- Probity in procurement - Artbank
- Artbank is an art rental scheme established in 1980 by the Australian Government to ‘provide direct support to Australian contemporary artists through the acquisition of their work and to promote the value of Australian contemporary art to the broader public’.
- Artbank generates revenue through the leasing of the Artbank collection to individuals, companies and governments. The Artbank collection presently contains almost 11,000 works and is valued at approximately $42 million. In 2021–22, Artbank reported revenue of $2.78 million; expenses of $2.5 million; and an acquisition budget of $395,140, through which 72 works were acquired. Since 2015–16, the Artbank acquisition budget has been between 10 per cent and 15 per cent of revenue.
- The Australian National Audit Office (ANAO) audited Artbank to provide assurance to the Parliament on the administration of the Artbank program by examining the appropriateness of the approach of the Department of Infrastructure, Transport, Regional Development, Communications and the Arts (DITRDCA) to acquiring, managing, and leasing Australian contemporary art in the Artbank collection.
- The audit found Artbank’s approach to acquiring, managing and leasing Australian contemporary art had not been appropriate. Artbank had no overarching strategy to support the direction of the program, and there were shortcomings in Artbank’s practices with regard to acquisitions, collection management, and leasing. In particular, Artbank’s approach to acquisitions had not been in accordance with the Commonwealth Procurement Rules (CPRs).
- This chapter discusses findings in the audit related to procurement and asset management, beginning with a summary of legal obligations under the CPRs and asset management requirements. It then examines previous Artbank audits. This is followed by a discussion of the audit outcomes in relation to Artbank’s strategic direction, acquisitions, collection management, and approach to leasing. Throughout the chapter, the response of DITRDCA to the audit findings is discussed.
Audit outcome
2.6As noted above, aside from lacking an overarching strategy to support the direction of the program, the audit found shortcomings across procurement and asset management. In particular, the audit concluded:
- the approach to acquisitions had not been in accordance with the CPRs and had not demonstrated strong alignment with the targets established in the program’s collection plan, which itself was designed to illustrate DITRDCA’s strategy to deliver against the program’s policy intent
- management of the collection was insufficient to ensure its integrity
- the approach to leasing was not appropriate.
- Of the eight recommendations arising from the audit, DITRDCA agreed to four, noted one, agreed in part to two, and did not agree with one. Where relevant, these are discussed in this chapter.
- DITRDCA told the Committee, ‘looking at the things that we're actually implementing as a result of the audit, as well as some changes that were already in train, we believe we will be fully compliant with the PGPA Act going forward and the CPRs going forward’.
Data and recordkeeping
2.9During the course of the audit, the ANAO found the reliability of Artbank program data and recordkeeping a challenge. The ANAO found in many instances that records were unreliable or non-existent: there was no documentation of some key decisions/approvals, processes, assessments or agreements; records of deaccessioning were unreliable; and certain data pertaining to program administration was not collected. This observation was not limited to the ANAO. DITRDCA itself, in its corporate plan, stated some Artbank ‘data was not available or reliable’.
2.10In particular, the lack of documentation for the acquisition process has been a long-running issue in the Artbank program. In the 2006 audit (discussed below), the ANAO identified the need for improved documentation in several areas. For instance, it stated a documented acquisition process would assist in providing evidence to support compliance with Artbank’s acquisition criteria and the then Commonwealth Procurement Guidelines. The ANAO found meetings and discussions regarding proposed acquisition were not documented and stated documentation justifying individual artwork purchases could be improved. The 2023 report found there remained a lack of documentation around key decisions and this was not consistent with the CPRs.
2.11It is notable the financial statements provided by Artbank to the Committee in relation to acquisition budget and number of artworks purchased did not match in any year between 2015–16 and 2021–22 the numbers obtained by the ANAO through its analysis of Artbank’s records.
Previous audits and reviews
2.12The 2023 audit was the second audit conducted by the ANAO of the Artbank program; an audit in 2006 made seven recommendations relating to Artbank’s strategic direction and collection management practices, all of which the department at that time agreed to. In particular, recommendations were made with regard to redrafting the Artbank Charter; the development of a publicly-available, focussed and documented acquisition criteria; greater transparency and accountability in the acquisition process; and the consideration of alternative acquisition strategies, given Artbank is an art supports program not a collecting institution.
2.13The Audit Office also identified that a 2014 departmental review had made eight recommendations similar to those in the 2006 audit. The departmental review called for, amongst other things, the development of a strategic plan with defined key performance indicators, and for the immediate clarification of governance arrangements.
2.14DITRDCA admitted it had not implemented all the recommendations from the 2006 audit, specifying the review of the Artbank Charter was never completed. DITRDCA acknowledged to the Committee ‘it would have been good’ if the program had had an overarching plan to pull together its various streams—collection, acquisition, preservation, and conservation.
