ARCHIVED—Speaking Notes

Presentation to the Industry Committee on Bill C-54
The Protection of Personal Information and Electronic Signatures Act

Speaking Notes for the Honourable John Manley, Minister of Industry

December 1, 1998

---

Good afternoon, Madam Chair, members of the Committee.

I welcome this opportunity to address the Industry Committee on Bill C-54, the Personal Information Protection and Electronic Documents Act. Before we discuss the specific elements of the Bill, I would like to give you some context which is helpful to understand its nature and scope.

A Six-Part Agenda for National Leadership

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

Connecting Canadians is a comprehensive strategy to provide Canadians with the tools and opportunities to take advantage of, and succeed in, the global, knowledge-based economy.

Connecting Canadians means making sure Canadians have access to the Internet, through SchoolNet and the Community Access Program; it means creating Smart Communities where all economic and social organizations are linked together to stimulate growth and create jobs; it means increasing Canadian content online, including tele-health and tele-education; it means Canadian governments providing citizens with 24 hour-a-day access to integrated services online; it means promoting investment in a connected Canada; and it means building an environment where electronic commerce can flourish.

Our Goal by the year 2000

Our goal for electronic commerce is to make Canada a world leader by the Year 2000

I would like to think that by the year 2000, firms anywhere in the world contemplating a new Electronic Commerce application would naturally think of checking whether it had already been done in Canada.

The rapidly changing environment (fax transmission)…

Why focus on electronic commerce? Because it is at the cutting edge of the global, knowledge-based economy. Electronic Commerce is:

• global
• information-driven, and
• technologically efficient

For example, sending a 42 page document from Ottawa to Tokyo over the Internet is 720 times faster and 260 times cheaper than overnight courier delivery.

Electronic Commerce Is…

Electronic commerce is growing quickly. For example, in 1994 only 3 million people were connected to the Internet, now there are more than 100 million. Traffic on the Net doubles every 100 days. It's growing faster than all previous technologies.

Unlike established private networks, the Internet is open to businesses and consumers world wide. Electronic commerce on the Net is revolutionizing the way we do business, and it provides consumers with 24 hour-a-day access to unlimited choices in products, services and suppliers.

Internet Commerce Has Enormous Jobs and Growth Potential for Canada

The growth potential for electronic commerce on the Internet is, by any measure, enormous. It is expected to grow to $C 653 billion globally by 2002, compared to $C 50 billion today.

If Canada does as well in Internet commerce as in other trading environments, our share of this market should be about $C 13 billion by 2002.

If we develop the proper framework, we could increase our market share to $C 33 billion leading to new business opportunities and job creation.

We are in a global race where…

To achieve our goal, we need a national vision — we need to set our sights on the ultimate objective.

We also need to work with the private sector, consumers and all levels of government.

And since we're not the only country thinking about this, we need to move fast.

I think we have a solid base from which to start.

Canada has a two-part Electronic Commerce Strategy…

For Canada to rise to the Electronic Commerce challenge, we have to act domestically and internationally.

Domestically, the private sector and consumers will drive electronic commerce development and growth in Canada. But governments have a key role in encouraging competition, removing barriers, reducing uncertainty, encouraging innovation and responding to accessibility and skills gaps. That is why the Prime Minister announced the Canadian Electronic Commerce Strategy on September 22, 1998.

Electronic commerce is borderless. Domestic policies only succeed within an international framework. That is why Canada was the host in October of the OECD's first ministerial level conference on electronic commerce.

The Domestic Agenda

On the domestic front, we have an ambitious agenda. An agenda that is action oriented in four areas:

• To build trust and confidence in the digital marketplace
• To clarify rules
• To ensure access to a world class information infrastructure; and
• To ensure Canadians realize the social and economic benefits of electronic commerce.

Building trust in the digital marketplace…

In building trust and confidence in the electronic marketplace, we need to ensure that businesses and individuals can undertake secure transactions.

That is why we issued our policy on cryptography on October 1, 1998, which balances security of transactions with law enforcement and international obligations.

Citizens need to know that their personal information is protected — that is why we introduced Bill C-54 on October 1st, and I will speak to the specific provisions of the Bill in a few minutes.

