Resale Right for Visual Artists Bill

Members, the House is in committee on the Resale Right for Visual Artists Bill. We come first to the debate on Part 1.

Point of order. I seek leave for all provisions to be taken as one question.

Leave is sought. Is there any objection? There is no objection. The question is that Parts 1 and 2, Schedule 1, and clauses 1 and 2 stand part.

Just settling in for a good few hours on this bill—only kidding, only kidding.

Hon Scott Simpson: There’s lots to talk about.

SIMON O’CONNOR: There is, actually. At one level, there is a lot to talk about. But, I mean, look, by and large, this—as I said in the second reading speech and as the Minister knows better than I do and the officials, to acknowledge them—is part of a free-trade agreement.

Look, a couple of questions, Minister. One is actually picked up from a speech by one of your colleagues just earlier about the using, in this case, of a Māori artist’s imagery. Just to be clear, this bill covers the artworks itself, not, if you will, the aspects of that artwork, and that in many ways relates to the purpose too when we look at clause 3(b)(i): “acknowledges and respects the role of Māori as tangata whenua”, etc., etc., which is absolutely appropriate. I suppose the underlying question is, there’s the physical, particular visual artwork—the question is, will aspects of those artworks, if someone chooses to use a particular moko in their artwork, be covered here? Are we creating a little bit of an issue particularly with—is it Wai 262?—the use of what is Māori or Pacific or another culture’s imagery; is that going to be caught up in some way? Will that German artist that was referenced earlier have to pay part of a royalty to the New Zealander because they used an aspect of cultural art rather than the artwork itself? I hope I’m being clear on that—just the difference between concepts and the physical artwork.

Second question is around—oh, yeah, that’s right—the amount of royalties. We’re going for 5 percent—so this is clause 16. Just for the Minister, if she were to address the concerns of some within the reselling space, who would see this ultimately sort of as an imposition and a tax that’s going to be passed on to consumers in some way, that’s going to be ultimately quite a bureaucratic—sorry, potentially could be quite a bureaucratic system. Does she have concerns there?

Something I raised in select committee, I’m now looking at clause 20; it’s around the collection agency. There’s a little concern, certainly on my side, that the agency could almost become too big as it sort of self-generates a lot of work to if not justify itself but also an ever-growing desire to try and garner further information. So I suppose the question there is, does she have any concerns that the collection agency could become too large? And, if not, what does she see as some of the ways to fence that in?

And final question, which you’ll be delighted to know, is, I think—well, not think; I know because I read it. The department’s regulatory impact statement said we’re going to pull in about $700,000 a year, which is—that’s OK. But does she think that’s going to be chewed away by just, again, the process of running the collection agency? Does she have any findings from officials or otherwise to give us a bit of an indication of all we’re collecting is less than a million a year? And, let’s be clear, the artists themselves love it, but less than a million a year less the costs of running the system, do we think this is going to be value for money? So just a few quick questions there.

So there are a few questions in there; I’ll do my best to respond to them.

Firstly, with respect to imagery that may be used without permission by an artist, by a business, or by someone else, there are separate copyright rules and laws around that, and so that’s not part of the legislation that we’re passing today. However, I do recognise the concern of the member that raised that in her second reading speech.

Also with the royalty, 5 percent is where it’s being set. This seems to be consistent with other countries who have similar schemes, certainly consistent with comparable countries that we work a lot with. So we’re happy with where it has been set.

There will of course be the deduction for the collection agency that helps to support the ongoing costs of having a collection agency in place. This seems to work well also with other countries. I think the one advantage to being behind, as such, with respect to putting this in place, is that we have had the opportunity over the course of at least a decade—more than a decade, really—to observe other people’s schemes in relation to this, and so have seen what their experience has been. So we don’t have any levels of concern with that. We’re also able to observe their experience with collection agencies. So, again, no level of concern there. Obviously, that will need to be set up and then run. It will be monitored. We have made sure that the Official Information Act can be applied to the collection agency. That was the good work of the select committee in actually interrogating the legislation and how it would be implemented and what the collection agency would look like and what powers we would need to be able to continue to hold the collection agency accountable as well. So we do not have concerns with respect to what that will look like once it’s established.

Thank you very much, Mr Chair, and I appreciate Minister Sepuloni’s contributions to my colleague Simon O’Connor’s questions, to open them. I have got a question in regards to clause 21(2), and it’s in regards to whether each party must ensure information is collected. I guess, Minister, I think of Depot Artspace, which is in Devonport in my home electorate of the North Shore, and Amy and Tere and Nina and the team down there that do an absolutely amazing job in terms of showcasing both cultural examples of some of our leading artists but actually, in a broader spectrum, what is the best of a community gallery—or two galleries, actually, in respect of that place. But can you just give a little bit of context in terms of what are the potential implications for a gallery such as that, around the information-collection aspect—as my colleague Simon O’Connor noted—around some of that burden? Do you feel that that is going to place a significant burden on a gallery like that? Or whether you feel that galleries such as that should not have any concerns in regards to this legislation—that perspective would be appreciated.

