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STANDING COMMITTEE ON INDUSTRY

COMITÉ PERMANENT DE L'INDUSTRIE

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, December 1, 1998

• 1531

[English]

The Chair (Ms. Susan Whelan (Essex, Lib.)): I'm going to call the meeting to order pursuant to an order of reference of the House dated Tuesday, November 3, 1998, consideration of Bill C-54, An Act to support and promote electronic commerce by protecting personal information that is collected, used or disclosed in certain circumstances, by providing for the use of electronic means to communicate or record information or transactions, and by amending the Canada Evidence Act, the Statutory Instruments Act, and the Statute Revision Act.

We're very pleased to have the Minister of Industry, the Hon. John Manley, with us today.

I'm going to call clause 2.

The minister first has an opening presentation for us on the bill, and then he is prepared to stay to answer questions. He has informed me that his presentation is a bit lengthy, so he is willing to stay longer than the hour that was originally designated. So he's here for about 45 minutes after to answer questions, if there are questions that take that long.

That being said, I will now turn it over to the Hon. Minister to begin his presentation.

Hon. John Manley (Minister of Industry): Thank you very much, Madam Chair.

First let me introduce Michelle d'Auray, executive director of the Electronic Commerce Task Force. She will also preside, with other officials, to take any of your additional questions following further presentation after I leave.

[Translation]

Good afternoon, Madam Chair and members of the committee. I welcome this opportunity to address the committee on Bill C-54, the Personal Information Protection and Electronic Documents Act.

Before we discus the specific elements of the bill, I would like to give you some context which is helpful to understand its nature and scope.

[English]

Bill C-54 is a key to Canada's overall strategy on electronic commerce. It's one of the six components of the government's “Connecting Canadians” agenda.

Connecting Canadians is a comprehensive strategy to provide Canadians with the tools and opportunities to take advantage of, and to succeed in, the global knowledge-based economy. Connecting Canadians means making sure that Canadians have access to the Internet, through SchoolNet and the Community Access programs. It means creating smart communities where all economic and social organizations are linked together to stimulate growth and create jobs. It means increasing Canadian content on-line, including tele-health and tele-education. It means Canadian governments providing citizens with 24-hour-a-day access to integrated services on-line, and it means promoting investment in Canada as a connected Canada. Finally, it means building an environment where electronic commerce can flourish.

Our goal for electronic commerce, which is the category in which this bill is situated, is to make Canada a world leader by the year 2000. I want to think that by the year 2000, firms anywhere in the world contemplating a new electronic commerce application would naturally think first of whether or not it had already been done in Canada, and find that in most cases it had.

• 1535

Why focus on electronic commerce? Because, simply put, it's at the cutting edge of the global knowledge-based economy. E-com is global, it's information-driven, and it's technologically efficient.

This slide will give you an idea of how important this changing environment is going to be. It shows that sending a 42-page document from Ottawa to Tokyo over the Internet is 720 times faster and 260 times cheaper than overnight courier delivery.

I thought a 42-page document was a good, bureaucratic example to send from Ottawa to Tokyo.

Electronic commerce is also growing extremely rapidly. For example, in 1994 only 3 million people worldwide were connected to the Internet. Now there are more than 100 million people connected. Traffic on the Net doubles every 100 days. Electronic commerce on the Net is revolutionizing the way we do business. It provides consumers with 24-hour-a-day access to unlimited choices in products, services, and suppliers.

The growth potential for electronic commerce on the Internet is by any measure enormous. It's expected to grow to $653 billion Canadian globally by 2002. That compares with about $50 billion today.

If Canada does as well in Internet commerce as in other trading environments, our share of this market would be about $13 billion by 2002, but if we develop the proper framework, we could increase our market share to $33 billion, leading to new business opportunities and job creation.

[Translation]

To achieve our goal, we need a national vision; we need to set our sights on the ultimate objective. We also need to work with the private sector, consumers and all levels of government. And since we're not the only country thinking about this, we need to move fast.

I think we have a solid basis from which to start. For Canada to rise to the E-com challenge, we have to act domestically and internationally. Domestically, the private sector and consumers will drive electronic commerce development and growth in Canada. But governments have a key role in encouraging competition, removing barriers, reducing uncertainty, encouraging innovation and responding to accessibility and skills gaps. That is why the Prime Minister announced the Canadian Electronic Commerce Strategy on September 22, 1998. Electronic commerce is borderless. Domestic policies only succeed within an international framework. That is why Canada was the host in October of the OECD's first ministerial- level conference on electronic commerce.

[English]

On the domestic front, we have an ambitious agenda, an agenda that is action-oriented in four areas: to build trust and confidence in the digital marketplace; to clarify the rules; to ensure access to a world class information infrastructure; and to ensure that Canadians realize the social and economic benefits of electronic commerce.

In building trust and confidence in the electronic marketplace, we need to ensure that businesses and individuals can undertake secure transactions. That is why we issued our policy on cryptography on October 1, which balances security of transactions with law enforcement and international obligations.

Citizens need to know that their personal information is protected. That's why we introduced Bill C-54 on October 1. And I'll speak to the specific provisions of the bill in a few minutes.

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Finally, consumers want the assurance that on-line transactions are given coverage equivalent to off-line commercial activities. That's why consumer ministers of all jurisdictions will develop a consumer protection framework that will establish a standard that we believe will apply throughout the world.

With regard to taxation, businesses need to know that electronic transactions will not be treated unfairly, or doubly taxed. We are committed to tax neutrality of electronic and paper transactions, and we have clearly indicated that existing laws and tax treatments apply to ensure a stable environment for business.

In clarifying the rules of the game, we've made sure with Bill C-54 that electronic transactions have a basis in law that is equivalent to paper transactions and that the courts can assess electronic documents and signatures.

We recognize that the digital economy also requires rules for intellectual property protection. Canada has signed the two most recent treaties of the World Intellectual Property Organization, and is developing its implementation schedule.

As we increase the use of electronic transactions in Canada, we need to make sure our information infrastructure is up to scratch. That's why we announced last August that, thanks to CANARIE, Canada is building the world's first fibre optic Internet, which makes it the world's fastest network. We're also developing a standards road map for electronic commerce on open networks.

Finally, we have to ensure that all Canadians can benefit from this new digital environment. Through the Community Access program, we are providing small businesses with the tools they need to reach their customers through the Internet.

Through its purchasing power, government can help create a market for electronic transactions. With Treasury Board and other departments, we will implement a government-wide Public Key Infrastructure. This will enable us to undertake electronic transactions securely and effectively within government and with our clients. We will be working with business to accelerate the take-up of e-com applications and solutions so that Canada can lead the world in electronic commerce.

World use of electronic commerce will depend on the ability and will of national governments to collaborate. Cooperation is necessary for Canadians to reach international markets. I was delighted, therefore, that Canada hosted the OECD ministerial conference on electronic commerce October 7 to 9, 1998, here in Ottawa. The conference was a first in bringing together three key actors for global electronic commerce—governments, businesses, and international organizations.

The benefits of this conference were considerable. We set out an aggressive work plan and we agreed on a taxation framework; on the development of consumer guidelines; on principles for electronic signatures and authentication; and on the application of the OECD privacy guidelines to the Internet. The conference provided the platform to promote our domestic strategy. We used the opportunity to announce concrete action we're taking in key areas and to position Canada as a world leader.