2.15DITRDCA is silent on whether it has complied with the recommendation that direct submissions by artists should have a documented assessment against the Artbank acquisition criteria.
2.16The ANAO in its 2006 report had found that reasons were not documented when artworks submitted directly by artists to Artbank for consideration had not been selected for acquisition. The discussion in the report strongly suggests the ANAO was of the view submissions by artists should have a documented assessment against the acquisition criteria regardless of whether there was a decision to purchase a directly submitted artwork. The ANAO stated ‘a documented acquisition process would assist in providing evidence to support compliance with Artbank’s acquisition criteria’ and the Commonwealth Procurement Guidelines.
2.17DITRDCA’s ongoing practice of not recording the receipt of unsolicited proposals, or the reasons for decisions not to purchase artworks, whether solicited or unsolicited, is discussed further below.
2.18Where DITRDCA has implemented a recommendation from the 2006 audit, in some cases this has taken many years. For instance, it was not until 2011 that a digital catalogue of artworks was loaded on the Artbank website; it took until 2019 for all works proposed for acquisition, regardless of value, to be accompanied by an acquisition proposal submitted to the relevant delegate; and it wasn’t until 2023 that Artbank conducted a client satisfaction survey, which appears to have been completed by approximately 44 clients, though not all questions were answered by all respondents. DITRDCA stated it considered the survey ‘an informative tool’.
2.19The Committee asked DITRDCA how it could have confidence DITRDCA would implement the recommendations from the 2023 audit, given 17 years had passed since the 2006 audit and all those recommendations had yet to be implemented. DITRDCA responded it had documented the actions it intended to take in response to the 2023 audit, and this would be monitored through the Artbank governance committee, the ‘normal departmental chain’, and would be reported to the internal audit committee.
Legal obligations
2.20A range of obligations are relevant to the discussion in this chapter, encompassing the Public Governance, Performance and Accountability Act2013 (PGPA Act), CPRs, Public Service Act 1999 (PS Act), and departmental policies.
Commonwealth Procurement Rules
2.21The CPRs are made under section 105B(1) of the PGPA Act and are the basic compliance framework for entities undertaking procurements. The CPRs state:
The Australian Government promotes the proper use and management of public resources. Proper means efficient, effective, economical and ethical.
2.22The Department of Finance defines probity in the context of procurement as:
… evidence of ethical behaviour, and can be defined as complete and confirmed integrity, uprightness and honesty in a particular process.
2.23Achieving value for money is a core rule of the CPRs, entities must consider value for money and officials must be satisfied a procurement achieves a value for money outcome. Similarly, competition is a key element of the CPRs, requiring non-discrimination and the use of competitive procurement processes.
2.24Accountability and transparency must apply to procurements, including through the keeping of records, publication of procurement plans on AusTender, and the provision of information on request to potential suppliers.
2.25The keeping of records for each procurement is obligatory and these are to be commensurate with scale, scope and risk. This documentation should provide accurate and concise information on: the requirement for the procurement; the process followed; how value for money was considered and achieved; relevant approvals; and relevant decisions and the basis of those decisions. It must be retained in accordance with the Archives Act 1983.
2.26Further, entities must establish processes to identify, analyse, allocate and treat risk when conducting a procurement.
Asset management
2.27Under the PGPA Act, officers have an obligation to discharge their duties with care and diligence, and the APS Code of Conduct (CoC) requires officers to use Commonwealth resources in a proper manner. DITRDCA’s asset policy states asset owners are responsible for the whole-of-life management of the assets used within their domain, including planning for, acquiring or building, using, managing, and disposal of assets. Artworks in the Artbank collection are assets for the purpose of DITRDCA’s policy.
2.28Further, a key purpose of the Artbank program is to operate a rental scheme. The rental income is a public resource. Under the PGPA Act, responsibility for the proper use of public resources rests with the accountable authority of an entity.
Key findings of the audit
2.29The following discusses some of the key findings from the audit in relation to strategic direction and accountability, acquisitions, collection management, and leasing, and DITRDCA’s response.
Strategic direction and governance
Audit findings
2.30The audit found there was no overarching strategy to support the direction of Artbank or measure its success, though a range of policy and planning documents had been approved since 2019, focussed on discrete parts of the program. There was no strategy to clearly articulate how Artbank would direct activity to achieve the program’s purpose or objectives. The program was established to encourage contemporary Australian artists by acquiring their work; stimulate a wider public appreciation of Australian art by making it available for display in public places; operate an Art Rental Scheme; and manage the Artbank collection. Its two policy objectives are to: provide direct support to Australian contemporary artists through the acquisition of their work; and promote the value of Australian contemporary art to the broader public.
2.31One consequence of the absence of an overarching program strategy identified by the ANAO was it enabled DITRDCA’s problematic approach to acquisitions, which the ANAO described as ‘uncoordinated and closed’, and not in accordance with the CPRs.
