The Australia Council, the nation's peak arts body, "is one major cut away from no longer being able to operate", a leading arts industry figure has said in the lead-up to a federal budget that offers the real prospect of such a fate. 
Esther Anatolitis, director of Regional Arts Victoria, said major cuts "would be disastrous for the nation's arts and culture".
"And yet, you can't help but wonder whether that's been the intention of the government all along: to ... replace strategic arts investment with discretionary funding, where politicians instead of artists get to determine what art is," she said.
Ms Anatolitis said the Australia Council, which will announce its funding for mid-size arts organisations following Tuesday's federal budget, had been crippled by cutbacks in recent years.
The 2015 budget contained a $105 million cut over four years from the Australia Council in order to bankroll a new funding body, the National Program for Excellence in the Arts.
New Arts Minister Mitch Fifield later restored about one-third of the funds - $32 million - to the Australia Council and renamed the National Program for Excellence in the Arts as Catalyst.
Leading arts figures do not hold high hopes for Treasurer Scott Morrison's first budget. National Association for the Visual Arts executive director Tamara Winikoff said she hoped the budget would restore Australia Council funding to at least 2013 levels. "My fear is that funding will stay as it is, or worse," she said.
Ms Winikoff was also critical of the Catalyst funding program under which $1 million was granted in   April to buy the home of painter Hans Heysen in the Adelaide Hills. The unorthodox grant to a Liberal-held seat ahead of the federal election in   July has led to accusations of pork barrelling.
"There is no strategic plan or framework for decision making, the assessment process is crude and completely opaque, the decisions don't follow the program's own guidelines, and decisions and their announcements are being used politically," Ms Winikoff said.
The director of western Sydney's Urban Theatre Projects, Rosie Dennis, said investment in the arts was vital to achieving the government's innovation agenda.
Senator Fifield's spokeswoman said: "The government does not comment on speculation in relation to what may be decided in the budget."