Proceedings of the Subcommittee on
Communications

Issue 5 - Evidence

The Subcommittee on Communications of the Standing Senate Committee on Transport and Communications met this day at 2:10 p.m. to examine the policy issues for the 21st century in communications technology, its consequence, competition and the outcome for consumers.

Senator Marie-P. Poulin (Chairman) in the Chair.

[English]

The Chairman: Honourable senators, this is our sixth meeting in the first phase of our study on convergence, competition and consumer policy issues for the 21st century.

Today, we are focusing on the challenges to public governance. The government is looking at increasing the effectiveness and efficiency of its governance, while the public is calling for increased transparency, accountability and accessibility.

We know the new technologies will facilitate these sometimes competing goals, but we would like to hear from those managing the implementation of the different services to Canadians, which we hope will give us an opportunity to ensure that we can make the appropriate recommendations for public policy.

Our first witness today is Ms Michelle d'Auray.

[Translation]

Ms d'Auray, at the Treasury Board you are responsible for information services, and must ensure the feasibility of our new services, those services that will allow for a better stewardship of our country. We have one hour to hear you, and that includes the presentation of your brief and our question period. You now have the floor.

Ms Michelle d'Auray, Chief Information Officer, Treasury Board Secretariat: Madam Chair, first, let me express some reservations about answering your questions. Since I have only been in this position since September 5, I may not be able to answer your questions as well as I would like to. However, some colleagues are here who will help me answer all of your questions; and I will be introducing them at the end of my presentation.

[English]

I am pleased to be here to assist you but, given that I only started a few weeks ago, you will have to bear with me. This is both an opportunity for me to try to explain what I do as well as to provide you with information about the Government On-line initiative.

Government On-line is an exciting and challenging initiative. Our presentation deals, in essence, with three key areas of how government responds to the impact of the information revolution. I will discuss our commitment to meet those challenges, and the opportunities that it provides us as a government to reach out to citizens. I will also specifically talk about some of the initiatives under the Government On-line initiative.

Government On-line is one of the many ways for government to meet the challenges of the digital age. The catalysts are those which you have heard about in the many presentations that have been made -- things such as information technology and the death of distance. Accessibility of information must meet the changing needs and expectations of citizens. Business needs and expectations are changing. Information is coming at us at a different pace. Technology is changing constantly. What we do in Canada is no longer isolated from the rest of the world. People are using information differently. Quite often we hear the term "knowledge workers." As well, of course, there is the ongoing explosion of the Internet.

The Minister of Finance said last week that business is no longer business as usual. In the same vein, it is no longer government as usual. We are driven by the same requirements, if you will, as the world that is transforming us.

This slide illustrates the impact of technology on reduction of costs, the facility with which we spread information around the world, and the rapidity at which that information is shared. It compares the cost of the actual delivery of a 42-page document by fax or overnight delivery with what it costs to send it by the Internet. In essence, the Internet allows you to send information 720 times faster and 350 times cheaper.

As citizens are achieving the ability to receive information at this pace, we in government are challenged to meet those expectations.

The growth of Internet users world-wide is exponential. The growth of Internet users in Canada is also exponential. There has been a significant change in the number of households that have access to the Internet and that are actually using the Internet. If we consider that government can be a catalyst, from both a business perspective as well as a citizen perspective, then government has an onus to meet the growing challenge that the increased use of the Internet will bring.

Better information and more efficient knowledge workers allow us to increase productivity, achieve greater interconnections among citizens, and produce a stronger society and a stronger economy.

The recent report of the Canadian e-business opportunities round table, which brought together the major players from the private sector, concluded that if Canada moved aggressively, our Internet economy could climb to $155 billion in revenues and create 180,000 jobs by 2003. Achieving those targets will require not only private sector initiative but also public sector action.

Senator Finestone: Would you go back to the figures, please?

Ms d'Auray: The e-business opportunities round table was created as an advisory committee to Minister Manley. It concluded that, if Canada moves aggressively, our Internet economy can climb to $155 billion in revenues, and create 180,000 jobs by 2003.

Obviously, the round table also concluded that the private sector has a huge challenge and opportunity in that regard, but so does government, to act as a catalyst, both in terms of citizens being on-line, being able to use and becoming comfortable with the Internet technology as much as driving business to become more adept at going on-line as well.

