The Australian arts community could be forgiven for being triskaidekaphobic. Last Friday, 13 May, around 65 arts organisations, including many thought to be essential to our cultural ecology and unassailable in their artistic output and fiscal stability, lost their federal funding.

As the news spread, so did the shock and dismay. Everyone was braced for grim news, but the outcome was worse than most people expected. Despite this, there was also good news, for Indigenous arts in particular. Esther Anatolitis, director of Regional Arts Victoria, outlined a useful initial summary of what she called the “dark ironies” of the current situation. As Anatolitis says, it’s complex.

The problem with arts funding is that it’s an arcane and intricate subject that’s about as sexy as a cheesegrater. Worse, the ad hoc policies applied by the Coalition government since 2013 make it difficult even for insiders to follow the vagaries of funding. Yet it’s impossible to understand the anger of the arts community without understanding some of these complexities, and in particular the history, behind Friday’s bloodbath. Because, although the money counts in very real ways in what has happened over the past three years, it’s not just about the money. Much of the damage we’re seeing now is about sheer administrative incompetence and a deliberately divisive policy that, like so many federal directives, protects the haves at the expense of the have-nots.

The distress that swept through the Australian arts last week was largely cathartic. It comes after a year in which the broader arts community has been fighting for its life. There’s a deep anger about the perceived contempt the federal government shows towards its knowledge industries, which encompass the sciences as well as the arts, although they are worth billions of dollars to the Australian economy and employ hundreds of thousands of people. And it comes in stark contrast to the Victorian Government’s recently announced Creative Victoria initiative, which is pumping an extra $115m into the arts as drivers of a $23 billion state cultural economy.

Like the crippling cuts to the CSIRO, the Coalition’s policies are widely seen as driven by ideological imperatives rather than sound economic or strategic sense. After last year’s budget, the arts community came together in unprecedented protests against former arts minister George Brandis’ requisitioning of $105m million over four years from the Australia Council for his pet ministerial project, the National Program for Excellence in the Arts (NPEA). The NPEA, which in its original form spelled unambiguous disaster for the small companies and individual artists that are the engine-room of Australian culture, didn’t even have the bad excuse of “savings”.

Critics said the NPEA was a transparent bid for direct ministerial control of arts funding, that its decisions were unaccountable, that the process lacked transparency (the draft proposal included a clause that permitted the Ministry of the Arts to keep decisions secret) and that it unnecessarily duplicated work the Australia Council was already doing far more efficiently and fairly through peer review. Many believed it was part of a longer-term process to dissolve the Australia Council altogether.

A senate inquiry into the Abbott government’s arts budgets received an unprecedented 2719 submissions from every sector of the arts community, from individuals to major peak bodies and companies. The result, for anyone who cares to wade through it, is a fascinating insight into how our cultural economy works.

Almost every submission argued the same thing: that our arts culture is complex and interconnected, and that you can’t hurt individual artists and small to medium companies without damaging the whole. Reportedly Brandis was taken aback by the response. The message was so consistent that LNP Senator Ian Macdonald, who lodged a dissenting report, accused the Inquiry of being a conspiratorial “political farce”. But in reality the unanimous response reflected how out of touch arts ministry policymakers are with the realities of making culture in Australia.

In an unsatisfactory compromise with the senate inquiry’s ultimate recommendations, Brandis’ decision was partly reversed in 2015 by the Turnbull government’s new arts minister, Mitch Fifield. The NPEA was rebranded as the friendlier Catalyst, and $32 million over four years was returned to the Australia Council, still leaving a $73 million shortfall. This is the context in which last week’s news was received.

Perhaps to defuse the coming Australia Council announcements, Catalyst quietly released $12 million in grants to a wide variety of organisations, which indicates that it has spent half of its four-year allocation in less than six months. As feared, there seems to be no strategy, and many grants look like unashamed pork-barrelling for the forthcoming election. The situation leaves Australian artists less certain than ever about their futures.

In short, arts funding in Australia is currently a smoking mess of ad hoc policies cobbled together on the run. So how did we get here?

Let’s wind back to another announcement that occurred on the 13th day of the month: Simon Crean’s ill-fated launch of Creative Australia, on 13 March 2013. Creative Australia was a real attempt to deal with a long-acknowledged problem of disconnection between a chaotic sprawl of cultural bodies. It sought to coordinate state and federal initiatives and to bring crucial departments such as education into the conversation. And it injected $200 million into the arts to make up a shortfall caused by the erosion of unindexed funds by inflation, which means they continually fall in real terms.