Finally, consumers want the assurance that on-line transactions are given equivalent coverage to off-line commercial activities. That is why Consumer ministers of all jurisdictions will develop a Consumer Protection Framework that will establish a standard for the world.

Clarifying marketplace rules

With regard to taxation, businesses need to know that electronic transactions will not be treated unfairly, or doubly taxed. We are committed to tax neutrality of electronic and paper transactions.

And we have clearly indicated that existing laws and tax treatments apply, to ensure a stable environment for business.

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

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

Strengthening the information infrastructure

As we increase the use of electronic transactions in Canada, we need to make sure that our information infrastructure is up to scratch.

That's why I announced last August that, thanks to CANARIE, Canada is building the world's first fibre-optic Internet, which makes it the world's fastest.

We are also developing a standards roadmap for electronic commerce on open networks.

Realizing the benefits

Finally, we have to ensure that all Canadians can benefit from this new digital environment.

Through the Community Access Program, we are providing small businesses with the tools they need to reach their customers through the Internet.

Through its purchasing power, government can help create a market for electronic transactions. With Treasury Board and other departments, we will implement a government-wide Public Key Infrastructure. This will enable us to undertake electronic transactions securely and effectively — within government and with our clients.

And we will be working with business to accelerate the take-up of Electronic Commerce applications and solutions so that Canada can lead the world in electronic commerce.

The OECD Ministerial on Electronic Commerce

World use of electronic commerce will depend on the ability and will of national governments to collaborate. Cooperation is necessary for Canadians to reach international markets.

I was delighted, therefore, that Canada hosted the OECD Ministerial Conference on Electronic Commerce, October 7-9, 1998, in Ottawa.

The conference was a first in bringing together three key actors for global electronic commerce – governments, business and international organizations.

The benefits of this conference are considerable - for Canada and the world. We set out an aggressive workplan and agreed on a taxation framework, on the development of consumer guidelines, on principles for electronic signatures and authentication, and on the application of the OECD privacy guidelines to the Internet.

The conference provided the platform to promote our domestic strategy. We used the opportunity to announce concrete action that we are taking in key areas and position ourselves as a leader.

Canada's Electronic Commerce Strategy - The Seven Firsts

At the end of December 1998, Canada will be one of the first G-7 countries to have set out all of the key elements of its electronic commerce agenda:

• we have a cryptography policy,
• we will issue consumer protection guidelines,
• we have committed to tax neutrality,
• we have introduced privacy legislation,
• we have introduced electronic signatures legislation,
• we will have a standards roadmap, and
• we'll have a policy for the government's public key infrastructure.

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

Let me now turn to the draft legislation that is before this committee. C-54 is indeed a first in Canada where we are applying a global principle of privacy protection for the first time nationally in a North American context.

Bill C-54 (Privacy) - Canadians Concerned About Privacy Protection

The Personal Information Protection and Electronic Documents Act, Bill C-54, is an essential component of our domestic and international electronic commerce agenda.

Internationally, it will allow Canada to protect the interests of its citizens and businesses in a global context, at a time when the privacy laws of European countries could directly affect whether we can do business with them. The European Union's Privacy Directive, which came into force on October 25, 1998, has the capacity to block data flows to and from Canada, if we do not have adequate privacy protection.

Domestically, Bill C-54 will ensure that Canadians feel secure in using the Internet as a medium of information and commerce.

As I indicated earlier, for electronic commerce to flourish in Canada, citizens must be confident about how personal information is gathered, stored and used. Businesses and institutions need a level playing field with clear rules and obligations.

Our opinion polls and consultations repeatedly tell us that Canadians do not yet have this level of confidence. A 1998 survey showed that 63% of Canadians would use the Internet if they knew how their personal information was going to be used.

While Bill C-54 covers all manner of information gathering — paper, telephone, or the Internet — Canadians know the threats to privacy are magnified in an electronic world. Every time our credit, debit or loyalty cards are swiped, every time we surf the Internet and pick up software tracking agents, we leave a "data trail." This trail can be compiled to provide a detailed record of our personal histories and preferences.

There is a risk that these records may be sent across provincial and national borders, sold, reused or integrated with other data bases — without our knowledge or consent.

