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Sorry, Trudeau. Somebody Will Have To Pay For Good Journalism

The prime minister's hasty decision to stomp on the recommendation for restoring fiscal health to the news industry was more than a little disturbing.

06/22/2017 15:17 EDT | Updated 06/22/2017 15:35 EDT

As Ottawa signals its intention to expand Canada's role in international relations and bulk up on defence spending (a 70 per cent increase is promised), Canadians may be inclined to feel a bit more secure in a world that seems more chaotic and threatening by the day.

Foreign Affairs Minister Chrysta Freeland's assertive address to Parliament earlier this month on diplomacy in the era of Trumpism, and Defence Minister Harjit Sajjan's policy statement following day were both generally well-received as expensive but necessary frameworks for the preservation of national security.

Bloomberg via Getty Images
An employee stacks newspapers at the Toronto Star printing plant in Toronto, Ont., July 6, 2011.

A week later the Commons Standing Committee on Canadian Heritage tabled its report on the threats facing a third pillar of national sovereignty and democracy -- the nation's news media. It noted that in the wake of a maliciously disrupted American presidential election and subsequent chaos, the security of our nation and its political institutions is more than ever dependent on a robust and trusted news and information sector capable of earning the trust of a majority of the population it serves.

The Heritage Committee report, released June 15, is just the latest in a long list of Parliamentary reports dating back to the 1950's, acknowledging the vital role of responsible journalism in maintaining democracy. Each has warned of the dangers of allowing media ownership to fall into too few hands, and encouraged a diversity of voices. All have stressed the important role played by the CBC/Radio-Canada.

The new Heritage Committee report joins another published by the Public Policy Forum earlier this year under the title, in drawing special attention to the disruptive impact of digital technologies on the Canadian media environment, including both broadcasters and newspapers.

Both refer to research conducted by the Canadian Media Guild showing that about 16,500 jobs have been lost in the media sector since 2008, including about 7,800 layoffs in print media, and nearly 6,000 in broadcasting.

As both documents make clear, the Canadian newspaper industry is in dire straits. Both warn of the imminent collapse of Postmedia, which owns 15 of the 21 largest English-language dailies in Canada --including eight of the nine metropolitan dailies in the Western provinces -- and which is itself controlled by a New York hedge fund. Thriving small town papers, they note, are but a distant memory everywhere.

The problem, of course, is vanishing advertising revenue: newspaper industry totals have declined by half since 2007. Almost all of that spending is now directed to the internet, mainly to Google and Facebook, which handle the bulk of the ad placement online.

Conventional television is caught in a similar squeeze. Few local television stations make a profit anymore; their newsrooms have become storage space.

Given all of this, the prime minister's hasty decision to stomp on the Commons committee's most important recommendation for restoring fiscal health to the news industry was more than a little disturbing.

The report called for expanding the existing five-per-cent "Canadian content" levy on cable and satellite TV distributors' revenue to include income generated from internet services, including wireless and streaming video service like Netflix. All of these services are provided for most Canadians by one of the Big Five: Bell, Quebecor, Rogers, TELUS and Shaw. Between them they account for more than 80 per cent of total revenues in the Canadian communication industry, including both broadband, and conventional television and radio. The additional money raised this way, around $1 billion a year, would go to supporting public interest journalism in Canadian media.

Something urgently needs to be done, and it will cost money.

Trudeau's response was: "We respect the independence of committees and Parliament and the work and the studies they do, but allow me to be clear: We're not raising taxes on the middle class -- we're lowering them."

It was classic populist, small-"l" liberal boiler plate rhetoric, but it reflects a failure to recognize a few important facts.

First, this country's journalism crisis is in genuine, and as Torstar President John Honderich told the committee, it actually is the case that "the quality of a democracy is a direct function of the quality of information citizens have to make informed decisions." Something urgently needs to be done, and it will cost money.

Second, the assumption that the big five broadband providers would pass the entire five-per-cent levy along to their customers assumes they have monopoly control over their market and are able to set prices independent of normal, competitive market dynamics. In a normal marketplace, some, but certainly not all, of such a levy might be passed along; the amount would be determined by the intensity of competition among providers.

Mark Blinch / Reuters
Toronto Sun and National Post newspapers, owned by Postmedia.

If Trudeau is right, then it's evident that something needs to be done to introduce more competition into the broadband market. Either that, or regulate prices by fiat, as the CRTC and its predecessors have done with telephone fees for many decades.

Third, the electoral chaos caused by misinformation, fake news and voter suppression through micro-targeting of individuals on social media will all be fixtures in Western elections for the foreseeable future. To think that Canada will be immune is naïve.

It would be equally naive to rely on Facebook and Google -- the main vehicles for this mischief -- to solve the problem. The real and obvious antidote to false information and fake news is broad dissemination of carefully verified, factual news and information. In a nutshell, good journalism.

We know how to sustain the processes and institutions necessary to high-quality journalism, but it costs money. The CBC/Radio-Canada annual budget, for example, runs to nearly $1 billion. The Commons Committee report and The Shattered Mirror both have many concrete suggestions as to how to preserve this process within the context of the digital revolution. But one way or another, Canadians are going to have to pay for it, just as we collectively pay for national defence and highways and schools and universities and hospitals, because it must be done.

If not a levy on broadband revenues, then an increase in some other area of taxation will be necessary. Responsible federal leadership demands it.

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