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Funding public interest journalism requires creative solutions. A tax rebate for news media could work

It has been a long time since an Australian government turned its mind to policy concerning the news media — other than the removal of outdated ownership regulations.

Now, thanks to the government’s intention to make Google and Facebook pay a negotiated price to news media organisations for using their content, policies to safeguard the health of the news media are front of mind.

The government has accepted journalism is a public good, deserving of public support. All sides acknowledge the future of the news media is under threat from the collapse of the advertising-based business model that has traditionally paid for most journalism.

To its credit, the government has shown determination to push ahead with its proposed news media bargaining code in the face of a concentrated campaign by Google and Facebook against it. By doing so, it has taken on a position of global leadership.

But there is a danger the government will regard the code as the end, rather than beginning, of a comprehensive policy response. What is needed is a suite of policy measures.

Ways to encourage investment in public interest journalism

The code, while welcome, does not directly encourage investment in public interest journalism and quality news media.

The Australian Competition and Consumer Commission (ACCC) has previously recommended a range of such measures. These include restoring adequate funding for the ABC, allowing tax deductions for philanthropic donations to news media and providing increased grants to local media.

Read more: How much should Facebook have to pay for news? We have a suggestion how to calculate it

One of the ideas the ACCC considered, but did not pursue, was favourable tax treatment for producers of public interest journalism.

The Public Interest Journalism Initiative has continued to research this idea and has released a proposal for a new tax rebate scheme that would encourage investment in public interest journalism in Australia.

This scheme, if adopted, could be transformative.

How a proposed tax rebate would work

Previous research by the Centre for International Economics (commissioned by PIJI) found such a tax rebate scheme would increase the amount of public interest journalism being produced and was more than justified on a cost-benefit analysis.

Meanwhile, Essential Media public opinion surveys prepared for PIJI have established how much the Australian public values journalism — respondents are prepared to see taxes increase by as much as $6 a year per head in order to support it.

The new tax rebate scheme we propose is modelled on the government’s existing research and development tax incentive.

Read more: 'Suck it and see’ or face a digital tax, former ACCC boss Allan Fels warns Google and Facebook

The proposal has been developed by a taskforce comprising journalist and academic Margaret Simons, David Pearce of the Centre for International Economics and Eddie Ahn and Gabrielle Hedge of DLA Piper Australia. It incorporates insights gained from extensive research on the “public good” nature of journalism.

This is how the scheme would work: it would allow news media organisations to claim a tax benefit for the money they spend on producing “core news content” -– that is, journalism of importance to democracy and community cohesion.

As with the research and development tax incentive, this benefit would be calculated as a percentage of the organisation’s eligible expenditures each year.

The tax benefit would be available to all serious players in the industry, including small and start-up organisations and rural and regional media. They would need to register with the Australian Communications and Media Authority in order to be eligible.

The refund would be administered by the Australian Tax Office and claimed through the usual annual income tax return.

Available to any news media covering local issues

This tax benefit is designed to encourage investment in all public interest journalism — including, but not restricted to, the high-profile investigative journalism that makes headlines.

Of equal importance, we believe, is the less glamorous but essential daily grind of reporting on courts, local governments and parliaments, community events and other issues of significance to Australians.

As such, any news media organisation covering these issues should be eligible for a tax rebate under this proposal. To qualify, they would need to show their journalism is “core news content”, which is defined by PIJI’s submission to the ACCC bargaining code consultation as

content that records, investigates or explains issues that are of public significance for Australians, are relevant in engaging Australians in public debate and in informing democratic decision-making; or relate to community and local events.

Organisations would also have to commit to professional journalistic standards that include a transparent complaints process.

Read more: The government's regional media bailout doesn't go far enough — here are reforms we really need

PIJI’s proposed guidelines also include clear delineations of what would and would not be an eligible expenditure under the scheme.

Advertising and advertorials, opinion articles and public relations lobbying and advocacy would not be eligible. Nor would reporting on the private lives of celebrities, shopping guides and reviews of goods and services.

What would be covered are such editorial costs as conducting interviews, attending and reporting public events, accessing information and providing analysis and explanation.

We propose the scheme be reviewed after three years of operation, and then at five-year intervals after that.

The essential service nature of public interest journalism justifies the provision of an industry rebate scheme. It should form part of a suite of public policy measures to ensure that in the future, the Australian public is able to access trusted sources of news.

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