2.32The Artbank Governance Committee was established in 2019 to be responsible for governance oversight of Artbank’s activities, and to monitor whether Artbank is meeting key objectives and is compliant with government rules and processes. The committee’s terms of references specified it was responsible for the governance oversight of: acquisitions and deaccessions; outreach and promotion of the collection; and the leasing scheme. However, the committee did not consider itself to be an ‘approving committee’. Amongst other things, it saw its role as being a ‘conduit to the Executive Leadership Team and the Secretary’s Business Committee, providing assurances to them that Artbank is meeting key objectives and complies with government rules and processes’.
2.33Though it was to meet quarterly under its terms of reference, at December 2022, the governance committee had met three times. While the Artbank program team had prepared reports for the committee in advance of its three meetings that reported on progress against the discrete Artbank purposes and plans (the Business Plan and collection plans), reporting on the overall financial performance of the program had not been developed or provided to the governance committee. Analysis conducted by the ANAO showed Artbank’s performance had been progressively declining across a number of key metrics since 2015. The audit was unable to find evidence (in the form of records or out-of-session considerations) that explained how the governance committee had discharged its duty of being ‘responsible for the governance oversight of Artbank’s activities’.
2.34That the governance committee only met three times and did not consider the overall financial performance of the program, according to the ANAO, ‘diminishes the department’s management of the program and its performance’.
Recommendations and response from DITRDCA
2.35The ANAO recommended DITRDCA implements an overarching business plan or wholistic program-wide strategy; and that the governance committee appropriately monitors Artbank’s performance.
2.36DITRDCA told the Committee it was now reviewing the existing Artbank Charter to assist with creating an overarching program-wide strategy that would pull together the client leasing, art acquisition and public programming arms of Artbank, and this would also include a review of Artbank’s approach to rates setting. According to DITRDCA, the strategic review would: better link all of Artbank’s operations with CPR and PGPA Act requirements; ensure there is a cohesive strategic direction for the Artbank program supported by appropriate governance arrangements; and define appropriate performance measures against which to gauge the overall performance of Artbank. As part of this work, DITRDCA would also consider an appropriate integrity framework for the work undertaken by the Artbank program.
2.37DITRDCA advised the aim was to have the review completed by the end of 2023, with implementation of new and revised elements from 1 January 2024.
2.38The Artbank governance committee would meet quarterly and reports on relevant areas of program achievements and operations would be tabled for consideration.
Acquisitions
Audit findings
2.39Though procurement is a core activity of the Artbank program, the ANAO stated:
The department’s approach to acquisitions under the Artbank program has not been in accordance with the Commonwealth Procurement Rules (CPRs) and has not demonstrated strong alignment with the targets established in the program’s collection plan designed to illustrate the department’s strategy to deliver against the program’s policy intent. Key shortcomings in the acquisition approach were: no open or competitive processes; value for money not being documented or demonstrated; and limited public reporting. Alignment with the program’s purpose and objectives was not evident due to deviations from the department’s Collection Plan for the Artbank program.
2.40The audit found shortcomings across the procurement process, including in planning, identifying artworks to acquire, and recording procurement decisions and approvals.
2.41In general, the ANAO found the effectiveness of the Artbank program in supporting artists through its acquisitions has progressively declined over time—fewer artworks are being purchased; acquisition budgets have declined; and the cohorts of artists intended to be targeted through the Collection Plan are often not the artists actually targeted by the acquisition approach.
Planning the procurement
2.42Determining a need: Under the CPRs, procurement commences when a need has been identified and a decision made on the procurement requirement. Though the Artbank Collection Plan contains ‘five primary marker of breadth’ against which the collection profile is assessed to identify gaps to inform future acquisition decisions, it was not used to guide acquisition activity. Acquisitions have not demonstrated ‘strong alignment’ with targets (associated with the breadth markers) in the collection plan. More broadly, record keeping on the markers was incomplete—for some markers, no data had been collected. The ANAO’s analysis showed ‘the requirements established in the Collection Plan … were not effectively used to scope the individual procurements undertaken or any approaches to market’.
2.43Estimating the value of the procurement: Under DITRDCA’s procurement-related Accountable Authority Instruction (AAI), officials undertaking a procurement must comply with DITRDCA’s Procurement Guide and other relevant instructions, policies and procedures; and estimate the expected value of the procurement to determine the appropriate procurement method—open or limited tender. The consequence of these requirements is that procurements of more than $80,000 must be conducted by open tender and in accordance with Division 1 and Division 2 of the CPRs, unless the procurement is exempt under Appendix A of the CPRs or meets one of the conditions in paragraph 10.3 for limited tender.
2.44Selecting the procurement method: Under the relevant policies and legal requirements, officials are encouraged to conduct research to understand the market, including what competition exists, and determine the most appropriate approach to market. In addition to the estimated value of the artworks to be acquired, the ANAO suggested the fact the Artbank program is an artist support program is relevant when determining the most appropriate procurement method to adopt, as required by the CPRs.
