INDY Committee Meeting

STANDING COMMITTEE ON INDUSTRY

COMITÉ PERMANENT DE L'INDUSTRIE

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, February 3, 1999

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[English]

The Chair (Ms. Susan Whelan (Essex, Lib.)): Pursuant to an order of reference of the House dated Tuesday, November 3, 1998, we are considering 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.

I know we're still waiting for the minister to arrive, so I thought maybe what we would do is move down to number seven on our agenda, which is Mr. Jones' motion, and deal with that now, if that's okay with you, Mr. Jones.

Mr. Jim Jones (Markham, PC): I guess so.

The Chair: Do you wish to move that motion?

Mr. Jim Jones: Yes, I would. I move that Mr. Howard Wilson, Ethics Counsellor, be summoned to appear before the committee to answer questions on his review of the Prime Minister's business dealings.

This motion is very straightforward. If adopted by the committee, it would require Howard Wilson as Ethics Counsellor to appear before this committee to answer questions from members about his handling of the disclosure rules as they apply to the Prime Minister.

In 1993 the Prime Minister reached an agreement to sell his 25% shares, worth over $200,000, in the Grand-Mère Golf Club.

The Chair: Mr. Jones, I have a couple of difficulties with your motion, and I think maybe we should discuss those first. The reality is that he would report to us only under the Lobbyists Registration Act. He wouldn't report to us under the workings of the Prime Minister or on the Prime Minister's private dealings or business dealings. So I—

Mr. Jim Jones: The Ethics Counsellor is under the Minister of Industry, so he'd be under this committee. He has an office in the industry building.

The Chair: In fact, though, that's not necessarily the case. In the past a number of things that have come under the Department of Industry have not necessarily been referred to this committee or have not been part of this committee's mandate. A good example has been the recent report by the Competition Bureau that was directed to the finance committee. Just because certain people come under the Department of Industry doesn't mean that we as a committee have a right to review their actions.

I believe the motion to be out of order based on what are the ramifications and dealings of this committee. As it stands right now, I would rule it out of order, unless you'd like to come back to us on another day with other evidence that it's not.

Mr. Jim Jones: I'd be delighted to do that.

I'd also like to file a notice of motion that Mr. François Beaudoin, president of the Business Development Bank of Canada, be summoned before this committee as soon as possible to explain requirements to granting loans, compliance measures, and loan repayments with specific reference to Yvon Duhaime.

The Chair: Thank you very much. We'll take that under notice, Mr. Jones.

We are very pleased that the minister has been able to join us today. I believe you have an opening statement for us. Correct me if I'm wrong.

Hon. Anne McLellan (Minister of Justice and Attorney General of Canada, Lib.): I do.

The Chair: I'd ask you to begin that whenever you're ready.

[Translation]

Ms. Anne McLellan: Thank you, Madam Chair. Good afternoon to you and to the committee.

[English]

I am pleased to be here before this committee today to speak on Bill C-54, the Personal Information Protection and Electronic Documents Act. Let me apologize for being a few minutes late.

Before we get into the guts of this, if you like, I just want to share with you a little story that I think helps put in focus why we're all here dealing with Bill C-54. Many years ago the Government of Canada was using a certain technology in dealing with its citizens, and then the government decided it wanted to start using a new and improved technology. However, there were concerns about the validity of using that second technology. Therefore, Parliament acted by passing the Public Documents Act, and I'd like to read you one small part of section 2 of that Public Documents Act:

no public writ, deed or other document...is required to be on parchment, but, when written...on paper, is as valid in all respects as if written...on parchment.

In a nutshell this is what parts 2 and 5 of Bill C-54 are all about. It eases concerns about and facilitates the use of new technologies, just as paper was viewed as a new medium or technology hundreds of years ago and replaced parchment. Today we're not talking of the replacement of paper, but we are talking about a new technology. We have gone from parchment to paper, and now we are going to the electronic medium.

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[Translation]

The government must be able to serve Canadians in ways that are cost-effective and efficient.

[English]

It is essential that we create for all Canadians options that will include modern alternatives for communications and service delivery. Bill C-54 will make it possible for the Government of Canada to deliver services to Canadians using electronic media efficiently and securely. The bill will also provide a way for our justice system to recognize and accept electronic evidence.

Madam Chair, in Ottawa last October at the meeting of ministers of the Organisation for Economic Co-operation and Development, the OECD, Canada made a commitment to make our legal infrastructure media-neutral. In other words, legally speaking, Bill C-54 will put electronic transactions on the same footing as paper. It will assure individuals and businesses that an electronic document or electronic signature does have legal standing. Bill C-54 will not replace or eliminate communication through the written word on paper; instead, it will make the electronic transmission of information through computers an option that is realistic, practical, and legally sound. With the passage of Bill C-54, Canada will go a long way to fulfilling the international commitment we made in October at the OECD.

At home it will bring us closer to this government's goal of making Canada the most connected nation in the world and an international leader in electronic commerce. I do believe, colleagues, that when John Manley was here, he shared with you a video as well as his views on the progress we have made in terms of becoming the most connected nation in the world.

[Translation]

Bill C-54 tackles a number of the barriers which stifle the growth of electronic commerce in Canada. Businesses and citizens have repeatedly told us that privacy and security concerns must be dealt with before they will use the Internet for transactions. Bill C-54 is designed to build trust and confidence in electronic commerce.

[English]

The bill does four things: it ensures the privacy of individuals who communicate through electronic means; it adjusts legal frameworks so that our laws are compatible with an electronic environment; it clarifies how the reliability of electronic documents used as evidence in court is assessed; and it gives official status to electronic versions of consolidated federal statutes and regulations.

Part 1 deals with the protection of personal information. The Department of Justice supports Industry Canada in establishing Canada's policy on privacy in the private sector. Last December, when Minister Manley and his officials addressed the privacy aspect of this bill before your committee, some members expressed concern about the role of the federal government in this area. As the government's legal adviser, I wish to assure the committee and to state for the record that this legislation is constitutional and that it is indeed proper for the federal government to introduce legislation for this purpose.

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As you know, with respect to the protection of personal information, federal constitutional powers derive from jurisdiction to regulate trade and commerce, while provincial constitutional powers stem from jurisdiction over property and civil rights. This bill proposes a uniform set of rules for the collection, use, and disclosure of personal information in the commercial, private sector. However, given their constitutional authority, the provinces should have the latitude to introduce similar legislation in areas related to their responsibility.

My colleague Minister Manley and I, along with our officials, look forward to continuing our close collaboration with provincial and territorial colleagues to provide Canadians with comprehensive privacy protection in all aspects of their lives.

Permit me now to turn to those areas of the proposed legislation for which I am responsible as Minister of Justice.

Part 2 of the bill offers a legislative tool that can be used to adjust existing federal statutes so that they are compatible with an electronic environment. This section of the bill will permit federal departments, boards, and agencies to communicate with Canadians and deliver services to them electronically. It will give Canadians and their government the option to send and receive information in digital form.

Currently over half of the 600 federal statutes make references to obtaining or sending information that could be interpreted as being restricted to paper. Given the number of federal statutes that need to be adjusted so they can accommodate electronic formats, we have to accomplish this in a way that is cost-effective and time-efficient. The approach I propose is general, yet comprehensive.

Part 2 contains interpretive and enabling provisions that would introduce a degree of equivalency between paper and electronic format. Existing statutes and regulations would be supplemented by these provisions by an opting-in process. Ultimately the proposed legislation will permit federal government departments to recognize and accept electronic documents and thereby satisfy the requirements for originals, signatures, and written forms. The legislation will be a tool that individual departments can use if and when their clients—businesses, individuals all over this country—are ready and willing to engage in electronic transactions.

During consultations, I assured a number of concerned departments that each of them would have the discretion and flexibility to opt into this legislative scheme only when they believe it to be appropriate and only when they are ready to use technology. This means that departments and agencies will have the time they need to update and re-engineer their business functions so they can operate in an electronic environment.

When we prepared proposals to create an electronic alternative to communicate and conduct official business, we considered some very basic questions about the nature of electronically communicated information. For example, how can specific requirements for such things as originals, signatures, and sworn or certified statements be fulfilled through electronic means?

Of course, those of you who are lawyers will be well familiar with those concepts in terms of our lives, be it in terms of the statute of frauds or other kinds of instruments, evidence acts, etc., by which we have proven the authenticity and certainty of documents.

[Translation]

To address this, we had to choose an approach that takes into account the differences between electronic and paper communication.

[English]

Usually evidence of an agreement is required in the form of an original document so that the court can be satisfied that the terms and conditions of the agreement have not been altered since the agreement was signed. We refer to this requirement as the “best evidence rule”.

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In the paper world, the best evidence rule is usually fulfilled by producing the original paper document, be it a contract, a will, a lease, or whatever the case may be. However, it is difficult to satisfy the best evidence rule in the electronic world because it is difficult to find an original electronic document. Unlike a paper document, there is nothing on the surface of an electronic document to distinguish an original from a copy. Unlike a paper document, there is no handwritten signature that can be authenticated simply by making a visual comparison to other samples.

