independent-review-aps.pdf">imposition of staffing caps</a>, in addition to the caps on administrative expenses. These have forced greater use of consultants and labour hire, even where this is less efficient than using public servants.</p>
<p>And we have seen it in the <a href="https://www.canberratimes.com.au/story/7535285/senate-committees-report-a-missed-chance-for-real-reform/">rejection</a> of key Thodey report recommendations, not only about removing the staffing caps but also about enhancing the role of the public service commissioner. This would have ensured more merit-based senior appointments and a more appropriate way of setting pay and conditions.</p><img src="https://counter.theconversation.com/content/183361/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Andrew Podger does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Many reviews over the years have revealed the efficiency dividend often does impact the level and quality of services, particularly for smaller agencies and particularly over time.Andrew Podger, Honorary Professor of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/587242016-05-02T09:02:21Z2016-05-02T09:02:21ZAustralia must act now to preserve its culture in the face of global tech giants<figure><img src="https://images.theconversation.com/files/120838/original/image-20160502-2396-135aar2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Local voices are more important than ever in a time of global oligopolies.
</span> <span class="attribution"><span class="source">i naina _94/flickr</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p><em>The following is an edited version of the Brian Johns lecture, delivered on Monday night by Professor Julianne Schultz. It’s a longer read at just over 4,500 words.</em></p>
<p>We now live in the Age of Fang – the shorthand term for the new global era dominated by the oligopoly of Facebook, Apple, Amazon, Netflix, Google and others. These companies have made globalisation real and personal thanks to the intimate objects we carry with us and access, unwittingly transmitting all the time.</p>
<p>In the Age of Fang, we need to find persuasive and creative ways to answer those who argue that the national and local are now irrelevant. In the Age of Fang, we’re all global citizens, which threatens to make national cultural institutions both more vulnerable, but also more important than ever.</p>
<p>The audience numbers that attach to the most popular items whizzing around the globe in an instant are remarkable – exceeding even the wildest dreams of the gatekeepers of the age of mass media. Millions of views, shares and likes, followers counted in the hundreds of thousands.</p>
<p>This is an almost unimaginable world away from an asterisk on a TV ratings chart, or the tally of a bestseller in one country.</p>
<p>Digital disruption has become the new cliché that is supposed to capture this phenomenon. But it is inadequate. It suggests that what is happening is just the latest technological change. Albeit one that has created a new class of self-interested global consumers, fostered new businesses and remarkable monopolies, transformed or trashed old ones. Technology has been transforming business, and by extension the way people live, for every generation since the industrial revolution.</p>
<p>But this is different. What is at stake is more profound, with implications that encompass but go well beyond the commercial. The speed and reach of the technology these companies deploy now challenge the mechanisms of public administration, regulation and taxation that have been refined and developed over a century or more. </p>
<p>They may in time even challenge fundamentals of the nation state itself. In the past, great realignments like this were the outcome of war – so far this has been avoided, but the tension between the global and the local is starting to play out in unpredictable ways.</p>
<p>As the British scholar Martin Moore noted recently,</p>
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<p>Democratic societies don’t understand the phenomenon of the tech giants, what the phenomenon might mean in civic terms, what benefits it might bring to governance and the dangers inherent in it.</p>
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<h2>Cultural and political disruption</h2>
<p>Most importantly, as scholars are beginning to draw out, and people are feeling in their bones, this disruption is not just about technology. It is cultural and political. Although we haven’t yet got our heads around what it might mean and how it might play out. You can see it in the Brexit debate in Britain, in the Trump rallies in America and authoritarian responses in China and India.</p>
<p>What we do know though, is that technology companies have figured out how to make money in an unprecedented way from the marriage of technology and culture. </p>
<p>As a result we are seeing a massive redistribution of wealth from the cultural sector, where meaning is created, to the technology sector, which has figured out how to market, distribute, reach and make money out of it in ways the cultural industries never imagined possible.</p>
<p>Now, in the Age of Fang there are a handful of global companies shaping tastes, distributing and exploiting information we didn’t even know we generated. In the process creating a new world which generates unprecedented wealth, yet which gives us enough of an illusion of choice and being in control to feel we are free agents, global citizens even.</p>
<p>It is hard to think of historical precedents. The new oligopoly exceeds the control and reach of the East India Trading Company. Even the grandest colonial empires did not manage to secure such willing and active participation. The international reach that characterises the companies at the heart of the Age of Fang exceeds even the ambition and scope of the American monopolies of the early 20th century that built that country before antitrust laws constrained them.</p>
<p>You could say that each of these epochs collapsed, but it took a long time for regulatory mechanisms to define and assert public interest.</p>
<p>What makes this different to say, the rise of the multinational firm of the middle years of the 20th century – the great corporations that sold energy, transport and consumer goods – is that culture and the art and craft of making meaning are at the heart of the new corporations.</p>
<h2>Capturing and creating meaning</h2>
<p>The old technology companies only sold machines and systems, software and business solutions. The new mega profitable firms make their billions by capturing and creating meaning and belonging: personal information, news, video, copyright, education, music, and information that is the sinew of everyday life – directions, health, banking, shopping. </p>
