A Cooper Review commissioned by the Commonwealth Government recommends that art investments in self-managed super funds (SMSF) be banned (read Artists fear super ban will destroy local industry). This, in my opinion, is a poor idea, and it makes no sense whatsoever. I am really starting to dislike the current Labor Government. They plan to slap a giant mining tax on the country and now they want to ban art investing.
Some people say that art (paintings) are not proper investments like stocks or real estate. But they are. An investment is defined as anything that can go up in value in the future. Since art can go up in value in the future, then it is therefore an investment.
Some people say that art is not a proper investment because it does not produce any income. Real estate investments produce income because you can rent the house out and get rental income. Stocks have income because companies distribute profits in the form of dividends. However, just because an asset does not produce income it does not mean it is not an investment. Arguably the world's greatest investment, i.e. shares in Berkshire Hathaway, the holding company of the world's richest man Warren Buffet, pays no dividends. All gains are in the form of capital gains. Another good investment is the safe haven asset gold, which produces no income at all, yet it has been used as an investment for millenia. If you store art in your house, it does not produce any income. However, it is possible for art fund managers to rent out the art to businesses. To see an example of this, read Smith and Hall - Why Rent Art?
Some argue that art has no real value and that people who are willing to pay millions for a painting are fools. Art has value because looking at it gives people pleasure. This is no different to, say, high-end real estate like mansions. It is also no different to stocks in companies that sell luxury goods. If people are willing to pay money to buy clothes, cars, and houses that look good, why wouldn't they also want to pay money to look at a good-looking painting?