Kyiv, Ukraine
Statements about “crisis of Ukrainian culture” or, at least, about it’s
unexpected underperformance during the first decade of Ukraine’s independence,
have been a commonplace in public discussions in recent years. In 1991, there
were hopes that, with the end of Communism and the birth of the nation-state of
our own, Ukrainian national culture would flourish. However, despite obvious
positive changes such as the undeniable freedom of artistic expression, the end
of State monopoly on financing and
administering of cultural organizations, and the unprecedented openness to the
world, it is also a fact that, during the 1990s, financial conditions of the
majority of Ukrainian cultural institutions have deteriorated dramatically,
while the social status and the incomes of Ukrainian artists (and other
professionals in cultural sector as well) became remarkably lower than, for
instance, during Gorbachev’s “perestroika” period. Several hundreds or even thousands of public cultural
institutions (cinemas, local cultural centers, libraries etc) went out of
business, Ukrainian’s book publishing plummeted, and domestic film production
is almost dead now.
Participation in culture has been shrinking, too. Today, Ukrainians buy
much less books and newspapers, less often visit cinemas, theaters and museums
than twenty or even ten years ago. (Although a slight increase has been noticed
in recent couple of years).
Some optimistic observers compare this situation to similar developments
elsewhere in Eastern Europe and conclude that this is a result of changing
cultural practices and the introduction of new communication technologies (the
rise of video, personal computers, the Internet etc). But in a poor
post-communist country like Ukraine, many argue, not the Internet and
globalization should be blamed for the decay of public cultural sector, but
deep economic crisis and bad government. An average Ukrainian simply does not
have enough money for theaters, museums, new books and non-pirated CDs and
videos, not to mention personal computers.
Many critics also believe that the State should be blamed in the first
place, for its inadequate and inert cultural policy (or even absence of a
sensible and articulated cultural policy at all). As the writer Oksana Zabuzhko
said recently, “Anybody can see that our native Ukrainian State does not give a
damn for our native Ukrainian culture”. She does not mean of course that it is
desirable that the State returns to old Soviet practices of controlling
culture, she merely expects that the Ukrainian nation-state gives not only
freedom, but much more money than before to Ukrainian arts and cultural
industries – if not directly, in cash, than at least indirectly, in tax
exemptions. Statistics about budget expenses on culture seem to back this
position: Ukraine’s public cultural expenditure has been remarkably lower (both
per capita and as a share of total budget expenses) through the 1990’s than in
virtually all neighboring post-communist countries, not to mention EU member states. On the other hand, Ukraine’s
financial resources are more modest than those of Poland or even Russia.
Alongside the allegedly apathetic State, there are other major factors
blamed for a sorry plight of Ukrainian cultural sector: for instance, the
rapidly increasing flow of mass-cultural imports from the West and from Russia.
As a result, Ukrainian cultural markets and electronic media are dominated by
Russian books, American films, Russian and Western pop-music. Some critics
argue that this poses a threat to Ukrainian cultural development and, in the
long run, to Ukrainian national identity.
The purpose of this study is not to find out whether there really is a crisis in Ukrainian cultural
sector. Actually, I subscribe to the moderate opinion expressed by the
prominent scholar and ex-minister of culture Ivan Dziuba, that there definitely
is a crisis of public cultural
institutions inherited from the Soviet
past, while the national culture in general undergoes a difficult
transformation process in which positive and negative trends intertwine.
Difficulties faced by independent cultural organizations, both non-profit and
commercial, are mostly caused by general economic hardships and by low
purchasing power of Ukrainian public. There are also “growing pains” of the
still very young Ukrainian cultural industries, with their inexperienced
managers and lack of investments. Virtual absence of state’s financial support
to independent cultural organizations which is the case in Ukraine is not so
unique to post-communist Eastern Europe and, having an NGO-friendly fiscal
environment, can be compensated by earning and skilful fundraising.
Looking for scapegoats in this difficult situation is not a very
interesting and promising task. One may assume from the very beginning that
both corrupt cultural bureaucrats and culture-blind government leaders, greedy
Russian and American mass culture tycoons and inert managers of public cultural
institutions have made their contributions.
Therefore we will, first, try to demarcate economic and financial
aspects of the current cultural situation in Ukraine, then analyze in detail
both the financial situation of cultural sector and the existing policies, so
as to find out whether these policies really address the existing problems. If
they do, we will try to measure how effective and efficient they are in
practice, and if something does not work, how can it be fixed. If certain
problems are not addressed, we will attempt to propose some new policies to
deal with such problems.
In such an analysis, comparisons with Ukraine’s post-communist neighbors
seem extremely useful. Specifically, Russian Federation and Poland look very
promising in this regard. They both are culturally close to Ukraine, they share
a lot of common historical, political and cultural experience. The experience
of the 1990’s, as the first post-communist decade in all three countries, is an
especially useful ground for analytic
comparisons.
On the one hand, Russia’s public cultural sector, although much bigger
in size, is very similar to Ukrainian in its structure, system of
administration and funding: in fact, both were parts of the same
state-monopolized Soviet cultural sector until 1991. On the other hand, Poland
not only shares centuries of common historical experience and close cultural
contacts with Ukraine, but is similar to Ukraine in its size and its position on global cultural map (both can be regarded as
“medium size” or even “minor” cultures, which no one would say about Russia, of
course). What makes Polish cultural sector quite attractive to us Ukrainians,
is the fact that it is more advanced in market reforms and more integrated into
European cultural space than ours.
It is natural therefore to turn to Poland and Russia with questions
like: how did they deal with cultural problems similar to ours, can their
policy recipes be applicable to Ukraine?
Before we turn to detailed examination of particular forms of culture
funding, we have to study the legal and institutional background. Specifically,
general principles of public cultural policy should be studied. For instance,
Ukrainian “Basic Law on Culture” defines funding of culture as a
task of national budget and local budgets, while funding from other sources
(businesses, private donations, earnings) is understood as secondary. In
post-communist Poland, on the other hand, a key problem in cultural policy has
been “defining the limits of state intervention in culture”[1].
This means, the state subsidizes particular cultural activity or institution
only if such intervention is regarded as inevitable. This does not mean,
however, that in Poland public cultural sector gets more money than in Ukraine
– on the contrary, as we will eventually expose.
Other important aspects of national cultural policies to be studied and
compared are: culture-related legislation (including legal regulations for
non-profit organizations, for charitable activities, on quotas for domestic or
imported products in the media, etc), and system of cultural administration
(including institutional schemes of funding in cultural sector). After a
general analysis of political and institutional environment we can turn to
financial processes themselves. There is a broad consensus on the use of
economic/financial indicators in cultural policy analysis; it has been applied, for instance, in European
Program of National Cultural Policy Reviews[2];
in a somewhat abridged version, it has been also used in the Compendium of
Basic Facts on National Cultural Policies (www.culturalpolicies.net)
from which some data on Russia and Poland where used in this research too.
As a brief formal description of a set of indicators to be used in
cultural policy analysis, we can turn to a Polish study ‘Monitorowanie uslug publicznych w miastach’
(Red.M.Posern-Zielińska, Poznań, 1999). Here the authors propose the
following indicators:
“…1) per capita budget expenses for culture [in national and local
budgets]; this indicator can be used for measuring priority of society’s
cultural needs in the eyes of [local/national] authorities;
2) share of public subsidies spent on particular kinds of cultural
activities, or share of subsidies to particular type of cultural institutions
in total amount of cultural expenditure (these indicators can reveal government’s
priorities in cultural policy);
3) number of residents per one public cultural organization (library,
museum, theater etc); number of books or periodicals published per capita in
particular year; these indicators help us to measure available cultural offer
[in public sector] and thereby evaluate effectiveness of public cultural
policy;
4) number of people participating in particular types of cultural
activities (also, participation numbers per capita); these help us in measuring
level of the use of available cultural offer by local community;
5) number of cultural actions and events (theater shows, concerts,
exhibitions etc) per one person employed in cultural institution of respective
type (theater, gallery, museum etc); where it is relevant, box office sum can
be used instead of number of actions; these indicators can be used in
evaluating effectiveness of the work of employees in cultural sector;
6) production (prime) costs of a cultural institution per one show or
per one customer; these indicators measure efficiency of cultural
goods/services delivery;
7) shares of earned income, of sponsorship income, and of charitable
donations in total income of an institution or average share of each type of
income for particular type of cultural institutions; these indicate how active
and effective cultural organizations are in seeking funds other than those from
public budgets...”.
This list can be amplified by adding some other indicators and
approaches, for instance:
-
behavior of values of particular indicators
through time periods (most often, through 1990-2000), it reflects trends either
in cultural situation or in cultural policy;
-
differentials between planned values of certain
indicators (for instance, amount of budget subsidy) and performance, where they
are significantly different (which is often the case in Ukraine), they
illustrate the quality of cultural planning and, sometimes, intentions of the
planners;
-
regional (local) differences in certain
indicators, since differences in local policy priorities (or perhaps in local
funding potential) are reflected in them;
-
breakdown of cultural expenses among different
levels of administration (national, regional, local), which help to measure
level of decentralization in cultural policy and illustrate the distribution of
financial responsibilities among different levels of cultural administration;
- structure of expenses of cultural institutions; it’s helpful in
studying how efficiently/effectively the money is spent, how adequate the
funding is to the needs of both the institution and the public.
Unfortunately,
getting complete statistical information required for a detailed analysis of
financial situation in Ukrainian cultural sector turned out to be virtually
impossible. The amount of official cultural statistics is rather unsatisfactory
(especially when we compare it to Polish cultural statistics available to
general public); Ukrainian Ministry of Culture and the Arts does not possess
much information on cultural processes in the regions, while regional
statistics are sometimes in accessible and often incomplete.
There has also been the problem of compatibility of cultural statistics
from different countries, caused by differences in budget system,
administration system etc. To be correctly compared, data from Ukraine, Poland
and Russia often had to be reshaped and even recalculated. This made us very
cautious about international
conclusions and recommendations based on foreign experience.
Once we have a more or less detailed analysis of financial situation in
cultural sector, we can turn to a critical appraisal of particular schemes of
funding. Here, the following aspects should be analyzed:
- legal regulations related to the funding scheme;
- sources of funds; their capacity;
- who funds & whom using a particular scheme (in
other words, description of institutions involved);
- decision making routines, formal and informal;
influence groups involved; typical reasons behind funding decisions;
- accountability; effect evaluation;
- future perspectives for this funding scheme.
In such an appraisal, not only results of statistical analysis and policy documents should be used, but also interviews with people involved in culture funding and policy making processes, from Government officials to rank-and-file culture managers. As the result of such critical appraisal, concrete recommendations can be designed, and on the basic of recommendations concerning particular funding schemes, a set of more general recommendations on culture funding policy as a whole can be build. We are fully aware that the research presented in this paper does not exhaust the problem, but the goal seems to be nearer now.
1.
Cultural sector
in Ukraine: a brief overview
1.1. The existing
cultural infrastructure
As a result of Soviet
‘civilizing’ cultural policy, a massive public cultural infrastructure was
created in Ukraine, totally administered and funded by Soviet party-state. On
the other hand, this infrastructure was weaker than, for instance, those of neighboring Soviet Russia or ‘socialist’ Poland (see Table 1).
Still, even this not-so-dense public cultural
infrastructure (or, more correctly, its pre-electronic sectors – performing
arts organizations, museums, libraries, heritage institutions, book publishing,
the press etc) reached its peak in the ‘70s, and then there was, basically, a
long stagnation. There was effectively no growth in Ukrainian book publishing until perestroika, while Soviet Ukrainian-language press was in fact
shrinking in the ‘70s and early ‘80s.
The number of Ukraine-made film
productions may seem impressive comparing to other small national film
industries, but in terms of cultural contents these productions were, save for
a handful of titles, undistinctive (and mostly mediocre) part of mainstream
Soviet film production.
After the fall of the USSR, the process of the
build-up of independent Ukrainian nation-state has began, and a Renaissance of
Ukrainian national culture has been expected by many patriotically-minded Ukrainians.
However, with ideological freedom and market reforms,
something unexpected has been
happening, namely: expansion of Russophone cultural industries, now mostly
private. As it is clearly seen from Tables 1 and 2.1 ‘conventional’ cultural practices
were shrinking in the ‘90s, print runs
of newspapers and magazines were plummeting.
As Table 1 shows, cultural
participation (at least in public cultural sector) fell dramatically in Ukraine
and Russia in the 1990s, so did the number of libraries, cinemas and ‘houses of
culture’ (local cultural organizations which have been founded from local
budgets). On the other hand, the number of theatres and museums even increased
(despite plummeting number of visitors).
Experts give two major reasons for this: first,
post-communist transformation of cultural practices in much more open and free
societies; second, dramatic decline in people’s incomes (Ukraine’s GDP fell by
more than a half in 1991-97; Russia’s did only slightly better). Poverty
coincided with the influx of Western mass culture, and young generation of
Russians and Ukrainians now prefer TV and [cheap pirated] videos to theaters
and cinemas, discos to concerts, computer games to museums, while elderly
people do not have money for any of these.
We can see brighter picture when we turn to Poland:
the decline in cultural participation was much less dramatic there, perhaps
because it began earlier, and more radical and effective Polish market reforms
of early 1990s made economic decline rather short-lived.
A great number of vibrant non-state cultural
industries evolved in Ukraine during the ‘90s which resulted in radical change
of the ratio between public and private sectors in culture, especially in
popular and mass culture industries. It is especially visible in electronic
media. There are numerous private local TV and radio stations who manage to get
along with virtually no funding or investments from the state. Similar
situation can be seen in book publishing. There are several hundred independent
(mostly small in size) publishing houses in Ukraine which publish more new book
titles than state publishers do since
early ‘90s, and, since 1999, they also
print more copies of books. Actually, book publishing deserves more detailed
discussions offered in a separate case study that follows this chapter. During
the initial period of independence characterized by deep economic crisis, most
of the old state-owned entertainment industries all but collapsed. On the other
hand, numerous private show-business structures came along, although not many
of them proved their sustainability during the 1990s.
However, since the state’s financial support to
non-public show-business and music industry is negligible, we will not focus on
them here.
Case Study 1: Book publishing
When we take a look at the developments in book
publishing and book market in Ukraine, Poland and Russia in 1990s (see Tables 2.1, 2.2, 2.3) we can see that
these decade can be divided in three uneven periods:
1990-1995: slow recession arguably caused by painful
market transformation (in the industry) and by general economic decline (and
accompanied, especially in Poland, by growing diversity of market offer);
1996-1999: period of more dramatic changes caused by
active protections policies (especially in Russia) and by the financial crisis
of 1998;
1999-till now: gradual stabilization.
Of course, each country shows its peculiarities. In
Ukraine, the decline in book publishing during the first period was the worst
among the three: total amount of printed books fell from 170 millions in 1990
to 52 millions in 1994-96 (and even lower, to 22 millions copies, later in
1999). There was similarly dramatic decline in Russia, only the scale was different
(1,55 billions in 1990, 475 millions in 1995), while in Poland it was
relatively mild: 170 millions to 115 millions copies. (see Graph
1 and Graph 2).
The specifically Ukrainian phenomenon was the
shrinking of the share of books and periodicals in Ukrainian language in early
1990s. The reason for this, at least in part, is believed to be that domestic
printed matter in Russian language has
been replacing books and periodicals printed in Russia. Another reason was
apparently the reduction in subscription of periodicals by public
libraries and other public institutions
which previously provided perhaps a lion’s share of subscription of
Ukrainian-language Soviet press in Eastern and Southern Ukraine.
On the other hand, Russian press was making
substantial progress since the times of
perestroika, and was widely read in
Ukraine both before and after independence, by both Russophone and Ukrainophone
audiences.
Table
2.1 Book publishing & the press in
Ukraine in the ‘90s
|
|
1990 |
1993 |
1994 |
1996 |
1999 |
2000 |
|
Books published, titles |
7046 |
5002 |
4752 |
6084 |
6282 |
7749 |
|
Books published, mln copies |
170 |
88 |
52 |
52 |
22 |
44 |
|
Of these, in Ukrainian Language |
95 |
40 |
21 |
31 |
12 |
29 |
|
Magazines & Journals, titles |
185 |
522 |
461 |
717 |
778 |
757 |
|
Annual print run, mln |
166 |
33 |
19 |
20 |
33 |
46 |
|
Of these, in Ukrainian |
150 |
30 |
13 |
12 |
|
|
|
Newspapers, titles |
1787 |
1757 |
1705 |
2206 |
2639 |
2667 |
|
Total single issue print run, mln |
25 |
40 |
21 |
23 |
31 |
35 |
|
Of this, in Ukrainian |
17 |
26 |
10 |
9 |
|
|
|
Total annual print run of newspapers, mln |
4652 |
2843 |
1593 |
1544 |
|
|
Table 2.2 Books,
publishing and the press in Russia
|
|
1980 |
1990 |
1995 |
1997 |
1999 |
2000 |
|
Books: Titles
(thousand) |
50.0 |
41.2 |
33.6 |
45 |
47.7 |
50.1 |
|
in
Russian |
n/d |
37.7 |
31.3 |
|
45.4 |
|
|
Copies
(mln) |
1393.0 |
1553.0 |
475.0 |
1998 |
421.5 |
404 |
|
in
Russian |
n/d |
1500.0 |
449.0 |
|
397.7 |
|
|
Periodicals: Titles |
3960.0 |
3681.0 |
2471.0 |
|
3358.0 |
|
|
in
Russian |
n/d |
3389.0 |
2343.0 |
|
3223.0 |
|
|
Copies
per year (mln) |
2488.0 |
5010.0 |
299.0 |
|
601.0 |
|
|
in
Russian |
n/d |
4915.0 |
289.0 |
|
596.0 |
|
|
Newspapers: Titles
(thousand) |
4413.0 |
4808.0 |
5101.0 |
|
5535.0 |
|
|
in
Russian |
n/d |
4488.0 |
4779.0 |
|
5258.0 |
|
|
Copies
per year (billion) |
29.0 |
37.7 |
8.8 |
|
7.1 |
|
|
in Russian |
n/d |
37.4 |
8.6 |
|
7.0 |
|
Table 2.3 Book publishing in
Poland
|
|
1990 |
1995 |
1999 |
2000 |
|
Titles: |
10242 |
11925 |
19192 |
21647 |
100% |
|
of
which: |
|
|
|
|
|
|
Scientific
publications |
3571 |
3065 |
6466 |
6840 |
31,6% |
|
University
textbooks |
1230 |
1205 |
1823 |
1785 |
8,25% |
|
Professional
publications |
1040 |
881 |
1244 |
1704 |
7,9% |
|
School
textbooks |
384 |
991 |
1342 |
1410 |
6,5% |
|
Popular
science |
2444 |
3227 |
4757 |
5890 |
27,2% |
Fiction
|
1573 |
2556 |
3560 |
4018 |
18,6% |
|
of
which for children and youth |
336 |
491 |
805 |
810 |
3,7% |
|
Number
of copies (mln) |
175.6 |
115.6 |
78.1 |
102.8 |
100% |
|
of
which: |
|
|
|
|
|
|
Scientific
publications |
6.6 |
3.6 |
5.8 |
6.0 |
4,7% |
|
University
textbooks |
1.6 |
1.6 |
2.0 |
1.7 |
1,6% |
|
Professional
publications |
4.4 |
2.7 |
2.8 |
5.8 |
5,6% |
|
School
textbooks |
38.7 |
44.0 |
24.4 |
41.4 |
40,2% |
|
Popular
science |
59.1 |
23.0 |
21.7 |
23.6 |
23% |
Fiction
|
65.2 |
40.7 |
21.4 |
24.3 |
23,6% |
|
of which for children and youth |
19.0 |
5.3 |
4.6 |
5.6 |
5,5% |
|
Specification |
1990 |
1995 |
1999 |
2000 |
|
Newspapers |
|
|
|
|
|
Titles |
130 |
108 |
74 |
71 |
|
Number
of copies in mln |
1390.5 |
1433.7 |
1190.0 |
1181.9 |
|
Total
single circulation (average) in thousand copies |
6947 |
6114 |
4592 |
4566 |
|
Magazines |
|
|
|
|
|
Titles |
3007 |
4340 |
5518 |
5314 |
|
Number
of copies in mln |
679.3 |
1776.8 |
1526.5 |
1616.4 |
|
Total
single circulation (average) in thousand copies |
41194 |
77720 |
65997 |
68368 |
|
Specification |
|
Share,
% |
||
|
|
Titles |
Copies,
thousand |
Titles |
Copies |
|
Official
publications |
277 |
1251,4 |
3,6 |
2,9 |
|
Sciences
|
1561 |
1018,8 |
20,1 |
2,3 |
|
Popular
sciences |
414 |
1875,1 |
5,3 |
4,3 |
|
Applied
sciences |
144 |
209,0 |
1,9 |
0,5 |
|
Professional
|
284 |
749,7 |
3,6 |
1,7 |
|
Textbooks, of
which: |
2407 |
26350,1 |
31,1 |
60,5 |
|
for
schools |
989 |
23495,6 |
12,8 |
53,9 |
for universities, colleges |
1296 |
2255,4 |
16,7 |
5,2 |
|
Political
|
249 |
1680,4 |
3,2 |
3,9 |
|
Reference
books |
618 |
4392,0 |
8,0 |
10,1 |
|
Leisure
publications |
87 |
1639,8 |
1,1 |
3,8 |
|
Advertising
|
55 |
194,3 |
0,7 |
0,4 |
|
Fiction, Of
which: |
986 |
2896,3 |
12,7 |
6,7 |
|
For adults |
826 |
1697,3 |
10,7 |
3,9 |
|
For
pre-school age |
66 |
647,7 |
0,85 |
1,5 |
|
For school age |
94 |
551,3 |
1,2 |
1,3 |
|
Total |
7749 |
43562,9 |
100,0 |
100,0 |
Table 2.6 Structure
of Book Publishing in Russia, 1990-2000
|
|
Titles |
Share % |
|||||
|
|
1990 |
1997 |
2000 |
1990 |
1997 |
2000 |
|
|
Textbooks |
7801 |
14879 |
14540 |
18,9 |
33,0 |
29,0 |
|
|
Fiction |
6101 |
9713 |
10981 |
14,8 |
21,6 |
21,9 |
|
|
Science |
9467 |
7581 |
9569 |
23,0 |
16,8 |
19,1 |
|
|
Professional |
9323 |
3745 |
4650 |
22,6 |
8,3 |
9,3 |
|
|
Popular science |
2268 |
3240 |
3571 |
5,5 |
7,2 |
7,1 |
|
|
Reference books |
1861 |
2046 |
2196 |
4,5 |
4,5 |
4,4 |
|
|
Political |
1684 |
313 |
169 |
4,1 |
0,7 |
0,3 |
|
|
Other |
2729 |
3509 |
4409 |
6,6 |
7,8 |
8,8 |
|
|
Total |
41234 |
45026 |
50085 |
100,0 |
100,0 |
100,0 |
|
Books and periodicals were VAT-exempt in Poland since
early 1990s. In 1995, similar protectionist regulations were introduced in
Russia, which arguably resulted in rapid growth of the market: number of books
published grew almost by four times in just two years. However, when the rouble
collapsed next year, book publishing began to fall again and after two more
years it was even below the level of 1995. Perhaps it was also a result of
previous overproduction of books which could not be absorbed by neither Russian
market, nor by neighboring Russian-reading markets of Ukraine and other
post-soviet countries. This roller-coaster development was not accompanied
however by similar changes in number of titles published: it has been
constantly growing since 1995. This perhaps means that Russian publishing
industry became much more market-oriented than ten years ago.
