An Artist Resale Royalty Scheme is being established to ensure the creators of visual art are recognised and rewarded when their work is resold on the secondary art market. Cabinet agreed to the establishment of this Scheme on 15 August 2022.
Standalone legislation has passed through the House, having been introduced on 29 March 2023. The Scheme will be established by late 2024.
Appointing a collection agency
The scheme will be managed by a collection agency who collect the royalties on resales, and then distribute them to the artist.
Manatū Taonga is currently in the process of appointing a collection agency.
The agency will be a non-profit, non-government organisation, and must be able to undertake the role and functions under the scheme’s legislation (the Resale Right for Visual Artists Act 2023). Manatū Taonga will be responsible for monitoring the performance of the collection agency.
The collection agency will need to be set-up and start administering the scheme by December 2024.
The three eligibility criteria that all applicants must meet are:
- Must hold a current New Zealand Aotearoa legal status
- Cannot operate for the purpose of profit-making
- Must have experience in the collection and distribution of funds from/to third parties.
Registration of Interest
Registration of Interest to be the collection agency to deliver the Artist Resale Royalty Scheme is now closed.
We are looking to partner with an organisation that has strong networks, existing capabilities, and a commitment to improving career sustainability for visual artists. We only expect to shortlist organisations that have a proven track record doing similar work.
The collection agency will be entitled to retain an administrative fee, made up of a percentage of the resale royalties that it collects. This has been set initially as 20%. It will also receive $0.954 million from Manatū Taonga across the first three and a half years to implement and embed the scheme. The administration fees are expected to make the service self-sustaining after the first three and a half years.
The Registration of Interest process is step one of the two-step application process. The Registration of Interest will identify interested organisations and assess eligibility and capability to deliver. This will result in a shortlist of organisations invited to progress to Step Two: Request for Proposal.
All eligible applications will be assessed by a six-member panel, including two external panel members representing the visual art and art market professional sectors
The Ministry is holding applicant briefings to talk about the purpose of the collection agency, the details (operational, financial, functions, timeframes, process and more), answer questions and have an open kōrero.
After the applicant briefings, the Ministry will open the procurement process for the collection agency. If you think that your organisation might be interested in applying to be the collection agency, we highly recommend attending one of the applicant briefings.
The applicant briefings will be held online on:
- 1-1.45pm Thursday 19 October
- 10-10.45am Tuesday 24 October
- 11-11.45am Friday 27 October.
You can register to attend by emailing [email protected].
Regulations design and feedback
Alongside the drafting of the Resale Right for Visual Artists Bill, Manatū Taonga has progressed work to design policy proposals for the Resale Right for Visual Artists Regulations.
These proposals were informed by research and modelling of the New Zealand art market, analysis of existing artist resale royalty schemes overseas, and similar royalty distribution schemes in New Zealand.
The Regulatory Impact Statement discusses the full range of options that were considered during the design of the proposals for regulations.
From October to December 2022, officials also engaged with two advisory groups (a General Advisory Group and a Toi Māori Advisory Group) to further inform these policy proposals.
The proposals were publicly consulted on in April-May 2023 via the Resale Right for Visual Artists Regulations discussion document.
During consultation, 22 people submitted on the regulations and an additional five made comments relevant to the regulations through the Select Committee process on the Resale Right for Visual Artists Bill. We took these submissions into account when designing the final proposals for the regulations.
Cabinet agreed the final proposals for the regulations on 21 August 2023. A summary of the proposals is available below.
These regulations will:
- Set the minimum threshold at which a royalty must be paid at $1,000 New Zealand dollars.
- Enable the collection agency to deduct 20 percent of the five percent royalty as an administrative fee, in return for collecting and distributing the royalty.
- Outline what the Minister must be satisfied of when making a decision on the appointment of the collection agency.
- Include detail on the collection and distribution of royalties, including the timeframes within which an art market professional must provide information on the sale and pay the royalty to the collection agency.