In the electronic world, when we want to verify the integrity of an electronic document—that is, when we want to be assured that the content of the electronic document has not changed since it was created and stored—what we really need to examine is the reliability of the electronic system that created the electronic document. To do this, we need to have in place legislation that draws the connection between the reliability of an electronic record-generating system and the reliability of an electronic document. Colleagues, this concept is fundamental to any and all proposals related to electronic evidence, not only here, obviously, but around the world.

By way of background, last August, after an intensive consultation period, and in collaboration with the provinces and territories as well as with the private sector through the auspices of the Uniform Law Conference of Canada, all interested parties met and approved a draft uniform electronic evidence act.

Part 3 of Bill C-54 proposes to amend the Canada Evidence Act to incorporate the principles set out in the ULCC draft.

There are a number of advantages to amending the Canada Evidence Act along the lines suggested by the draft ULCC proposals.

First, the amendments will address the often confusing points about electronic evidence that we currently find in the case law. Amendments to the Canada Evidence Act will mean that the rules governing electronic evidence will be much more transparent to lawyers and their clients. These proposed amendments will help encourage people to create and use electronic documents without worrying that courts may disregard their electronic records and instead engage in a fruitless search—dare I say, costly—for an original document in order to satisfy the best evidence rule.

Secondly, in order for the court to rely on electronic evidence in court proceedings, the changes to the Canada Evidence Act will make clear what a person must show in order to prove the reliability of the record-keeping system. As a result, we will ensure that record-keepers remain accountable for the reliability of their electronic documents and record-keeping systems.

Thirdly, the amendments will not create an undue burden of litigation to parties in an action because the proposals will explain what must be proved.

The amendments strike a balance among various interests and concerns. At the same time, the new provisions reflect procedural differences between those who seek to introduce as evidence electronic records generated by their own record-keeping systems and those who rely on electronic records made by record-keeping systems of other parties, and that is an important distinction.

I am also proposing amendments to the Canada Evidence Act to permit the establishment by regulation of specific evidentiary presumptions with respect to secure electronic signatures associated with the federal government's public key infrastructure.

As you know, public key infrastructure refers to a system of technology and procedures that enables us to determine who signed an electronic document. These presumptions will guide the courts when considering electronic documents that have been signed using digital signature technology or cryptographic techniques. These proposed changes to the Canada Evidence Act will assist the courts to determine the identity of the individual who signed the electronic document and will help confirm the integrity of that document.

• 1600

Bill C-54 will make the Government of Canada a model user of electronic technology and will establish high but reasonable standards of practice. The federal government will require the use of secure electronic signatures that use digital signature technology when the law requires statements of truth or original documents.

Part 3 also proposes amendments to the Canada Evidence Act that will give notices and acts published electronically by the Queen's Printer the same legal weight as those that are published on paper.

Next, part 4 of Bill C-54 will amend the Statutory Instruments Act to allow the governor in council to require the publishing of an electronic version of the Canada Gazette, which we are all familiar with in hard copy, that will have official status.

Finally, part 5 of the bill authorizes the Minister of Justice to publish revisions of the statutes and regulations of Canada, as well as a consolidated version of the statutes and regulations, in either print or electronic form. Although currently the electronic version of the statutes and regulations is accessible on the Internet and on CD-ROM, it does not have official status.

The amendments proposed in parts 4 and 5 will be brought into force when the appropriate technology is in place to ensure the integrity of electronic versions of the statutes and regulations. After part 5 comes into force, both the printed version and the electronic versions would have official status and be admissible as evidence under the Canada Evidence Act.

In conclusion, Madam Chair and members of the committee, the Government of Canada aspires to make Canadians successful in the increasingly competitive economy and connected society. I am sure when Mr. Manley was here he spoke with great eloquence on that very important challenge and how well we are in fact succeeding in meeting that challenge as a nation.

The electronic environment is evolving rapidly and is becoming more and more sophisticated. As technology advances, the legal issues and implications that emanate from these changes will continue to demand our vigilance and our action at both the federal and the international levels.

At home, we will rely on continuing efforts to find practical and effective solutions through such bodies as the Uniform Law Conference of Canada. Abroad, we will continue our work with international organizations such as UNCITRAL and The Hague Conference to identify and reduce the roadblocks among different legal systems so that we will move ever closer to a legal framework that harmoniously supports the borderless world of electronic communications and commerce.

Bill C-54 will make adjustments to the federal legal framework and adapt statutes and regulations so that they will be relevant in a digitally driven millennium.

[Translation]

Madam Chair, I wish to thank you for the opportunity to address the committee, and thank you also for your careful consideration and support of this important bill.

[English]

Madam Chair, colleagues, thank you for your attention. I realize that the parts of this bill for which I am responsible are fairly technical, but they're very important. They're providing us with that legal infrastructure we need to facilitate Canadians and governments using electronic means to transact commerce and business, not only with us, but with each other and the world.

I would be happy to answer your questions. I've brought along my highly and well-informed officials who will be able to answer the highly technical questions that you might have in regard to technology and those aspects of our proposal that deal with it.

Thank you, Madam.

• 1605

The Chair: Thank you very much, Madam Minister.

We're going to turn to questions. Before we do, though, I should let you know that when we first talked about Bill C-54 and I was explaining the areas of jurisdiction, I smiled when I was doing it. People thought I was joking when I said the Minister of Industry was responsible for part 1, which was the privacy legislation, and that the Minister of Justice was responsible for parts 2 to 5, which deal with the electronic matters.

Ms. Anne McLellan: Exactly. It does seem perhaps a little ironic, but that is in fact the case. You have accurately defined that.

The Chair: Maybe you could explain that to us before we start.

Ms. Anne McLellan: I'm responsible for parts 2 through 5 because they deal with the legal infrastructure. What we're dealing with there are amendments to acts like the Canada Evidence Act—for which I have direct responsibility—and amendments that apply to how we go about leading evidence—for example, authenticating documents and these kinds of things. It is technical, it's not very glamorous, but it's an important part of our legal infrastructure, and I am responsible for that.

Obviously, in relation to things like ensuring that the Canada Gazette electronic copy and revisions are viewed as official for the purposes of admittance under the Canada Evidence Act, again, it's highly technical stuff. Any of you who are lawyers know you can get tied up in this and can spend an awful lot of time at it, though. You can get thrown out of court. You can waste your clients' time and money unless you pay attention to the nuts and bolts by which you just meet basic evidentiary burdens and presumptions. That's what I am responsible for here.

My colleague, the Minister of Industry, is responsible for those proposals regarding how we ensure that Canadians can have confidence that, when they use electronic media, their communications are held in confidence and are treated as this scheme outlines. Of course, Mr. Manley has been working and has responsibility—it is not me—for working with the OECD, UNCITRAL, and with his colleagues in the provinces, to ensure that we have a system that protects that privacy that's so important to Canadians, yet, I think quite fairly, reflects the existing constitutional jurisdiction of the provinces.

The Chair: Thank you.

We're now going to begin with questions from Mr. Pankiw.

Mr. Jim Pankiw (Saskatoon—Humboldt, Ref.): Thank you, Madam Chair.

With respect to the concerns of the provinces, what is your plan and timeline to resolve them?

Ms. Anne McLellan: Are you speaking in terms of the privacy parts of this? Those are the only problems I'm aware of with the provinces.

Mr. Jim Pankiw: Yes, that's what I'm saying.

Ms. Anne McLellan: That is the part of this legislation that is under the jurisdiction of my colleague Mr. Manley. I understand you had a full discussion with Mr. Manley when he was here in relation to that. I do know that he has met with his provincial counterparts, the ministers responsible for consumer and corporate affairs, since he was here. In some cases, such as that of Saskatchewan, there are also the ministers of justice to deal with. There is therefore a degree of coincidence between the two files, at least in some provinces. Mr. Manley's meeting went very well, although that is not to say some provinces do not continue to voice concerns.

To paraphrase Mr. Manley, when it was made clear what the existence of the recent OECD directive can possibly mean for the ability of Canadians to transact electronic commerce, for example, it became apparent to many provincial ministers that this was not an issue that was strictly provincial. In fact, it not only transcended provincial boundaries, but transcended national boundaries. We're talking, of course, about the transaction of business around the world through electronic means. What that is going to require is an ongoing effort to enter into more and more multilateral agreements—at least bilateral, but preferably multilateral—with other countries in order to ensure that our citizens cannot only transact commerce, but that their rights are protected.

I believe the period of time is set out in the legislation. It applies to the federally regulated private sector, over which we have exclusive jurisdiction. As I understand it, if provinces do not have their own legislative scheme in place at the end of three years, our legislative proposal will then apply. It is not possible to have a gap in the legislative infrastructure that exists, because you then find people without protection.

