ARTSVICTORIASUBMISSION

February2008

TheRoleofArtsandCultureinLiveabilityandCompetitiveness

ASubmissiontotheVictorianCompetitionandEfficiencyCommission’sInquiryintoEnhancingVictoria’sLiveability

PreparedwiththeassistanceofDr.Chee-WahCheahMarionPowell

TABLEOFCONTENTS

1.EXECUTIVESUMMARY...... 1

2.INTRODUCTION...... 3

3.WHATISMEANT BY‘ARTSAND CULTURE’...... 3

4.ECONOMIC CHARACTERISTICS OFARTSANDCULTURE...... 5

4.1.PUBLIC/MERITGOODANDOPTIONDEMAND/EXISTENCEVALUE...... 5

4.2.EXTERNALITY...... 6

4.3.EQUITY...... 7

4.4.PUBLICEXPENDITUREONARTS...... 7

4.5.GOVERNMENT ROLE INARTSANDCULTURE...... 8

4.6.CULTURALCAPITAL...... 8

5.THEROLEOFARTSANDCULTUREINLIVEABILITYANDCOMPETITIVENESS9

5.1.CREATINGAUNIQUEANDDISTINCTIVEDESTINATION...... 12

5.2.CREATING‘SPACEANDPLACE’FORTHE‘CREATIVECLASS’...... 14

5.2.1.TheCreativeClassin Victoria...... 14

5.2.2.ImplicationsforRegionalVictoria’sLiveabilityandCompetitiveness...... 17

6.QUANTITATIVEANDQUALITATIVEEVIDENCE...... 18

6.1.QUANTITATIVEEVIDENCE...... 19

6.2.QUALITATIVE EVIDENCE...... 20

6.3.CONTINGENTVALUATION...... 21

APPENDIX A:VICTORIANGOVERNMENT’S ARTS PORTFOLIOCURRENTPOLICYINITIATIVE – CULTURAL PRECINCTS 22

A.1CULTURALPRECINCTS...... 22

A.2INFRASTRUCTURE ANDACTIVITY...... 23

A.3SOUTHBANKCULTURALPRECINCTREDEVELOPMENT–MELBOURNE’SCREATIVE CITYCOMPETITIVEADVANTAGE 24

A.4CULTURALPRECINCTSINREGIONALVICTORIAANDMELBOURNE’SGROWTHCORRIDORS 24

A.5CULTURALPRECINCTS–QUANTITATIVEEVIDENCE...... 25

A.6CULTURAL PRECINCTS–QUALITATIVEEVIDENCE...... 25

1.EXECUTIVE SUMMARY

Therearemanymeaningsof‘culture’rangingfromthebroadconceptsofa‘wayoflife’anda‘set of values, attitudesandwayofthinking’toanarrowerdefinitionwhichencompassesproductsandserviceswhichhaveeconomicvalueandaretradedinthemarketplace.

Thisnarrowerconceptofculture,whichiscommonlytoas“artsandculture”includesperformingarts,visualarts,literature,filmandnewmediaandculturalheritage.Governmenthasadirectinfluenceonthemarketsforthesegoodsandservicesand,inturn,hasanindirectinfluenceonthebroaderconceptsofculture.

Governmentsinterveneinthemarketforartsandculturalgoodsandservicesforsoundeconomicandsocialequityreasons.Therationalesfortheseinterventionsincludethecharacteristicswhichtheartsandculturedisplayasbothpublicgoodsandmeritgoodsandinordertoincreaseaccessonsocialequitygrounds.TheinterventionsbyGovernmentincludedirectprovision,subsidisationandregulation.

Liveabilityisabroadconceptwhichincludesacombinationofthesocial,cultural,economicandenvironmentalattributesofaplace.Theseattributesdeterminetheattractivenessofaplaceforbothresidentsandinvestors.

Theculturalattributesincludethequantity,qualityanddiversityoftheartsandculturalinfrastructure,activitiesandservicesonofferandareaccordinglykeyelementsoftheattractionofacityorregionasaplaceinwhichto“work,liveandinvest”.

Thereisincreasedcompetition,nationallyandinternationally,betweencitiesandbetweenregionstoattractnewresidentsandnewbusinesses.

Artsandculturecancreateacompetitiveadvantageforacityorregionspecificallyby:

•creatingormaintainingauniqueanddistinctiveimageforacityorregion;and

•increasingthe‘drawingpower’ofacityorregiontoattracttheso-called“creativeclass”.

Artsandculturecontributedirectlytothe“senseofplace”whichattractsbothresidentsandbusiness.Thereisamergingbetweentheattributesofacityorregionthatareseenbyindividualsasofferingthemabetterqualityoflife,orliveability,andthoseattributesthatareseenbyinvestorsorbusinessesasofferingthemcompetitiveadvantage,thatis,contributingtothecityorregion’scompetitiveness.

Vibrantanddiverseactivitiesareanimportantcontributiontothelivelinessandvitalityofanurbanenvironment.

Theartsalsocontributetowell-designedpublicspacemakingalocalenvironmentmoreattractiveandaccessible.Engagementwiththelocalcommunityinthedevelopmentanddesignofpublicartworkscreatespublicspaceswherepeople want to meet; enrichesurbanregenerationprojects;anddistinctlybrandsaregionorsuburbasadestinationfornewresidents,touristsandbusiness.

Thereisanincreasingbodyofevidence,bothquantitativeandqualitative,onthepositivecontributionofartsandculturetoacity’sorregion’sliveabilityandhencetoitscompetitiveadvantage.Inparticular,inregionalcentres,thepresenceofadiversifiedlifestyleandculturalchoices,isakeydriverofhigheconomicperformance.

ThereisfurtherevidencethatMelbournehasadistinctiveimageasaninternationalcentreofinnovation,includinginnovationinartsandculture.Melbourneiswell-placedtobuildfurtheronthissoundreputation,continuingtoattractnewresidentsandnewinvestment.RegionalcitiesinVictoriaarealsoinvestinginculturalinfrastructureandactivitiestocreatevibrantanddiverselocalculturalofferingsattractivetonewresidents.

RegionalVictoriaandMelbournescorewellontheRichardFloridaartisticandcreativityindicesindicatingafurtherstrongcompetitiveadvantageinattractingthe‘creativeclass’andtheconsequentpositiveeconomicflowon.

ArtsVictoria,theVictorianGovernment’sartsdevelopmentagencyiscurrentlypursuingpolicyinitiativesinsupportofthecontributionofartsandculturetoliveabilityandcompetitiveness.Investmentinculturalprecincts,includingamajordevelopmentinSouthbankandotherdevelopmentsinsuburbanandregionalareas,alongwithsupportforvibrantanddiverseprogramming,isenhancingthereputationandattractivenessofVictoriaasaplaceinwhichpeoplewanttolive,workandinvest.

Recommendation

ThissubmissionrecommendsthatVCEC:

1.includesaculturaldimensionintegratedwiththesocial,economicandenvironmentalelementsofaconceptualdefinitionofliveability;

2.incorporatesintoanymeasurementofliveabilityallfouroftheelements(social,economic,environmentalandcultural)andthewayinwhichtheseelementsareinter-related;

3.notestheevidenceoftheclearlinkbetweenthecontributionofartsandculturetoliveability,inparticular,inrelationto:

•strategicallypositioningMelbourneasaninternationalcentreforinnovationandasaculturaltourismdestination;and

•creating/maintaining Melbourne, suburban and regional communities asattractivetonewresidents,familiesandbusinesses;

4.notesthecontributionofartsandculturetohighqualityurbandesign;and

5.endorses thecurrent policyinitiativesbeingpursuedbytheVictorianGovernment’sartsportfolioinrelationtovibrantanddiverseartsandculturalprecincts.

2.INTRODUCTION

OneofthefocalpointsoftheVictorianCompetitionandEfficiencyCommission’s(VCEC)InquiryintoEnhancingVictoria’sLiveabilityisthelinkbetweenliveabilityandVictoria’scompetitiveness.

Thissubmissionfocusesonwhyandhow:

•Artsandculturearekeycontributorstoliveability.

•Victoria’sculturalassetsandresourcesshouldbeharnessedtofosterandenhancethecompetitivenessoftheStateinanincreasinglyglobalisedeconomy.

Thesubmissionisstructuredasfollows:

•Section3commentsontheconceptofartsandculture.

•Section4commentsontheeconomiccharacteristicsofartsandculture.

•Section 5 explains why and how arts and culture contribute to liveability andcompetitiveness.

•Section6providesexamplesofboththequantitativeandqualitativeevidenceonthepositiveimpactofartsandcultureintheeconomy.

•InformationontheVictorianGovernment’scurrentartspolicyforwardinitiativesinrelationtoculturalprecinctsisprovidedinAppendixA.

3.WHATISMEANTBY‘ARTSANDCULTURE’

Theconceptof‘culture’isamultifacetedone.

•Cultureasa‘wayoflife’

Cultureasa‘wayoflife’iscommonlyunderstoodasreferringtothelocaltraditionsofpublic/social life,festivals, creativeexpression,artisticactivities,skills,and traditionalknowledgeaswellasfood,sportandlanguagethatareapartofthelivesofpeople(andsocieties);andwhichprovideabasisforsocialengagementandenterprisedevelopment.

