Remarks to the House of Commons Standing Committee on Canadian Heritage, Jan. 31, 2017
By Edward Greenspon, President and CEO, Public Policy Forum
Thank you Madame Chair. I am pleased to be with you today to speak about The Shattered Mirror: News, Democracy and Trust in the Digital Age. Le Forum des politiques publiques est fier de notre processus consultatif et du rapport que nous avons produit.
But we are not the Standing Committee on Canadian Heritage. And so I think all people who care about the state of news in Canada have high hopes for your deliberations.
I am struck how increasingly important the questions of news and democracy look with each passing day. Last week, we saw more layoffs at Postmedia. Over the weekend, we were reminded of the importance in the United States of a free AND strong press. The coverage of the terrible shootings in Quebec City speak to the need for reliable news and the role of news in communities seeing themselves reflected.
Je sais que nous n'avons pas beaucoup de temps et que vous avez eu l'occasion de lire le rapport ou la couverture médiatique de ce rapport. Je vais prendre cinq minutes ou moins pour vous guider dans quelques-unes de nos douze recommandations.
One minute on analysis. We’ve documented convincingly, I believe, not just the sharp decline of revenues in the traditional media, especially newspapers and increasingly local television, but the fact there is an unsustainable acceleration of this downward trajectory. Perhaps more disturbing to me is the absence of indicators that new digital-only news operations have the capacity to fill this democratic gap.
Several of our recommendations are, I believe, simple enough:
1. Rectify the perversity that Canadian companies are charged sales tax on digital advertising and subscription sales but foreign news companies are not;
2. Address the lack of clarity that inhibits philanthropic organizations from investing in journalism in Canada;
3. Bolster the “Informs” part of the CBC/Radio Canada mandate in a world with not enough genuine news and increasing volumes of fake news
4. Remove digital advertising from CBC.ca and radio-canada.ca.
At the heart of this report is a modernization of Section 19 of the Income Tax Act that would rebalance the playing field in favour of news organizations providing original civic news for Canadians. Cela comporte plusieurs éléments:
1. Extend Section 19 to Internet, a matter which often tends to be treated as more simple than we believe it is. The original Section 19 and 19.1 were intended to change advertising behaviour. It is less likely that behaviour would be changed in digital advertising and therefore a different approach is required.
2. Address the new realities of international trade agreements, which don’t allow public policy to be ased on corporate nationality. We have chosen two new criteria: that a news organization is subject to taxation in Canada and that it meets a minimum threshold of journalistic investment in Canada.
3. Instead of either being able to deduct or not deduct advertising costs under Section 19, we have recommended moving to a 10 percent levy, or withholding tax, on distributors of news that fall outside the Section 19 criteria. This borrows from the approach of the long-standing cable levy.
4. We estimate the 10 percent levy would produce revenue of $300-$400 million a year. This money would go to an arm’s length Future of Journalism and Democracy Fund.
5. We find this approach superior in many ways to tax credits. It generates money to support journalism and digital news innovation from the $5.5 billion (and growing) digital advertising pie rather than from the government. The governance structure we have suggested for the Fund would keep the government out of decision-making about where the money goes. These are critical points. I am a journalist like some of you and I want to keep the government as distant as possible from both supplying money to the fund and disbursing money to news organizations.
Why is this better than tax credits?
Tax credits are more prone to politics than our proposal. You can see this right now in Ontario, where the newspaper is lobbying to be reinstated in the Ontario Digital Media Tax Credit scheme.
Tax credits also tend to reward equally those organizations that spend their money wisely and those with less-than-stellar records of managing their enterprises.
6. I have been asked in recent days who would qualify. My answer is that any bona fide news organization can apply. We were very conscious not to be excluding early-stage news companies that need help to grow.
7. Finally, beyond applications for funds, we hope news organizations will be more creative than we can anticipate, we have suggested the fund finance four initiatives:
A badly needed local news initiative under the auspices of The Canadian Press, an under-appreciated national asset with high standards and a sturdy technological infrastructure.
An Indigenous news initiative to cover the institutions and debates of Indigenous democracy, particularly on a local level.