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Officials, is there anything else you want to say on that in order to explain it? I underscore the fact that this is Mr. Manley's area. I think Mr. Manley's official should come up and sit here, since I'm so busy talking about him.

Mr. Jim Pankiw: I can appreciate that it's Minister Manley's more direct concern. Maybe I shouldn't—

Ms. Anne McLellan: I don't mind what we're doing.

Mr. Jim Pankiw: If I understand you correctly, you don't really have a problem. You're saying that if the provinces don't come up with their own legislation in the three-year period, the federal legislation applies and that's it.

Ms. Anne McLellan: No, the legislation applies to the federally regulated private sector. That is within our exclusive jurisdiction, clearly. The courts have always said that. There's no problem about that. We also have our own Privacy Act that applies to the public sector, so it's clearly covered.

On the trade and commerce power, I'm sure some members from the Bloc will have a different interpretation, and that's legitimate. That's why we have courts. But our view of the trade and commerce power in relation to this issue is that it is an issue that transcends property and civil rights when you are dealing with commercial transactions outside a province. When I am in Ottawa and I am transacting business with someone in British Columbia or Geneva, that transcends property and civil rights. We believe it is an aspect of trade and commerce.

I'm not going to give you a lecture—I'm accused of lecturing sometimes—on the jurisprudence surrounding the development of the trade and commerce power in this country. However, we do know that the Province of Quebec has its own legislation. That legislation does apply, should apply, and will apply to transactions within the borders of the province of Quebec. Nobody disagrees with that. In fact, we would like other provinces to do what Quebec has done. We would like for them to pass their own legislation to ensure that Canadians, wherever they live, have that degree of protection for their information when they transact business through technology, electronic commerce.

The Chair: Last question, Mr. Pankiw.

Mr. Jim Pankiw: Why did your department and the industry department feel it was necessary to combine the separate issues of the privacy section of the bill with the legal infrastructure part of it? I guess they are related, but why not just have two bills?

Ms. Anne McLellan: I hope I'm not revealing any confidences or secrets here, but Mr. Manley and I actually were very interested in having the two parts of the bill moved forward separately. I think we acknowledge the problems you have grappling with the privacy issues that have a whole host of dimensions to them, and then with the highly technical, highly legal parts, 2 to 5, dealing with the legal infrastructure. But the decision was made in terms of management through the House. It made sense. We are dealing with electronic commerce, and when it was explained to me, I accepted it fully. Privacy is an important part of electronic commerce.

I'm sure that when he was here, Mr. Manley told you that Canadians embrace e-commerce but for one small fear: privacy, or what their information will be used for. It is therefore not possible to separate a discussion of privacy from our movement toward establishing the legal infrastructure to facilitate e-commerce.

So at the end of it all, I said yes, it made perfect sense to me. They're two halves of a whole, which is why you have both of us appearing before your committee on this legislation.

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Mr. Jim Pankiw: So at the end of the day, it's not your preference to proceed with two separate bills.

Ms. Anne McLellan: No, I'm quite happy to have them come together. As I said, I see them now quite clearly as two halves of one whole picture. Without the privacy assurances, Canadians are not going to use e-commerce the way they want to, and we will lose our number one position in the world. We will fall behind.

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

[Translation]

Mr. Bellemare, do you have any questions?

Mr. Eugène Bellemare (Carleton—Gloucester, Lib.): Minister, thank you for your history of the background involving parchment, paper and today's electronic system. Your explanation is both very reassuring and very interesting.

One thing about this bill concerns me. It seems to me that journalists have extraordinary rights, and that there could be abuse. That is what worries me. The media disclose confidential information on consumers, individuals, and Canadians. So why are they protected this way? Moreover, why are citizens not protected against potential abuse?

[English]

Ms. Anne McLellan: For our colleagues, Monsieur, I think the subclause you are referring to is subclause 4(1), which says, “This Part applies to any organization in respect of personal information”. Paragraph 4(2)(c) then says that the part does not apply to

any organization in respect of personal information that the organization collects, uses or discloses for journalistic, artistic or literary purposes and does not collect, use or disclose for any other purpose.

I'm sure, Monsieur, that with your avocation, you would appreciate the importance of artistic licence.

Mr. Eugène Bellemare: Yes.

Ms. Anne McLellan: This clause acknowledges the fact that, under the Charter of Rights and Freedoms, there is the protection of freedom of expression. Freedom of expression is one of the fundamental liberties that all Canadians hold sacred. It's important to strike a balance between the privacy rights of individuals, which are also sacred, and freedom of expression. Therefore, in legislative regimes like this, what you will find is government acknowledging both rights while attempting to strike a balance that we think is appropriate. What we have carved out here is what we believe to be a fair, balanced recognition that you have to balance the rights of individuals to privacy, and the rights of journalists and those who are artists or those who are authors to pursue fair and reasonable professions.

Is there anyone who wants to say anything further about that?

You shouldn't think they get an unfettered right to publish personal or private information. They do not. It is in relation to journalistic, artistic or literary purposes and you cannot collect, use or disclose for any other purpose.

Mr. Eugène Bellemare: The media, Madam Minister, have a wide power in terms of accessing just about anything they feel like accessing. Throughout their syndicated systems and their ownership of a variety of organizations, companies, and so on, a single newspaper person can certainly access a lot of information and misuse it. As an example, during an election period, you can really demolish a candidate you do not like. In terms of the recourse of any candidate who is demolished through the misuse of private information, he or she would have no recourse because of the time element in an election. In the case of a single mother who is on welfare, for example, she would not be able to access the justice system in the way a huge corporation would. How do you protect these individuals from abuse?

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Ms. Anne McLellan: Let me underscore again that this part of the act is Mr. Manley's. While I'm happy to carry back to him the concerns you've raised and am happy to answer them to the best of my ability, I do want to underscore that.

There's one thing to keep in mind here. We have attempted to strike the balance between privacy and freedom of expression, but nobody should think the normal laws do not apply in this case. For example, the normal laws of defamation apply. In situations that we're all aware of because we are in public life, there is a civil liability that might attach to someone for disclosing something about us in a hard-copy newspaper today. If we believe it to be defamatory or if we believe it to have invaded our rights, we do in fact have recourse to the courts. We have had it for centuries in some cases, and that recourse will continue. There's nothing here that in any way changes either common law or statute laws that may exist in terms of our basic protections in relation to issues such as defamation or whatever the case may be.

I think you certainly have identified a legitimate question about how we strike a balance and whether we got it quite right here. If this committee feels the definition is too broad or the balance isn't appropriately calibrated here, I will certainly be open to hearing your suggestions, as I know Mr. Manley will be.

I come back to the fact that it must be a case of balancing different rights. Therefore, we have to acknowledge that there is an important right of freedom of expression, at least on the part of some, and the courts have already defined it as it relates to other media, such as newspapers, radio and television, and the Internet.

The Chair: Thank you, Minister.

[Translation]

Thank you, Mr. Bellemare.

Ms. Lalonde, please.

Ms. Francine Lalonde (Mercier, BQ): Good afternoon, Minister. First of all, let me say how surprised I am by your statement; you are still Minister of Justice, though it seems you are responsible only for parts 2 and the following of this bill.

Mr. Owens conducted comprehensive research on personal information for the Task Force on the Future of the Canadian Financial Services Sector. Throughout his book, but specifically on page 152, he states:

Though privacy should generally be protected, such protection will be provided within the framework of co-operation among federal and provincial governments, since both levels of government have legitimate privacy concerns. Moreover, since confidential data flow is no respecter of boundaries, jurisdictions will have to work together.

However, Minister Manley interrupted that combined approach to the problem. This is something that all 12 justice ministers, who met with you on October 29 and 30, have deplored. And the result is this bill... But this must be an important issue for you as Minister of Justice. In Montreal, on November 24, you stated:

But increasing public confidence requires something more subtle. To achieve that goal, the administration of justice must be made more accessible, easier to understand and more effective. The justice system must be homogeneous and consistent.

However, part 1 of this bill—I will be talking about part 2 later—is not consistent. All of the many people I have asked and who will be appearing before us, including business people, feel it is inconsistent.

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In terms of recourse, the bill is not effective. And in Quebec—aside from the constitutional wrangles it will cause—I refer to legal disputes, and these will not be minor problems—it has the enormous disadvantage of establishing two sets of rules that will apply to the same companies. These companies do not know what to expect or what their obligations are. Moreover, citizens do not know what their rights are.

Minister, how can you give us the assurance that this bill will protect personal information and even facilitate electronic commerce? You quite rightly talk about certifying signatures, but a signature cannot be different at the federal and at the provincial level. I cannot have two signatures when I sign something. All I have is one. Both civil and common law have had signature rules in place for a long time. The Quebec Civil Code defines "signature" as follows:

2827. A signature is the affixing by a person, on a writing, of his name or the distinctive mark which he regularly uses to signify his intention.

In the definition of "electronic signature", there isn't a mention of such intent or consent. And in the definition of "secure electronic signature", we see a reference to regulations that we know nothing about.

