We Need Tax Breaks For Media Diversity

While extolling their own democratic watchdog role, mainstream media have resisted any measures to increase the diversity of quality journalism in Australia.

Big Media argues in the Federal Government’s media inquiry that diversity has exploded in recent years due to online content — and that there is no need to promote additional quality journalism. The line is that journalism is safe in the hands of commercial media and, really, the market will take care of things.

Yet we know that investigative journalism is expensive, time-consuming, messy and legally fraught. It doesn’t pay. We also know about crashing advertising revenues, staff cuts and other cutbacks. Will anyone be asking: "What is the problem" in two years time? Five years? 10?

Several academics and I have argued that in the right environment with tax breaks and other incentives, it may — just may — be possible for other models for quality journalism to succeed.

Fairfax’s submission finds it "unbecoming” for the media to claim independence from the government while asking for financial assistance. "….Fairfax does not support the proposition that independent journalism needs assistance by way of Government subsidy or tax breaks as have been suggested by some submissions.”

Similarly, News Limited dismisses support for independent outlets, saying that the issue of lack of diversity is now "redundant” because Australians consume media from at least 50 — or perhaps more than 100 — different sources each day.

These submissions ignore the experience in many other parts of the world where tax breaks and subsidies have invigorated serious investigative journalism without any apparent kowtowing to governments.

At least $US140 million a year is pumped into independent journalism centres in the United States by philanthropic foundations and "mum and dad" donors, with about half going to investigative reporters at ProPublica, the Centre for Investigative Reporting and the Centre for Public Integrity.

The projects produced by these centres are published routinely in The New York Times, The Washington Post or broadcast on programs like Frontline or NPR. The two most recent Pulitzer Prizes for investigative journalism were won by non-profit centres.

Australia doesn’t have philanthropic foundations as wealthy as those established in the US in the early decades of the 20th Century. Nor do philanthropists see journalism as a charity case — yet. Perhaps in the not too distant future they might regard quality journalism in the same way they view poetry, museums or art galleries: they don’t pay their own way either but are sustained by donors who care about civil society.

It is debatable whether any of the 60 US non-profit investigative centres would exist if they could not offer tax deductibility to their funders. Few in the United States, as far as I can see, think this support is "unbecoming”, and given the general distaste for government intervention there, that says something.

Several of the bigger US centres, now well established, are trying to reduce their dependence on foundations by accepting paid advertising and sponsorship, or through book sales, training programs and other revenue measures.

But without donations being tax deductible under 501(C)3 of the Internal Revenue Code they would never have been able to start or to reinvigorate investigative reporting in the way they have.

A study by Jan Schaffer, executive director of J-Lab, concluded that foundations donated to journalism that provided a bulwark for democracy, held the powerful to account, and promoted free speech. "Journalism, after all, has typically been a for-profit business. But that is beginning to change as foundations across the nation realise that shrinking news coverage of local and national issues threatens not only the topics they care about, it also handicaps communities and threatens democracy itself."

US media academics Leonard Downie Jr. and Michael Schudson wrote in the Columbia Journalism Review in October 2009 that "tax deductibility is an added incentive for donors, and the nonprofits’ tax exemption allows any excess income to be re-invested in resources for reporting”.

"Unbecoming", defined generally as unflattering, indecorous or unsuitable is an odd description for a practice that is common not only in the United States but in many countries. Swinburne University’s Peter Browne, who edits the website Inside Story, says Norway and Sweden provide subsidies to individual newspapers based on circulation; France provides subsidies to newspaper publishers as do Finland and Austria.

What this shows, according to Browne, is "support … for action to maintain a diversity of outlets”. Furthermore, the US, Britain and Australia have "offered indirect subsidies, including significant postal concessions and, in some jurisdictions, government advertising contracts” to media outlets.

What a number of journalism academics and I propose as a way of increasing the diversity of quality reporting isn’t support for mainstream media but tax breaks for donations to new non-profit investigative start-ups with properly constituted boards of industry leaders and academics, codes of conduct and professional journalistic standards.

In many parts of the world, similar centres collaborate with, rather than concern, traditional media. They employ significant numbers of professional journalists, many of whom are former newspaper reporters. Other than the US, the Bureau of Investigative Journalism in London has had its reports published in The Financial Times, various BBC outlets including Panorama, The Daily Telegraph and others. The Scoop organisation — which receives support from the Danish government — represents investigative centres in a dozen east and southeastern European countries whose work is widely published in mainstream media.

The importance of supporting an investigative news media has been recognised globally since the 1990s with foundations and Western governments, including the US State Department, providing aid to more than 40 investigative centres in developing and democratising countries.

Swinburne’s Peter Browne notes that the federal government currently is reviewing not-for-profit companies and charities and is considering which activities should be defined as charitable. Common law definitions include "the advancement of education" and "other purposes beneficial to the community not falling under any of the preceding heads". And, there must be a public benefit, which, on the surface, seems a good fit for the models we are advocating.

Before Ray Finkelstein QC and Dr Matthew Ricketson were appointed to the independent media inquiry, and before the terms of reference were settled, a group of academics that included Wendy Bacon, Margaret Simons, Chris Nash, Philip Chubb, Matthew Ricketson and myself wrote to independent federal MPs, the Greens and the Minister for Broadband, Communications and Digital Economy, Senator Stephen Conroy, urging the inquiry to examine tax deductibility for donations to non-profit journalism centres.

The Greens subsequently supported tax deductibility in their submission as a way of providing a "platform for more media voices” and noted our letter in its submission. (Other submissions also supported the idea).

The Murdoch media soon after figured it was onto a conspiracy or scandal due to Ricketson’s signing of the letter and the fact that he had then been appointed to assist the inquiry. The Daily Telegraph’s Steve Lewis wrote that Ricketson had "mired the committee in controversy”.

The Australian noted criticism of Ricketson by Malcolm Turnbull but went further, suggesting that Bob Brown’s biggest donor, Wotif founder Graeme Wood, could be the biggest beneficiary of the proposal for tax deductibility because he was backing a non-profit journalism project involving former ABC reporter Monica Attard.
So there must be some unbecoming scam being run by Brown, Ricketson, Attard and Wood. Right?

And if Wood were to be found guilty of investing in a non-profit quality journalism venture and being able to claim it on tax … well, ahem, what is the crime here? God help us, it might convince others to donate.

Wood could just as easily direct his donations to a university, animal welfare charity, a family counseling fund, museum, art gallery or emergency service and claim a tax deduction.

For the record, the responses to our letter can be summarised as follows: Rob Oakeshott forwarded the letter to Conroy for his consideration and advice; Tony Windsor flicked it to Treasurer Wayne Swan with a request for the issue to be considered; and Andrew Wilkie found himself unable to help.

About a month later, after the terms of reference had been announced, Wilkie’s office responded with a second email saying the MP would keep the matter in mind if he were in a position to influence the terms of reference. Informed that the terms of reference had already been announced, a staffer responded that the news hadn’t made it to the office. "We are a bit behind down here…” Now, that’s unbecoming.