Peter Batey, the founder of one of Australia's most famous art prizes, has died aged 85.

Mr Batey founded the Bald Archy Prize in 1994 and it quickly attracted attention for its irreverent and comic portraits taking humorous aim at the events of the past year.

NSW Police confirmed a man believed to be aged in his 80s died in a single-vehicle crash on Muttama Road at Coolac, about 30 kilometres from Gundagai, about 2:30pm on Friday.

The car reportedly left the road and struck a tree.

A statement on the Bald Archy Facebook page today described Mr Batey's passing as "the unthinkable".

"Bald Archy founder, theatre director, actor and Australian legend Peter Batey OAM, has died," the statement read.

"Driving home from Cootamundra yesterday his car left the road. He may have had a heart attack."

From the theatres of Melbourne to a festival in Coolac

A Bald Archy Prize entry in 2014, 'Cate the Great', by Judy Nadin. ( Artist: Judy Nadin )

Living in Coolac, NSW, in 1994, Peter Batey first came up with the idea of a satirical art prize as a colourful addition to the town's Festival of Fun.

It became the Bald Archy, whose winner was judged by a sulphur-crested cockatoo named Maude.

According to Mr Batey, who saw Maude far more than anyone else, she would flap her wings in front of the painting she liked best, and the decision was made.

In February 2019, while presiding over the prize for the final time, he told the ABC it was as relevant as ever for its quirky and critical illustration of Australian politics, sport and current affairs.

"We've got to the stage where it's announced that somebody will stand for parliament and you know that the snipers in the media are standing up ready to say 'I'll shoot you now'," he said.

Peter Batey at the opening of his last Bald Archy in February 2019. ( ABC News: Michael Black )

Born at Benalla, Victoria in 1933, Mr Batey was creating art from a young age, before moving to Melbourne at the age of 16 to study drama.

He went on to become a prominent playwright and founding member of the Melbourne Theatre Company, directing and producing theatre productions, operas, musicals, revue and puppetry.

His first original play, The No Hopers, was presented across the country in 1961.

He directed about 130 professional plays across several genres.

He was a founding member and the inaugural artistic director of the South Australian Theatre Company, and the first director of the Victorian Arts Council.

Australian comedian Barry Humphries credited Mr Batey with contributing to the creation of one of his most famous characters, Dame Edna Everage.

In 1999, Mr Batey was awarded an OAM for his services to the arts and community.

A champion of intelligent and irreverent art

Bald Archy Prize portrait of Pauline Hanson by Jack G Kennedy. ( ABC News: Siobhan Heanue )

The creation of the Bald Archy prize was not simply a light-hearted elbow-jab to the Archibald Prize.

It also aimed to provide an outlet for artists who otherwise would not be able to showcase their work to a wider audience.

His mission statement to artists hoping to have their works accepted into the prize was straightforward: "Hit me in the face, if you can."

The competition copped criticism from what Mr Batey called "art snobs", but he said he believed that every artist should have an outlet and all art should be judged for its own value.

"We get it quite a lot from the art snobs saying, 'Oh that. It's just nasty little paintings, jokes'," he told the ABC last year.

"Well they're not, they're terrific."

Fran Henke met Mr Batey over 50 years ago when he worked with the Canberra Theatre Company and he later launched a gardening book she wrote.

"He could be such a funny man — wicked as well, but with a depth," she said.

"You could never underestimate him.

"When James Brennan's painting of Anh Doh as a tribute to a painting of Norman Rockwell won last year, I said 'is that going to give you enough publicity?

"He said 'it's not about that, dear. It's the intelligence behind that painting that makes it the winner'."

She said Mr Batey was known for saying that while it took 12 galahs to judge the Archibald Prize, it only took one cockatoo to judge the Baldy Archy.

Ms Henke also revealed Maude the cockatoo had died some years ago, but Mr Batey forbade her from telling anyone, relishing in the secret.

"Somehow her ghost came back to judge the Bald Archy Prize, and now she won't be visiting that garden at Coolac anymore, and neither will Pete," she said.

"But he made such a mark on Australian culture."