Angus James and Gabrielle Trainor’s review of the Australia Council is a bold yet sensible reform blueprint for an organisation that badly needs reform.

I’m not sure whether it can be implemented, though. More on that later.

Let’s begin with the welcome aspects of reform. First, the review has re-affirmed the role and relevance of the council in the 21st century, even while acknowledging the sclerotic structure of the council has failed to meet the challenges of a rapidly diversifying and democratising cultural sphere. The review is also strong on the need to retain the principles of arm’s-length funding and peer review, and has some important recommendations for strengthening and diversifying peer review.

The headline reform is of course the decision to say goodbye to legislated silos for the assessment of grant applications. Some will be concerned about this, but I think it’s all upside.

It reflects the reality that contemporary culture is constantly morphing and blurring, and it recognises that attempting to draw a line around the practice of “literature”, “visual art and craft” or “theatre” in 2012 is an increasingly problematic exercise. By stripping away the bureaucratic demarcations, the Australia Council will be better able to support hybrid cultural expressions, as well as “new” artforms like gaming (gaming is decades old, but such is the inertia of the Australia Council game art practitioners find little support in the current set-up).

Getting rid of the artform silos will also bring the Australia Council into line with the practice of most of the state-based arts agencies, which don’t maintain separate peer panels for each artform and instead farm out applications to a broader pool of peer reviewers according to expertise and circumstance.

There’s also $21 million in new money recommended, which everyone agrees is desperately needed in  order to fund more projects and artworks. The acknowledgement that many high-quality applications went unsupported is one of the most pleasing aspects of the review.

There are some long-term headaches stored up for Simon Crean in this, however. The recommendation to open the major performing arts sector up to peer review is a recipe for major political disagreement.

In any genuine and “contestable” peer review process, some of Australia’s major performing arts organisations would almost certainly have their funding cut. For peer review to be worthy of the name, under-performing organisations have to eventually be taken off the teat. This is exactly what happens currently in the small-to-medium sector.

And there’s no doubt the performance of some of the state theatre companies and orchestras in recent years has been a lot closer to mediocre than excellent — even if your definition of “excellence” includes the constant rehashing of classic repertoire.

But when it comes to the crunch, will the Australia Council and the arts minister of the day really have the courage to take money off an orchestra or theatre company? In 2005, the mere suggestion of smaller companies in the Strong review of the orchestras was enough to ignite a storm of public criticism, leading rapidly to new funding from the Howard government. In 2006, when the Sydney Dance Company went broke after a series of poor box offices, it too was rescued with a big funding injection.

As Julian Meyrick told the ABC last night on PM: “Many have tried and nobody has succeeded yet over the last, whatever it is, 40-odd years of the Australia Council … It’s very difficult to de-fund major arts institutions.”

The constant use of the word “excellence” throughout the report (it appears no fewer than 129 times) is also a concern. As I’ve consistently argued, the word can be used in so many different ways that it has become almost meaningless as a description of arts funding priorities. James and Trainor are at pains to admit that excellence is inevitably subjective and that it should encompass artistic merit “in all its guises”. This means “excellence” essentially becomes a synonym for “a high-scoring application in the peer-review process”.

There are some things, however, that excellence is not: notably “access”. Again, access is not particularly well defined. Is “access” a code-word for public art and cultural programs in the community? For touring and marketing programs? The review suggests access includes things such as “the national arts training organisations and the work of the Australian Curriculum, Assessment and Reporting Authority in its role developing the Australian Arts Curriculum”, as well as “community cultural maintenance as part of the Australian government’s broader policy on ‘Closing the Gap’.” More than that, however, we don’t really know, but we can say this review appears to endorse the move away from policies of community cultural development.

There are also some potential pitfalls inherent with the move to a more conventional governing board to run the strategy and set the overall priorities of the Australia Council. In agencies such as Screen Australia, this more conventional structure has generally meant a few top bureaucrats appointed by the board are given wide discretion to decide overall priorities and funding directions. This is likely to mean that policy will become much more centralised, in contrast to the current structure where the artform boards were much freer to pursue their own, sometimes quixotic, policy directions.

The theatre board, for instance, spent a lot of time and effort on a new strategy to “Make It New”, while the literature board got interested in the digital sphere with the “Story of the Future”. Under the new arrangements, such initiatives will likely come from the top, so policy will be both better co-ordinated but also less diverse.

Much will turn on the coming consultation period and the government’s response. Can Simon Crean find the extra $21 million in the next budget? How will the major organisations react? And how will these recommendations fit with the National Cultural Policy?

I think Crean can secure the new funding, and drive through these reforms. If he does, it will mark a significant evolution of Australian arts policy, one of the most important in at least two decades.

But genuine peer review for the major performing arts organisations? Don’t hold your breath.