Federal Support for Journalism

About

Reference number:
PCH-2019-QP-0026
Date received:
2019-12-04
Organization:
Canadian Heritage
Name of Minister:
Guilbeault, Steven (Hon.)
Title of Minister:
Minister of Canadian Heritage

Issue/Question:

The print media industry continues to face serious challenges despite the announcements made in the 2019 budget. The most recent series of events that occurred in the industry have been Group Capital Media’s announcement of filing for bankruptcy, layoff of 15 journalists in La Presse’s newsroom and Torstar who announced that it will cease production of its StarMetro free dailies (formerly Metro) which estimates suggest that 73 workers will loose their jobs.

Suggested Response:

• The new tax measures are based on two fundamental principles: first, that any mechanism designed to support the news industry must be independent from the Government of Canada, and second, it must be based on the creation of original content.
• An independent group of experts was established in May for the very purpose of ensuring that the key eligibility criteria are defined by experts with thorough knowledge of journalism and print media. The group of experts published its report on July 16, 2019.
• The Government is working on the implementation of the tax measures. More details will be announced in the near future.
• The Government also launched in May 2019 the Local Journalism Initiative, with an annual budget of $10 million, to increase the journalistic coverage in underserved communities.

Background:

• Budget 2019 reaffirmed and clarified three measures to support Canadian journalism that were previously announced in the 2018 Fall Economic Statement:
o Adding registered journalism organizations as a new category of qualified donors, enabling them to receive donations and issue official donation receipts;
o Introducing a new refundable tax credit of 25 percent on salaries or wages paid to eligible newsroom employees in qualifying Canadian journalism organizations (QCJO). Labor costs will be subject to a cap of $55,000 per employee, for a total tax credit of $13,750 per employee, per year (broadcasters and Canada Periodical Fund recipients are ineligible); this measure applies to expenditures incurred as of January 1, 2019; and
o Introducing a new temporary, non-refundable tax credit of 15 percent for subscriptions to Canadian digital news media. Individuals will be able to claim up to $500 in costs paid toward eligible digital subscriptions, for a total tax credit of $75 annually. This measure will apply as of January 1, 2020.
• These measures are estimated to cost $595 million over five years.
• To preserve the independence of the press, an independent panel was established to recommend eligibility criteria for these measures.
• On May 22 2019, the Minister of Canadian Heritage announced that eight organizations representing Canadian newspaper editors and journalists were invited to each provide the name of a candidate to sit on the independent panel of experts mandated to make recommendations on:
o Eligibility criteria allowing news organizations to obtain Qualified Canadian Journalism Organization (QCJO) status;
o Criteria related to the labour tax credit;
o The composition of the group responsible for the evaluation of the admissibility of news organizations as QCJOs.
• The panel’s report was released publicly on July 16, 2019, and the Government is working on the implementation of the tax measures.
Local Journalism Initiative
• Following Budget 2018, the Government announced funding of $50 million over five years to support the production of original civic journalistic content covering underserved communities. Funds were approved for the period from 2019-2020 to 2023-2024, with an allocation of $10 million per year.
Recent industry developments
• On August 19, 2019, Groupe Capital Média (GCM) announced its intentions to file for bankruptcy protection. Parties that were interested in acquiring GCM had until November 7 to submit their proposals. The retained proposal, which was announced on November 20, consists of transforming GCM into a workers co-op formed of management and employees.
• The Mouvement Desjardins, which was initially part of the funders, has decided to withdraw from the proposal. This led the Fédération des travailleurs du Québec to also re-evaluate its participation. This leaves GCM’s future at risk.
• This comes after the Quebec government announced measures to aid local media organizations at the beginning of October, in the context of a parliamentary commission which gathered most of the industry players. These measures total $50 million per year and include a refundable tax credit on journalist salaries.
• The written press industry continues to struggle with job losses. As recent as November 19, La Presse announced 15 positions will be abolished in its newsroom.
• On the same day, Torstar announced that it will cease production of its StarMetro free dailies (formerly Metro) in the five cities it currently operates, namely Vancouver, Calgary, Edmonton, Toronto and Halifax. It is estimated that 73 workers will lose their jobs as part of the announcement.

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