In Ottawa’s fall economic statement, the Canadian government has allocated a $129-million boost for news organizations, aimed at alleviating financial strains and staff cutbacks faced by newsrooms nationwide.
The extension of the Canadian Journalism Labour tax credit allows news groups to retroactively claim costs for employing journalists, increasing the maximum tax credit per journalist per year from $13,750 to $29,750. The cap on eligible salaries has also been raised from $55,000 to $85,000, permitting employers to claim back a higher portion of newsroom labor costs.
This move, effective beginning January 1 of this year and estimated to cost $129 million over five years starting in 2024-2025, is a response to the challenges faced by news outlets, some of which have closed due to the migration of advertising to major tech companies.
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Heritage Minister Pascale St-Onge is also reportedly engaged in discussions with Google about the Online News Act (Bill C-18). The bill aims to inject funds into news organizations by compelling tech giants to pay for their use of journalism, but the feds are finding out that it’s not as simple to go around demanding big tech to pay up. In response, Meta moved to block Canadians’ access to news on Facebook and Instagram. Google announced it was set to follow suit.
Michael Geist, Canada Research Chair in Internet and E-Commerce Law at the University of Ottawa, calls the allocation a bailout for the “obvious and unmitigated disaster” that has been Bill C-18.
Bill C-18 has resulted in “lost traffic and revenues for Canadian news outlets who did not take the prospect of blocked news links on Facebook and Instagram seriously,” Geist wrote. “If blocked news links extends to Google – a decision will presumably be forthcoming in the next month – the effect will be catastrophic to the Canadian media sector.”
Geist warns that as the bailout further burdens taxpayers, it could also raise “enormous concerns” about the independence of Canadian media — especially if the government succeeds in getting support from the likes of Google.
“While the government claims this is being done to ensure a ‘strong and independent’ press, it is not hard to see how the opposite may be true. Canadian media was already reluctant to hold government to account on Bill C-18 and now it finds that more than 1/3 of its labour costs for journalists are effectively paid by the government.”
Information for this story was found via the Globe and Mail, Michael Geist, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