Thank you, Madam Chair.

[English]

Ms. Anne McLellan: I thank you for your question and comments. I would go back to the point about cooperation because it is very important in this area. There are important jurisdictional questions, and it is very important that we, as a government, respect provincial constitutional jurisdiction and work very hard to work cooperatively with the provinces where there is shared jurisdiction, to avoid problems of duplication, for example.

I was not part of the discussions that went on with the provinces on the privacy provisions. Those negotiations and consultations were carried on by my colleague and the department of industry, with his provincial homologues. I know there was a fairly substantial cooperative process in place. Having said that, I do not deny that at least some provinces take a different view of how we should proceed than that expressed in this legislation. I clearly respect that, but my challenge is to ensure that what we are proposing to you is within the constitutional jurisdiction of the federal government. If it is, there may be those who choose to disagree with what we are doing, but that's a matter of policy choice, instrument. It's not a case of whether what we are proposing is beyond the power of the Government of Canada, constitutionally.

So I respect the points you've made, and I've certainly noted the questions you've asked me and Mr. Manley in the House of Commons in Question Period on these issues. I will carry back to him your reiteration of those concerns. But as Minister of Justice, I can only reiterate that I believe what we are proposing in this legislation is constitutional and within the power of the federal government. Having said that, I agree it is absolutely key for us to work wherever we can in a cooperative and collaborative fashion, to avoid duplication where possible, and ensure that we are facilitating electronic commerce and the public's confidence in the use of electronic commerce.

I think that's as far as I can go today in providing reassurance on that point.

The Chair: Thank you.

[Translation]

Thank you, Ms. Lalonde.

[English]

Mr. Keyes.

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Mr. Stan Keyes (Hamilton West, Lib.): Thank you, Madam Chairman.

Thank you, Minister, for your input to this committee and for answering our questions. I'm going to try to get technical, so you may be able to get a break now.

On the technical part of it, I don't think Canadians would disagree that moving from parchment to paper, and now paper to cyberspace, is an important step and we have to keep up with that technology and have it available to our constituents. I'm sure the 20% of those constituents in my riding who have computers would love to be able to file their income tax returns, for example, from their homes to Revenue Canada. That will be an eventuality when we can sort out the privacy problems involved in that.

A constituent in my riding—to protect his privacy I'll just call him Bill on Caroline Street South—wrote to me about a technical issue surrounding the recent release by Intel Corporation's Pentium 3 processor. He says the release of the product in its current form has serious privacy implications for Canadians.

Just yesterday in the Globe and Mail there was an article—I don't know if your officials saw it—about this Intel Pentium 3 processor and how it's generating a lot of excitement because it's more powerful, etc. But embedded in that piece of machinery is an electronic tracking device that threatens to turn Internet use into a highly public exercise. The article goes on to explain how this device can keep track of whatever the user is trying to tap into on the Internet and eventually build a file on that particular individual—no doubt a consumer profile.

This electronic tracking device is called a PSN, or a processor serial number, and eventually it builds this consumer profile when the consumer taps into different things on the Internet on a regular basis. Privacy groups are very concerned. I heard what you said about privacy and how that's Minister Manley's territory, but I think we are going to have a problem separating privacy from technology because they're almost intertwined. But let's try to do it on this particular issue. There are accusations that the law is too narrowly constructed at the present time to target fast-moving and broad technology like PSN.

So could one of your officials explain to me what the government is doing, from your point of view on what your ministry is responsible for, on this business of Internet technology, and in particular the PSN and this high technology that is increasingly accused of even one day replacing traditional law with these on-line activities?

Ms. Anne McLellan: Thank you, Stan. I think Mr. Power is going to respond to that question.

Mr. Michael Power (Assistant Director, Policy, Interdepartmental PK1 Task Force, Treasury Board Secretariat): It's on days like this you kind of wish you went to engineering school as opposed to law school.

Mr. Stan Keyes: Somebody had better know about this stuff.

Mr. Michael Power: Yes, sir.

I would start by saying that the capacity of the chip to track came as a surprise to the world. It has generated a firestorm of concern internationally about its capacity to do so. I think Intel itself, according to the press reports I've seen, is rethinking the issue.

But I would suggest to you that Bill C-54 is perhaps not narrow. It is in fact—and we have attempted to draft it that way—technology-neutral, in that the collection of information by these chips would be covered by part 1. I don't profess to be an expert on part 1, but I'm trying to marry my knowledge of part 1 with my knowledge of the press reports concerning the Pentium 3.

• 1635

The device is not illegal, but any misuse of information collected using that device would be covered under part 1, and there would be recourse available under part 1 to address any such misuse.

Mr. Stan Keyes: With all due respect, Mr. Power, let's not kid ourselves. If there's a technology out there that is going to do what it claims to do, and that is monitor, check, and build a profile, and then that profile is distributed to the maker of widgets, and the widget maker sees how you, Mr. Power, are very interested in widgets because you've been dialing in all these different widget companies over the last six months and then it decides to not so much pester you but deliver its magazine to your front door, the consumer is going to be hard pressed to turn around and start to prove that there's some kind of improper use of the information that the consumer has not supplied to anyone.

By virtue of the fact that I'm visiting Internet sites, suddenly a profile is being built on me. I'm sort of the innocent player in this whole game. But these profiles are being built, and therefore it might be the widget maker and the widget maker's competitors, numerous widget maker competitors, who are now going to be sending Mr. Power their magazine because they all know he likes looking at widget makers on the Internet.

There's no real recourse for the person to try to find who compiled the profile and sent the profile out, probably making a bit of money by putting this profile together and then distributing it, without anybody's knowledge. It's very hard to track, and very hard to track back to who exactly started the profile and whether that profile isn't in fact being collected by numerous different players.

Mr. Michael Power: There are a couple of elements to answer that.

First, I would like to say it's my understanding—again, I haven't seen the white paper on the Pentium 3 chip, so I don't know the specifics of the technology, but it is under my understanding from the press report, so we're sort of having a debate using second-hand or third-hand information—that the ability to track can be turned off, and it can be turned off at the desktop. So in some respects it's a question of public education to ensure that the users of a Pentium 3 computer are aware of this ability to disconnect the tracking mechanism and go on about his or her business.

But on the other aspect, in some respects this tracking question came up last year with respect to cookies. It's the same question, and I would suggest, with respect, the same answer that has to be delivered. This is a question of informed consent that is necessary.

Quite frankly, I stand to be corrected by my industry colleagues who are more knowledgeable in the privacy area, but it's my understanding that under the legislation, practices can be investigated by the Privacy Commissioner, so the Privacy Commissioner does not have to wait for complaints. If there was widespread misuse of information, to the extent that you suggest, the Privacy Commissioner could act without even receiving a complaint and then proceed to the recourse mechanisms under part 1.

Mr. Stan Keyes: As a final comment, this is very important, and to tell you the truth and with all due respect, Mr. Power obviously isn't up to snuff on this part of the technology.

I'm just sort of involved in computers; I like them, and they keep me up to date on technologies. But on this Pentium 3 chip, Mr. Power, what you have to understand is that it can be bought from Intel when it moves to Pentium 3, and then if you want not to have this PSN activated, you have to buy the software in order to have that disengaged. Then, in order to install the software that you have had to buy in addition to the Pentium 3, it has to be installed by a certified Microsoft person.

The Chair: Negative-option billing.

Mr. Stan Keyes: Negative-option billing and all that kind of thing.

Mr. Power, please, I appreciate the answer you gave me, but you have a lot of catching up to do.

Ms. Anne McLellan: But, Stan, at the end of the day, explain to me what your concern is in terms of....

Mr. Stan Keyes: Well, Minister, it's because of the technology that we're speaking of in this part of the bill, which has to be monitored more closely so that the consumer isn't (a) negatively billed, or (b) has to purchase—

Ms. Anne McLellan: Okay, so that's a different issue.

Mr. Stan Keyes: No, it's still—

• 1640

The Chair: It's the issue of consent. You're talking about changing a number of these acts, and about signatures and about legal ramifications.

The cookie thing is a little bit different, because you click on yes or no. You don't have an option with this process that's being sold.

You're requiring the average consumer to become technical wizards on what they're buying and getting, and there seems to be no protection in the law. I think that is what Mr. Keyes is getting at.

We're in the presence of this bill that talks about privacy and protection. You're talking about making legal changes in parts 2 to 5. Maybe you should be looking at something in parts 2 to 5 in another act that would protect people who are not required to give their consent for something like this.

Anyhow, we have to move on. The minister's time is running out.

Ms. Anne McLellan: Let me take that back, because obviously I want to pursue that. It's an important question, and I want to pursue what, if any, recourse...or what would even be appropriate in that situation, where people in fact chose to use a certain technology and must know about the inherent potential and limitations of that technology.

Before your deliberations are over we will certainly let you know, through my officials, what our take is on the issue you have just raised. I would be happy to do that.

The Chair: Thank you.

