Question Period Note: Federal Support for Journalism

Canadian newspaper publishers face many challenges. The COVID-19 pandemic and its impact on the economy has exacerbated the situation of newspapers, already weakened by declining advertising revenues.

• The news industry has faced significant economic pressures for years and these challenges are being exacerbated by the COVID-19 pandemic.
• As part of Canada's COVID-19 Economic Response Plan, the Government moved quickly to support news media, including through the Recovery Fund for Arts, Culture, Heritage and Sport Sectors.
• Our Government remains committed to supporting the long-term vitality of the Canadian news media ecosystem.

Local Journalism Initiative (LJI)
• The Government's implementation of the Local Journalism Initiative to support the creation of original civic journalism that covers the diverse needs of Canada's underserved communities has resulted in the hiring of 342 journalists in 251 Canadian news media organizations across the country. In its first year, 418 communities have benefited from the LJI. Budget 2021 increased the budget of the program by $10 million over two years, with at least 60% of this funding reserved for groups that are often underrepresented in the media (e.g. Indigenous, ethnocultural and Official Language Minority communities).
Emergency support for journalism due to COVID-19
• As part of the COVID-19 Emergency Fund established by the federal government to support cultural, heritage and sport organizations, $60.9 million was distributed in two phases to Canadian periodicals through the Canada Periodical Fund.
o In Phase 1 of the Emergency Support Fund, the Department provided a formula-based top-up to recipients of the ATP component, calculated as 25% of what they received in 2020-21. There were 571 periodicals funded for a total of approximately $15.4 million.
o As part of Phase 2, the Department provided $45.5 million through the CPF to assist free magazines and weekly newspapers, including those that serve official-language minority or ethnocultural communities. There were 793 recipients in Phase 2.
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 are 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;
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 is in effect as of January 1, 2020.
• These measures are estimated to cost $595 million over five years.
• On June 29 2021, amendments to income tax measures providing support to Canadian journalism, as announced in Budget 2019, received Royal Assent in Bill C-30. These amendments allow news organizations that receive support throughthe Aid to Publishers component of the Canada Periodical Fund to qualify for the Canadian journalism labour tax credit and removal of the requirement that journalism organizations be “primarily” engaged in the production of news content and not significantly engaged in the production of content to promote goods and services. Newsroom employees eligible for the labour tax credit need to spend at least 75 per cent of their time engaged in the production of original written news content.
Recent industry developments
• More and more Canadian newspapers are reducing or abandoning their print editions to publish only online because of the COVID-19 pandemic. These include the free daily Métro, the six dailies of the National Independent Information Cooperative and the free daily 24 Heures.
• On December 1, 2020, La Presse obtained from the Canada Revenue Agency its status as a Registered Journalistic Organization (RJO), allowing it to issue official receipts for donations it receives from its donors for tax purposes.
• The decrease in advertising revenues caused by the COVID-19 pandemic has led to service reductions and newspaper closures, resulting in the temporary or permanent loss of more than 3,000 jobs in the industry. Indeed, since the beginning of the pandemic, 64 news outlets have permanently closed, including 52 community newspapers. (Local News Research Project, 2021)
• In October 2020, Canada's newspaper publishers co-authored a report entitled Levelling the Digital Playing Field, which called on the federal government to adopt Australia's model to force web giants to pay the media for their content.

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