[Translation]

At the end of December 1998, Canada will be one of the first G-7 countries to have set out all of the key elements of its electronic commerce agenda: we have a cryptography policy; we will issue consumer protection guidelines; we have committed ourselves to tax neutrality; we have introduced privacy legislation; we have introduced electronic signatures legislation; we will have a standard road map; and we will have a policy for the government's public key infrastructure.

We will be well on our way to making Canada a world leader in electronic commerce.

Let me now turn to the draft legislation that is before this committee, Bill C-54.

• 1545

[English]

This bill, as I hope you now understand, is an essential component of our domestic and international electronic commerce agenda. Internationally, it will allow Canada to protect the interests of its citizens and businesses in a global context at a time when the privacy laws of European countries could directly affect whether we can do business with them. The European Union's privacy directive, which came into force on October 25, 1998, has the capacity to block data flows to and from Canada if we do not have adequate privacy protection.

Domestically, Bill C-54 will ensure that Canadians feel secure using the Internet as a medium of information and commerce. Our consultations repeatedly tell us that Canadians do not yet have this level of confidence. A 1998 survey showed that 63% of Canadians would use the Internet if they knew how their personal information was going to be used.

While Bill C-54 covers all manner of information-gathering, and not just electronic, including paper, telephone and the Internet, Canadians know the threats to privacy are magnified in an electronic world. Every time our credit, debit or Loyalty cards are swiped, every time we surf the Internet and pick up software tracking agents, we leave a data trail. This trail can be compiled to provide a detailed record of our personal histories and preferences.

There's a risk that these records may be sent across provincial and national borders, sold, reused, or integrated with other databases without our knowledge and consent. As consumers and citizens, we need to have some control over our personal information and be assured that we enjoy a basic level of protection.

Bill C-54 establishes a right to the protection of personal information. It sets out, in law, ten clear rules on how that information will be collected, used, and disclosed in commercial activities. Thanks to these rules, Canadians will have to consent to the information they are being asked to provide. Companies will have to specify why they are asking for this information, and collect only the necessary information. Businesses will need the consent of Canadians to use their information for purposes other than the reason for which it was originally collected. These same businesses will have to treat this information securely, and they will be accountable for it.

These ten rules are based on the ten fair information principles contained in the national standard for the protection of personal information of the Canadian Standards Association, the CSA. The CSA standard was developed in the early 1990s, through consultations with the public sector, business, consumer advocacy groups, and labour. Our consultations revealed strong support for the standard. Canadians have told us they want independent oversight, someone to investigate complaints and ensure compliance and meaningful redress.

Under our proposed legislation, the Privacy Commissioner of Canada will oversee compliance. The privacy commissioner's role will include receiving and investigating complaints and mediating disputes. Unresolved disputes can be taken to the Federal Court for final resolution.

[Translation]

In 1994, Quebec was the first jurisdiction in North America to enact privacy legislation for the private sector. No other province or territory has done the same. There is some sectoral regulation, but the overall picture is of a patchwork of protection punctuated by large gaps. This situation is no longer acceptable.

In our consultations, Canadians told us repeatedly that they wanted consistent protection, across the country, for their personal information. Canadian businesses raised similar concerns about consistency, and the need for a single set of rules to ensure a level playing field.

To address these concerns, the legislation will apply first to the federally-regulated private sector, more precisely to federal works, undertakings and businesses such as the Chartered Banks, telecommunications and broadcasting companies, airlines and interprovincial transporting firms. It will also immediately apply to interprovincial and international trade in personal information, where the information is sold.

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Three years after coming into force, the legislation will apply more broadly, covering all commercial activities conducted by the private sector, except where a province or territory has passed similar legislation. Where and whenever organizations are subject to such provincial or territorial law, they would be exempted from the application of the federal law by order of the Governor in Council. For example, since Quebec already has privacy legislation, the provincially-regulated private sector in that province will be exempt from the federal legislation.

Federal legislation will continue to apply to federal works, undertakings and businesses. It will also immediately apply more broadly to all interprovincial and international flows of personal information for commercial purposes, including intra-firm transfers.

[English]

Our goal is to encourage provinces and territories to legislate in a similar fashion. Ideally, provinces and territories would pass similar legislation that would cover not only the provincially regulated private sector but also personal information outside of the commercial realm—for example, medical data, school records, municipal records and the activities of charities. These, for the most part, lie outside the federal domain.

But if they don't wish to legislate, or if they prefer the federal approach, as some provinces and territories have indicated to us they do, then Bill C-54 sets a timeframe and a process whereby all Canadians will have their personal information protected, at least in commercial transactions.

In Quebec, Bill C-54 will be complementary, and fill in the gaps by reaching areas that the provincial government cannot. For example, when Quebec citizens call an Alberta company to order something, or buy something on the Internet from a New Brunswick company, the Quebec privacy commissioner does not have the jurisdiction to help if something goes wrong. Bill C-54 will protect personal information no matter where it travels in Canada and abroad.

Bill C-54 will help protect our trade flows that involve personal data. There is an international movement towards better privacy protection, and Canada cannot be left behind. For example, as I indicated earlier, the European Commission's data protection directive, which took effect on October 25, can block the flow of personal data to countries without adequate protection. Bill C-54 meets this challenge for commercial activities, and provides Canadian business access to European markets.

Bill C-54 will also assist industry, especially small and medium-sized enterprises. It sets up a complaints-driven system and does not require the registration of databases or certification of company practices as a meeting of standard. We want business to comply with it, not spend their time fighting it or, worse yet, move offshore to countries without legislation.

Bill C-54 also establishes rules for the use of electronic documents. The federal government has pioneered the use of the Internet as a means to improve service to Canadians, increase efficiency, and lower costs. But many federal statutes and regulations specify that information must be given in writing, or signed. Such references can be interpreted as restricting transactions to paper and as precluding electronic delivery of government information and services.

Bill C-54 allows us to make existing statutes and regulations compatible with an electronic environment. It gives federal departments, agencies, and boards the authority to decide when to offer their services to the public via electronic media. It also determines how requirements in existing statutes and regulations can be satisfied by electronic means in place of paper.

Since the integrity and reliability of electronic transmissions must be ensured, fostering the practical development and implementation of secure electronic signatures is a key component of this bill.

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Electronic technology is increasingly affecting evidence presented to Canadian courts. Bill C-54 will clarify how the courts assess electronic documents and recognize electronic signatures, give recognition to notices and acts published electronically by the Queen's Printer, and give official status to the electronic version of the consolidated statutes and regulations of Canada.

The creation of an electronic alternative does not mean the federal government is doing away with the traditional methods it uses to communicate. Rather, we are enabling the federal government to accommodate a way to conduct business that is more and more popular with Canadians. Bill C-54 provides us, as parliamentarians, the opportunity to set a high standard in Canada for privacy protection and for building confidence and trust in the digital marketplace.

I look forward to your deliberations. I'm confident that Bill C-54 will receive your support. This legislation will help to ensure that Canada is a world leader in electronic commerce and the global knowledge-based economy. I stress again how much this bill rests as part of our overall electronic commerce strategy for global leadership.

I'd like you to enjoy a short video we prepared for the OECD conference.

[Editor's Note: Video presentation]

The Chair: Thank you very much, Minister, for your opening statement. The clerk is going to have copies of the slides distributed if people want to refer to the slides we've just seen.