2.45The ANAO found that despite the annual acquisitions budget being at least $400,000 over the past six years, providing a reliable estimate for the planning of procurement activities, acquisitions had been ad hoc and not undertaken in a coordinated or open approach. This approach, the ANAO stated, ‘is at odds with the CPRs and DITRDCA’s procurement guide’. Further, the research activities undertaken by Artbank staff (discussed below) are intended to identify artworks for purchase, not to inform decisions about the procurement method most appropriate to adopt.
2.46Approaching the market: DITRDCA’s Procurement Guide (August 2021) states procurement plans (which are approvals to approach the market) are mandatory for all procurements and must contain sufficient information on the project objectives, methodology and risk for the delegate to make an informed decision about whether undertaking the procurement would be value for money, this includes documenting and agreeing the procurement method to be used prior to approaching the market. The ANAO found approvals to approach the market (procurement plans) had not been documented for Artbank program-related procurement activities.
2.47Further, Artbank policies and strategy documents do not address how the art market is to be notified of a procurement opportunity or approached to participate. The ANAO found the policy and strategy documents do not ‘refer to, or otherwise seek to promote open, competitive and transparent processed’. As a consequence, Artbank has not undertaken coordinated approaches to market or open calls for submissions from artists or their representatives.
2.48The CPRs do not require artworks to be procured via open tender. However, the ANAO stated such an approach would provide artists fair and equitable access to opportunities to compete for the purchase of their work; and it would enhance transparency and integrity. In short, it would help ensure the Artbank procurement process was compliant with the requirements of the CPRs.
Identifying artworks to acquire
2.49Evaluating candidates for acquisition, including the value for money proposition: The CPRs stated entities should include relevant evaluation criteria in request documentation to enable the proper identification, assessment and comparison of submissions on a fair, common and appropriately transparent basis. The ANAO found the Artbank Acquisition Policy and Collection Plan contained the necessary information to develop an appraisal criteria for evaluating acquisitions.
2.50Assessing value for money, under the CPRs, requires consideration of whole of life costs (including initial purchase price, maintenance, decommissioning, remediation, disposal) and benefits, and fitness for purpose. Further, the ANAO stated Artbank’s specific business requirements included considerations such as: rentability, appeal to client base, alignment with collection goals, suitability to the rental nature of the collection, and collection management.
2.51The audit found procurements, when they occurred, were not open or transparent, and there was no competitive process. Officers visited galleries, biennales and art fairs, examined catalogues and contemporary art journals, received unsolicited proposals, applied their expert knowledge and identified work suitable for acquisition. This was undocumented. Artbank’s consideration of unsolicited proposals is not documented, they are not formally assessed or their associated risks outlined and reported on; it is not clear which or how many acquisitions have resulted from unsolicited proposals.
2.52The ANAO stated there is no transparent assessment and comparison of available artworks. Acquisition proposals are generated only for preferred artworks already determined by Artbank program officers. The ANAO found:
The proposals do not:
- consider alternative artworks, or alternatively, apply a score against a baseline standard expected for the program’s acquisitions;
- inform the delegate on how the work was identified and selected;
- include a value for money assessment; and
- apply weightings to the considerations provided by the three program teams. There is no evidence that comparative analysis is applied to the considerations and selection of artworks for acquisition to demonstrate competition.
- The report includes a case study of an acquisition meeting in September 2022, attended by 13 people, with three decision-makers identified in the records: Artbank Director, Curator, and Assistant Curator. The remaining staff participated in the discussion and voted on acquisition decisions.
- The format of this meeting had changed from previous meetings following the ANAO’s queries about written comparative evaluations and value for money assessments. DITRDCA’s adjusted its approach by recording in writing the group of artworks to be assessed and considered to determine which works to propose to the delegate for approval. The acquisition meeting was to discuss potential acquisitions identified at the Sydney Contemporary Art fair. Information on seven artworks from six artists were circulated beforehand to the attendees; an additional artwork was introduced during the meeting.
Records from the meeting indicate that votes were taken against each artwork, with staff in attendance to indicate whether they agreed that that artwork was suitable for the collection or not. While concerns and other comments were noted, they were not clearly linked to assessment criteria nor the expertise of the staff making the contribution … Where comments were reported to be ‘overwhelming yes’ there were no documented comments on the rentability, conservation needs/requirements of the work; alignment to Collection Plan; or any other value for money considerations.
Of the eight works considered in the meeting, six works were agreed by the majority of the officials in attendance to be ‘suitable for the Artbank Collection’.
It is not clear from these records how this suitability was determined; which of the six works were to proceed to Acquisition Proposal; at what point a value for money assessment would be completed; and how (and when) the Artbank Collection Plan and budget limitations would be considered when determining which works to acquire, and where these decisions would be recorded.