•Cultureasa‘setofvalues,attitudesandwayofthinking’

Cultureinthissenseofthewordreferstothesociologicalfactors(viz.thesetofvalues,beliefs,knowledge,andpractices)thatarecommontoorsharedbymembersofaparticulargroupataparticularlypointintime.1

1Theparticulargroup in questionmaybe delineated furtherintermsof politics,geography, religion, ethnicity orsomeothercharacteristics.SeeD.Throsby(2001)EconomicsandCulture,Oxford:CambridgeUniversityPress,p.4.

•Cultureasasetofproductsandservices

Thisviewofculturetakesafunctionalperspective.Allculturalproductsandserviceshavedefinableeconomiccharacteristics.Whatdistinguishesthemfromothergoodsandservicesisthattheirproductioninvolvessomeformofcreativityandthegeneration andcommunicationof symbolic meaning. Culturalproductsand servicesembody(orpotentiallyembody)someformofintellectualproperty.2

Thefocusofthissubmissionisonthethird conceptofculturewhichwillbereferredtointhissubmissionas“artsandculture”.TheVictorianGovernment’sartsportfoliohasadirectroletoplayinthepromotionanddevelopmentofculturesodefined,inparticularinrelationtoissuesofliveability.Althoughthefocusofthissubmissionisoncultureasasetofproductsandservices,itisacknowledgedthatGovernmenthasanindirectrelationshiptocultureasawayoflife,aswellasasetofvaluesandwayofthinking.

Theliteratureonculturaleconomicsmakesafurtherdistinctionbetweenartsandculturalsectors:

•theperformingarts,e.g.music,theatre,opera,dance,circus;

•thevisualarts,e.g.paintings,sculpture,artobjects;

•filmandnewmedia,e.g.,movies,televisionand,morerecently,productsontheInternetandhand-helddevices;

•literature,e.g.,books,magazines;and

•culturalheritage,e.g.museums,historicalbuildings,monumentsandsites,andtheircollections.

ArtsVictoriahasapolicyadvisoryandimplementationroleinallofthesesectorsoftheculturaleconomyofVictoria,theoutputsofwhichincludebothproductsandservices.

Specifically,ArtsVictoriaoverseesthestate-ownedArtsCentreandtheGeelongPerformingArtsCentre(intheperformingartssector),theNationalGalleryofVictoria(inthevisualartsandculturalheritagesectors),MuseumVictoria(intheculturalheritagesector),theStateLibraryofVictoria(intheliteratureandculturalheritagesectors)andAustralianCentrefortheMovingImage(inthenewmediaandculturalheritagesectors).

ArtsVictoriaalsosupportsthenon-Governmentsectorthroughfundingandothersupportprograms.Individualartistsandartsandcommunityorganisationsareassistedtocreateandpresentnewworksandtotourworkregionallyandinternationally.

Themeaningofculture,asitis(orbecomes)understood,evolvesandchangeswiththedevelopmentofaplace(i.e.acity,townorprovincialcentre).Forexample,therehasbeenapolicyfocusinMelbourneoncreating“hard”culturalinfrastructuresuchasgalleries,performancevenues(andevensportstadiums).Morerecently,thefocushasshiftedtoimproving andenhancing theattractivenessandquality of lifein Melbourne(suchasstreetentertainment,nightlifeandissuesofsecurityandsafety).VCEC’sinquirybearstestimonytothisshiftinpolicyfocus.

2Throsby,opcit,p.4. SeeV.A.Ginsberg(2001),“TheEconomicsofArtsandCulture”inN.SmelserandP.Baltes(eds.)InternationalEncyclopaediaoftheSocialandBehaviouralSciences,Amsterdam:Elsevier.

Thus,itisimportanttoembraceamultifacetedconceptofcultureinordertohaveabetterunderstandingofitslinkswithandcontributiontoVictoria’sliveabilityandcompetitiveness.

Inadditiontounderstandingwhatculturemeans,itisalsoimportanttoknow‘howto’workeffectivelyandstrategicallywithinthecomplexitiesofculture–namelytheneedtoidentify,celebrate and projectcultural pluralityand distinctiveness.These aspects of “soft” culturalinfrastructureencouragenetworkingandcreativity.

4.ECONOMICCHARACTERISTICSOFARTSANDCULTURE

Itiswell-establishedineconomicsliteraturethatthemarketcanfailtooperateefficientlywhentheproduct(orservice)inquestionhastheeconomiccharacteristicsofapublic/meritgood;orwhenthereareexternalitiesassociatedwithitsproductionorconsumption;orwhenthegoodhasanoptiondemand/existencevalue.

Oneoracombinationofthesecharacteristicsispresentinthecaseofmost(butnotall)artsandculturalgoodsandservices.

Asinthecaseofanyproductswithsuchcharacteristics,Governmentcanandshouldplayaroleinaddressingtheextantorpotentialmarketfailureinrelationtoartsandculturalgoodsandservices.Governmentcanandshouldalsoplayaroleinensuringequitableaccesstosuch goods andservicesbyallconsumers.Inthisregard,theform ofGovernmentintervention–whichincludesdirectprovision,subsidisationandregulation-shouldbeonethatwillorislikelytoresultinmakingsocietyasawholebetter-off,i.e.ensuringthatthesocialbenefitstobegainedfrominterventionexceedtheattendantsocialcostsofintervention.

4.1.PUBLIC/MERITGOODANDOPTIONDEMAND/EXISTENCEVALUE

A(pure)publicgoodisoneforwhichthebenefitsthatarederivedfromitsusageorconsumption(byanyperson)arenon-excludableandnon-rivalrous.

Non-excludabilitymeansoncethegoodisproduced,asupplierisunabletoeconomicallyexcludeortechnicallypreventthosewhodonotorarenotwillingtopayforthegoodfromenjoyingthebenefitsofthatgood.

Non-rivalrousmeansthatanynumberofpersonsmayenjoythebenefitsofthegoodwithoutreducinginanywaythebenefitsthatremainavailabletoallotherpersons.

Allartsandculturalgoodsarenon-rivalrous,andmost(butnotall)arenon-excludable.Thusanartsorculturalproductisapublicgood,orattheveryleast,aquasipublicgood(seeTable1below).Forexample,eventhoughonehastobuyatickettogainentrancetoanopera(i.e.itisexcludable),theattendanceofthispersondoesnotdiminishinanywaythebenefitsthatareprovidedandenjoyedbyeveryoneattendingthatopera(i.e.itisnon-rivalrous).

Table1.Consumptioncharacteristicsofaneconomicgood

Excludable / Non-excludable
Rivalrousconsumption / Privategood(e.g.ahamburger) / Commonpropertyresource(e.g.apublicbeach)
Non-rivalrousconsumption / Quasipublicgood(e.g.anopera,abook) / Purepublicgood(e.g.heritagebuilding)

Insofarasartsandculturalgoodsareintrinsicallydesirable,upliftingorsociallyvaluable,theymayalsobeconsideredas“meritgoods”forthesamereasonwhyeducationissometimesreferredto(intheliteratureonpubliceconomics)asameritgood;viz.agoodwhich,iflefttothedecisionofanindividual,maynotbeconsumedatthe“right”amountbecauseofthatperson’sinabilitytofullyevaluateandmakeaninformedchoiceaboutthebenefitsofthatgood.Similarly,ifallconsumersarelefttothemselves,theymaynotmakethe“right”choicestopurchasethe“appropriate”quantitiesofartsandculturalgoods.Governmentshouldthereforepromoteorsupporttheprovisionofartsandcultureasameritgoodforthereasonthatdoingsowouldimprovethecollectivewelfareofpeople insocietymorethanifrelianceweretobeplacedontheindividualchoicesofpeople.

Thereisafurthersubsidiaryfeatureof‘publicness’stemmingfromtheoptiondemand/existencevalueofanartsorculturalproduct.Onceanartsobjectorculturalproductiscreated,peopleplaceapositivevalueonitsexistence(overandaboveitseconomicorcommercialvalue).Forexample,apersonmayperceiveasymphonyorchestratohaveapositiveexistencevalueeventhoughthatpersonmayconsideritunlikelythats/hewillattendaperformance.

4.2.EXTERNALITY

Anexternalityisthedirecteffect(eitherpositiveornegative)thatoneperson’sactionsordecisions (with regardsto consumptionorproduction)haveonthe economic well-being ofotherpersons.Apositive(negative)externalityoccurswhensomeoneotherthanthepersonwhoconsumedorproducedthegoodreceivesabenefit(bearsthecost);andthatbenefit(cost)isnotreflectedinthemarketpriceforthegoodorservice.

Theconsumptionorproductionofanartsandculturalgoodwilldefinitelybenefittheindividualpersonwhoconsumesorproducesthatgood.Butitwillalsohavepositivesocialandeconomicrepercussionsonallwithinacommunity,e.g.strongerculturalidentityandsocialcohesion.3Ifthesebenefits(positiveexternalities)arenotfullytakenintoaccount,thentheconsumptionorproductionoftheartsandculturalgoodinquestionwilltendtobelowerthanthesociallyoptimallevel.4

Asanotherexample,majorartsfestivalsandeventsgenerateeconomicactivityintherelatedtourism,travelandhospitalitysectors.AnalysisofMelbourneWinterMasterpieces‘block-

3See,forexample,JDayton-Johnson(2000),What’sDifferentaboutCultural Products?:AnEconomicFrameworkOttawa:CanadianHeritage.

