Anthony Albanese has urged Google, Meta and TikTok to make deals with Australian media outlets to avoid a dedicated 2.25% levy on local revenues, warning digital giants should not be able to exploit the work of journalists to boost profits.

But tech giants Google and Meta have criticised the government’s change. Google rejected the need for the reform and was scathing Labor didn’t include AI platforms, while Meta – which manages Facebook and Instagram – said the government’s position was “simply wrong”.

“A government-mandated transfer of wealth from one industry to another, with no connection to the value exchanged, will not deliver a sustainable or innovative news sector,” a Meta spokesperson said.

Releasing an exposure draft for the government’s news bargaining incentive (NBI) scheme on Tuesday, the prime minister said platforms could avoid the levy by signing new deals with publishers to pay for news content, and even greater offsets for making deals with smaller publishers. The government expects the plan will raise up to $250m annually for Australian journalism.

“People are increasingly getting their news directly from Facebook, from TikTok, and from Google,” said the communications minister, Anika Wells.

“And we believe it’s only fair that large digital platforms contribute to the hard work of journalism that enriches their feeds and that drives their revenue.”

The NBI model replaces the Morrison government’s news media bargaining code (NMBC), which Labor says is no longer effective. The model comes more than two years after Meta, the parent company of Facebook and Instagram, said it would not renew deals worth about $70m to compensate for news content being shared on their platforms.

Under the previous model, Google and Facebook agreed deals worth about $250m over three years. Media outlets used the revenue to hire more journalists and modernise news reporting.

Under Labor’s model, big tech companies who make agreements with publishers would receive offsets against the levy of up to 170%, with excess offsets carried forward to future years. Digital platforms can avoid the levy by entering into new agreements with media outlets.

If platforms choose not to make deals, the government will collect the levy and distribute it to media outlets themselves, based on how many journalists they employ. But Albanese said the government didn’t plan to collect revenue and instead wanted to incentivise deals.

“[Journalism] shouldn’t just be able to be taken by a large multinational corporation and used to generate profits for that organisation with no compensation appropriate for the people who produce that creative content,” he said.

The government proposes the code will apply to platforms with annual Australian revenue over $250m, and a “significant” number of Australian users: 5 million for social media services and 10 million for search websites.

That definition currently captures TikTok, Google and Meta. The assistant treasurer, Daniel Mulino, said if other companies reached those thresholds, they would also be captured.

Tech giants reacted angrily to the news. Google, pointing to its existing arrangements with Australian media outlets which it said covered 90 news businesses and 226 outlets, said the reform was not needed and was scathing of the government not including AI.

“While we are currently reviewing the draft legislation, we have been clear: we reject the need for this tax,” a spokesperson said.

“It ignores the fact that Google already has commercial agreements with the news industry, misunderstands how the ad market changed and mandates payments from some companies while arbitrarily excluding platforms like Microsoft, Snapchat and OpenAI – despite the major shift in how people consume news.”

A Meta spokesperson said: “News organisations voluntarily post content on our platforms because they receive value from doing so.

“This proposed legislation, which would apply to platforms regardless of whether news content even appears on our services, is nothing more than a digital services tax.”

TikTok was contacted for comment.

Former ACCC chair Allan Fels, now chair of the Public Interest Journalism Initiative, called for the plan to be swiftly implemented.

“The delay in progressing these reforms has only reinforced the extent to which large digital platforms have been able to avoid accountability. That imbalance in bargaining power has only become more entrenched over time,” he said.

“These measures must ensure that global technology companies cannot continue to operate on their own terms while benefiting from Australian news content.”

The plan will not capture artificial intelligence platforms like OpenAI, which also use news services in their models to produce information.

Mulino said this was a “key policy issue” examined during consultations. However, despite OpenAI and similar tools using news content in their models and results, Mulino said this would be managed through other processes.

“AI is currently being examined through a range of other policy forums, including, for example, the work on copyright being led by the attorney general. ”

A joint statement from some of Australia’s biggest publishers – including executives from the ABC, News Corp, Nine and Guardian Australia – said journalism was “under threat” and that all platforms “need to step up.”

“If digital platforms fail to pay for the use of the news content from which they profit then journalism becomes unsustainable. It is also in the public interest that reliable, professionally created news and information remains accessible and visible on the digital platforms used by millions of Australians,” the statement said.

“The government’s News Bargaining Incentive (NBI) draft legislation is a critical step toward securing the future of Australian news. By prioritising commercial deals this legislation protects our democratic way of life.”

Labor’s new plan could also prompt a backlash from the US president, Donald Trump, who has pledged to defend American platforms from additional taxes around the world.

The government plans to introduce the draft legislation to parliament in the winter sitting period.