Naturally, federal budgets are fretful times for economic sectors underwritten by discretionary public expenditure. The arts and cultural sector is composed of parts that rely heavily on public funding (such as heritage, museums), parts that are a mixture of public and private (such as film, television, radio), and parts that are largely private (fashion, design, video games). Obviously, some parts of this sector therefore have more reason for trepidation than others.
The recent report from the Commission of Audit makes clear that there is indeed a budget crisis — although not everyone would see things that clearly.
But if we can accept for a moment there is such a crisis, political reality indicates it will need to be met with expenditure cuts as well as tax increases (although the Abbott government did make an election promise not to do this). As I previously noted on The Conversation, those spending cuts — come May 13 — will probably not have much impact on arts and culture in this budget cycle (although the Commission did recommend that Screen Australia face funding cuts).
So what then is the state of culture in Australia? Basically, it's in rude health. We know this from government data itself. The Australian Bureau of Statistics collects a variety of statistics, although as with most aggregate economic data, there are several years of lag between gathering and reporting.
In February of this year the ABS released an experimental set of cultural and creative activity satellite accounts. These are for 2008-9.
How we're doing now
The ABS Satellite account for 2008-9 shows the contribution of the cultural and creative economy to Australian GDP was A$86 billion, which is almost 7%. Cultural activity makes up A$50b of that, and creative activity is larger, at A$80b (a A$42b overlap of cultural and creative explains how these numbers add up to A$86b).
Public cultural spending was A$7.6b. Some A$2.3b of this was from federal spending, about half of which was for public broadcasting.
A 2010 survey carried out by the ABS indicates that Australians get a regular fix of culture, with about 85% reporting attending a cultural event, the most popular being cinema, but with music festivals, parks, and museums and galleries not too far behind.
Private cultural spending in 2010 was just under A$20b, with television, books and film capturing the bulk of that spending. According to the Australian Tax Office, just A$28 million was donated to cultural organisations from tax-deductible private ancillary funds.
By industrial sector, gross value added (GVA) estimates run to A$65b, the majority of which was broken down as:
- design (A$26b)
- literature and print media ($13bn)
- fashion ($12bn)
- broadcasting, digital media and film ($8bn).
The cultural and creative sector produces more GVA than health care, but less than construction.
There were about 1 million employees in this sector, with a quarter of those working in cultural and creative occupations outside the cultural and creative industries. There are more than 160,000 business or non-profit organisations in the cultural and creative industries sector.
International comparisons are plagued by definitional consistencies, but the ABS reports that Australia's cultural and creative sector is very similar to that of Canada, Finland, Spain and the UK by most measures. (The largest, on a per-capita measure, is the US.)
How we got here
There is much more detail that we could report from the above statistics. Yet we don't need to worry too much about the lags in the data or the crude aggregations because a few overarching findings and long-run trends stand out.
The first is that the cultural and creative industries are large, vibrant and growing, and it is the creative, market-facing parts that are doing most of the heavy lifting.
That is entirely unsurprising, and nor — I will stress to add — is it an ideological point. These sectors can grow because they face not just millions of Australians but billions of global consumers.
The single most important factor driving and shaping the Australian cultural and creative economy is the global marketplace. And within that, Australia's single greatest advantage is that we are a multi-cultural English-speaking nation, meaning that we have a comparative advantage in cultural content production for a global market.
The factor most accelerating this is the rise and spread of digital and computational technologies into all corners of cultural and creative production. This lowers the cost of production and distribution, increases access and variety, creates new platforms, and makes possible new business models.
A further significant trend is the long-run growth in household wealth globally, not just in Australia. This increases the quantity of household spending and, consequentially, demand for cultural and creative content. Furthermore, as demonstrated recently in the UK, a strong case can be made connecting the growth of the arts and cultural sector with GDP growth.
These three factors — globalisation, technology and wealth — are not the only things that matter, but to a first order of approximation they are most of the story of how we got here.
The next ten years
The most important policy forces affecting the cultural and creative economy in Australia are not those from within Australian cultural and creative industry policy. They are the factors affecting Australia's position vis-à-vis the global economy, digital technology development and adoption, as well as the factors affecting household wealth.
These are factors relating to bilateral trade agreements (and the intellectual property provisions written into these), the state of the National Broadband Network, Australian tax policy, the vibrancy of the mining sector, and so on, will likely continue to have a far greater impact on the state of Australia's cultural economy than, say, specific details pertaining to the funding of the National Gallery.
What is likely to change? We might usefully distinguish among the cultural economy between those parts that are more in the manner of public goods (such as national galleries, museums, and so on) from those that are subsidised industries (such as public support to the film industry).
Public goods suffer free-rider problems, and are best supplied through public funding. We can expect that Australian cultural public goods will continue to be funded, and maybe even receive greater funding as Australian wealth grows.
But the subsidised industries part of the cultural sector will face a tougher time. These can survive through lobbying and scare campaigns. But they also tend to be eventually defeated by innovative competition and new technologies.
It's unclear where, for example, Australia's public broadcasters fall on this spectrum. In the early years they very clearly were a public good. They still are in the case of some remote and regional broadcasting. But they are a purely subsidised industry in most urban markets and many media segments.
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