4Thequantitativeliteratureusestheterm“leakage”torefertothebenefitsconferreduponthosewhodonotresideinthespatialareaorwhoare notmembersofthegroupforwhichthearts/culturalprojectisintendedtobenefit.Forexample,thebenefitsofalocalartsfestivalaccruetolocalresidents,butvisitorsandtouristswillalsoenjoythebenefits.Itisinthissensethattheartsfestivalissaidtohavegeneratedpositiveexternalities.

buster’exhibitionsattheNationalGalleryofVictoria,indicatesthatover$64millionofeconomicactivitywasgeneratedbythefirstthreeexhibitions:TheImpressionists(2004),DutchMasters(2005),andPicasso:LoveandWar(2006).5TheprivatebenefitsenjoyedbythosewhopaidforadmissiontotheseexhibitionsdonotfullyreflectthecollectivebenefitstotheVictorianeconomyandcommunityasawhole.Inotherwords,theartseventhasgeneratedapositiveexternality(orspillovereffect).

Itiswell-knownineconomicsthatwhenagoodorserviceis“under-priced”(i.e.pricedatalevelthatdoesnottakeintoaccountthefullbenefitsofthatgood),theproductionofthatgoodwillbelessthanthesociallyoptimallevelofproduction.

ThusGovernmentcanandshouldplayaroleinensuringthatthepositiveexternalitiesfromartsandculturalactivitiesaretakenintoaccountbytheorganisersandfundersofsuchactivities.

4.3.EQUITY

Giventhe public(and quasi-public) nature ofartsand culturalgoods, Government canandshouldforequityreasons,ensurethatsuchgoodsaremadeaccessibletoallconsumers,includingthosewithlowincomesandwhocannotaffordtopay(evenwhentheyarewillingtopay).

4.4.PUBLICEXPENDITUREONARTS

InasurveyconductedbyWithersetal,itwasfoundthattheAustraliancommunity(asawhole)acknowledgedandagreedwiththe“marketfailure”rationaleforpublicinterventionintheartssector:6

•Morethan75%ofrespondentstothesurveyacceptedthepublicgoods/externalitiesrationaleforarts.

•82%acceptedthemeritgoodrationale.

•Almostall(97%)ofrespondentsagreedwiththeoptiondemand/existencevalueargument.7

Itwasalsofoundthatmorethanhalf(53.2%)ofthepeoplesurveyedperceivedbenefitsfrompublicexpenditureson“artsandpublicbroadcasting”.Further,thesurveydatasuggestedtheAustraliancommunityis“willing-to-pay”morefor“artsandpublicbroadcasting”.“Informed”respondents(i.e.afterbeinginformedoftheiractualtaxliabilities)demonstratedawillingness-to-pay7%morethanwhattheyhaveactually“paid”asmeasuredbytheiractualtaxliabilities.

5MinisterfortheArts,LynneKosky,pressrelease,Melbourne’sWinterMasterpiecesattractonemillionvisitors,(22August2007)

6G.Withers,D.ThrosbyandK.Johnston(1994),“PublicExpendituresinAustralia”,EPACPaperNo.3,AGPS,Canberra,October2004.

7Someartisticorculturalgoodsorservicesmayhaveeconomicandculturalvaluesthatareyettobeevident.Hence theneedtokeepoptionsopenforthefuture.Existencevaluereferstothebenefits a communityderivessimplyfromtheknowledgethatagoodorserviceexists.

4.5.GOVERNMENTROLEINARTSANDCULTURE

Governmentplaysasupportingroleinthemarketforculturalgoodsandservicesusingpolicyinstrumentscommontootherareasofmarketactivitythataresubjectto‘marketfailure’;viz.

•Directprovision

MajorState-ownedculturalinstitutions,establishedandoperatingunderlegislation,curateanddisplayexhibitionsfromtheStatecollections.

•Subsidisation

Subsidiesareprovidedtonon-Governmentartsorganisationstoenableticketandadmissionpricestoremainlowtherebyincreasingaccesstothearts.

•Regulation

Localcontentrulesforcommercialtelevisiondramaandchildren’sprogramsandrequirementsforapercentageofmajorbuildingbudgetstobespentonpublicartworksaretworegulatorymechanismsforsupportingartsactivity.

4.6.CULTURALCAPITAL

Culturalcapitalreferstoanassetthatembodies,stores,orprovidesculturalvalueinadditiontowhatevereconomicvalueitmaypossess.AccordingtoThrosby(2002),culturalcapitalinitstangibleform(e.g.aworkofart,aheritagebuilding,location,sites,precincts,films,recordings,artefacts)iscreatedbyhumanactivity,lastsforaperiodoftime,candecaywithoutmaintenance,givesrisetoaflowofservicesovertime,canincreasewithinvestmentofcurrentresources,andcangenerallybeboughtandsold.8Forexample,aworkofartwillcertainlyhavecommercialvalue(irrespectiveofitsculturalworth),butitisimportanttorecognisethatthecommercialvaluemayormaynotbefullyreflectedintheculturalvalueintermsofitsaesthetic,symbolicorothercharacteristics.

Itisimportant,forreasonsofculturalheritageandidentity,thattheexistingstockofculturalcapitalis preserved, maintained and protectedforfuture generations to come.The conceptof“culturalsustainability”issimilartothatfortheenvironment,viz.meetingtheculturalneedsofthe presentgenerationwithoutcompromisingthecapacity offuturegenerationsinmeetingtheirownneeds.Likewise,theprinciplesofculturalsustainabilitymaybedrawninparalleltothosethatareappliedearnestlyinmanagingtheenvironment:

•Theprincipleofintergenerationalequity(i.e.treatmentofdifferentgenerationsovertime)imposesadutyofcareonthepresentgenerationinmanagingthestockofculturalcapitalthatistobepassedontofuturegenerations.

•Theprincipleofintra-generationalequity(i.e.equitywithinthepresentgeneration)impliesequalaccesstobothtangibleandintangibleculturalcapitalacrosssocialclasses,incomegroups,andlocation.

8D.Throsby(2002),“Culturalcapitalandsustainabledevelopment:Howdoesculturalcapitalpromoteurbandevelopment?”,unpublishedpaperpresentedataseminarintheFacultyofEconomics,SaitamaNationalUniversity,Tokyoon25November2002.

•Theprincipleofculturaldiversitywillaccordduerecognitionoftheoptionorexistencevalueofdiverseartisticandculturalservices.

•Theprecautionaryprinciplewouldsuggesttheadoptionofahighlyrisk-aversestanceinmakingdecisionsthatmaycauseirreversibledamagetothestockofculturalcapital,e.g.demolitionofhistoricbuildings.

Inparalleltotheconceptofculturalsustainability,therearestrongargumentsputforwardthattheartsandculturalsectoroperatesasan“eco-system”.Anyhealthyandvibrantartssectorrequiresadynamicbalancebetweenmajorinstitutions,establishedcompanies,risk-takingsmallerenterprisesandindividualartistsfromdiversebackgrounds.Characteristicsofasustainableartssectorincludeabalanceofscaleoforganisations,clearcareerpathways,asharedunderstandingofthedynamicsofthesectorandahealthyecologyatalllevelsencompassingeducation,communityengagement,fundedandcommercialactivities;andthecapacitytoproducearangeofhighqualityandvaluedartisticproductsandservices.9

5.THEROLEOFARTSANDCULTUREINLIVEABILITYANDCOMPETITIVENESS

As noted inVCEC’s Issues Paper, theconcept of liveability has“nopreciseor universallyagreeddefinition…mostpeoplecouldprobablyacceptthatliveabilityembracesnotionssuchasqualityoflife,the‘character’ofaplace,thehealthofcommunitiesandsustainability.Itisarelativeconceptandwillinvariablymeandifferentthingstodifferentpeople,butitembodiessocial,economicandenvironmentaldimensions”(p.4).

Thissubmissionagreeswiththispositionbut,importantly,withtheaddeddimensionofaculturalattribute.

Further,ratherthanarisingfromaspecific(orasetofspecific)attributes,thenotionofliveabilityofacity,suburbancentreorprovincialcentre,hasmoretodowiththecombinationofsocial,cultural,economicandenvironmentalattributes.

Theattributesofalocation(beitacity,town,regionalcentre)thatmakeitanattractiveplacetoliveinclude:

•tangiblefeaturessuchastheexistenceofpublicinfrastructure(publicspaces,urbantransit,availabilityofhealthandeducationservices,effectivemeansforprovidingcleanairandwater,efficientsanitationandwastedisposal);and

•intangiblefeaturessuchasasenseofplace,adistinctivelocalidentity,well-establishedsocialnetworks.

Furthermore,themanifestbehaviourofacity’spopulation,e.g.activecivicparticipation,andactiveculturalandrecreationalinvolvements(suchasartistic productionandconsumption)canbetakenassignsofresponsivenesstoaliveableenvironment.10Acitythathasacombinationofsocial,cultural,environmentalandeconomicattributesthatmeetsthe

9CHuntandPShaw(2008),Asustainableartssector:Whatwillittake?,PlatformPapersNo.15,CurrencyHouse.

10D.Throsby(2005),“Culturalheritageasfinancialassetinstrategiesforurbandevelopmentandpovertyalleviation”unpublishedpaperpresentedatInternationalConferenceforIntegratingUrbanKnowledgeandPrac-tice,Gothenburg,Sweden,May29-June3,2005.

aspirationsofitsresidents will,inturn,stronglyinfluencetheirperceptionofthequalityofthecity(metropolitanorregional)inwhichtheyreside.