I'll now turn over to questions, beginning with Mr. Jaffer.

Mr. Rahim Jaffer (Edmonton—Strathcona, Ref.): Thank you, Madam Chair.

I'd like to thank the minister for making his highly digital presentation today. It was quite impressive.

• 1600

My question pertains to some of the comments that were made today by the Auditor General in his report. I would actually like some clarification from the minister.

It sounded overall as though the Auditor General was quite positive with the direction of this legislation. However, his criticism was that the legislation may lack a broad e-commerce strategy, in fact particularly with regard to bringing government services on-line.

I was wondering if the minister agrees with those comments, and the AG's call for a senior sponsor who would direct the government's e-commerce efforts.

I would like some clarification or comment from the minister on that.

Mr. John Manley: I took the Auditor General's comments to really be reflecting more on the Public Key Infrastructure initiative aspect of this, which is one of the components. I feel quite satisfied that with the e-com strategy we've put together, there literally aren't—and we passed this thing around at the OECD—very many other countries that have put together as many of the components of the e-com strategy as we have done.

Yesterday in Washington, President Clinton, with Vice-President Gore, convened a meeting, essentially to talk about a lot of the stuff we've already done, although I don't think we got direct credit for it. The ground they're covering is basically what we've been doing over the last couple of years, culminating with the e-com strategy announced in September, and the cryptography and privacy policies that have followed.

On Public Key Infrastructure, I think what is right is that we're putting in place the mechanism, but we're not yet ready to say what all the applications are going to be. The Public Key Infrastructure is really intended to create a secure environment in which citizens can deal with government. For example, you would expect that many citizens will want to use Public Key to file their income tax returns. There will be other normal transactions that would occur.

So that broader strategy of usage on a department-by-department basis is what I take the AG to be getting at, and I think that will come as we overcome some of the technical challenges that still lie ahead of us.

Mr. Rahim Jaffer: One of the things I thought he was saying was that he thought the process has become almost too departmentalized, and he would like to see a more central direction. That's what I thought it was meant to mean.

So perhaps you could clarify that specifically, because I thought it was almost an opposite thing of what you just said, Mr. Minister.

Mr. John Manley: I mean, I don't disagree in the sense that what I want to see is a PKI that's established and usable by the largest possible number of Canadians. From that point of view, I'm happy to see it more centrally driven. But the applications that are going to be meaningful to people are going to arise out of individual departmental mandates, whether it's, as I say, income tax or other relations that government has with individual citizens or businesses or entities across the country. That's where the dynamism is going to come.

But certainly I agree with the notion that to have a strategic development we do need to have a common view of it, and that sometimes requires specific leadership.

Mr. Rahim Jaffer: The other question I had is with regard to some of the concerns the provincial justice ministers have had with the privacy affecting provincial jurisdictions. I know my colleague from the Bloc asked this question in the House before. One of their concerns was that they need more public consultation, or more consultation, before this legislation comes to pass.

I am curious as to what is being done on your part to work with the provincial jurisdictions in privacy, and what's being done to communicate that with various provincial counterparts.

Mr. John Manley: This isn't a new endeavour. In 1996, at the meeting of information highway ministers in Winnipeg, we had a discussion about privacy. We discussed the CSA norm. I indicated then that our commitment was to have legislation by 1998, which I thought was too slow, but sometimes the wheels turn slowly. It was generally agreed at that time that this was something all legislation, all jurisdictions, ought to be moving upon.

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Quebec, at that time, was the only jurisdiction that had enacted privacy protection legislation, and since then, nobody else has done anything.

So I don't really see this as sudden. I see this as a continuum that's gone on since the OECD guidelines came out in the 1980s. The CSA standard came along in the early 1990s and was discussed among informational highway ministers in 1996.

If we're going to succeed in having an electronic commerce advantage, one of the key components is that trust or confidence that people need to have in it. That's why we've decided that we should respond to the needs that Canadians have expressed. Over 80% of them say they want their personal information protected, and it's clear that full protection can't be provided at the provincial level. There is need for federal jurisdiction. Some information goes transborder, interprovincial, and international. We need to meet the test of the EU directive if we're not going to run into some trade difficulties with the European Union. That came into effect in October of this year.

All of those things put together suggest to me that, if anything, we're not moving too quickly. It's probably a bit last minute, and it's time we acted.

Mr. Rahim Jaffer: I do agree with the process. I guess my concern has been as recent as the end of October. Many of the justice ministers have called for this bill to be repealed because they feel there hasn't been as much of a consultation on this issue of provincial jurisdiction.

I guess my question is, specifically, what is being done to deal with the provincial counterparts to work with them to bring them on side? I do agree with the scope that you mentioned, but I'm just curious as to what you're doing in essence to bring them on side with this.

Mr. John Manley: As it happens, some of the justice ministers are also consumer ministers, and when I met with them in Charlottetown, we went through it. In some cases, provinces said, well, we didn't know what they were talking about, so we just agreed. But some of the maritime provinces in fact want the federal law. They don't intend to pass a provincial law. They want the federal law to apply to their jurisdiction. They don't want the cost of dealing with the enforcement side of it.

In the case of other governments, there was clearly not an understanding that the European Union directive was coming into effect, that this was not a domestic issue.

Of all things, electronic commerce doesn't happen in the.... It's not the Regional Municipality of Ottawa-Carleton. This is a global phenomenon. Therefore, to deal with it requires action that transcends local concerns. It has to be dealt with on a larger level.

We think that what we've come up with, frankly, is a method that gives the broadest possible coverage, that avoids the patchwork quilt of coverages. In some ways, for Canada, building a Canadian advantage, the worst case would be to have a total patchwork, with some jurisdictions having coverage and some not.

So this gives us a means of establishing a minimum level of coverage—that being the CSA norm—that can apply across all jurisdictions. That is an approach that actually respects, and I think quite well, provincial jurisdiction, while enabling provinces that wish to do so to rely on the federal trade and commerce power, if they want, to apply to their citizens.

The Chair: Thank you very much, Mr. Jaffer.

Mr. Murray, please.

Mr. Ian Murray (Lanark—Carleton, Lib.): Thanks, Madam Chairman.

Mr. Minister, can you expand on this concept of tax neutrality? You say electronic commerce is a global phenomenon, and I'm not quite sure what you mean by tax neutrality.

Mr. John Manley: Our objective—and this has been articulated in a number of ways—is essentially to ensure that the taxation regime is not a discouragement for electronic commerce transactions by effectively causing an increase in taxation, with no targeted tax on it, but neither should e-com be a means of avoiding tax that would otherwise be payable. Essentially, what we'd like to be able to establish is that the regime is “tax neutral”, so to speak.

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Under the Minister of Revenue we had an e-com task force on taxation, which reported back in the spring. Recently, just around the time of the OECD, the government issued its response to the task force report.

As well, Mr. Dhaliwal chaired a meeting of OECD revenue ministers at the time of the OECD conference here in Ottawa—just the day before it started, in fact—so that we can begin making progress on the international issues.

Clearly there are some tricky issues involved in this, but they're not totally new, either.

Mr. Ian Murray: Do you anticipate treaties, then, to try to resolve this? Is that the length we'll have to go to?

Mr. John Manley: One of the things the OECD is looking at is whether existing tax treaties are adequate to the task that e-com has set for taxation. To some extent it will be. Some clarification on certain rules is going to be necessary.