<p>Some would argue that no one saw this coming – but that is not strictly true. While the particularity of Facebook, Google and the others was not foreseen, the notion that content would be king has been around for a long time.</p>
<p>However the role of the creator of that content has proved to be somewhat more precarious than anticipated, as we saw in Productivity Commission’s <a href="http://www.pc.gov.au/inquiries/current/intellectual-property/draft">draft report on copyright</a> released on Friday.</p>
<p>As a result, support for sustaining, growing and exploring <a href="https://theconversation.com/a-hybrid-australia-where-identity-has-a-multi-layered-crunch-34861">cultural identity</a> is also more fragile than those who came of age in the middle of last century could have ever anticipated.</p>
<p>Facebook’s 31-year-old founder Mark Zuckerberg is alert to this, but takes a different perspective. He recently warned the 2,500 developers who paid US$595 each to attend <a href="https://developers.facebook.com/videos">Facebook’s F8 conference</a> of:</p>
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<p>the danger of people and nations turning inward – against this idea of a connected world and a global community. […] It takes courage to chose hope over fear.</p>
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<p>We might nod in agreement if we think about China at its authoritarian worst, but what about in an open place like Australia? Do we become invisible and lose our moorings? Is that the price of embracing hope over fear?</p>
<p>Certainly Zuckerberg and his shareholders are better off for this connected world. Arguably, so are many of the 1.6 billion people who regularly use Facebook.</p>
<p>Content is the glue that brings people back to Facebook: personal stuff, photos, articles, video, news, music. It also means there are fewer and fewer reasons to leave.</p>
<p>In the last three months of 2015, Facebook generated revenue of US$5.8 billion, and last week reported a first quarter profit for this year of US$1.5 billion. Facebook now includes its rapidly growing services like WhatsApp, Instagram and its free internet service in 37 developing countries, where the provision of national infrastructure is being outsourced to a company led by a man born in 1985.</p>
<p>The stock analysts who came up with “<a href="http://www.investopedia.com/terms/f/fang-stocks-fb-amzn.asp">Fang</a>” as a way of describing the companies that are at the heart of this new era were acutely aware that the list of the top companies has changed fundamentally over the past two decades. Where there were once energy, banks and pharmaceutical companies, there are now companies that with the exception of Apple, Amazon and Google did not even exist at the end of the millennium, with a couple of banks and energy companies just hanging in.</p>
<p>It is a remarkable tribute to the resilience and opportunism of American capital that this has occurred – no other country (with the possible exception of China) can point to such transformative renewal. For a reality check look at our top companies – banks, mining, insurance and a couple of former government owned enterprises. The names and ownership may have changed but the structure is, with the exception of News Corp, more or less as it was twenty years ago.</p>
<p>There is not enough time to do a full analysis of the Fang companies but it is important to provide a few numbers to sketch why what is at stake is so profoundly different to anything we have known before if we are to shape a cultural and civic response.</p>
<h2>Spreading Apple seeds</h2>
<p>Apple is the granddaddy of these companies. Despite recent slowing, I expect it will go on doing what it has done so well since it was founded in 1976 when it produced stylish and functional devices that appealed to the cognoscenti. I bought them then and loved them. They called us early adopters “apple seeds”. And like all the best genetically modified seeds we have gone on to produce an unrivalled crop – in our house we have nine devices we use every day and three on reserve.</p>
<p>In January, there were a billion Apple devices operating and communicating with the Apple cloud, and more than 800 million people with an Apple iTunes account.</p>
<p>According to recent research by accounting academics from UTS, Apple paid tax here at the rate of <a href="http://www.uts.edu.au/about/uts-business-school/accounting/news/research-finds-multinationals-pay-half-statutory-corporate">1.2% on the billions of dollars in revenue</a> it earned in Australia, thanks to what in other circumstances would be regarded as a disappointing 3-4% net profit. </p>
<p>I prefer to spell Fang with two A’s – so it is F-A-A-N-G. This is to include Amazon, which recently turned 22. Amazon did not take long to recognise that those who buy books, were also likely to buy other stuff. Last year 244 million of them did so – in many cases Amazon knew what they wanted to buy before they did. It is a ruthless operator, the Walmart of the online world, but much more glamorous and convenient.</p>
<p>Amazon has relentlessly pushed prices down, squeezing publishing companies and their authors, using the power of its algorithms to make books virtually disappear, or pop to the top of the list.</p>
<p>In the trade books sector it is estimated that Amazon accounts for about A$250 million of the almost one billion dollars worth of annual Australian sales. </p>
<p>Amazon is not a flash company. It is focused on keeping costs down, profits up and goods moving, and while global in its reach it is another quintessentially American enterprise.</p>
<p>I had an interesting insight into this a couple of years ago. I met with one of the senior editors responsible for originating long form essays for the Kindle in his cubbyhole office in midtown Manhattan. After a fruitful conversation full of praise for the essays published by Griffith Review, he told me Amazon would be very interested in publishing the pieces we generated.</p>
<p>There were just a couple of issues: we’d need to Americanise the essays, with American examples and locations. There was no point in saying we Australians are absorbed in the stories of obscure American towns and events, people are people, does it matter if it is Des Moines or Brisbane? The next condition was that Amazon would have to publish first, and there would be no advances or guarantees that could be made about income. Finally as I prepared to leave he asked, “We can work with either, but what is your currency, the euro or US dollar?”</p>
<p>Somehow I didn’t think it was going to be worth the effort, and we’d remain wrapped in the bandages of global invisibility.</p>