The impact on art market professionals was a common concern at the time of introduction of the UK and Australian schemes. Reviews of these schemes show that, overall, the administrative burden is not significant. For example, the 2014 review of the UK scheme found that the median time spent on administration by auction houses and dealers per quarter was 95 minutes and cost around $50 per quarter, adjusted for inflation. Similarly, a review of the Australian scheme estimated two to three hours per quarter, at a cost of about $100. We do recognise, as a Government, that there will be some additional administrative impacts and costs for art market professionals, who will be required to provide information to the collection agency on resales and will be jointly liable with the seller for the payment of the royalty. In establishing the New Zealand scheme, the collection agency will work with art market professionals and businesses to support them to adapt to the requirements of the scheme and reduce administration and compliance costs. The royalty—5 percent of the sale price—is also considerably smaller than fees charged by art market professionals through buyers’ and sellers’ premiums, often at least 17 to 20 percent.

Thank you, Mr Chair. Just a question to kick off to the Minister around the requirement, the need for this bill, and the focus on it being a reciprocal arrangement, which is why, because of our free-trade agreement and agreements—

CHAIRPERSON (Greg O’Connor): The member might just need to speak up or go a little bit closer to the microphone. His voice is quite quiet.

Dr JAMES McDOWALL: I’ll try to speak a bit louder. How’s that? Just a question around the purpose behind this is so that we meet our requirements, our obligations under a free-trade agreement, and the focus has been on it being reciprocal.

So I was just going to query the Minister, then, as to why it isn’t reciprocal, in the sense that, in this bill, it sets a 5 percent fixed amount, fixed rate, whereas if we look at the European Union and look at the United Kingdom, who have the same regime in place in each of those territories by way of Brexit. If we look at those rates, the maximum royalty is 4 percent, but then it’s staggered. It goes down to 3 percent for the next threshold, then down to 1 percent, then to 0.5 percent, then to 0.25 percent, and the total amount of the royalty may not exceed €12,500, looking at the European Union. So that’s my first question. If this is supposed to be a reciprocal arrangement, then why isn’t it the same?

Requirements in the NZ-UK free-trade agreement and the NZ-EU free-trade agreement are high level. The bill meets all of these requirements. The requirements are that the bill must be reciprocal, the right is inalienable, eligible works must be an original work of art, the work must be a resale, the royalty must apply to all acts of resale by a person or persons acting in the course of dealing in the business of visual works.

So we did have the opportunity to actually set our own threshold with regards to the royalty fee. My understanding is that we did not look into the staggered proportion or percentage that that member referred to because of the administrative burden that that would put on the system. So there’s already been questions from the Opposition today around the level of bureaucracy and potential administrative burden. Having a flat rate clearly makes that a lot easier to manage, and it’s also a lot easier for people to understand.

I appreciate the response from the Minister. So I guess a portion of that is around going above and beyond, as opposed to just simplifying. I can understand not using the thresholds, because that is added bureaucracy. None the less, our percentage is set higher, so it is a case of why is it above and beyond? And also the fact that there is, in fact, a cap in those jurisdictions that we haven’t adopted.

Yes, the member is right. In many overseas schemes, including the UK and some EU countries, there is a cap on the maximum royalty payable. However, the New Zealand market is much smaller and artworks here do not sell for the high prices seen in many overseas countries—although we would like them to.

Not having a cap is also key in ensuring the scheme can ultimately be self-sustaining into the future. As an administrative fee will be deducted from all royalties collected, the administrative fees collected on higher-value sales will help, in many ways, cross-subsidise administrative costs associated with collecting and distributing royalties from lower-value sales. Therefore, in line with the Australian scheme—a more comparable market to New Zealand than the United Kingdom—there will be no cap on the maximum royalty paid.

The honourable—Dr James McDowall.

Hon Peeni Henare: That’s a long valedictory!

I know. Thank you, Mr Chair. One further question around the setting of the threshold at which artworks are eligible: between $500 and $5,000. That is quite a wide range, and I’m just curious, because the systems are already in place overseas in the UK and the EU, why the Government has opted to take quite a large range there and not actually indicated something a bit more specific.

A minimum threshold is necessary because having no threshold—and therefore covering all sales, even those of very low value—is not administratively feasible or cost effective. The bill states that the threshold will be between $500 and $5,000, with exact amount to be set in regulations, rather than in legislation.

I think the range of $500 to $5,000 has been chosen because a threshold lower than $500 would, as I’ve said, be administratively unviable, while an upper limit of $5,000 provides room for upward adjustment in the event of future inflation and/or a substantive market growth. So if we put it in regulation, then what we can do is, over time, if we choose to—it’s much easier to shift that threshold than what it would be if it was set in legislation.

Thank you, Mr Chair. So just on that, is there any indication that the Minister has, as to where—and I understand that it’s going to be in regulations—as to where she, or the Government, would like to see that threshold start?

At this point, final decisions on that are yet to be made.

Thank you, Mr Chair. Separate question entirely: something I raised in the previous reading was around will there be any consideration for exemptions—or exclusions, I should say—around, say, an artist that has been imprisoned for whatever, whether they’re still in prison or whether afterwards. Once they’ve finished their sentence, will they still be eligible to keep being paid by the scheme?

The answer to that is no.

The question is that the Minister’s amendments set out on Supplementary Order Paper 413 be agreed to.

Amendments agreed to.

Parts 1 and 2, Schedule 1, and clauses 1 and 2 as amended agreed to.

Bill to be reported with amendment.

House resumed.

Madam Speaker, the committee has considered the Resale Right for Visual Artists Bill and reports it with amendment. I move, That the report be adopted.

Motion agreed to.

Report adopted.

This bill is set down for third reading immediately.

Third Reading