Art gallery wins more funding, faces more job cuts in tough NSW budget

The Art Gallery of NSW will receive “record” funding in the NSW budget but has been knocked back on its bid for a $17 million annual boost following a forensic audit of its finances.

A NSW Treasury review found the gallery’s landmark new home for contemporary art in December 2022 had failed to deliver a predicted boost to income from ticketed shows.

The Minns government said it was unprepared to meet the $8 million shortfall in the gallery’s forecast commercial revenues.

The north and south wings of the Art Gallery of NSW. Credit: Graphics

The audit flags leaner times for the 153-year-old gallery, which last year warned of a looming financial crunch if it could not cover its greater operational costs after doubling the footprint of its campus.

In March, The Sun-Herald revealed that Arts Minister John Graham had handed the gallery a one-off $12.1 million top-up payment to address a looming $16 million black hole.

The gallery has since announced a staff restructure, cutting the equivalent of 30 full-time positions.

NSW Treasury suggests 315 full-time staff is a “reasonable” number, some 30 fewer than currently employed at the gallery. The review found that before the latest cutbacks, the gallery had been operating at much higher staffing levels than comparable institutions.

Revenue from entrance fees and membership had halved since its $344 million expansion, the audit found.

The gallery held far fewer ticketed exhibitions than before the COVID lockdowns, and the new gallery spaces opened – seven in 2018–19 brought in 482,172 visitors compared to two in 2022–23, which attracted 155,760.

At times, the gallery had overspent on its allocated budget with tensions existing between its various compliance legislation.

The report warns that any overspending is a potential breach of the Government Sector Finance Act. The gallery maintains it has a robust financial governance framework led by its Board of Trustees, which ensures its resources are allocated efficiently, effectively and appropriately.

Since opening Sydney Modern, now known as Naala Badu, the gallery has welcomed more than 2 million visitors.

Taxpayers should not cover shortfall

Graham committed to lifting funding of the gallery to record levels at a time of tough economic conditions and belt-tightening. He did not specify the final budget figure, saying only that the allocation would exceed $100 million.

However, the Treasury strongly believed that taxpayers should not be left to cover the shortfall in the gallery’s commercial revenue targets.

“An increased budget allocation of $8.8 million is an appropriate level to meet core costs, including paying staff and ensuring the gallery remains free to enter for families and individuals and continues to be a free place of learning for our school children across NSW,” he said.

“The art gallery’s total approved expenditure budget has been increased by 83 per cent, from $58.8 million in 2017–18 to well over $100 million.

“Despite doubling its floor space through the opening of Sydney Modern, the review of its operation shows ticketed visitors are down.

“The gallery projected almost $21 million in ticket and membership revenue, but the reality has been closer to $13 million.

“In a budget environment in which families in NSW are doing it tough, the NSW government has a plan to build a better NSW, and we are committed to providing support to the creative sector, including the Art Gallery of NSW.”

The report recommended that the art gallery strike a balance between the government’s savings measures and the promotion of its new galleries in advertising and marketing.

At the same time, the review said the gallery faced a changed operating environment, with the unwinding of COVID restrictions impacting revenues and the cost-of-living squeeze shrinking the buying power of domestic visitors.

The gallery experienced significant costs, including collections management, digitisation and online storage, insurance, security, curation and building maintenance. The costs of organising exhibitions were also higher.

Apart from exhibitions, self-generated income from retail, merchandise, and food and drinks was also down and less than forecast.

The art gallery said its commercial revenue assumptions made in 2017 had proven challenging to meet in the post-COVID world, like for most organisations.

“Efficiency dividends imposed by government since then have also removed a further $8.5m from our budget allocation in financial year 2024, rising to $8.9 million in financial year 2025,” it said.

“The art gallery continues to balance its budget and spend within its government allocation and self-generated revenue.”

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