As consumers and citizens we need to have some control over our personal information, and be assured that we enjoy a basic level of protection.

Bill C-54 (Privacy) - 10 CSA

Bill C-54 establishes a right to the protection of personal information. It sets out in law 10 clear rules on how that information will be collected, used and disclosed in commercial activities.

Thanks to these rules, Canadians will have to consent to the information they are being asked to provide. Companies will have to specify why they are asking for this information and collect only the information that is necessary. Businesses will have to seek the consent of Canadians to use their information for purposes other than the reason for the original collection. Those same businesses will have to treat this information securely; they will be accountable for it.

These 10 rules are based on the 10 fair information principles contained in the National Standard for the Protection of Personal Information of the Canadian Standards Association (CSA).

The CSA standard was developed in the early 1990s, through a consultative process that included the public sector, business, consumer advocacy groups, and labour. Our consultations revealed strong support for the standard.

Canadians have told us that they want independent oversight – someone to investigate complaints and ensure compliance – and meaningful redress.

Bill C-54 (Privacy) - Powers of the Privacy Commissioner

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

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

This situation is no longer acceptable. In our consultations, Canadians told us repeatedly that they wanted consistent protection, across the country, for their personal information. Canadian businesses raised similar concerns about consistency, and the need for a single set of rules to ensure a level playing field.

(Privacy) - Two-Stage Application

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

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

For example, since Quebec already has privacy legislation, the provincially-regulated private sector in that province will be exempt from the federal legislation. Federal legislation will continue to apply to federal works, undertakings and businesses. It will also apply more broadly to all interprovincial and international flows of personal information for commercial purposes — including intra-firm transfers.

Bill C-54 (Privacy) - Impacts of Legislation

Our goal is to encourage provinces and territories to legislate in a similar fashion. Ideally, provinces and territories would pass similar legislation that would cover not only the provincially-regulated private sector, but also personal information outside of the commercial realm. For example, medical data, school records, municipal records, and the activities of charities. But if they don't wish to legislate, or if they prefer the federal approach (as some provinces and territories have indicated) then Bill C-54 sets a time frame and a process whereby all Canadians will have their personal information protected, at least in commercial transactions.

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

Bill C-54 will also help protect our trade flows which involve personal data. There is an international movement towards better privacy protection, and Canada cannot be left behind. For example, as I indicated earlier, the European Commission's data protection directive which took effect October 25, 1998, can block the flow of personal data to countries without adequate protection. Bill C-54 meets this challenge for commercial activities and provides Canadian business access to European markets.

Bill C-54 will also assist industry, especially small and medium sized enterprises. It sets up a complaints-driven system, and does not require the registration of data bases or certification of company practices as meeting the standard. We want businesses to comply with it, not spend their time fighting it, or worse yet – move offshore to countries without legislation. We want a set of rules that businesses recognise as fair and flexible enough to meet their individual circumstances. Those rules should also be competitive in a global context.

Bill C-54 (Electronic Documents) - Bringing federal statutes into the electronic age.

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

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

And, since the integrity and reliability of electronic transmissions must be ensured, fostering the practical development and implementation of secure electronic signatures is a key component of the Bill.

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

The creation of an electronic alternative does not mean that the federal government is doing away with the traditional methods that it uses to communicate. Rather, we are enabling the federal government to accommodate a way to conduct business that is more and more popular with Canadians.

And Canadians increasingly want to do business electronically, not just with their governments, but also with the private sector.

With this Bill, the Government of Canada is breaking new ground:

• It is providing Canadian citizens with the means to control their personal information in the private sector;
• it is providing businesses with a clear set of rules so that they can be competitive in a global environment; and
• it is providing the world with a standard-based approach to privacy legislation which incorporates the best of the US self-regulatory approach and the European Union's legislative approach.

Bill C-54 provides us, as Parliamentarians, the opportunity to set a high standard in Canada for privacy protection and for building confidence and trust in the digital marketplace. I look forward to your deliberations, and am confident that Bill C-54 will receive your support. This legislation will help to ensure that Canada is a world leader in electronic commerce and the global knowledge-based economy.

And now let me show you how we will capitalize on our leadership.