Ukraine and Poland faced similar crisis (although
smaller in scale) in 1998-99. Actually, the year 1999 was the worst in book
publishing in all three countries. There was also similar stability in number
of titles published. But the structure of market supply and demand in each
country is different. Ukrainian book market was the smallest in size in 2000
(7,75 thousand titles in 43,5 million copies); while Poland with its 38 million
people (compared to Ukraine’s 48 million) published 21,6 thousand books in
102,8 million copies, which means
Polish book market is almost three times bigger. However, these
statistics do not include book import: experts believe that Ukraine imports
several times more books from Russia than it prints itself, which means that
book consumption in Ukraine can be similar to that of Poland or Russia (140
million people, 50 thousand books published in 404 million copies in 2000).
Hence Ukrainian book publishing can be regarded as to
some extent “supplementary” to imports: textbooks for schools and colleges
(which cannot be replaced by imported Russian textbooks) make almost two thirds
of total book printing in Ukraine (Poland – 43 %); science and popular science
publications make 6,6% (Poland – almost 30%), while fiction makes only 6,6 %
comparing to Poland’s 24,3%. Ukraine also publishes much less books for
children (2,8 % comparing to Poland’s 5,6%).
Since Ukrainian school textbooks are commissioned by
Ministry of Education, it makes Ukrainian publishing industry much more
dependent on public budget money than Russian or Polish. On the other hand,
governments of Russia or Poland proved to be much more active and effective in
protectionist policies: tax exemptions
for books and periodicals which exist there for several years make
Polish and Russian publishing industries much better off than ours.
This does not mean, of course, that the lack of
governments active support (and constraints on privatization of publishing
houses, as we will see) is a brake on the development of private sector of book
publishing. For instance, all publishing houses remaining in state property published
only 10% of total number of titles and 20 % of total number of copies in 2000,
while private publishers delivered 60 % of titles, and 70 % of copies.
1.2. Public cultural administration
The system of cultural
administration in Soviet Ukraine or,
rather, in the USSR as a whole (that is, Ministry of Culture, other
culture-related State departments in
charge of the press or of radio &
TV) was virtually unfit for independent policy making for the simple reason
that it wasn’t meant for this. It was a task for proper departments in the
Central Committee of the Communist Party,
to determine goals and design means for cultural policy.
Since 1991, culture-related
government agencies have had to learn how to design and fulfil national
cultural policy by themselves.
In contemporary Ukraine,
cultural sector in broader meaning is administered on the national level by
several government agencies (Ministry of culture and arts, State Committee of
information policy, television and radio; State Committee for youth policy,
sports and tourism; National Council for television and radio broadcasting).
Most of them are coordinated by Vice Prime Minister of Ukraine for Humanitarian
Affairs, and each of them (and some other government bodies) have budget
expenses for culture and arts. (See Table
3.1)
Table
3.1 Expenses for culture, arts and mass
media in State budget of Ukraine
|
Government agency |
Comments
|
Amount
of expenses |
||
|
2000 |
2001 |
2002 |
||
|
Ministry
of Culture and Arts |
Expenses for education and academic research not included |
131137 |
170807 |
196040 |
|
State Committee for information policy, TV and radio broadcasting |
Funding of State TV and Radio-channels |
121618 |
117283 |
134601 |
|
Administrative Department of the Parliament |
Purchase of air time for media coverage of Parliament work, subsidies
to ‘Holos Ukrainy’ daily; and ‘Ukraina’ Concert Hall |
8066 |
10764 |
11069 |
|
Administrative Department of the President of Ukraine |
Subsidies to the ‘Kyiv Camerata’, the Ukrainian House cultural center,
National Exhibition Center* |
1381 |
1868 |
2204 |
|
Ministry of Foreign Affairs |
Promotion of Ukrainian culture in the world |
75 |
95 |
153 |
|
Ministry of Education and Sciences |
Pedagogical Museum, Museum of Aviation, subsidies to educational
periodicals |
89 |
120 |
589 |
|
Ministry of Health |
National Medical Library, National Museum of Medicine |
1250 |
1984 |
2175 |
|
Ministry of Agriculture |
Promotion of culture in the countryside |
1729 |
2160 |
2333 |
|
Ministry of Finance |
Museum of Treasures |
951 |
1123 |
1215 |
|
State Committee for Nationalities and
Migration |
Support to cultures of national minorities |
- |
400 |
1000 |
*in December 2002, Ukrainian cultural center in Moscow
also was transferred to the jurisdiction of the Administrative Department of the President’s Office.
Source: Committee for Culture of the
Supreme Rada in Ukraine
Although it looks natural
that some Ministries fund related public museums, it is rather strange that two
biggest cultural venues in Kyiv, the ‘Ukraina’ Concert Hall and Ukrainian House
cultural center, are administered and funded neither by Ministry of culture,
nor by culture department of Kyiv city administration, but by administrative
departments of the Government.
The Ministry of culture and
the arts, although declared the main government agency for cultural policy, is
in fact in charge of cultural sector in narrow meaning (music and performing
arts, plastic arts, film, libraries, cultural heritage, artistic education).
The Ministry administers nearly 130 state-owned cultural organizations and has
some recommendational power over all
other public cultural organizations. These organizations (over 45
thousand of theaters, museums, libraries, cinemas, artistic schools, community
cultural centers, or ‘houses of culture’) are administered and funded by local
government bodies (Oblast administrations, Raion administrations, city
councils, town and village councils) (see Table
3.2 ).
Table 3.2 Public cultural organizations in Ukraine, 2001
|
|
Owned by the state |
Owned by regional and local authorities |
|
Theaters |
4 |
116 |
|
Performing arts organizations |
17 |
71 |
|
Circuses |
16 |
- |
|
Libraries |
9 |
18654 |
|
Museums |
13 |
545 |
|
Cultural heritage reserves |
13 |
23 |
|
Cultural centers (‘houses of culture’, ‘clubs’) |
548 |
18054 |
|
Artistic schools and colleges |
12 |
1487 |
|
Film studios |
5 |
- |
|
Archives |
12 |
10 |
|
Other |
4 |
971 |
|
Total |
655 |
45803 |
Source: State Committee for Statistics of
Ukraine, 2002
Regional government agencies
(Oblast Administrations, Raion Administrations) and local Councils have
Directorates for culture or Departments for culture in their structure to take
care of local public cultural organizations and cultural activities. The system
of public administration in Ukraine has its peculiarity: Oblast and Raion
Administrations are subordinate not to the Cabinet of Ministers of Ukraine, but
to the Administration of President of Ukraine. This is why the influence of the
Ministry of Culture on local cultural administration is rather weak. It seems that the Ministry of Finance is a
more powerful actor in regional (local) cultural policy, because it defines the
recommended levels of culture funding in Oblast budgets (this important issue
will be discussed later in more detail).
As mentioned earlier, since
late 1980s, several thousands independent cultural organizations have been
developing in Ukraine (theaters, publishing houses, musical collectives,
recording studios, art galleries, etc.). However, public agencies in charge of
cultural sector don’t feel obliged to help them, financially in particular. The
only funding scheme designed for non-public artistic organizations or individuals
that exists in Ukraine today is the President’s grants for younger artists.
Traditionally,
so-called ‘Creative Unions’ founded in
Stalinist 1930s have been major legitimate representatives of the artistic
community in Ukraine. Before 1991 virtually all professional artists have had
to be members of the ‘Creative Unions’. The latter also received remarkable
financial support from Soviet Government. Nowadays, many artists either don’t
join the traditional artistic unions or create artistic associations of their
own. However, Ukrainian government still treats the traditional Unions (they
have adopted the title of ‘the National Creative Unions’ now) as legitimate
representatives of the artistic community and still provides same financial
support to them, while the recently founded artistic associations get none.
1.2.1. Cultural
administration systems in Russia and Poland
The Russian Federation, as
its name suggests, is a federate state consisting of 89 ‘subjects of
Federation’, including 21 republics with their own Presidents, Parliaments and
Ministries of culture. Similarly to its Ukrainian counterpart, the Ministry of
culture of the Russian Federation carries out federal policy on cultural
heritage, on libraries management, the arts, film production and distribution
(since 2000), folk arts and crafts, cultural recreation, and professional
cultural and artistic education. It regulates and finances federal cultural
organizations, provides funds from the federal budget to regional cultural
administrations and institutions. This support is provided through Federal
programs for the preservation and development of culture and the arts.
The latter function makes a
difference from Ukrainian system of state support to culture in the regions,
where the only way to do so is through budget transfers from National budget to
Oblast budgets, and the amount of transfers is decided by Ministry of Finance,
not Culture. Another difference in Russian system is lack of formal
subordination of regional (Republican) cultural administration bodies to the
Federal Ministry of culture. As the National
Report on Cultural Policy in Russia (Strasbourg, 1996) describes it, “At
present, government departments at different levels are not subordinate to each
other. Regional authorities regulating culture are subordinate to higher
authorities only when the latter possess resources which can be distributed and the former have to ask for material
and moral support.
Subjects of the Federation
themselves determine the structure of regional and local executive powers. As a
rule, executive structures imitate the federal structure. For example, in some
areas, cultural departments within area administrations regulate film
distribution and tourism, whereas in other areas, separate departments perform
these functions.
In 1991, the Russian
government established the Federal Council for Culture and the Arts to
co-ordinate the activities of the Ministry of Culture and territorial
departments regulating culture. The Council includes the ministers for culture
of the republics of the Russian Federation and the administrators of
territorial and area departments of culture”. In 2000, it merged with Federal Council for Cinematography into the
coordinating Council for Culture and Film.
Federal (National) cultural
institutions in Russia include 19 theaters, 27 concert organizations and
performing arts groups, 43 museums, 9 libraries and 74 artistic schools and
colleges. Many of these institutions are considered “particularly valuable
objects of the cultural heritage” of Russia. They include such prominent
institutions as the Bolshoi, Mariinsky, Maly and Khudozhestvenny theatres, the
Hermitage museum, the Tretiakov gallery, the Russian museum of arts, the
National library, Moscow and St.
Petersburg conservatories.
The Ministry of Culture funds them from federal budget. The federal
budget also provides funds for projects included in the federal program for the
preservation and development of culture. The majority of public cultural
institutions are under the control of municipal administrations and are
financed from municipal budgets.
Museums, artistic organizations and major libraries are under the
control of regional administrations and are financed from regional budgets.
Although not a federate
state, Poland seems to be even more decentralized than Russian Federation in
its system of public administration, due to the intensive process of
integration into EU. At first glance, its cultural administration looks quite
similar to those of Ukraine and Russia: there is the Ministry of Culture and
National Heritage (formerly Ministry of Culture and Arts), with several
national cultural organizations it funds; there are cultural administration
bodies at regional (Voivodships) and local level, which care about the vast
majority of public cultural organizations. However, this system underwent
several reforms during the 1990s, the main of which have been administrative
and financial decentralization and privatization of major cultural industries
(film and book publishing).
Polish scholars Dorota
Ilczuk and Anna Wieczorek in their detailed discussion[3]
of public funding of culture in Poland conclude that the decade of
transformation resulted in: “ – withdrawal of the state from super-patronage of
culture and of the Ministry of Culture from direct administration of public
cultural sector. Within the Ministry’s competence, we see now only not so
numerous but important public cultural institutions as well as tasks of
national character. Instead, the Ministry got a very important task of framing
legal, financial and program conditions for support of cultural development;
- the shift of the
implementation of state patronage of culture from national to regional level;
- the decentralization of
cultural administration which resulted in the majority of tasks and public
cultural institutions being shifted to the local level and funded by local
authorities;
- adoption of the idea of
public-private partnership in culture funding; support to the development of
NGO in cultural sector. The system of indirect funding [through tax incentives]
shaped in the 1990s serves this purpose”.
1.3.
Culture-related legislation
1.3.1 General overview
Few years ago, Ukrainian
culture-related legislation was evaluated as deeply heterogenous, incomplete and
lacking conceptual integrity (O. Grytsenko, Kultura
v Zakoni, 1999). The reasons for
these conclusions were that,
first, while there has
been a number of recently adopted, modern and liberally looking culture-related
bills, too many aspects of daily activities of public cultural institutions
(especially funding) still has been regulated by old sectoral by-laws
(so-called ‘normative documents’) inherited from the USSR;
second, many new
developments of post-communist cultural life (for instance, private artistic
organizations and cultural NGOs) are still not supported by appropriate legal
base (state support to independent cultural organizations is never mentioned in
Ukrainian culture related bills);
third, ineffectiveness
and internal contradictions of some culture-related legal acts can be
understood as a result of confusing mix of different ideologies and values underlying them: modern democracy
and market liberalism coexist with
XIX-century-style nation-building; state paternalism - coexists with laissez-faire
approach to cultural industries, not to mention some elements of
multiculturalism coexisting with basically ethnocentric notion of Ukrainian
nation.
A good example of this ideological mix is The
Basic Law of Ukraine on Culture
(Osnovy Zakonodavstva pro Kul’turu). This act became the main official
cultural policy document of the initial period of independence. The Basic Law was adopted by Supreme
Rada (Ukrainian parliament) in February 1992, soon after the proclamation of
independence, in the midst of so-called ‘state build-up period’ (rozbudova derzhavnosti). The
Basic Law itself is far from consistent or sound in its
provisions. In fact, it mirrors both Post-Soviet bias and romantic
post-independence expectations of its
authors and [implied] readers/subjects[i].
Although the cultural policy principles and the State’s goals and priorities the Basic Law proclaims seem to fully
correspond to modern democratic standards, the concrete mechanisms of state
support for culture The Basic Law
prescribes are clearly oriented towards continuation of the familiar budget allowance funding.
As for public financing of culture, some articles in
Basic Law are directly related to it: «Article
23. Financing of culture.
The financing of culture is based upon the official
funding norms and shall be provided by
the [State] budget and local budgets, by means of enterprises, organizations,
civil associations, and from other sources, as well.
The State guarantees subsidies necessary for
development of culture in the amount no lower than 8% of Ukraine’s national
income (...)
Article 24. Foundations for Cultural Development
(...) Civil associations (Creative Unions,
corporations, foundations, associations) as well as enterprises and citizens
may independently or on the ground of treaties, establish charitable
foundations for financing of cultural programs, development of literature and
the arts, for promotion of talented persons or for creative initiatives in
cultural sphere (...)
Article 26. Taxes in cultural sector
The State
carries out the policy of tax benefits in cultural sector.
It exempts Creative Unions, [ethnic] cultural
associations and foundations, other cultural civil associations from taxes.
Exempt from taxes are also cultural organizations which are subsidized by
[State] budget, by [public] enterprises or
by trade unions.
[The State] establishes tax exemptions for those
incomes of enterprises, organizations and individuals which are donated for
cultural needs...
The regulations for tax exemptions for cultural
organizations as well as concrete tax incentives for those who donates to
culture shall be drawn by acting Laws of Ukraine».
Apparently, no state in contemporary world ever spent
as much as 8 % of its national income on culture. Neither Ukraine’s budget ever
confirmed to this requirement since 1992. This, of course, undermined the Basic
Law as a whole.
In the 1990s, several culture-related bills were
adopted: «The Law on Museums» (1995), «On Libraries» (1997), «On Charities and
Charitable activities» (1997), «On Cinematography» (1998), «On Protection of
Cultural Heritage» (1999), «On Professional Artists and Artistic Unions» (1997)
and some others. In all these bills, issues of financing of cultural
organizations are rarely touched.
In 1997, an important amendment to Article 7 of «The
Law on Income Tax for Enterprises» was made. It provided some tax exemptions
for non-profit organizations (for which certain types of cultural organizations
are also eligible).
Unfortunately, no clear legal definition of the
non-profit organization accompanied the amendment, which resulted in common
interpretation of the NPO by tax officials as organization which carries out no
entrepreneurial activity at all.
The amended Article 7 of the Bill on Taxing of
Profits of Enterprises (specifically, its sub-paragraph 7.11.1) lists six
groups of NPOs eligible for tax relief. For instance, group ‘a’ includes some
types of budget-funded public organizations regarded as NPOs; group ‘b’
includes «charitable foundations and civic associations established with the
goal to carry out environmentalist, athletic, amateur artistic, cultural,
educational, academic activities; Artistic Unions» - all these are free of tax
on their incomes derived from «core activities».
Group «c» includes «legal entities other than those mentioned in groups «a» and «b» whose activities do not result in obtaining profits according to the acting law». This definition is rather confusing and can be interpreted so that any NPO (including those ascribed to groups «a» and «b») shall not carry out any activity which can result in obtaining profits. Unfortunately, this is precisely how many tax inspectors interpret this article of the bill.
To be eligible for tax relief, an NPO should be registered at local Taxation Administration (according to the Regulations of Registering of Non-profit Organizations and Institutions issued by the State Administration of Taxation, 11.07. 1997). The latter may either include an NPO in its Register or refuse (if, for instance, it finds something «untypical» for non-profit activities in the NPO’s Statutes) and the applicant have no right to appeal to the court.
This
legal structure results in small and weak «third sector» in Ukraine.
A
new Budget Code was adopted in 2001. According to it, State budget and local
budgets have to be designed according to the principles of program budgeting which means that, on the
national level, sectoral ministries and departments should design «target
programs» for the development of corresponding sectors of national economy as
the ground for calculation of budget expenses.
The
very wording of corresponding articles of the Budget Code apparently signifies
a controversial compromise between the explicitly stated principle of program
budgeting and the still valid principle of permanent financial support to the
existing network of public cultural organizations.
Article 87 of the Budget Code deals
with «expenses to be covered by State Budget of Ukraine». Specifically, it
mentions:
«…
10) Culture and arts:
a)
State programs of cultural enlightenment (state
libraries, museums, exhibitions, historic reserves of national importance,
international cultural contacts, major cultural actions of the state);
b)
State programs of development of theatrical and
performing arts (national theaters, national philharmonic institutions, state
organizations of music and dance, other public cultural organizations and
actions, according to the Inventory approved by Cabinet of Ministers of
Ukraine);
c)
State support to civic artistic and cultural
associations which have the status of National Unions;
d)
State programs of development of
cinematography;
e)
State archives».
Article 89 of the Code regulates expenses from local budgets (those of towns, cities, villages). Specifically, it mentions:
«…5) public programs of cultural enlightenment and of theatrical and performing arts (theaters, libraries, museums, exhibitions, houses of culture, artistic schools for children)».
Article 90 regulates expenses from «Budget of Authonomous Republic of Crimea and Oblast budgets». It mentions:
«…5) culture and arts:
a) State programs of cultural enlightenment (Oblast libraries, museums, exhibitions);
b) State programs of theatrical and performing arts (philharmonic organizations, ensembles of music and dance, theaters, houses of culture of regional importance, other artistic organizations and actions);
c) other state programs supporting culture and arts…»
The term «state programs» as applied to regional cultural programs means that, if a regional budget has not enough revenues, a «state program» can count on a subsidy from the State budget. Otherwise, such programs are called «cultural and artistic programs of local importance» and have to be covered by local budget revenues alone.
Although the Budget Code speaks about cultural/artistic «programs» as the grounds of funding, it in fact obliges the State and local authorities to fund existing public cultural organizations (even those which may seem to be commercial enterprises, like circuses or some musical organizations). On the other hand, it effectively prohibits to finance from State budget those independent cultural organizations which are not included in the «Inventory» approved by the Government. This results in the situation when an independent cultural organization can get some funds from the state only if it takes part in a major state-sponsored cultural event.