<p>N comes next, and Netflix, the company that spectacularly made the transition from renting videos and DVDs to streaming and creating global content. There are more than a million people in Australia whose credit cards are debited $11.99 each month from Netflix, Los Gatos, CA for their subscription. There are virtually no Australian employees. The only Australian content is recycled programs often under a different name – so <a href="http://www.imdb.com/title/tt3163562/">Utopia</a>, the wonderful Working Dog production, has become <a href="http://www.smh.com.au/entertainment/tv-and-radio/netflix-buys-hit-australian-comedy-series-utopia-from-working-dog-20150723-giim1n.html">Dreamland</a>. This week you will be pleased to know there were two other Australian features: <a href="http://www.imdb.com/title/tt5006468/">Restaurant Australia</a> season one, and that old favourite <a href="http://www.imdb.com/title/tt1125887/?ref_=fn_al_tt_1">Yindi the Last Koala</a>, a 1996 documentary about a baby koala injured in car accident.</p>
<p>We know the American screen industries have always been ruthless: charging top dollar or dumping product depending on what the market will tolerate, remaking the best ideas with American accents.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/120848/original/image-20160502-2404-1bfpqru.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/120848/original/image-20160502-2404-1bfpqru.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/120848/original/image-20160502-2404-1bfpqru.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=901&fit=crop&dpr=1 600w, https://images.theconversation.com/files/120848/original/image-20160502-2404-1bfpqru.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=901&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/120848/original/image-20160502-2404-1bfpqru.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=901&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/120848/original/image-20160502-2404-1bfpqru.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1132&fit=crop&dpr=1 754w, https://images.theconversation.com/files/120848/original/image-20160502-2404-1bfpqru.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1132&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/120848/original/image-20160502-2404-1bfpqru.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1132&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Claire Foy in The Crown, 2016.</span>
<span class="attribution"><span class="source">Left Bank Pictures,</span></span>
</figcaption>
</figure>
<p>With this comes alertness to opportunity and ideas. The most striking example of this approach I am aware of now is the new series <a href="http://www.imdb.com/title/tt4786824/?ref_=fn_al_tt_1">The Crown</a>, which Netflix describes as an American series, albeit one that it is making in the UK with multi-million pound budgets for each episode and much of the best British talent of a generation. Thanks to the Downton Abbey effect and the love affair with the British upper class in the US and China, the number of episodes of The Crown keeps growing. </p>
<p>Finally, to the silent G in Fang. Google is ubiquitous. It only emerged in 1998 and last year reported earnings of US$75 billion and gross profits of US$48 billion.</p>
<p>In many ways it is the glue that holds all this together. In the course of writing this speech I must have made 30 or more Google searches – it accounts for 89% of global searches, even more in many countries, its video streaming service responsible for about two thirds of the desktop video watched on devices everywhere. A few years ago it digitised 20 million books for a grand Google library, without the approval of authors or publishers, fair use in
an information marketplace. And that is just the start.</p>
<p>There is a paradox at the heart of this – the way that global digital monopolies are able to sell themselves as enablers of greater consumer choice.</p>
<p>In Australia we are more committed to free trade than most. We want to believe in the level playing field, in the opportunities to trade, and we have done OK out of this. But it works better for minerals and agriculture than for services or cultural product, as we will see as the copyright and IP debate unrolls in coming months. Even though the global cultural sector continues to grow faster than any other segment – we don’t take it seriously.</p>
<h2>The European example</h2>
<p>To my mind, the Europeans are more clear-minded about what is at stake. Australian media companies have grizzled about the impact of the Fang companies. Generally they prefer to blame the public broadcasters and regulation, rather than the global enterprises at the source of the problem. </p>
<p>European companies and regulators are more adept at cultural protection and export. They get particularly agitated when they see their revenue streamed off to American companies, even if they have tax domiciles within the EU.</p>
<p>European regulators have demonstrated they are more willing to use legal and regulatory tools to ensure a level playing field, protect cultural products, secure a local return and reach international markets. So there are tax and <a href="http://uk.reuters.com/article/uk-eu-google-antitrust-idUKKCN0XH0VU">antitrust</a>, privacy and <a href="https://www.theguardian.com/technology/2016/feb/11/google-extend-right-to-be-forgotten-googlecom">right to be forgotten</a> cases against Google and the other Fangs.</p>
<p>I was struck last year when talking to European media executives about the clarity of their vision of why this mattered. Sure there was the commercial dimension – if advertising income is growing, as it is, but 80% of it is going to Google and Facebook – that is a problem. If Google and Facebook and the others are not paying anything like the tax they should, that is a problem.</p>
<p>But one of the oldest lessons of American business shows that that they are not only tough, but always ready to find ways to co-opt the best ideas and neutralise the opposition. So there is the sweetener of <a href="https://www.digitalnewsinitiative.com/">Google’s Digital News Initiative</a> – 150 million euros to provide opportunities for innovation in news, and new ways of European story telling – at the same time broadening and deepening the content pool, and putting a gloss on one of the most spectacular global monopolies ever known. The first tranch of 27 million euros was announced in February – but across 23 countries, with hundreds of organisations, it won’t go far.</p>
<p>This snapshot is I think you will agree, somewhat chilling. It goes some way to explaining why the age of Fang is quite different to any we have known before for those of us engaged in cultural exploration, production and participation.</p>
