Imagine this scenario. A Government employee arrives at my front door unannounced. His job – to inspect my home for signs that I have been openly displaying art.
Is he concerned that I have stolen this art? No.
Is he on the lookout for works that might be pornographic, racist, seditious or that might otherwise be somehow contrary to the national interest? No.
He is inspecting my home to determine if the art in question belongs to my very own self-managed superannuation fund (SMSF) and that – perish the thought – I might be enjoying it. That’s right – he is deeply troubled that I might be deriving benefit from my art when everyone knows that the only justifiable place for any investment quality art is in the dark;anywhere at all as long as it cannot be seen, appreciated or enjoyed.
Believe it or not, we live in a country where the Government has legislated for the censorship of Australian art. By Government decree, works of art – some of them undeniably masterpieces of contemporary Australian art – must be stored away and hidden from view. Why? Because our Government is insanely preoccupied with the thought that Australians are populating the walls of their homes with art for which they have obtained a tax concession through their SMSF.
Yet, since July 2011, shameful regulations that prohibit people from displaying their SMSF art at home or at work abruptly ended the acquisition of any art by SMSFs. As a consequence, a large chunk of the Australian art market disappeared and the art industry in this country descended into a sharp decline. Ironically, it is not investors and collectors like me who are struggling but, across the country, it is art dealers and the artists they represent who are feeling the financial pain.
And there is an impending deadline that poses an especially grave threat to the art industry in Australia about which the Federal Government is actively doing nothing at all, deaf to the cries of the art industry and immune to any reasonable argument. By July 2016, every piece of art acquired by any SMSF before July 2011 will have to be stored in a registered storage facility and insured at market price.
Few SMSF directors will accept these draconian and costly directives and it is anticipated that a large percentage (if not all) of the estimated $589 million worth of art currently held in Australian SMSFs will be sold or written off before the deadline is reached. Our Government is retrospectively enforcing the complete dissolution of SMSF art – the consequences for the value of that art and for the livelihoods of many of our artists are likely to be severe.
It is disgraceful and absurd that art should, by Government diktat, be hidden from view. Irrespective of the Government’s irritation at the tax concessions that have been obtained for the purchase of art, some of which is undeniably of uncertain long term investment value, there simply cannot be any valid justification for legislation that seeks to censor art in this country.
If the Federal Government truly believes that art should never be included as an investment vehicle in SMSFs, it should have the courage to say so and enact appropriate prospective legislation. But to effect this outcome through censorship of art and to do so retrospectively is not only cowardly, it sets an uncomfortable and even dangerous precedent.
Meanwhile, Australian SMSFs hold almost 100 times (by value) more shares than art. Amongst that vast mass of shares arebillions of dollars’ worth of genuinely speculative share market investments.Without doubt, billions of dollars of tax concessions have been obtained by – and continue to be issued to – SMSFs for the purchase of shares with little or no likelihood of either annual dividend or long term capital gain. And the Government is silent.
This is unabashed discrimination against art in favour of the share market.
Our Prime Minister trumpets that we are “open for business” yet, at the same time, his Government knowingly suffocates our almost defenceless art industry.
Mr Abbott parades around the globe as a spearhead of liberal tolerance and democracy while his Government stands alone in the world in legislating for the concealment and censorship of art.
The Government’s openly stated aim to reduce regulation and to encourage business is utterly selective and clearly does not extend to include the Australian art industry.
Art in Australia is in decline and it is so at the hands of its own Government. What a disgraceful cultural legacy for any Australian Government.
Michael Levitt, Perth
Published in the Financial Review July 7 2014.