The articles of the Budget Code cited above can be interpreted as the demarcation of the limits of financial intervention of the State in culture. In other words, the ‘third sector’ wound up beyond these limits.
How much money the State has to give to culture (or, more precisely, to public cultural organizations)? The Budget Code does not specify it, but «The Law on Social Welfare Standards and Social Guarantees of the State» gives a detailed definition of «State social standards in cultural services» (Article 13):
«State social standards related to services of cultural organizations include:
the inventory of free-of-charge services provided by cultural institutions, organizations and enterprises; quality requirements with regards of services provided by cultural institutions, organizations, enterprises; [quantitative] norms of provision of population with cultural organizations, institutions, enterprises”.
Article 21 of the Law on Social Welfare Standards regulates norms of financial provision assuring State social standards and guarantees in practice. It mentions three kinds of such norms:
Norms of per capita financing of particular services from State budget or from local budget;
Norms of financial provision for particular types of public institutions and organizations (educational, cultural, medical etc.);
Norms of the State’s capital investments in development of public cultural organizations.
The Article also rules that the mentioned financial norms should be specified in the Law on State Budget of Ukraine for each particular year. Unfortunately, the reality is different. The most powerful player in the process of budget-making is the Ministry of Finance; and it uses only one kind of norms: those of per capita cultural expenses for each region (Oblast) of Ukraine.
These norms, calculated by Ministry of Finance itself, tend to strongly underestimate real demand for public funds in cultural sector, so that budget performance in most of Ukraine’s Oblasts shows that actual cultural spending is often 2-3 times higher then proposed by Ministry of Finance (see Table 9.2).
1.3.2.
Regulations on earned income
The majority of public cultural organizations in Ukraine (even libraries and archives) have earned incomes. How much (little) they earn and why, will be discussed later in detail. This source of financial means for public organizations is regulated by The Inventory of paid services that may be provided by public institutions of culture and arts, confirmed by Cabinet of Ministers of Ukraine in its Decree dated 05.06.1997. The Inventory includes a broad range of cultural services, from theatrical and musical shows, through paid courses in music, dance and acting, festivals, exhibitions of arts or books, to dance parties and discotheques. Each public cultural organization is supposed to have its Regulations confirmed by appropriate cultural administration body (in case of independent cultural organization, its regulations have to be registered at local self-government body), and all kinds of paid and unpaid services it provides should be listed there.
Public cultural organizations also have to plan their earned income for each year. The amounts of their planned income are used by cultural administration bodies to design their budget programs; they also can be used as a reason for cuts in budget subsidies to those organizations who are better off. To avoid such cuts, cultural organizations tend to underestimate their expected/planned earned incomes.
Independent cultural organizations don’t have to have such plans, but they have virtually no public funding too. If a cultural organization is not a non-profit organization (NPO), its activities are treated by Law on Enterprise and corresponding taxation Laws as «usual business activities», with no tax relieves or incentives. Their earned income depends on paid capacity of the public (which is far from high in contemporary Ukraine) and on its ability to avoid some taxes.
If a cultural organization is registered as an NPO, tax officials tend to fully tax most of its incomes save for charitable donations (referring to the mentioned ambiguous formulation in Article 7.11 of The Law on a Taxation of Profits of Enterprises). This in fact forces many cultural organizations to choose between disguising their earned incomes as donations and abandoning their NPO status.
“Article 29. State
programmes for preservation and development of culture in Russian Federation.
Government of Russian Federation shall design Federal Programmes of
preservation and development of culture, which embody the State’s cultural
policy and its implementation, and provides funding for such Programmes (…)
Article 30. Obligations of the State on assuring access of citizens to cultural
activities and cultural goods.
The State is responsible before its citizens for assuring general access to cultural activity and
cultural goods.
To do so, State authorities
and local self-government institutions shall, within limits of their
competence:
(…) provide conditions for general esthetic education and basic artistic
education, …assure free access to library services and amateur artistic
activities;
- establish and support, through tax incentives and financial credits,
public and independent cultural organizations and their activities;
- provide budget funding for public cultural organizations and, where
necessary, provide matching funding for
independent cultural organizations.
Article 37. Competence of the Federal Government of Russian Federation in cultural
sphere.
The competence, as described in this article, includes:
“…drawing federal budget, specifically its parts related to cultural
expenditure, creating federal funds for cultural development;
- introducing tax incentives for cultural development, defining minimum
levels for budget funding of public cultural organizations;
- assuring direct funding for federally administered public cultural
organizations”.
Article 39. Competence of Republics and Oblasts of Russian Federation.
(…) drawing regional
programs of protection and development of culture, assuring their funding and
implementation;
- establishing regional funds of cultural development…;
- introducing regional norms of budget funding for cultural activities.
Article 45. Financing of culture and cultural activities.
Public funding is the basis of State guarantees of protection and development of culture in Russian Federation.
No less than 2% of federal budget expenses of the Russian Federation
shall be assigned to these goals.
Amounts of subsidies for
culture in budgets of the Republics of the Russian Federation and in local
budgets shall be no less than 6% of total budget expenditure.
…Special regulations for profit taxation of non-commercial cultural
organizations shall be introduced”.
Thus the Basic Law of the Russian Federation on Culture attempts to fix
federal spending on culture at the level of 2% of all spending and recommends
that regional authorities raise this amount to 6%. However, these regulations
have not been enforced.
The Law on Taxation and many other general laws regulating
various aspects of economic life, exempt state cultural institutions almost
entirely from all kinds of taxes. Federal law on non-commercial organizations
was adopted in 1996 adding private and independent institutions to tax
exemption practices. However, in late ‘90s financing difficulties of the state
limited or even abolished tax exemptions for culture.
In 1995, book publishing and some related activities were made
VAT-exempt; in 2002, this exemption was prolonged.
It is well known that political and economic reforms in Poland began
earlier than in post-soviet countries and were more radical. This is true also
with regards of cultural legislation. In 1991, a new Bill on organization and carrying out of cultural activities (Ustawa o organizowaniu i prowadzeniu
dzialalnosci kulturalnej) was
adopted by Solidarity-dominated Parliament (Sejm). It made all legal entities
and individuals eligible for carrying out cultural/artistic activities freely,
as well as for public financial support of such activities. As a legal ground
for decentralization of cultural policy, all public cultural organizations were
divided into two groups: state organizations (to be funded from National budget
or from regional budgets) and local (community) organizations (to be supported
from local budgets).
Among the first group, the
narrower circle of the most important cultural institutions was selected. These
were subordinated to the Minister of culture and financed directly from National
budget. By 1999, there were 48 National institutions (museums, theatres,
libraries, performing arts organizations, historical reserves etc.), 17
artistic colleges, 304 artistic schools.
Voivodships owned and funded 323 cultural institutions (112 museums, 51
libraries, 37 theatres, 52 cultural centers and ‘houses of culture’, 20
philharmonic institutions and symphonic orchestras. Several thousand other
public cultural organizations (predominantly libraries and community cultural
centers) were funded from budgets of municipalities and communities
(Gminy).
The prominent policy culture theorist professor Kazimierz Krzysztofek in
his article “Ewolucja zalożeń i programów polityky kulturalnej
w Polsce w latach dziewiecdziesiatych”[4]
(The evolution of principles and programs of cultural policy in Poland in the
1990s) notes that:
“The changes [that took place in 1989-2000] in thinking about cultural
policy and in its practical implementation were, first and foremost, results of
the transformation of the state and the economy, and of their adaptation to EU
standards.
The decade of transformation is ending now, and it seems that we have to
change the perspective, because we see that the transformation is not heading
toward some particular goal. It is obvious that such final goal does not exist,
or more precisely it is movable because the modern capitalist world of which
Poland is now a part, is inconstant transformation itself”.
K.Krzysztofek concludes on the trajectories of Polish cultural policy in
the 1990’s:
“First, a common denominator for all governmental cultural programs
seems to be sets of priorities, like protection of heritage and cultural
education of the society…
Second, each new program showed an increase in the number of priorities,
each of them quite right and correct, but the more priorities we have, the
lower the rank of each of them;
Third, the area of the state’s patronage over culture has also been
increasing with each new program, starting from the doubts about the need of
the state’s cultural policy, to the extensive set of obligations and tasks,
many of which remained empty declarations because the increase in number of
policy priorities has not been followed by increase in financial means;
Fourth, in drawing each new program, an approach of “beginning from
zero” is visible; there has been no critical evaluation, negative or positive,
of previous program”.
Beside direct funding of public institutions, there is a legal mechanism
of budget support to independent cultural organizations: it is called ‘cultural
tasks of state importance (“zadania panstwowe w sferze kultury”) and regulated
by the corresponding Decree of the Council of Ministry of Poland issued in July
1992. According to the Decree, state may fund following tasks performed by
either public or independent actors:
- festivals, artistic competitions, conferences of national importance;
- non-commercial book publishing;
- purchase of works of art for museums, purchase of books for public
libraries;
- preservation of historical monuments;
- production of documentary and educational films;
- support of amateur creativity;
- support to Polish culture abroad;
- support to cultures of minorities in Poland.
However, according to experts, both the State and the voivodships do not
make broad use of this funding instrument.
The government program document adopted in 1993, Polska polityka kulturalna.
Zalożenia. (Polish cultural policy. Foundations) contains a warning
against “total commercialization of culture” and proclaims that the state shall
not surrender its role as the major donor of culture. However, “moderate
commercialization is not a threat to culture”.
The program set forth the following policy principles: decentralization (of both administration and funding); devolution (certain responsibilities have been shifted from national to regional and local level); demarcation of “protected areas” in culture (this means protection from free market forces); direct financial support to the most important cultural institutions. At the moment, heritage and book publishing were defined as the main “protected areas”.
Income tax is regulated by the Bill
on taxation of incomes of legal entities (1992).
Normal taxation rate is 32% since 2000, but earning of cultural
organizations are made exempt from this tax by article 17.4 of this Bill. Also,
donations of legal entities for cultural purpose are made income tax exempt (up
to 15% of total income). Memorial buildings are exempt from tax on real estate
as well. Taxation of income of individuals also may be regarded as
artists-friendly. The general scale of taxation is 19%, 30% and 40%. However,
royalties of artists and authors are subject to special regulation: it is ruled
that the amount of expenses that can be deducted from taxation base shall be
counted as 50% of the total amount of earned royalties, unless the actual
expenses are higher than 50% (in this case, the actual amount is deducted),
after which the remaining amount of income is taxed.
Another important legal instrument of indirect financial support of
culture is reduced or even zero rate of VAT. The VAT in Poland was introduced
in 1993; its normal rate is 22%. However, the following cultural activities are
VAT-exempt:
- publications of books and newspapers (save for commercial catalogues
and advertisements);
- production of documentaries and educational films;
- screening of films (cinema tickets);
- routine activities of theatres, libraries, museums, galleries,
cultural centers, philharmonic institutions, circuses;
- protection and restoration of historical monuments.
1.3.4. Conclusions
Summarizing this brief review of culture-related legislation in the
three countries we can conclude that Ukrainian law is perhaps the least
culture-friendly: it provides very little tax relief for earning of cultural
organizations and very weak incentives for private donors to culture and the
arts.
Ukraine also lacks a specific law on non-profit organizations while in
Poland and Russia such laws have been acting for quite a while.
Legal protectionism for cultural industries in Ukraine is also the least
developed among the three countries.
1.4. Stockholders in cultural policy
A discussion of policy-making in cultural sector is supposed to include not only cultural administration (on the national, regional and local level) and representatives of cultural community, but also major government institutions (the President, the Cabinet of Ministers, regional authorities), as well as the Parliament with its major political groups. Major stockholders in cultural industries with their diverse and sometimes opposite interests should also be included in the analysis. Apparently, the interests of Ukrainian content-providers (artists, writers, publishers, filmmakers, show business-managers, etc.) rarely overlap with those of import-oriented show business and book trade, as we have seen in our discussion on State policy in book publishing.
Of course, interests and demands of mass consumers of cultural goods and services (in other words, of larger groups of Ukrainian public) should be taken into account as well. The role of the Ministry of Culture and of regional/local authority was discussed before.
Here we will take a look at the positions of major political forces in
Ukraine on cultural issues. Once we do this, it is not difficult to come to the
conclusion that the absence of broad
consensus on basic principles and concrete mechanism of public cultural
policy is not accidental.
To make things less
complicated, let’s use the already traditional approach to political groups in
Ukraine whereby they are divided into: the left, the national democrats, the
liberal reformers, and the ‘centrists’
a.k.a. ‘the party of power’. We have to admit in the first place that for
each of these major political forces cultural issues are not of foremost
importance and usually a means of achieving more important political goals,
particularly those related to nation-building or identity-shaping.
National culture issues used
to be especially prominent in political
programs and actions of the national
democrats (the label often used for those parties and groups which are now
united in Victor Yushchenko’s block ‘Our Ukraine”). Among their
cultural-political priorities we see the goal of strengthening National
identity of contemporary Ukrainian’s through the development of national
culture, return of the previously neglected or even prohibited cultural
heritage into active use, and of course the demand to firmly establish
Ukrainian language in all key spheres of public life has always been among
their political priorities. Not all of this has been achieved so far. And the
traditional questions arise: why so, and who is to blame?
For the national democrats,
the usual answer goes that the state has not been firm and persistent enough in
pursuing these policy goals. The state didn’t provide enough money for
Ukrainian film production and book publishing; the government fell short of
enforcing the Law on Ukrainian language
and the Law on Broadcasting which says that 30% of music and 30% of TV programs
should be Ukrainian, etc.
Ironically, concrete
measures proposed by national democrats so as to achieve their cultural goals
and to strengthen Ukrainian identity, very often resemble those practiced by
Soviet regime in its latest, mellow
phase. These are mostly administrative, paternalistic ‘affirmative
actions’ aimed at ‘Ukrainianization’ of
public services, the media, and education. Among the more modern measures
proposed by national democrats as we have seen earlier there are legal
proposals aimed at limiting free market
influence on national cultural industries by introducing protectionist laws
favoring domestic cultural products (films, books, music). Still, they regard
state budget as the main source of funding for cultural sphere.
The ‘liberal reformers’ (for
instance, the ‘Reforms and Order’ party led by Victor Pinzenyk) who often act
as natural allies of the national democrats against the left and, against ‘the
party of power’, are rather indifferent to cultural issues. They seem to either
believe that free market reforms, once conducted ‘properly’, should also solve
many problems of cultural industries, and increase in budget revenues will
hopefully solve the remaining problems of artistic institutions, or perhaps
they are not sure whether a free market democracy is supposed to meddle with
the arts at all. However, as allies of national democrats, they tend to back
policy proposals of the latter.
The left-wing parties (Communists and their smaller allies)
traditionally raise a number of cultural issues in their political programs,
too. The most important among them are, or course, the role and status of
Russian language (they insist that
Russian should be second official language in Ukraine) and the notorious
Western pop cultural invasion which allegedly corrupts our people and
undermines our values.
They (and not only they)
tend to use for their own political purposes the nostalgia for the late Soviet
period (a popular feeling among millions of our compatriots of older age), when
movies, books and magazines were so nice and decent.
This nostalgia has been
often instrumentalized as pro-Russian political and cultural orientation, which
turned out to be a mixed blessing for the left. Indeed, there are strong
Russophile sentiments in Eastern Ukraine and especially in Crimea, which can be
and are used during elections, but cultural proximity and recollections of
common past don’t necessarily mean readiness to sacrifice national independence.
On the other hand, for Western Ukraine and for urban intelligentsia virtually
everywhere in Ukraine, this orientation shaped a strong stereotyped image of
Communist Party of Ukraine as an anti-patriotic political force.
There is a number of
political groups (or, rather, of business-administrative-political syndicates) with rather blurry ideologies
and controversial public images who
call themselves ‘centrists’ but are often called ‘the party of power’ by
observers and journalists. During the 2002 parliamentary elections, these
parties and groups merged into pro-presidential block ‘For United Ukraine’ and
today, they form a shaky majority in the Parliament.
Their ideas about culture
and cultural policy seem to be as blurry and opportunistic as the political
ones. After a period of ‘cultural
apathy’ which followed President Kuchma’s famous remark that ‘National idea
didn’t work’, there has been a
short-lived ‘new wave’ of the government’s interest in national culture. As
manifestations of this ‘new old approach’, I can mention increased number of
folklore festivals, several restored historic buildings (including two historic
cathedrals in Kyiv ruined by the Soviets in 1934 and in 1941), and a number of
newly created monuments to prominent national leaders of the past.
There was also a number of
Presidential Decrees allegedly aimed at supporting the arts and culture, but
concrete measures provided by these decrees (scholarships and stipends to
prominent artists, etc) were of limited importance.
The role of regional and
local authorities and regional elites was touched already in our discussion of
culture funding in the regions. We can only add here that they very seldom take
an active in cultural policy issues of national scale (perhaps the only such case
has been the radical position of regional elites in Lviv on music FM stations
airing predominantly Russian music).
The groups that can be
called ‘industrial lobbies’ (those representing the book industry, the film
industry, the musical industry and the show business in Ukraine) tend to be
much more active in policy making process. For instance, major Ukrainian book
publishers, in alliance with the Ministry of Information Policy, initiated
virtually all protectionist bills related to book publishing. Ukrainian
Filmmakers Union, in alliance with Film Department of the Ministry of Culture,
initiated the bill on dedicated tax on cinema tickets. These industrial lobbies
usually interpret their initiatives as serving best interests of Ukrainian
economy and society as a whole, although this is not necessarily so. For
instance, the proposed 10% tax on cinema tickets will almost inevitably make
them more expensive and less accessible to general public. Since the revenues
raised from this tax will be spent on Ukrainian film productions, this will
serve only those cinema goers who prefer Ukrainian films.
The interests of industrial
lobbies and of different groups in cultural/artistic community are represented
by several NGO’s, including the traditional (national) artistic unions and the
newer ones, like the Association of Ukrainian book publishers (very active in
promoting the 2002 bill ‘On State support to book publishing’), or the recently
created umbrella group Young Artists’ Forum. However, as the story with the book-protecting
bill demonstrates, these groups are still much less powerful than government
bodies in promoting the interests in cultural sector.
2.
The existing policy of culture funding
2.1. Direct Public Funding of Culture
As was mentioned before, public subsidies to cultural organizations
still remain the major source of their funding in all three post-communist
countries covered by this analysis, which makes their public cultural sector
very vulnerable in times of budget difficulties.
As financial statistics show, public funding of culture in Ukraine
plummeted in 1993-1998, and although the nominal amount increased in 1999-2001,
it has been declining both as a share of Ukraine’s GNP and as a share of State
budget (see Table 4.1).
We can see that in 1999 (the next year after the deep financial crisis)
actual public expenses on culture and
the arts were slightly above 60% of the 1996 level, and this level has not been
reached even today. Ukraine’s cultural expenditure as a share of GDP have
hardly reached 1/3%, and as a share of consolidated public budget expenditure,
it has been slightly above 1%. When we turn to Poland and Russia for
comparisons, we see that, while Ukrainian public cultural expenditure in
relative terms is only slightly lower than in these countries, in absolute per
capita figures it is much lower ( Table
5).
Table 5. State support to culture in some post-communist countries, 2000
|
|
Ukraine |
Poland |
Russia |
|
Share of cultural
expenses in National and Federal budgets |
0,53 % |
0,8 % |
|
|
Share of Federal
(National) budgets in total public expenses for culture |
15 % |
15,4 % |
16 % |
|
Per capita public
cultural expenses, total |
$1,8 |
$17 |
$5 |
|
Share of cultural
expenses in regional and local budgets |
3% |
3,12% |
2% |
|
Per
capita income (1995) |
$1630 |
$2800 |
$2240 |
Although Ukraine’s per capita GDP has been almost 75% of that of Russia,
Ukraine’s public cultural expenses per capita (approx. $ 1,8 in 2000 and $2 in
2002) are disproportionately lower than those in Russia ($5). The comparison
with Poland is even more striking: Ukraine’s per capita GDP is almost 60% of
the Poland’s, still its cultural expenses are almost 10 times lower.
Table 5.1. Share of culture expenditure in total
expenditure of State budget of Poland
|
Year |
1991 |
1992 |
1993 |
1994 |
1995 |
1996 |
1997 |
|
Share, % |
1.0 |
0.81 |
0.76 |
0.75 |
0.77 |
0.76 |
0.82 |
However, the data in the Table
5.1 show that even in better-off Poland, it has been hardly possible to
keep the share of cultural expenditure at the 1991 level of 1%.
Looking at the distribution of public funding of cultural sector between
the national level and the local levels (see Table 5), we find the figures for the share of the national budget
in all three nations almost identical
(15-16%). One may conclude from this that, in Ukraine, the degree of
underfinancing is spread over all levels of cultural infrastructure.
In Poland, on the other hand, the share of local administration in
cultural expenditure has been continuously increasing through the 1990s (see Table 5.2), as a result of the policy
of consistent decentralization.
Table 5.2 Breakdown of public cultural expenditure in
Poland 1991-2000 (%)
|
|
1991 |
1992 |
1993 |
1994 |
1995 |
1996 |
1997 |
2000 |
|
Ministry of Culture |
17.4 |
18.5 |
19.5 |
19.9 |
20.1 |
19.4 |
17.3 |
15.4 |
|
Other Government departments |
4.9 |
2.7 |
1.0 |
0.9 |
0.9 |
1.1 |
1.2 |
|
|
Voivodships |
36.0 |
35.1 |
32.5 |
30.0 |
30.5 |
28.5 |
29.9 |
20.2 |
|
Communities (Gminy) |
41.7 |
43.7 |
47.0 |
49.2 |
48.5 |
51.0 |
51.6 |
26.5 – powiaty 37.9 - gminy |
Cultural funding priorities in the three countries are also to some
extent similar.