For example, at the meeting a document was adopted by ministers that indicated, for example, that where a transaction occurs it's the jurisdiction in which the consumer resides that any sales or commodity tax would be applicable. That would have been an uncertainty: Is it the jurisdiction of the vendor or is the jurisdiction of the purchaser? Countries have agreed that it will be the jurisdiction of the purchaser. Does that need to be incorporated into additional treaties? That we're not sure on yet, and the OECD is looking at that.

Mr. Ian Murray: The only other question I have is regarding government purchasing. You talked about using that as a model to try to encourage people on this path of electronic commerce. Do you anticipate a need for any incentives to get this running, or do you just feel that the benefits will be self-evident?

As an add-on question, do you see the government saving money over time by doing this? I haven't thought this through as to why the government necessarily would, but perhaps you could comment.

Mr. John Manley: I think it will. One of the advantages that has played very well with the progress we're trying to make under the Internal Trade Agreement, to open procurement not just for the federal government but other levels of government as well, is using the electronic system to create access to procurement opportunities.

For example, it may be a purchase for supplies required at a government department, a department that's located in Ottawa. If you happen to be in Moose Creek, you can get that information on-line. You can submit a bid, and you can win the bid. You no longer have to be hovering around the lobbies in order to find out what's going on. You don't have to be a regular reader of the Canada Gazette. Most small businesses don't have time to ferret out those things. You can bring it up on the screen.

If there's something in your area of expertise, or that you supply, you have an opportunity to bid on it. That in turn is going to save money for governments, not just federal but at all levels, because less legal advertising in national publications for a more effective distribution of the information means more bids, resulting in better prices paid by governments. So the advantages are all-round.

In my own department, we've recently been able to offer electronic registration under the Lobbyists Registration Act. The saving is about $150 in total costs per registration, by doing it electronically. We've introduced the means whereby law firms can make on-line applications under the Investment Canada Act. This in turn is going to save costs in delivery services, in paper production, copying, and so on, because it's all available.

So I think the advantages for Canadians are tremendous, and it's going to save costs for government, for sure.

The Chair: Thank you very much, Mr. Murray.

[Translation]

Ms. Lalonde, please.

Ms. Francine Lalonde (Mercier, BQ): Mr. Minister, the objectives of this bill are laudable. However, for Quebec, it is totally unacceptable that you pursue these objectives by weakening existing Quebec legislation protecting personal information.

You stated that since 1994, Quebec has a law which works quite well. Its adoption and subsequent revision, during the last session, were both done with the unanimous consent of all parties. This law protects the rights of citizens, and provides for free, efficient, and speedy redress. Moreover, this legislation applies to businesses that come under federal jurisdiction with Bill C-54. It also covers businesses located outside Quebec that receive information originating in Quebec.

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As part of an examination of financial services, Mr. Owens drafted a report in which he clearly stated that the Quebec legislation affords Quebeckers a protection that goes far beyond the provincial borders. He said:

    Moreover, the consequences of this Act are not limited to the province of Quebec. National institutions operating elsewhere in the country must respect these provisions for transmitting personal information outside the province. Practically speaking, this means that they may be prohibited from forwarding personal information about people living in Quebec, unless they implement measures to satisfy the legal requirements throughout the country.

There exists, at this time, legislation that applies beyond the Quebec border. Mr. Dubreuil, a jurist, who quoted the recently published Owens Report, even stated that this Quebec law would withstand a Charter challenge, as long as federal legislation had not been enacted.

The provisions of Bill C-54, which is weaker—I don't think anyone will disagree with that—will apply to federal works, undertakings and businesses, and will also immediately apply to information which is transmitted outside Quebec. This means that businesses, including the banks, that have agreed to abide by the rules and the law, must now be subject to a new set of regulations. Everyone agrees, including the lawyers who represent private companies, and with whom I have spoken, that this is unacceptable; it is obvious that the weaker legislation will quickly win out over a law that takes a different approach. This means that, at the end of the day, Quebeckers now have rights that they will no longer have if the provisions of Bill C-54 are applied.

I could quote you the example of Marie Laperrière, who is in conflict with Air Canada, and who, for three years now, has been seeking access to her complete medical file. Air Canada challenged the request, and finally, a decision was handed down last May that stated that, until there is a federal law, Quebec law will apply to Air Canada.

According to ministers Beaudoin and Boisclair, who signed the letter that was addressed to you, a letter that was made public, and a copy of which I gave to the clerk, so that she may distribute it to all committee members, Bill C-54 weakens the Quebec law in the areas that it now covers. The provisions of this bill will set in place a dual system of rules that will, at the very least, give rise to a confusing, if not extremely complex, situation. It will diminish the rights of Quebeckers.

Finally, Mr. Minister...

[English]

The Chair: Lastly, Madam Lalonde, please.

[Translation]

Ms. Francine Lalonde: Madam Chair, you must understand that this is important. Finally, I am sure that you are, as you say, in favour of protecting personal information; I'm sure you don't want the Quebec law to be weakened.

I know that steps were taken with the other provinces, even though it did take some time, so that they would be mainly responsible for applying the measures to protect private information; according to what I have read, the federal government would play a residual role.

Therefore, why did you not pursue this essential collaborative approach, rather than marching in as the federal government to put forward a bill which doesn't give enough protection? This bill does not protect citizens' rights, rather, it is a bill which will turn a standard into an obligation for businesses.

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The Chair: Thank you, Ms. Lalonde.

[English]

Before the minister replies, the minister should be aware—

[Translation]

Ms. Francine Lalonde: But I have something to say.

[English]

The Chair: —excuse me—that the letter that was given to the clerk has not yet been distributed to committee members. It cannot be distributed until it's in both official languages. It's in translation. So we do not have it.

[Translation]

Ms. Francine Lalonde: Have you distributed the notice from Mr. Paul-André Comeau, which was in English?

[English]

The Chair: No, she's been waiting for the translation.

[Translation]

Ms. Francine Lalonde: I gave you a copy in English.

[English]

The Chair: No, she's waiting for the translation of the letter so that she can distribute them together. So it hasn't been distributed.

Mr. Minister, did you have a reply to that?

Mr. John Manley: To which part?

[Translation]

Some Honourable Members: Oh, oh!

Mr. John Manley: It was a good speech, but it wasn't quite accurate. First of all, this bill will not weaken the Quebec law. Its provisions are a little different, but the objectives of both laws are the same, and provide for almost the same standards. Nothing is being watered down.

Secondly, what could the information commissioner of Quebec do with respect to a New-Brunswick business that might have received private information about a Quebec citizen? He can do nothing. He cannot become involved in the affairs of New-Brunswick, in order to apply a law from Quebec. It is at least necessary...

Excuse me. I listened when you were speaking.

Ms. Francine Lalonde: I'm listening. I am hanging on your every word.

Mr. John Manley: At very least, it is necessary to protect the information sent between provinces and outside the country.

Secondly, even though our opinions differ, I don't agree that the Canadian government would only have a residual role to play in protecting the privacy of Canadian citizens. I have a responsibility towards all of them.

I am sure that such a bill would respect the right of a provincial government to enact legislation to cover businesses in its own jurisdiction. As I said, Quebec has done so. Businesses that come under Quebec jurisdiction would be exempt from the provisions of our Act.