Melbournehasestablishedandmaintaineditsreputationforartsandculture,asshownbytheresultsoftheBrandHealthSurvey1996-2007(conductedbyRoyMorganResearch):11

•Melbourneisseenastheleadingcapitalcityfortheatresince1996.

•Since 2005, Melbourne has the reputation of being the leading “city-host” ofinternationalsportingandculturalevents.

•MelbournehasabettercitynightlifethanSydney.

•Melbournehas(nexttoSydney)interestinganddiverseregionalexperienceswithin1.5hoursfromthecity.

Generallyspeaking,the“identity”ofacity(likeMelbourne)hasverylittletodowiththeeconomicandcommercialfunctionsitspecialisesinorthephaseofitsgrowthanddevelopment.Acityisconsideredtobeamoreattractiveandrewardingplaceto“work,liveandplay”becauseofthequantity,qualityanddiversityofculturalactivitiesandservicesinthecity.12

Furthermore,acityismorethanjustaplace“towork,liveandplay.”Itisalso,fromtheperspectiveofeconomicgrowthanddevelopment,aplace“toinvestinandtomakemoney”.Thismeansthattheattributesthatareattractivetoindividualsarealsoattractivetobusinesses.

Artsandculturecontributesdirectlytothat“senseofplace”whichattractsbothresidentsandbusiness.Vibrantanddiverseactivitiesareanimportantcontributiontothelivelinessandvitalityofanurbanenvironment.13Artsandculturaleventsandcelebrationsformpartofadiversemixofcommercial,hospitalityandcommunityactivitycreatinganactivestreetlifeandgenerallymakingaplacefeel“alive”.

Theartsalsocontributetowell-designedpublicspacemakingalocalenvironmentmoreattractiveand accessible.

Publicartisaspecificmeansofenhancingthebuiltenvironment(“hard”infrastructure)inawaythatengageslocalresidentsbycreatingpublicspaceswherepeoplewanttomeetandcreatenewsocialconnections(“soft”infrastructure).

Publicart,andgoodurbandesign,canalsohavepositiveeconomicspin-offscreatinglandmarksthatattracttourists,aswellasresidents,enrichingurbanregenerationprojectsandcontributingtothebrandingofcities,townsandsuburbs.

11TheBrandHealthsurveyconsistsofaseriesofquestionsonaRoyMorganCATI(ComputerAssistedTelephoneInterview)omnibusrunover2weeksinJune.The2007surveyisbasedonanationallyrepresentativesampleofapproximately1,400respondents.

12SeeAllenJ.Scott(2004),“CulturalProductsIndustriesandUrbanEconomicDevelopment:ProspectsforGrowthandMarketContestationinGlobalContext”,UrbanAffairsReview,39:461-490.

13J.Montgomery(2007),TheNewWealthofCities,CityDynamicsandtheFifthWave,Ashgate(p.271)

Engagementwiththelocalcommunityinthedevelopmentanddesignofpublicartworksensuresthatthereisstrongownership ofandpridein public spaces.Sitespecificartworkscreatedistinctivelocations,therebybuildinglocalidentityandneighbourhoodcharacter.Adistinctlybrandedregionorsuburbbecomesadesirabledestinationfornewresidents,touristsandbusiness.

ResearchbyVicHealth,basedontheArtsandEnvironmentScheme,indicatesthatwell-designedpublicspace,inwhichcouncilsengagedwithartistsandthelocalcommunities,hadapositivecontributiontosocialcohesionthroughcreativeprojects.Inparticular,byengagingwiththemarginalisedorthevulnerableinthecommunity,thesepeoplehavebeengivenavoiceinplanningdecisionsthathadanimpactontheircommunity.14

Anotherexampleofpublicartcontributingtohigh-qualityurbandesignisatMelbourneDocklands.Theurbanartspolicyhascreatedasseriesofmajorsculpturesrespondingtoandreflectingthelocalenvironment,inparticularthewaterfront,Indigenousheritage,culturaldiversity,industrialhistoryandurbaninterface.ThroughactiveandcreativeengagementwiththelocalenvironmenttheartsareakeycontributortotheDocklandsgrowingattractivenesstonewresidentsandnewbusinesses.15

Itisinthissensethatthereisamergingbetweentheattributesofacitythatareseenbyindividualsasofferingthemabetterqualityoflife(i.e.thecity’sliveability)andthosethatareseenbyinvestorsorbusinessesasofferingthemcompetitiveadvantage(thecity’scompetitiveness).Foraninvestor,acityisattractivebecausethepresenceandavailabilityofhighlyskilledandcreativeworkers,whoarethemselvesattractedtothatcitybythequalityoflifeandworkenvironment.

AccordingtoBayliss(2004),theGovernmentofDenmarksuggestedacloserinteractionbetweenandevenconvergingcultureandindustrybecauseofitspotentialto“triggeranewsocialdynamic,whichwill,atoneandthesametime,strengthencultureandthearts,offeringnewopportunitiesfordevelopment,andaddimpetustoindustrialdevelopmentmarkedbyinnovation,creativityandresourcefulness”.16

Inthefaceofanincreasinglyglobalisedeconomy,Victoria(andMelbourneinparticular)mustthereforecontinuetotransformitselfeconomicallyandculturally.Inadditiontotheconventionalthinkingofimprovingacitybyimprovingits“hard”infrastructure(intheconventional economicsectors suchastransport, aswellas“hard”infrastructure intheartsandculturalsector),seriousconsiderationneedsalsotobegiventoimprovingthe“soft”artsandculturalinfrastructureoftheState–servicesandactivitieswhichidentifyandcreateexpressionsof culturaldistinctivenessand vibrancy;andencouragenetworkingandcreativity.

14VicHealth,ArtsandEnvironmentScheme,VicHealthwebsite(accessed11February2008)

15DocklandsAuthority(2001),Spirit:IntegratedUrbanArtPolicy.

16Page 4ofaDanishGovernment’sreportDenmark’sCreativePotentialcitedinD.Bayliss(2004),“Denmark’sCreativePotential-TheRoleofCulturewithinDanishUrbanDevelopmentStrategies,”InternationalJournalofCulturalPolicy,10.

Therearetwoprimary(butnotnecessarilydistinct)waysbywhichtheartsandcultureof,andin,Victoriacancontributetoenhancingliveabilityandfosteringcompetitiveness:

•Create/maintainauniqueanddistinctiveimage.

•Increasethe‘drawingpower’ofacityortowntoattracttheso-called“creativeclass”(asdefinedbyRichardFlorida17).

5.1.CREATINGAUNIQUEANDDISTINCTIVEDESTINATION

Inthisapproach(drawingfromthelessonsofEuropeanexperience),theVictorianGovernmentshouldharnessalloftheexistingculturalresourcestorevitaliseregionalcentresand/ortofosteramoreattractivecitylifeinMelbourne.18Itispremisedonthecontributionofcultureasproductsandservicestothewideranthropologicalconceptofcultureas“awayoflife”.Culturalresourcesincludeallthetangiblesandintangiblesthatcontributeto“themakingofaplace”,suchasarts:culturalheritage;localfestivals;localproducts; local crafts andcompetencies;public spaces; architecture; image.19

ArtsandculturehavethepotentialtoplayacriticalroleinstrategicallypositioningMelbourneasaninternationalcentreofculturalexcellence,asadynamiccentreofcreativityandinnovationandasaninternationaldestinationforculturaltourism.

The“CitiesofCulture”programinEuropehasbeenpursuingthisrationalesince1985withstand-outsuccessesforcitiessuchasGlasgowin1990,andDublinin1991.20

EvidenceshowsthatMelbournehasalreadydemonstratedacompetitiveadvantagewithincreasingrecognition,withinAustraliaandNewZealand,asacentreofcultureandasignificantculturaltourismdestination.MarketresearchfocussedontouristswhopatronisedMelbourne’sartsandculturalvenuesconcludedthat:21

•MelbourneiscurrentlyenjoyingareputationasAustralia’smostvibrant,creativeand‘edgy’city.Locals,interstateandyoungerinternationalvisitorsdescribeMelbourneasacitythatcelebratescreativityandstimulatesthesenses.

•Avibrant,youthfulsub-cultureemergesasacriticalcomponentofthisreputation,whichisinturn,drivenbythenetworkof‘groovy’barsandpubs,andlivemusicscene.

•Beyondthisanddrawinginawideraudience,liesitsreputationforstaging‘bigevents’(sports,springcarnival,GrandPrix)andblockbustermusicaltheatre/shows.

17R.Florida(2002),TheRiseoftheCreativeClass.NewYork:BasicBooks.

18F.BianchiniM. Parkinson (eds.) CulturalPolicyandRegeneration:TheWestEuropean Experience. Manchester:ManchesterUniversityPress.

19C.Landry(2006),TheArtofCity-Making.London:Earthscan.

20J.RGoldandM.MGold(2005),Citiesofculture,StagingInternationalFestivalsandtheUrbanAgenda,1851-2000,Ashgate.

21CulturalParticipation,OpenMindResearchGroup,June2005

•Melbourne’sreputationforexcellenceinfoodandfashionremainshigh,despitetheeffortsofotherAustraliancities.

•Authenticity,theideathatpeopleinMelbourne(unlikemanyotherplaces,includingSydney)genuinelyparticipateforenjoymentrather than justtobe seen, emergedas animportantdifferentiator.