Other countries have also set goals and targets. They are putting together strategies for government. Two years ago the Conference Board of Canada ranked Canada second only to the U.S. in terms of being connected, but every month and every year bring a different level of "connectedness" and a different speed at which we are measured. Although Canada has reached a significant level, we are being challenged for the next phases of our levels of "connectedness". My colleague from Industry Canada brought you up to speed on the number of schools that we have connected. Connecting schools is but one aspect. The next step is connecting the classrooms. In certain parts of the country we are connecting ourselves and accessing broadband capacity. Ensuring access to broadband transmission across the country is the next step.

While we are measured against some of the basic elements and some of our own metrics that we have set out as a government, other governments are also moving ahead. To keep the competitive edge, we must move forward as well. That is why we have also set for ourselves the goal that is stated in the Speech from the Throne, namely that the government will become a model user of information technology and the Internet. By 2004, our goal is to be known around the world as the government most connected to its citizens, with Canadians able to access all government information and services on-line at the time and place of their choosing.

The next part of my presentation will give you both the context in which we have set ourselves up to meet these goals and where we are at on some of these targets.

[Translation]

The Government On-line initiative is part of a series of Canadian government programs. I am sure that you are familiar with the Connecting Canadians initiative and the Government On-line initiative. If we want our services to be on-line, the citizens themselves must be technologically connected and must have access to Internet services. This is why the Government On-line component is important. Putting our services and information on-line is important, but it is equally important for the Government On-line initiative that communities be wired and that there be community access sites.

Moreover, government generates a great deal of information. Other departments have set up entities to accelerate the growth of non-government content. Where a e-commerce is concerned, if we want businesses to be able to provide on-line services faster, it is or will be partly up to the government to put its own services on-line and to encourage, for instance, through interactive procurement and transaction policies, our businesses to position themselves on the Internet as quickly as possible.

Our presence on the Internet is an important element of our presence on the world stage. Our Internet presence also influences how people perceive Canada as more and more information is being put out on the Internet.

Seen from this perspective, Government On-line is a priority, a catalyst in the initiative to connect Canadians. We have surveyed citizens to find out how the Government On-line initiative could meet some of their expectations. We have received some very interesting responses. Citizens want our information to be relevant, they want the service to be courteous, quick, easily accessible, fair, and they want results to be clear and effective. In a way, Government On-line will allow us to meet all of those expectations quickly.

We can also provide single-window access. The Internet provides us with the technology and mechanisms that will allow us to provide all of these services to citizens through a single window. The Internet becomes an additional access point. It is not the only way to have access to government services, but the advantage is that the Internet allows us to gather and organize our information in a coherent way, whatever the mechanism used. Whether we use the telephone or the mail, meet people in person or on-line, the information is coherent and consistent.

The Internet allows us to provide direct support to someone who is trying to find a specific site with a search engine or is perhaps using a telephone link-up. Once on-line, a client could eventually reach an operator for guidance.

We are at this time building on successes. There have been some outstanding successes in this area.

[English]

Most government departments and agencies have an on-line presence. Some sites, for example, the Canada site -- that is, the overall Government of Canada entry point -- receives about seven million hits each month. There is a job bank that posts 350,000 job opportunities each year. The Canadian Health Network has a huge amount of resources. Increasingly, a large number of people draw upon that site for information. I will let my colleagues from Canada Customs and Revenue talk about their successes. They have had tremendous success with direct e-filing or the net-file, as it is called. Next year, it will probably be even greater. However, I will not pre-empt their presentation. I will let them tell you what a terrific service they provide.

We have experienced a tremendous amount of success. Initiatives that were piloted by a number of government departments and agencies have shown tremendous progress over the last year. We have organized ourselves because, when there is a target to meet, governments always try to organize themselves in easily deliverable chunks. We have a tier one presentation which ensures that information, programs and services are on-line, that all the key program forms are downloadable, and that we will have a revamped Government of Canada Web site or access point completed before the end of the calendar year.

Tier two deals with end-to-end secure electronic transactions and will involve integrating services across programs and handling financial transactions. These measures are being phased in over time. We also have a series of pilot projects or pathfinders that help us find a path to some of the issues that we must work out. The first round of those is being developed and will be tabled for funding by the end of the fall.

The third tier deals with inter-jurisdictional partnerships and looks towards having undertaken a number of those before the end of 2004. This does not mean that in 2004 everything will come to a dead halt. We will continue to integrate and to push ahead.