Recording procurement decisions and approvals
2.55DITRDCA’s procurement guide, which is consistent with the CPRs, requires the documentation of how value for money was considered and achieved to be sufficient to justify the recommendation to the delegate. The documentation should capture, under the CPRs, the requirement for the procurement; the process followed; how value for money was considered and achieved; relevant approvals; and relevant decisions and the basis for those decisions.
2.56The ANAO could not find records of approvals and the rationale for decisions, for all acquisitions, especially for artworks valued under $10,000. Further, the acquisition proposal template, required for all artworks since October 2018, does not include any reference to ensuring and recording how value for money was achieved in the absence of a competitive process.
Recommendations and response from Department
2.57The ANAO recommended DITRDCA develops a fit for purpose procurement framework, which is consistent with the CPRs, including open and transparent opportunities for artists to submit their artwork, with clear records made at each step. DITRDCA noted this recommendation, stating it ‘understands the Commonwealth Procurement Rules and is committed to abiding by them to ensure that acquisitions of artworks are made in compliance with the requirements …’
2.58As discussed above, the ANAO found there were several shortcomings in DITRDCA’s approach to acquisitions, including the lack of open or competitive process. The use of competitive procurement processes is required by the CPRs, which state:
Competition is a key element of the Australian Government’s procurement framework. Effective competition requires non-discrimination and the use of competitive procurement processes.
2.59The ANAO report suggested there ‘would be benefit’ in DITRDCA examining the acquisition approach taken by similar entities, such as the Canada Council Art Bank and entities such as the Australian Council, which employ open funding rounds and identify successful applicants through a peer assessment process.
2.60In evidence to the Committee, DITRDCA did not undertake to make any substantive changes to its procurement practices. DITRDCA stated open tendering was ‘not considered the primary procurement methodology’. Rather, procurement by limited tender was the predominant procurement methodology ‘as is the industry practice for most public art institutions’. As noted by the ANAO, Artbank is not a public art collecting institution.
2.61DITRDCA stated the Artbank team had ‘recently had a conversation with the Canadian Art Bank’ about their processes. It advised the Committee that as it agreed in 2006, while Artbank is ‘happy to also consider alternative processes to the one we have’, ‘realistically’ any alternative would be complementary. At the hearing DITRDCA stated maintaining the current arrangement ‘ensures that we can make sure that Artbank is complying with its broader charter’, though it is not clear how this is the case, given the shortcomings identified by the ANAO. In particular, the ANAO found that acquisitions are not strongly aligned with the program’s own collection plan and the effectiveness of Artbank in supporting artists through acquisitions has been progressively declining over time.
2.62DITRDCA further justified its approach by stating it was mindful it had to be careful ‘that … [the acquisition process] doesn’t become unwieldy and end up with poor results. A lot of the artists and works that are suitable for an Artbank arrangement are from galleries, and we'd need to be very careful about how that was working so that well-resourced galleries weren't the only source from any sort of process’. It is possible an open and competitive tender process where any artist could submit work for consideration could deal with the potential for the acquisition process to be dominated by well-resourced galleries.
2.63DITRDCA also contended a limited tender approach was consistent with the CPRs and provided for under Rule 10.3(d). The ANAO states this rule exists due to the ‘particular nature of artworks as original and unique articles (where there is no reasonable alternative or substitute)’.
2.64Rule 10.3, contained in Division 2 of the CPRs, is an exemption that allows for limited tender. Division 2 applies when a procurement exceeds $80,000. The CPRs are clear that ‘the rules set out in Division 2 are additional to those in Division 1 and must not be interpreted or applied in a manner that diminishes or negates Division 1 [emphasis in original]’. Division 1 contains the rules for all procurements, including: value for money; encouraging competition; conducting efficient, effective, economical and ethical procurement; and accountability and transparency. The CPRs state, ‘Officials of non-corporate Commonwealth entities must comply with the ‘rules for all procurements’ listed in Division 1, regardless of the procurement value’ [emphasis in original].
2.65In response to DITRDCA declining to accept recommendation 4 and justifying it through reference to Rule 10.3(d), the ANAO commented:
Rule 10.3(d) permits entities to conduct limited tenders for works of art ‘when the goods and services can be supplied only by a particular business and there is no reasonable alternative or substitute’. In considering the application of this Rule to the Artbank program, it is important to recognise that the focus of the Artbank program is on supporting contemporary Australian artists, including emerging artists, rather than seeking to acquire particular works of art.
2.66The Auditor-General confirmed to the Committee that while there is an exemption with respect to art, ‘… it was for collections purposes, not necessarily for an artist development program’.
2.67Regardless of whether Artbank legitimately applies Rule 10.3(d)(i) to avoid an open tender, under the CPRs, this rule cannot be used as a device to avoid undertaking a competitive procurement process.