It is visible from Table 6, that
Poland spent 14% of its cultural budget on museums in 2000; Russia spent 34% ;
while Ukraine - only 5,6%! As for performing arts, our neighbors spent several
times less on them than Ukraine. Why
so? Since performing arts and mass entertainment events do not belong to
explicit priorities of Ukraine’s cultural policy, we can only speculate about
it. One possible reason is, that Ukrainian government likes grand pompous
actions. Another possible reason is, that big performances are a convenient
tool of money-laundering.
Table 6. Breakdown of cultural expenditure in national budgets of
some
post-communist countries, 2000
|
|
Ukraine |
Poland |
Russia
|
|
Museums, galleries |
5,60 % |
14 % |
34,0 % |
|
Heritage |
8,50 % |
13 % |
6-9 % *** |
|
Libraries |
8,04 % |
4,6 % |
8,3 % |
|
Artistic
associations |
2,6 % |
2,4 % |
|
|
Theaters |
11,10 % |
8,1 % |
|
|
Performing arts
(musical) organizations |
38,60 %*) |
2,1 % |
11,7%**) |
|
Film |
10,20 % |
0,5 % |
8,8 % |
|
Artistic
education (schools, colleges) |
15,60 % |
47% |
9,7 % |
*) «National-scale mass cultural actions»
included.
**) All performing arts.
***) Estimated as 1/2 of expenditure of the
Federal Program of Protection and Development of Culture in RF.
Financial responsibilities of the Ministry of Culture and of local
cultural administration are rather different Table 7
The Ministry’s care focuses on National cultural organizations (theaters, opera
houses, museums etc), artistic colleges and circuses. It also dedicates nearly
40% of its expenses to performing arts, festivals, exhibitions of national
importance. On the other hand, local authorities fund most of public libraries,
theaters and museums. Let’s look at the breakdown of cultural expenses at
national level, in other words, at the expenses of the Ministry of Culture (see
Table 8.1) for the dynamics of funding in
1993-2001, and Table 8.2 for a more detailed
picture of the Ministry’s expenditure in 2001 and 2002. At least two questions
arise from first-glance analysis of Tables 8.1, 8.2.
First, once we know that there were no serious changes in public
cultural infrastructure during the 1990s, why shares of funding for particular
types of organizations has been so unstable (for instance, «museums and
exhibitions»: 1993 - 9,7%; 1996 - 6%; 1999 - 7,5%; 2001 - 14,5%; 2002 - 6,8%).
For libraries, the amount of funding oscillated between 10,5% (1993) and 4,3% (1998); for film
productions between 1,3% (1998) and 10,2% (2000).
Second, why as much as 40-48 % has been spent on performing arts (in
1998-2000, this item included «mass cultural actions» as well)?
Unlike budget subsidies to public cultural organizations, funding of
major cultural events (festivals, big shows during national holiday
celebrations, big exhibitions etc) is formally based on competitive tendering.
This form of funding is also known as «targeted funding» because the money must
be spent on achieving particular «targets». As can be seen from Tables 8.1, 8.2, the
share of «targeted funding» can be as high as 25-30% in some years.
One may argue that, once this funding is competition-based and
non-public organizations also may be eligible, this form of funding presents an
alternative to traditional yearly subsidies to public cultural organizations.
However, the procedures of competition are not transparent and there are
usually no more than 2-3 competitors (and the future winner is usually known
from the beginning). Also, only pre-planned events (projects) may be funded in
this way.
Recapitulating the problems of direct budget funding, we must note that
it is not the instability of the structure of cultural expenditure in the
National budget, or its arguable disproportion, or the marginal role of
project-oriented funding schemes, that can be defined as the biggest
shortcoming of Ukrainian state’s cultural budgeting. Perhaps the most
depressing effects have been caused by periodical budget underperformance which
has become almost a rule in the 1990s.
The data on public funding of culture in Table 4 are a little bit misleading in this regard, for they
represent consolidated budget of Ukraine (that is, total amounts of public
cultural funding on all levels of administration – national, regional, local).
The figures of “planned amount” have been calculated by the Ministry of
Finance, while the amounts planned by local authorities themselves are usually
remarkably higher (see also Table 9.2). So, when we
compare the actual cultural expenses on the national level to the planned
amounts (see Table 8.2 for 2001 and
2002) we can see that the level of actual budget subsidies tends to be around
70% of the planned level.
Still worse, this underfunding is not spread over all major items more
or less equally; it usually differs remarkably for different groups of
organizations which can be interpreted as the use of underfunding as a kind of
policy tool.
For instance, in 2001 (see Table 8.2) actual
budget subsidies given through the Ministry of Culture were only 150 mln. UAH
(planned amount 215 mln.). Artistic colleges and schools got almost 100% of the
planned 38,9 mln., while theaters and other performing arts organizations got
41 mln. (instead of 49,7 mln UAH). “Non-artistic” organizations (libraries,
museums, heritage) got less than half
of the planned (27,37 mln. instead of 62,5 mln.).
Similar practice continued in 2002: artistic colleges and schools got
92,5% of the planned; National creative unions got 99%, while libraries and
museums got only 38% of the planned subsidies.
It is hard to guess which policy goals, if any, stand behind this
re-shaping of cultural budgets, but the results for those who seem to be “black
sheep” are undeniably depressing.
Let’s take film making. Table 8.3
shows the levels of budget underfunding for filmmaking and the number of
full-length films released each year (production usually takes 2-3 years,
because of irregular funding).
The statistics in Table 8.3
show how dramatic has been the impact of bad funding (in the absence of private
investors) on Ukrainian film.
Table 8.3 Film
production and its funding in Ukraine
|
Year
|
Level
of actual budget funding, % |
Number
of full-length films released |
|
1991 |
|
68 |
|
1993 |
|
47 |
|
1996 |
68,7% |
8 |
|
1997 |
71% |
7 |
|
1998 |
27,2% |
4 |
|
1999 |
14% |
7 |
|
2000 |
95% |
4 |
|
2001 |
66% |
8 |
|
2002 |
38% |
7 |
2.2. State budget funding of culture in Russia and Poland
The financial crisis in Russia of 1997-98 gave way to periodical sequestering of the budget, culture expenditure included. As a result, financing for public cultural institutions was limited to salaries and even those were paid with several month’s delay. In 1997, the underfinancing of culture reached the record low level of 12% of the approved budget, which deprived of all financing several cultural projects included in the Presidential program for cultural development.
When we take look at a more detailed account of Polish cultural
expenditure on the national level (see Table
8.4, 8.5), we see numerous similarities with Ukraine, but also a few
significant differences.
Table 8.4 Breakdown of expenses of Ministry of Culture of Poland in 1991-1997
|
Expenditure |
1991 |
1992 |
1993 |
1994 |
1995 |
1996 |
1997 |
|
|
Total expenditure of the Ministry of Culture and the Arts |
PLN % of
previous year* |
155 290 |
227744 102.6 |
304399 98.8 |
419170 104.2 |
537758 100.4 |
657832 102.0 |
782984 103.6 |
|
Structure of expenditures by budget classification (% from total
expenditure) |
||||||||
|
Of which: |
100.0 |
100.0 |
100.0 |
100.0 |
100.0 |
100.0 |
100.0 |
|
|
‘Material services’** |
4.3 |
4.7 |
4.3 |
3.5 |
3.0 |
2.8 |
2.8 |
|
|
Education *** |
28.7 |
30.9 |
30.9 |
31.2 |
27.8 |
27.5 |
31.1 |
|
|
Higher education |
15.2 |
15.5 |
14.6 |
13.2 |
13.8 |
15.6 |
16.4 |
|
|
Culture and the arts |
46.7 |
44.8 |
46.2 |
48.2 |
51.2 |
50.0 |
47.3 |
|
|
Other activities |
0.5 |
0.5 |
0.3 |
0.3 |
0.3 |
0.4 |
0.4 |
|
|
Administration |
4.6 |
3.6 |
3.7 |
3.6 |
3.9 |
3.7 |
2.0 |
|
* corrected
by inflation rate
** predominantly film production
*** artistic schools
As Table 8.4 shows, since
1994, there has been a slow increase in real culture expenditure each year. However, the breakdown of
expenses has been almost as unstable as in Ukraine (for instance, expenses for
filmmaking varied between 2,8% and 4,7%; total expenses for education – between
41% and 47,5%; expenses for museums and heritage – between 32,5% and 53%; for
theatres – between 9,4% and 16,1%, etc.). However, there has been a general
trend of constant increase of expenses for heritage-related items (museums,
libraries, heritage sites): from 45% of total expenses for “Culture and the
Arts” in 1995 to 65% in 2000.
Table 8.5 Dynamics of expenditure of Ministry of
Culture of Poland for the item “Culture and Arts”, 1991-2000
|
Expenditure |
1991 |
1992 |
1993 |
1994 |
1995 |
1996 |
1997 |
2000 * |
|
Total expenses, thousand PLN |
72500 |
101993 |
140598 |
202079 |
275194 |
329037 |
370012 |
433534 |
|
As % of previous years |
100 |
98.38 |
101.89 |
108.72 |
106.56 |
99.72 |
97.87 |
|
|
Structure of expenditures for
culture and arts (as %) |
|
|||||||
|
Museums |
32.3 |
31.2 |
29.4 |
25.4 |
23.9 |
26.5 |
31.3 |
28.5 |
|
Heritage |
3.7 |
3.5 |
3.1 |
13.4 |
11.3 |
14.0 |
18.7 |
24.6 |
|
‘Zacheta’ art gallery |
1.2 |
1.9 |
1.4 |
2.1 |
1.6 |
1.6 |
1.7 |
1.1 |
|
Filmotheque |
0.4 |
0.4 |
0.3 |
0.3 |
0.3 |
0.4 |
0.4 |
0.6 |
|
Centers of Arts |
2.6 |
2.1 |
1.8 |
1.9 |
1.5 |
1.4 |
1.5 |
2.7 |
|
National library |
8.6 |
10.8 |
9.0 |
9.5 |
9.7 |
8.1 |
8.6 |
9.2 |
|
National arts and cultural organizations |
3.8 |
3.3 |
2.8 |
2.8 |
4.0 |
3.6 |
4.0 |
4.6 |
|
Theaters |
10.4 |
10.2 |
10.6 |
10.3 |
9.4 |
12.5 |
16.1 |
16.1 |
|
National philharmonic |
2.8 |
2.7 |
2.9 |
2.5 |
2.6 |
2.4 |
2.99 |
|
|
State concert department |
0.1 |
0.1 |
0.1 |
0.1 |
0.1 |
0.1 |
0.18 |
4.1 |
|
Cinema organizations |
4.8 |
3.4 |
3.4 |
2.5 |
1.6 |
1.3 |
1.25 |
0.3 |
|
Other expenditures |
29.3 |
30.3 |
35.1 |
29.2 |
34.0 |
27.9 |
13.8 |
|
* WWW. CULTURALPOLICIES.NET /PROFILES/ POLAND
However, clear comparisons between Ukraine’s and Poland’s cultural
budgets are somehow complicated by the fact that, in Poland, education and
filmmaking do not belong to “Culture and the Arts” expenditure (see Table 8.4), while the latter
cover 47-51% of the Ministry’s expenses. That is, heritage-related expenses
actually make not 65% but 31% of the Ministry’s total expenses. Still, it is
remarkably more than in Ukraine (15%-18%).
2.3. Funding
through targeted programs
There are no explicit legal regulations for contents, design and implementation of targeted programs in Ukrainian law so far (the Cabinet of Ministers presented the draft bill “On State Targeted Programs” to the parliament, recently and the latter already included it in its agenda).
However, targeted programs are mentioned in the Law “On State Forecasts and Programs of Economic and Social Development in Ukraine” (approved in 2000). This bill rules that the Cabinet of Ministers shall design and present for the parliament’s approval, alongside the draft National budget for each year, the draft State Program of economic and social development of Ukraine which must correspond to the draft budget.
Article 8 of this bill defines that the State Program must contain, among other elements: “…a list of state targeted programs to be financed from the National budget in corresponding year. (…)
State targeted programs must contain:
- main phases and deadlines for their implementation;
- amounts of funds necessary for each program (total funding and funding for each particular year), and sources of the funding;
- concrete results of each targeted program;
- amount of funds needed by each targeted program in the planned year; including the amounts needed from National budget;
- state Administration bodies which commission each particular targeted program”.
There are four main reasons for the use of targeted programs as cultural policy tool: - first, targeted programs serve as a means of making the Government’s work more effect-oriented and evaluable;
- second, with the routine one year budgeting spin, only targeted programs (for a period of 3,5 or more years) can serve as a means of planning and accomplishing something which can not be achieved in one year period;
- third, national (federal) targeted programs usually combine national, regional, local funding with non-public resources, which cannot be provided by routine budget funding process;
- fourth, specific targeted programs seem to be indispensable if there is a large-scale problem which cannot be solved in a routine way, that is, if much more than usual amount of public resources is needed to cope with it.
It should be noted, however, that targeted programming as a method of
planning and investment was also used in the former Soviet Union (but not in
the cultural sector). This perhaps explains why there are so many elements in
the targeted programming in Ukraine which remind us of old Soviet times.
To have an idea on how targeted programs are being used in cultural
sector, let’s take a look at the list of culture-related targeted programs
approved in Ukraine in 2002 (Table 8.6).
|
Program name |
Approved by: |
Funding, mln. UAH |
|
|
Total |
National
budget |
||
|
All-State
program of the development of national film industry in 2003-07 |
Law
of Ukraine ¹ 361-IV, 25.12.2002 |
609,69 |
130,6 |
|
State
program for the development of social infrastructure of the country-side till
2005 |
The
President’s Decree ¹ 640, 15.07.2002 |
60,8 (for
cultural aspects) |
20,4 (for
cultural aspects) |
|
Program
of development of extracurricular school education in 2002-2008 |
Decree
of the Cabinet of Ministers ¹ 378, 28.03.2002 |
46,5 |
1,4 |
|
Program
of the development of museums till 2005 |
Decree
of the Cabinet of Ministers** ¹
442, 30.03.2002 |
130,4* |
57,6* |
|
Program
of the development of local lore studies till 2010 |
Decree
of the Cabinet of Ministers** ¹
781, 10.06.2002 |
0,475* |
0,475* “for
each year” |
|
Program
of replenishment of public library
stocks till 2005 |
Decree
of the Cabinet of Ministers ¹ 900, 1.07.2002 |
28,1* |
19,14* |
|
Complex
program of the preservation of cultural monuments of the State Reserve “The
Hetman’s capital” and development of social infrastructure of the town of
Baturyn |
Decree
of the Cabinet of Ministers ¹ 1123, 17.08.2002 |
38,4* |
21,6* |
|
Program
of technical modernization of National O.Dovzhenko Film Studio |
Decree
of the Cabinet of Ministers ¹ 1294, 20.08.2002 |
20 |
19,7 |
|
Complex
program of certification of cultural heritage objects for 2003-2010 |
Decree
of the Cabinet of Ministers ¹ 1330, 9.09.2002 |
183,5*
(appr. 22 mln. for each year from region. budgets) |
8,6* |
|
State program of support of National creative unions for 2003-2005 |
Decree
of the Cabinet of Ministers**
¹ 1398, 19.09.2002 |
0,835 |
0,535
(including 0,3 mln. for grants to first stage of Ukrainian plays). |
* “Estimated costs”
** The Decree specifies that the funding for this program should be within the limits of funds provided by National and local budgets for corresponding years.
However, one has to see culture-related programs in the broader context of
target programming in public budgeting in Ukraine to be able to locate the
place of culture among the state’s priorities (see Table 8.6a)
Table 8.6a. State targeted programs included
in the National budget for 2003
|
|
Number
|
Total
funding, mln. |
From
National budget,
mln. |
|
All targeted programs |
182 |
23 434,8 |
11 102,3 |
|
Culture-related
programs |
18 |
88, 54 |
29,7 |
|
Share
of culture-related programs (%) |
9,9% |
0,4% |
0,27% |
We see that, despite the remarkable number of culture-related programs, their share is almost negligible.
The lack of general rules on composition, contents and certification of state programs is clearly visible in the contents and the legal status of the 10 programs listed in Table 8.6.
Most of them were approved by the Cabinet of Ministers and contain only estimated amounts of funding (however, some of the programs contain no explicit figures of total expenses at all); one program was approved by Presidential decree, and the program for development of film industry was enacted by a special law in December 2002, and therefore is obligatory. There is some confusion caused by the latter program, however: it seems that the “smaller” program of modernization of National film studio approved by the Cabinet of Ministers in August, 2002 has been overlapped by the “bigger” program approved later by the Parliament. But since there are no rules to deal with such situations, the “smaller” program was not been cancelled yet.
We know that to be enacted and funded, all programs approved by the Cabinet need including in the National budget; otherwise their character is only recommendational. According to the Ministry of Economy, there have been 206 approved state targeted programs covering the year 2003; but only 182 of them were included in the budget for 2003; the remaining 34 exist only on paper. The recommendatory character of the majority of targeted programs can be seen in the Cabinet’s Decrees they were approved by. Concerning the funding, the Decrees usually use the cliche phrase: “the funding shall be within the limits of allocations provided by National [local] budgets for corresponding years”.
This means, as a matter of fact, that those implementing the programs have to compete for funds with those doing routine work in the same sector of public cultural infrastructure.
For instance, the “Program of the development of museums till 2005” (total expenses 57,6 mln. UAH from National budget in 3 years) can count on a share of the usual amount of allocations to state museums which has been at the level of 20-25 mln. UAH in 2000-2002 (see Table 8.1, 8.2). This makes the implementation of the program rather problematic.
By comparing the amounts of funding needed for targeted programs in Table 8.6 with the actual amounts of state subsidies to corresponding sectors of culture sphere Table 8.2 we can amplify this pessimistic conclusion over the majority of targeted programs. The only exclusion is perhaps the Program of support to National creative unions (with 0,535 mln. UAH for 3 years, comparing to 5,17 mln. UAH given to the same National unions in 2002 alone) it doesn’t seem too difficult to accomplish. But the question arises: if only 0,535 is enough to support the National creative unions for 3 years, what the remaining 4,6 mln. are spent for?
Even a brief study of the contents of the programs listed in Table 8.6 allows us to make some more observations. First, there is a number of strictly sectoral programs which deal with the [under-] development of certain sectors within culture (libraries, museums, local lore studies, institutions of extracurricular education) and are rather limited in their score and goals. For instance, the Program of the development of local lore studies consist mostly of educational and research activities in which several government and academic institutions are engaged (Ministry of Education and Science, Ministry of Culture, National Academy of Science etc.).
The Program of replenishment of the stocks of public libraries is even more narrow in its means and goals; it consists completely of the tasks which seem to belong to libraries routine activities, while any new general approach to the mechanisms of replenishment of library stocks is absent.
The Program of development of museums also consists mostly of museums’ core (or even routine) activities (repair, renovation of the displays, acquisition of new exhibits). However, there are some non-routine tasks in it, for instance:
- creation of ten new public museums in different cities of Ukraine (funded from local budgets, not from national budget);
- development of the State Register of Objects of National Cultural Heritage;
- “comprehensive investigation of the situation of museums’ stocks”.
It seems that the main reason for the emergence of these programs was precisely the insufficient budget funding of museums and libraries: year after year they have had enough money only for salaries and maintenance of buildings, and no funds to buy new books or to renovate museum displays.
Another type of targeted programs is presented by the Program for “Hetman’s Capital” historical reserve in the town of Baturyn (which includes a set of tasks aimed at the renovation and development of both the historical site and the town itself) and by the Program of technical modernization of National Dovzhenko Film Studio. Both programs are of rather limited character, and the reason for state intervention (in Baturyn’s case, also for the intervention of the regional administration in Chernihiv) is perhaps the lack of necessary resources both in Baturyn and in the film studio.
On the other hand, there is an example of a more elaborated, strategic and comprehensive approach to targeted programming: the Program for development of National film industry which will be analyzed later in more detail and in comparison with the similar Russian program.
2.3.1. Targeted funding of culture in Russia
Targeted programs are not unique to Ukraine, though. Targeted support for culture has become common in Russia in the 1990s. The development of targeted programs is considered a means for more effective and efficient funding of cultural public sector, in the regions especially.
The emergence of the targeted support of culture in Russia was
stimulated by changes in the system of budget
expenditure on culture after the collapse of the USSR in 1991. Because the
Ministry of Culture of the RF no longer approved local budget’s expenses for
culture and the arts, it attempted to regain its former influence on local
cultural policy, in part, by obtaining funds from the federal budget to do so,
in addition to funds for organizations under its direct control. These demands
became the rationale for targeted programs.
Initially, targeted programs for culture have been designed and
implemented according to the old Soviet planning techniques, but in 1993, there
was an attempt to change the procedure for developing targeted programs by
introducing a competition for federal grants to cultural projects. Independent
board of experts was created to evaluate applications for funding.
The Ministry of Culture of the RF launched the competition and selected
a number of projects to receive state funding. However, the federal government
failed to live up to its financial commitments. Initially, 108,400 million RUR
were allocated for the Federal program
for the preservation and development of culture
and the arts. In the autumn 1993, the allocation was reduced to 97,100
million RUR, although only 83,100 million had been effectively allocated by the
end of 1993. Unsurprisingly, all available funds went first of all to cover the
expenses of public institutions under the direct control of the Ministry of
Culture. More than half the funds were directed towards the restoration of
historical and cultural monuments, and support to library and museums
collections. The targeted programs were financed according to the residual
principle. The selection of projects thus lost its meaning.