•Melbourne’svisualspacesarealsokeytoitscharmsandreputation(itsarchitecture,parks,distinctprecinctsandcitywalks)andtendtobethefulcrumaroundwhichbothlocalsandvisitorsstructuretheircityexperiences.

Tellingly,othercitiesinthewiderregion,suchasHongKong,SingaporeandShanghai,havebeen makingsubstantialinvestmentsinartsandculture through newinfrastructure,fundedactivitiesandeventsandthedevelopmentofculturalpolicieslinkedtofutureeconomicwell-being.Forexample,theChiefExecutiveofHongKong,inhis2007-08PolicyAddressincludedinhisfivemainareasforthefuturedirectionofHongKong:“10majorinfrastructureprojectsforeconomicgrowthincluding…theWestKowloonCulturalDistrict;…developingaqualitycitywithqualitylifebyimprovingthelivingenvironment,enhancingheritageprotectionandrevitalisinghistoricbuildings,promotingculturalandcreativeindustries.…”22

Anotherinterestingexampleofacityusingculturetopositionitselfgloballyintothenextcenturyisa$27USbilliondevelopmentprojectbeingundertakeninAbuDhabiintheUnitedArabEmirates.Aswellasincludinghotels,resortsgolfcoursesandhousing,theprojectincludesthreemuseumsanda“sprawling,partspaceship,partorganism”performingartscentre.Oneofthemuseums,designedbyFrankGehry,isintendedasabranchoftheGuggenheim Museumin New York; another museum is undernegotiation as anoutpostoftheParisLouvreMuseum.23

InVictoria,seriousconsiderationisnowgiventointegratingartsandculturewiththesocialandeconomicdevelopmentprogramsinurbanandprovincialareas.Theartsandculturecomponent(e.g.artsfestivals,eventsandpublicartschemes)playsacatalyticroleincreating(orrediscovering)thedistinctivenessofboththe‘spaceandplace’ofacityortown.Thiswill,inturn,heightenthecommunity’sawarenessandappreciationoftheurbanorprovincialdevelopmentprogramasawhole.ThecurrentpolicyinitiativesbeingpursuedbytheVictorianGovernmentinrelationtoculturalprecinctsarepresentedinAppendixA.

Furthermore,itisnowacceptedthatlocalculturalactivitiesarethesourcesofeconomicremunerationandtherearemanylocalcommercialandbusinessactivitiesthataredirectlyorindirectlydependentonthe‘soft’infrastructureanddistinctive“culturalenvironment”ofalocalplace.

Thereisoverseasevidencethatsuchanapproachcanandhascontributedtoeconomic(competitiveness)andsocial(liveability)developmentsimultaneously:byenhancingthedistinctiveimageofacityortowntoattractinvestorsandtheskilledworkerswhofollowintheirtrain;andbyincreasingthevisibilityofacityortowntovisitorsfromotherareasand

22HongKongMonitorNo5(2007)(AjointpublicationoftheHongKongEconomicandTradeOffice(HKETO),HongKongTradeDevelopmentCouncil(HKTDC),HongKongAustraliaBusinessAssociation(HKABA)andHongKongNewZealandBusinessAssociation(HKNZBA).

23HFattah(2007),“CelebrityArchitectsRevealaDaringCulturalXanadufortheArabWorld”,TheNewYorkTimes,1February2007.

boostingtourismrevenue(withmultipliereffectsontheincomeoflocalbusinesses).Examplesofthecontributionofartsandculturetoliveabilityandcompetitivenessinclude:

•TheBayreuthWagnerFestival24,theInternationalFestivalofGeographyatSt.Dié-des-Vosges,25orNewOrleans’sMardiGras;26

•Theannualliteraryfestival(andthegrowthofasecond-handbookssector)inthesmallWelshmarketofHay-on-Wye;27

•TempleBarprecinctinDublin28;and

•The‘placemarketing’oftheartsandcraftstraditioninKinmen,Taiwan.29

5.2.CREATING‘SPACEANDPLACE’FORTHE‘CREATIVECLASS’

ThecentralpremiseofRichardFlorida’s(2002)theoryisthat,inthecontextofaknowledge-economy,acity’seconomicperformanceisaffectedbyitsappeal/amenitytoanew‘creativeclass’ofhighly-educated,well-paidprofessionalsinavarietyofindustries(includingthearts).These professionals sharecommonvalues ofcreativity,individuality,differenceandmerit.Theyareattractedto placesthatprovideopportunitiesforcreativeworkandqualityoflifeamenities,andoffersorareacceptingofcertainlifestyleoptions.RichardFlorida’s“creativecities”arecentresofinnovation(becauseofthe“talent”thatisbeingattracted)thatarealsocapableofavoidingindustrialstagnationor“institutionalsclerosis”(bycontinuallyadjustingtothefastpaceofglobalchange).

5.2.1.TheCreativeClassinVictoria

TheStateoftheRegionsReport2002(authoredbyNationalEconomicsfortheALGA)providedananalysisofthecomposition(byoccupationalclasses)ofeachState’sworkforce.InthatReport,the‘creativeclass’comprises‘creativeprofessionals’and‘supercreativeclass’,where theformerincludes professionalsintheareas ofmanagement,businessand finance,law,healthcarepractitionersandtechnical,high-endsalesandsalesmanagement;andthelatterincludesprofessionalsincomputerandmathematicaloccupations,architectureandengineering,life,physicalandsocialsciences,education,trainingandlibrary,arts,design,entertainment,sportsandmedia.

24F.Spotts(1994),Bayreuth:AHistoryoftheWagnerFestival,NewHavenandLondon:YaleUniversityPress.ForasummaryandreviewofSpotts,seeT.J.Saunders(1995),"ModernEurope--Bayreuth:AHistoryoftheWagnerFestivalbyFredericSpotts", Canadian Journal of History, April 1995 (accessible at

25G.BenkoandU.Strohmayer(1993),“The1993InternationalFestivalofGeographyinSaint-Dié-des-Voges,France”,GeoJournal,31(4),December1993.

26K.F.Gotham(2002),“MarketingMardiGras:Commodification,SpectacleandthePoliticalEconomyofTourisminNewOrleans”,UrbanStudies39:1735-56.

27A.V.Seaton(1996),“Hay-on-Wye,TheMousethatRoared:BookTownsandRuralTourism”,TourismManagement,17:379-82.

28J.Montgomery(2007),TheNewWealthofCities,CityDynamicsandtheFifthWave,Ashgate.

29M.C.Yang,andW.C.Hsing(2001),“Kinmen:GoverningtheCultureIndustryCityintheChangingGlobalContext”,Cities18:77-85.

AsshowninTable2below,37.4percentofthetotalworkforceinMelbourne’smetropolitanareas(i.e.theareascoveredunderthedescriptivelabel“InnerMelbourne”whichincludetheCBD,StKildaandthePortofMelbourne)areconsideredtobeinthecreative class of occupations.This proportion isaboutthe same asthat in ‘Global Sydney’(37.9percent),whichcoversawidermetropolitanareathanInnerMelbourne.30TherespectiveproportionofcreativeclassworkersinInnerMelbourneandGlobalSydneyissignificantlyhigherthanthenationalaverage(25.2percent).

Table2.Compositionofworkforcebyoccupationalclass(inpercent):MelbourneandSydney

OccupationClass / InnerMelbourne / GlobalSydney / Nationalaverage
Creativeclass / a.Creativeprofessionals / 24.9 / 25.4 / 16.3
b.Supercreativeprofessionals / 12.5 / 12.5 / 8.9
1.Totalcreativeclass(=a+b) / 37.4 / 37.9 / 25.2
2.Agriculture / 0.1 / 0.1 / 3.4
3.Service / 48.4 / 47.1 / 47.8
4.Workingclass / 14.1 / 14.6 / 23.6
Total(1+2+3+4) / 100 / 100 / 100

Source:StateoftheRegionsReport2002

Itcouldbesurmised,onthebasisofFlorida’stheory,thatthesemetropolitanareashave(respectively)moreofthecombined“spacesandplaces”acceptingofalternativeviewsandadiversityoflifestyles(relativetootherAustraliancitiesandurbanisedareas).Moreimportantly,thisfindingsuggeststhatMelbourneandSydneyareequallycompetitiveintermsofthetypesofbusinessesthatdependonandareattractivetoespeciallythesupercreativeclassofworkers.

Table3belowcontraststheworkforcecompositionintheurbanisedandsomecountryareasofVictoria.Asonewouldexpecttofind(onthebasisofRichardFlorida’stheory),theproportionofcreativeclassworkersishigherinurbanisedareas,viz.MelbourneEastandMelbourneSouth,thaninanyotherareasofregionalVictoria.

30GlobalSydneyincludesSydney’sCBD,therestoftheCityofSydney,theinnerNorthShore(Chatswood)andtheEasternSuburbs(BondiJunctionandairport).

