Business
The government surrenders to reality with rewritten Online News Act—and pleases no one: Peter Menzies
From the MacDonald Laurier Institute
By Peter Menzies
The shakedown of Meta and Google didn’t go as planned—but now they’re eyeing other lucrative targets.
There were some long faces in the news industry last week when Heritage Minister Pascale St-Onge rolled out the final terms of her surrender to reality.
Media executives who once campaigned for the Online News Act with sugar-plum visions of Big Tech cash dancing in their heads were left to deal with some pretty serious lumps of coal. After years of effort to procure what they once fancied would be hundreds of millions of dollars annually from web giants, all St-Onge could bring down the chimney was a bump up in Google’s spend to $100 million.
How much the mother of all search engines was already paying to publishers is unknown, but in-the-know estimates tend to range from $30-$50 million. Splitting the difference at $40 million would mean the industry—newspapers, broadcasters, and online platforms—wound up with $60 million in fresh cash, give or take.
That’s less than the Lotto Max jackpot Rhonda Malesku of Kamloops and Ruth Bowes of Edmonton shared last summer. A lot of money for Rhonda and Ruth for sure, but for an entire industry it’s a drop in a leaky bucket.
Then there’s the fact the Act resulted in Meta blocking all news links in Canada on Facebook and Instagram. Again, the exact cost is unknown but the social media company had been spending $18 million on journalism supports plus—and here is the killer—Meta estimated it had been sending $230 million a year worth of referrals to news websites.
Even if Meta is only half right, that still leaves the news industry many tens of millions of dollars worse off. If Meta’s estimate is accurate—and no one has really debunked it—the scenario is a lot uglier.
This is what happens when you make things up.
The Act was rooted in the make-believe premise that “web giants” were profiting from “stealing” news. Legislation was designed on that basis to force Big Tech to “negotiate” commercial deals and share those profits with all news organizations.
In the end, as Michael Geist has detailed, that charade of “compensation” was dropped as the government, desperately afraid Google would follow Meta’s lead, posted regulations that essentially rewrote the Act to suit the search engine and, as an aside, puzzle lawyers. All that the media were able to salvage from the hustle was a fund they wound up fighting over like street urchins in a soup kitchen.
Here, St-Onge actually did something sensible. Her original plan was to have the fund distributed solely on a per journo basis. In other words, if there are 10,000 journalists, $100 million would turn into $10,000 per journo, never mind whether they are paid $35,000 or $150,000. The problem with that is that one in three Canadian reporters works for CBC, which is not in mortal peril. The next highest is Bell Media, whose parent company made $10 billion last year. Meanwhile, the Toronto Star is hemorrhaging at a rate of $1 million a week, small centres are becoming news deserts, and Postmedia’s stable of zombie newspapers continues to, well, zombie on.
Broadcasters would have consumed 75 percent of the loot and the vast majority of the cash would wind up with companies for whom news is not a primary aspect of their operations.
St-Onge changed that to cap private broadcasters’ windfall at 30 percent, with CBC limited to 7 percent.
That means 63 percent of the money will go to operators in the greatest peril which, for a fund resulting from a need to address industrial poverty, is at least rational.
Still, there was grumbling.
“Well, this is disappointing—sure wasn’t expecting a cap on broadcasters’ access to compensation,” Tandy Yull, vice president of policy and regulatory affairs for the Canadian Association of Broadcasters, posted on LinkedIn.
“Hey, Universe! More needs to be done to support Canadians’ most important providers of news, local radio, and television stations, who are facing significant—even existential—declines in advertising revenue,” she added.
Yull went on to stake broadcasters’ claim to government assistance currently reserved for newspapers and online-only media: the Journalism Labour Tax Credit and the Local Journalism Initiative.
And of course “our democracy demands that we explore these and other options—soon.”
She may not have long to wait.
Broadcasters opened up a fresh lobbying for loot campaign just last month when the Canadian Radio-television and Telecommunications Commission (CRTC) held a hearing to launch the implementation of the Online Streaming Act.
Supposedly about funding Canadian entertainment programming, the concept of a news fund was introduced early and repeated often.
Commissioners appeared happy to embrace well-worn lines about a news “crisis” that needs “urgent” attention to prevent—cue the tympany—the death of democracy. And they did so without needing to be persuaded there was any rational reason for creating a fund which, logically, makes no more sense than taxing cinemas to pay for newspapers. Nor were any concerns raised about impacts on entrepreneurship and online innovators.
“Local news is in crisis and requires immediate intervention,” Susan Wheeler of Rogers, which made $7.12 billion last year, told the panel.
“A fundamental outcome of the modernized contribution regime must include new mechanisms to provide long‑term financial support for high‑quality Canadian‑produced broadcast news from credible outlets,” she said, calling for 30 percent of money raised from foreign online streaming companies to be directed to a news fund “accessible by all private TV and radio stations producing news.”
The humiliating squabbling over the remnant scraps of the Online News Act clearly wasn’t the end of the Great Canadian Quest for other people’s money.
So maybe the shakedown of Meta and Google didn’t quite work out. But Spotify, Disney+, and Netflix? They have money. Let’s mug them instead.
It’s not like anything bad could happen. Right?
Peter Menzies is a Senior Fellow with the Macdonald-Laurier Institute, a former newspaper executive, and past vice chair of the CRTC.
