Graeme Murphy, artistic director of the company for 29 years, has said he will leave the company if budget constraints force him to cut the number of dancers in his troupe.
Without an additional $500,000 per year in funding, the company says its future will not be secure. Out of the A$8.7 million that the Australian government recently allotted to performing arts, the company will receive only $62,000 over the next four years.
Although arts ministers Rod Kemp and Helen Coonan have said that they support the company's efforts to stay alive, they have not backed up their support with additional funding.
In an interview for the Weekend Australian, Murphy said, "We're on tenterhooks, but the silence is deafening and terrifying. It's very hard to make new works in an atmosphere of doubt."
The company has been negotiating its continued existence with the government since March, when it announced that last year's season produced a A$600,000 deficit. The government said that it would not bail out the company, but would help it make a transition to a different operating model.
Ian McRae, who was commissioned by the government to study the company's finances, concluded that its current model was outdated. "Any contemporary dance company is always going to be at the riskier end of the scale," he said. "It needs to be funded to take what are quite substantial artistic risks."
The Australia Council has guaranteed the company's cashflow until March of 2006.