CNZ yesterday announced two new funding initiatives would replace its recurrent funding programme from January 2012.
The "arts leadership investment programme" would provide funding for between two and five years "to well-run, financially-sound organisations that fulfil a key role or roles in the creation, presentation and distribution of high-quality arts experiences to New Zealanders".
The "arts development investment programme" would offer funding from six months to two years for arts organisations, groups and individuals not fulfilling a key role.
"Creative New Zealand will continue to support well-run and innovative organisations that provide leadership in the arts and professional development for artists.
These organisations must achieve the highest possible standards with careful use of resources," Arts Council of New Zealand chairman Alastair Carruthers told the Otago Daily Times from Wellington after the announcement.
The criteria were "strong governance, management, artistic management and direction", he said.
Otago receives about 5% of CNZ's $15,265,400 recurrent funding budget - the Fortune Theatre gets $480,000 a year and the Southern Sinfonia $315,000.
Fortune Theatre Trust chairman Peter Brown was downcast after the announcement yesterday.
"It's bad news for the Fortune and any other arts organisation that isn't based in Auckland, Wellington or Christchurch," he said.
"It would appear that the Fortune will be forced back into annual funding applications and living hand-to-mouth and from year-to-year.
Three years ago, CNZ identified the Fortune as one of its key players in the professional theatre network and they have supported us well through some difficult times ..
"Now, just when we start to get our heads above water and are in a reasonable financial position, we have the rug pulled.
"This could have significant negative implications for the Fortune and professional theatre in the South. "CNZ is saying to the whole of New Zealand: `You only need two orchestras and you only need three theatres.
If you want to enjoy either art form, you will need to travel great distance ..."
Mr Brown said the change would affect all Otago.
"Somehow, I can't see national touring theatre productions ever getting to Te Anau or Ranfurly or Lumsden, like the Fortune does.
"The worst thing, though, is that the theatre industry and employment opportunities in Dunedin could wither. If practitioners can't find regular employment here, then they will have to go north or offshore."
Southern Sinfonia manager Philippa Harris was also concerned at the funding changes.
"What they're proposing is quite a major change in the funding of their recurrently-funded organisations by creating a two-tier system. Later this year, we'll be applying for funding and hope for the best," she said.
"We won't know for some time yet - it could be as early as the end of this year or as late as August next year - what the outcome will be and what the implications are for us. So, we will just have to wait and see how this works out."
Mr Carruthers said the new programmes would give greater clarity and flexibility to CNZ's investment priorities and take into account support provided by local government and the private sector.
"We will continue our dialogue with local authorities about our shared investment in arts organisations in their communities. We provide foundation investment; the Local Authority Act requires the cultural wellbeing of a community."
However, he conceded there would be uncertainty as the organisational mix was decided.
"The mix will be resolved over the next six to 12 months. There will be a period of instability as it flows through. There will be a natural sorting out."
CNZ arts infrastructure services manager Jane Clarke could not confirm yesterday whether the Fortune and sinfonia would be included in the new funding regime.
"It's too early to say which organisations will be supported through which programme and how much we will invest until we have received and assessed expressions of interest in the new programmes."
CNZ's existing funding arrangements end in December 2011, with the changes taking effect from January 2012.