We must bridge the existing gaps. Even if some provinces have already adopted similar laws, we must legislate to protect not only the interests of citizens living in provinces that do not, themselves, wish to enact privacy laws and whose private information crosses provincial borders, but also those whose private information is affected by federal businesses. That's the only thing that we are trying to accomplish. However, I don't believe that the standards are any weaker. They are a little different, that's all.

The Chair: Thank you very much.

Mr. Bellemare, please.

Mr. Eugene Bellemare (Carleton—Gloucester, Lib.): To the Minister for high technology, who has the interest of all Canadians at heart, including those living in Ontario, and those who live in Quebec, I am happy to see you here today.

I would like to ask a question about

[English]

enforcement. The enforcement officer would be the privacy commissioner, exclusively?

• 1625

Mr. John Manley: Essentially, the privacy commissioner would be the person who would have the jurisdiction to investigate complaints and devise a complaints-driven system that enables the privacy commissioner to obtain information, to subpoena documents, to require evidence be given to them, and to sort out problems, essentially, which is the model that we've taken. If the privacy commissioner runs into difficulty, then he has the ability to go to the Federal Court, which can issue orders requiring that companies comply with the requirements of the law.

Mr. Eugène Bellemare: In the proposed law, I read a great number of quotes saying, it “should”, and it “may”. It has a language that is not dogmatic, for lack of a better term, not using words like “shall” and “must”.

How can you prosecute people if you say you “should” be doing this, or “may” be doing that?

Mr. John Manley: Well, there are “shalls” and there are “shoulds”. If you go through the bill, you can see there are distinctions. The obligations of the bill are shalls. In other words, they're mandatory. The method by which companies can comply with those mandatory obligations may be optional.

In other words, we're not trying to kill electronic commerce here, we're trying to promote it. It is necessary that we build an appropriate balance. I mean, we want something that's going to work, that will be capable of being enforced readily, and that will be respected.

That means to a certain extent that we respect the needs that individual enterprises may have for managing their systems in a more or less prescriptive way. So I think we've covered the obligations that you see in the ten principles in the appendix to the bill, but with enough scope that the way of going about doing it can be somewhat flexible.

Mr. Eugène Bellemare: During your presentation I heard you mention the term “voluntary guidelines”.

Mr. John Manley: The guidelines were initiated as voluntary guidelines. The CSA's standard is a voluntary standard. When we pass Bill C-54, it will become mandatory.

Mr. Eugène Bellemare: There will be fines and jail sentences?

Mr. John Manley: There can be fines and enforcement.

Mr. Eugène Bellemare: Or just reprimands?

Mr. John Manley: No, there can be fines. I'm not sure we've sent anyone to jail for it. But that requires the Federal Court to issue, to fine.

Mr. Eugène Bellemare: Thank you very much.

The Chair: Thank you very much, Mr. Bellemare.

Mr. Jones, please.

Mr. Jim Jones (Markham, PC): Yes, Mr. Minister. In your presentation, you said you're building an e-commerce strategy for Canada, and hoping that Canada has an advantage in e-commerce. How are you going to do that, to make sure that Canada's way out in front and has an advantage in this fast-growing arena?

Mr. John Manley: The key thing we have at our disposal is to try to get the framework right. The role that government plays is first of all framework. That's where privacy protection and digital signatures and cryptography really come to the forefront. Those are things that would otherwise be uncertain. We're trying to clarify them, set the standards, and that will help.

With respect to purchasing, using, we'll be the biggest user with the financial institutions of electronic commerce by accelerating use and acquisition of the technology. That can contribute to building a Canadian industry.

We've a number of programming opportunities that we're using, including, under the Community Access program, to help small business discover how they can use electronic commerce in their marketing community. Storefronts is an example of where we've set up pilot projects to get small businesses to use the Net as a marketing tool, to discover how they can use it.

I think overall, with things like Strategis, with the Community Access program, with our connectedness agenda, what we're trying to do is really give small and medium-sized businesses some of the advantages that large firms are going to more quickly adopt, of using electronic means of doing their business, in order to get some of those costs savings, which could be significant, down to the small and medium-sized enterprises as well.

Mr. Jim Jones: Okay.

What is the U.S. doing with regard to e-commerce, especially the privacy legislation? Last year, I believe, 85% of all the Canadian goods that were bought over the network, e-commerce-type transactions, were done with the U.S. from Canada. How are we going to ensure that we're in step with the U.S.? It's nice to be in step with Europe, which is about 5% of our transactions, or less, but 80% to 85% of all the commerce transactions are with the U.S.

• 1630

Mr. John Manley: First of all, in the broader e-com strategy, as I say, as recently as yesterday the White House was engaged on that issue. If I might be so bold, I think they're playing a little catch-up with us. Our cryptography policy has been there for a number of months. We're out ahead on some of those things.

That's not to say we can't fall behind, because when they set their minds to it, they're fast and they're good.

On privacy, it's very controversial. The U.S. administration continues to believe they don't need any legislation. They're advocating entirely a voluntary compliance mechanism.

At the time of the OECD meeting, both Secretary Daley and Mr. Magaziner from the White House indicated that they were looking to a system using a type of Better Business Bureau seal of approval such that you would know, when dealing with a company, from an insignia of some type on their site or in their information packages, that they respect certain levels of behaviour with respect to the protection of information.

Nobody really disputes the objectives or the standards. They're not all that different between the European directive, what we are proposing under the CSA norm, and what the U.S. expects companies to do voluntarily. It really becomes an enforcement question.

The Federal Trade Commission in the U.S. last summer issued a couple of reports saying that they didn't think voluntary compliance was going to work, and that Congress would probably have to legislate. The administration's view at this moment is that they are holding back. They're in discussions with Europe. The guidelines are being delayed until the end of December in terms of their application to the U.S., to see if they can work it out.

The bottom line, from my point of view, is that we've adopted a standard that is light and flexible enough that it's not so intrusive that it will discourage investment, for example, in Canada, but it does provide a standard, (a) that consumers will have confidence in, and (b) that companies, who already really apply this standard, can now say everybody's going to have to live up to the standard. Most reputable firms in Canada are already applying the CSA norm, so they're not going to experience an increased burden, but some of the others that haven't been applying it are.

On balance, I think, it works out well.

Mr. Jim Jones: I'd like to follow up on Mr. Murray's question on tax neutrality. Right now there are hearings going on with the CRTC. Why are they claiming the Internet? Why are they doing hearings on this? Do you feel they're going to control the Internet?

Mr. John Manley: I don't think anybody's going to control the Internet.

Mr. Jim Jones: But why are they doing the hearings? Are they trying to impose some type of tax on the Internet?

Mr. John Manley: The CRTC is not going to have the jurisdiction to impose the tax themselves. They may make recommendations of some type. We'll have to see what they come up with.

I believe what their interest has been—and the hearings really deal with new media—given the evolution that's dramatic in communications, the Internet being the phenomenon, is that as bandwidth becomes more and more available, the changes to what has been the traditional broadcasting sector can expect to be impacted quite significantly by Internet-based communications. Is there a way for us to be positioning ourselves to ensure that Canadian producers of new media content have access to this new flood of sources?

I mean, I think it's a problematic area for us. Essentially, the old broadcasting rules worked well in a world in which you had a shortage of spectrum, but on the Internet, you have a shortage of bandwidth, but it's temporary. There won't be a shortage of spectrum. Whatever you can produce can find its way on there. How do we make sure that Canadian stuff actually has a place in that?