It was to be a futile gesture from a dying government. Less than two weeks after his announcement, Crean was on the back bench after an abortive attempt on Julia Gillard’s leadership. Six months later the ALP lost office, and Creative Australia – the result of literally years of work and consultation – was dead.

The announcement of Creative Australia was probably the last day the arts in Australia felt any optimism that the federal government might install a cohesive, evidence-based policy for Australian culture.

Clearly, since everyone knew that the ALP would lose the 2013 election, Crean was hoping that there would be bipartisan support for Creative Australia. This wasn’t an entirely unfounded hope: bipartisan arts policy has historically been more common than not. But when George Brandis took over the arts portfolio, the Coalition took little time in removing most of the $200 million granted through Creative Australia, slashing $110m from the arts in its first budget.

Altogether, $300 million has been lost to the arts sector since Tony Abbott was elected in 2013, and the Turnbull government shows no will to reverse those decisions.

The Coalition policies intensify a divisive two-tier approach to arts funding. Twenty-eight major organisations funded by the Australia Council are completely protected from cuts. In 2014 those companies represented 55% of the $191.5 million total expenditure that year. Opera Australia alone received $25 million in government funding in 2014, $3 million more than the 175 smaller organisations put together. The Australia Council losses mean that smaller organisations and individual artists are left competing for drastically dwindling funds.

Since 2013, damage has resulted as much from the government’s wildly swinging policy as it has from lost investment. In August 2014, for instance, Brandis announced the newly restructured Australia Council, an evolution from the original Creative Australia proposals, in a swish launch at the Sydney Opera House, which was also attended by Foreign Minister Julie Bishop. Brandis said it was a sign of his “very strong support” for the funding body.

Yet in May 2015, before the Australia Council had even released its first grants under the new system, Brandis announced the NPEA. It blindsided the entire arts sector. Even the Australia Council wasn’t warned: Australia Council chair Rupert Myer had to scramble home from the Venice Biennale to deal with the crisis, which forced an emergency downsizing of all its newly structured funding programs.

One of the blacker ironies of last Friday’s announcements is that the money the Australia Council awarded to operational funding last week, as Mitch Fifield said in a terse five-sentence press release on Saturday, is actually higher than it’s ever been, albeit taken from a smaller pool: up $6 million a year to $28 million. But since 2014 the number of supported organisations has dwindled by almost 30%, from 175 to 128.

As Brisbane Festival artistic director David Berthold points out, this funding round was in fact the final part of a restructure which, among other aims, sought to bring new blood into the funding system. It’s effectively the remnants of what was originally envisioned as Creative Australia, as shown by its strong emphasis on Indigenous arts. In this round 43 new organisations, roughly a third, have been granted multi-year funding. They include 17 Indigenous arts organisations, which are receiving a long overdue focus.

What’s beyond argument is that this particular restructure couldn’t have landed at a worse time. We are seeing seemingly unassailable arts organisations with highly successful track records seriously reconsidering their futures in the bleakest funding environment anyone can remember. No matter how you parse it, Friday’s announcement reflects a shrinkage from which our cultural sector will not recover for years, if at all.

The defunding of these companies means a loss of staff, infrastructure and experience that have taken years to build. If we have to throttle thriving arts organisations in order to admit new blood, the system is broken.

Underneath this mess lies, mostly unacknowledged, the real problem. The arts sector, underfunded by successive governments for years, was already cut to the bone. The loss of $300 million in public investment since 2013, already a heavy blow, has been exacerbated to crisis point by chaotic and damaging government policy. Now we are seeing chunks of our cultural infrastructure, from the National Library of Australia to small companies such as Arena Theatre, all of them built over decades of painstaking work, begin to crumble.

To add insult to injury, the amounts of money concerned are relatively small change. A sum that represents a disaster in the arts is, as arts bureaucrat Leigh Tabrett once observed, a rounding error in any other portfolio. And that ignores the wider benefits that the arts generate, even when it comes to the economic bottom line. In a country where we’re seeing a $28 million advertising campaign for the “Ideas Boom” that supposedly promotes our “creativity and innovation”, the ironies are black indeed.