The closure of Australian Associated Press, announced today, is a tragedy for our already under-reported nation. It underlines what was already clear: that the crisis in public interest journalism has reached a critical stage.

It affects us all, threatens our democracy and requires urgent and enlightened responses from our policymakers.

For the best part of a century, AAP reporters have provided media outlets and their audiences with basic, reliable reporting of courts, parliaments and public events.

When we talk about the importance of public interest journalism, we tend to immediately think of the headline-grabbing investigative reports – the kind of journalism that spurs royal commissions, wins awards, holds the powerful to account and contributes to fundamental reforms.

That kind of journalism is vitally important, of course.

AAP to close after wire service tells staff it is no longer viable Read more

But the death of AAP is about a greater quantum of ordinary, routine, reliable reporting – the kind that does not win Walkley awards but which, I think, is cumulatively even more important than the big investigative scoops.

When investigative journalism causes the calling of a royal commission, it is AAP that reports the hearings, and makes sure we know the facts that emerge. AAP has reported every single hearing day of every national royal commission in recent years, including those into child abuse, banking and disability.

AAP was crucial even in the old days of plenty, when rivers of gold from advertising paid for big editorial staff numbers. Editors could count on AAP to be there whenever the staff reporters were allocated elsewhere.

The AAP contribution was like a foundation – a base level of quality coverage on which media companies could build their particular services to audiences.

The chair of AAP, News Corp executive Campbell Reid, yesterday described AAP as having been journalism’s “first responder”. That’s true, but it was also the safety net, the guarantee, that meant media organisations could take risks and be innovative.

The reporters from AAP were at most important court cases, business AGMs, sporting matches and public events. They reported parliamentary committees. Country newspapers and broadcast media depended on AAP to inform their audiences about things of relevance to their communities happening in the cities.

One of the reasons given for AAP no longer making a profit is that so much information is now available online. Media organisations incorporate – and sometimes rely on – social media posts made by members of the public. The first pictures and reports of news events often come from people who happened to be there with a mobile phone and a Facebook account.

A moment’s thought tells you that this kind of citizen-lead activity, while important, is no substitute for all the ordinary, routine, professional journalistic work performed by organisations such as AAP. “Citizen journalists” will not sit for hours in courts or parliaments or in local council meetings and then write clear, accurate, dispassionate accounts, month after month. Citizens will not approach public figures and ask them hard questions.

Or, if they do these things, it will be because they have a stake in the outcome, rather than because they see their job as providing a straight account of what has happened – telling citizens what to think about, not what to think.

The AAP announcement is the latest, and one of the biggest, lurches down a slippery slope.

If we reach the bottom of that slope, we will be a nation that doesn’t know itself, with citizens prey to fake news. We will be a nation that can’t cohere, and a nation in which democracy ceases to work.

Over the past 12 years, the number of journalists employed in Australia has fallen sharply, with the most significant reductions over the past five years, according to the Australian Competition and Consumer Commission.

This is largely because of the collapse of the advertising business model that has traditionally supported most journalism.

Over the past 10 years, 106 local and regional newspapers have closed – a reduction of 15%. As a result, many local governments go completely unreported. As the numbers of journalists employed by big media organisations has shrunk, state parliaments have been less well reported.

New entrants – including the Guardian in Australia – have contributed, but they tend to employ few journalists and concentrate on national and international affairs. We have already lost much of the close-grained coverage of state and local events.

AAP's future in doubt as Nine and News Corp reconsider investment Read more

The ACCC found that many fewer articles are published on local government, local courts, health and science than was the case 15 years ago. That means we are all less well informed, and because information is power, that means we are less powerful.

It is easier these days to find out what Donald Trump was up to last night than to find out what is happening at the local school or hospital.

The closure of AAP is likely to lead to another 180 journalists losing their jobs.

The ACCC recommended a range of measures by government to address the crisis in public interest journalism. These included tax deductibility for philanthropic contributions to journalism, and an improved grants scheme for local media.

The Public Interest Journalism Initiative, of which I am a board member, has suggested governments also consider tax rebates for investment in public interest journalism, which would boost the industry by an estimated $380m.

Such investment would go a long way to fixing the problem – and because the rebates would be implemented under the Tax Act, would remove most concerns about political interference in the work of a free media. As we have seen in recent weeks, grant schemes will always carry with them the potential for political interference.

• Declaration: Margaret Simons is a board member of the Public Interest Journalism Initiative.