Question Period Note: Improvements to Federal Support for Journalism

Canadian news publishers continue to struggle. The current COVID-19 pandemic has now dramatically amplified revenue shortfalls which jeopardizes an already fragile industry.

• The news industry has faced significant economic challenges in recent years and the written press is not immune to the challenge brought on by the COVID-19 challenges.
• The Government has already announced important measures that will help our news media deal with current challenges, including the Canada Emergency Business Account and the Canada Emergency Wage Subsidy.
• On April 17, 2020, the government announced adjustments to tax measures to ensure that they achieve their initial original objectives of supporting the Canadian news sector.
• The Government recognizes newspapers’ essential role in maintaining a healthy democracy and especially in this time where information is vital to all Canadians.

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.
Tax measures to support journalism
• 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. The panel’s report was released publicly on July 16, 2019.
• On April 17, the Department of Finance Canada announced draft legislation that would amend the journalism tax measures announced in Budget 2019. Amongst the amendments, Finance proposes to allow news publishers and media organizations that receive support through the ‘Aid to Publishers’ grant of the Canada Periodical Fund to qualify for the Canadian journalism labour tax credit. Furthermore, these amendments suggest removing the requirement that qualified Canadian journalism organizations be “primarily” engaged in the production of original news content and not be significantly engaged in the production of content to promote goods or services. Newsroom employees eligible for the labour tax credit would need to spend at least 75 per cent of their time engaged in the production of original written news content.
Recent industry developments
• There continues to be considerable impacts to the industry. Prior to the COVID-19 pandemic, most notable changes in the industry include the transformation of Groupe Capitales Médias into CN2i (6 workers co-ops formed of each coop’s management and employee), continued layoffs at La Presse with 15 positions abolished in its newsroom, abolishhing the production of Torstar’s StarMetro free dailies (formerly Metro) in the five cities (Vancouver, Calgary, Edmonton, Toronto and Halifax) estimated to create 73 layoffs.
• The current COVID-19 pandemic has dramatically amplified revenue shortfalls for the industry. In opening weeks of the pandemic, news publishers reported a drastic and unanticipated drop in advertising revenues. Preliminary estimates from industry associations and information obtained from certain publishers reported a decrease of approximately 50 percent in advertising dollars in the first 3 months of the crisis alone.
• According to an industry study (COVID-19 Media Impact Map for Canada), more than 100 media outlets in Canada have made cuts in 11 provinces and territories in a six-week period, with nearly 50 community newspapers ceasing operations resulting in more than 2,000 job cuts.
• Postmedia recently announced it was laying off about 80 employees and permanently closing 15 community newspapers. Postmedia had already announced in January, the closure of three community newspapers in Alberta. The company’s quarterly statement, published in January of this year, showed a $3 million loss for the financial quarter ending November 30, 2019.
• Industry stakeholders (which include news publishers, union representatives and editors) are calling the federal government to follow suit with countries like France and Australia who plan to oblige Google and Facebook to pay for news content and sharing ad revenues with publishers.

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