In 1997, the Presidential Program
for the development of culture was adopted. The major tasks facing cultural
development in Russia for 1997-99 were set in this program as follows:
- to create conditions necessary for the widest possible access for all
social groups to national and international artistic and cultural works, assure
freedom of creativity, cultural and spiritual development of individuals;
- to preserve the historical and cultural heritage of the peoples of Russia as a factor for unifying different social and cultural groups;
- to develop the principle of federality, that is to implement cultural
policy at territorial and local government level, where the state and the
people interact more naturally.
Due to the economic crisis, these goals, especially that of development,
have not been entirely achieved.
In 1998, the level of budget funding of the Presidential Program fell to 12% of the planned amount.
However, the idea of the targeted program as a key instrument of culture
funding has not been abandoned.
In 2000, the Federal targeted program Culture of Russia 2000-2005 was adopted.
The ‘strategic goals’ of this Program were articulated as follows:
- preserving cultural potential and heritage of the country, providing
continuous development of Russian culture and diversity of cultural life;
- maintaining unity of Russia’s cultural space, providing equal access
to cultural activities and goods for the inhabitants of different territories
and those belonging to all social groups, promoting cultural dialogue within
the multiethnic state;
- shaping individual and group orientations towards values which promote
successful modernization of Russian society.
Among the “main tasks” of the Program were:
- providing logistical, legal and financial support for professional
creative activity and development of the market for professional artistic
products;
- preserving national artistic traditions and assuring development of
Russian theater, music and fine arts, sustainable development for film industry
by reorganizing state sector and promoting of market interaction between film
production, screening and audio-visual presentation;
- in 5 year period, radical change in the infrastructure and
technological resources of federal cultural organizations should have been
achieved.
The Program’s total budget was established at 49,1 billion RUR (around $
1,6 billion; see Table 8.7).
The Federal Program consists of several subprograms:
“Development of culture and preservation of heritage of Russia” (total
funding 27,8 billion rubles, from federal budget – 19,9 billion rubles);
“Film of Russia” (total funding 19,7 billion rubles, federal budget –
7,45 billion rubles);
“Archives of Russia” (total funding 1,5 billion rubles, federal – 0,98
billion rubles).
Table
8.7
Expenses for the Federal Program ‘Culture of Russia 2000-2005’
|
Source
|
Total
(bln RUR) |
2001
|
2002 |
2003 |
2004 |
2005 |
|
All
sources |
49,15 |
5,07 |
8,3 |
9,8 |
12,04 |
13,95 |
|
Federal
budget |
28,4 |
2,23 |
4,84 |
5,84 |
7,24 |
8,26 |
|
Regional
and local budgets |
7,84 |
1,15 |
1,33 |
1,52 |
1,78 |
2,05 |
|
Non-budget
sources |
12,9 |
1,7 |
2,12 |
2,44 |
3,02 |
3,64 |
Since the scheme of targeted programming has had such an important place
in Russia’s cultural policy, and since the similar targeted program of
development of National film industry was adopted in Ukraine recently (January,
2003), we found it relevant to analyze comparatively in more detail the
Ukrainian program and the “Film of Russia” subprogram of the federal program
“Culture in Russia” discussed above.
Case Study 2: Targeted
programs for film industry in Ukraine and Russia
All-State Program for development of National Film Industry in 2003-2007
The program was
designed by Ministry of Culture and the Arts of Ukraine (as a matter of fact,
by the Ministry’s department of cinematography in association with National
O.Dovzhenko film center) and approved
by the Supreme Rada (Parliament) of Ukraine on December, 2002.
The legal status of this program is
therefore unique among culture-related targeted programs activated in 2002,
because only this one was enacted by the special law.
This is how the current situation in Ukrainian film industry is described in the introductory part of the Program:
“There are 5 state-owned film studios and more than 20 private studios in Ukraine (…) Ukrainian film production plummeted in the 1990s: only 4 full-length feature films and 29 documentaries and animated films were produced in 2001, which makes about 10-15 % of the production level of late 1980s (…)
Today, approximately 6,8 thousand “film-screening units” (that is, halls equipped with film-screening equipment) exist in Ukraine, including over 500 cinemas. The rest are mostly halls in the village clubs (houses of culture) possess film-screening equipment. Among the cinemas, only 62 have been modernized and technically re-equipped recently (…)
Cinema attendance has also dropped dramatically through 1980s-1990s and is now at the level of 0,15 visits per capita per year. However, there has been a tendency to slow increase in film attendance during the last 2-3 years (mostly in big cities). The majority of public cinemas make losses from core activities and are able to survive only due to lease of their premises to other businesses.
Film market and TV in Ukraine are 95% dominated by exports, mainly from the US and Russia.
The National Program defines its main goal as follows:
“The key goal of the Program is the provision of conditions necessary for development of national film industry in market environment, as well as for the restoration of the role and the impact of Ukrainian film on the society”.
The Program envisages the following set of targets to be reached:
- “assure State protectionism of domestic film productions;
- shape a modern national film industry, including priority development of the producer-led scheme for film production;
- assure state support to all businesses, public or private, active in Ukrainian film industry;
- reform the existing technical infrastructure of the industry;
- implement the regional programs for development of cinema services for the population;
- reach the following target levels in yearly film production (after 5 years of the Program’s implementation):
- 30 full-length feature films;
- 120 episodes of TV series;
- 30 animated cartoon films;
- 500 min. of animated series for TV;
- 5 000 min. of documentaries”.
However, no direct funds for support
of film production is provided in the program, which of course make these
targets quite problematic.
In the cinema infrastructure, 250 cinemas should be renovated and
technically modernized during the 5 year period (almost 60% of the Program’s total budget is
allocated for this, but there are no funds from national budget in this
amount).
Increase in cinema attendance shall be assured so as to reach the level of 2,5 visits per capita per year by 2007; revenues from ticket sales shall reach the level of 200-250 mln. UAH (40-45 mln. USD) by 2007.
There is also a number of concrete tasks to be accomplished so as to achieve the goals of the Program:
- a set of new legal regulations for the industry should be designed and introduced so as to provide relevant legal environment necessary for the success of the Program;
- privatization (désétatisation) of film enterprises and cinemas shall be promoted, assured that the privatized businesses don’t change their activity profile;
- regional programs for development of cinema services shall be carried out in all regions of Ukraine;
- public TV channel “Culture” should be developed (23% of total Program budget);
- market mechanisms in film industry should be actively promoted;
- film/video piracy should be eradicated;
- technical modernization of public film enterprises (studios, cinemas) should be carried out.
As for the sources of funding, the Program envisages improvement of the tax system, including introduction of tax incentives for businesses active in film industry, the creation of supportive market environment”, and support to public-private partnership schemes in funding of film productions.
It is also stated that “public funding for the Program in 2003-2007 will be assured by including the necessary amounts of budget allocations [for the tasks defined by the Program] in State and regional budgets for each year”.
Table 8.8 The All-State Program of development of the national film
industry in 2003-2007
|
Program
tasks |
Years
|
Funding
|
||
|
Total |
State budget |
Other sources |
||
|
Program as a
whole % |
2003-07 |
609,7 100% |
130,6 21,4% |
479,1 78,6% |
|
of which, in each
year: |
2003 2004 2005 2006 2007 |
100,56 89,9 122,26 133 163,9 |
13,56 18,2 29 40,9 28,9 |
87 71,7 93,26 92,1 135 |
|
Development of the
“Culture” TV channel; as % of total expenses
of the Program |
2003-07 |
140 23% |
61,7 10% |
78,3 13% |
|
The restructuring of
the Institute of Drama and film arts into the Academy of theater, film and
television; as % of total expenses
of the Program |
2004-07 |
5,15 0,85% |
5,15 0,85% |
- |
|
Repair and technical
modernization of no less than 2 cinemas in each of 25 regions per year; as % of total expenses
of the Program |
2003-07 |
368 60,4% |
- |
368 60,4% |
|
Technical
modernization of state-owned film studios (the National Dovzhenko studio, the
National Cinematheque); as % of total expenses
of the Program |
2003-07 |
99,56 16,3% |
56,7 9% |
42,86 7,3% |
|
Technical
modernization of the National Dovzhenko Film Center; creation of the Museum
of audio-visual culture; as % of total expenses
of the Program |
2003-07 |
6,68 1,05% |
5,42 0,9% |
1,26 0,15% |
|
Other
(legal improvements, development of the network of centers of Ukrainian film,
etc.) |
2003-07 |
Funding will be
provided by other programs, including the regional programs for development
of cinema services for the population. |
||
The Program envisages the introduction of the [dedicated] film tax (10% of film ticket price), revenues from which will be spent on public financial support to domestic film productions.
As its funding priority, the Program envisages the technical renovation of the three “basic national film institutions”:
- the National Dovzhenko Film Studio (for feature film production);
- the National Cinematheque (for documentaries and animated cartoon production);
- the National
Dovzhenko Film Center (research center and film archive).
More than 16% of the Program’s
budget (mostly from the State) shall be spent on the renovation. A more
detailed picture of how the Program’s budget should be formed and spent is
presented in Table 8.8.
“Film of Russia” subprogram
This subprogram is a part of the Federal program of development of culture
and the arts for 2000-2005.
Its introductory chapter says it is
based on the “Concept of the development of film industry in the RF till 2005”
adopted by Russian Government on 18.12.1997. This Concept understands “the
national character of Russian film as an artistic genre which plays special
role in the audiovisual communication system; and as a means of the state’s
social policy”.
Main goals of the Film of Russia subprogram are defined as
follows:
“ - stabilization of domestic film
production at the level which assures permanent presence of Russian films in
the country’s cinemas;
- preservation of viable
infrastructure of film industry, both public and private, which would assure
normal development of Russian film, with certain support from the state;
- assuring effective cooperation
between federal administrative bodies, administrations of the subjects of the
RF, and local self-government, in state regulation and state protectionism
policy in film industry”.
Main tasks of the Subprogram are
defined as follows:
“- increase film production and the
competitiveness of Russian films, under the circumstances of the massive presence
of imported film production in Russian cinemas;
- assure the shift in the structure
of film market in favor of Russian films;
- improve the mechanisms of
distribution of domestic films;
- provide state support for the
investment program in the film industry;
- increase the presence of the
Russian films in international cultural space”.
The Subprogram gives a grim
description of the current situation in film production:
“In recent years, Russian films,
produced with very low budgets, have been unable to compete with foreign
products which dominate the cinemas (in 1999, the share of foreign,
predominantly American, films has been more than 93% of Russian markets). As a
result of insufficient funding, the subprogram “Development of domestic film”
of the Federal targeted program “Development and protection of culture and the
arts in RF” (1997-1999) has not been accomplished.
Current situation suggests that the
perspectives of Russian film industry depend on the renewal of the interest of
the broad public in the phenomenon of Russian film. This is why the Ministry of
Culture and the Union of Filmmakers of Russia insist on the necessity of
restoration of state’s commissioning of film productions”.
The Subprogram proposed the
following strategies in the development of film production:
“the renaissance of domestic film industry, its technological
modernization;
increase in film production, so as
to reach the level of 457 feature films per year (of these, 202 films funded by
the state); 8647 episodes of non-fiction films (3147 funded by the state); 514
episodes of animated cartoons (314 funded by the state); 60 TV series”. To
achieve this, more than 60% of the Subprogram’s total budget will be spent (see
Table 8.9).
The Subprogram also provides serious
measures aimed at reforming film distribution and projection. There have been
1539 cinemas and over 19 thousand public halls equipped with film projection
units in the RF in 2000. Of these, only 80 cinemas have been modernized and
possessed Dolby Stereo equipment (31
modernized cinema halls are in Moscow, the remaining are in 29 other Russian
cities). During the 1990s, federal and regional administration created the
network of Centers of Russian Film (CRFs) where only domestic productions are
shown. The Subprogram’s authors believe that the CRFs are a relative success:
the attendance in the CRFs grew by 20% in 1999 comparing to 1998. However,
Russian movies rarely appear in “normal” cinemas, other than CRFs.
The Subprogram envisages the
following goals to be achieved in public film distribution:
- further development of the CRF
network; creation of the network of federal cinemas (owned and administered by
the Ministry of Culture of the RF);
- introduction of electronic system
of ticket sales in all cinemas, so as to provide credible film statistics;
- introduction of certification of
cinemas and licensing of certain film-related activities.
Almost ¼ of the Subprogram’s
budget will go for the support of film distribution.
The Subprogram also states that the
industry’s demand in capital investment in 1997-99 was satisfied by as little
as 0,4%, and puts forth the following investment priorities:
- the development of federal cinema
network;
- the renovation and modernization
of the existing cinemas to be converted into CRFs;
- technical modernization of public
film production facilities.
In the realm of international
contacts, the Subprogram envisages the following priorities:
- development of a “united film
space” of the Commonwealth of Independent States (ex-Soviet states);
- promotion of Russian film abroad,
especially in “promising regions of the world”.
Total funding for the Subprogram in
2001-2005 is 19,728 billion RUR in 2001 prices (equivalent to $ 0,7 billion),
of which 7,457 billion ($ 270 mln.) will be provided by the federal budget;
3,148 billion by regional and local budgets, and 9,124 billion RUR is expected
from non-public sources.
The detailed picture of the
Subprogram’s expenses is presented in Table
8.9
Table 8.9 Subprogram “Film of Russia”
|
Tasks |
Year |
Funding
|
Funding
sources
|
||
Federal budget
|
Regional & local
budget |
Other sources |
|||
|
Film production:
“support to artistically significant works, to problem films, (…) films of
popular genres, debut films, action
movies for young audiences”, commissioning of films for mass audiences
which meet the interests of the state
and the society”. as % of total expenses
of the Program |
2001-2005 2001 2002 2003 2004 2005 |
12061 1544,7 2201,1 2392,5 2768 3154,7 61,1% |
3971 476,7 840 881,5 878 894,7 20% |
50 2,7 4,7 8,0 13 21,6 0,3% |
8040 1065 1356 1503 1877 2238 40,7% |
|
Protection of film
archives. As % of total expenses |
2001-2005 |
40,8 0,2% |
40,8 0,2% |
- - |
- - |
|
Development of film
distribution: modernization of the network of cinemas, the Federal cinema network & the CRFs. as % of total expenses |
2001-2005 |
4867,7 24,6% |
810,7 4,1% |
3052 15,4% |
1005 5,1% |
|
Investments: Federal cinema network, modernization of
public film enterprises. as % of total expenses |
2001-2005 |
1620 8,2% |
1589 8,05% |
- - |
31 0,15% |
|
International
contacts: film festivals, promotion of Russian films abroad. as % of total expenses |
2001-2005 |
904 4,6% |
810 4,2% |
46 0,2% |
48 0,2% |
|
Research as % of total expenses |
2001-2005 |
53,1 0,3% |
53,1 0,3% |
- - |
- - |
|
Other as % of total expenses |
2001-2005 |
229,5 1,2% |
229,5 1,2% |
- - |
- - |
|
Total
as %
of total expenses |
2001-2005 |
19728 100% |
7457 37,8% |
3148 15,95% |
9124 46,25% |
Some conclusions from the Case Study
2
a)
The situation in film industries in Ukraine and
Russia
There are several common features:
decay in film production and distribution in the 1990s, technological
backwardness and lack of investments, dramatic cuts in state funding for film
production, decline of incomes of public cinemas; dominance of western products
in the film market (over 90% in both countries), decentralization and
désétatisation at least partial of public system of film
distribution.
The situation in Russia has its
peculiarities: Russian film as an art and as an industry has been relatively
highly developed in the former USSR; it dominated Soviet cinemas and was very
much present in Eastern Europe; unlike Ukraine, Russia has developed virtually
all necessary elements of national cinematography (professional education,
research, film journalism, archives etc). The level of privatization of Russian
cinema has also been much higher than in Ukraine, so was the amount of private
investment in film production (mostly in TV series, however).
Russian cinematography tried to get
rid of State control and to create self-regulatory market environment in their
film industry as early as in mid-1980s; they decentralized film distribution,
eliminated censorship and state commissioning of film productions. Their reform
projects were based on the assumption that “free Russian film” will be
economically sustainable and even profitable. This never happened, however, and
the dramatic socio-political transformations of early 1990s, accompanied by
deep economic crisis, made the situation only worse.
Ukraine also decentralized its film
distribution system and attempted to introduce market mechanisms in film
production (so-called “producer-led funding scheme”), with similarly little
success. However, Ukrainian peculiarities in cinematography begin with much less
favorable (sometimes even hostile) conditions for the development of Ukrainian
national film art in the Soviet period. Film institutions have also been
relatively underdeveloped here (film-related professional education consisted
of a single film department in Kyiv Institute of Theater and Film for the whole
country; there was no national film archive till late 1990s etc). That is the
starting point for reforms in Ukrainian film industry has been much lower that
in Russia. There have been some private investments in film production in early
1990s; but they virtually evaporated by today. The privatization of cinemas
attempted in some cities in recent years can be recognized a failure (only a
handful of the privatized cinema halls still show movies).
Ukraine tried to protect its film
production by introducing minimal 30% quotas for national film production in
cinemas and on TV; these quotas turned out to be virtually impossible to
enforce so far, because of insufficient supply of domestic products and weak
control mechanisms.
b) Comparisons of the policies proposed by the two state programs
The essence of both programs can be
described as an attempt to give a powerful impulse to the film industries of
the two countries, so as to get out of the crisis and assure sustainable
development of the industries. In certain sense, both programs can be called
“disposable” because it is hardly possible to increase state funding of film
production by 20-25% each year (as the Russian program suggests) or renovate 50
cinema theaters every year, as Ukrainian program promises for the period of
2003-2007.
Diverse policy instruments are
engaged in both programs: budget subsidies, investment, state commissions of
film production, protectionist taxation, institutional measures (creation of
new cinemas etc.), promotion of public-private partnership in film industry.
However, it seems that neither the designers of the programs nor the
policy-makers have enough control over some of these instruments (especially
when it comes to assuring private investments in film industry), therefore some
targets put forward in the programs (like film production levels) look more
like optimistic forecasts than like feasible goals.
In the Russian program, the clear
tendency toward increase in state intervention in film industry is very
visible, the tendency that may even be called re-nationalization (for instance, the dramatic increase in budget
subsidies to the industry, the return to state commissioning of film
productions; the creation of the network of “federal cinemas”, the plan to
introduce licensing of some film-related activities etc.). There is also the
attempt to retake on important position for domestic productions in Russia film
market.
In Ukrainian case, the tendencies to
increase state intervention is also present, but its aim is much more moderate:
to assure survival of Ukrainian film as an art and as an [downsized] industry,
to keep it visible on the cultural map of Europe.
Some target figures in both programs
seems to be based on optimistic forecasts or on financial and technical
requirements rather than on financial/investment capacity of the economies or
on market capacities (for instance, planned amounts of investments in film
production and renovation of cinema theaters, or increase in cinema audiences).
This makes the feasibility of such targets doubtful.
The evaluation of
effectiveness/efficiency of both programs also becomes difficult: one can
easily guess that even the authors of the programs understood that many goals
are hardly achievable, hence both programs (and their goals) can be better
assessed by dividing them into two parts: the ideological and declaratory ones,
and the specific and concrete ones, the latter really meant to be implemented.
The goals to raise considerable
non-public funds for Ukrainian film production and dramatically increase this
production seem to belong to the first part, while the goal to modernize public
film studious using budget subsidies belongs to the second.
If we take this into consideration,
then both programs may be evaluated as relatively effective (although not very
efficient) means of helping the industries to get out of the crisis and assure
further development.
The trajectories of this
development, it is understood, will be different in Russia and in Ukraine.
2.4. Funding from regional and local budgets
As was previously noted, Ukrainian local administration’s financial
priorities in public cultural sector are libraries (19-20%), museums (8-10%),
theaters (10-12%) and local cultural centers known as “clubs” and “houses of
culture” (23-24%). Performing arts organizations (other than theaters) get only
3-5 % of public subsidies of the local level Table 9.1
Again, comparison with Poland shows certain similarity in the breakdown
of local cultural expenses, unlike on the national level.
Table 9.3 Subsidies for cultural organizations
from the budgets of voivodships of Poland, 1992-2000
|
Organizations and activities |
Structure of subsidies from the budgets of voivodships |
||||||
|
|
1992 |
1993 |
1994 |
1995 |
1996 |
1997 |
2000 * |
|
Total subsidies (mln PLN), of which in %: |
193.78 |
233.66 |
304.34 |
415.94 |
482.83 |
641.04 |
2389.5 |
|
Theatres |
32.5 |
34.5 |
33.8 |
32.5 |
28.8 |
28.4 |
17.6 |
|
Philharmonic and Symphony orchestras |
7.7 |
7.5 |
7.1 |
7.2 |
6.8 |
6.9 |
3.3 |
|
Museums |
21.3 |
20.4 |
20.7 |
19.9 |
19.6 |
18.8 |
11.4 |
|
Heritage |
2.5 |
3.2 |
3.6 |
4.3 |
5.0 |
3.9 |
3.2 |
|
Arts exhibitions |
2.8 |
2.7 |
2.3 |
2.3 |
1.2 |
1.1 |
|
|
Libraries |
16.2 |
16.4 |
16.9 |
19.0 |
23.1 |
24.4 |
24.3 |
|
Cultural centers |
8.7 |
8.7 |
9.1 |
8.8 |
8.9 |
8.1 |
12.0 |
|
Other organizations and activities |
8.1 |
6.4 |
6.4 |
5.8 |
6.3 |
8.1 |
|
* Gminy included,
WWW.CULTURALPOLICIES.NET/PROFILES/POLAND
On the level of voivodships (see Table
9.3), Polish theaters used to get 28-32% of public subsidies in the 1990s;
museums 19-21%; libraries 17-24%; cultural centers 9-12%. However, on the level
of local communities (where theaters and museums are rather rare), libraries
and houses of culture consume the lion’s share, from 54% in Lower Silesia to
85% in Carpathian mountain region (Podkarpackie and Swietokrzyske voivodships,
see Table 9.4). The average share of cultural
expenses in local budgets in all three countries is also similar: 2-3%.