I think it's a worthwhile set of questions to ask. I may have views on the answers when they start to come forth, but right now, I think it's worthwhile to get that information.

• 1635

Mr. Jim Jones: One last question. Quebec has their own privacy laws, and I guess the Maritimes said they were just going to use—

Mr. John Manley: Some of the provinces do; I don't mean to imply all of them.

Mr. Jim Jones: But I think it's a good idea that we try to have just one type of privacy legislation for all of the provinces, because really, where the differences are going to be coming is not between the provinces in Canada but all the countries we're dealing with. Therefore, we can't afford to have ten different provinces have their legislation, plus the federal, plus then 200 countries. It's going to be difficult enough just conforming with the other countries.

What actions are you taking to see if we can bring the provinces on-line and have just one, uniform privacy act?

Mr. John Manley: We continue to work with the Uniform Law Conference of Canada to try to develop a common approach. Frankly, it would have been nice if we could have waited. On the other hand, time marches on, and as I mentioned in response to Mr. Jaffer's question, we talked about this over two years ago, and the ULCC hasn't come out with a standard approach yet. We haven't had any provinces act, and it's clear, from all of our consultations with Canadians and the polling we've done, that this is something people are really concerned about.

Now, there isn't really a way for the whole area to be covered by one law. To have the most complete coverage, you need both provincial and federal laws.

Personally, I still am baffled by the comments I've had from the Bloc and from Quebec, because in fact we have a system that is going to be complementary. Quebeckers will have the most comprehensive coverage for privacy of any citizens in Canada as long as no other province acts. Rather than being contradictory, they are complementary. This to me is the way it should work, and it can work.

I would like to see the other provinces at least fill in the gaps. Some are content to leave a few gaps and simply allow the federal law to apply to them.

I would point out that once this law has been proclaimed, it doesn't come into force for a year. Secondly, it doesn't come into force in provinces that have not acted for three years. So we're really looking at four years until it comes into effect in provinces that choose not to act. If anything, that's slow.

The Chair: Thank you very much, Mr. Jones.

Mr. Shepherd, please.

Mr. Alex Shepherd (Durham, Lib.): I'd like to address the whole issue of encryption technology. This act is somewhat dependent on the ability of people to get access to that technology.

I know Canada is a signatory in a treaty or convention—it escapes me right now—whose thrust, basically, with some of our international players, was to actually restrict the importation of encryption technology basically to deal with the flip side of this—that is, organized crime, security, and so forth.

Is that an impediment to ensuring the privacy you're trying to attain in this legislation?

Mr. John Manley: Not really. They're really two separate issues, in a way.

What we're dealing with in Bill C-54 is protection of information, however you gather it. So it's not strictly limited to information that might be conveyed over the Net from your computer terminal to another.

When we're talking about encryption, we're really talking about means of protecting electronic communications from being monitored, for example, or from information being taken out of computers by hackers and used for improper purposes.

So although in a consumer's mind they might be very closely related.... I mean, basically, you don't want somebody to have your credit card number, right? So however you do that is important. Well, encryption, when you key your number into the computer, is one of the ways of protecting that.

• 1640

Bill C-54 really enables you to ensure that when you've made a purchase from somebody on the web, they don't take your information and sell it to somebody else who's gathering a database, because they've now learned some of your characteristics. Your Visa card purchases, for example, over a period of time, will be able to show whether you like to travel or what kind of restaurants you like to go to. It could be quite useful information.

Well, Bill C-54 gives us a means of saying that this kind of information can't be sold. The bank running your Visa card isn't able to sell it to the local restaurant association so they know what coupons to send you, unless you consent to it, whereas cryptography protects you when you're actually doing the transaction.

Mr. Alex Shepherd: But once again, to obtain the objectives of the legislation, which presumably is to put consumers in an area of confidence where they're happy to use this kind of technology, it must similarly follow that hackers and so forth, as you suggest, will not break into the system and access this privacy information directly.

Mr. John Manley: That's right. You know, the cryptography policy we released in October does permit very strong cryptography in Canada, and we have some pretty good producers of it, including right in Ottawa South, where one of our leading firms happens to be located. There are others as well. But I won't advertise.

So I think the policy does make it available. When you talk to the banks, for example, about how they're setting up their systems for Internet-based banking, they use cryptography, and it becomes available to you as users so that your transaction with the bank is secured.

When we launched ChaptersGLOBE.com, the Canadian equivalent to Amazon.com, again they're using pretty strong cryptography to protect those transactions. You'll know it, because you go through a sequence, generally speaking, on the computer when you go into an encrypted mode.

The Chair: Thank you, Mr. Shepherd.

I'm going to remind members that the minister is being very generous with his time, and has agreed to stay awhile longer. I'm going to hold you now to five minutes on the opposition side. I've been very generous and allowed the opposition to go to about ten minutes each.

That being said, if you decide to talk and not ask a question, after two and a half minutes I will cut you off. I'm warning you of this so that the minister has equal time to reply in that five minutes.

Mr. Jaffer.

Mr. Rahim Jaffer: Thank you, Madam Chair.

I have just a short question. I know we spoke about, and the minister addressed—and I believe it's the industry's view—the fact that this is good legislation to begin with, a framework to regulate this industry and obviously for privacy protection, but one of the organizations that's been kind of critical of this legislation, it's been brought to my attention, is the Canadian Medical Association.

According to what they say, in terms of the CMA's code, Bill C-54 inadequately and insufficiently protects patient privacy and medical record confidentiality.

Obviously the minister would recognize patient-doctor confidentiality to be something very important, I'm sure, but I'm curious as to how he would comment or address the concerns of the CMA.

Mr. John Manley: Our view is that this falls squarely in provincial jurisdiction, which is of the reasons I was saying that if the provinces don't bring in any complementary legislation, there will be some gaps.

Mr. Rahim Jaffer: I can see that. Then that would also, to some extent, stem out to what I notice in the presentation on the issue of consumer protection, too, because to some extent that is provincial as well.

Mr. John Manley: Almost entirely, in fact.

Mr. Rahim Jaffer: In essence, then, what's being done is that the framework is being set and then you're relying on the provinces to fill in the gaps. Is that what's going to be done on that level, on those issues particularly?

• 1645

Mr. John Manley: In a sense, we have constitutional jurisdiction under the trade and commerce power to extend our authority to enterprises, businesses that are engaged in commerce, even though they may be entirely of a provincial type. But trade and commerce power doesn't apply to doctors and patients. That's a clear gap.

Even a province that says they'll just as soon rely on the federal jurisdiction may want to consider some kind of complementary legislation to cover those particular gaps where we don't think we have the constitutional power to do it, really.

So if there's trade in medical data, and if somebody's selling the information, well, that I think is already going to be caught in Bill C-54. I don't think that's excluded from Bill C-54 if it's actual commercial trade.

On consumer protection stuff—really quickly, Madam Chair—at a federal level we don't have very much jurisdiction at all. An interesting parallel to privacy would be misleading advertizing in which there is complementary legislation, federally and provincially. It works fine. Complaints are made, and they're sorted out between the Competition Bureau and the provincial regulators. Usually the right jurisdiction gets the result that the consumer wants. That's what's going to happen with the privacy stuff as well.