Organizing by tier is a way to overcome the challenges involved in delivering Government On-line and we are proceeding along those lines. We also must look at the whole range of issues that must be taken into account as we move government on-line, whether it involves information, services or transactions. There is a service transformation that changes the nature of the business of government and how we interact with citizens, with business and with different stakeholders. That can involve as basic a concept as: What is an acceptable level of service? What is the turnaround time for an e-mail message? Once a form is filled in and filed, what is the standard for returning the form? They can also involve more in-depth issues such as how you actually deal with the marriage of financial systems, for example, within an e-payment. Let us say that you transfer a payment that you received electronically. How is that transfer reflected in the financial and accounting systems of government? They go from what would be normally accepted standards or levels of service to how we actually make the interconnection between the service systems and the financial and accounting systems of government.

We also deal with the human resources issue. People within government also must be brought up to speed. They do not become knowledge workers at the drop of a hat, but competencies can be transformed through training.

We need to identify the common ties between information technology and infrastructure. What added structure do we need to support these systems? What investments are required in terms of architecture and information technology itself?

We have presented to you a graphic showing three intertwined circles surrounded by the area of policy issues. We instinctively know some of the policy questions that will arise: Security, privacy, identification, speed of procurement, speed of organization, and relationships with the private sector. Unforeseen policy issues may also arise. All of these issues must be addressed.

Rather than trying to cover the whole waterfront on these policy questions, we take a pilot-project approach. Many of you have been involved in policy development, so you know that policy questions can become quite thorny and can require a long time to crystallize at a generic level. Trying things out in a pilot project can provide new viewpoints and solutions.

Risk management must be addressed in testing new ideas. What level of risk is acceptable to a minister or senior official? At what point do you decide to either pull the plug or to continue? How do you manage a project when the end result is unknown? These concepts are not new to government, but they become more sensitive when services to citizens and businesses are involved. Trying things out is a good idea, but government does not normally conduct business in that way; government prefers to solve all outstanding issues before proceeding.

Initiatives must be communicated to citizens, to departments internally, to other governments, to stakeholders, and often to international parties. End results must also be communicated. How will government ultimately emerge from this process, in which business transformations are converging?

Accountability is another issue which is just now being crunched by a number of members of Parliament.

We have prepared graphs to help illustrate where we are today. There are a multiplicity of portals or entry points into the Government of Canada, which is not a bad thing. Every department, every agency and many subgroups have a Web presence. If a person does not know how government is structured, though, he or she may have trouble finding the information being sought. Issues and information can overlap. The Web sites themselves are not necessarily intuitive.

[Translation]

Where organization is concerned, it has been proposed that we move directly to the way in which people would like to receive information. How can we organize government information and services to serve citizens and businesses? At the very beginning, we had thought -- a great deal of work had already been done in this direction -- to organize information by life cycle, by age group. For instance, at a certain age, people would want to register to take classes or engage in certain activities, while another age group might be interested in something else such as obtaining a passport, etc. We came to realize that people needed information and services at every stage of their lives. This approach, even though it seemed interesting to us at the outset, was not necessarily the best way of organizing information and services.

[English]

For someone who cannot find his or her way around this kind of information, the Government of Canada main entry portal would be the starting point. Then three main gateways appear: one for business, one for citizens, and one for people outside of Canada looking in. Each area would be organized on the basis of priority; for example, listing the top 10 services or types of information required under each grouping.

If a person enters at the tax page but is also interested in other subjects, he or she can find the way back fairly quickly to the Government of Canada's main site. Another person who may have come in through the international gateway may also end up looking in the tax area to find more details on the Canadian tax regime. Not all information will necessarily be in the first gateway.

This whole system is just another way of organizing our information, and there are several ways to obtain the information that is offered. In this way, we can build the services and transformation initiatives on a more logical and intuitive base to meet the priorities of business, of citizens and of the international community. We will be testing the process as we go along to ensure that the sites actually meet the interests and the needs of those three client groups.

I recently assisted the Toronto Dominion Financial Group in going through a similar process to organize its Web sites based on a similar cluster of needs, but with different clients: Needs of individuals, needs of small and medium-sized businesses, and needs of large institutions.

In some sense, all large on-line enterprises are going through the same process of dividing information by client groups to make that information more intuitively accessible. This includes setting out the 10 or 15 services or initiatives which are of the most interest to each group.

Each cluster of departments or agencies is headed by a "champion." As we transform the services, a process is in place to engage all of them at the same time.

