Have you ever heard of Melba Recordings?

Unless you work in classical music, you’re not likely to. Melba is a niche classical label based in Melbourne. It was started by former ABC producer Maria Vandamme, who left Aunty in 1998 to pursue a career in the recording business. It has been in operation for roughly a decade and has produced some high-quality work featuring Australian soloists and musicians (though not many Australian composers).

A glance at Melba’s website gives you an idea of the sort of work it releases: classical and baroque music from name-brand composers, generally performed by talented Australians. A recent example is Ensemble Liaison‘s A Lotus Blossoming, which features emerging Melbourne musicians David Griffiths, Svetlana Bogosavljevic and Timothy Young. As such, it’s a great outcome for some passionate and hard-practising musicians. In common with many, if not most Australian independent record labels, Melba’s catalogue supports artists who are generally not superstars or even making a full-time living from their music.

What separates Melba from nearly every other music publisher in Australia is that the label has received more than $7 million in federal funding since 2004: $1 million a year from 2004-2009 and a further $750,000 annually since 2009. What’s more, that funding has bypassed the normal structures such as the Australia Council’s Music Board and checks and balances such as peer-review.

The amount of funding given to Melba is significant in the context of the small amounts available through the Australia Council. While established institutions such as Opera Australia and the orchestras receive millions in federal funding annually, for most in the sector the available funding is limited to small amounts through grants sourced from the Music Board. Last year, the Music Board dispensed a little over $3.5 million to the sector, according to the Australia Council’s 2010-2011 annual report. That means Melba’s funding equates to something like 21% of the Music Board’s ongoing grant funding.

Melba’s original grant was for $5 million over five years. It came as a bolt from the blue in the 2004 budget papers, when the Portfolio Budget Statement for the Department of Communications, IT and the Arts included the line: “Core funding has been maintained and the government has increased funding by $10 million over five years to support arts organisations, assist in the expansion of international markets for Australian artists and for the production of high quality music recordings through support to the Melba Foundation.”

The Melba Foundation is the philanthropic NGO that helps to fund Melba Recordings. At the time of the 2004 budget, the minister for the arts was Helen Coonan. Before Coonan, the senior minister in the communications, IT and arts portfolio for much of the early Howard government was Richard Alston. After leaving politics in 2004, Alston later became the chair of the Melba Foundation. At the time, Crikey understands Melba had considerable access to senior Liberal government figures, including treasurer Peter Costello himself.

Accessing powerful people is not unusual for Melba. The foundation boasts a list of A-list celebrities and establishment figures to make any ordinary sponsorship and development executive weep. Melba’s founding benefactor is Dame Elisabeth Murdoch, it’s current “patron in chief” is Governor-General Quentin Bryce, and its “ambassadors” include high-profile public identities such as Terry Cutler, Baz Luhrmann, Sir Gus Nossal, Donald McDonald, Malcolm Long, Maureen Wheeler, Barry Jones, James Wolfensohn, Richard Alston. Even Gough Whitlam is on the list.

Connections like that have meant Vandamme has had no trouble getting her case heard in the offices of successive federal arts ministers. When Melba’s initial five-year funding was due to end in 2009, then-arts minister Peter Garrett renewed it, albeit at a lower rate. The funding continued to be administered by the Australia Council, but, at least as Crikey understands it, the money came from a separate line item from the arts department, not from the council’s ongoing funding.

For several years, Melba’s sweetheart deal attracted little attention beyond a few grumblings in the sector. That changed in 2011, when the story was picked up by Samantha Randell, then working as an intern at the Australian Independent Record Labels Association (AIR). Randell and AIR chief executive Nick O’Byrne started to do a bit of digging as to why Melba was getting so much funding, when other record labels were struggling for tiny grants through the Music Board, subject to rigorous peer review and reporting requirements.

Randell writes up her investigation at the blog Love.Destroy. It’s riveting stuff. She made extensive use of Freedom of Information requests and met with the Australia Council many times in an effort to understand Melba’s funding arrangements. What she uncovered was a public subsidy that dwarfs the most generous handouts available to almost any other arts organisation in the country:

“In the 2009-2010 financial year Melba recordings produced seven CDs — They received $1 million dollars in government funding to do so, as well as over $40,000 in patronage. From the sales of the seven CDs they made around $3500. That’s it. That means they were making $500 on each CD and at say $20 a CD, selling only 25 of each CD. I’ve worked gigs at the likes of the Workers Club and sold more CDs than that. That equates to $142,000 for the creation of each CD. So, if you do happen to be the proud owner of one of these CDs, hold onto that disc. As far as the maths is concerned it’s worth $5500.”

The investigation set off alarm bells in many parts of the contemporary music sector, which has long complained about an imbalance in federal funding priorities (according to a recent Arts Queensland research paper, classical music receives around 98% of the available Commonwealth funding across the music sector). The contemporary sector has also got markedly better organised in recent years, particularly in Victoria, spurred on by the success of the SLAM rallies in 2010 against Victorian liquor licensing crackdowns.

As a result, Melba’s funding is now being bitterly contested. Representatives of industry bodies ARIA, AIR and SLAM have all written to federal Arts Minister Simon Crean calling for an investigation of the circumstances behind the funding, with a clear objective of redistributing the dollars to the contemporary sector.

According to AIR’s Nick O’Byrne: “We don’t [want to] make this debate about classical music versus contemporary music. That’s not the point. In fact, it’s undeniable that some of Melba’s projects do have serious cultural significance.”

But, O’Byrne says, “it’s important this money stays within the arts funding system and is just redistributed”. O’Byrne is concerned the funding could simply vanish into consolidated revenue as a part of  Labor’s increasingly desperate efforts to deliver a federal budget surplus on May 8.

Melba is not going down without a fight. Crikey understands the label has been mounting strenuous lobbying efforts in recent months. A letter to The Australian yesterday by Melba chair Barry Tuckwell claimed “it would be a national tragedy if Melba Recordings ceased to exist”.

But it may be tough for Melba to keep its special deal in the light of a newly assertive contemporary music sector. A spokesman for Crean told Crikey Melba’s application for funding would be considered “as just one of 450” competing requests for arts funding, and that Melba would have to take its chances alongside all the rest.