An update from the Chair, Ron Merkel QC, on developments towards a mandatory code of conduct in relation to Indigenous artists and art.

Late last year the IartC Board of Directors provided a detailed report to the then Federal Minister for the Arts, the Hon Simon Crean MP, recommending that a mandatory Code be put in place by the Federal Government. The report was provided in accordance with the process for industry regulation provided for in the June 2007 Report of the Senate Committee report ‘Indigenous Art – Securing the Future: Australia’s Indigenous visual arts craft sector’

EXECUTIVE SUMMARY OF IARTC’S REPORT TO THE MINISTER

To enable you to better appreciate the reasons for IartC’s recommendation I am setting out the Executive Summary of the report to the Minister:

Significant problems persist

There continues to be significant unethical and unfair treatment and exploitation of Indigenous artists by some dealers in the Industry. While the majority of dealers have acceptable professional standards and operate in good faith when dealing with Indigenous artists, the misconduct identified in the Senate report persists and there is an unacceptable level of exploitation of Indigenous artists. The nature of the misconduct has not changed significantly since the Senate report was published in 2007.

There are insurmountable problems with a voluntary Code

Despite IartC’s extensive efforts, there are significant deficiencies in the existing self-regulatory regime in the voluntary Code, which sought to have the Industry adopt ‘best practice’ standards of conduct in relation to Indigenous artists. There has clearly been inadequate support by dealers for the voluntary Code with less than one-third of the dealers eligible to be bound by the voluntary Code agreeing to do so. Consequently, the essential requirement that the voluntary Code be binding on all or most dealers in Australia cannot be satisfied. The inadequate coverage is significant as IartC cannot investigate, sanction or name dealers that are not members. Consequently, the majority of the Industry operates outside the voluntary Code and is able to avoid any form of industry self-regulation. These and the other deficiencies identified in this report in relation to the voluntary Code are such that there is no reasonable prospect of the voluntary Code operating to prevent the ongoing unethical and unfair treatment and exploitation of Indigenous artists. Giving further time for a voluntary Code to take effect will not overcome the deficiencies identified in IartC’s report to the Minister in respect of a voluntary Code and self-regulation.

A mandatory Code is needed

The failure of the Industry to develop its own effective means of self-regulation demonstrates that it is not capable of addressing the misconduct identified in the Senate report, which in IartC’s view persists, and, consequently, a mandatory Code under the Competition and Consumer Act 2010 (Cth) (CAC Act) is necessary to address that misconduct. There are no other realistic alternatives available that can adequately or effectively address that misconduct.

Support for a mandatory Code

IartC is confident that there will be general support by artists and many others in the Industry for a mandatory Code to be prescribed under the CAC Act which will set minimum standards of conduct that must be observed by all dealers. The Senate Committee conducted in depth consultation across the Industry addressing the many problems affecting the Industry and received comprehensive oral and written submissions. That consultation contemplated the need for regulation of the Industry. More recently, there has been consultation in the Industry about the voluntary Code and the prospect of a mandatory Code by IartC’s CEO, including the carrying out of surveys, and discussions with gallery owners and art centre managers as part of Desert Mob in September 2012. IartC also met with representatives of the Treasury and the Australian Competition and Consumer Commission (the ACCC) to discuss a mandatory Code.

IartC believes that there will be strong support for a mandatory Code among Indigenous artists. Artist meetings recently have called for a “stronger” Code and peak Indigenous organisations and arts service agencies, such as Arts Law, have indicated support for a mandatory Code prescribing minimum standards.

The mandatory Code will ensure fairness, minimise regulatory complexity and enhance the Industry for both Industry participants and the wider community

By setting minimum standards of conduct or, more accurately, by prohibiting the proscribed misconduct that exploits Indigenous artists, the mandatory Code will ensure that Indigenous artists are afforded fairness in their dealings with other Industry participants. The mandatory Code would prohibit misconduct such as carpetbagging, unfair contracts and the specific misleading, unfair and unconscionable conduct in the Industry.

The setting of minimum, rather than best practice, standards will ensure that the Code cannot unreasonably or unnecessarily impact on dealers who engage with Indigenous artists in a fair and reasonable manner. A mandatory Code will have no compliance costs for dealers and there would be no burden of additional administration.

The mandatory Code will also benefit members of the general public in Australia and internationally who have legitimate concerns about the provenance and authenticity of Indigenous artwork and the fair and ethical treatment of Indigenous artists. Securing public and international confidence in Indigenous art being ethically sourced is critical to maintaining public confidence in the integrity of the Indigenous art market. The mandatory Code is the only effective vehicle that can achieve that outcome.

IartC’s continuing role

IartC has been very successful in promoting public awareness of the need for a code of conduct in relation to dealings with Indigenous artists. It has also been successful in mediating disputes between those artists and dealers and in developing best practice standards for the Industry. In addition to the proposal for a mandatory Code to replace the voluntary Code, IartC would propose to build on these successes by continuing its mediation function and by working with the ACCC to ensure that the new mandatory Code is well publicised to consumers and to the Industry and becomes well known to, and understood by, Indigenous artists. IartC will also assist the ACCC by becoming a filter for misconduct complaints and mediating, or forwarding for prosecution, the complaints.

The cost of establishing and implementing the mandatory Code

The cost of establishing and implementing the mandatory Code will be minimal. Costs will, however, be incurred by the ACCC in enforcing the Code but the social, cultural and economic benefits from enforcement will far outweigh those costs.

Leadership

A mandatory Indigenous Art Code administered by the ACCC with the support of IartC will make Australia a world leader in this area.

WHAT IS MEANT BY A MANDATORY CODE?

A mandatory Code means that regulations would be put in place under the CAC Act requiring minimum standards of conduct when dealing with Indigenous artists and art. These standards are being observed by the majority of dealers in the industry and will require no additional level of compliance and record keeping than already exist under current law. The important difference under a mandatory Code is that those players who engage in exploitation and other unfair conduct that is damaging to Indigenous artists and to the reputation and integrity of the industry would be subject to investigation, and in appropriate cases prosecution, by the ACCC.

THE MANDATORY CODE SOUGHT BY IARTC WOULD:

  • be binding on everyone in the industry, not just members of IartC. This means that any person or organisation who buys Indigenous art for resale would be prohibited from exploiting Indigenous artists or otherwise acting unfairly toward them;
  • prohibit misleading, deceptive, dishonest and unconscionable conduct in relation to Indigenous artists and artwork;
  • set minimum standards of conduct in relation to making fair and just contracts with Indigenous artists;
  • make unlawful all conduct that is in breach of the mandatory Code;
  • require dealers to keep basic records of their transactions with and for Indigenous artists (eg. dates of purchase, name of artwork and payments made to artists).

Disputes or complaints under a mandatory Code could be investigated by the ACCC, with the assistance of IartC. The ACCC could prosecute a person for breaching the Code and the artist could seek appropriate relief (return of artwork, cancellation of the contract and compensation in some circumstances). An artist could also take private action against a dealer for a breach of the Code.

THE PROCESS REQUIRED FOR A MANDATORY CODE

If the Government considers that problems in the industry are serious and persistent it may decide to investigate the possible implementation of regulatory measures for the industry, such as a mandatory Code. As part of this, the Office for the Arts would develop a Regulation Impact Statement and undertake public consultation on a number of options, including a mandatory Code. The Government would then consider the outcomes of the public consultation and, if it decided to implement a mandatory Code for the industry, a Code would be drafted and laid before the Australian Parliament for approval, as per usual legislative processes.

Ron Merkel QC, Chair