The 2011 Archibald Prize winner, Ben Quilty, said the resale royalty scheme was benefiting "rich white artists" at the expense of others.

"I open great big fat cheques and, although I like fat cheques, one of the most important reasons the scheme was formed was to support indigenous artists," he said.

However, the arts sector is divided over resale royalties. More than 100 artists, including Archibald Prize winner Nicholas Harding, Reg Mombassa and Matthew Johnson, staged an exhibition at Boomalli Aboriginal Artists Co-operative in Leichhardt, which has been extended until May 24.

Quilty, who is also a trustee of the Art Gallery of NSW, said the scheme, which may be scrapped by the Abbott government, had damaged the secondary art market while failing to benefit the artists most in need.

"The truth is the top artists make all the money at the complete disadvantage of the emerging market," he said. "It is red tape on the purchase of an emerging artist's work, simple as that. How can that possibly be good for the arts community?

"Rich white artists do not need more money at the expense of the emerging art community."

Introduced by the Rudd government in 2009, the resale royalty scheme pays artists 5 per cent of the sale price when their works are resold for more than $1000. It was designed to give artists a share of the rising value of their work, with indigenous artists singled out as major potential beneficiaries of the program.

Similar schemes operate in several European countries including France, where the vast majority of resale royalties flow to the estates of a handful of artists.

A review of the scheme launched in July received more than 70 submissions, including one from Quilty who said the scheme was "providing substantial returns for the wealthiest artists or their estates".

The review is currently with Arts Minister George Brandis, who told the ABC before last year's federal election: "The Coalition has long been sceptical about the resale royalty scheme, which, even years after it was introduced, has still failed to provide economic benefits to artists as much as it has cost the Commonwealth."

Despite his scepticism, Senator Brandis said that he was aware of the variety of views about "the success and utility of the scheme" but the government had not decided whether it should scrap resale royalties.

Art auctioneer Damian Hackett said the scheme was commercially unviable and was propped up by the taxpayer. He also questioned the statistics provided by the Copyright Agency, which administers the scheme.

Figures to February this year provided by the Copyright Agency indicate artists or their beneficiaries had been paid $2.28 million under the scheme, which had cost taxpayers $2.2 million.

Quilty's outspoken criticisms are shared by leading indigenous art dealer Adrian Newstead, who described the resale royalty as "yet another form of passive welfare".

"None of this money will ever go into community development or address indigenous disadvantage," he said in February.

His view is backed up by Jon Altman, of the Centre for Aboriginal Economic Policy Research at the Australian National University, who said the income of indigenous art centres had more than halved since a 2007 Senate inquiry into the Aboriginal arts sector.

Factors causing this decline included the global financial crisis, changing art tastes, the decline in tourism and "opprobrium associated with the demeaning of Aboriginal culture in popular discourse with the NT Intervention", he said.

"The capacity of the resale royalty scheme to even partially offset this disastrous decline would appear like a drop in the ocean," he said.

A petition calling for the retention of artists' royalties has attracted close to 4000 signatures since it was set up by the National Association for the Visual Arts last month.

"They know it delivers sorely needed income for artists who struggle to make a living while trying to maintain their practice," National Association for the Visual Arts executive director Tamara Winikoff said. "It also provides parity with other artists like composers and writers whose entitlement to royalties has been in place for a very long time."

But Quilty said the scheme punished those collectors who had backed him as a young artist.

"The money I received for my first Torana paintings allowed me to give up my day job," he said. "I am awkward and embarrassed that those people should now have to pay me money when they sell those works 10 years later.

"Collectors are now aware that, if they buy an emerging artist, they will have to pay money back in decades' time – whether that purchase has been a good investment or not."