<p>It is true that the internet has made a long tail of information more accessible than ever before. There is more, but most of it remains invisible. When the habits of human nature are combined with the algorithms designed to recognise patterns it becomes inevitable that increasingly we go back to the same handful of sources.</p>
<p>There is a long tail but it is an odd shaped tail – more like a fat sausage with a tiny sliver of the intestine it was stuffed in to, dangling at the end. And it is in that sliver that most of our cultural product resides, virtually invisible to the rest of the world, and increasingly hard to find at home.</p>
<p>Last year’s report by Oxford’s Reuters Institute showed that Australians were the most likely people in the world to use a <a href="http://www.digitalnewsreport.org/survey/2015/executive-summary-and-key-findings-2015/">digital device to obtain their news</a>. Most strikingly, international sites accounted for two-thirds for this. It was tempting to explain this as a product of Australia’s undoubted multiculturalism and outwards looking nature.</p>
<p>But I think really it is a testament to the power of the great English language sources – the BBC, New York Times, Guardian and the other international news generators that fill our Facebook feeds and pop up at the top of most Google searches. While our brands remain strong, Australians are increasingly going to the world for their news, information and entertainment.</p>
<p>Being English speaking is both a blessing and a curse. Canadians, Irish, Scots, New Zealanders all have the same challenge: how to remain visible and distinctive when living next door to a pushy, noisy neighbour. It is scarcely surprising that some of the most <a href="https://theconversation.com/friday-essay-thriving-societies-produce-great-books-can-australia-keep-up-54473">innovative and distinctive cultural products</a> should emerge from countries with their own language – The Netherlands, Germany, Denmark, Korea come immediately to mind. Their people may be effortlessly fluent in English, but with an additional layer that makes them unique, adds meaning at home and creates global opportunities.</p>
<p>The big question is how do we – with 24 million people living in an Asian timezone – respond, and what is the role of our cultural institutions in this?</p>
<h2>A culturally grounded nation</h2>
<p>Before I attempt to answer that I want to take a side step and trace the process of developing an idea of Australia that is culturally grounded – that is more than koalas and celebrity cooks. Understanding this as part of the process of trying to make sense of this new world order is important, otherwise we risk operating with the cultural equivalent of terra nullius.</p>
<p>Terra nullius is a good place to start, because in recent years we have come to realise that one thing that makes Australia unique, that is not replicated anywhere else, is being home to the world’s longest continuous civilisation, one that is different in structure, tone and content to any other. This is now centre stage in Australian cultural engagement, though it still fails to be realised politically or economically.</p>
<p>But it is a big step from where we were 50 years ago.</p>
<p>It came as something of a shock to me recently to realise that with the exception of the ABC, all the key national cultural institutions in Australia are only about 50 years old.</p>
<p>Of course there are great state libraries, galleries and universities that were founded before federation, but it took more than 60 years after federation to create national cultural institutions.</p>
<p>I was with a group of chairs of these institutions when I realized this, and I must say it took me by surprise – the National Library and Gallery, the Australia Council, AFTRS and others have been fixtures in my adult life. But they are younger than me. They were created as a result of persuasive argument, gathering supporters and connecting with the public. </p>
<p>These institutions are now facing the greatest financial challenges they have ever confronted. This is due to budget cuts, the rupturing of bipartisan political support and the exclusion of culture from the innovation and comparative advantage agendas (even when a quintessential cultural industry – education – is one of our biggest exports).</p>
<p>The creation of these cultural institutions was a product of the post war world. Post war mandarins, particularly <a href="http://oa.anu.edu.au/obituary/coombs-herbert-cole-nugget-246">Nugget Coombs</a>, following in the footsteps of John Maynard Keynes, recognised that culture is as important as legal institutions, trade, land and people in creating a strong nation.</p>
<p>A generation of writers, artists, editors and scholars who had seen the horrors of the war pursued this in little magazines, art, books, on stage and radio.</p>
<p>The result was the cultural architecture we now take for granted, the national institutions and the funding agencies, which foster excellence and innovation and make it possible for skilled artists to tell old stories and imagine new ones on the page, screen, stage and canvas.</p>
<p>For people of my generation it created a sense of belonging and opportunities to explore, to see ourselves reflected back, to dig deeper into the forgotten layers, to make sense of place and time.</p>
<h2>Beyond Oi Oi Oi</h2>
<p>But then something happened. The interrogation slowed down, no go areas appeared, we stopped telling stories to ourselves, happy with the first version. The Aussie Aussie Aussie Oi Oi Oi of the Olympics made us cringe and the politically sanctioned history wars forced people into defensive positions.</p>
<p>We stopped telling different stories and got stuck with a handful of tropes, Gallipoli, Ned Kelly, Eureka (without the women until <a href="https://www.themonthly.com.au/issue/2013/november/1383224400/robyn-annear/clare-wright-s-forgotten-rebels-eureka">Claire Wright</a> came along), Bradman and more recently 1970s pop culture: <a href="http://www.imdb.com/title/tt2222848/?ref_=ttep_ep_tt">Puberty Blues</a>, <a href="http://www.imdb.com/title/tt4158318/?ref_=fn_al_tt_1">Molly</a>, <a href="http://www.imdb.com/title/tt1724700/">Ita</a>.</p>
<p>No wonder young people hankered for a bigger global stage, and felt somewhat embarrassed about being Australian, preferring to take their skills and education somewhere they will be valued and challenged. Individual Australians are conspicuous in film, music, television, media, theatre, design, fashion, architecture all around the world – our companies are not.</p>
<p>But if we are not to be a net exporter of creative talent – the country town that sees its best and brightest leave and never return – we need to make more effort.</p>
