"No new events please, support the existing events that are struggling," Port Fairy Folk Festival director Justin Rudge told a parliamentary hearing into live music in Canberra.
Government backing of for-profit concerts that only last a year or two had increased competition for events such as the Victorian folk festival, he said.
The Port Fairy event has been running for 48 years and in 2024 $3.4 million was spent in the town, but its costs have skyrocketed: insurance has increased by a third, artist costs by 65 per cent and liquor licence application costs have doubled.
"The town has thrived as a result of the folk festival, but the festival is struggling, we are in hard times," Rudge said.
With "pretty awful" mobile coverage in the area, the festival had paid Telstra $15,000 yearly for extra phone infrastructure as a safety measure during the event, but these costs had recently gone up 70 per cent, he said.
Cobargo Folk Festival director Zena Armstrong also called on government to fund community festivals rather than encouraging new market entrants.
Events such as Cobargo, which attracts about 7000 people to the NSW town, are vital to help Australian musicians get a start in the industry, she said.
"We can't compete against the fly-in, fly-out festivals," Armstrong said.
"They take our volunteers, they take our audiences, they take our dollars and we love them but it's challenge for us."
The Tamworth Country Music Festival in NSW, which brings an estimated $50-$100 million into the local economy, uses much of its funding on infrastructure and has little to spend on developing musicians, the inquiry was told.
Live music costs have increased 30-40 per cent across the board over the past three years, reported global live entertainment company TEG, but cost of living pressures mean event organisers are reluctant to increase ticket prices.
In NSW, staging events with less than 25,000 tickets sold is not financially viable due to the state's user-pays policing costs, which are more than three times other Australian states, the company said.
Insurance costs are a big problem: cancellation insurance for TEG's Laneway Festival was about $138,000 in 2020, but has gone up to $526,000 in 2024.
The music scene has suffered a string of cancellations, with Caloundra Music Festival the latest in a list that includes big events such as Splendour in the Grass, Groovin' the Moo and Falls Festival.
In April a separate senate inquiry into the national cultural policy also scrutinised the live music industry and was told operational costs had spiked by almost half, while insurance premiums had risen tenfold.
The federal budget in May allocated $8.6 million to support live music venues and festivals.
The average cost of running a music festival is $3.9 million, according to Creative Australia research, but 35 per cent of events lose money, with a median deficit of $470,000.
