Arts Funding in New Zealand

Why should government fund the arts? It should not do so because it wishes to prescribe (or proscribe) what artists produce. It should fund because it wants more art more, that is, than the market (private transactions between the artist and their public) would supply if left to itself. The market falls short because the consumption of art generates 'externalities' -- benefits to third parties whose interests may not be fully taken into account in private transactions. These external effects range from culturebuilding, through the value of the higher arts as an input to the applied arts and technology, to the educative role that consumption of the arts now has on our likelihood of being able to enjoy them in the future. Public benefits generally depend on the extent of private engagement in the arts, and policy and funding should therefore be aimed at fostering engagement _ not, as at present, be directed onto the artists themselves. The paper suggests a performance-based funding system which, at a relatively low administrative cost, would encourage artists and their producers to achieve higher levels of engagement by topping up their revenues from sales or box-office. The paper sketches applications of the funding system to literature, to the lively arts, and to the problematic 'glamorous megafauna' of the arts & culture scene, which currently soak up most of the arts budget. The paper also considers how to support avant garde art, which is probably not well suited to revenue based funding.