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OTTAWA The idea that crises bring opportunity as well as danger is becoming trite.

But it doesnt make it less true.

Canadian officials are intrigued by what is happening in France and Australia, where governments have moved with alacrity to take measures aimed at forcing Google and Facebook to share advertising dollars generated locally with domestic publishers.

Competition authorities in both countries are devising a new payment for content regime, so that the social media giants pay for the news stories that help drive traffic on their sites.

One Canadian government source said the measures are being studied to see if they could work here.

The Liberals should stiffen their spines and follow the lead of the French and Aussies.

The consequence of not doing so could be no less than the demise of the Canadian news industry.

Google and Facebook consume around 70 per cent of advertising revenue, yet provide little in terms of news content.

The government passed on the option of taxing the tech giants two years ago, preferring to introduce a $600-million media bailout fund that offers publishers a 25 per cent refundable tax credit on the salaries of eligible reporters. It also included a 15 per cent tax credit on digital subscriptions.

But this was nothing more than a Band-Aid and it has taken the 30-40 per cent drop in revenues experienced by some publishers during the COVID crisis to bring the issue back onto the agenda.

A more lasting solution was offered by the Public Policy Forum in its Shattered Mirror report in 2017. It suggested using the Income Tax Act as a means of encouraging Canadian advertisers to use local media or more accurately, to discourage them from using foreign companies. The act currently restricts the deduction of business expenses to advertisements that appear in Canadian-owned media.

Nobody is more aware of how unpalatable it is to rely on the government than news organizations themselves

The Policy Forum proposed to extend that idea to the online sphere. However, to avoid abrogating trade and income tax agreements, the government would introduce a withholding tax to be paid by companies that advertise through foreign social media companies money that would be funneled into a journalism fund.

Some contribution to the system that provides content that benefit their enterprises seems reasonable, the report concluded.

That wasnt how the government saw it when it rejected the idea. It argued there was a public interest argument for supporting the media, which justified backing the fund with money from general revenues.

There were concerns that Google and Facebook would simply pass on the cost to advertisers who did not see local publishers as a viable online alternative to the dominant social media channels.

Officials looking at the issue today are further concerned about the reaction from the White House, should Canada go down the same road as the French and Australians.

But, make no mistake, this is not an industry that is warning of an imaginary danger. Print organizations were already at the cliffs edge, despite incremental gains in online advertising.

The deteriorating state of media puts at risk the health of our democracy. As the Forum summarized: Sources of opinion are proliferating, but sources of facts on which opinions are based is shrinking.

Nobody is more aware of how unpalatable it is to rely on the government than news organizations themselves.

With so many other demands on Ottawas coffers post-COVID, reliance on a fund paid for from general revenues is not sustainable.

Even increasing the subscription tax credit to 50 per cent is not a long-term solution.

But some form of payment for content by companies that have been freeloading for years is simple fairness.

The whole debate foreshadows a far larger discussion about the role of government when we all finally emerge from this impasse.

There is growing opinion that the Washington consensus of trade agreements, financial deregulation and offshore production is dead and that new rules will govern the economy of the near-future.

The idea that Canada can rely on traditional market forces to remain competitive, while everyone else adopts more active industrial strategies is foolhardy, wrote Sean Speer, a former adviser to Stephen Harper, and Robert Asselin, a former adviser to Justin Trudeau, recently.

The debate about open and closed economies is as old as Canada.

The country has veered between the poles of protectionism and free trade, never fully embracing either one.

But it seems we are at a point in our history where actions that hint at mercantilism are in the ascendancy.

Email: jivison@postmedia.com | Twitter:

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John Ivison: Liberals should follow the French lead and force tech giants to pay for news content - National Post