Later today, the Canadian Heritage committee will continue its clause-by-clause review of Bill C-18, the Online News Act. The committee is virtually certain to expand the eligibility of news outlets, responding to concerns that the current criteria may exclude smaller, independent outlets from benefiting from the bill’s mandatory payment/arbitration system. However, earlier this week, just as the committee was hearing that the bill covers users Facebook posts with quotes and links to news content, it quietly expanded the scope of the definition of “eligible news business” in a manner that opened the eligibility door to some organizations that may not even produce news content. As a result, the bill faces another potential trade challenge as it evolves into a straight subsidy model in which the bulk of the payments go from Internet companies to Canadian broadcasters with little regard for value or any notion of actually use of news content.
The gradual expansion of eligibility for news outlets is an interesting one. When the government first created new tax supports for Canadian journalism, it created the concept of the Qualifying Canadian Journalism Organization (QCJO). I’ve written about QCJO status in the past, which requires that organizations be Canadian, produce general interest news, and meet certain journalism standards. There are some criticisms of the system (including the lack of transparency), but it has clear standards and a review process to ensure eligible entities meet the criteria. Given its limited scope – broadcasters are not included nor are foreign entities with Canadian operations – the government expanded the scope of eligibility in Bill C-18 by adding a second avenue. Section 27(1)(b) states that in addition to a QCJO, an eligible news business:
produces news content that is primarily focused on matters of general interest and reports of current events, including coverage of democratic institutions and processes, and
(i) regularly employs two or more journalists in Canada,
(ii) operates in Canada, including having content edited and designed in Canada, and
(iii) produces news content that is not primarily focused on a particular topic such as industry-specific news, sports, recreation, arts, lifestyle or entertainment.
It is this definition that will be subject of amendment later today as MPs grapple with how to lighten the requirement of employing two or more journalists in Canada to capture owner-operated journalist outlets. There may also be an effort to incorporate a journalism standard to this definition, since at the moment the requirements are limited to employment, Canadian operations, and producing general news content.
Yet the reality is that MPs already supported an expansion of the definition that not only eliminates journalism standards, it may not even require the production of news. The amendment, first proposed by NDP MP Peter Julian but subsequently amended by Liberal MP Chris Bittle, expands the scope of eligible news businesses in Section 27(1)(a) from QCJOs to campus, community or native broadcasters licensed by the CRTC under Section 9(1)(b) of the Broadcasting Act:
“as defined in subsection 248(1) of the Income Tax Act, or is licensed by the Commission under paragraph 9(1)(b) of the Broadcasting Act as a campus station, community station or native station as those terms are defined in regulations made under that Act or other categories of licensees established by the commission with a similar community mandate”
Why does this matter?
First, under this amendment, any of these broadcasters automatically qualify as eligible news businesses. Unlike those that qualify under QCJO or Section 27(1)(b), there is no review of their operations or consideration of whether they produce general interest news. Rather, the provision states that the CRTC must, by order, designate it as eligible. This creates a massive loophole that renders of hundreds of broadcasters as eligible news businesses without any regard for whether they actually produce news.
Second, there is no iron-clad requirement under these licences to produce news. The CRTC standard of licence for community and campus radio stations requires that at least 15% of programming be “spoken word”, but its rules do not limit spoken word to news content. While there have been some CRTC decisions that have required these stations to air news content, there may well be stations that do not air news, yet are now incredibly treated by Bill C-18 as eligible news outlets. In fact, even for those that do air news, it is hard to see what that content has to do with links on Google or Facebook (or even if links to news content exists on those platforms) that might merit compensation.
Third, this loophole opens the door to a trade challenge, since one of the requirements for a Section 9(1)(b) licence is Canadian ownership. By limiting entities that may qualify as eligible news outlets without regard for Canadian employees or Canadian news production to Canadian owned entities, there is a risk of a trade challenge under CUSMA for discriminatory treatment.
Conservative MP Rachael Thomas was the only committee MP to raise questions about the implications of the amendment, noting that it “seems quite broad.” Heritage official Owen Ripley responded to questions by leaving little doubt that the amendment was creating an entirely new class of eligible news business:
Perhaps I can characterize it like this: The section 27 eligibility right now has two doors you could knock on. Either you are a QCJO under the Income Tax Act – in which you are automatically deemed eligible – or if you’re not eligible to be a QCJO – for example, the best example is because you’re a broadcaster and you have to meet the criteria at subparagraph (b). My understanding of the amendment is essentially to create a third door which if you are licensed by the commission as a community station, as a campus station or as a native station then you would also automatically be deemed eligible.
Creating automatic eligibility based solely on a licence without regard for actual news production blows a hole in the entire structure of Bill C-18. Had the Liberal and NDP MPs been willing to do something other than recycle amendments from lobby groups, they might have placed the amendment in subsection (b), so that eligibility would still be subject to review and actual news production. Instead, a bill that is almost entirely a lobbyist driven document is now an incoherent mess for news outlet eligibility, one of the most fundamental aspects of the bill.
How does this happen?
I fear the answer lies in an abjectly broken process. The bill was driven by media lobby groups who self-censored their editorial pages to support swift passage and was backed by those who were willing to trade good public policy for the hope that Google and Facebook cash would solve the problems of legacy media companies. Once the bill arrived at committee, the government limited the number of experts who appeared as witnesses, largely ignoring critics or experts who might have identified potential problems. During clause-by-clause, the government isn’t much interested in serious amendment, with one Liberal MP robotically claiming most amendments are loopholes for big tech and another characterizing digital news outlets as not real news. Meanwhile, Heritage official Owen Ripley is apparently the only person in government capable of answering questions on both Bills C-11 and C-18, meaning that he has been running from one hearing to the next with 10 hours of review each week. This is no way for a G7 country to make law with enormous ramifications for freedom of expression, leaving Canada in, well, dire straits when it comes to digital policy.
It is extraordinary to see Mr. Ripley, an Associate Assistant Deputy Minister, be the only official who seems to know what the legislation is all about. It is rare for an official above the rank of Director to actually speak to the details of legislation. I take Mr. Ripley’s role as an indication of a very politically driven agenda, with no organic roots in Departmental policy deliberations. In short, the Government has installed Ripley to shepherd these initiatives and there is essentially no policy input from the Public Service.
How is this supposed to work? This would appear to suggest that a community station can engage in mandatory negotiations to be compensated for a social media site making available … what, exactly? If the station does not produce news, then what is on that side of the negotiation balance?
This is becoming surreal. Yes, there is a big problem to be addressed. But this appears to be the “Willie Sutton solution”. Ultimately, if the government thinks journalism needs to be supported, but there is no workable market-based solution, then … fund it out of taxes. I really do not have a problem with that option.
I am curious if that type of ‘positive promotion’ would still result in a trade issue.
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