What a week it’s been for the art markets. Two weeks, actually. The Cooper Review (“an oppressive and loathsome series of recommendations,” according to opponents) that advised that art works should no longer be eligible for inclusion in superannuation portfolios has had everyone on edge since the recommendations began to be bruited about back in April. There were plentiful predictions of the disheartening effects such a decision would have on the secondary market in particular. The enforced dumping of works that had been accumulated over decades in the face of the impending five-year sunset was predicted to glut the market and drive prices down. At the same time, potential buyers would be frightened off participating in auctions if they no longer believed (rightly) that they could salt away masterworks as investments.
This would have been enough by itself to give everyone concerned, artists, investors, auction houses, and galleries, a good case of the jitters. But the turmoil in Australian politics that began with the coup that toppled Kevin Rudd and continued with Julia Gillard’s precipitous call for an election on August 21 blew a strong gust of uncertainty at what was being worried over as a house of cards.
In the midst of all this, the Save Super Art campaign got underway, with promises of marches in the streets in advance of the opening of the Melbourne Art Fair to protest the destruction of a large percentage of the art market, if only a small part of the overall economy. But given the general uncertainty of the political scene and an election campaign that was beginning to look uncomfortably American (shaped more by fear than by determination), there seemed to be little hope for a resolution favorable to the art market.
And then, suddenly, the Aboriginal auction season was upon us and the gusts of uncertainty turned into willy-willy’s. Deutscher and Hackett’s July 21 Melbourne offering drew heavily from the collection of William and Lucy Mora. Leading with Paddy Bedford’s gorgeous Gum Hole (2005), the Mora Collection seemed to ignite an ember of belief that all was not lost, even if a prominent taste-maker was selling off his private collection. The works in the auction were reasonably priced. The majority had a top-end estimate of under $10,000 and even those that reached into higher brackets were less than twenty years old. Thus the restrictions on the export of cultural heritage would not come into play and at least theoretically the vaunted overseas market could feel safe in engaging, even if domestic consumers were concerned about the future of their investment portfolios.
On July 16, Sotheby’s Australia unveiled the 350 works that would go under the hammer on July 26 and 27 with an upper estimate, in total, of $6.2 million. It looked like a textbook example of raising the stakes. It would be Tim Klingender’s final sale before moving to a position as consultant to the company. In the Melbourne taste-maker realm, the selections from the personal collection of Gabrielle Pizzi looked to eclipse the buzz created by the Mora Collection. And in terms of simple economics, Sotheby’s Australia backed away from the high-stakes pattern of recent years and announced that the lower threshold of $5,000 for any lot would be abandoned this time around, a move that was sure to bring back buyers who were perhaps more interested in owning a small masterpiece by Tatali Nangala or Ian Abdulla, an early work by Tiger Palpatja, or a historic bark from the brush of Murramurra or Yirwala.
Then came the end of July and the gust that became a willy-willy transformed into a storm that successively washed away expectations. The good news was that the Deutscher and Hackett sale saw only 8% of the lots passed in, realizing a full $1.1 million. The Paddy Bedford sold for $132,000, well past its top estimate of $80,000, and an elegant bark painting by Ivan Namirrki sold at $16,800, nearly triple the high estimate. An early work by Mick Jawalji topped out as expected around $28,000 while a large canvas by Kayili Arts’ Nancy Carnegie sold for more than double its anticipated price at $31,600. Hope blossomed like wildflowers in the desert.
But in the floodwaters, as John Irving famously put it, sorrow floats. A week later the Sotheby’s Australia sale turned into a mighty disappointment. Only 40% of the lots sold, realizing just over $2 million, less than a third of what could have been hoped for. As I pencilled in prices realized in my copy of the catalog, I saw pages on end left blank. To cite just one example, from lot 221 (Millie Skeen) to lot 236 (Minnie Pwerle) there was a drought. In between, works by stalwarts like Eubena Nampitjin, Ian Abdulla, Fiona Omeenyo, Julie Dowling, Dorothy Napangardi, Ngoia Napaltjarri, Lilly Kelly, and Cory Surprise languished. (Ironically, by week’s end, Cory Surprise would win the Western Australia Indigenous Art Award.) Many of the masterpieces from the Pizzi Collection remained unsold. The biggest excitement of the evening–and it must have been a thriller to watch–was the sale of Anatjari Tjakamarra’s Story of a Woman’s Camp and the Origin of Damper, which went to the National Museum of Australia for $320,000. The work is stunning, a large scale (122 x 92 cm) board from 1973, and it will be splendid addition to the NMA’s extraordinary collection of early works from Papunya.
And then came yet another reversal as The Australian reported on July 31 that the government was backing away from the Cooper Review’s recommendations on art as investment. Sort of. In the story (“Labor promises art investment won’t be excluded from super funds“), Michaela Boland and Ashleigh Wilson reported:
Following concerns that recommendations from the recent Cooper report into superannuation would cripple the fragile industry, Labor yesterday joined the Coalition and Greens in promising that art would not be excluded from self-managed superannuation funds as proposed in the review.
Did the Melbourne debacle spur the government to respond? Well, you’d be forgiven for thinking so if you’d been reading The Australian the day before. In “Art market gets ugly as indigenous bubble bursts” the paper lamented that “The Aboriginal art boom has run its course,” repeating their familiar elegy on the dying out of traditional custodians of culture, and indeed of traditional culture. But it went on to point the finger directly at a series of government actions, combined with the world economic crisis, that were pulling the backhoe up to the gravesite.
First they blasted Garrett for establishing the Code of Conduct, which the paper claims has generated consultants galore, but left carpetbaggers unscathed. Then came the resale royalty to undermine the important secondary market and also to discourage collectors who might donate works to museums and state galleries. And finally, there was the Cooper Review and its icy implications.
And if that weren’t bad enough, The Australian claims, government support for community art centres in the wake of the Senate Inquiry (for which the paper modestly takes credit while disavowing the consequences they cite) has led to direct competition via internet sales from the centres that have undermined commercial galleries in the major cities.
While admitting Labor’s pledge to ameliorate the situation by providing relief for those who stockpile art in their supers, the article did highlight an odd consequence of the new rules. In fact, Labor had drawn attention to the problem the new regulations will pose for investor-collectors in its own media release.
Federal Labor recognises that collectables like artworks can be a legitimate asset class, providing investment opportunities for self managed retirees as well as important commercial benefits to Australia’s artists.
However, Labor acknowledges concerns over such assets attracting superannuation’s concessional tax treatment while being available for ‘personal benefit’ (for example, being displayed in the home of a super fund member).
There are currently no enforceable guidelines around how these assets can be held to prevent them from giving rise to such personal benefits.
I understand that if you collect antique cars as an investment, you shouldn’t be driving them, or if you buy vintage wines, you can’t very well drink them. And perhaps I’m just being naive here in thinking that anyone who wants to buy art as an investment would also want to look at it for some aesthetic pleasure as well, and not merely to see whether it’s mouldering or foxing or being invaded by borers.
Or am I missing the point here–does the stipulation refer to the acquisition of art, not by individuals, but by corporate fund managers? I’m easily confused by regulations I’m subject to here in America, so I may be totally in the wrong about Australian opportunities. If so, please correct me.
But at least I can take some (very) small comfort in knowing that I’m certainly not the only one who’s been ended up in a state of confusion after the events of the past two weeks. It might be time to take a deep breath and try for calm. But no, less than two weeks hence the 27th National Aboriginal and Torres Strait Islander Art Awards will be on us and I’m sure that Darwin will be swirling with speculation once again. Too bad I’ll be stuck here in the States and missing it all.