On the consumer framework, we're trying to do that cooperatively. If we can get a common framework for all of Canada on e-com transactions, we think actually the world is going to be looking for this, and we may actually be able to set a standard that'll be adopted elsewhere as well. But that really does require the provinces to be working on it as well.

Mr. Rahim Jaffer: Thank you.

The Chair: Thank you very much, Mr. Jaffer.

Ms. Jennings, please.

Ms. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): This question may be somewhat technical. I'm having some difficulty with the language in division 2, “Remedies—Filing of Complaints”, a good part of that section. You might be able to clear it up for me.

For instance, subclause 11(4) says:

    The Commissioner shall give notice of a complaint to the organization against which the complaint was made.

Subsection 12(1) goes on to say:

    The Commissioner shall conduct an investigation in respect of a complaint

and then describes all of the powers.

When we come to subclause 13(2), it says:

    The Commissioner is not required to prepare a report if the Commissioner is satisfied that

and then there's a series of grounds on which the commissioner can decide not to issue a report.

In the last part of that subclause, it says:

    If a report is not to be prepared, the Commissioner shall inform the complainant and give reasons.

But it doesn't say anything about informing the organization, who is the object of the complaint, that the commissioner has decided that the complaint is, for instance, frivolous, or trivial, or vexatious, or made in bad faith. There's no notification of the organization. So the organization gets notified that a complaint has been filed concerning their conduct but is not notified of what the disposition of that complaint is if the commissioner has come to one of those grounds listed under subclause 13(2).

That's the first thing.

Mr. John Manley: I don't know why we would have left it out.

Ms. Marlene Jennings: That's why I said it may be of a technical nature.

Mr. John Manley: You may want to consider an amendment that would provide in those last words in subclause 2 that the commissioner shall inform the complainant and the organization.

Ms. Marlene Jennings: Okay. And it would be in writing, I'm assuming.

Mr. John Manley: I would think they would inform in writing.

Ms. Marlene Jennings: Good.

The other point is about the whole process of the remedies and the investigations of complaints.

In the French section, it says, examen des plaintes, which, if I'm not mistaken, doesn't necessarily mean “investigations of complaints”.

[Translation]

I may be wrong, because I am more familiar with the Quebec law, but usually, when we talk about examining a complaint, it means that we take note of the complaint, we examine it, and, depending on the type of complaint, we then decide whether or not it warrants an investigation.

• 1650

When we talk, for example, about the power to assign, to compel witnesses to appear, etc., to order the tabling of documents, and the power to search, in that case it would be an official investigation.

That is why I said yesterday that, as far as I was concerned, there was a language discrepancy between the French and English versions. This may be acceptable elsewhere in Canada, but I have my doubts.

Mr. John Manley: That is why I will refer it to the Department of Justice, who will decide if the translation is accurate.

Ms. Marlene Jennings: To the Department of Justice? Good. Then, I will put my questions to the officials from the Justice Department.

I would like to thank you and congratulate you for having acted in tabling this bill. Contrary to my colleague, I understand full well, and I am delighted, that the federal government has decided to operate within its own jurisdiction, while also being in the forefront in the matters relating to privacy protection and electronic commerce.

[English]

I think we're ahead of the game. I think you described it very clearly—you know, Chapeau!

[Translation]

Mr. John Manley: Thank you.

[English]

The Chair: Madam Jennings, you should be aware that we will be inviting the Minister of Justice to appear before us when we begin part 2.

Ms. Marlene Jennings: I'll make up more questions for her.

The Chair: Currently we're on part 1. However, we will be meeting with the officials as well after we're finished meeting with the minister, if not today then tomorrow afternoon.

Ms. Marlene Jennings: Okay.

[Translation]

The Chair: Ms. Lalonde, please.

Ms. Francine Lalonde: Ms. Jennings, I am certain that I speak on behalf of Quebec when I say that, if the bill were as forward- thinking as you say it is, Quebec would be completely satisfied. It is in order to have the best possible law for Quebec and for all of Canada, because what happens elsewhere affects Quebec, that Quebec wants it withdrawn. It is not to prevent the federal government from doing its job, but rather to coordinate its involvement.

This is my question, Minister. You know that the Quebec legislation complies with the European directive. However, bill C- 54 states, in clause 3, that protection must be given to Canadians.

    3. The purpose of this part is to provide Canadians with a right of privacy with respect to their personal information...

It's a little strange, especially since the intention is—and this is how the Quebec law is drafted—to protect, in Quebec, information originating in other countries, let's say the European Union, as if it were information coming from Quebec.

I don't think that this will be the only problem for the European Union if bill C-54 is passed, because its laws are extremely stringent with respect to the protection of information originating there and sent to Quebec and to Canada. The Act must therefore protect all of the information moving through Quebec and Canada.

Moreover, do you not think that the redress—and Ms. Jennings could have continued—has little effect, since the Commissioner can only investigate and make recommendations? It's up to the individual to take the case to the federal court. It's up to the individual to seek justice. With the Quebec law, the Commissioner can be asked to exercise mediation and to rule, if mediation is not successful.

Mr. John Manley: That is not true. The Commissioner can go before the court.

Ms. Francine Lalonde: The Commissioner? That is what is written in your bill. The Commissioner can go to court if he hears about it, when there is a public event, but otherwise, the lowly individual who has a problem with an ordinary small business must attempt to settle the matter with the company. That is what is provided for. If there is no settlement, then the complaint can be submitted to the Commissioner. The Commissioner can attempt mediation; he drafts a report and then he makes the recommendation to the business. And if the business does not accept his recommendation, then one must turn to the federal court. That will discourage a fair number of people.

Ms. Marlene Jennings: Read clause 15.

• 1655

Ms. Francine Lalonde: I did read it. I am very well acquainted with the bill, madam. It is only when the Commissioner gets wind of it.

Ms. Marlene Jennings: He has the power to ask himself...

The Chair: Ms. Jennings, please.

Mr. John Manley: First of all, it begins with the complainant who can address the Commissioner and file a complaint. Usually, as has been the experience in Quebec, where the system exists, the complainant appeals to the Commissioner. If the complainant is not satisfied, he or she can go directly to the court. But also, according to clause 15, the Commissioner can himself go directly to the court. According to what has been done for the past three years in Quebec, it is not necessary to impose a fine.

Ms. Francine Lalonde: We are not talking about fines.

Mr. John Manley: It's all settled.

Ms. Francine Lalonde: But there is a legal decision... You have not answered my question about the European Union.

Mr. John Manley: I'm told that discussions have begun with the European Union. I don't foresee any problems.

The Chair: Thank you, Ms. Lalonde.

[English]

Mr. Murray, please.

Mr. Ian Murray: Thanks.

Minister, for many years there have been problems with the use of the social insurance number as a personal identifier for business transactions. Even though it's not required—and I think more and more people are aware that it's not required—to give out the number for non-governmental reasons, it's still demanded often.

This legislation anticipates the use of a secure digital signature. Now, I don't know if this makes any sense at all, but I'm just wondering if there's some way we could eventually eliminate the use of the current social insurance numbers. For example, a number of them floating around are bogus or belong to other people. Would this digital signature potentially replace the social insurance number to try to correct some of those problems that have developed over the years?

Mr. John Manley: You're straying out of my jurisdiction.

Mr. Ian Murray: I was afraid I might be. I didn't want to be unfair.