A legal advisory service to bolster smaller news organizations in pursuing investigative journalism.
A research institute that can tell us the many things we don’t know: how much fake news is in Canada and from where; what happens when a community loses a local news organization; where news originates; public attitudes to news and democracy and trust; and other essential information.
Je pense que je devrais probablement laisser cela pour le moment. Je suis heureux de répondre à vos questions.
Public Policy Forum report finds crisis in news is a growing threat to Canadian democracy
OTTAWA, Jan. 26, 2017 – A major study released today by the Public Policy Forum shines a light on the state of the news industry in Canada, revealing it is reaching a crisis point as the decline of traditional media, fragmentation of audiences and the rise of fake news pose a growing threat to the health of our democracy.
THE SHATTERED MIRROR: News, Democracy and Trust in the Digital Age investigates the major shifts and disruptors in news and journalism – the broken business model, under-development of digital-only news providers and consolidation of digital distribution revenues by Google and Facebook.
After six months of study and discussions with close to 300 people, the report proposes a series of bold recommendations aimed at ensuring the news media and journalists continue in their role as the watchdogs over our elected representatives and public institutions and the connective tissue within our communities.
“This report is not about the journalists, with whom I feel great solidarity, but rather the role they play, and what we may be putting at risk if we are inattentive,” writes Edward Greenspon, President and CEO of the PPF and the report’s author. Mr. Greenspon spent more than 30 years as a journalist before joining the PPF.
Among the 12 recommendations are proposals for a new “local mandate” for The Canadian Press, the national wire service, ensuring there are more journalistic “boots on the ground” to supplement coverage of courts, legislatures and city halls; an Indigenous journalism initiative to put more resources into communities and governments that are often overlooked; and the creation of a research institute that would examine news and democracy issues more closely, including the distribution of fake news in Canada.
The report also calls for changes to Section 19 and 19.1 of the Income Tax Act to support civic-function journalism in Canada, whether by incentivizing Canada-centred news organizations to do more reporting or, for those that don’t, creating a revenue stream to support a Future of Journalism & Democracy Fund.
Three recommendations deal with measures to modernize the CBC’s special role in Canadian news – so important now in an era where so much news is tainted. The report calls on the CBC to stop selling digital ads in order to free it from the pressures of having to “attract eyeballs.” This would reinforce the corporation’s civic-function mandate of informing Canadians.
Included in the study is exclusive public opinion research by Allan Gregg of Earnscliffe Strategy Group. He conducted focus groups and surveyed more than 1,500 adult Canadians about their perceptions of the relationship between news and democracy, their trust of journalists and their level of awareness of the disruption of the media business.
The title ‘The Shattered Mirror’ pays homage to the 1970 groundbreaking Senate report on the mass media called The Uncertain Mirror.
“Unfortunately, the state of the news media’s job in reflecting society back to itself is no longer uncertain,” Greenspon said.
However, the findings and recommendations are the PPF’s alone.
Mr. Greenspon concludes Canada has already reached a “crunch point” in terms of the state of the news industry and its ability to fulfill its democratic responsibilities.
“This report is meant to offer insight into the state of news two decades into its existential crisis, as well as ideas for how to respond,” writes Mr. Greenspon. “We hope it will stimulate a necessary debate and necessary action, while understanding no story is ever at its end.”
The report can be downloaded by visiting shatteredmirror.ca, where the report is accompanied by videos, FAQs, a statement by PPF President Edward Greenspon and more.
Download charts and videos: The PPF has made its videos and most of the charts used in the report available for reuse at shatteredmirror.ca/media. They can be downloaded as editable vector files to be adapted to news outlets’ individual styles, or as PNGs to be embedded as images on websites or other documents.###
About the Public Policy Forum
The Public Policy Forum works with all levels of government and the public service, the private sector, labour, post-secondary institutions, NGOs and Indigenous groups to improve policy outcomes for Canadians. As a non-partisan, member-based organization, we work from "inclusion to conclusion," by convening discussions on fundamental policy issues and by identifying new options and paths forward. For 30 years, the Public Policy Forum has broken down barriers among sectors, contributing to meaningful change that builds a better Canada.