<p>There are many more layers of stories to be told and explored. We need to find the songlines that connect the past and the present and share them at home and with the world. This even more important in a country that welcomes hundreds of thousands of new people every year but fails to value the tales and experiences, warts and all, that have shaped us.</p>
<p>In the Age of Fang this forgotten history, these neglected stories risk becoming even more invisible – hidden on an algorithm that is almost never accessed, unless it pops up with sob stories about injured koalas.</p>
<p>As this attachment to cultural identity weakens, it is easier for politicians to cut budgets, if neither the economic or intangible value is recognised. We saw this last year with the extraordinary and disrespectful cuts to the Australia Council, and the swingeing MYEFO efficiency dividend cuts to the tiny budgets of the cultural institutions and the broken promises in relation to public broadcasting.</p>
<p>Unless there is a reprieve in the budget tomorrow night, we can expect about a third of the small and medium key organisations funded by the Australia Council to be told next week that their funding will cease next year.</p>
<p>But paradoxically in the Age of Fang, it is the cultural richness, the democratic, inclusive, pragmatic, egalitarian, highly skilled, educated and creative elements of Australia that make us attractive and distinctive. </p>
<p>Britain, which we still like to emulate, realised this some years ago, and started investing in cultural industries for economic and social returns. This year that sector again grew faster than any other to generate just under 10% of GDP.</p>
<p>Last year when the British chancellor led a trade mission to China, culture was at the heart of the enterprise. We know that China’s growth rates have slowed, but the cultural and creative industry sector is still growing at 17% a year. So a group of British cultural leaders were in the advance group, setting up exchanges and new ventures – like the Chinese audience for the new Netflix series The Crown.</p>
<p>Yet on a recent Australian Chinese tour, cultural leaders and representatives of the cultural industries were conspicuous by their absence.</p>
<p>The purpose of public investment in the cultural sector is not just the output but the outcomes – the building of capacity, sustaining citizens and civil society, fostering creativity and a sense of belonging, the projection of understanding, the strengthening of a sector of the economy that already accounts for more than mining or agriculture.</p>
<p>Culture is one of the engines of economic growth, which produces outcomes as well as outputs.</p>
<h2>What can be done?</h2>
<p>So what can be done to join the dots in the Age of Fang?</p>
<p>We need to become better advocates of the value of cultural investment. We need to find new ways to put the case so we can win political and bureaucratic supporters with hard headed and sustainable arguments.</p>
<p>We need to find ways to embrace the particularity of being Australian in a global context and find new ways to express that. </p>
<p>We need to be willing to challenge the market if it is not delivering – adding our voices to those demanding that the Fangs pay their taxes, and not allowing them to unfairly distort the market.</p>
<p>We need to be prepared to use the legal and other means at our disposal to demand that laws are not broken.</p>
<p>We need to use the leverage we have as the generators of 2% of global GDP to get returns and opportunities to participate that are our due – a digital news initiative here for instance, or a major contribution to the digitisation of cultural assets without giving up the copyright.</p>
<p>We need to leverage 50 years of cultural investment to ensure our stories are told not only to ourselves, but the world.</p>
<p>If, as the scholars have identified, the dominant companies in the Age of Fang have the power to command attention, communicate news, give voice, enable collective action, hold power to account and influence votes, we need that to be done on our terms.</p>
<p>This power needs to be institutionalised so that it is civically accountable. The smartest Fangs understand that playing a civic role brings extra kudos and wealth, but there is a need for vigilance to sustain this.</p>
<p>Getting the settings of this institutionalisation will be challenge of the next decade. It will require a carrot and a stick.</p>
<p>Some Americans are suggesting a royalty should be paid on data mining of personal information, as is done with the mining of minerals, and returned to the country of origin.</p>
<p>Europeans are challenging antitrust and privacy. G20 is renewing attention on tax to examine ways to ensure that the wealth generated is spread appropriately, and not left to a few rich dudes to distribute to suit personal philanthropic ambitions.</p>
<p>The market alone won’t do this. We know from the process of creating cultural institutions that there is a role for the state – a place where in the words of Robert Menzies, the future and past can connect in the present.</p>
<p>Even in this rapidly globalising age, the nation state remains the best organising principle we have. I am not alone in feeling uneasy about the proposition we should give it over to a new oligopoly that is present every moment of our lives.</p>
<p>The purpose of cultural investment in the Age of Fang needs to be reiterated and maintained. As a nation, we need to take this seriously now if we are not to become an asterisk. The purpose of cultural investment in the Age of Fang needs to be restated, funding maintained and opportunities to innovate and export enhanced.</p>
<p>Otherwise we will become invisible at best and tribal at worst. If that happens we will be reduced as citizens and countries to passive consumers in a digital marketplace that values us only for our ability to pay. </p>
<p><em>The Brian Johns lecture was presented by the Centre for Media History at Macquarie University and the Copyright Agency.</em></p><img src="https://counter.theconversation.com/content/58724/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Julianne Schultz does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In a global era dominated by Facebook, Apple, Amazon, Netflix and Google, we need to find persuasive, creative ways to answer those who claim the national and local are now irrelevant. If we don’t, we will become invisible.Julianne Schultz, Founding Editor of Griffith REVIEW; Professor, Griffith Centre for Creative Arts Research, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/551322016-03-03T19:02:54Z2016-03-03T19:02:54ZFriday essay: Silver-tongued Turnbull fails to woo the arts vote<p>In May 2015, the Australian arts community was shocked, perplexed and bemused when the then Arts Minister and Attorney-General, George Brandis, raided the government’s allocation to its own professional funding body, the Australia Council, and <a href="https://theconversation.com/arms-length-forget-it-its-back-to-the-menzies-era-for-arts-funding-41743">withdrew A$104.7 million</a> to create his own private slush fund, the <a href="https://theconversation.com/au/topics/npea">National Program for Excellence in the Arts</a>. </p>