There's a time constraint on the minister, but the officials will be staying with us to continue to answer questions.

Mr. Jones.

Mr. Jim Jones: I found Mr. Keyes' intervention very interesting, and I would definitely like to get more information. I would assume that Intel did something to try to eliminate some repetitive tasks and that you can turn it on and off again whenever your credit card...all that information. That's what I would assume it is. I don't know either, but I'd be interested in finding out.

On the last part of it, the former human rights committee recommended that sufficient resources be made available for the Privacy Commissioner to carry out his duties. In particular, this committee noted that without additional staff and funds, any power and responsibility that was granted to the Privacy Commissioner would be meaningless.

Are you ensuring that there is adequate funding with this legislation to make sure the Privacy Commissioner can carry out his duties?

Ms. Anne McLellan: Again, this is an issue that deals with the first part of the act, but I understand the concerns that have been expressed about the ability of the Privacy Commissioner to carry out his tasks.

You've heard from the Privacy Commissioner, who I believe was here before the committee. I don't know what, if anything, he said about that. Maybe the industry representative can comment on that. What I would say is everybody in government is expected to do the job they're doing with the resources they have. We understand that when we impose additional new duties that are substantial, obviously we have to look at the question of resources. I would certainly be willing to do that in light of this legislation if it appears that there are substantial new obligations upon the Privacy Commissioner that do not permit him with his—

The Chair: Minister, just so you know, the Privacy Commissioner told us very clearly that he could not fulfil the mandate of this legislation with the budget he presently has.

Ms. Anne McLellan: And does that surprise us?

The Chair: Well, I just thought I would let you know that, to clarify.

Ms. Anne McLellan: But I certainly am willing to entertain any submission from the Privacy Commissioner with justification for increased resources due to new legislation, this being one example and the one we're considering today, that would impose substantial additional obligations upon him, his office, and his staff. Obviously, if he does not have the resources to do the job, we can pass all we want, but he is not going to be able to investigate complaints, and he's not going to be able to initiate complaints on his own volition if he so chooses.

I understand the point. I think it's a fair point, and I will be interested to hear from the Privacy Commissioner as to what case he can make for additional resources.

Mr. Jim Jones: So I guess when he's putting his budget forward to you, because he's under your jurisdiction, you'll be asking that question, right?

Ms. Anne McLellan: Yes.

• 1645

Mr. Jim Jones: With respect to choosing particular technologies for encryption and electronic signature, who will be making the actual choices? Will it be members of the general public? Will members of the general public have access to this technology?

Mr. Michael Power: Unrelated to parts 2 to 5, Minister Manley announced on October 1 the Government of Canada's cryptography policy. It is the policy of the government that there are no restrictions on the use of encryption technology domestically. The only restriction we have on the export of such technology is that we will honour our international obligations under the Wassenaar arrangement.

Mr. Jim Jones: Okay. How far advanced are the provincial governments in using electronic documents? Are the federal and provincial governments moving forward on this matter in a coordinated way? For example, will Canadian consumers be able to deal with the provincial and the federal government using the same software?

Mr. Michael Power: I think there you have to consider the end application, what particular thing is desired to be done. I do know, for example, that there is pilot project work being done so that their joint filings can be done electronically. I understand Industry Canada is working not only with the Province of Ontario but also with the City of Mississauga to facilitate that.

I do know that the Government of Canada is committed to using, wherever possible, commercial off-the-shelf software, off-the-shelf technology. For example, in the development of the Government of Canada public infrastructure we're using one particular vendor. The Government of Ontario and I believe the Government of Quebec in certain ministries are also using the same technology, the same software. So there seems to be a degree of harmonization developing. Certainly on the electronic service delivery front there are lots of discussions at all three levels of government as to how best to provide service to Canadians.

The Chair: This is your last question, Mr. Jones.

Mr. Jim Jones: Which federal government department has the largest opportunity for using electronic commerce? When do they plan to be totally on-line and who is responsible for ensuring that all departments are moving forward on this issue?

Ms. Anne McLellan: Well, perhaps I can answer the last question. As I indicated in my comments regarding those provisions in part 2 that apply to the federal government, federal departments can opt in. We are not forcing them all at the same time to be in the same state of readiness. That acknowledges the fact—and your question is a good one—that because the different departments deliver different services and interact with Canadians in different ways, some are further advanced than others.

Of course it comes as no surprise that probably the department that is most advanced in this regard are our friends at Revenue Canada. But I don't know if there are other departments—I would presume that Industry Canada would be very well advanced in this area because of its contacts and the way it interacts with Canadians because of the mandate it has.

But we acknowledge the fact that different departments are at different stages of readiness and have different pressures and should be ready, if you like, faster because of the nature of their interactions in the commercial world. It is an opt-in strategy, but I want to assure everyone that my colleagues are fully supportive of the legislative approach that is outlined here and they are moving forward as quickly as they can, as budgets permit.

In some cases they are moving forward very proactively, as in Industry and Revenue Canada. In other cases, it's more reactive in the sense that when the pressures arise, they meet them. Certainly my goal is to encourage colleagues to move forward in tandem to the greatest extent possible. But yes, some departments will be ready and along the road to completion of that stage of readiness than others.

The Chair: Thank you.

Madam Minister, we are aware that you have time commitments and that you have to go at this time. However, your officials will be staying, I understand, to continue to answer questions.

• 1650

Ms. Anne McLellan: Yes, that's absolutely right. I'm sorry I have to go, but I have a commitment at five o'clock I'm not able to extricate myself from. Otherwise, I would be delighted to stay and talk to you further about the fascinating world of authenticating signatures in e-commerce and other issues.

These things do seem dry, I know, but they are fundamentally important in terms of establishing the basic legal infrastructure so that we can continue to be a world leader in relation to electronic commerce. We can't lose the strategic and competitive advantage we have now in this area.

Canadians are ready to embrace e-commerce, but we do have to allay their concerns, the main concern being in the area of privacy. This is very important to us as a nation and to our competitive advantage. Therefore I know you will take your work very seriously, as I can tell from your questions today. You're very up to date on some of the challenges presented by different kinds of technology, and I appreciate that.

There are ways we can make this bill better due to your insight and your expertise and advice. Certainly Mr. Manley and I will embrace that in the spirit in which it was intended.

I thank you very much.

The Chair: We thank you. On behalf of the committee, Minister McLellan, we thank you for being with us here today. We appreciate your time.

Ms. Anne McLellan: I'll be happy to return on any other legislation that brings me into your area.

The Chair: Into the world of industry. Thank you very much.

We're now going to continue with questions and I'm going to go to Mr. Shepherd.

Mr. Alex Shepherd (Durham, Lib.): I guess to whoever is left, my question zeros in on part 2 and the whole concept of electronic signatures.

First of all, clause 43 refers to provisions as outlined in schedule 2 or 3. I don't have schedule 2 or 3, and I don't know if anybody does. But I presume that what is supposed to be entailed there is the type of encryption technology that would be used to authenticate electronic signatures.

Mr. Michael Power: I should start out by saying that part 2, except for two instances, is intended to provide electronic alternatives to paper coming into government and paper leaving government. In certain instances, because of the nature of the specific reference in federal legislation or the nature of the document, we basically said “Look, any old electronic document is not good enough, because at the end of the day, it's just a bunch of electrons on a screen. We want something with a little more security surrounding it.”

So in certain parts of part 2—where we deal with the subject of original documents, where we deal with the subject of seals, where we deal with the subject of sworn statements, witness statements, certified statements—what we say is that with respect to electronic alternatives, those electronic alternatives are acceptable if they have what we call a secure electronic signature on the electronic document.

You will see in clause 48 that we prescribe the technologies that would qualify.... Actually, I should say we create a list whereby we would put on those technologies that would qualify as secure electronic signature technologies. We say “In order to get on the list you have to meet the criteria that are contained in subclause 48(2)”—and you can see the list there.

• 1655

In 1999 the only technology we are aware of that would meet these criteria are digital signature technology or public key cryptography, although we do know that down the road, for example, we can anticipate quantum cryptography. Whereas in public key cryptography we talked about the manipulation of numbers, in quantum cryptography—and I know it's going to sound a bit like science fiction here—we are talking about the manipulation of photons to create cryptographic keys to encrypt information. You can also see down the road technologies that incorporate, either in whole or in part, biometrics as a signature technology.

So in part 2 we attempted to be as technology neutral as possible. We don't know the technologies that are coming down the road. We have a glimpse of them. But we know what we want from them. We want to be able to assure document integrity. So with respect to certain submissions or issuances to or from the Government of Canada, we say we want some assurance as to the electronic document's integrity and we want some assurance as to the identity of the person purporting to send or create the document.

Mr. Alex Shepherd: Are you also purporting to make it illegal for somebody to break into that encryption technology? Is that an illegal offence?

