The Arts Victoria review needs to address the Ombudsman’s profound critique of management. Next: Why Arts Victoria needs Better Managers.
A little-reported tender was posted on the Victorian Government’s tender site in June for a $100,000 engagement of Nous Group, prominent executives of which are Melbourne Lord Mayor, Robert Doyle, and Australian Arts Council board member, Tim Orton.
It was for, ‘Supporting Arts Victoria to undertake an organisational review, including the development of strategic direction and organisational change proposal.’
It’s a welcome development to see Arts Victoria’s strategic positioning being examined, if troubling to see that, as with past strategic reviews, it is being conducted internally with external assistance. I’m reminded of the strategic review of funding for organisations in 2011/12, conducted in the same way. Key staff admitted at the launch that the recommendations had not been tested through financial modelling to understand its implications in later years.
The tender has two elements: organisational change and strategic direction. In this article I will examine organisational change.
An organisational review of Arts Victoria provides the opportunity to both assess the progress made in remediating the deficiencies that have been exposed by two special government reports in recent years, and to talk about the sort of Arts Victoria that the arts in Victoria needs.
Two years ago the Victorian Ombudsman issued a profound critique of Arts Victoria’s management. His report was widely presented by the agency as dealing with an isolated incident involving the corrupt conduct of a procurement officer who had purchased 40 years supply of print toner even when the product had a 24 month life and was free or available at a lower price to the department under an existing contract. Yet the Ombudsman’s finding, although based on this event, stated clearly that the concern was about a culture at Arts Victoria which permitted the corrupt conduct to run unchecked and, it seemed, to deny responsibility for it.
A report by the State Services Authority into the Ombudsman’s findings was commissioned, the terms of reference for which made no mention of the Ombudsman’s concerns about the culture at Arts Victoria. Instead they focused on the nuts and bolts of the management systems and staff knowledge and practices. When the SSA report was tabled in November, 2011, the Department of Premier and Cabinet said the findings were that the corrupt conduct was ‘an isolated case’, ‘not systemic’ and the report ‘exonerated’ Arts Victoria. The word ‘exonerated’ was not used in the report and nor were the other claimed findings. The issue of a deficient culture was not examined.
Rather, it is more accurate to say that the SSA found no more instances of such fraudulent activity and a generally acceptable awareness among staff of procedural proprieties. It went on, however, to identify some deeply-rooted deficiencies in the management practices and procedures which had left Arts Victoria’s procurement systems wide open to exploitation by a corrupt staff member.
The SSA observed, for instance, ‘Key staff undertaking purchasing/procurement provided different versions of parts of the purchasing process.’ (p34) Further, ‘… there was a lack of segregation of duties at Arts Victoria … the purchasing officer involved had the ability to initiate, process, receipt and approve transactions.’ (p38) ‘Arts Victoria advised that [new supplier] checks are conducted by DTF …. However, DTF officers advised that … (it) … relies on Arts Victoria staff undertaking this verification. Accordingly … new supplier details and background … are not checked by either organisation.’ (p35)
It wasn’t just in financial management that poor management discipline was noted. Its core activity of grants management was also highlighted by the SSA as having serious shortcomings. The SSA reported ‘… there is no formal grants management system training available to staff at Arts Victoria …. Several of the Arts Victoria managers consulted … considered it would be useful to be provided with greater clarity regarding their responsibilities as a manager at Arts Victoria ….’ (p22)
Perhaps this is historical, but it arose under the current administration and serves as a powerful case for an organisational overhaul. And Arts Victoria committed at the time to improve its operations, making it a good time now for it to explain what progress has been accomplished.
The lack of management discipline exposed in the recent past is not the only reason why an organisational review is needed. A broader, more compelling, argument exists as to why the organisational structure of Arts Victoria should be reviewed under the guiding principle of how best to serve the arts in Victoria.
And by serving the arts I mean arts organisations, since Arts Victoria can but pull the levers; it’s the organisations that produce and deliver the product. At one end, the super novas, the NGVs, Melbourne Theatre Company, the Melbourne Symphony Orchestra, the Arts Centre and such are largely self-operating, governed by experienced boards and managers and they are the arts’ equivalent of our big banks – too big to fail. Their funding is a product of the Commonwealth/State agreement and it has essentially moved in lock-step with inflation for years. The role of Arts Victoria in this sector of the arts is mainly as a conduit to government.
At the other end are the myriad smaller organisations, the equivalent of small business and, like it, the engine of much of what is exciting and new in the arts. Major organisations which have come from these roots include the Comedy Festival, Heide Museum and Circus Oz.
Funding available for them is pitifully limited, even after allowing for their lack of infrastructure to support. Based on 2012 figures, 19 organisations shared just $2 million and a further 48, $7 million. As a result of the structure of the new Arts Organisations Investment program, 16 of the upper tier will join the 19 in vying for possibly just $1-2 million, resulting in compulsory defunding of many at the end of the first triennium, ineligible for any more because they have been there for three years.
Small they might be, but they account for a disproportionate amount of Arts Victoria’s work. It’s here that, in many ways, the true test of Arts Victoria’s capabilities is found. The arts at this level is a heart-palpitating, nerve-splicing struggle, yet an exhilarating place to be. After working for a year or more on a project, with inividuals playing multiple roles from artist procurement to ticketing, the entire investment might have to be justified by the performance on one night.