<p>The raid had all the drama and high farce that accompanied another attorney-general’s raid on his own department, back in 1973. Then, national security was at stake, but here it was a petty power grab. </p>
<p>While some people may be critical of the Australia Council, myself included, Brandis’s move was arrogant, ill-conceived and foolhardy. His <a href="http://www.abc.net.au/news/2015-05-13/eltham-brandis-extraordinary-raid-of-the-australia-council/6467534">justification in the media release announcing the NPEA</a> was transparently inaccurate and mischievous:</p>
<blockquote>
<p>Arts funding has until now been limited almost exclusively to projects favoured by the Australia Council. The National Programme for Excellence in the Arts will make funding available to a wider range of arts companies and arts practitioners, while at the same time respecting the preferences and tastes of Australia’s audiences.</p>
</blockquote>
<p>Secrecy surrounded the Brandis move, with the Australia Council informed of the cuts only a few hours before they were announced in the treasurer’s budget speech. Here the Abbott Government also <a href="http://www.budget.gov.au/2015-16/content/bp4/download/00_BP4_consolidated.pdf">slashed the allocations to Canberra’s cultural institutions</a>. Brandis was subsequently <a href="https://theconversation.com/was-it-but-a-dream-post-brandis-we-need-a-reordering-of-national-arts-priorities-47835">roundly condemned in the arts community</a> for his cowboy politics. </p>
<p>Although Brandis was dumped as arts minister in the leadership coup and the new minister, Senator Mitch Fifield, <a href="https://theconversation.com/catalyst-or-npea-we-need-to-grow-up-artists-arent-playthings-for-the-government-51106">returned A$32 million to the Australia Council coffers</a>, the damage had already been done. </p>
<p>Much of the Australia Council funds were frozen for allocations to the major players in the performing arts sector. It is the smaller to medium size operations that have been forced to carry, and will continue to carry, the brunt of these cuts.</p>
<p>Arts programs, including youth theatre and fringe festivals, have been curtailed or have collapsed, jobs have been lost in the arts sector and a Senate enquiry uncovered <a href="http://www.crikey.com.au/2015/08/03/senate-submission-reveals-full-impact-of-brandis-raid-on-ozco/">something of the depth of the carnage and the passions unleashed</a>.</p>
<p>Hopes were high when Malcolm Turnbull became Prime Minister in September, but Turnbull failed his first test of leadership with the arts community. Rather than reversing completely the Brandis folly, the new slush fund was <a href="https://theconversation.com/out-with-the-npea-in-with-catalyst-expert-response-51026">renamed a Catalyst Fund</a>. It is designed to duplicate the activities of the Australia Council, but now controlled by a government oligarchy.</p>
<p>While the Australian arts community was still reeling from the Brandis folly, Turnbull’s government dealt a second body blow to the arts and artists as a pre-Christmas present in its December 2015-2016 <a href="http://www.budget.gov.au/2015-16/content/myefo/html/index.htm">Mid-Year Economic and Fiscal Outlook budget update</a>. </p>
<p>The government announced further cuts of A$52.5 million to the arts sector over the next four years – as part of a process of increasing its “efficiency dividend”. These especially targetted national cultural institutions and the Australian film industry. </p>
<p>Screen Australia was crippled with an additional A$10.3 million cut to its budget over the next four years, at the same time as the Federal Government diverted A$47.3 million to Hollywood studios to bring popular commercial productions to Australia. </p>
<p><a href="https://theconversation.com/the-book-council-of-australia-well-its-better-than-nothing-47549">The Book Council of Australia</a>, one of the very few cultural initiatives by the Abbott Government, was also <a href="https://theconversation.com/short-shelf-life-the-book-council-of-australia-is-stuffed-back-on-the-rack-52382">promptly scrapped after only three months</a> with barely enough time to print the new letterhead paper.</p>
<h2>The efficiency dividend</h2>
<p>The <a href="https://theconversation.com/getting-more-bang-for-public-bucks-is-the-efficiency-dividend-efficient-24803">efficiency dividend</a>, an annual cut to the funding of Commonwealth government agencies, was introduced by the Hawke Government as an emergency measure in September 1986 at the level of 1.25% a year for three years, commencing 1987-88. </p>
<p>This temporary emergency measure has now been in place for more than 25 years and despite several reviews <a href="http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BN/2012-2013/EfficiencyDividend">demonstrating</a> its <a href="http://www.finance.gov.au/publications/measures_of_agency_efficiency/docs/measures_of_agency_efficiency.pdf">shortcomings</a>, governments have remained addicted to it. </p>
<p>Against the unambiguous advice of the reviews, the Rudd Government increased the efficiency dividend to 2.25 per cent in 2013. The Abbott Government, against further advice and its own commission of audit, then increased it to 2.5 per cent. </p>
<p>Nine Commonwealth government agencies have full or partial exemptions from the efficiency dividend, including most of the Department of Defence, but the arts are not amongst the chosen few. The Australia Council cops the whole efficiency dividend cut, except for its multi-year appropriations for the Major Performing Arts organisations. </p>
<p>There is no relief for the national cultural institutions, which have been caught in the vicious cycle of being required to do more with less for a couple of generations. </p>
<p>The problem is that you cannot compare the National Gallery of Australia or the National Library of Australia with a huge organisation like the Department of Health, the Department of Finance or the Department of Veterans’ Affairs. </p>
<p>Size does matter. Economies of scale do not work in a relatively small organisation with a few hundred staff. It can be crippled by a loss of ten colleagues, which would be more readily absorbed within a staff of thousands.</p>