2.68More generally, the Auditor-General told the Committee with regard to Artbank: ‘you'd expect to see a documented procurement strategy which explains why you've chosen [the procurement method] … if the objective of the program is to encourage new and emerging artists, how do you make sure that they know it's happening and that people understand the processes around it … If you're not doing an open tender process, the rules require you to put the rationale within the rules for why you're undertaking the procurement the way you are’.
2.69DITRDCA did commit to improved documentation, and stated:
- it had refined its acquisition processes, documentation and compliance measures by requiring explicit documentation of value-for-money considerations for acquisitions, and documenting the exhibitions, art fairs, catalogues and galleries visited to identify works for potential acquisitions
- curatorial meetings which discuss acquisitions are now minuted
- acquisition documentation has been revised to include: details of the artist, the artwork, artwork condition, rental accessibility, significance, evaluation against the criteria of the Artbank Collection Plan and Acquisition Policy, and a value-for-money assessment
- acquisition decisions are formally recorded and documented.
- Notwithstanding these actions, DITRDCA has not committed to undertake a comparative assessment of artworks, and it will not formally assess works not considered appropriate for procurement. DITRDCA confirmed to the Audit Office in November 2022 that only works intended for acquisition would be included in proposals ‘as it would not be possible to document every work reviewed by the team’. The basis upon which DITRDCA might demonstrate a competitive process in compliance with the CPRs remains unclear.
- When asked specifically to provide its methodology for assessing value for money, DITRDCA did not do so. The only information DITRDCA provided was that it was ‘enhancing capability around assessing value for money, through guidance material and dedicated Value for Money training, which was undertaken by SES employees in early 2022’.
- In terms of transparency and providing notice to the market, DITRDCA stated Artbank had:
- run a series of information sessions called Artbank Unpacked that educated galleries, attendees of galleries and artists in general about how Artbank manages its acquisitions
- provided a link in DITRDCA’s annual procurement plan to the Artbank website that contains the Collection Plan and the Acquisition Plan
- revising the Collection Plan to state the mechanisms for identifying works
- recently released an Artbank year in review—also on the website—which lists all acquisitions, including where they were purchased and the price
- included links on the website for represented and unrepresented artists that explain the Artbank process
- established a regular series of ‘Artbank Open’ events at the Sydney and Melbourne premises.
- In light of these actions, DITRDCA stated, ‘We feel that we're covering the breadth of the market through that. We also attend galleries off catalogues, art fairs and the like. We feel through that mix and consideration of alternate mechanisms that we'll cover the full breadth of the market’.
Collection management
Audit findings
2.74The ANAO found the management of the Artbank collection was insufficient to ensure the integrity of the collection and did not appropriately support artists or the reputation of Australian contemporary art:
- conservation activities are not consolidated, prioritised, committed and reviewed against a planned, wholistic schedule
- deaccessioning activities are not timely and rarely initiated, records of deaccessioning are unreliable
- integrity has been placed at risk by the absence of a policy to guide the management of digital or time-based artworks.
- Under DITRDCA’s Asset Accounting Policy, asset owners are responsible for the whole-of-life management of assets within their management area. The ANAO found ‘limited consistency’ between the asset management principles contained in the Asset Accounting Policy and Artbank’s management of the collection. The Audit Office could not find evidence of: asset disposal and life-cycle management being integrated into strategic and organisation planning; of asset planning decisions being based on an ‘evaluation of alternatives’; an effective control structure; clear accountability for asset condition, use and performance; or the principle of ‘best available net return’ guiding deaccessioning decisions.
Preservation and conservation
2.76It was noted by the ANAO that as Artbank is a lending collection, all artworks are income generating assets, ‘expected to be widely leased, transported frequently, and not held in storage for extended periods of time’. This means damage, loss and security preoccupations differ from those for a standard collecting institution.
2.77Artbank’s preservation activities are focussed on artworks being prepared for lease, returning from lease, or identified as having high prospect of rentability. However, the ANAO found the information from individual condition checks was not consolidated or used to develop a preservation or maintenance plan for the collection; and for a range of reasons, the requirement for conservation activities was mostly identified when artworks were being prepared for lease to clients. This truncated the timeframe for repairs and often resulted in a sole-sourced arrangement for the conservation activity or the work being leased in its current state and flagged for conservation at the end of the lease.
2.78The audit found that prior to 2019, conservation treatments undertaken on artworks had not been recorded centrally in the collection management system, and despite the 2019 Artbank Preservation Policy stating Artbank had an ‘ongoing and routine collection maintenance schedule’ to help ‘reduce the likelihood of serious damage to collection objects’, the Audit Office was unable to locate evidence this was the case. Absent a clear pipeline of conservation activity, the audit concluded it was difficult for DITRDCA to plan for and manage conservation activities more strategically.
Deaccessioning
2.79The audit identified deaccessioning as an ‘essential collection management process with the capacity to increase the funds available for acquisition and conservation’, and to manage and reduce ongoing expenses for conservation and storage.
