The Art Newspaper

Australian art world unites against Cooper Review

Government report threatens to wreak havoc on market

By John McDonald. Web only
Published online: 01 September 2010

sydney. In a rare show of unity, the Australian art world has successfully campaigned to fight off the recommendations of a government report on superannuation that threatened to wreak havoc on the art market.

At the end of June, the Cooper Review proposed the closure of a popular scheme whereby works of art may be acquired as part of Self-Managed Superannuation Funds (SMSFs), which can act as pension nest eggs for individuals or small groups of people. It was also recommended that all works of art held by these funds should be dispersed within five years.

This caused widespread indignation among art dealers already reeling from the government’s hasty imposition of a resale royalty scheme that no-one seems to want or understand.

Many believe that it was only the purchases made through SMSFs that allowed the Australian art industry to survive the global financial crisis relatively unscathed. The prospect of having so much art dumped on dealers and auction houses within the next few years would have sent prices into free fall.

Works of art account for only 0.1% of the value of SMSFs, but this represents hundreds of millions of dollars for the art market . In a year where business has been slow, the Cooper recommendations would have had a predictably dramatic effect. The committee’s chairman, lawyer Jeremy Cooper, was unrepentant, arguing that the art industry was subject to insufficient regulation. In reply, the dealers pointed out that it was the highly regulated finance sector that recently brought the world economy to its knees.

The Federal Opposition and the Greens were quick to rule out the Cooper proposals but the Labor government waited until 3 August before agreeing. This followed a highly visible campaign led by accountant, Tom Lowenstein, who counts many of Australia’s leading artists and dealers among his clients.