At times, the gallery had overspent its allocated budget with tensions existing between its various compliance legislations.
The report warns that any excessive spending is a potential breach of the Public Sector Finance Act. The gallery maintains that it has a strong financial governance framework led by its Board of Trustees, which ensures that its resources are allocated efficiently, effectively and appropriately.
Since opening Sydney Modern, now known as Naala Badu, the gallery has welcomed more than 2 million visitors.
Taxpayers should not cover the deficit
Graham said the government would boost gallery funding to record levels at a time of tough economic conditions and belt-tightening. He did not specify the final figure, saying only that the allocation would exceed $100 million.
However, the Treasury strongly believed that taxpayers should not be left to cover the shortfall in the gallery's commercial revenue targets.
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“An increased budget allocation of $8.8 million is an adequate level to cover core costs, including paying staff and ensuring that the gallery remains free for families and individuals to enter and remains a place of free learning for our school children across NSW,” he said. said
“The total approved budget for art gallery expenses has increased by 83% from $58.8 million in 2017-2018 to more than $100 million.
“Despite doubling its floor space through the opening of Sydney Modern, the review of its operation shows that ticketed visitors are down.
“The gallery projected almost $21 million in admissions and membership revenue, but the reality has been closer to $13 million.
“In a budget environment where NSW families are struggling, the NSW Government has a plan to build a better NSW and we are committed to supporting the creative sector, including the Art Gallery of NSW.”
The report recommends that the art gallery strike a balance between the government's austerity measures and the promotion of its new galleries in advertising and marketing.
At the same time, the review said the gallery faced a changed operating environment, with the unwinding of COVID restrictions hitting revenue and cost-of-living pressures reducing the purchasing power of domestic visitors.
The gallery experienced significant costs, including collection management, digitization and online storage, insurance, security, curation and building maintenance. The costs of organizing exhibitions were also higher.
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Apart from exhibitions, self-generated revenue from retail, merchandise and food and beverage also fell and less than expected.
The art gallery said its commercial revenue assumptions made in 2017 had proved difficult to meet in the post-Covid world, as for most organisations.
“Efficiency dividends imposed by the government since then have also removed another $8.5 million from our budget allocation in 2024, rising to $8.9 million in FY2025,” he said.
“The art gallery continues to balance its budget and spend within its government allocation and self-generated income.”
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