Mr. Michael Power: Well, the Criminal Code currently—and I'll defer to my colleague, Mr. Piragoff, who's the criminal policy expert—is technology neutral, and it does contain anti-hacking provisions, computer crime types of offences. It does create them. If somebody attempted to crack an encrypted document or hack a document, that would be a criminal offence.

Mr. Alex Shepherd: That would come out of the Criminal Code, not necessarily part of this legislation.

Mr. Michael Power: That's correct, it would come out of the Criminal Code.

Don, do you...?

Mr. Donald K. Piragoff (General Counsel, Criminal Law Policy Section, Department of Justice): I'll answer the question.

There are existing provisions in the Criminal Code that prohibit the interception of communications or functions of a computer system. So if one of the functions was encryption, then a person has, under the Criminal Code, the right of privacy that the computer system can operate in private and that someone cannot intercept functions that are occurring within that computer system.

The Criminal Code also prohibits the alteration or destruction of your data. Of course encryption is a form of data that has been processed according to some mathematical algorithm to produce a particular result. Basically, it's a computer program. And the Criminal Code also prohibits the interference with the use of or the destruction of computer programs. So the interference with someone's encryption programs or intercepting a person's computer systems so they could find out what was going on inside the computer system are currently prohibited under the Criminal Code.

Mr. Alex Shepherd: The flip side of this is what assurances do people have that they'll be able to get access to this encryption technology? Is it something that only large corporations are going to be able to afford to use, or in fact is it something that's going to be widely distributed so small and medium-sized companies can also use that encryption technology that is satisfiable under this act?

Mr. Michael Power: Well, I'm not sure what you mean by satisfiable under the act. To answer the first part of the question, encryption technology is readily available. Technology such as PGP is free on the Internet. Companies like Entrust can.... You can buy the commercial product, but they also have available on the web encryption technology for use by individual Canadians.

Mr. Alex Shepherd: But as time moves on presumably there are going to be better and better encryption technologies. We don't know at this time whether in fact more sophisticated encryption technology is going to be expensive for people to use or not. Sure, the banks all have high-calibre encryption technology to do electronic commerce, but is somebody else in a small business going to also be able to...? What assurances are we going to have that small businesses will have access to what's satisfiable under the Evidence Act and so forth?

• 1700

Mr. Donald Piragoff: I think that given the speed with which technology is moving and given the marketplace, right now the marketplace is addressing these concerns as much as possible.

Right now you can buy encryption packages off the shelf. Just as you can buy off-the-shelf WordPerfect or Microsoft Word as a program, you can buy encryption packages off the shelf. You can also get them for free off the Internet, PGP. It's too soon to tell whether or not they'll be adequate.

At this point we're not proposing that the government regulate the adequacy of encryption products, just as we don't regulate the adequacy of the lock on the door of your house. The marketplace basically says you can buy various types of locks. You can go to Canadian Tire and buy a lock for a certain price, or you can go to a locksmith and buy another lock for twice the price. So to some extent the marketplace will govern. If there is a need, the market will address that need.

I think that at this early stage in the development of the industry, the position of the government is to let the marketplace develop the technology, and where clear problems arise, the government will then step in to regulate. But I think the policy of the government, as Mr. Manley had indicated, is that this is a new form of commerce, so let the marketplace develop it, and the government will step in on a need-be basis to regulate.

At this point in time the government does not believe there is a need to regulate cryptography products. The policy of the government is that Canadians should be free at this time to buy or use whatever cryptography product they want, however strong or however weak, depending on their own choices. Again, that is in part a matter of what level of privacy they personally want, just as what level of privacy you want in your home. Do you want to live with one lock or five locks on your door, an electronic monitoring system, or burglar alarms? Again, it's the consumer's choice. That's basically what the government right now is providing to the marketplace, to let the marketplace have an ability to develop the technology and the consumer needs and to address those consumer needs. If needed and if there are problems, the government will step in, as it has in the past.

The Chair: Thank you.

Thank you, Mr. Shepherd.

[Translation]

Ms. Lalonde, do you have other questions?

Ms. Francine Lalonde: Yes, I do. I will put my question again. The term "signature" is defined in both the Civil Code and common law, even though common law is not codified. In the Civil Code, it is found in article 2827:

2827. A signature is the affixing by a person, on a writing, of his name or the distinctive mark which he regularly uses to signify his intention.

That is what a signature is. When I sign a document, the import of that signature implies all those things.

Yet in Bill C-54, the definition of "electronic signature" contains no mention of intention, or consent. Doesn't that pose a problem? And the term "secure electronic signature" refers us to regulations we do not have. I'm not talking about the schedule, which we do not have either. The bill states:

48., (1) Subject to subsection (2), the Governor in Council may, on the recommendation of Treasury Board, make regulations prescribing technologies or processes for the purpose of the definition of "secure electronic signature" in subsection 31(1).

Subsection (2) does provide some criteria, but everything refers us to the Governor in Council and to a regulation we do not have. This violates the process in place in Quebec, which is to ensure that a signature is valid, regardless of the support on which it appears, so that no serious problems arise. If the federal government adopts a definition of "signature" which does not correspond to the definition in force in Quebec, will that mean documents signed in Quebec will no longer be valid? I see a problem there. The problem might of course arise in any case, but it is certainly there in this bill. That is why I was saying that governments should be working together. That is why the government of Quebec is asking that Bill C-54 be withdrawn. We should work together to ensure that all aspects of the issue are consistent. We all have the same objective, but this is not the way to attain it.

• 1705

[English]

The Chair: Mr. Power or Ms. Remsu.

Mr. Michael Power: First I would like to say that part 2 does not address the subject of what constitutes a signature for the purposes of a private sector act or between people in Quebec or in any other province. What it simply says is that where there is a signature requirement in a federal statute, that signature requirement can be satisfied with an electronic signature, and in certain other instances it would be required to be a secure electronic signature.

I would draw the committee's attention to clause 38. In some federal statutes you do see a reference to a notarial act under the law of Quebec. Where there is a provision under a federal law for a document recognized as a notarial act in the Province of Quebec, an electronic version of such a document would satisfy a statutory requirement under federal law if the electronic version of the document is recognized as a notarial act under the laws of the Province of Quebec. What we're simply saying is that if Quebec considers an electronic version of a notarial act to satisfy Quebec law, we accept it as such.

We don't get into defining signatures for the purposes of dealings between citizens or between citizens and businesses. All we're saying is that if in a federal statute there's a signature requirement, an application has to be signed. You'll see this in regulations.

You have to understand that part 2 refers not only to statutes, but also to regulations. So if there's a requirement for something to be signed, an application to be signed, we're simply saying that if you translate that application into an electronic application, then an electronic signature is sufficient. You don't need a wet or ink-based signature. That's all we're saying.

[Translation]

The Chair: Ms. Lalonde.

Ms. Francine Lalonde: The objective seems to be more broadly defined. In her brief—and I'm looking forward to seeing the blues—the Minister felt that the electronic signature could be used for electronic transactions. Minister, you talk about recording and communicating information or transactions, but you do not answer my question in full, because that would mean conceding there are two types of signature.

[English]

Mr. Michael Power: There are many kinds of electronic signatures. It could be a digitized signature. A faxed signature is considered an electronic signature.

[Translation]

Ms. Francine Lalonde: Yes.

[English]

Mr. Michael Power: It could be simply typing a name on an e-mail.

What we're saying is that when you're dealing with the federal government, for the most part we will accept an electronic signature. In some instances where a federal statute says that person A dealing with person B can use an electronic signature, we're saying, basically, that we'll leave it to them to decide what's acceptable, subject to certain conditions, and they agree on the certain conditions.

[Translation]

The Chair: Thank you, Ms. Lalonde.

[English]

Mrs. Barnes.

Mrs. Sue Barnes (London West, Lib.): Thank you.

In looking over this bill, I must admit that I'm happier with the clauses that Justice is concerned with than the clauses that Industry is concerned with.

I think when we talk about electronic commerce, we always think about somebody out there, and a lot of this bill actually will affect everyday lives, such as people making laws, people buying property, and people litigating in court. Thousands of people are engaged in these activities in Canada everyday. So it's not as removed as talking about some electronic commerce that people think doesn't apply to them yet. I sometimes think some of our examples are not easily understood, and when we talk about this act we should try to make it make sense to people. That could easily be done.

• 1710

A couple of questions here have been on jurisdictions. I want to just give you some practical examples of some of the confusions about the different types of signatures and whose evidentiary means are paramount.

Let's take, for example, the case where you're in a civil litigation matter at a federal court. It involves property rights and you're using documentation on evidence that is a deed, which is going to be a property right of the provincial government. Is there any way we could develop a system through this act where the province, say my province of Ontario, says this is necessary as the type of evidentiary matter in an Ontario court at a federal level, that is different from what we are setting out under this act?

You can talk about cooperation, but if you have two levels of evidence, that's where I think confusion gets in. That's what I think of as a simple example.

Are we setting out here that for the federal courts, for example, on the evidence rule on signed, sealed, and delivered, it doesn't matter whether it's a document under the provincial court's jurisdiction at provincial level, it's still this level on the signature? You look confused, as if you don't know what I'm talking about.

