Treasury ordered to war game media bargaining code battle with Meta, Google

Tech and social media companies could be hit with strict taxation measures as a way to boost compliance with the News Media Bargaining Code, a senior government bureaucrat has revealed.

Speaking at a wide-ranging parliamentary committee on social media and its impact on Australian society, Treasury assistant secretary overseeing competition Tony McDonald said the department had been asked to war game scenarios in case tech giants pulled out of the code.

Under questioning from Greens senator Sarah Hanson-Young, he said the department was “looking at the tax base of these companies” and the “scope for taxation options to buttress the code”.

He added this included investigating “longstanding debate” into a “fairer allocation of taxing rights” and using tax as a compliance measure.

“The focus of the points that we have been considering to what extent might the taxing power be an avenue to encourage compliance with the News Media Bargaining Code,” he said.

On March 1, Meta, which owns Facebook and Instagram, flagged it would not be renewing its agreements with news organisations to pay them for news content, as required by the code.

Stating this was “obviously very disappointing to the government”, Mr McDonald said Treasury had been asked to “co-ordinate advice” like whether there was a “bargaining power imbalance”.

“We’ve been exploring what you might be able to do to encourage or force them to carry news in those circumstances,” he said.

“There’s a number of legal as well as policy issues that are associated with that. As you would expect, we’ve been seeking legal advice on a number of questions as well.”

Mr McDonald said this involved briefing Assistant Treasurer Stephen Jones on his “powers and obligations” under the bargaining code as well as the scope of taxation options to enforce the code.

Reflecting on how the social media sector has changed since the code was first struck in 2021, the chief bureaucrat said he believed big tech had become more powerful.

“The overall point is that social media is just more pervasive and has stronger bargaining position now,” Mr McDonald said.

The committee will continue its hearings this Friday.

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