<p>In the 2011-12 Budget, the efficiency dividend was applied at the portfolio ministerial level. This gave ministers the flexibility to vary the impact of the cuts on the various agencies in their departments. </p>
<p>This proved particularly necessary when governments applied additional single-year imposts on top of the base level. In 2012-13, for instance, the rate of the efficiency dividend went up to 4 per cent. </p>
<p>Simon Crean, the last Labor Arts Minister, used his ministerial discretion to prevent the 2012-13 impost from applying to various organisations. They included the: </p>
<ul>
<li>Australian National Maritime Museum; <br></li>
<li>National Gallery of Australia; <br></li>
<li>National Museum of Australia; <br></li>
<li>National Library of Australia; <br></li>
<li>Australia Council for the Arts; <br></li>
<li>Australian Film Television and Radio School; <br></li>
<li>National Film and Sound Archive; <br></li>
<li>National Archives of Australia; <br></li>
<li>Old Parliament House (Museum of Australian Democracy); <br></li>
<li>Australian Institute of Aboriginal and Torres Strait Islander Studies; <br></li>
<li>Australian War Memorial and the Torres Strait Regional Authority <br></li>
<li>and Screen Australia. <br></li>
</ul>
<p>This move was <a href="http://www.smh.com.au/federal-politics/political-news/new-creative-australia-revealed-20130313-2fzsl.html">widely applauded</a> within the arts community. </p>
<h2>Here comes the new boss, worse than the old boss</h2>
<p>Few expected the Turnbull Government to be worse for the arts than the Abbott one, but it is. </p>
<p>The effect of its first mid-year budget update and its new efficiency dividends for the next four years will cripple the federally funded cultural institutions. Such cuts are not sustainable and operations and functions of the national cultural institutions stand to be affected, in some cases irreversibly. </p>
<p>The National Library faces a A$6 million cut, the National Museum of Australia a A$5 million cut, the National Gallery a A$4 million cut, the National Film and Sound Archive a A$3 million cut and the National Portrait Gallery a reduction of over A$0.5 million, as well as a smaller cut to the Museum of Australian Democracy in Old Parliament House. </p>
<p>The Australian National Maritime Museum also faces <a href="http://delimiter.com.au/wp-content/uploads/2016/02/nbn-estimates-feb-2016.pdf">a substantial cut</a>. </p>
<p>Through a strange roll of the dice, the Australian War Memorial, with former Liberal Party minister Brendan Nelson at the helm, has been spared and survives within the safety of the Department of Veterans’ Affairs.</p>
<p>Most of the national cultural institutions will now face cuts to their staffing. Public outreach will be restricted and this new 3 per cent efficiency dividend will prevent the major cultural institutions from meeting their legislative obligation to grow and develop collections. </p>
<p>The arts sector is in crisis and while many had hoped the Turnbull Government would mark a new enlightened beginning, this has not eventuated. </p>
<p>As a public speaker at arts events, Prime Minister Turnbull does not provide the embarrassing spectacle of his predecessor – the cringe factor has eased. </p>
<p>Turnbull has appeared on stage with charm, eloquence and erudition in the past few months to speak at the National Gallery, the National Library and at the National Portrait Gallery. Yet all of this accumulated cultural capital was instantly undone in the mid-year budget cuts and in his inability to restore full funding to the Australia Council.</p>
<p>It is foolhardy for any government to attack most of the arts community, as you are attacking a network affecting millions of people.</p>
<p>Australians love the arts and Australians vote. While the Turnbull government may, in the next May Budget, splash some dollars for major bricks and mortar arts projects in Melbourne and Sydney, the damage has already been done. I assume that in the past couple of months much of the Australian arts community has already made up its mind and will vote Labor, again.</p>
<p>It remains a mystery as to why the Turnbull Government wants to return to the culture wars. We had all hoped that the new prime minister and the new arts minister would be better than their predecessors, but we were wrong. </p>
<p>The arts sector in Australia is more depressed than it has been for many decades. At a time when even <a href="https://theconversation.com/what-went-wrong-at-the-melbourne-art-fair-55295">the Melbourne Art Fair has been cancelled this year</a> as insufficient commercial art galleries can afford to participate, the Turnbull Government continues to kick the arts community in the guts.</p><img src="https://counter.theconversation.com/content/55132/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sasha Grishin does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The arts sector is in crisis and while many hoped the Turnbull Government would mark a new, enlightened beginning, this has not happened.Sasha Grishin, Adjunct Professor of Art History, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/248032014-07-02T20:30:38Z2014-07-02T20:30:38ZGetting more bang for public bucks: is the ‘efficiency dividend’ efficient?<figure><img src="https://images.theconversation.com/files/52615/original/yys7mzm8-1404110458.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">In the 27 years since the Hawke government came up with a public service efficiency dividend, the evidence has mounted against it.</span> <span class="attribution"><a class="source" href="http://recordsearch.naa.gov.au/scripts/Imagine.asp?B=11607705">National Archives of Australia</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>Every now and again in public policy debates a consensus emerges on some particular point among policymakers, stakeholders and commentators. These moments are distressingly rare. It is even more distressing when the government ignores such consensus. Unfortunately, this is the case with the most significant attempt in the federal budget to increase the efficiency of government, through the <a href="http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BN/2012-2013/EfficiencyDividend">“efficiency dividend”</a>.</p>
<p>First introduced to federal public sector organisations in 1987 <a href="http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;db=CHAMBER;id=chamber%2Fhansardr%2F1986-09-25%2F0106;query=Id%3A%22chamber%2Fhansardr%2F1986-09-25%2F0120%22">by the Hawke government</a>, the efficiency dividend is a reduction of the budgets of these bodies by a certain percentage (usually 1.25%, but <a href="http://www.budget.gov.au/2014-15/content/overview/html/overview_33.htm">2.5% in the current budget</a>). </p>