Small arts organisations are typically desperate for government funding and tend to focus on it partly because it’s obvious and specially allocated to the arts. But having a government department deciding on the distribution of grant money to community organisations is a fraught issue. The famous story of Ros Kelly, a Minister in the Hawke government, allocating grants to marginal seats on a White Board, was a lesson to all.
Arts Victoria is run by a director who reports to the head of the Department of Premier & Cabinet. This wires the organisation directly in to the political process. To remove the possibility of this influence extending to the allocation of grants, they are determined by a peer review process conducted under the auspices of Arts Victoria but independently of it. But there are questions about this process. How valid is it as a decision-making process in this day? How can complex financial, marketing and governance assessments be made by ephemeral groups without the participation of the best-informed people in the room? And while Arts Victoria is notionally hands-off in the decision making, it’s influence is considerable in screening applicants and providing briefings to panel members.
Perhaps most important, how do we ensure that funding decisions are made in line with overall arts policy when they are made by people who don’t administer the policy? And who is accountable for the decisions when Arts Victoria doesn’t make them?
The issue of accountability remains an important one. There is, of course, direct accountability – straight to the Arts Minister who has often also been the Premier. But the arts portfolio has typically lacked serious political weight. Large amounts of money for the arts are insignificant politically and don’t command political attention, especially for a minister who has significant other portfolio issues. In election campaigns, the arts are almost invisible.
The arts portfolio has at times seemed to be more of a diversion for Premiers and ministers, uninterested until the opportunity turns up to announce a grant or open a gala event. It’s a platform for political showmanship rather than a serious policy portfolio, vide the lack of an arts policy revamp in Victoria for how many years?
So the direct accountability of Arts Victoria is more on a structure chart than in practice. And the effect of the practice of spreading the limited available monies thinly over a large number of grant applicants, is both highly attractive to the politicians – many highlight local grants in their electorate newsletters – while insulating Arts Victoria from criticism within the sector.
Even those organisations that receive a few thousand dollars when tens of thousands are needed, dare not be critical of the hand that feeds them. Those who receive nothing live in hope that they might receive some next time. If they don’t show restraint, they almost surely will find themselves cut off at the knees, by whom it is not clear since grants are decided by peer groups. This writer is considerably shorter than he used to be.
Arts Victoria has a high degree of control over the allocation of funding across and within arts forms without ever having to publicly justify funding decisions, which it purports not to influence. The allocation of the overwhelming share of new arts funding in Victoria since 2006 to Victorian Opera occurred without a solitary published policy paper. Supposedly the champion of transparency and good governance, Arts Victoria does not even produce an annual report of its own financial performance and the information it reveals in DPC’s books is of little value.
The degree to which Arts Victoria has operated in an accountability vacuum was highlighted in the SSA report. It made continual reference to satisfaction among arts officers with their relationship with the Department while noting the unsatisfactory status of communication between the two. For instance, ‘DPC holds regular … meetings for Branch Directors … [which it is not] common practice for the Arts Victoria Deputy Directors to attend …. All Arts Victoria officers … identified themselves as working for DPC … DPC staff … often referred to [Arts Victoria] as a portfolio agency …. increas[ing] the sense of difference/distance between [the two].’ (p17)
Yet this is the body through which Arts Victoria is accountable to the Minister and Parliament. The SSA report reinforces the impression that Arts Victoria is unimportant within the context of the Department, while its notional inclusion as part of the Department allows it to slip below the radar of public scrutiny and sidestep the need to justify its performance.
An alternative model, with accountability as an essential element, would see the current hybrid agency/sub-department replaced with an independent statutory body. Its charter would be to develop for approval and, once approved by the Minister, implement the State’s arts policy. Arts officers would be appointed for their expertise in project evaluation and report, through a director, to a board which is appointed by government.
A key function would be to provide funded organisations with direct input from specialist personnel in formulating effective funding strategies. This is a less passive and reactive role which should result in a more dynamic contribution to the sustainability of arts organisations.
The board, in turn, would make decisions on funding allocations between sectors which it must publicly defend and hold the Director responsible for the quality of advice it receives. In addition, it would annually review in public papers and its annual report, the impact of current policy and funding activities.
The Australia Council has a not-dissimilar structure although its funding boards, the intermediate tier for funding approvals, operate on a peer-composition basis with members drawn from the industry sector that each board serves. That is also a possibility for a new organisational structure at Arts Victoria.
I mentioned earlier how concerning it is that this review, while supported by Nous Group, is still being run as an internal exercise. The senior team at Arts Victoria today is the same one that was responsible for the events that led to the Ombudsman’s report on corrupt conduct, the initial failure of Melbourne’s most significant new arts infrastructure project for twenty years, the Recital Centre, and the introduction of the new Organisations Investment Program which guarantees little new other than defunding of most of the successful applicants after three years.
It’s hard to comprehend that it can be given the responsibility for a strategic organisational review of itself but this could be a reflection of the ability of the organisation to stay under the radar of public scrutiny and the disappointing lack of significance of the arts at the political level. If this were the Victoria Police or the Office of Corrections, the public would demand a more independent and transparent approach from the government.