Mr. Donald Piragoff: Let me try to answer the question.

The problem you raise exists right now just because of the federal nature of our country. Even in the Evidence Act there are differences between the federal jurisdiction and the provincial jurisdictions. There are differences with respect to the admissibility of business records under the business documents exception.

I believe the Ontario provision for the admissibility of business documents is much more limited than the federal legislation, section 30 of the Canada Evidence Act. It's a lot easier to get documents admitted in a federal proceeding than in some provincial proceedings. So those differences continue to exist.

That is why one of the reasons for putting forward this bill to be enacted was not just simply because it was an initiative of the federal government. The federal government worked together with the provinces through the Uniform Law Conference.

The Uniform Law Conference is a body that has existed since about the 1920s. It was originally with the Canadian Bar Association. It is now represented by governments at the federal and provincial levels, as well as representatives from private practice. They try to develop and harmonize a uniform legislation that will then be taken by each of the jurisdictions and enacted, so at least there will be interoperability and harmonization amongst the various jurisdictions.

The provisions concerning admissibility of evidence in part 3, and to some extent the discussion of digital signature, were and are being discussed by the Uniform Law Conference to try to address that particular point.

The government is exercising its responsibilities within its mandate, but it's also trying to ensure that across the country, at the provincial and federal levels, there is interoperability of the law, just like on the technological side, Industry Canada is trying to ensure there is interoperability between two different languages of signature and two different languages of encryption, so if someone uses a particular signature or language, the federal government will be able to talk with them. So we are trying to deal with that.

The proposals in part 3 concerning the admissibility of evidence mirror almost word for word, with some slight drafting alterations, the proposals of the Uniform Law Conference. We will be asking all of the provincial jurisdictions to enact legislation that also puts into force those particular principles. That's how we are trying to address the particular concern you have raised.

The Chair: Okay. Last question, Mrs. Barnes, please.

Mrs. Sue Barnes: Who will benefit the most—individuals, governments or businesses—from cost savings on electronic commerce? Who's most ready at this stage to take advantage?

• 1715

Mr. Michael Power: With respect, I think that's a very difficult question for us to answer. It's a question that perhaps should be addressed more—I know I'm going to duck it here—to Industry Canada, but also to Treasury Board because essentially we're talking about electronic service delivery. I honestly couldn't even begin to answer that question. Arguably, everybody benefits.

Mrs. Sue Barnes: Thank you.

The Chair: Thank you, Mrs. Barnes.

Mr. Jones, do you have any more questions?

Mr. Jim Jones: This is sort of a curiosity question. Electronic commerce and this whole revolution that's going on is not new; it's been going on for a long time. A lot of companies have been doing electronic document interchange and electronic business with their vendors for a long time. What are the obstacles that prevent all the provinces from being ready with the same type of legislation, or legislation that's complementary to this legislation? Quebec has legislation that I would assume is complementary. I just don't understand the problem. What is the serious impediment that means the provinces couldn't be ready with similar acts to complement this?

The Chair: Ms. Remsu.

Ms. Joan Remsu (Senior Counsel, Public Law Section, Department of Justice): Thank you very much.

I believe a couple of provinces have made some amendments to their infrastructure, not in the same way as we have done, but still they have made adjustments to their legislation using regulatory authority as well.

Further to what Mr. Piragoff said earlier about working with the Uniform Law Conference of Canada, we have been working with that conference to make draft legislation very similar to part 2, and it was approved in principle in August of this year. In about a year or so the provinces may have a vehicle similar to what's in part 2 to apply to their infrastructure. So in a way, the concerns you've raised are being addressed through the Uniform Law Conference of Canada.

Mr. Jim Jones: But didn't they start at the same time as the federal government did? Why isn't the Province of Ontario ready with sister legislation almost at the same time as we're ready?

Mr. Donald Piragoff: I think you'd have to ask that question of your colleagues at the provincial level.

Someone has to go first. We can't all be coordinated and introduce legislation in all of the legislatures at the same time. Someone has to go first, and I think in this particular case we went first. On the privacy scene Quebec went first. I think it's just a question of someone going first and someone second, and someone will be tenth.

Mr. Jim Jones: There's nobody bucking this? Everybody is trying to get to the same place?

Mr. Donald Piragoff: That's right.

Mr. Jim Jones: Okay, that's good to hear.

The Chair: Thank you, Mr. Jones.

Mrs. Finestone.

Ms. Sheila Finestone (Mount Royal, Lib.): Thank you very much, Madam Chairman.

I have a serious problem, and my question relates to the purpose of this whole undertaking. The purpose of the undertaking is to protect the private lives of the citizens of this country, and all we are talking about is electronic commerce and the signature on electronic commerce. I'd like to know what we're doing with respect to information that is gathered by surveillance cameras, the photos that are in that surveillance camera and to whom they belong, and how one controls the personal and private lives of individuals. What do you do about the genetic information you get and how you transmit and protect that—all forms of surveillance, whether it's biometric, geometric or genetic? I don't see anything in the definition of the purpose of this bill other than what would strike me as electronic commerce.

Is this bill strictly about commerce, or is this a bill about protection? It says the purpose is:

to provide Canadians with a right of privacy with respect to their personal information that is collected, used or disclosed by an organization in an era in which technology increasingly facilitates the collection and free flow of information.

Well, if I'm at the corner of St. Catherine and Peel and there is a robbery, and my picture seems to be close to the outlet for money, it might well be that the information you've transmitted is going to point the finger at me. What protection is this going to provide me? This is not what I call a protection of privacy act for an individual. This is not described in its proscribed area, and it doesn't indicate that another form of privacy act for the individual needs to be envisaged.

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Perhaps I've totally misunderstood this, but I did hear the minister say at the outset that this is two halves of one whole, that the electronic is to protect the private and the private is going to be reflected in the electronic commerce. Well, in this electronic era, there is more than a signature to consider.

I've been very distressed to hear all this conversation. This is my first time at this meeting. For me, the communication of materials that you've collected, the data you've captured, and the release of those records is a very serious matter. It goes far beyond what the stores are selling, what the best product is, who I'd like to sell the next magazine group to, or what the holiday schedules are.

Madam Chair, I'm at a loss. Maybe I've directed this in the wrong direction. Maybe it should have gone to Mr. Manley instead of the Minister of Justice.

The Chair: Madam Finestone, we do have officials from both Industry and Justice at the table at the present time.

Mrs. Sheila Finestone: Then I've really arrived at a dilemma. Everything I've heard here today is about signatures and about authentication. All of that is very important, well-founded, and obviously carefully thought through, but this doesn't come anywhere near to meeting what I consider to be a privacy act.

The Chair: Let's hear from the officials. Perhaps their response will clarify things for you.

Ms. Stephanie Perrin (Director, Privacy Policy, Electronic Commerce Task Force, Department of Industry): Thank you.

On the issue of the two halves being together, I can echo what Minister McLellan just said. As we indicated, these did start out as separate bills: a bill to protect personal information and a series of legal infrastructure amendments. The two were put together because they're both vital for electronic commerce. The parts that we're discussing today are vital to facilitate electronic commerce; to reap the benefits; to make the cost savings; to make government more effective; to allow citizens to purchase and to participate in the global electronic village, if you like; to facilitate business making money on this, basically; and to move forward quickly so that we can compete and be first.

Privacy has been recognized as a fundamental, not just as a fundamental human right. We've known that for some time, and you studied it in your committee. It is also recognized that we will not move forward in electronic commerce unless we protect privacy, because the concern of Canadians is too high. They will not use the system; they will not go forward. They will be nervous about the new technologies, just as we're all nervous about things like the new Intel chip, and rightly so. The two bills are therefore put together as one bill.

The language that focuses on commerce speaks to our federal responsibilities under trade and commerce, as Minister McLellan explained. It's not that this doesn't protect a fundamental human right because we talk about commerce. That's the limit of the scope that we can do as a federal government. We already have the federal Privacy Act that covers the information that is collected, used, and disclosed within federal institutions and government departments. We're now moving to cover matters as broadly as we possibly can in the private sector. And it is also vital that the provinces move in their jurisdictions, because they do have jurisdiction over property and civil rights.

The language in this bill does not sound like human rights language, but that doesn't mean the requirements of the bill aren't the same as those you would have in a bill that talks about human rights. The proof of the pudding is in the eating. It is in the requirements that you see transferred back and forth. The schedule contains the CSA standards, which have been acknowledged as a very good set of fair information practices. If we focus on that schedule, that's where the obligations and the rights are.

In terms of the technologies that you're speaking about, the issue is collection of information. If we were to write a bill that talked about a particular surveillance method, as Michael Power has talked about, we can't really name a particular cryptographic technique right now because it will be outmoded in two years' time. It will have changed to lasers or photons or whatever. It's the same thing with surveillance technologies. We have global satellite systems. We have see-through radar. If we started to try to name permissible devices, it would be limiting.