Mr. John Manley: SI numbers really lie with the HRDC minister.

I think the point of the digital signature is that it's not, like the SI number, a filing reference point for a collection of information. The digital signature really is your unique identifier when you go on-line so that whoever you're transacting business with knows that in fact it's Ian Murray and not anybody else who's making this order or agreeing to sell this product.

As you know, the SI number is used as your collection of information on everything from your CPP contributions through to your income tax filings as a reference point for government. It's needed by government in order to keep track of all of your transactions, independently of whether you're involved in one particular one or not. So there's a little different usage there.

I thought you were going to ask me why we didn't put something in the bill about social insurance numbers. The answer is that we think the present legislation is already in effect to entitle individuals to decline to give their social insurance numbers unless there is a purpose for doing it.

Mr. Ian Murray: I just saw it as an opportunity to perhaps clean up the mess that may be out there.

On this digital signature itself, what form will it take? Is it like the personal identification number you get at the bank, which is essentially a numeric identifier?

Mr. John Manley: It can be like a PIN number or code that's unique to you. It can also be a physical chip that's installed in your computer that gives you essentially a digital fingerprint when combined with a code. In other words, I can't log onto your computer and use it and have somebody think it's you without my also adding the digital code.

So the technology is evolving, but compared to what we started with in law school, a signature with a red, sticky little seal put on a piece of paper, digital signatures are going to be a pretty certain way of knowing who you're dealing with.

Mr. Ian Murray: Okay. Thanks.

The Chair: Thank you, Mr. Murray.

Mr. Jones, some further questions?

• 1700

Then, Minister, it's indeed been a pleasure to have you here today. As chair of the committee, I would also like to make you aware that I've received numerous pieces of correspondence from different associations about concerns they may have with Bill C-54, in particular about proposed exceptions to Bill C-54.

Currently, as I understand it, Bill C-54 would not allow you to use the phone book for a direct sale. My understanding is that the department is looking at possible exceptions that may go into this area.

I want to raise a red flag with you that this committee is very concerned that policy be discussed at committee level and not solely in regulations. I raise that with you because I'm not sure if you're aware—I'm sure you are—that this discussion is already taking place and that I'm continuing to receive letters on a daily basis from different organizations that are looking for the same type of exceptions.

Mr. John Manley: I think you're going to hear a lot of testimony over the course of time, and we'll want to evaluate what comes in. I mean, there are going to be different exceptions requested, and in some cases you may want to entertain them.

My personal view is that the individual ought to be able to consent to the use of their personal information, and frankly, I find it unfortunate that, in the modern age, on the current use of name, address and telephone number in the telephone book, in order to be exempt from that publication you need to pay money. It seems to me to be against the principles of privacy that I would like to have respected. So indeed, use of that information ought to be subject, in my view, to some consent being given.

You may want to consider whether that consent is implicit in the fact that people essentially have the right to withhold that publication in the telephone directory. But if you can imagine, people are beginning to compile directories of e-mail addresses, of cellphone numbers. This multiplication of reference information is going to result in some real challenges to us if we think that everybody that publishes a directory of any sort does so with the consent of the individual to be called or solicited or approached on any number of things.

There's other public information that of course is available, but not electronically, that likewise could, I think, to the average citizen, really impinge on their personal privacy.

You, Madam Chair, as a lawyer, know that information on house purchases and mortgages is available to the public at the registry office. I'm not sure that every citizen wants that information extracted and used, even though it exists in a public form.

So you're into an area that's going to be very interesting for the committee to discuss and debate, and I'll be interested in receiving your views on it. And I'll have views on it too.

The Chair: I'll let you know that in my discussions with your department, I was informed, since I haven't practised law for about five years now, that it's now not only at the registry system but it's also available in electronic format and is sold by the Province of Ontario, as an example, to banks and other organizations to let you know when your mortgage is coming up for renewal.

I'll let Mr. Jones ask the final question.

Mr. Jim Jones: Along this line, I think one of the things they're recommending in the U.S. is Internet ethics, that when you log onto some site, some company like IBM or something like that, right on their first screen they will have all the rules and regulations on what they do with their privacy information.

Can we enforce that for everybody, that whenever you visit any company's site they should have their terms and conditions and their Internet ethics, how they will treat the information?

Mr. John Manley: In fact, you'll find that a lot of the major sites now, including strictly Canadian sites, will express those policies. It's not necessarily on the front screen, but you can click to their ethical guidelines.

• 1705

Whether we need to legislate that, I'm not sure. That may be something you want to talk about.

What we have in the bill is a mandatory compliance of those standards, of the ten principles in the appendix. Presumably it doesn't need to be further stated, unless there are particular additional statements that companies want to make as to what their guidelines are. It may be a marketing advantage for firms to do so.

Mr. Jim Jones: It gives you a comfort factor.

Mr. John Manley: That's right. In that sense, though, it may be something that the firms themselves want to develop as a standard to add to the comfort level. I guess my responsibility is to try to create a legal framework in which consumers can look to appropriate legal recourse if they're troubled by privacy concerns.

You have that in Bill C-54 by making mandatory compliance to a schedule I, which currently is what a lot of Canadian firms would publish if they were publishing their privacy guidelines. So it's sort of already captured there.

I guess I'd throw the question back to you: Do we need to legislate in respect to web sites to have firms say, (a) of course we're caught by provisions of federal and provincial privacy, but in addition, (b) here is our statement of ethics or guidelines?

Mr. Jim Jones: Especially when 85% of all our transactions are with the U.S., it'd be kind of nice if we could know what their ethics are and that you, as a minister, can be forcing the U.S., since they don't have any privacy legislation, to at least have some ethical legislation like this—Internet courtesy, I guess. Because that type of thing, I think, would increase the use of e-commerce on the Internet.

Mr. John Manley: Some of the firms that are talking about this are actually doing that very thing in Canada. They're applying their code very rigorously and building confidence in that way.

My view is that as consumers become more and more accustomed to this, and it becomes less unusual, as has been the case with ordinary commerce, they're going to start to recognize certain features. They're going to say, well, I know when I go to this particular site what they're going to do with my information—they've stated it up front, and they have this seal of approval and everything—but if I show up on another site, and that's not there, the price might look good but I'm not sure it's worth the risk.

So the market is going to drive some of that practice just by virtue of consumers wanting it, and looking for it. You might think about whether...within federal jurisdiction, because in this one you're going to find it's a little bit complicated unless we can conclude that all Internet commerce is potentially interprovincial and therefore falls entirely within the jurisdiction of the federal government.

I'll leave that to Madam Lalonde to think about.

The Chair: Thank you very much, Minister.

I want to thank you very much for your comments and for your time with us today. You've been very generous.

I'm going to let members know that the officials are here. However, they've graciously agreed to return tomorrow. We'll start our meeting tomorrow with the officials at 3.30 p.m. and then move to the federal privacy commissioner. We'll extend the meeting until 6 p.m. tomorrow, because we have votes tonight, and the bells are going to start at 5.15 p.m.

Ms. Francine Lalonde: Who will come tomorrow?

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The Chair: Tomorrow we have the federal privacy commissioner, but we're going to start with the department. If you have any technical questions, as Madam Jennings has already had, you can ask them of the department for about half an hour before we move to the federal privacy commissioner, and then Thursday we have the provincial members.

Again, thank you very much, Minister.

The meeting is now adjourned.