Art Gallery of NSW faces multimillion-dollar government funding shortfall

The Art Gallery of NSW is bracing for a looming financial crunch after the Minns government failed to provide any extra operational funding despite the institution doubling in size since the opening of its landmark new home for contemporary art.

More than one million visitors have poured through the doors since the opening of the 17,000-square-metre Sydney Modern building, next door to the gallery’s historic sandstone facility, in December last year.

But the 153-year-old gallery faces likely budget cuts should it fail to convince the Labor government of the need for millions of dollars in extra funding to cover increased staffing, energy and general operational costs.

The new wing at the Art Gallery of NSW.

Director Michael Brand told a parliamentary estimates hearing on Thursday that he was locked in discussions with Arts Minister John Graham and senior bureaucrats over a much-needed funding boost.

“We’re in discussion with the government to ensure we do have budget that allows us to keep the building open seven days a week and free of charge to the public,” he said.

The September state budget – the first for Labor since it returned to power after 12 years in opposition – allocated $40.6 million for the gallery’s running costs in the 2023-24 financial year, compared with $43 million allocated the previous year when its new campus had been opened for half the year, Brand said.

An “efficiency dividend” of about $3 million has also been applied to the gallery by the government as per previous years, the estimates hearing was told. An efficiency dividend represents an effective cut to funding.

Budget papers show the gallery has agreed to raise $40 million from its two gift shops, restaurants, private functions and box office to help its bottom line over the current financial year – four times the revenue it raised in 2022-23.

Cuts to staff and general entry fees were “pure speculation”, Brand told the hearing in response to a barrage of questions from Susan Carter, a Liberal member of the Legislative Council.

“If I buy a house that’s twice as big, my electricity bill doubles,” Carter told the hearing. “If I have an art gallery that is twice as big, what happens to its recurrent costs?”

Brand replied: “That is what we are currently discussing with the minister and the department.”

Earlier, Graham promised budgetary pressures would not lead to “creeping privatisation” of cultural institutions.

Historically, new or expanded cultural institutions have struck financial trouble in their second or third years of operations because the cost of running them is often greatly underestimated.

Sydney Modern was built with the support of taxpayers and private philanthropists, with some of Sydney’s wealthiest families contributing $109 million towards the project’s $344 million total cost.

Asked by Carter whether philanthropists may question whether to support the gallery if it did not enjoy enough government funding, Brand told the estimates hearing: “It’s very clear that benefactors like to contribute to a successful and popular institution.”

Cuts to staff and general entry fees were pure speculation, Michael Brand said.Credit: Nic Walker

“The reason behind the success of the Sydney Modern project is the ambition of our vision and our long track record of delivering a fantastic public art museum for Sydney,” he said. “That’s why they are on board. So it’s true that a successful institution attracts more support.”

Pressed on whether an insecure funding mix would make it harder to attract philanthropy in the future, Brand said: “Hypothetically, yes.”

Graham said the NSW government would continue to support the art gallery and help it reach its full potential as its new wing was integrated. “Those discussions are ongoing,” he said.

The gallery’s balance sheet shows that overall state funding last year topped $71 million, bolstered by COVID support and short-term loans covering private donations.

Under the Minns government, funding for operations has returned to around levels that presaged Sydney Modern’s opening when it was operating in its one building.

The Herald earlier this year revealed the National Gallery of Australia in Canberra had contemplated drastic measures including forced redundancies, the closure of the building two days a week and the possible reintroduction of entry fees to cover a serious federal government funding shortfall.

The Albanese government later awarded the NGA a $76 million “vitamin pill” to bolster its operations and an extra $42 million to fix its leaky building.

Arts Minister Tony Burke said the funding secured jobs and took “institutions back to where they should be – where the government delivers strong core funding and philanthropists take them to the next level”.

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