Should the government save the national newswire from going under?

How could the government either save Australian Associated Press (AAP) or support a similar entity that would play the same role of providing basic public interest journalism to media outlets? And should it?

As the media industry has come under existential threat from the internet, and latterly Google and Facebook in particular, there have been increasing calls for government support for the industry. Given the Australian media cheered on policymakers in the 1980s and 1990s to remove protection and support from other industries like manufacturing, such calls look richly ironic.

But the importance of public interest journalism in a democracy, even when people won’t pay for it, is recognised as having a stronger case than the demands of other industries for government support. And governments for decades have recognised the media as a special case: not merely have they funded first one, then a second national broadcaster, but tight regulation of the ownership and operations of broadcasters was accepted as important to democracy.

In 2017, the government went further and established a fund to directly support the operations — though not the editorial content — of small and regional media outlets (Crikey receives support from that fund).

According to AAP itself, it had costs of around $65 million last year, and eked out a small profit off subscription revenue and linked services such as sub-editing and photography.

The existing funding could be replicated with government funding of $60 million a year and content sold on a cost-recovery basis, with the proceeds re-invested in journalism, targeting priority areas such as regional and rural news or local courts.

To enable genuinely independent journalism — independent both from the government and from existing shareholders — a reinvigorated AAP would have to be overseen by a board of directors drawn from a range of existing media outlets and perhaps the media union (MEAA).

An alternate model is to use an existing media outlet with national reach into regional communities, an extensive journalism infrastructure and a mandated requirement for news that is “accurate and impartial according to the recognised standards of objective journalism”. That of course is the ABC, which right-wing interest groups like News Corp and the Institute of Public Affairs blame for destroying AAP.

The ABC is ideally placed to play a similar role to AAP, even though it is primarily broadcast-based, and if anything has a deeper regional news-gathering infrastructure than AAP or any other media outlet. It also has formalised internal and external complaints processes for that content that AAP does not.

Its basic journalistic content, bolstered with additional funding, could be made available on a cost-recovery basis to other outlets. After all, taxpayers have already paid for the creation of the content.

The additional funding required to sustain an ongoing wire news service need not add significantly to the looming budget deficit. As of 2018, Google paid just $37.2 million in tax in Australia off profit of $188 million and revenue of over $1 billion. Facebook paid $12.7 million of $42 million in profits and $480 million in revenue.

Google agreed to pay $480 million to settle a long-running tax dispute with the Australian Tax Office in late 2019, which will increase its overall Australian tax burden. But a tech tax of the kind proposed by Boris Johnson’s Conservative government in the UK — 2% on domestic sales of tech companies — would raise around $30 million from Google and Facebook alone.

However, there’s a moral hazard issue with any government move to support or replace AAP.

Any government provision of a wire service, either through a standalone body or the ABC, might encourage existing media organisations to reduce their own basic newsgathering operations. Both News Corp and Nine, having said they will beef up their own newsgathering rather than continue to fund a wire service used by their competitors, could abandon those plans if a government wire service, or the equivalent thereof, went ahead.

Other outlets — there is no media outlet in Australia that isn’t under financial pressure currently — might in effect cost-shift to the new body; indeed, shareholders might wonder why they are not doing so.

To prevent this, either significantly tighter regulation of editorial resourcing would be required, or some form of incentive provided for outlets to maintain resourcing provided. A tax concession that provided a greater-than-100% tax deduction for investment in editorial content would play such a role. But that only works when media companies have profits to pay tax on — something becoming more and more problematic.

Still, a managed process of cost-shifting to government may be better than a market-driven free-for-all that causes dislocations like the one facing AAP and Australian journalism more generally.