From the Canadian Taxpayers Federation
Author: Franco Terrazzano
This tax costs Canadians big time at the gas pump, on home heating bills, on the farm and at the dinner table.
The Canadian Taxpayers Federation is calling on the federal government to scrap the carbon tax in light of newly released government data showing the tax will cost the Canadian economy about $25 billion in 2030.
“Once again, we see the government’s own data showing what hardworking Canadians already know: the carbon tax costs Canada big time,” said Franco Terrazzano, CTF Federal Director. “The carbon tax makes the necessities of life more expensive and it will cost our economy billions of dollars.
“Prime Minister Justin Trudeau must scrap his carbon tax now.”
The government of Canada released modelling showing the cost of the carbon tax on the Canadian economy Thursday.
“The country’s GDP is expected to be about $25 billion lower in 2030 due to carbon pricing than it would be otherwise,” reports the Globe and Mail.
Canada contributes about 1.5 per cent of global emissions.
Government data shows emissions are going up in Canada. In 2022, the latest year of data, emissions in Canada were 708 megatonnes of CO2, an increase of 9.3 megatonnes from 2021.
The federal carbon tax currently costs 17 cents per litre of gasoline, 21 cents per litre of diesel and 15 cents per cubic metre of natural gas.
The carbon tax adds about $13 to the cost of filling up a minivan, about $20 to the cost of filling up a pickup truck and about $200 to the cost of filling up a big rig truck with diesel.
Farmers are charged the carbon tax for heating their barns and drying grains with natural gas and propane. The carbon tax will cost Canadian farmers $1 billion by 2030, according to the Parliamentary Budget Officer.
“No matter how many times this government tries to put lipstick on the carbon tax pig, the reality is clear,” said Kris Sims, CTF Alberta Director. “This tax costs Canadians big time at the gas pump, on home heating bills, on the farm and at the dinner table. Trudeau should make life more affordable and improve the Canadian economy by scrapping his carbon tax.”
From Heartland Daily News
By Joshua Loucks for the Cato Institute.
Energy producers will be subject to retroactive taxes in New York if the state assembly passes Senate Bill S2129A, known as the “Climate Change Superfund Act.” The superfund legislation seeks to impose a retroactive tax on energy companies that have emitted greenhouse gases (GHGs) and operated within the state over the last seventy years.
If passed, the new law will impose $75 billion in repayment fees for “historical polluters,” who lawmakers assert are primarily responsible for climate change damages within the state. The state will “assign liability to and require compensation from companies commensurate with their emissions” over the last “70 years or more.” The bill would establish a standard of strict liability, stating that “companies are required to pay into the fund because the use of their products caused the pollution. No finding of wrongdoing is required.”
New York is not alone in this effort. Superfunds built on retroactive taxes on GHG emissions are becoming increasingly popular. Vermont recently enacted similar legislation, S.259 (Act 122), titled the “Climate Superfund Act,” in which the state also retroactively taxes energy producers for historic emissions. Similar bills have also been introduced in Maryland and Massachusetts.
Climate superfund legislation seems to have one purpose: to raise revenue by taxing a politically unpopular industry. Under the New York law, fossil fuel‐producing energy companies would be taxed billions of dollars retroactively for engaging in legal and necessary behavior. For example, the seventy‐year retroactive tax would conceivably apply to any company—going back to 1954—that used fossil fuels to generate electricity or produced fuel for New York drivers.
The typical “economic efficiency” arguments for taxing an externality go out the window with the New York and Vermont approach, for at least two reasons. First, the goal of a blackboard or textbook approach to a carbon tax is to internalize the GHG externality. To apply such a tax accurately, the government would need to calculate the social cost of carbon (SCC).
Unfortunately, estimating the SCC is methodologically complex and open to wide ranges of estimates. As a result, the SCC is theoretically very useful but practically impossible to calculate with any reasonable degree of precision.
Second, the retroactive nature of these climate superfunds undermines the very incentives a textbook tax on externalities would promote. A carbon tax’s central feature is that it is intended to reduce externalities from current and future activity by changing incentives. However, by imposing retroactive taxes, the New York and Vermont legislation will not impact emitters’ future behavior in a way that mimics a textbook carbon tax or improves economic outcomes.
Arbitrary and retroactive taxes can, however, raise prices for consumers by increasing policy uncertainty, affecting firm profitability, and reducing investment (or causing investors to flee GHG‐emitting industries in the state altogether). Residents in both New York and Vermont already pay over 30 percent more than the US average in residential electricity prices, and this legislation will not lower these costs to consumers.
Climate superfunds are not a serious attempt to solve environmental challenges but rather a way to raise government revenue while unfairly punishing an entire industry (one whose actions the New York legislation claims “have been unconscionable, closely reflecting the strategy of denial, deflection, and delay used by the tobacco industry”).
Fossil fuel companies enabled GHG emissions, of course, but they also empowered significant growth, mobility, and prosperity. The punitive nature of the policy is laid bare by the fact that neither New York nor Vermont used a generic SCC or an evidentiary proceeding to calculate precise damages.
Finally, establishing a standard in which “no finding of wrongdoing is required” to levy fines against historical actions that were (and still are) legally permitted sets a dangerous precedent for what governments can do, not only to businesses that have produced fossil fuels but also to individuals who have consumed them.
Cato research associate Joshua Loucks contributed to this post.
Originally published by the Cato Institute. Republished with permission under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
