Tech giants who refuse to renew their commercial deals with Australian news publishers will face financial penalties under a proposal by the Labor government.

Prime Minister Anthony Albanese is expected to introduce a new scheme under which companies such as Meta and Google would be hit with a levy if they choose to no longer pay news publishers for content, the Daily Telegraph reports.

The outlet reports the levy would amount to greater than the cost of paying for the news content.

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An announcement is expected on Thursday.

Labor started working on the plan after Meta announced in February it would not renew commercial deals struck with Australian outlets in 2021 under the former Morrison government’s world-first News Media Bargaining Code.

The code forced the online powerhouses to pay for displaying news content and therefore compensated Australian media organisations for producing it. The three-year deals expired in March.

Meta, parent company of Facebook and Instagram, said the decision not to renew – estimated to have cost the industry $70 million – was “part of an ongoing effort to better align our investments to our products and services people value the most”.

Executives would not rule out banning all Australian news content from Facebook if the federal government tried to force it to strike deals with publishers – as it has done in Canada.

Google has previously said it would strike new contracts with local media outlets as they expired – however, it’s unclear if they would be renewed at original levels.

A parliamentary inquiry recommended the government “explore alternative revenue mechanisms” such as a “digital platform levy”.