The government has taken the first step to creating a bailout for its disastrous Bill C-18 by agreeing to News Media Canada demands to increase the support under the Labour Journalism Tax Credit. While the current system covers 25% of the journalist costs up to $55,000 per employee (or $13,750), the government’s fall economic statement increases both the percentage covered and cap per employee. Under the new system, which is retroactive to the start of this year, Qualified Canadian Journalism Organizations (which covers print and digital but not broadcasters) can now claim 35% of the costs of journalist expenditures up to $85,000 per employee. The increases the support to up to $29,750 per employee or an increase of 116%. This new support will run for four years at a cost of $129 million ($60 million this year alone).
Despite the huge increase and the growing dependence on government support for the news sector, this bailout should not come as a total surprise. Notwithstanding the tough talk, Bill C-18 has been an obvious and unmitigated disaster, resulting in lost traffic and revenues for Canadian news outlets who did not take the prospect of blocked news links on Facebook and Instagram seriously. 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. News Media Canada, which was the lead lobbyist for Bill C-18, became the lead lobbyist for a bailout this past summer. As I wrote back in September, the organization was demanding – wait for it – an increase to 35% of costs at $85,000 per employee. In other words, the government gave the lead news media lobbyist in Canada precisely what it demanded.
This raises enormous concerns about the independence of Canadian media. 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. Indeed, this inches Canadian news outlets ever closer to the CBC, particularly if government legislation is able to extract even more support from external sources such as Google.
I warned back in August that a government bailout was the likely next step given the epic miscalculation of Bill C-18, writing:
The third and most worrisome course of action would be for the government to bail itself out of the Bill C-18 mess by using public money to compensate for the losses that it triggered. But a bail out for its miscalculation should be a non-starter as it would mark a huge government intervention into the media sector and result in the public directly funding media at an unprecedented level that call into question its very independence.
That has indeed come to pass, ultimately leaving the Canadian media less independent and the public spending over $100 million for the mistaken hubris of the Pablo Rodriguez, Pascale St-Onge and the entire Trudeau government.