THE GST AND THEATRE

by David Spicer of David Spicer Productions
274 Military Road, Dover Heights, NSW 2030

08 August 1999

The Howard Government’s proposed Goods And Services Tax is set to radically change the administration of Australian
theatre for both professionals and amateurs. Doomsayers in professional ranks are predicting it will put great pressure on ticket
sales, and some amateur groups are concerned that the paper work will scare the wits out of volunteer Treasurers. However
following an exclusive briefing with the Federal Ministry of the Arts I can reveal a clearer picture of the changes. The first issue
to realise is that non-profit organisations such as amateur theatre, if their turnover is under $100,000 a year are entitled to NOT
charge a GST, on their ticket sales. This means most amateur theatre companies across Australia have the option of opting out
of the whole system. This will mean that amateur theatre ticket prices will be even more competitive against their professional
counterparts. However, as I will explain later, in some cases, amateur theatres , will apply a GST to their ticket prices . The
second issue is, will the public continue attending the arts for
steeper prices. According to the GST paper released by the Federal Government the cost of attending museums, libraries and
the arts will rise by 7.7 percent. This is higher than any other good or service, apart from Tobacco or Government
Administration. The reason is that the arts has never been taxed before and is entitled to as many rebates as other industries. 

The professional world is very worried. Take Opera Australia, it already costs more than $100 for an A reserve seat, and last
year the company still lost 4.6 million dollars. The Artistic Director Mophat Oxenbould says . “ We are in an extremely
competitive area. There is an enormous amount on offer. So anything that has the potential to increase prices has the potential
to impact us significantly in a negative way,” he said. So what will they do cut costs? “ We already have cut costs. You can’t
cut half the violin section, you can’t not have the wind instruments. This is incredibly labour intensive,” he said. The Executive
Producer of the Sydney Theatre Company Wayne Harrison. “ What we do in this industry is something very fragile. Even when
a Federal election is in the air, we see a drop on in casual ticket sales, the mark softens. Six months after, people are still
apprehensive, the market we work in is subject to allot of forces so anything that increases ticket prices is of great concern to
us, “ he said. The Minister for the Arts disagrees. Senator Richard Alston says after the GST was introduced into Canada,
there was a boost to the arts because people had more disposable income. “ If you talk about the increase of tickets, yes ticket
prices will increase, but so will the amount that people have in their pockets by a much higher proportion. So it does become a
judgment about what people will do with their discretionary income. And I think at the end of the day people will still continue
to p atronise the arts, because they enjoy them. No-one goes to the theatre, even to an amateur company performance because
this is $11 , but if it was $11.50 I would not go. They go because they want to go. At the end of the day if they have more
money in their pockets, why would they be less inclined to patronise a whole range of art forms.” he told Radio National’s Arts
Today. 

Then there is the issue of administration. As I explained before organisations with budgets under $100,000 can opt out. If you
put on shows for a few thousand dollars and the most of the inputs, labour, sets, equipment are donated then don’t bother. But
most medium to large groups, and that would include just about all musical societies should go through the process of applying
a GST. 

Here is why. The cost of many inputs that go into a production will increase. For instance hiring a venue, Building material for
sets, printing costs, hiring costumes and possibly also royalties. * Other costs such as make up will go down. What your club
has the option of doing is applying a GST to your ticket costs, and being able to keep some of this increase. Here is how. The
new system allows you to add up, all the GST you have paid on inputs to the business and deduct this from the GST you apply
to the outputs. So lets say your show costs $30,000 to stage. The costs for the production includes the payment in total of
$1400 in GST. You apply a GST to your ticket costs and raise $3000. At the end of the year you send a tax to Canberra of
only $1600. 

There is another option still. Lift your ticket prices to cover the increased cost of your inputs, but dont declare it is a GST,
because you dont have to. This protects your club and saves your Treasurer some bother. So lift your ticket prices from say
$16 to $17.50 and not many people will notice the difference. A spokesman for the Minister for Arts, told the GST will not be
an administrative nightmare, but rather will only involve a few keystrokes on a computer every three months. That remains to be
seen, but certainly the role of Treasurer will be more complex. This has not stopped amateur theatre from flourishing in New
Zealand, and should not do so in Australia.