Malcolm Turnbull has called artists of the Biennale festival “viciously ungrateful” for campaigning to have the festival cut ties with detention centre contractors Transfield Holdings.

The board of the contemporary arts festival and Transfield Holdings, which is owned by the Belgiorno-Nettis family, decided the company would stop sponsoring it last week after artists started boycotting the festival.

The communications minister said artists had risked the future of the festival and he wants the board and Transfield Holdings to reconsider the decision.

“Really this is disastrous, I hope the Biennale can survive but I think the artists that have done this have potentially driven a stake, not through the asylum seeker policy I can assure you of that, but through the Biennale, it’s extraordinary, the sheer vicious ingratitude of it all,” he told ABC 702 on Monday.

“Transfield does not make government policy, it’s in business, it’s fulfilling a contract for the government, if they don’t like the government’s policy they should reject any arts even that has funding from the federal government.”

The company was a founding sponsor of the festival and its chairman, Luca Belgiorno-Nettis, also resigned as chairman of the festival.

Transfield Holdings is a contractor for Australia’s network of immigration detention centres.

Turnbull said the treatment of the Belgiorno-Nettis family had been “unfortunate” and the festival would not exist as it does today without them.

“The artists are entitled to do that, I think it’s a very destructive act on their part, but I have to say I’m disappointed that the board of the Biennale decided to end the association with Transfield, it sounds like Luca made the decision, it was done mutually, but I think it’s a real pity the board and Luca didn’t say to those artists, ‘well I’m sorry you feel like that about it but the show goes on’ because if we lose the Bien as a consequence of this, that would be an absolute tragedy,” he said.

Investor and philanthropist Mark Carnegie has also criticised the artists, calling them hypocrites who should reject all funding from the federal government.

“The artists that vetoed this need to understand that most arts funding in the country comes from the government, and the government are the ones behind Manus Island,” he told the Australian Financial Review.

“If these guys are honest about it they should object to government funding as well as corporate funding. But instead, they take all the government funding they can and pick on somebody who’s been incredibly ­philanthropic in Sydney over a long period of time. The Belgiorno-Nettis family is one of the most philanthropic in the nation.”

Carnegie said the campaign could stop other companies from investing in the arts.

“This is bad for the arts, bad for art funding and bad for the artists,” he said.

The artists of the Biennale have said they will continue to target Transfield Holdings and other arts organisations that receive money from the company.

“We are going to pursue this through divestment workshops and seeing how much more we can affect this policy through targeting the companies that are profiting from mandatory detention,” Gabrielle de Vietri, one of the artists who led the campaign, told Fairfax.