Table3. Composition of workforce by occupation class (inper cent): RegionalVictoria

Occupationclass / Agriculture (%) / Serviceclass(%) / WorkingClass(%) / CreativeClass(%) / Total(%)
MelbourneEast / 0.1 / 49.7 / 22.1 / 28.0 / 100
MelbourneSouth / 0.1 / 47.1 / 27.1 / 25.4 / 100
Loddon / 6.1 / 49.2 / 24.3 / 20.3 / 100
Ovens-Hume / 6.9 / 46.2 / 26.1 / 20.9 / 100
Mallee-Wimmera / 19.8 / 39.6 / 23.5 / 17.0 / 100
VicWest / 20.0 / 39.7 / 23.5 / 16.8 / 100

Source:StateoftheRegionsReport2002

Table4belowsummarisestherelativenationalrankingsofsomeofVictoria’sregionsbytheirArtisticIndexandCreativityIndex.31The‘ArtisticIndex’,basedontheso-calledBohemianIndex(originallydevelopedbyRichardFlorida),isameasurederivedfromtheproportionofregion’sworkforceemployedinartisticallycreativeoccupations,dividedbythenationalaverage.The‘CreativityIndex’isacompositemeasureincorporatinghigh-techoutput, proportion of population bornoverseas, patent applicationsand artisticallycreativepeople.Asproportions, theseindicesaccountfordifferencesinoverallpopulationsizesofeachcentre.

Table4.CreativityIndices

Region / ArtisticIndex / ArtisticRank(1-64) / CreativityIndex / CreativityRank(1-64)
GlobalSydney / 2.0 / 1 / 992 / 1
InnerMelbourne / 1.85 / 2 / 985 / 2
MelbourneEast / 1.09 / 7 / 519 / 10
MelbourneSouth / 1.30 / 11 / 606 / 12
Mallee-Wimmera / 0.42 / 61 / 7 / 62
VicWest / 0.53 / 54 / 8 / 58
Loddon / 0.68 / 38 / 163 / 35
Ovens-Hume / 0.76 / 29 / 98 / 37

Source:StateoftheRegionsReport2002

31TherankingreferstowhereeachofVictoria’sregionstandamongthe64SORSregionsofAustralia.

ItistheviewofthissubmissionthattheArtisticIndexismoreinformativeofthepossiblelinksbetweenartsandculture,andliveabilityandcompetitiveness,howevertherankingsaccordingtoeachindexareverysimilar.

Nationally,GlobalSydneyhasthehighestArtisticIndexof2.00,which(byitsdefinition)suggeststhattheproportionofGlobalSydney’sworkforceemployedinartisticallycreativeoccupationsistwiceaslargeasthenationalaverage.InnerMelbourneisrankedsecondwithanArtisticIndexof1.85,i.e.InnerMelbourne’sartisticallycreativeworkforceis85percenthigherthanthenationalaverage.Intermsofnationalranking,thecountryregionsofLoddonandOvens-Homearesomewhere“inthemiddleofthepack”,whereasVicWestandMallee-Wimmera(inparticular)aretowards“thetail-endofthepack”.

Amore“like-with-like”comparisonof Melbourne’scompetitivenessrelative toSydney’s,usingtheRichardFloridacreativityindexapproachisprovidedbytheMelbourneCreativityreportfortheNationalEconomyAdvisoryBoardoftheDepartmentof Innovation,IndustryandRegionalDevelopment.32ThisreportmeasuredtherespectiveCreativeIndexforthethreedistinctsub-regionsofMelbourne,viz.MelbourneCentral,MelbourneInnerandMelbourne Outer;andlikewiseforthe comparablesub-regionsofSydney,viz.SydneyCentral,SydneyInnerandSydneyOuter.Accordingtothefindingspresentedinthereport:

•MelbourneCentralscoredhigherthanSydneyCentralontheCreativityIndex.

•BothMelbourneCentralandSydneyCentralscoredwellinternationally,bothbeingranked4thcomparedtoUSregions.

•AustraliascoredhigherthantheUnitedKingdomforinnovationandcreativeclassgrowthbutisjustbehindontheproportionofthoseemployedinhighskilledandcreativeoccupations.

5.2.2.ImplicationsforRegionalVictoria’sLiveabilityandCompetitiveness

Onepractical(andpolicy-related)implicationofRichardFlorida’stheoryisthat“spaceandplace”needtobecreatedtoconveythemessagethat“creative”peoplearewelcomeandaccepted.Thecongregationoflike-mindedcreativeworkersincloseproximityandaccesstoaudiencesandmarkets(andperhapsevenfundersandsponsors)will,inturn,createthe“take-off”conditionsforinnovativeandcreativeideas,andtheresultanteconomicandsocialbenefitstoallwholivein thatcityortown.Thissuggests thatGovernment’sprograms forthedevelopmentofcountryVictoriashouldavoidanarroweconomicfocus,andinsteadapplyanintegrativeapproach thattakesinto accounttheinteractionsandlinkagesbetweenlocaleconomic,socialandcultural‘spaceandplace’incountryVictoria.

Thecrucialbasesforcompetitiveadvantagearelocalandincludethepresenceofaskilledworkforce(inadditiontotheotherfactorsofproductionthatarealreadypresent).AsnotedbyRichardFlorida,theskilledcreativeclasshasapropensitytoseekoutandcongregateinplaceswherethereareopportunitiesforstimulatingworkandqualityoflifeamenities(includingartsandculturalactivities).

Thusonewayofincreasingthe‘drawingpower’ofcountryVictoriaistoextendtheconceptof‘clusterdevelopment’(i.e.interrelatedindustriesinwhichtheregionspecialisesin)toincludetheartsandcultureof,andinthatregion.Anapproachthatopensupopportunities

32NationalInstituteofEconomicsandIndustryResearch,tradingasNationalEconomics,MelbourneCreativity,areportfortheInnovationEconomyAdvisoryBoard,February2004.

foramorevibrantculturalenvironmentwillnotonlycomplementtheextantefficiencies(i.e.scaleeconomies)ofindustryclusters,itwillalsohelptocreatethesynergiesnecessarytoattracttalentsandinvestors.Thesesynergiesmaynotnecessarilyfeeddirectlyintothe(muchvaunted)innovativeprocesses,buttheyareindispensableinthefood-chainofcreativityandinnovation.

Thereisstrongevidencethatvibrantculturalofferingstoregionalcommunitieshaveapositiveimpactoneconomicperformance.Anationalsurveyofregionaleconomicperformancehasconcludedthatregionalcentreswhichhavesuccessfullyhelpedimprovetheeconomicperformanceoftheruralregionhavebeenthosewithhighemploymentgrowthrelativetopopulationgrowth.Akeydriverofthispopulationgrowthwasthepresenceofadiversifiedlifestyleandculturalchoicesforresidents(StylisedFactEight).33

Inaddition,theculturalsector,initsownright,isalreadyanimportantelementofmanyregionalVictorianeconomies,suggestingastrongbasefromwhichthereareopportunitiestogrow.TheculturalandrecreationalservicessectoroftheeconomyhasdemonstratedthesecondhighestgrowthrateinVictorianregionalareas(afterpropertyandbusinessservices)between1991and2001.34ThissectordemonstratedthehighestgrowthrateinGeelongoverthatperiod.35

ItisimportanttonotethattheroleofartsandcultureincontributingtocreatinganattractivelocationfornewresidentsandnewbusinessisfundamentallythesameforbothMelbourneandforregionalVictoria.Theremayhoweverbedifferencesofscale,targetpopulationsandrangeofculturalofferings.

6.QUANTITATIVEANDQUALITATIVEEVIDENCE

Muchcan(and has beensaid in theextantliterature)thatliveability (or thequalityoflife)shouldbemeasuredinamultidimensionalway—economically,socially,environmentally,aswellasculturally.Thismeansthatinpractice,itisnotsufficienttoonlyevaluatewhetheracity,town,orregioniseconomicallyviable,butalsowhetheritisenvironmentally,socially,andculturallysustainable.

Justascommercialenterprisesmustconstantlyimproveproductsandservicestoremainviable,vibrancyisakeycharacteristicofculturalsustainability.Sustainableartsorganisationsmustbe“artisticallyoutstanding,servetheirdiversecommunitieswithimaginationandverveandare,attheendoftheday,financiallysolvent.”36

Twoextensivereviewsofboththequantitativeandqualitativeempiricalevidencethathavebeencollectedoverseasontheimpactofartsandcultureinaneconomyare:

•G.EvansandP.Shaw(2004),“TheContributionofCulturetoRegenerationintheUK:AReviewofEvidence”,aReporttotheDepartmentforCultureMediaandSport,LondonMetropolitanUniversity.

33AustralianLocalGovernmentAssociation/NationalEconomics,StateoftheRegionsReport2004-05.

34MovingForward:MakingProvincialVictoriatheBestPlacetoLive,WorkandInvest,VictorianGovernment,2005.

35ProvincialVictoriaEmergingtrendsinjobsandpopulation,VictorianGovernment,2005

36CathyHuntandPhyllidaShaw,ASustainableArtsSector:Whatwillittake?,PlatformPapersno15,January2008.

•J.Ruiz(2004),ALiteratureReviewoftheEvidenceBaseForCulture,theArtsandSportPolicy,ScottishExecutiveEducationDepartment.

Inthefollowing,thesereviewsaredrawnupontobrieflyillustrateboththequantitativeandqualitativeapproachestomeasuringtheeconomicandsocialimpactofartsandculture.