However, the absolute per capita amount of local funds for culture in Poland in
2000 was approximately 5 times higher (45,5 PLN) than in Ukraine (12,1 UAH).
Ukraine’s richest region, the capital city of Kyiv, with its 31,2 UAH of
cultural funding per capita, could only compete with Poland’s poorest
voivodship, Swietokrzyskie, with 28,3 PLN (with the ratio 1 PLN = 1,2 UAH).
The data on per capita cultural spending in Ukraine’s regions Table 9.2 not only show that we are much poorer than
Poland in this regard, but also illustrate the relevance and effectiveness of
the government’s policy in this sphere. In Table 9.2,
actual per capita spending in each region is compared to budget spending norms
recommended by the Ministry of Finance of Ukraine for each year. As it can be
easily seen, actual figures are usually remarkably higher (for Kyiv, for
instance, almost 5 times higher) than recommended ones. Nevertheless, for the
next year the Ministry of Finance changes their “recommended funding norms”
only slightly. What is the purpose for these “recommendations” then? Actually,
the “norms” are used in calculation of general amount of transfer subsidies
from the national budget to regional budgets (for health care, education,
culture, pensions, etc). But the norms arguably also “stimulate more rational
and balanced cultural expenditure in the regions”. Do they?
A detailed analysis of the dynamic changes in both actual amounts of
cultural spending in the regions and in the “recommended funding norms” in
2000-2002 Table 9.2 brings us to a number of
pessimistic conclusions.
In the first place, the “recommended funding norms” promoted by the
Ministry of Finance are insufficient and unrealistic: the ratio between “norms”
and actual amounts was 1:2,1 in 2000, and 1:2,105 in 2001; while the gap
between the minimal and the maximal ratios only grew:
2000: Zaporizhzia – 1,32; Kyiv – 4,72;
2001: Vinnytsia – 1,42; Kyiv – 5,33.
This means that the “norms” perhaps have no stabilysing effect. Neither
they have levelling effect: for instance, the difference between actual
expenses in Chernivtsi and Cherkasy was only 16,2% in 2000 (8,6 UAH and 7,4
UAH), while recommended norms for these two regions differed by 63% (3,5 UAH
and 5,7 UAH). The same conclusion can be done about Transcarpatian region and
Zaporizhzia:
recommended norms: 3,3 UAH and 5,8 UAH;
actual expenses: 8,7 UAH and 7,6 UAH.
In this case, the actual budget capacity of agrarian Transcarpatia
turned out to be even higher than in industrial Zaporizhzia (while the
Ministry’s norms evaluated them vice versa!). By the way, the norm for
Transcarpatian region was the lowest in Ukraine in 2000 (3,3 UAH) but suddenly
became the highest in 2001 (6,3 UAH).
The Ministry of Finance’s funding norms also look quite illogical:
although the budget performance in 2000 has shown that the norms are 2 times
lower than actual spending, for the next year – 2001, the norms were made much
higher for some regions, while for other regions, they became even lower, for
some strange reason.
Table 9.5. Comparison of Ministry of Finance’s funding norms and actual cultural
expenses in some regions
|
Region
|
Ministry
of Finance’s funding norms |
Actual
expenditure |
||
|
2000 |
2001 |
2000 |
2001 |
|
|
Donetsk |
5,6 |
5,3 |
8,0 |
10,6 |
|
Chernivtsi
|
3,5 |
6,1 |
7,4 |
11,5 |
We can see from Table 9.5
that actual funding tendencies in both regions have been similar, while the
Ministry of Finance tried to impose quite opposite trends through their
“recommended funding norms”.
All this brings us to the conclusion that the Ministry of Finance’s
“regional cultural policy” embodied in the “recommended norms” is, to put it
mildly, counterproductive.
Why the average level of actual funding in Ukraine’s regions has been
1,5-2 times higher than the level recommended by the government in Kyiv?
On the local level, deficits of budget revenues can be even higher than
in the national budget, yet (recommended) cultural expenditures is usually so
intolerably low that cultural organizations simply can’t survive with the
planned amounts of subsidies, and local administrations must increase these
amounts.
Table
9.6 Expenditure for culture and the arts
in the budget of Kyiv (in thousand UAH)
|
|
2000 |
2001 |
||||||
|
Planned amount |
Correct. plan |
Perfor mance |
Perform to plan, % |
Planned amount |
Correct. plan |
Perfor mance |
Perform to plan, % |
|
|
Amount recomm. by Ministry of Finance |
12834 |
|
|
|
15410 |
|
|
|
|
‘Culture and arts’ |
50731,0 |
60138,6 |
60551,0 |
119,4 |
73883 |
84231,0 |
82151,0 |
111,2 |
|
Creative unions |
- |
- |
- |
- |
2000,0 |
1031,0 |
1031,0 |
51,5 |
|
Theaters |
7074,2 |
7955,0 |
8025,5 |
113,4 |
9495,0 |
10412,4 |
10002,0 |
105,3 |
|
Philharmonic, musical collectives, other cultural organizations and
activities |
7916,6 |
12136,0 |
11669,6 |
147,4 |
13291 |
20739,6 |
20416,0 |
153,6 |
|
Libraries |
6448,0 |
6774,0 |
7044,0 |
109,2 |
8051,0 |
7734,3 |
7568,5 |
94,0 |
|
Museums, exhibitions |
8918,0 |
10163,0 |
10404,6 |
116,7 |
12597 |
11523,4 |
11224,4 |
89,1 |
|
Heritage |
2428,0 |
2760,0 |
2833,5 |
116,7 |
7666,5 |
6708,5 |
6511,0 |
84,9 |
|
Houses of culture |
8360,0 |
8478,0 |
8627,0 |
103,2 |
10587 |
11069,2 |
10861,0 |
102,6 |
|
Art schools |
5893,0 |
7060,6 |
7136,0 |
121,1 |
7678,0 |
11200,4 |
10863,0 |
141,5 |
|
Cinema |
938,0 |
1195,4 |
1190,0 |
126,9 |
1017,0 |
1075,0 |
1060,0 |
104,2 |
|
Archives |
323,0 |
323,5 |
344,0 |
106,5 |
323,4 |
484,0 |
440,0 |
136,1 |
|
Other cultural organizations and activities |
2432,5 |
3291,2 |
3276,0 |
134,7 |
1176,5 |
2253,0 |
2173,0 |
184,7 |
Source: City Administration of Kyiv
The data on cultural expenditure in Kyiv and in the Autonomous Republic
of Crimea presented in Tables 9.6
and 9.7 illustrate this phenomenon
quite well.
The capital city of Kyiv is a relatively well-off region in Ukraine (Table
9.6), therefore it can afford the
level of cultural expenses (60,5 mln. UAH in 2000, 82,1 mln. in 2001) much
higher than the amounts recommended by the Ministry of Finance (12,8 mln. and
15,4 mln. UAH respectively). However, Table
9.6 also shows the not-so-simple process of cultural planning. The
initially planned funding for 2000 was only 50,7 mln., it was corrected
(increased) later by almost 20% (because it was realized after a few month of
the year 2000 that the city’s actual revenues are higher than predicted, but
the actual amount of subsidies was even higher than that). In 2001, on the
other hand, the correction (84,2 mln. instead of 73,9 mln.) turned out to be
over-optimistic, and the performance wound up slightly below the corrected
target.
Table 9.7 Cultural
expenditure in the budget of Autonomous Republic of Crimea
and
in local budgets of Crimea (in thousand UAH)
|
|
2000 |
2001 |
||||||
|
Planned amount |
Corrected plan |
Performance |
% |
Planned amount |
Corrected plan |
Performance |
% |
|
|
Amount recommended by Ministry of Finance |
12596,3 |
|
|
|
11290,6 |
|
|
|
|
Culture and arts, total |
30432,9 |
29563,7 |
23727,6 |
78,0 |
38672,1 |
38184,6 |
31483,1 |
81,4 |
|
Creative unions |
|
|
|
|
|
|
|
|
|
Theaters |
3716,8 |
3763,5 |
3346,9 |
90,0 |
4274,6 |
4741,1 |
4216,8 |
98,6 |
|
Philharmonic, musical collectives, other art org. and activities |
4308,8 |
3538,2 |
2964,9 |
68,8 |
4688,6 |
4674,7 |
4001,6 |
85,3 |
|
Libraries |
4800,2 |
4726,8 |
3873,3 |
80,7 |
6148,5 |
5924,9 |
5129,3 |
83,4 |
|
Museums, exhibitions |
3509,6 |
3418,6 |
2905,9 |
79,9 |
3381,2 |
3294,9 |
2365,5 |
70,0 |
|
Heritage |
1643,3 |
1495,0 |
881,1 |
53,6 |
2077,9 |
1693,4 |
1239,7 |
59,7 |
|
Houses of culture |
6600,5 |
6657,3 |
4987,0 |
75,6 |
9452,4 |
9321,5 |
7030,7 |
74,4 |
|
Art schools |
4127,4 |
4053,7 |
3464,8 |
83,9 |
6650,9 |
6548,1 |
5763,4 |
86,7 |
|
Cinema |
413,0 |
413,0 |
201,1 |
48,7 |
174,4 |
251,4 |
175,6 |
100,7 |
|
Archives |
274,0 |
274,0 |
259,2 |
94,6 |
324,0 |
324,0 |
306,1 |
94,5 |
|
Other cultural organizations and activities |
1039,3 |
1223,6 |
943,4 |
90,8 |
1499,6 |
1410,6 |
1254,4 |
83,6 |
Source: Ministry of Finance of
Ukraine
Crimea (Table 9.7) is,
however, a much poorer region, and this also shows in culture funding. The
originally planned amounts of cultural expenditures here also were much higher
than the Ministry of Finance’s recommended funding norms (30,4 mln in 2000;
38,6 mln UAH in 2001). However, these amounts soon proved to be unfeasible, and
the corrected levels became slightly lower. The actual levels of subsidies,
alas, were almost 20% lower than that.
These examples also show us, among other things, how difficult it is to
define how much money culture actually “needs”: it needs all we can give it,
and if we cannot give much, culture is supposed to be satisfied with what it
gets.
The data in Table 9.8 and 9.9 illustrate yet another aspect of
cultural funding in the regions: the distribution of financial responsibilities
between different levels of local administration.
|
|
Consolidated
budget of Kyiv |
City
budget |
District
budgets |
|||
|
Share of total budget expenditure |
Share of cultural
expend. |
Share of total budget expend. |
Share of cultural
expend. |
Share of total budget expend. |
Share of cultural
expend. |
|
|
Culture and arts total
|
2,88 % |
100,00% |
3,48 % |
100,00% |
1,93 % |
100,00% |
|
Theaters |
0,39 % |
13,54% |
0,63 % |
18,1% |
0,03 % |
1,5% |
|
Philharmon. and
musical collectives |
0,09 % |
3,1% |
0,15 % |
4,3% |
- |
- |
|
Libraries |
0,32 % |
11,1% |
0,11 % |
3,15% |
0,66 % |
34,2% |
|
Museums and
exhibitions |
0,60 % |
20,8% |
0,97 % |
27,9% |
- |
- |
|
Heritage |
0,11 % |
3,8% |
0, 18 % |
5,2% |
- |
- |
|
Houses of culture |
0,01 % |
0,3% |
- |
- |
0,03 % |
1,5% |
|
Art schools |
0,39 % |
13,5% |
0,11 % |
3,15% |
0,84 % |
43,5% |
|
Cinema |
0,09 % |
3,1% |
0,15 % |
4,3% |
- |
- |
|
Other
cultural activities |
0,86 % |
29,9% |
1,17 % |
33,6% |
0,38 % |
19,7% |
Source: City Administration of Kyiv
For Kyiv, the picture is relatively clear: the city budget cares about
theatres, performing arts, museums and heritage; while city districts fund
libraries, houses of culture and artistic schools for children.
Table 9.9 Breakdown of culture expenditure between budgets
of different level of administration in Lviv region, 1998
|
|
Consolidated
oblast budget |
Oblast
budget |
City
budget of Lviv |
Budgets
of districts |
Town
budgets |
Village
budgets |
|
‘Culture and arts’ of which: |
100,00 % |
34,26 % |
25,18% |
25,77 % |
5,51% |
9,28% |
‘Arts’
|
100,00 % |
79,73% |
20,27% |
0,00% |
0,00% |
0,00% |
‘Culture’
|
100,00% |
21,49% |
27,08% |
31,73% |
7,33% |
12,37% |
Source: Ministry of Finance of
Ukraine
In Lviv region, where we see six levels of local budgeting (Table 9.9), the situation is fuzzier.
What is certain, however, is that districts, small towns and villages don’t
fund “the arts” (theaters, musical organizations, dance, film, etc), while the
main financial burden for “culture” (libraries, museums, houses of culture) is
met mainly by city budget of Lviv and by district budgets of Lviv region. This
situation can be compared with that of Polish capital city of Warsaw (Table 9.10).
Table 9.10 Public expenditure on culture in Warsaw, 1999 (thous. PLN)
|
|
Ministry of Culture (for Warsaw) |
Mazowsze voivodship |
City
council of Warsaw |
Gminy
of Warsaw |
Total
|
|
Museums |
36567 |
25928 |
290 |
650 |
63435.0 |
|
Heritage |
9995 |
378 |
10 |
- |
10383.0 |
|
Arts centers,
galleries |
2620 |
1311 |
- |
- |
3931.0 |
|
Libraries |
31348 |
7713.6 |
- |
35417 |
74478.6 |
|
Houses of culture |
1653 |
2442 |
100 |
11813.6 |
16008.6 |
|
Theaters, opera,
operetta |
68390 |
25384 |
27000 |
500 |
124896.8 |
|
Performing
organizations |
2862 |
- |
- |
||
|
Concert
organization |
760.8 |
- |
- |
||
|
Cinematography |
1200 |
- |
- |
- |
1200.0 |
|
‘Dissemination of
culture’ |
|
- |
3477,7 |
|
3477.7 |
|
Artistic prize’s |
|
- |
350 |
- |
350.0 |
|
Other activities |
|
1066 |
|
11180 |
12246.0 |
|
Total for culture
and arts |
151773 |
67845.4 |
31227.7 |
59560.6 |
310406.7 |
|
Same,
in % |
49% |
22% |
10% |
9% |
|
Source: D.Ilczuk, “Finansowanie kultury w Warszaw³e” – Kultura w
Warszaw³e, 2000
We can see that the situation is similar here (however, we didn’t have
the data on the Ministry of Culture’s expenditure in Kyiv, and this makes our
comparison incomplete).
Similar problem of federal-regional policy relations exists in the
Russian Federation. According to Russian experts, actual policy of public
financing of culture “has not changed there to any significant degree” (The
1997 National Report).
Until 1991, funding for culture and the arts from local budgets was
approved first by the Ministry of Culture of Russia, then by the Ministry of
Finance. Since 1991, local authorities make decisions on the distribution of
their local funds independently. However, taxation in Russia remains highly
centralized. For most regions, the part of tax revenue that remains in their
possession cannot cover their expenses. 77 out of 89 “subjects” of the Russian
Federation receive subventions (transfers) from the federal budget.
In 2000, the estimated average cultural expenditure per capita was 115
roubles (about $ 5) that differs greatly in particular “subjects of Federation”
(from 56 roubles in the Rostov area to 167 roubles in the Tatarstan Republic).
In the 2000, the share of cultural expenditure in consolidated budgets
of the subjects of Federation varies
from 1,14% in the Yamalo-Nenets Autonomous District to 4,82% in the Komi-Permyak Autonomous District. On the
whole, the average cultural expenditure in consolidated regional budgets remain
at the level of 2%.
The amount of budget transfers is determined by the Russian Duma
(Parliament) on the basis of proposals made by the government. Thus, most
regional administrations request transfers from the federal Ministry of Finance
after drafting local budgets and realizing that they have not enough funds,
again. This process inevitably involves the approval of a local budget by the
federal Ministry of Finance. Thus, although public finances are formally
decentralized, centralization actually persists in Russian budgeting.
Federal cultural authorities do not participate in this process, while
the Ministry of Finance plays the major role. Therefore funds for culture in
local budgets are ultimately determined by the Ministry of Finance which does
not care much about cultural policy priorities.
We can see that the system is in fact more restrictive and centralized
than that of Ukraine where the Ministry of Finance can assure too small amount
of budget transfers for regions but cannot prevent them from spending much more
on culture than the Ministry of Finance recommends.
2.5. Earned income & donations
Although budget funding
remains the main source of income for public cultural organizations, earned income is also very important for
many of them. Table 10.1 illustrates how vital
earned income is for state-owned performing arts organizations in Ukraine.
Let’s take the theaters. Although it was planned for 2000 that they would get
6/7 of their revenues from state budget and earn only 1/7, in fact they earned
almost 1/3, while state subsidies were
lower than planned and covered only 2/3 of their expenses instead of 6/7. In
2001, the difference was also remarkable: earned income was expected to cover
only 16,7% of the expenses; in reality it covered 28,5 %.
With remarkable
under-payments from state budget to state-owned cultural institutions in
Ukraine in 2001 and 2002 (for museums, it was as low as 26% of the planned
amount in 2001), earned income has become a crucial source of income even for
libraries and museums whose earning capacity has been traditionally low.
State-owned museums earned 17 % of their total revenues in 2001. In 2002, the
share of earned income in total revenues of heritage institutions (libraries,
museums, historical reserves) reached as high as 30% (mostly due to bad public
funding: the actual level of budget subsidies to them was only 42,6 % of the
promised).
Table
10.2 further amplifies this picture over several types of Ukrainian public cultural organizations, both
state-owned and community owned.
Table 10.2 Earned income of public cultural
organizations, 2001
|
|
Planned for 2001, mln. UAH |
Performance, mln. UAH |
Performance as % of the plan |
|
Artistic organizations |
1, 646 |
5, 87 |
356,4 |
|
Cultural organizations |
73, 06 |
104,26 |
142,2 |
|
Other |
2,3 |
4,04 |
181 |
|
Cultural and Artistic, total |
77 |
116,55 |
149, 9 |
Table 10.3 gives a detailed data on
subsidies and earnings of National
institutions of performing arts – theaters, choirs, orchestras, dance ensembles
etc. These data only confirm the general conclusion: the state tends to give
less than promised, so the organizations have to earn as much as they possibly
can. This can be seen especially in Graph 3. When we
compare the data on earned income (plan and performance) on 2000, 2001 and
2002, a question arises: why public cultural organizations tend to
underestimate their future incomes in their plans? For instance, state-owned
theaters earned 16,8 mln UAH in 2000, yet they planned the amount of earned
income at 4,69 mln UAH for the next
year (no wonder they actually earned almost two times more). The most probable reason is: they are afraid
that, once they promise higher earned income, they will get smaller budget
subsidies.
As for general picture of sources of income other than public subsidies,
we can look at Table 11.1. We must admit, however,
that statistics on charitable donations and on sponsors’ donations are scarce
and incomplete in Ukraine. Public cultural organizations have to report to
cultural administration about their earned income, but not about funds raised
in other ways. Independent cultural organizations report only to taxation
bodies about their incomes. Nevertheless some data on share of grants and
donations in total revenues of public cultural organizations have been
accessible. We can see that this share seldom reaches the level of 1%. It must
be told, however, that real amounts of donations can be much higher than the officially reported
levels. For independent cultural organizations which get no public subsidies,
grants and donations often remain the main source of income. All this brings us to the conclusion that, although
cultural organizations try hard to earn their living, and although some of them
earn much more today than they did 5-6 years ago, public subsidies remain
the main source of income for virtually
all public cultural organizations,
while independent cultural organizations mostly rely upon grants and donations.
When we turn to Russian comparison Table 11.2
we can see similar picture: through 1990-1995, the share of public subsidies in
the incomes of cultural organizations grew remarkably, although the amount of
public subsidies plummeted (earned income fell even more drastically). Although
in the following ten years the general economic situation has been changing for
better, both in Ukraine and Russia, and amount of earned income in their
cultural sector also grew, this didn’t undermine the dependence on public
subsidies.
Table 11.3 Breakdown of incomes of Polish artistic
organizations in 1997, %
|
|
Budget subsidies |
Earned income |
|
|||||
|
Cultural and artistic
organizations |
From Ministry of culture |
From voivod- ships |
From local self-govern- ment |
Box office |
Private donations |
From non-related activities |
Other |
|
|
Theaters: |
|
|
|
|
|
|
|
|
|
Drama |
4.01 |
49.90 |
19.49 |
16.93 |
1.62 |
3.87 |
4.05 |
|
|
Opera |
0.31 |
79.24 |
0.86 |
10.35 |
1.40 |
3.64 |
4.18 |
|
|
Music |
0.00 |
48.00 |
26.87 |
17.75 |
0.24 |
4.10 |
3.04 |
|
|
Philharmonic |
8.99 |
36.36 |
38.58 |
8.00 |
3.51 |
1.93 |
2.41 |
|
|
Museums |
9.50 |
62.14 |
13.06 |
6.58 |
2.22 |
4.02 |
3.69 |
|
|
Art galleries |
12.21 |
1.03 |
58.84 |
4.11 |
2.72 |
14.10 |
7.32 |
|
Table 11.3 shows similarly high level of dependence of Polish cultural
institutions on public subsidies. What should be mentioned, however, is that
exemption of earned incomes of cultural organizations from VAT in Poland and
Russia makes their real earned incomes 20-22% higher!
