An incentive (in the Canberra sense)

Few policies are as revealing about the deceits of Australian political economy as the News Media Bargaining ‘Code’ - now being rebranded as a News Bargaining ‘Incentive’.

The code originated as a Morrison-era political project to manipulate foreign digital platforms into giving money to local news outlets.

The public justifications for the code have always been incredibly dubious.

The media business used to rely on advertising, but lots of advertising has gone online. In the Australian government’s mind this means that online businesses should be compensating the media business for lost revenue.

An even more bizarre justification we’ve heard over the years is that online platforms should be paying media firms for the privilege of linking to their content.

So the code was born: where the government pushes digital platforms to “bargain” with news outlets to give the latter money.

Facebook however pulled out of the code - refusing to play this extortion game - early last year. The Albanese government has wanted to respond with something more aggressive than a ‘code’, but has been worried about how the US would react (as I wrote about in the AFR). But in October Anthony Albanese had a pleasant meeting with Donald Trump, so it seems they feel comfortable to push again.

Today Treasury released a consultation document spelling out the government’s plans. It is no longer a code. It is an ‘incentive’. The incentive is quite simple. If a digital platform (above a certain size) does not give money to media outlets then it will be fined by the government more than the value of the extorted money.

It is an incentive in the same way that we are incentivised to pay our taxes because the government will fine us if we don’t.

There is a lot of cant in the Treasury consultation. It talks about “bargaining power imbalances” between digital platforms and media companies. It talks about “promoting commercial deals in markets with a competitive imbalance”.

But until the government decided that we could subsidise news content by taking money from one set of companies and giving it to other companies, there was nothing to bargain about. Media firms do not have a natural right to advertising dollars. Nor is linking to news content a violation of intellectual property.

Indeed, the Treasury consultation strays even further from the purported rationale for the policy when it says that “without further incentive, a platform withdrawing news entirely from its service would render designation under the code ineffective (as there would be nothing to negotiate or arbitrate over)”. Well, of course.

We might say that reflects the government starting to reckon with the unintended consequences of it policy: that the code could actively reduce the amount of news consumed by Australians. But this, frankly, would be too kind.

The new policy even proposes to extend the ‘bargaining’ to platforms that do not, and have never, linked to news stories (like TikTok).

The news bargaining incentive is a bespoke corporate tax specifically structured for efficient rent-seeking.

A corporate tax should not favour some firms over others. It should not target specific companies, sectors, or business models. Neutrality avoids steering investment away from higher-productivity activities.

The News Bargaining Incentive is not that. It is a tax of worst practice: narrow, punitive, distortionary, opaque, arbitrary, and explicitly designed to transfer wealth from politically disfavoured global firms to politically favoured domestic incumbents.

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