6.1.QUANTITATIVE EVIDENCE

Thequantitativeapproachtoassessingtheeconomiccontributionofartsandculturalactivitiestothelocalandwidereconomyincludecost-bestanalysis,financialassessment,andinput-outputanalysis.Theeconomiceffectsareusuallymeasuredintermsofthenetoutputandemploymentgeneratedorexpenditureincurredasaconsequenceofthearts/culturalprojectinquestion.Netoutput,employmentorexpenditureismeasuredusingwhateconomistsreferto asthe“with”and“without” framework,i.e.whathasresultedfromantheartsorculturalactivityorprograminquestioncomparedtothehypotheticalofwhatwouldhavehappenedwithoutthatactivityorprogram.Specifically,theeffectsthataremeasured:

•“leakage”,whichreferstothebenefitsconferreduponthosewhodonotresideinthespatialareaorwhoarenotmembersofthegroupforwhichthearts/culturalprojectisintendedtobenefit.ThisconceptissimilartothatofpositiveexternalitiesreferredtoinSection4.2above;

•“deadweight”,whichreferstotheoutcomesthatwouldhaveoccurredwithoutthearts/culturalproject;and

•“displacement”and“substitution”effects,i.e.theextenttowhichthebenefitsoftheprojectareoffsetbyreductionsofoutputoremploymentelsewhere.

Example:DundeeContemporaryArts

ThefindingsofaneconomicimpactevaluationoftheDundeeContemporaryArts(DCA)CentredemonstratedapositiveeconomicimpactthatextendedbeyondtheboundariesofDundee.37Theanalysisshowedthat:

•DCA’spayrollof£561,507generatedanetimpactofanadditional£3,620,000intheTaysideeconomy–aleverageratioofalmost6.5to1.

•Anestimatedthat258fulltimeequivalentjobshadbeengenerated,comparedwiththeoriginalestimateof58,andbusinessdevelopmentaccountedforapproximatelytwo-thirdsofalladditionaljobsgenerated.

•LocalcraftproducersbenefitedfromDCA’sshop,with39.5%ofitsturnoverbeingcraftwork.

•Thecafébarsignificantlyexceededexpectationsbyahugemargin,andprovidedturnover-basedloyaltiesofover£120,000in2001/2comparedtotheoriginalprojectionof£9,000.

37S.Westbrook,“EconomicImpactEvaluationofDundeeContemporaryArts”,2003.

Example:West KowloonCulturalDistrict

AneconomicimpactstudyofthedevelopmentoftheWestKowloonCulturalDistrict38found,aftertakingintoaccounttheleakage,deadweightanddisplacementeffectsdescribedabove,that:

•thedistrict will bring $HK 2,660 million valueaddedcontribution toGDPonopeningrisingto$HK5,280millioninyear16;

•9,980jobswillbecreatedonopeningrisingto20,080byyear16;and

•2.4milliontouristswillvisitinthefirstyearandwillthengrowatanannualrateof2.2%over30years.

6.2.QUALITATIVEEVIDENCE

Qualitativeapproachestoassessingtheimpactofarts/culturalprojectsrelymoreonsurvey,andanecdotaldata.For example, the contributionof an arts/cultural programto liveabilitymaybeevidencedby:

•Achangeinresidents’perceptionsoftheplacewheretheylive

•Greaterindividualconfidenceandaspiration

•Aclearerexpressionofindividualandsharedideasandneeds

•Increasedsocialcapital–‘thenormsandnetworksthatenablecollectiveaction’(WorldBank)

•Greaterparticipationandcontributionbyvolunteers

•Achangeintheimageorreputationofaplaceorgroupofpeople

•Strongerpublic-private-voluntarysectorpartnerships

•Newapproachestoevaluation,consultationandrepresentation

(Notethattherearemanyelementsoftheaboveindicatorswhichcanalsobemeasuredquantitatively.)

In theDCAcase example(summarised above),qualitativeresearch wasalsoundertaken toassesstheroleofDCAasaculturalandsocialcreativehubandnetworkingvenue;thedevelopmentofacentreofinternationalexcellenceinexhibitionsandcinema;aboostinconfidencetoDundee;theroleofDCAinthedevelopmentofa‘culturalsector’inthearea;anditssynergywithDundee’stwouniversitiesandcolleges.

Othersourcesofqualitativedataontheimpactoftheartsincludeoverseaswork:UseorOrnament(Comedia).LocalstudiesincludeCreating Community,Celebrations, Arts andWellbeingWithinandAcrossLocalCommunities(TheGlobalismInstituteVicHealth)andStrengthening

38EconomicAnalysisandBusinessFacilitationUnit,FinancialSecretary’sOffice,EconomicimpactofdevelopingtheWestKowloonCulturalDistrict,ExecutiveSummary,May2007.

localcommunities,ArtsinCommunitySettings,TheEvaluationofTwoCommunitySupportFundedArtsPrograms(DepartmentforVictorianCommunitiesArtsVictoria).

6.3.CONTINGENT VALUATION

Thecontingentvaluationmethod (CVM) involvesdirectlyaskingpeople, ina survey,howmuchtheywouldbewillingtopayforsomethingspecific,contingentonaspecifichypotheticalscenario.39Inthecaseofartsandculture,anexample couldbe howmuchoneiswillingtopayforpreservationofaheritagebuildingormonument.Alternatively,peoplemaybeaskedfortheamountofcompensationtheywouldbewillingtoacceptto“giveup”theheritagebuildingormonument(i.e.allowsthebuildingormonumenttobedemolished).

CVMtechniqueshavebeenincreasinglyappliedtomeasuringthevalueofservicesprovidedbyculturalcapital,particularlyitemsofculturalheritage.40Neverthelessithastobeunderstoodthattheseanalysesyieldestimatesinpurelyeconomicterms.Suchestimatesareimportant,butbytheirnaturetheycannotcapturethoseelementsofculturalvaluethatarenotexpressible infinancial termsorthatcannotbe sensiblyrenderedin termsofindividualwillingnesstopay.

39Economistsrefertocontingentvaluationasa“statedpreference”method,becauseitaskspeopletodirectlystatetheirvalues,ratherthaninferringvaluesfromactualchoices(asitisdoneinthe“revealedpreference”methodology).

40Forsomeexamples,seeS.NavrudandR.C.Ready(eds.)(2002),ValuingCulturalHeritage:ApplyingEnvironmentalValuationTechniquestoHistoricBuildings,MonumentsandArtifacts,EdwardElger:Northampton,MA.;orD.Noonan’s (2002) annotated bibliography, accessible at:

APPENDIXA:VICTORIANGOVERNMENT’SARTSPORTFOLIOCURRENTPOLICYINITIATIVE–CULTURALPRECINCTS

A.1CULTURALPRECINCTS

The Victorian Government’scurrentarts policystatement,Creativecapacity +, arts forallVictorians,isundertakingafiveyearreviewwhichincludesextensiveconsultationwithindustry,othergovernmentagenciesandthecommunity.

Thereviewismaintainingtheoverallarchitectureofthepolicy.Creativecapacity+adoptsatriple-bottomlineapproachwiththreegoals(social,economicandcultural)andfourstrategiesasfollows:

Asignificantlevelofartsindustryandcommunityconsultationhasbeenundertakenaspartofthisreview.Changestotheartsenvironmentsincethelaunchofthepolicyhavebeenidentifiedandnewinitiativestorespondtothesenewcircumstanceshavebeenproposed.

OnemajorpolicyinitiativearisingoutofthisreviewisanemphasisonculturalprecinctsasameansofmakingtheartsanintegralpartofthelifeandeconomyofeverycommunityintheState.

Contemporarycitiesplaceincreasingemphasisonamenity,liveability,innovationandeffectiveinfrastructureandservicesmakingfulluseofthepotentialofinformation,inter-network,andknowledgeasprogressivekeydrivers.

Harnessingthecreativepotentialwithinthecommunityisoftenthekeyaspectofacity’scompetitiveadvantage.Characteristicsofacreativecity,amajorityofwhichispresentinMelbourne,include:

•astrongartsfabric,evidencedthroughacommunitythatcelebratesartistsandhasstrongculturalinstitutions;

•artists’thatlookattheworldinnewwaysandstretch,broaden,liftanddeepentheunderstandingofthesocietiesinwhichwelive;

•iconicbuildings(suchastheArtsCentre);

•strongcommercial cultural sector(design,galleries,architecture, broadcasting, filmandfashion);

•freespacestothinkandpromoteknowledgesharing(suchaswi-fispaces);

•programmingwhichreflectsthediversityofthecommunity;

•adiversecommunity;and

•amixofinfrastructure(heritageandcontemporary).

Creativeenvironmentsarecriticalincreativecitydevelopment.Networkingandprojectdevelopmentbetweencreativecitieswillbepivotaltofutureglobalsuccess,intercitycompetitivenessisnotasustainablefuturepractice.

Culturalprecinctsacrosstheworldhaveproventobeanimportantcivicinvestmentandamajorsteptopromoteculturalandartisticactivitiesandsupportthelongtermdevelopmentofregionsascreativeeconomiesandworldcities.Precinctsbringaboutsubstantialtangibleeconomicoutputsandemployment,andalsovarioussignificantintangiblebenefits.

Thetangibleelementsincludevalueaddedandjobopportunities,venueoperationsandprograms.Theintangibleincludesfosteringthedevelopmentofaknowledgebasedeconomy,invigorationofcreativeindustriesandinnovationrelatedactivities,nurturingandpoolingtalent,attractinginvestors,raisingthequalityoflifeandenhancingacity’sbrand,positionandprofile.Creativeprecinctdevelopmentalsoassiststoupgradesoftinfrastructuresuchasnetworking,culturaldistinctivenessandvibrancy,allqualitiesofamodernworldcity.

