Pearls and Irritations

Objective and anecdotal evidence shows that activity in the Australian arts sector declined significantly during the pandemic. Performances closed, venues shut, exhibitions were cancelled and many artists were forced to abandon their artistic careers — hopefully temporarily. The sector’s demise produced the occasional news item, but otherwise it has aroused little reaction from the public or public policy makers.

Part of the problem is that the relationship between artists and public policy makers is lose—lose. On the one hand those working in the arts sector are often not the best advocates for their profession, especially if a key part of that advocacy is to present the economic credentials of their case. It has been my experience that many in the arts sector are inclined to push back against the suggestion that the arts and economics are related. They see the monetisation of art as negative and unhelpful, and the risks are accentuated if the sector is dropped into the broader context of economics or industry policy. Those disciplines have their own and disenfranchising ways of evaluating issues, their own tools and even their own language when discussing how value should be applied to artistic goods and services.

On the other hand, politicians and public policy makers are generally disinterested in the arts at the best of times. They are already under pressure from more powerful and influential interest groups, all pleading their case and making demands on scarce resources. A sector that looks economically and politically insignificant is unlikely to progress much beyond being a half-hearted priority.

In my opinion, both views are unhelpful. I put forward three reasons why this is so, and why it needs to be corrected.

First, the arts sector is not as insignificant as it looks, if by looking that means using Australia’s National Accounts to measure the sector’s value expressed as a percentage of total industry gross value added (GVA).

The national accounts aggregate economic activity into a number of industry categories, one of which is arts and recreation services. Even allowing for the unconvincing suggestion of an economic
homogeneity between art and recreation, the sector remains by far the smallest, contributing just 0.8 percent of GVA at current prices to June 2021. By comparison, agriculture forestry and fishing accounts for 2.4% and manufacturing for 6% of GVA.

But the data behind any of the activities listed in the National Accounts can be disaggregated and reassembled to present a different picture. Tourism, for example, doesn’t appear in the National Accounts To measure its value and help guide public policy and investment the Government established a Tourism Satellite Account.

Similarly, several OECD countries including Australia have either introduced or experimented with arts industry satellite accounts to improve their understanding of their arts and creative industries. These prototype satellite accounts suggest the arts industries’ contribution to economic activity is much larger than suggested by a cursory reading of the National Accounts. The contribution is more like 3% to 4% of industry GVA. That puts the arts sector well among Australia’s larger industries.

Second, the arts are a significant source of export income.

Australia’s tourism export earnings were over $45 billion per year prior to the pandemic. But Australia doesn’t export a generic thing called ‘tourism’. It exports specific tourism goods and services that
international visitors seek out and immerse themselves in to experience the complex, special or unique amalgam of qualities, values, beliefs, and practices that define Australia. Most prominent among these are the arts — the museums, galleries, theatres, music and other cultural and creative activities that help reveal who we are. These goods and services are not just incidental to tourism, like travel and accommodation: these are the things that drive it. It’s why people come here. We know this because we have decades of International visitor surveys that tell us these are the goods and services people travelling to Australia want in particular to experience.

And there are similar synergies between art and domestic tourism.

And third, the arts are an important driver of innovation.

Innovation is important because it underpins productivity, and increasing productivity is essential to maintaining Australia’s international competitiveness and growth in per capita GDP. The more a country innovates, the faster it grows.

But not all innovation is beneficial to everyone. Imported innovation can be expensive, and it may not be that well suited to local conditions; path dependent innovation is safer but can produce narrower benefits compared with riskier frontier innovation; and innovation can produce losers as well as winners, as Joseph Schumpeter pointed out in his theory of creative destruction.

Australia’s artists are well placed to understand these processes. There are few other professional groups that engage so consistently and so profoundly with creativity and innovation. Artists deal
routinely with conflict between the old and the new; with the application of emerging technologies; risk is commonplace; the use of trial and error is part of the job description; and they learn that being resilient in the face of failure is not simply desirable but essential. Anyone who wants to get a better understanding of Schumpeterian philosophy and what it means for innovation could do worse than talk with a group of arts. Australia’s art community has a wealth of understanding about the processes of innovation, and that knowledge and experience can be made available to other industries. It just needs to be asked for and the means to facilitate its transfer put in place.

The 2022 election result presents Australia with a timely opportunity to re-think conventional approaches to measuring the value of the arts and how to boost the range of government policies to support its growth and investment. But change is difficult and some will be resisted. It’s unlikely to occur in the absence of convincing quantifiable as well as qualitative evidence. The good news is that
alternative approaches to building that quantitative evidence are being developed and the results are becoming more widely available and accepted. What’s needed now is for more of our public policy makers to begin taking appropriate notice.

Dr Michael Edwards has been working as a professional practicing visual artist for fifteen years. Prior to picking up a paint brush, he worked as an economic analyst in a number of economic and industry
Departments in the Australian public service.

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