Don
Arts policy inevitably involves government 'interference' in the Arts.
If policy is not simply to be a duplication of the markets/audiences independent choices, policy must inevitably play favorites.
The number of possible 'arts things' is infinite, funds are not. Thus policy comes down to what we don't fund. The use of peer review processes and arms length to answer this curly question has resulted in academic circularity. ( And an awful lot of management costs).

The most productive time in french art in the past few hundred years was exactly when the peer review academy collapsed and was replaced by a free market free for all. The independent representative agent for example, Volard was very important reason why Picasso and Matisse became very well paid.
Gustave Courbet once said 'The one and only thing a government can do for an artist is, leave him alone.'

Cultural policy always risks turning culture into an 'artifact'.

Don

" ought to be a whole-of-government matter"
culture = the whole country, every thing we do from cheese making to VFL and to which side of the road we drive on is Australian culture.
Art can be anything.
An integrated approach to cultural/arts policy = the Government of the commonwealth of Australia.

Don

Institutions are not culture, institutions regulate they maintain standards. culture is not an area that needs regulation for 'public safety' reasons. Culture is meta it is literally change.
Australia is littered with hundreds of expensive over managed cultural white elephants.

Of the 15 million in annual VACS funding all but 1.5 million is paid to managements. Are you seriously advocating paying them even more money to "Look after their artists".

The publicly funded Visual arts sector has been managed to death, how many more 'phantom employees' do you want?

Far too much money is into things that only a portion of the population wants. Most people are too realistic to be humbugged by so called art.
It's a minor value and should not be funded.

Which art funding policies created The Colossus, Guernica, or Starry night?

Don makes some good points. Art has always been an integral part of societies but has generally, until modern times, been sponsored and instigated by individuals other than the odd funded Art College or Gallery. Arts funding has gone much further than this with many questionable grants over the last 20 odd years.

It is individuals that make art and music and while I agree the money spent on the justice system is high in stark comparison to arts, what would be the alternative other than to let prisoners free. (Although, perhaps art and music art could be encouraged in the prison system to soothe ths savage beast.)

Having been involved in a local theatre group many years ago we did it without any input from government, just a concerted effort by a group of people with costumes borrowed, sewed or bought in Op shops as the roles demanded. Same with sets and all the work was done for the love of the theatre. The end result was not the poorer for it but the reward in fact was enhanced by personal effort.

Governments don't have to be across everything cultural nor endeavours that come into the gamut of personal interests. There is much room for private sponsorship and volunteer efforts and to a large extent this is still the case.

It is bemusing that funding for the Arts has taken a turn upwards when it is hospitals that are now seeking volunteer labour and private donations for various essential machinery.

Other than the bare necessities (ovals, galleries and the odd college), leave the arena of arts and sport to private individuals.

As an aside, there has been much controversy over roadside art purchased by state governments - some of it dubious (although art is subjective) and stuff that my old grandma could have whipped up with some bits of old metal and a welder.