However, as Table 11.4
demonstrates, earning possibilities are quite different in different regions of
Poland.
Table 11.4 Earned
income of cultural organizations in Polish cities
|
City |
Share
of earned income in total revenues, % |
|||
|
‘Houses of culture’ |
Libraries |
Theaters |
Museums |
|
|
Big cities |
||||
|
Bialystok
|
37 |
- |
- |
6 |
|
Gdansk |
21 |
3 |
20 |
7 |
|
Katowice |
13 |
2 |
13 |
2 |
|
Krakow |
33 |
3 |
30 |
14 |
|
Poznan |
39 |
2 |
19 |
2 |
|
Szczecin |
67 |
2 |
19 |
- |
|
Warszawa |
36 |
2 |
38 |
- |
|
Wroclaw |
11 |
- |
17 |
19 |
|
Average: |
28 |
7 |
22 |
8 |
|
Medium size cities |
||||
|
Legnica |
35 |
3 |
- |
8 |
|
Przemysl |
27 |
6 |
- |
- |
|
Siedlce |
32 |
16 |
- |
- |
|
Zgiez
|
8 |
4 |
- |
1 |
|
Average: |
25 |
7 |
- |
4 |
Source: Monitorowanie uslug publicznych w miastach.
For instance,
theaters in big cultural centers like
Warsaw and Krakow have been able to earn as much as 30-38% of their revenues,
while in de-industrialized Katowice theaters earn only 13%. On the other hand, Wroclaw museums earned
almost 20% of their revenues (among all
Ukrainian museums, only Historical museum of Lviv manages to earn that much).
It is difficult to guess, however, how did public libraries in the small town
of Siedlce manage to earn 16%, several times above Poland’s average?
The availability of the more detailed data (Tables 12.1, 12.2) on revenues and expenses of public artistic organizations in
Krakow (J. Slowacki Theater, Ludowy Theater, Scena STU Theater, Capella
Cracoviensis and Simphonietta Cracovia) makes it possible to compare their
income to those of Ukrainian artistic organizations. The data on revenues of
three National theaters and two musical ensembles were taken from Table 10.3 (National I.Franko Theater
(Kyiv), National L.Ukrainka Theater (Kyiv), National M.Zankovetska Theater
(Lviv), National Symphonic Orchestra and the Kyiv Camerata orchestra) so as to
form a graphic comparison presented in Graph 10.
Table 12.1 Sources of income of public artistic organizations in Krakow, 1998
|
Sources |
Theatres |
Musical collectives |
|||
|
J. Slowac kiego |
Teatr Ludowy |
Teatr Scena STU |
Capella Cracoviensis |
Simfo-nietta Cracovia |
|
|
1.Budget subsidies thous. PLN equivalent, thous. USD as a share of income, % |
3094,800 |
2520,166 |
371,180 |
1285,860 |
488,347 |
|
$ 774 |
$ 630 |
$ 93 |
$ 322 |
$ 122 |
|
|
68,8% |
72% |
67% |
74,1% |
69% |
|
|
2.Commissions from local budget for artistic projects |
- |
- |
- |
160000 |
- |
|
3.Earned income, thou. PLN Earned income thou. USD % of which: |
1343,260 |
708,432 |
172,094 |
323,885 |
166,526 |
|
$ 336,0 |
$ 177,0 |
$ 43,0 |
$ 81,0 |
$ 42,0 |
|
|
29,8% |
21,0% |
31% |
18% |
24% |
|
|
à)
core activities, % of which: |
716017 15,9% |
567432 16,3% |
139933 25,2% |
320254,7 17,8% |
166525,55 24% |
|
- core services; |
- |
32000 |
- |
- |
118946,68 |
|
- box office; |
666970 |
514200 |
139933 |
320254,76 |
12372,16 |
|
- leasing of stage props; |
49047 |
6600 |
- |
- |
- |
|
- other related activities |
- |
14632 |
- |
- |
35206,71 |
|
á) other activities, % of which: |
627243 13,9% |
141000 4,7% |
32161 4,8% |
3630 0,2% |
- |
|
- leasing of premises; |
515669 |
86500 |
26195 |
- |
- |
|
- advertising; |
24979 |
22200 |
- |
- |
- |
|
- bank interests; |
42104 |
32300 |
5966 |
3630 |
- |
|
- other |
44491 |
- |
- |
- |
- |
|
4. Sponsorship, donations % of which: |
61702 |
250803 |
11418 |
28248 |
52244 |
|
1,4% |
7% |
2% |
1,5% |
7% |
|
|
à) sponsorship; |
4000 |
227593 |
6062 |
28248 |
52244 |
|
á) donations; |
- |
3710 |
5356 |
- |
- |
|
â) other |
57702 |
19500 |
- |
- |
- |
|
Total income, thous. PLN |
4499,762 |
3479,400 |
554,700 |
1799,0 |
707,0 |
|
Total income thous. USD |
$1130,0 |
$870,0 |
$140,0 |
$450,0 |
$177,0 |
Source: Monitorowanie uslug publicznych w miastach.
We can see that the level of public subsidies to two
municipal theaters in Krakow has been almost the same as to two biggest
national theaters in Kyiv, while M.Zankovetska Theater in Lviv (a city with
population and cultural capital similar to Krakow’s) gets far less both in
subsidies and in earnings.
On the other hand, Ukrainian musical ensembles seem to be
much poorer than their Polish counterparts, especially when it comes to
earnings. As for charitable donations and sponsorship, it has been only Teatr Ludowy
where it played any noticeable role.
Table 12.2 Expenses of public artistic organizations in
Krakow, 1998
|
|
Theatres |
Musical collectives |
|||
|
Expenses, thousand PLN
|
J. Slowac kiego |
Teatr Ludowy |
Teatr Scena STU |
Capella Craco- viensis |
Simfo-nietta Cracovia |
|
À. Maintenance of buildings % |
403,713 |
506,885 |
37,079 |
45,619 |
- |
|
9% |
14,4% |
8,6% |
2,4% |
0 |
|
|
Â. Expenses for personnel,
% of which: |
3396,231 |
1929,830 |
283,176 |
1237,049 |
356,363 |
|
75,5% |
54,9% |
65,5% |
64,4% |
53% |
|
|
1)
salaries % |
3109,900 69,2% |
1751,160 49,8% |
189,454 43,9% |
1201,592 62,6% |
309,125 46% |
|
2) travels |
22,759 |
5,110 |
- |
0,673 |
2,486 |
|
3) office supply |
226,904 |
13,370 |
2,458 |
14,284 |
2,398 |
|
4) furniture etc. |
- |
64,870 |
- |
- |
9,584 |
|
5) communication |
- |
29,740 |
980 |
20,500 |
1,800 |
|
Ñ. Expenses for core activities
% |
458,900 |
1026,155 |
111,770 |
607,126 |
315,309 |
|
10,2% |
29,2% |
25,9% |
31,6% |
47% |
|
|
D. Capital investments % |
236,918 |
52,542 |
- |
30,000 |
- |
|
5,3% |
1,5% |
- |
1,6% |
- |
|
|
Å. Total expenses |
4495,762 |
3515,412 |
432,025 |
1919,794 |
671,672 |
These comparisons may seem not completely correct, since
the data on Krakow theaters came from 1998, while the data on Ukrainian theaters
cover the period of 2001-2002. But if we take into account the general
socio-economic context in the two countries (Ukraine is arguably several years
behind Poland in economic reforms), the time gap doesn’t look too dramatic.
Tables 12.4 and 12.5 present a more detailed description
of incomes and expenses of four Ukrainian theaters (the three National theaters
mentioned above and the Regional Puppet Theater from Donetsk, the center of industrial
South-Eastern Ukraine). These tables offer data on actual revenues and expenses
in 2001 and 2002. However, some important data are not available: for instance,
amounts of private/corporate donations and actual expenses on core activities
of the three National theaters (we had to estimate these amounts by ourselves).
However, the available data make it possible to form a number of observations
on financial activities of Ukrainian and Polish public theaters.
First, similarly to the economic conditions of Polish
theaters (see, for instance, Tables 11.4
and 12.1), the financial conditions
of public theaters in Ukraine are quite diverse and depend strongly on their
status and location. Their total incomes (subsidies included) vary remarkably:
from 0,4 mln. UAH in Donetsk Puppet Theater to over 9 mln. UAH in National
L.Ukrainka Theater in Kyiv. The amounts of budget subsidies also vary.
Interestingly, they vary remarkably even within the small group of National
theaters: M.Zankovetska Theater in Lviv gets 3-4 times less (1 mln. UAH in
2001; 1,68 mln. UAH in 2002) than, for instance, L.Ukrainka Theater in Kyiv
(4,5 mln. UAH in 2001, 6,5 mln. – in 2002). The amounts of earned income vary
as well: 129,6 thousand UAH for the Donetsk Theater; 2,7 mln. UAH for L.Ukrainka
Theater. On the other hand, the breakdown of financial revenues of all public
theaters remains quite similar:
- budget subsidies: approximately 70%;
- earnings from core activities: 20-30%;
- other earnings: 5-10%.
As for the share of private donations, we can only guess
that it is, on the average, not higher than in Polish theaters (1-2%), and that
in big cultural centers it must be higher than in the provinces.
Curiously, the National I.Franko theater reported absence
of earnings other than from core activities, despite the well-known fact that
this theater often gives its premises to touring theater companies,
predominantly from Russia.
We learned from Table 10.1 that actual budget subsidies to state-owned theaters have
been rather unstable: they reached the level of 94% of the planned allocations
in 2000 and 2001, but only 76,5% in 2002. In absolute numbers, however,
subsidies to the three National theaters Table 12.4
grew by 22%, 44,6%, and 60% respectively. It seems that the reason for such
remarkable growth has been the heavy burden of problems: of the 2 mln. increase
in subsidies to L.Ukrainka theater, 1,65 mln. UAH had to be spent on major
repairs. (Same is true about I.Franko theater: of the subsidies increase of
almost 1 mln. UAH, 82% had to be spent on major repairs). On the other hand,
M.Zankovetska theater in Lviv (where the building is arguably in the worst
condition) got no funds for repair at all Table 12.5
The comparison of the growth in public subsidies to the
growth in earned income Table 12.4 can bring us to
the suggestion that essential increase in subsidies generates bigger earnings,
due to improvement in quality and variety of shows on stage. However, this
hypothetical functional dependence is not proportional: too small increase in
subsidies does not produce quality change and, therefore, does not induce
increase in box office; on the other hand, when the increase in subsidies is
too big, it is difficult to use it properly, which results in
disproportionately low or even zero increase in earnings.
For instance, I.Franko’s subsidies increased by 22% in
2002, while its earnings increased by 14,8%. L.Ukrainka theater’s subsidy was
44,6% bigger, but its earnings grew by
23,7% only. The weakest effect the increase of subsidies (60%) had on the
earnings of M.Zankovetska heater (only 22,2%).
Furthermore, when (if) public subsidy gets big enough to
cover all major expenses, theaters may loose interest in earning.
However, this hypothesis does not take into account such
important factors as financial capacities of theatrical audiences in Kyiv and
Lviv, as well as the creative capacities of particular theaters which do not
necessarily coincide with their financial capacities.
When we turn to expenses of the theaters presented in Table 12.5, we see that employee payments make the lion’s share of expenses in all
four Ukrainian theaters (63% to 80%).
This is slightly more than in Polish theaters which spend 50% to 70% on their
personnel. The level of earned income in the theaters of Krakow is also lower
(16-17%), while the average for Poland is 22%.
The systems of employment in public theaters in Poland
and in Ukraine is still based on permanent lists of staff members
(administrative, artistic, supportive) and on fixed salaries. This system is
regarded by virtually all theater managers in Ukraine as obsolete and
ineffective, because actors’ salaries don’t depend on artistic performance,
therefore it must be replaced with a system based on individual contracts.
As can be seen form Table 12.5, the amount
of public subsidy to Ukrainian theaters is usually adequate only to cover
employee payments and expenses for maintenance of buildings. Expenses for core
activities (for instance, stage decorations and costumes for new shows) are
usually covered from earned income. In
some cases, part of earned income is also spent on heating, electricity and
routine repairs.
We can see rather similar situation in public theatres in
Krakow. For instance, the amount of subsidy to J.Slowacky theater wasn’t big
enough even to cover employee payments; the rest of expenses were covered by
earned income and donations. On the other hand, Theater Ludowy covered 1/3 of
its expenses for core activities from public subsidy.
An important difference in the financial situation of Polish
theaters is its transparency, which seem to be a result of less corrupt and
more culture-friendly taxation system.
We can conclude this comparative overview by brief
discussion of possible ways of improvement of the financial situation of public
theaters (at least in Ukraine).
The most obvious way is further increase in budget
subsidies. This is what Ukrainian theater managers have been constantly
demanding (but without much success). We can see from the data in Table 12.4 that
even if the government satisfies such demands to some extent (like it happened
in 2002), not everyone gets what one needs, even within the narrow group of
National theaters.
The second way is to assure increase in earned income,
either from core activities (that is, from box office), or from other sources
(lease of premises, merchandizing, advertising services etc.). Again, the
statistics show that this way has been extensively used by public theatres in
Ukraine, and with remarkable success.
However, the goal of maximizing earned income (especially
from non-related activities) to some extent contradicts the mission of the
subsidized public theater, which is more about cultural public service than
about money earning.
In practical terms, this means public theatres are not
supposed to raise ticket prices too high, or to produce openly commercial
“lowbrow” shows, not to mention extensive lease of theater halls to touring
entertainers (especially foreign) or housing of corporate events. Too active
engagement in such activities can backfire in the form of lost public
credibility and reduced subsidies (however, it is hard to recall at least one
case when a public theater in Ukraine has indeed been financially punished for
doing such things).
Another obvious way to increase incomes of public
theaters (perhaps alongside other artistic organizations) is to introduce
special reduced or zero rate of VAT for their core services (following the
example of Poland, Russia and many other nations). This has also been a
recurrent demand of Ukrainian cultural/artistic community for years, but again,
without much success.
Another potentially important sources of income,
charitable donations and private/corporate sponsorship, also need more
favorable legal environment.
Finally, there are several ways to make the use of earned
and subsidized costs more effective and efficient. For instance, extensive use
of individual contracts in hiring artistic personnel would can not only save
some money, but bring about remarkable increase in artistic quality.
Summarizing, the theaters’ efforts to earn more (hereby
compensating the insufficiency of public subsidies) are in many aspects impeded
by inadequate state policy, especially when it comes to tax incentives for
cultural organizations and arts donors.
2.6. Protectionism in cultural industries
Reduced tax rates on cultural goods and services are important means of
support of cultural industries in many countries. For instance, majority of
European countries use reduced or zero VAT rates on some cultural goods. When
we turn to our favorite comparison with Poland and Russia, we can see that in
both countries book publishing is also VAT-exempt (see Case Study I in this Paper).
If reduced tax rates apply only to domestic cultural goods or services,
or if there are extra taxes or duties on imported goods, such a policy is
usually referred to as protectionist.
The issue of protectionism toward domestic cultural goods and services has
been widely discussed for a few years in Ukraine. The reasons usually given for
aggressive introducing of such policy include the crisis in Ukrainian cultural
industries («if we don’t protect them, they will be killed by more powerful
competitors, mostly Western or Russian»), the dominance of imported [popular]
cultural produce (films, books, music) in Ukrainian markets, and, quite
importantly, the successful protectionist policies of our Russian neighbors in
book industry. Estimates show that share of Ukrainian books in our market is
7-9 %; the share of Ukrainian music and films is arguably even smaller.
As mentioned in Case Study I, Ukrainian book publishing
has been in decline since early ‘90s.
How did the State cope with this crisis? In 1995, ‘Government Program for Development of Book Publishing for the period
until 2000’ was adopted by the
Cabinet of Ministers of Ukraine. This
was basically a Soviet-type extensive development program feasible only under
centralized planned economy which was not the case in 1995. No wonder there
were little evidence that the government ever tried to put the Program into
practice. In the meantime, Russian government made its book publishing industries virtually tax exempt in the 1995, which resulted in prime costs of
Russian books being 40-50% lower than those of books printed in Ukraine. In a
year or two, Ukrainian book export to Russia almost disappeared, while Russian
imports overrun Ukrainian book markets (see Graph 1, Graph.2).
“The Law of Ukraine on
publishing business” was adopted in June, 1997. Article 6 of this bill seems to
be protectionist, at least in its wording:
“The State shall support
publishing organizations, and printing and book selling enterprises which
publish, print or sale at least 50% of their products in official [Ukrainian]
language, and/or in languages of small national minorities, by the means of
introducing taxation relieves”.
However, this regulation has
not been supported by proper amendment in taxation laws.
The bill on publishing
business also introduced limitations on privatization of publishing houses and
printing enterprises “of a national importance”: 51% of them shares had to
remain in State property.
In September 1997, sales of
domestic book were also made VAT-exempt in Ukraine by the new Bill on VAT.
Specifically, its Article 5.1.2 exempts from VAT “sales (subscription) and
pre-paid delivery periodicals printed in Ukraine; …sales of books produced in
Ukraine”. But this didn’t help much: the industry was already too weak to
afford remarkable price cuts so as to increase sales. By this time, almost 90%
of book supply in Ukraine were imports from Russia.
On March 16, 2000, a
previously unknown body called Committee for Protection of the Ukrainian Book
published a report in the literary weekly Literaturna
Ukraina named «The National Book: Its Current Situation, What Caused it And What Are the
Perspectives». The Committee argued that, to save our book publishing, the Russian expansion should be stopped, and
to do so, the extent of tax exemptions and incentives should be at least equal
to that of Russia, or even bigger.
Both the Committee’s report
and several other press publications on this problem (which were indeed numerous)
blamed not Russians, but our own Government’s apathy for ‘the catastrophe of
our book’.
As a result of both the
press campaign and energetic activities of the new head of the State Committee
for Information Policy, the prominent poet and national-democratic politician
Ivan Drach, a draft law proposing
increased tax incentives for a number of publishing-related activities
was presented to the public. The draft law provided zero-level VAT rates for Ukrainian language publications, except for advertisements
and ‘publications of openly erotic contents’. Publications in Russian language,
were not eligible as well. This proposal caused numerous angry comments from
Russian-language media in Ukraine. Some media in Russian even argued that
Russian books are being made legally equal to pornography in Ukraine.
In September 2000, participants of the 7th Lviv Book
Fair issued an appeal to the President,
the Parliament and the Cabinet of Ministers, arguing that the National
Book is on the threshold of death and demanding
not only more tax exemptions but also «temporary introduction of custom duty
for Russian book imports’ as well as
«limitation of purchases of imported fiction books by public libraries’.
They pointed out that
Ukraine published only 0.4 books per capita in 1999, while Russia published
3.2, and Poland 9.5. This allegedly puts Ukraine among “the least
informationally developed nations”. Actually, the statistical data, however
grim they look, taken together with the data of book imports from Russia, only
prove that Ukrainian consumers tend to buy cheaper Russian books instead of
supporting national products.
But to cope with the
underdevelopment our book industry, the authors of the appeal propose to cut
the imports, hereby further diminishing
book supply. Perhaps, this would stimulate domestic production, but it
is much more likely that this would only stimulate book smuggling and black
market which is already big enough.
However, these radically
proposals got a cold response from the Government. The parliament adopted the
above-mentioned ‘moderate’ draft law, making it a little bit more moderate in
the process (for instance, not only Ukrainian-language books were make for tax
exempt but all domestic books).
According to this temporarily-acting bill (it was valid from 1.06.2001
till 1.01.2003) some materials used in printing were made exempt of import duty
and VAT; and “incomes from sales of publishing products” had to be dedicated
from taxation of profits.
However, the State Administration of Taxation (in its instruction on
14.02.2002) interpreted these regulations as applicable only to book publishing
enterprises, and not to booksellers.
It is difficult to judge about
effectiveness of these protectionist measures, however. Although book sales slightly
grew in Ukraine in 2001-2002, average prices of Ukrainian books remained the
same, so the growth in the industry can be a result of general growth of
Ukrainian economy. The factor of increased budget funding of publications of
textbooks also has been very important. On the other hand, there is no reason
to believe that lower price of Ukrainian books would force Russian-speaking
population to read in Ukrainian instead of Russian.
Still, these protectionist measures were temporary, and expired on December
31, 2002. The Cabinet of Ministers tried to be pro-active and proposed a draft
bill “On State support to book publishing in Ukraine” in September, 2002.
President Kuchma also backed the draft and proposed that it is considered by
the Parliament as a top priority bill. In the Government’s rationale to the
bill, the opinion was expressed that the tax exemptions for books active in
2001-2002 did not cause serious loss of budget revenue comparing to the year
2000 and that “potential losses of budget revenues possibly caused by the
proposed bill, will be completely compensated in the long run by remarkable
increase in production of books and in employment in the publishing sector”.