EnhancingculturalassetsthroughprecinctdevelopmentcancontributetoGDPorGSP,encourageemploymentopportunitiesandawidespectrumofeconomicsectors,includingartsandculture,designandpublishing,advertisingandmarketingandtouristrelatedindustries.Touristsareattractedtoattendingexhibitionsandartsperformancesandculturalexperiences.

Inthisregard,theGovernmentiscurrentlyinvestinginthedevelopmentofamasterplanfortheSouthbankareabetweenStKildaRoadandSturtStreet,fromtheYarraRivertotheMalthouseTheatre.

A.2INFRASTRUCTUREANDACTIVITY

RoodhouseandMontgomery41pointoutthatartsprecinctswhichsuccessfullydeliverbenefitstolocalcommunitiesaremorethancollectionsoflandmarkbuildingsorheritageinstitutionslocatedinaparticularvicinity.Redevelopedand/ornewmajorbuildingsmaybeanimportantstartingpoint.

Successfulprecinctsprovideandsupportarangeofartistic,economicandcommercialactivitieswithintheprecinct,includinglocally-generatedartsenterprisesandcreativebusinesses,an evening‘foodand beverage’ economy,anda diversityof content includingcontent‘imported’fromoutsidethelocalarea.

41J.Montgomery(2007),TheNewWealthofCities,CityDynamicsandtheFifthWave,AshgateandS.Roodhouse(2006),

CulturalQuarters,PrinciplesandPractice,Intellect.

A.3SOUTHBANKCULTURALPRECINCTREDEVELOPMENT–MELBOURNE’SCREATIVECITYCOMPETITIVEADVANTAGE

TheSouthbankCulturalPrecinctRedevelopmentprojectidentifiesandaimstostrengthentheprimaryCityartsdistrict,apivotalcitylocationandtoreinforceitspresenceandlinkageswithotherkeyareas.Over15culturalvenueswillbeconnectedtogetherwithintheculturaldistrict.

TheprojectwillaffirmMelbourne’scommitmenttobeingoneoftheleadingcreativecitiesandmaintainingaleadershippositionthroughenhancingitsexistingculturalassetsanditsculturalicons.Itwillreinforce,andcontinue,Melbourne’spositioningasthepreferreddestinationinAustraliatoexperiencethebestofthenation’sartsandculture.

Theprecinctwillbeamajorcontributortothe“hard”and“soft”artsinfrastructureofMelbourne.Theareawillbehometomajorperformingartscompaniesandinstitutions(theArtsCentre,MelbourneRecitalCentre,MelbourneTheatreCompany,MalthouseTheatre,MelbourneSymphonyOrchestra,ChunkyMovecontemporarydancecompany,TheAustralian Ballet), major visualartsorganisations (NationalGalleryof Victoria,AustralianCentreforContemporaryArt)andnationally-recognisedartseducationorganisations(VictorianCollegeoftheArts,TheAustralianBalletSchool).Venuesintheprecinctwillbehiredforperformances by thesmall-to-medium sectorcompanies.The diverseand vibrantworkofthisrangeofartsorganisationswillcreateavitalityandrangeofofferingswhichwillbeunequalledintheregion.

TheprojectwilldeliveraninternationalprecinctthatonlyMelbournecandeliverenrichingtheentirecommunityandconfirmingMelbourne’splaceamongtheworld’sgreatcities.

A.4CULTURALPRECINCTSINREGIONALVICTORIAANDMELBOURNE’SGROWTH CORRIDORS

ArtsprecinctshavethepotentialtoimproveliveabilityinregionalVictoriaandinMelbourne’souter-suburbs.

KeyregionalVictorian cities suchasGeelong, Bendigo and Warrnamboolareestablishingthemselvesasgrowthareasfornewresidentsseekingthe“treechange”or“seachange”lifestyle.Theyalsohavescopetoestablishthemselvesasmajorculturalandtourismdestinations.

AnetworkofartsprecinctsatMelbourne’sprincipalouter-suburbanactivitycentreswillcomplementSouthbankandsupportingandextendingMelbourne’sreputationasaliveablecitybeyond the inner-city.

BuildingonVictoria’snationally-recognisednetworkofartsinstitutions,workforceandprogramsbothinMelbourneandregionalVictoria,inclosecollaborationwithLocalGovernment,localartsprecinctswillintegratetheartsintothelifeandeconomyofeverycommunityintheState.

Inadditiontosupportingnewandre-developedculturalinfrastructure,Governmentinitiatives–throughtheMovingForward42ProvincialStatementandtheArtsintheSuburbs43

42RegionalDevelopmentVictoria,VictorianGovernment(2005),MovingForward:MakingProvincialVictoriatheBestPlacetoLive,WorkandInvest(alsoknownastheProvincialStatement)

432007-08VictorianBudgetfactssheet(availablefromArtsVictoriawebsite)

initiative–buildonthatstrengthandaddresses“gaps”inbothprogramdeliveryanddiversityofcontentavailabletocommunitiesoutsidethecapitalcity.

Supporttoorganisationstodevelopworkforthetouringcircuitwithafocusondeliveringnewproductintonewareas–acrossregionalVictoriaandMelbourne’sgrowthcorridorswillfocus onbroad, supporting programming frommain stage theatre, orchestrasandvisualarttosmallscaleinnovativeworksacrossallartforms.

Inaddition,producerswillbeencouragedtoworkwitheducatorsandcommunitygroupstoprovideoutreachprogramsthatengagewithnewaudiencesandfosterabetterknowledgeofanddemandforallartforms.

Theprogramfocusesonincreasingaccessibilitytoqualityculturalproductbyprovidingprogramswherepeoplelive.ItaimstoprovideequityofaccesstotheartsatthelocallevelparticularlyinnewgrowthareasonthesuburbanfringeandwillsupportotherwholeofgovernmentinitiativesunderbothM2030andTransitCitiesthroughthedevelopmentofculturalfacilitiesandprogramsinkeysuburbanactivitycentres.

A.5CULTURALPRECINCTS–QUANTITATIVEEVIDENCE

RefertotheWestKowloonCulturalDistricteconomicimpactstudyabovewhichdetailstheemployment,tourismandeconomicflow-on effects ofthe constructionof a majorculturalfacilityinaninternationalcity.

Forregionalprecinctdevelopment,refertotheStateoftheRegionsreport2004-05whichdemonstratestheimportanceofdiversityofculturalofferingsinregionalareasasadriverofpopulationgrowthandhenceregionaleconomicperformance.

A.6CULTURALPRECINCTS–QUALITATIVEEVIDENCE

TouringVictoriaisacrossartformfundingprogramthatprovidescommunitiesinouter-metropolitan,regionalandruralcommunitieswithaccesstoprofessional,artisticandculturalexperiences.Theone-offprojectgrantsadministeredthroughArtsVictoria’sTouringVictoriaprogramprovidefinancialassistancetoartistsandartsorganisationstooffsetthecostoftouringperformancesorexhibitionswithinVictoria.Toursincludedrama,music,comedy,contemporarydance,craft,photography, ballet,heritageandcontemporaryvisualart.

Toursplayanimportantroleindevelopingtheculturalandsocialandlifeofacommunity.

RecentevaluationoftheseArtsVictoriatouringprogramshaveprovidedqualitativeevidenceoftheimportanceofvibrantculturalofferingstotheattractivenessofregionalandsuburbancentres.Thisevidenceisintheformofthepositivefeedbackfromvenuemanagers,andmembersoflocalcommunities.

Affordableandaccessibleexhibitions/performancesforVictorianslivinginouter-metropolitanandruralareas

“Forruralandremoteareasitprovidesaccesstoartsexperiences,particularlywiththedrought,thattheydon'thavethemoneytotraveltoregionalcentrestosee”(Venue)

“Bringstheatreouttothesuburbs”(Venue)

“Weprovideprofessionalentertainmentthatthecommunityenjoysanditcombatsregionalisolation”(Venue)

Opportunitiesforsocial interactionanda senseofcommunity

“Theyareentertainedanditaddstotheirsenseofcommunity,itenhancestheirwellbeingbecausetheygetoutandhavealaugh”(Venue)

“Providingqualityentertainmentonaregularbasistoimprovetheliveabilityofthecity”(Venue)

“Weprovideprofessionalentertainmentthatthecommunityenjoysanditcombatsregionalisolation”(Venue)

Anexample:

TheCafeConcertSeriestoursculturallyandmusicallydiverseacts,suchascabaret,jazzandCubantosmallerandintimatevenuesaroundVictoria.

TheSnowyRiverArtsNetworkinOrbosthasbeenhostingthisseriessince2002andrecentlyreportedthat:

“Inasmallandattimesaverydividedcommunitysuchasourstheseopportunitiestobringpeopletogetherinapositiveandpowerfulwaycannotbeunderestimatedforthestrengtheningeffecttheyhaveonrelationshipsinthecommunity.Orbostisanisolatedcommunitythathaslittleculturaldiversity.Experiencingartsistoexperiencehumanity:whenwelistentothepowerfulsongsofKlezmermusic,dancetopotentAfricanrhythms orthrilltothebittersweet stories oftheIrish,wecomealittleclosertobeingopenandacceptingofpeoplewhomaynotbelikeus.TheCafeConcertSeriesisthesinglebiggestcross-culturalexperienceregularlyavailabletoourcommunity.”