- Enable the collection agency to establish a cultural fund, and set out how undistributed royalties will be handled by the collection agency, including how long they must be held for.
- Outline how the collection agency must engage with participants in the scheme and the wider visual arts community.
- Require the collection agency to keep financial records and records of how the scheme is impacting artists, which must be provided to the monitoring agency (Manatū Taonga) regularly.
- Require the collection agency to have a formal complaints process.
Summary of proposals
A minimum threshold at which a royalty will be payable of $1,000.
An administrative fee (collected by the collection agency) of 20 percent of the five percent royalty.
Appointment of the collection agency
The Minister must be satisfied, before making a decision on the appointment of the collection agency, that the prospective collection agency can uphold the obligations in the Bill to:
- acknowledge and respect the role of Māori as tangata whenua and provide culturally appropriate support to Māori artists
- be inclusive of, and recognise the different needs of, all peoples in New Zealand.
Collection, holding and distribution of the royalty
The art market professional must provide information on the sale and pay the royalty to the collection agency within a certain timeframe (60 days).
The collection agency must have a publicly available royalty distribution policy that would have to include information on:
- how the royalty will be collected and distributed (including the timeframe within which royalties will be paid to right holders)
- how funds will be held prior to payment
The collection agency may establish and operate a cultural fund that would be used to support the career sustainability of the wider artistic community.
The structure and purpose of the cultural fund will be determined in consultation with right holders and the wider artistic community (as noted in the engagement section below).
Declined and unclaimed royalties
Declined and unclaimed royalties will be transferred to the cultural fund in the first instance, if there is one.
If there is no cultural fund, declined or unclaimed royalties will be returned to the liable parties who paid the royalties. If the liable parties cannot be found, the collection agency will retain the declined and unclaimed royalties to fund the costs of administering the scheme.
The collection agency must hold unclaimed royalties for six years.
Engagement with participants in the scheme
The collection agency must ensure that participants in the scheme are informed of key decisions and must seek feedback on any significant changes to the scheme’s operation.
The collection agency must determine, in consultation with right holders and the wider artistic community, the structure and purpose of the cultural fund, and review this periodically.
The collection agency must engage with Māori before making key decisions or significant changes to the operation of the scheme, including when determining the structure and purpose of the cultural fund.
Record-keeping and monitoring
The collection agency will keep financial records of resale royalty transactions and the financial position of the scheme, including operating expenses, admin fees collected, royalties collected and distributed and payments made to the cultural fund.
The collection agency will keep records of how the scheme is impacting artists, including the specific impacts on Māori and Pacific artists. This would include records of:
- how many Māori and Pacific artists received a royalty and the value of those royalties
- how the collection agency is engaging with Māori before making key decisions or significant changes to the operation of the scheme
- how many royalties were declined by artists or their estates
- what proportion of the cultural fund was made up of Māori and Pacific artists’ declined or unclaimed royalties
- any royalties paid into the cultural fund and how the cultural fund is being operated to benefit artists
- compliance with the scheme, including any complaints raised and how they have been resolved, and any enforcement action taken by the collection agency
- Māori and Pacific artists’ use of the complaints process and any enforcement action taken on behalf of Māori and Pacific artists.
Regulations would require the collection agency to:
- ensure right holders have reasonable access to copies of the records outlined above
- provide these records to the monitoring agency
- publish these records annually, with any personal or commercially sensitive information redacted.
- Note: The collection agency must collect and hold information in line with the Privacy Act 2020. In line with privacy principles, only information necessary to administer the scheme and meet reporting requirements would be collected from right holders.
The collection agency is required to establish a formal complaints process if it does not have one already.
Next steps and timing
Now that Cabinet has agreed to the regulations proposals, Manatū Taonga will be working with the Parliamentary Counsel Office to draft the regulations, which will be submitted to Cabinet later this year.
The Bill requires the scheme to commence by Order in Council on 1 December 2024 at the latest.
Updated on 23rd November 2023