2.80The ANAO found an update to the deaccession policy in October 2019 had raised the bar for deaccessioning and in so doing had limited the effectiveness of deaccessioning as a tool to manage the Artbank collection. Under the new policy, when an artwork has failed to lease for over ten years (previously, not leased to the full-term of the agreement for a period of five years), staff are to attempt to generate interest by reviewing lease fees and increasing the artwork’s visibility, prior to considering deaccession against five criteria. The deaccessioning policy also no longer encourages the consideration of whole-of-life costs in deaccession decision-making.
2.81The ANAO noted that in 2006, Artbank had a ‘vigorous and strategic approach to maintaining the integrity of the collection through its deaccessioning program’ in respect to non-significant artworks in the collection. This was no longer the case. The ANAO suggested, ‘a more active, systematic and strategic approach to deaccessioning would enable conservation and storage costs to be contained; and keep the collection manageable, appropriately sized, and suitable for renting’.
2.82Where deaccessions were approved, the audit found deficiencies in the implementation of approvals and failures to obtain approvals prior to the sale of some artworks. Of 425 artworks approved for deaccessioning prior to 2014, 424 were returned to the status of ‘accessioned’ in 2021 and at July 2022, 28 were on loan and 260 available for lease. The remaining 136 were under continuing consideration for deaccession or had been approved again for deaccession and were pending disposal.
2.83The ANAO also examined an April 2018 approval by the Chief Financial Officer of the disposal by sale of 77 artworks that contained no indication in the approval minute that 76 of the artworks had been sold at least four years earlier.
2.84In part because of Artbank’s deaccession process, which the ANAO said did not increase the public’s awareness of and appreciation for Australian contemporary art, the audit stated DITRDCA’s approach to collection management did not appropriately support artists or the reputation of Australian contemporary art.
Collection integrity
2.85Museum-standard registration practices of all individual objects and appropriate registration methods for recording technological items are required under Artbank’s Preservation Policy. However, the audit found 15 artworks in the Artbank collection were duplicated copies of 14 unique time-based digital artworks. Since 2012, Artbank had leased these 15 duplicate copies to six separate clients across 22 agreements, with one rented as recently as June 2022.
2.86The ANAO suggested the practice presented the following risks: overstatement of the collection; copyright implications; misleading clients who believed they were leasing a unique artwork; potential infringement of the artist’s intellectual property; and bringing the Artbank collection into disrepute.
2.87The Committee received evidence on this matter and had difficulty reconciling DITRDCA’s position that ‘multi-user leasing and duplicate copying of the video artworks could reasonably be implied based on a broad interpretation of the licence terms under the relevant Acquisition Agreements’; and internal communication within DITRDCA where the copies were identified as ‘rogue’.
2.88The Committee was told DITRDCA in 2019 had ‘amended its practice in relation to the treatment of video artworks to reflect industry best practice’ and duplicate copies that had been produced up until 2019 had been destroyed. However, as noted above, the Audit Office found one of the copies was on rent in June 2022.
2.89In August 2022, after queries were raised by the Audit Office, the director of the Artbank program advised staff:
Time based works we have in collection will now have 1 master file kept and ONLY 1 COPY to go to clients. The only possible exception is if we talk to the artist to get a licenced copy made, although this is not suggested. This is to be really clear.
All of the rogue copies which have been made over time will all be coming back and will be deaccessioned.
Recommendations and response from Department
2.90The ANAO made two recommendations with regard to collection management. The first was that DITRDCA develops a conservation work plan with a more strategic and systemic approach to the conservation (or deaccessioning) of artworks, and maintains accurate data on condition checking and conservation activities.
2.91DITRDCA did not agree with this recommendation, stating its existing conservation work plan and approach to conservation and deaccessioning of artworks was based on guidelines set by the world authority in this area, the International Council of Museums, and met industry practice. The approach recommended by the ANAO, DITRDCA believed, had significant resourcing implications for no discernible benefit. DITRDCA also stated the accuracy of its conservation and deaccessioning records was consistent with industry standard.
2.92The ANAO pointed out the conservation requirements for a program established to support contemporary artists by acquiring and leasing out their work differed in some important respects from those of a collecting institution, like a museum or art gallery. Artworks in a rental scheme are income generating assets expected to be leased and transported. Further, it stated DITRDCA’s practices did not in fact accord with guidance from the International Council of Museums.
2.93The audit also recommended DITRDCA revisits its deaccessioning policy to ensure it is consistent with the Artbank program objectives, including the maintenance of an appropriately sized collection that is suitable for leasing. DITRDCA declined to revise its deaccessioning policy, stating revisions would be considered from to time to time and the policy would be updated to reflect industry best practice and compliance with Commonwealth finance laws and policies. It stated Artbank’s collection size was sufficient and had fit-for-purpose storage.