<p>As the name suggests, this is intended to drive efficiency improvements. The idea is that public sector bodies do the same work with less resources and the government bottom line should benefit accordingly. Thus it is argued that this cut is not a cut at all, but merely a dividend from increased efficiency.</p>
<p>It is important to subject these justifications to scrutiny. As <a href="http://cpd.org.au/2014/06/false-economies/">my research</a> for the Centre for Policy Development points out, the efficiency dividend is the most significant initiative in May’s budget for driving more efficient government operations.</p>
<p>The measure’s predicted total saving of A$2.8 billion dwarfs the $530 million saved by the <a href="http://www.financeminister.gov.au/publications/docs/smaller-and-more-rational-government.pdf">“Smaller and More Rational Government”</a> initiative, which identifies a number of organisations for cessation or merger. This initiative is less of a blunt instrument in that it shows specifically what services will be affected, though the scattering of different organisations targeted makes it difficult to see any underlying rationale for the cuts.</p>
<h2>An incomplete form of efficiency</h2>
<p>The problem with the arguments for the efficiency dividend is that they take a very narrow view of efficiency. If the same results are obtained from fewer resources (this is questionable in some cases), this improves what is called technical efficiency. However, this ignores the “allocative” and “dynamic” <a href="http://cpd.org.au/?p=19141">aspects of efficiency</a>.</p>
<p>Allocative efficiency is about ensuring resources are directed to the areas where they achieve the highest benefits. An across-the-board cut affects all public services regardless of the value they provide. This means allocative efficiency is not increased; worse, it may be reduced because the efficiency dividend’s effects are not even.</p>
<p>Smaller organisations and offices (such as the <a href="http://www.abs.gov.au/AUSSTATS/abs@.nsf/mediareleasesbyReleaseDate/745695D9AEBEFE64CA257CEE0004715C?OpenDocument">Australian Bureau of Statistics</a>) feel a disproportionate level of pain, while larger organisations have more flexibility on where to make the savings. This means smaller offices serving regional Australia tend to be disproportionately affected. It also punishes more efficient organisations since they are expected to improve at the same rate as those with more numerous and easily addressed inefficiencies.</p>
<p>Dynamic efficiency, which involves adapting to change (including new technologies and modes of operating), is also damaged because the operation of the efficiency dividend is directly at odds with the dynamics of innovation.</p>
<p>First, it applies each year, yet innovations are “lumpy” with large opportunities in some years and less opportunity in others.</p>
<p>Second, innovations often lead to an apparent decrease in efficiency before the gains begin to show. For example, the introduction of a more efficient computer system will initially slow down work as staff learn to use it. The efficiency dividend takes away the resources first, meaning that the initial dip in efficiency occurs in a situation of constrained resources.</p>
<p>Third, working out innovative new ideas and ways to implement them often requires an investment of resources. The efficiency dividend ensures such investment is harder to find.</p>
<h2>Experts unite against the efficiency dividend</h2>
<p>A number of well-supported government reviews stressed the need to review the efficiency dividend. Examples include parliament’s joint committee of public accounts and audit’s <a href="http://www.aph.gov.au/parliamentary_business/committees/house_of_representatives_committees?url=jcpaa/efficdiv/report.htm">2008 inquiry</a> and the <a href="http://www.dpmc.gov.au/publications/aga_reform/aga_reform_blueprint/">2010 Moran Review</a>. </p>
<p>Cynics may reject these findings as self-serving, but they might find it harder to dismiss two more recent critiques. The <a href="http://www.ncoa.gov.au/">National Commission of Audit</a>, led by former Business Council of Australia head Tony Shepherd, was very critical of the common practice of governments to increase the efficiency dividend as a savings measure. The commission’s opinion is that cuts should be targeted with a clear rationale. </p>
<p>Even more damning was <a href="http://www.cis.org.au/publications/target30-papers/article/5191-withholding-dividends-better-ways-to-make-the-public-sector-efficient">this year’s report</a> by the Centre for Independent Studies (CIS), an organisation with a firm commitment to smaller government. The CIS recommended the “failed” efficiency dividend be abolished.</p>
<p>It is an indictment of any government’s commitment to efficiency that the most significant approach to driving more efficient operations is the use of such a blunt instrument, which flies in the face of condemnation from all sides. Complete disregard of advice on the efficiency dividend is unfortunately a bipartisan failing. It has survived through the governments of Hawke, Keating, Howard, Rudd, Gillard, Rudd again, and now Abbott.</p>
<p>The Rudd government’s <a href="http://www.budget.gov.au/2013-14/content/economic_statement/download/2013_EconomicStatement.pdf">economic statement in August 2013</a> increased the efficiency dividend to 2.25% for a period of three years despite all advice. The Abbott government has also gone against this advice, and the recommendation of its own Commission of Audit, by increasing the rate to 2.5%. </p>
<p>It is understandable, of course, that the Abbott government will not follow every recommendation. Governments must make decisions based on a range of different opinions, including from the departments of Treasury and Finance. Nevertheless, cultivating a more efficient government will require more rigour than the blunt and untargeted efficiency dividend. This approach is likely to be doing more harm than good.</p><img src="https://counter.theconversation.com/content/24803/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>This work draws on research conducted for the Centre for Policy Development's Public Service Research Program which is funded by the CPSU, the Becher Foundation and Slater & Gordon.</span></em></p>Every now and again in public policy debates a consensus emerges on some particular point among policymakers, stakeholders and commentators. These moments are distressingly rare. It is even more distressing…Christopher Stone, Research Director at the Centre for Policy Development and PhD Student, Macquarie UniversityLicensed as Creative Commons – attribution, no derivatives.