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The point here is that the collection of information must be with the consent of the individual, and that's the key to this bill. It doesn't matter how you're collecting it. You have to get the consent of the individual. That's the critical thing. It doesn't matter whether they're collecting genetic information. It has to be consistent with the purpose for which it was gathered. They have to get consent. The same thing applies whether it's photo radar or whatever technology you might name. That's the answer.

Mrs. Sheila Finestone: I'm sorry, but the definition that's in this bill, or the purpose of this bill, gives me no sense of comfort. That may be out of my own ignorance as an individual Canadian. I know all the statistics related to privacy and the interests of people, but Big Brother is busy watching us in many different ways, in many different forms. This purpose as defined here—short, sharp, and very sweet—doesn't give me much comfort that the need for a privacy act that enables the Privacy Commissioner to do his work in the interests of a person, a private citizen, is properly covered through the definition in this purpose clause. I can think of many ways in which this could be subverted.

Further, I must say that the fact there was no money attached for an enlargement of the personnel and staff of the Privacy Commissioner was a little bit disconcerting too. The Privacy Commissioner shouldn't have to prove need when it comes to a bill of this nature.

My last question really relates to the issue of the schedule. You're putting in a schedule that is to protect. As you've pointed out, you believe the schedule to be the finest form of privacy protection so long as it is followed. But the schedule isn't even in there so that we would have the right to amend it or to review any amendments that are brought forward. It is outside of the right and obligation of parliamentarians to review any changes of the schedule. I think that shows a lack of respect for the role of citizens being allowed to review the things that are being brought forward for change. With the way this is written, business could bring forward all kinds of different changes that would not necessarily be in the best interests of citizens, and those changes would be made by the governor in council. I wonder if you could explain that process.

Ms. Stephanie Perrin: On the process for making changes to the standard, there is a business, government, and consumer advocate matrix in a standards body. There's a standards technical committee. Any changes to the standard are voted on through that. There will always be a set number of consumer advocates there, of academic experts, of government people, and of business people. The notion that business could get this bill through and then change it and water it down is I think misleading. It's a lot harder than that. It's not easy to get changes to a standard; they have to be voted through. The clause was put in there so that the standard would remain viable and could be cited in international contracts.

Mrs. Sheila Finestone: I have no objection to that. I object to the process for amendment.

The Chair: Madam Finestone, I really have to move on. I apologize.

[Translation]

Ms. Lalonde, do you have any other questions?

Ms. Francine Lalonde: Yes, I do. Let me go on. This is a question I put to the Minister, and I would like to hear an answer from the Minister of Justice. How can the Governor in Council be given the authority to amend the Act in line with amendments to the standard? Only Parliament should have authority to change a statute, particularly when it would have such a major impact on the lives of our citizens.

[English]

Mr. Michael Power: It's a privacy question.

Ms. Stephanie Perrin: It's a privacy question, yes. Basically, the answer is that the clause was put in so that any minor changes made to the standard could be reflected quickly and easily in the legislation. The two would then remain parallel. There have been discussions about the règlement coming to the committee if that's the kind of oversight required. This is certainly not an attempt to change the law, and it is entirely voluntary. It is not necessary to change it as the standard changes. It is just there for convenience purposes. If the standard moves in a direction that is not appropriate to the protection of privacy, there is no obligation to change it. But I think we're in your hands in terms of the process for doing that.

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[Translation]

The Chair: Ms. Lalonde, do you have any further questions?

Ms. Francine Lalonde: Yes, I have so many. Raymond Doray, an attorney who works with business people in Quebec, stated:

In the same way, since it was designed as a voluntary standard to protect personal information, the Code uses terms that are frequently imprecise, provides examples rather than stipulating exceptions, and establishes principles rather than rules. I would add that it contains many conditionals. It provides extremely specific examples of instances where there will be two sets of rules for some companies in Quebec. The result could not possibly be better protection of personal information. If there are two sets of rules, how will people know which set to follow? This is not the kind of system guaranteed to improve the protection of personal information. I have not even mentioned the Constitution, but Quebeckers are extremely concerned about this bill.

[English]

The Chair: Madam Lalonde, I really need your question right now.

[Translation]

Ms. Francine Lalonde: Yes. How can they say that this bill will provide greater protection for personal information, when in fact it creates major obstacles for businesses and individuals, at least in Quebec?

[English]

Ms. Stephanie Perrin: I think it's inevitable, if we are moving to protect privacy across Canada, that there is a certain amount of concurrent regulation between what is within provincial jurisdiction and what is within federal jurisdiction. We don't believe there would fundamentally be two separate rules, because the CSA standard is developed from the OECD guidelines and so is the Quebec bill. The actual inconsistencies are quite small. If a company meets the higher standard, they will be on safe ground. We believe that's what business does normally in these situations. This is not the only situation of concurrent legislation across the country. Business finds a standard that will work across the country and works to it.

So if you feel there are higher standards in certain areas in Quebec, I expect business will meet them. That will suffice for the federal law as well.

[Translation]

Ms. Francine Lalonde: The issue of consent—

[English]

The Chair: Madam Lalonde, no. We'll allow Mrs. Barnes one last question. The officials are available until 5.30 p.m., so we'll hear from Mrs. Barnes and Mr. Jones and then we'll be done.

Mrs. Sue Barnes: I'll just make my question short.

If I had a digital signature—say it's a simple PIN number—and somebody stole my PIN number but didn't use it to do anything illegal, is there any criminal liability under the Criminal Code right now for just taking my digital identity, or do they have to misuse it before the law would hit them?

Mr. Donald Piragoff: It would depend on how that PIN number was acquired. If you left it on a desk and someone were to simply read it, there's no liability for that.

Mrs. Sue Barnes: There's no mens rea there.

Mr. Donald Piragoff: That's right. So it's really a question of the manner. If they hacked into your computer system in order to see what kind of personal data you kept there, like your PIN number and your credit cards, that could be a criminal offence. If they were to intercept communications between you and the bank or between you and a merchant and you were transmitting your PIN number and your credit card number over the Internet, for example, and they were able to intercept or wiretap the line and obtain your PIN number or your credit card number, that could also be an offence.

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There is also a provision in the Criminal Code that prohibits trafficking in computer passwords. A computer password is basically defined as any data that entitles a person access to the computer system. So there might be an offence if people were to traffic in your PIN number because that is a problem with respect to passwords. Passwords are actually posted and trafficked. Credit card numbers are posted and trafficked so people can use them. So it really comes down to a question of how it's acquired, whether there is a dishonest intent, whether there is a breach of the computer system, the security system—it's kind of a hard question in general. But there are a number of offences that would apply to protect the security of your password or your PIN number.

The Chair: Thank you, Mr. Power.

Mr. Jones.

Mr. Jim Jones: When you were mentioning signatures, you said a signature can be valid by fax or electronic digitized signature. But you also said in e-mail, if I just type my name on the bottom, that can be valid?

Mr. Michael Power: Under the common law a signature is essentially an identifying mark, and if you choose to make that your identifying mark, and if I agree to accept your name at the bottom of an e-mail as your identifying mark, then it constitutes an identifying mark under the common law. I can't speak for the law of Quebec, but under the common law a signature is whatever mark you wish to make.

If we have agreed that I will accept your name at the bottom of an e-mail as your signature and I receive an e-mail with your name typed at the bottom of it, we have agreed under freedom of contract that is a signature as between us. It may not necessarily be a signature between yourself and a third party, but between us, because we've agreed, it's a signature.

Mr. Jim Jones: With the importance of security and the way people can pirate your information, have you taken into consideration thumb prints or hand prints or voice—because a lot of technology is heading that way or can do it now—to validate the person?

Mr. Michael Power: What we have done is we have said that in certain instances, because of the nature of the documents, we don't want just an electronic signature because your name on the bottom of an e-mail can be easily forged or it could come from some hacker we don't know. So we say that in certain instances, because of the nature of the document, that's not good enough. What we want is a secure electronic signature. We define a secure electronic signature as having certain criteria, and those criteria are listed in subclause 48(2). When you go through it you'll see that we are looking for a firm means of you, the person, being linked to that electronic signature and we're looking for document integrity. Without going into a large explanation of the technology, digital signatures can provide document integrity, because of the nature of the technology and the use of the algorithms involved.

The Chair: Thank you, Mr. Power.

I just want to remind committee members before we adjourn that tomorrow morning we begin at 9 and we're scheduled to go till 1 p.m. We have witnesses at 9 a.m. until approximately 10 or 10.30 a.m. and then we'll move into the report. We have the room until 1 p.m., and I don't anticipate we'll take that long. However, it depends on how many amendments and changes and considerations we have for our draft report.

I want to thank our witnesses for being here today. We appreciate your time and we appreciate your comments and the interaction back and forth. I believe there is the probability that throughout the course of our hearings over the next several weeks we'll be asking you many questions.

Thank you very much. The meeting is now adjourned.