Are the arts too conservative and not ambitious enough? The answer would appear to be yes for Carriageworks director Lisa Havilah, who calls on cultural institutions to take risks and be more entrepreneurial.

She could also have added too expensive compared to Carriageworks, which costs NSW taxpayers less than $2 million a year and is on track to attract a million visitors this year and 2 million by 2021.

At a time of savage funding cuts to the arts, Havilah will call on public museums and performing arts centres to include commercial activities in their programs.

"Arts and culture needs to be deinstitutionalised," she says. "Collaboration has to be considered core business and the commercial and the public must be constantly colliding in new ways.

"Institutions need to be places that are entrepreneurial, expansive and multi-centred. Survival should never be the aim."

Havilah also criticises the federal government's handling of the arts, including funding cuts and the lack of a national arts policy, in a speech she will deliver on Wednesday at the Currency House Creativity and Business breakfast.

"The ongoing lack of a national policy has resulted in unprecedented damage to the sector," she says in a draft of the speech. "It is not acceptable for the Australia Council who after authoring their strategy a Culturally Ambitious Nation to now be put into a position where they can no longer deliver that strategy to any great degree.

"Is it possible for the Australia Council to remain relevant when their decisions aren't supported through a broader national policy?"

Havilah will tell the meeting of arts heavyweights at the Museum of Contemporary Art that cultural centres need a radical overhaul to remain relevant. Her speech will outline her experiences in leading Carriageworks, housed in the historic Eveleigh Rail Yards, and previously the Campbelltown Arts Centre.

"Cultural institutions should be radical and participatory," she says. "They should lie in the heart of their communities, providing moments of great joy and wonder, they should provide pathways, lead social change and create and deliver on our individual and collective ambition. We as a community and as individuals should demand a lot of our institutions."

Havilah says NSW cultural facilities, big and small, should not look to the major arts institutions for leadership.

"At Campbelltown we never looked to the major institutions for leadership," she says. "We were our own leaders, not outside the centre, but constructing our own centre. We never attempted to educate anyone and as an institution we never saw ourselves as the professionals with the authoritative voice within our communities."

Havilah outlines Carriageworks' business model that ploughs the profit made from hosting major events and programs into its multi-disciplinary artistic program.

She offers words of support to the NSW government, which she says has "clearly articulated its vision and provided opportunities for the sector to deliver outcomes" through its Create in NSW arts and cultural policy".

"Not everyone agrees with the priorities but everyone is clear on the direction and how they fit or not within a broader policy framework," she says.

Havilah is critical of the federal government's shake-up of arts funding, which has delivered large cuts to the Australia Council for the Arts and the creation of the controversial Catalyst funding program.

"Where things fall apart for the arts is when decisions are made by government outside of a consistent policy framework," Havilah says. "Within a reduced federal resource base for the arts, inconsistently applied policy and government protectionism for parts of the sector result in inequity for some organisations and complacency by those protected."

Havilah says there is no pathway for smaller arts organisations to join the group of major performing arts companies such as the Australian Ballet and Opera Australia, which have been largely protected from budget cuts.

"Twenty years later those companies are still our major performing arts companies but is that it?" she says. "Will we have the same group of major performing arts companies for another 20 years?"