Also it was estimated that much of Russian imports will be replaced by domestic
books and it will save Ukrainian economy approximately $ 100 million. However,
the Government experts did seem to notice that after two years of tax
exemptions Ukrainian books are not cheaper than before, while the inflation has
been less that 1% during this period. This means that it was publishers and
booksellers who gained from the exemptions, not the general public.
The new bill “On State support to book publishing” proposed a set of
protectionist changes in taxation:
- publishing, printing and book trade, as well as production of paper
for books, shall be made VAT-exempt till 1.01.2008;
- imported equipment and supplies (including computers) to be used in
publishing and printing of books shall be exempted from custom duties;
- profits of publishers and printing enterprises obtained from
publishing of book shall also be exempted from tax on profits until 1.01.2008.
Ukrainian society and even book publishers themselves had mixed feelings
about this bill.
On the one hand, representatives of the biggest (especially public)
publishing and printing enterprises expressed believe that without the proposed
measures, Ukrainian book industry will be doomed, and having this bill enacted,
the industry soon will be sound and competitive. Some other publishers (especially
those who publish non-commercial books) argued that the new bill will help,
first and foremost, big commercial publishing houses that print best selling
books in tens of thousand copies and, quite probably, in Russian language. The
Capranov brothers (writers and publishers from Kyiv) even argued that “the real
goal of the bill is to help in moving the printing of Russian pulp fiction to
Ukraine [from Russia and Byelarus]”. They also believe “that the bill will
promote money laundering through book publishing business that will be made tax
free”.
These arguments don’t look very convincing however. First, because
textbooks make the majority of books in Ukrainian language, the average print
run of a Ukrainian book is more than 6 thousand copies, while for Russian
language book is 5 thousand. That is, those who publish in Ukrainian would get
not less, but slightly more from the
proposed tax exemptions.
Second, the production potential or Russian printing industry allows
printing of 3-4 times more copies than are printed today, and there is no
reason to believe that the printing of Russian pulp fiction will move to much
smaller Ukrainian printing industry.
The bill was adopted by Ukrainian Parliament on November 21, 2002, by
406 votes out of 450 members of the Parliament. However, President Kuchma
vetoed the bill a month later. Why did he vetoed the bill which he himself
defined as a legal act top priority four month before? There are two
explanations. The first is official, given by the President himself: according
to the calculations of the Cabinet of Ministers, the bill will cost Ukrainian
budget more that 700 million UAH in lost revenues per year, and there is no
compensation for it in the adopted National budget. It is worth noticing that
by this time, Ukraine had new Prime Minister and new Cabinet, and it became
obvious that budget performance in 2002 turned out to be much worse that
expected. Hence any possibility of future budget losses has been regarded as
quite dangerous.
Another popular explanation is unofficial: in January 2002, tax
exemption for books publishing in Russia expired, and big Russian publishers
were seriously considering the use of Ukrainian printing capacity. This
arguably explains strong backing that pro-Russian groups in the Government and
the Parliament gave to the bill. However, in December 2002, the Russian Duma
restored tax exemptions for books, and pro-Russian lobbies in Ukraine lost
their interest in the bill “On State support to book publishing”. Regardless of
which explanations is correct, Ukrainian book publishing wound up back in the
unfriendly legal environment that
existed before 2001.
Another example of cultural protectionism is the attempt to introduce a
duty on screening of imported films. Revenues raised from this duty (10% of
ticket price) were supposed to be collected in the special budget fund and then
spent on Ukrainian film production. However, the amendment to «The Law on Cinematography» introducing the
film duty has not been adopted by the Parliament, so far.
The failures of the “civilized” protectionist measures discussed above
left the Government with the only available option; public investment into
cultural industries (direct financing of film productions, commissioning of
books publications etc). We have in fact analyzed the use of this policy
instrument in the case study on “targeted programs” of support of film
industries in Ukraine and Russia.
However, under the circumstances of general under-financing of cultural
sector, the amount of budget investment in
film or publishing are inevitably too small.
3.1
Policy problem
Summarizing all said before,
we can describe the policy problem we have to deal with as financial
deterioration of cultural sector in contemporary Ukraine, which resulted in
lower cultural participation, lower quality of many cultural services, and in
retarded development of modern cultural industries.
The main reasons for this deterioration are:
insufficient funding, by which we mean unsatisfactory level of all major
sources of funding (public subsidies, earned income, private charitable
donations to cultural/artistic organizations); as well as virtual lack of
investments in cultural industries and insufficient level of indirect financing
through tax relieves and exemptions.
Since public subsidies from
state and local budget remain the main source of income for cultural sector in
Ukraine, the problems of budgeting for culture are of key importance.
Public budget funding in
Ukraine is not only insufficient, but also inefficient and, for the most part,
effect-blind. The existing mechanisms of budget funding are obsolete and
inflexible, the newer ones are often poorly designed, lacking transparency and
equity (cultural NGOs, for instance, are in fact discriminated against).
As for other sources of
income for cultural sector, the State’s policy is either unfriendly (numerous
constraints on earning and spending for public cultural organizations) or
ineffective (tax benefits and direct investments are too small, non-profit
status is difficult to obtain, etc).
The general problem of
culture funding can be divided into a number of sub-problems; each of them
caused by a set of more or less intertwined factors.
For instance,
insufficience (or even decrease) of
budget subsidies to cultural sector is caused both by general budget crisis in
Ukraine, and by imperfect mechanisms of budget making as well as by so-called
«residual approach» to cultural needs. Effects of these factors may overlap
(for instance, unfriendly taxation causes both low level at earned income of a
cultural organization and insufficient charitable donations to cultural
sector), which means that, by
eliminating these causes we can remove obstacles for more than one source of
financing.
The result of such
structurization of the policy problem is presented in Chart 1.
Chart 1
Structuring
the major financial problem of cultural sector in Ukraine
I. Major problem:
Economic/financial deterioration of the majority of cultural organizations
1.1 Relative decrease of budget subsidies to culture and of their efficiency
1.1.1 General budget crisis
in Ukraine
1.1.2 Imperfect mechanisms
of budget planning
1.1.3 Low priority of
culture needs for the Government
1.1.4 No clear priorities in
public funding of the cultural sector
1.2 Difficulties in increasing earned income of cultural organizations
1.2.1 Decreasing income of
the population, lower demand for cultural goods/services
1.2.2 The rise of competing
forms of leisure and of cultural imports
1.2.3. Unfriendly taxation,
underdeveloped ‘third sector’, administrative constraints for public cultural
organizations.
1.3 Insufficient private/corporate sponsorship of culture, insufficient
amount of charitable donations for
culture
1.3.1 Unfriendly taxation,
lack of incentives for donors
1.3.2 Lack of philanthropic
traditions
1.3.3 Lack of fundraising
skills among cultural managers.
3.2. Strategic policy
alternatives
3.2.1.
Re-nationalization (re-centralization)
Basically, this alternative
means remarkable increase in State intervention in cultural sector as a remedy
for its miserable financial situation. In its mildest form, such an approach
would mean sheer increase in public expenditure for culture; in more radical
versions, it can be accompanied by restored administrative control over
important cultural institutions or even by creation of new state-owned
organizations (like the network of federal cinemas in Russia).
A raison d’etre for this strategy is the disillusionment with market
reforms in cultural sector (especially strong, for instance, in Russian and
Ukrainian film sector, in Ukrainian book publishing etc) and the belief, shared
by many, that no one and nothing can replace the State as major donor for
culture. Among the dangers and temptations of the market, it seems natural for
many that the state, as the major agent of the public interest, not only funds
cultural organizations, but also controls them so that they would become “too
selfish and commercialized” and that taxpayers’ money are spent “properly”.
The demand of radical
increase in budget expenditure for culture is raised, arguably by the majority
of cultural communities in all three countries analyzed here. In Ukraine,
however, with its public cultural expenses of $2 per capita per year, this
demand is perhaps the best grounded.
With regards of the increase
in administrative involvement of the State (re-centralization),
situation looks differently in each country.
In Poland, where
administrative and budget decentralization is an important element of the
process of EU accession, re-centralization is not a real political option at
all. In Putin’s Russia, on the other hand, the obvious trend toward political
re-centralization encourages similar tendencies in cultural policy. Federal Programs of protection and
development of culture which combine federal, regional and non-public
funding but are designed and administered at the federal level, are just one
example of this trend. The creation of federal network of cinemas (which would
screen Russian films only) is, perhaps, an even more striking example of the re-nationalization trend.
In Ukraine, such trends are
rather sporadic and inconsistent. For instance, several regional cultural
organizations has applied for the status of National
cultural institutions, because funding from State budget looks more generous
and reliable to them than subsidies from local budgets. Among these,
M.Zankovetska Theater in Lviv and Odessa Philharmonic Orchestra were given National status last year[5].
However in Ukraine, financial capabilities of the State are, as we know, quite
limited, and culture doesn’t belong to the Government’s top policy priorities.
This makes the option of re-nationalization not very feasible both economically
and politically here. Neither it looks very efficient, because routine budget
funding of state-owned cultural organizations tends to be inflexible,
effect-blind and discourages fundraising activities. In other words, a reform
of mechanisms of budget funding can be more efficient and effective than mere
increase in the amount of funds not accompanied by such reform.
3.2.2.
Decentralization
In terms of financing, this
policy strategy means a major shift of financial responsibilities in cultural
sector from national to regional and local budgets. As a matter of fact, this strategy has been tried in all
three countries analyzed here. The most consistent and far-reaching
decentralization has been carried out in Poland, first as a means of cultural
de-monopolization (1991-93), and later as a part of efforts aimed at EU
accession. However, it became obvious quite soon that decentralization has its
financial and political limits, and the preservation of both the network of
national cultural institutions and of remarkable amount of state funding for
culture are still indispensable.
In the Russian Federation,
essential decentralization (“federalization”) of cultural policy has been a
constitutional requirement. However, the federal government has been
continuously looking for new instruments of influence on regional cultural
policies (such as federal programs of cultural development, federal budget
investments, state licensing of certain cultural activities etc).
In Ukraine in the early
1990’s, similarly to Poland, the majority of public cultural organizations was
transferred to regional and local ownership and, parallel to this, the funding
of these became a responsibility of regional and local budgets. However, this
process was not supported by much-needed increase in budget revenues of the
regions. As a result of this, the decentralization of cultural and funding
policy in Ukraine brought about financial deterioration of many cultural
institutions, especially in small towns, villages, de-industrialized areas. The
policy of “recommended levels” of per capita funding from local budgets
calculated and imposed by Ministry of Finance only added more bitterness into
national-regional relations. This policy discredited the idea of
decentralization to great extent, and made the option of re-centralization
quite attractive to many.
However, a proper reform of
budgeting system could bring new life into this strategy. The actual culture
funding policies in many regions (where much more money has been given to
cultural sector that the national government recommended) seem to confirm this
optimism.
3.2.3 “Leaving the things as they are”
This strategy presupposes no
radical changes in the existing policy of cultural funding.
In positive terms, this inert
strategy has been articulated more than once as a policy of “preservation of
the existing network of public cultural organizations”. That is, the state believes or pretends to believe
that not a single public library, village house of culture, museum or cinema
should be closed or privatized (with the exemption of cinemas, perhaps, because
dozens of cinemas have been privatized or leased to private operators in recent
years).
This policy also means that
no big increase in the amounts of public funding should be expected. At the
first glance, this strategy would not bring big changes (for the better or for
the worse) in the cultural sector.
However, this conclusion is
too optimistic and superficial, because, after the decade or under-funding and
inflation, the majority of public cultural venues (which are formally preserved
by the state’s policy) in fact in bad shape, modern technical equipment can
hardly be found there, and every other library or house of culture has enough
funds only for one part-time employee.
This means that lack of
policy changes can easily make the process of decay in provincial cultural
organizations irreversible.
This inert strategy also
makes the cultural sector, even the better-offs in it, very dependant on
general economic situation: with economic growth, budget expenses for culture
could also grow, and with bigger buying power of the public, earned incomes of
cultural organizations would increase. But if the economy would follow less
optimistic scenario, the cultural sector would suffer disproportionately,
because of the “residual approach” to its needs.
However, it is exactly this
“residual approach” that makes the “leave things as they are” strategy
preferable for the government.
3.2.4.
Désétatisation
Unlike Poland and Russia,
where cultural industries (book publishing, film, music and show business) have
been predominantly privatized during the 1990s, Ukraine’s cultural sector
virtually avoided privatization[6].
This does not mean of course
that there is no private book publishing or private show business in Ukraine;
on the contrary, private sector dominates these industries, but it came along
with negligible state support.
On the other hand, none of
the three nations ever considered the option of total privatization of public
cultural infrastructure. So the problem of privatization
(désétatisation) can be articulated as follows:
- What extent and form can
désétatisation take to be helpful in solving financial problems
of the cultural sector without damaging the “public interests”?
The problem was analyzed in
one of the author’s previous research projects [Rozderzhavlennia v kulturnii sferi Ukrainy. – Kyiv, U.C.K.D., 2001
(Ed. O.Grytsenko)], and the following conclusions were obtained:
1) A “classical”
privatization (as a sell-out of assets to private investors) would almost
certainly fail, because cultural assets are unattractive to big investors,
while those willing to invest in culture usually don’t have enough money for
big purchases.
2)
Désétatisation of those cultural organizations which will not be
placed among “basic public cultural institutions” (therefore subsidies to them
will became problematic) can be effective as a means of assuring them better
conditions for earning and fundraising.
In legal terms, the désétatisation
can mean transformation of formerly public institutions into non-profit NGOs.
However, under contemporary circumstances, this can be counter-productive if
désétatized organizations loose all public funding they previously
got. The continuity (at least partial) of public financial support, therefore,
is a precondition for effective désétatisation.
3) The rise of a strong and
sustainable third sector in Ukrainian culture (the ultimate goal of the
désétatisation) is hardly possible without a more
culture-friendly tax system. It would be a very useful (if not very original)
idea for Ukraine to imitate Polish or Russian tax systems: in both countries
the majority of cultural organizations and activities are tax-exempt, as we
have seen.
Just one example of how
efficient this might have been: in 2002, actual subsidies to culture from
National budget were 170 mln. UAH (instead of the planned 251 mln.). In the
same period, public cultural organizations earned 168 mln (including 33,6 mln.
paid as VAT). If the earnings were made VAT-exempt, this would bring cultural
organizations extra 33,6 mln. and compensate at least half of the amount that
the State promised them, but failed to deliver.
3.2.5.
Preferable policy alternative
We can summarize this review
of possible policy strategies by concluding that neither of them, taken
separately, can cure financial problems of Ukrainian culture, but there are
certain elements in each of the strategies which can be effectively applied
without contradicting each other.
Having political will, the
state can achieve certain increase in budget financing (or, if sheer increase
in the amount of funds does not look feasible, can make funding more efficient and effective by
using modern, more diverse and sophisticated schemes of funding). It can also
focus on creating favorable conditions for cultural organizations to earn more
by themselves (by providing tax incentives and lifting many of the existing
administrative constraints on earning for subsidized cultural institutions).
Actually, these two options are not
alternatives to each other, they can easily be combined. However, tax
incentives mean revenue losses for the budget, and the traditionally-thinking
Ukrainian government will perhaps prefer the first option in its moderate form,
that is, a modest increase in budget subsidies to culture. It is hard to
believe that this will radically change the situation for better.
As for the problem of the
lack of clear priorities in culture funding, an introduction of explicit funding
priorities can also be politically dangerous: those employed in those public
cultural organizations which will fall into «low priority» bracket (and this
can mean more than 100,000 people) will of course protest angrily.
From cynically political point
of view, it is less dangerous to spread insufficient subsidies all over the
sector than to divide the recipients into
«haves» and «have-nots».
The perspective of
increasing charitable donations to culture must not be overlooked, too, since
grants from Western charities remain a major source of income for many cultural
NGOs. This goal can be achieved by increasing tax incentives and by promoting
public/private partnership in cultural sector. The latter way can be especially
productive if applied to domestic businesses who are not very active in
promoting Ukrainian culture so far.
An important reason for
insufficient earned income and negligible private donations to many cultural
organizations, both public and private, is the lack of modern managerial and
fundraising skills among Ukrainian cultural workers. Public cultural
administrations can help them by organizing free-of charge training courses,
workshops etc.
Chart 2 presents a more or less formal listing of all these options, some of
them further detalized, and divided into three levels: - policy goals; -
concrete tasks; - policy instruments.
Chart 2
Structure of policy goals, tasks
and implementation mechanisms in culture funding
1.
Improvement of budget financing
of culture
1.1.
increase in the share of cultural
expenditure in state and local budget
1.1.1. fixed
share (%) of budget expenses for culture
1.1.2. ‘normative’
calculation of cultural expenses on each budget level
1.1.3. introduction
of the ‘basic network’ of public cultural organizations
1.2 .
improving of the structure of cultural expenditure
1.2.1. fixing
cultural priorities for each fiscal year
1.2.2. target
programs as base for calculation of budget expenses
1.3. diversification of schemes of public
funding
1.3.1. introduction
of competition for grants
1.3.2. tax
incentives for cultural organizations
1.3.3. lotteries,
dedicated taxes, privatization
2. Increase in earned income of cultural
organizations
2.1.
simplify procedures of accounting and reporting
2.2.
provide tax incentives
2.3. lift administrative and financial
constraints for public cultural organizations
2.4. teaching managerial and marketing skills
etc
3. Increase in charitable donations and sponsoring
income for culture
3.1. development
of private/public partnerships for arts finding
3.2. bigger
tax incentives
3.3. teaching
in fundraising skills.
3.3 Policy recommendations
1)
Comparisons with Russia, where public cultural infrastructure and economic
situation are similar to Ukraine, demonstrate that the reasonable level of
public cultural expenses per capita can be estimated as $4-5, that is public
expenditure for culture in Ukraine can be increased at least twice.
2)
The Government’s policy capacity in cultural sphere should be increased:
information supply improved, inter-sectoral policy cooperation strengthened,
systemic sectoral research carried out.
3)
Quality of budget-making and of budget performance on the national level, with regards
of cultural expenditure, needs radical improvement, so as to get rid of
underfunding and lack of budget discipline.
However,
this problem is a part of the broader issue of quality of budgeting in Ukraine,
and hardly can be solved for cultural sector alone.
4)
Financial priorities on all levels of public cultural administration should be
reconsidered. In particular,
-
funding of grand-scale actions “of national importance” can perhaps get
considerably less attention than it gets now; instead, more funds should go to
libraries, museums, filmmaking.
-
the goal of preservation of all existing public cultural institutions,
especially in small towns and villages with low budget potential, should also
be transformed into the more realistic goal of keeping a basic network
of more important cultural organizations, while the rest can be
désétatized, or even sold;
- in
budget subsidies to cultural organizations, more money should be dedicated to
core cultural activities, not only to salaries and keeping of buildings.
-
désétatisation (especially on local level) in the form of
transformation of public cultural institutions into NGOs should be started,
with continued financial support from local budgets to
désétatized organizations.
5)
The practice of “recommended levels” of per capita cultural funding applied now
by the Ministry of Finance should be abandoned completely as counter
productive. Instead, a more relevant scheme of direct financial transfers
(subsidies) to regional budgets can be introduced.
6) The
system of program budgeting, as prescribed by the acting Budget Code of
Ukraine, needs serious corrections with regards of cultural expenditure. The
program budgeting approach can be used for defining budget subsidies to such
artistic institutions as theaters, operas, musical ensembles, film producers;
while for libraries, museums, cultural centers the previous model of routine
maintenance funding seems to be more adequate.
7)
With insufficient budget funding, a set of culture-friendly changes in taxation
regulations seems to be necessary:
-
the regulations for non-profit organizations should be made more adequate
(today, NGO’s are in fact made non-eligible for any business activities, even
directly arts-related);
- a combined
funding: from public budgets, from private donations and earned funds from
cultural services, should be made legally permissible and practically
accessible for all types of cultural organizations, because today, privatized
cultural institutions have little chance to survive without public financial
support.
8)
More diverse schemes of public funding should be developed alongside the
existing ones, which under Ukrainian circumstances means the following:
-
further development of the producer oriented funding scheme of film and theater
productions;
-
improvement of the already existing scheme of Presidents Grants for prominent
artists; these grants should be at least made VAT-exempt.
9)
More active protectionist policies are necessary for such Ukrainian cultural
industries as film making, book publishing, music recording. Under contemporary
market conditions in Ukraine, only protectionist measures can save these
industries from decay and pretty marginal position.
[1] K.Krzysztofek, ‘Ewolucja
zalożeń i programów polityki kulturalnei w Polsce’ in: ‘Kultura Polska w dekadzie przemian’,
red. T.Kostyrko, M.Czerwinski, Warszawa, 1999.
[2] Russia’s National Report on Cultural Policy was extensively used in this
research.
[3] D.Ilczuk, A.Wieczorek. Finansowanie
kultury ze środków publicznych. In: Kultura w dekadzie przemian, Warszawa, 1999, p. 187-230
[4] Kultura Polska w dekadzie przemian. Red.
T.Kostyrko, M.Czerwinski, Instytut Kultury, Warszawa, 1999.
[5] This was accompanied by a general
correction of the policy on National cultural institutions: before, only
one (“leading”) organization in a group
(one drama theater, one opera, one arts gallery etc) could get such status,
today it is “not more than three organizations”.
[6] Many cultural workers still believe
that privatization in public cultural sector is banned. This is not so. The
existing law bans privatization of public assets “financed from the State
budget of Ukraine”. That is, if the State decides it can not (or shall not)
fund certain cultural institution, it may sell it.