They fear the planned media code, which would force tech giants like Google and Facebook to pay news companies for content or face hefty fines, will line the pockets of big media conglomerates while independent news crumbles.

Country Press Australia president Bruce Ellen has told an inquiry into the bargaining code’s underpinning legislation that it must ensure smaller publishers get a larger portion of money.

He said the code currently rewarded larger companies at the expense of smaller ones, who were footing the bill of producing journalism on the ground.

“This can only lead to reduced diversity of media in Australia,” Ellen said on Monday.

Country Press Australia represents more than 160 regional and local mastheads.

Their primary revenue comes from local businesses advertising, a market now dominated by technology companies.

Country Press wants the ABC and SBS excluded from the code, as they receive government funding and don’t need to charge consumers for content.

Star News Group’s managing director Paul Thomas said regional papers were struggling, pointing to News Corporation turning many of their rural mastheads into digital-only publications that syndicate stories from bigger newsrooms.

“If they had a golden egg there they would still be there wouldn’t they,” he said.

Solstice Media chairman Eric Beecher backed their concerns, saying bigger media companies benefited from the exposure and clicks afforded to them from Google and Facebook.

He argued for tech giants to pay both proper corporate tax and to support public interest journalism, as well as including a mechanism in the planned code to protect media diversity.

The Media, Entertainment and Arts Alliance urged senators to tweak the bill so it ensures money paid by tech giants goes towards journalism.

“The beneficiaries of the code must be journalism and the citizens who rely on it, not shareholders and senior executives,” the union’s Adam Portelli said.

“Any money from this code or other mechanism, needs to go to the newsroom not the boardroom.”

Over the past decade the number of journalists in the country has been slashed by thousands and hundreds of newsrooms have closed, he said.

The inquiry is due to report on February 12, with possible recommendations to the government on how to tweak the code.

Google has threatened to pull its search engine from Australia if the code isn’t changed, arguing it would have no other choice due to the financial risk created by the impending law.

Facebook says it would have to remove news articles from user feeds.

However, Prime Minister Scott Morrison shows no signs of blinking first in response to Google’s threat.

“Microsoft’s pretty confident,” he told the National Press Club on Monday when asked if another search engine could fill the void left by Google.

Morrison said he wanted a practical outcome that would ensure journalism is supported for a functioning democracy.