Under the Coalition government of Malcolm Fraser economic conservatism gained ascendancy, heralding a period of public sector restraint and cutbacks in government expenditure. Accordingly, the Industries Assistance Commission (IAC) was asked to investigate government funding of the performing arts sector. The IAC applied an explicitly rational economic model that rejected arguments about ‘public good’ and ‘special pleading’, instead viewing the sector as an ‘industry’ in order to assess its economic potential.

Perhaps surprisingly, the IAC rejected assumptions of cultural ‘excellence’ espoused by elite arts bodies and adopted a broader anthropological definition of culture incorporating concepts of national and community benefit. In abandoning the ‘flagship philosophy’ of existing cultural policy and advocating policies that reflected community values and the ordinary culture of citizens, the report recommended three new principles of cultural policy: innovation, dissemination and education. This meant re-directing support away from elite cultural bodies and towards objectives that aligned with community expectations and interests. In some ways, these recommendations were thoroughly modern and in line with the cultural sustainability arguments of recent times. Yet, the report has been ‘misrepresented and misunderstood, [and] vilified’ (Macdonnell 1992: 142-3), dismissed as anti-arts, anti-patronage and cast as the incarnation of all that is wrong with what later became known, pejoratively, as ‘economic rationalism’.

The 1976 report created enormous controversy for a policy arena that had only recently begun to benefit from government largesse (e.g. Rowse 1985; Parsons 1987). Although the report fitted the new governance agenda of smaller government and self-sufficiency, it created an outcry about the inappropriateness of such a model for the arts/cultural sector. While its recommendations were repudiated by Fraser himself and ostensibly ignored by his government, the report nonetheless set the terms for policy during the next decade.

In a sense, Australian cultural policy became infused with the rhetoric of economic rationalism by stealth through strategies aimed at demonstrating community benefit, measuring performance and evaluating outcomes of government support. The ghost of the IAC report lingered in subsequent cultural policy-making. The intended outcome of the report (to wind back funding of elite culture and facilitate community cultural development) was stymied while the unintended outcome (maintain elite cultural support, impose accountability and shift from program to project and incentive funding) underpinned arts and cultural policy into the late 1990s. Specific developments in cultural policy became a tussle between influential lobbyists and sectoral interests, on the one hand, and instrumental policy-makers and outspoken critics, on the other.

Of all post-federation governments, it was the Labor Government led by Bob Hawke that was, arguably, responsible for the greatest changes in Australia’s cultural policy landscape. Initially welcomed as a ‘pro-culture Prime Minister’, Bob Hawke did not share previous prime ministers’ enthusiasms for the opera and the ballet. Rather, his sensibilities leaned more towards sport and everyday culture. He also oversaw an administration which had already undergone major culture changes and was beginning what was to become a long flirtation with managerialism. Governments had to be seen to be responsible in their spending of public money and to demonstrate greater efficiencies in activities they supported.

In the area of culture, Hawke set up inquiries into arts employment, youth arts, cultural statistics, orchestras, government funding, folk life and the indigenous arts and culture industry. This occurred against a broader backdrop of administrative and policy reform across all areas of government activity, centred on measures such as the application of performance measurement, the introduction of market incentives and corporatisation. The effect was the infusion of facilitation and architect strategies into an arts and culture policy mix that already contained elements of patronage and commercialisation.