19 Jul Public interest journalism: let the public pick their own winners
James Paterson — The Australian Financial Review — 19 July, 2017
The best way to promote media diversity in the digital age is to simplify and reduce media regulations, not create new tax-redistribution schemes to fund favoured publications.
Australian media companies are facing unprecedented challenges brought on in part by technological change. This is why the Turnbull government’s much-needed media reforms to removed outdated regulation which stifles Australian media companies has gained unanimous support from all major Australia media companies.
Unfortunately, the reforms are stuck in the Senate, with Labor refusing to support the package because it eliminates the archaic “two-out-of-three rule” – a regulation preventing media proprietors from owning a television network, radio station and newspaper in the same geographic area.
Attempting to break the deadlock, Senator Nick Xenophon has suggested that the government replace the two-out-of-three rule with a variety of measures to support public interest journalism.
Some of Xenophon’s ideas are worth considering. But one major feature of the package – a tax on Google and Facebook with revenue used to fund journalism – is misguided and will ultimately only hurt Australian businesses. Google and Facebook will almost certainly pass on the tax through higher costs for advertisers. This will be particularly hard on small businesses, who are now able to conduct targeted small scale digital advertising campaigns that historically have not been possible through traditional media platforms.
It’s certainly true that media companies, especially newspapers, have suffered from the migration of advertising revenue online. This may pose challenges to their business model, but that doesn’t mean the government should step in to protect them from technological changes.
Journalism is vital for a proper-functioning liberal democracy, but there isn’t any inherent connection between advertising and journalism. Newspapers only came to rely on advertising revenue because they had a product to sell: access to their readers. Technological changes have now provided alternatives. Media companies don’t have a right to these funds in perpetuity – and it certainly isn’t the role of government to guarantee it.
Even if the funds could be raised, distributing them is fraught with danger. Proposals put to the Senate Select Committee on the Future of Public Journalism include the creation of a new grant-awarding mechanism designed to support public interest journalism. However, any such scheme risks becoming politicised, as governments of different political persuasions will have different views about how generous funding should be and which outlets should receive it. A body arms-length from government still runs the risk of being ideologically lopsided – not a risk worth taking when it comes to taxpayers funds and independent media outlets.
The success of any new media outlets should be determined by the people who consume the news, or those willing to invest in such publications. It should not be determined by government bureaucrats who will have their own priorities and judgments about what constitutes public interest journalism, what it covers, and which values it should uphold.
There is, however, some merit to Xenophon’s proposal to reform Australia’s tax laws to support media diversity, for example with deductions for donations to not-for-profit outlets, or rebates for companies who invest in news.
Using the tax system to support not-for-profit journalism is not a new idea. It’s a model that has long existed in the United States.
While traditional media companies in the US have been forced to downsize and adapt to the same pressures that exist in Australia, there is a growing sector of journalism non-profits that are helping to fill the void.
Many well-established thought magazines are run on this model. This includes the The Nation and Mother Jones on the left, the centrist journal Foreign Affairs, the libertarian Reason magazine, and the conservative Commentary magazine.
More recently they have been joined by a new breed of investigative journalism non-profits, including the Pulitzer prize winning ProPublica, The Texas Tribune, and the Daily Caller News Foundation.
These publications qualify for the same tax-exempt status as think tanks and other educational organisations. They are funded by foundations and individual donors who support their work. Whilst they are prohibited from engaging in lobbying or political campaigning, they are given wide latitude to take whichever approach to journalism they see fit.
Australian tax law does not facilitate the creation of these sorts of outlets.
The non-profit model isn’t a panacea for providing journalism in the digital age, but it may be part of the answer. A viable and profitable private media sector is also absolutely vital.
Parliament can help deliver that without imposing cumbersome and problematic new tax-redistribution schemes. By reducing media regulations so that existing publications can survive, and reforming the tax system so that new publications can more easily emerge, we can help create a more diverse and vibrant media landscape.
Senator James Paterson is a Liberal senator for Victoria and a member of the Select Committee on the Future of Public Interest Journalism.
This article was originally published in The Australian Financial Review.