2.94The ANAO responded that if Artbank’s collection size is sufficient, the rate of deaccession needed to reflect the rate of acquisition—this was not the case. It also pointed out that between 1 July 2015 and 30 June 2022, nearly 60 per cent of the collection was either not leased at all or had spent more time stored than rented and as such:
This situation indicates that an improved approach to deaccessioning would enable conservation and storage costs to be contained, improve the focus of the collection on work that is suitable for renting and (through sales) bring in additional revenue to enable greater support to be provided to emerging artists through new acquisitions.
Leasing
Audit findings
2.95The ANAO found both rental revenue and Artbank’s client base have been in decline since 2017–18, and DITRDCA’s approach to leasing the Artbank collection had not been appropriate:
- DITRDCA had leased approximately 40 percent of the collection where its target was 70 per cent; between 2015 and 2022, nearly 30 per cent of the collection was not leased at all, and 29 per cent spent more time stored than rented
- the recorded and advertised rental prices for over 50 per cent of the available artworks did not align to the most recent rent price calculator
- there had not been appropriate documentation of the approach to setting rental prices, including discounts; where there had been deviations from the pricing methodology, there was no recorded rationale as to why.
- The ANAO also stated:
Achievement of the full breadth of the program’s purpose has not been a focus, with no reporting to provide assurance that the department’s approach to leasing supports artists or the reputation of contemporary Australian art.
2.97The 2006 audit had found the pricing structure for artwork leasing ‘could be more closely aligned to a documented strategy of meeting [the Artbank program’s] objectives’. The ANAO could not find records that any such review or analysis was undertaken to ensure alignment between the pricing structure and the program’s strategies. The ANAO was of the view, ‘such a review would provide the department with assurance that all rental price considerations have been fully canvassed and carefully considered’.
2.98The audit also found DITRDCA measured the success of the leasing program by the number of artworks leased, and focused the program on supporting artists through new acquisitions. Artbank was established to ‘provide direct support to Australian contemporary artists through the acquisition of their work and to promote the value of Australian contemporary art to the broader public’.
2.99The ANAO found ‘the majority of the Artbank collection spends the majority of its available time in storage’ and the Business Plan does not include strategies to promote and activate interest in the unrented portion of the collection. This limits Artbank’s capacity, the ANAO wrote, to actively support artists or the reputation of Australian contemporary art.
2.100DITRDCA does not collect data on whether the display location for leased artworks is public or private. DITRDCA does not have a strategy to identify, target, and tailor offerings to clients that display leased works in public locations, to both support artists and the reputation of Australian contemporary art as required under the Charter.
2.101DITRDCA did not directly respond to a question from the Committee on whether it collected data on the display locations of leased artworks (that is, public or private locations). DITRDCA responded that lease agreements recorded the precise location of each artwork, including the institution address. DITRDCA said it placed ‘works in diverse non-museum settings to reach new audiences who might not visit traditional galleries or arts institutions’.
Recommendations and response from DITRDCA
2.102DITRDCA agreed to the two recommendations relating to leasing, specifically that it: undertakes a review of the rental pricing methodology; and reviews its approach to providing discounts.
Ethical behaviour
2.103Notably, despite the findings of the audit, in particular that acquisitions had not been in accordance with the CPRs and thus finance law, DITRDCA told the Committee ‘… the ANAO made no finding of unethical behaviour in relation to the management of Artbank …’ When asked to expand on this statement, a departmental official stated:
Certainly, the department would like everything it runs to be 100 per cent compliant with everything. That is the end goal of all frameworks and all governance, and it's certainly the goal of all integrity frameworks. There are some gaps that were identified in the audit report, and we've undertaken to fix and work on those and have an implementation plan to deliver on that. I guess it comes back to the question about whether we think there was anything that was being done deliberately or with malice, and our answer is: no, we do not think so. We think anything that was not fully compliant was either a misunderstanding or just a lack of documentation, or not necessarily understanding the full process, which could go back to simple things like training or documenting things.
2.104When asked again in a question on notice why DITRDCA was of the view there were no findings of unethical behaviour, DITRDCA did not answer the question and responded instead that it had a ‘focus on developing a pro-integrity culture which maintains the highest standard of ethical behaviour’.
2.105When asked to define ethical behaviour, DITRDCA stated it had adopted the APSC’s definition of integrity: ‘The pursuit of high standards of professionalism, which in turn means doing the right thing at the right time to deliver the best outcomes for Australia sought by the government of the day’.
2.106The Audit Office stated that in its experience, the existence of independent external audit, and the accompanying potential for scrutiny improves performance, and that improvements in administrative and management practices usually occur in anticipation of an audit, during audit engagement, as interim findings are made, and/or after the audit has been completed and formal findings are communicated. During the course of the audit of Artbank, the ANAO did not observe changes in DITRDCA’s approach to the acquisition, management and leasing of artworks by Artbank.