[Translation]

We also discussed investments. We must invest in human resources. Putting our services and activities on-line is not the only thing to be done if this government transformation is to become a reality. That component is a large part of the work, but is not the only one. We have to reach all public servants; we have to ensure that all of them will be comfortable with technology and that they adapt to information processing and its use. We have to make our initiatives known both within government and client groups. We must be able to organize information with a view to the longer term and use the information that people provide to us on-line.

As for programs and services, managers must understand that technology will not solve every problem and that everyone still has to work together.

[English]

The business line people and the IT people must work together because technology in and of itself will not transform the way in which we do business. We must also must rethink our approach to programs and services in light of what technology can offer us.

[Translation]

Program managers and those who are responsible for information technology programs must work together; that is essential.

As you have read or heard, we are competing directly with private enterprise. We have a challenge to meet where information technology and information management professionals are concerned, as well as employee training and attracting the necessary personnel to government to support this transformation.

We also must invest in infrastructure. Of course, on-line services or information is not the only way the government offers its services and information.

Together, we support an infrastructure that in turn supports information distribution through the following channels: in person, by telephone, and through the Internet.

We have common elements and we need common directories, security systems and frameworks that will allow us to organize information and present it in a uniform way, in accordance with information distribution mechanisms.

We also need to connect the various communication systems, either through the telephone or through Internet.

[English]

Another slide which, unfortunately, we did not bring with us, illustrates the work that we are doing on the policy front which also supports not just the investment in infrastructure, in people, and in portals and systems, but also investment in policy deliberations which, in large part, will be the result of the pilots in the business transformation. These are policies surrounding access, common directories, privacy, official languages, procurement, security, et cetera.

Ultimately, the benefits will be significant. I was asked by a number of colleagues to put to you the case for business and to give some indication of how much this will cost. That question is very difficult to answer, but I know it is one that you will, no doubt, ask me in any event. The investment will be significant. Can there be a dollar figure put on it at this point? It is too early to tell. However, my short answer is that we do not have much of a choice. The cost is the relevance of government. That is the business case. We must be on line. We must provide integrated services from a multiplicity of points, but primarily through an Internet base. Internet is becoming the way in which business is conducted. I mean business in a generic sense, not business in terms of solely the private sector; that is, how we conduct ourselves; how we receive information; what we use as reference points; and so on. That does not mean everything else will go away. It will not. However, it is the primary vehicle and the primary driver, and if we are not part of it we will become invisible. That is the cost.

On the question of results, obviously the results will be access to a richer array of information and services, information and services organized in ways that make sense to citizens, and faster and more responsive services through the Internet, by telephone and in person. What we do in the on-line environment will go to support the other two services. I would include the third service, that is, the paper-based service -- information that is sent through the mail. Whatever the channel, the Government On-line initiative will support it.

I will now conclude my visual presentation and move to the front of the table.

The Chairman: That is a very good idea.

[Translation]

My colleagues were very interested in your presentation, and they would like to ask you a few questions. Are you with some of your co-workers?

Ms d'Auray: Yes, I would like to introduce my colleague.

The Chair: Once again, thank you for your presentation.

[English]

Thank you for giving us this first glimpse at the overall plan to connect Canadians to the Government of Canada on a one-site shopping centre.

[Translation]

Ms d'Auray: Allow me to introduce Ms Jill Velenosi, Deputy Chief Information Officer.

[English]

The title makes more sense in English. It is the deputy chief information officer, the deputy CIO.

The Chairman: I would ask Senator Spivak, our deputy chair, to lead off the questions.

Senator Spivak: I think that even before your presentation, the benefits of this new way of providing service were obvious. Also, it is a fact that it must be done, since more and more business is conducted over the Internet,

You said that we could estimate the cost, but I think that most businesses would know what their costs are. I want to ask you several questions in relation to cost, quite apart from the initial investment.

Will this result in fewer people in the civil service, or will it result in increased employment in the public sector? What would be the costs of maintaining Web sites which must be brought up-to-date continuously because, if they are not, they become useless? Will direct access also democratize or enhance the relationship between the people and government?

The role of lobbyists is another area of concern. People have expressed various concerns about lobbyists and the fact that everything should be transparent. If everyone has access to all of this information and can use it, do you think that will diminish the need for lobbyists?

Ms d'Auray: I noted four questions. On the question of costs, I was not trying to be facetious when I said that we do not have the overall costs. We have asked departments to provide us with their overall departmental plans and an estimate of costs by the end of September. Whether or not those will end up being the true total costs, we will see over time. We are asking them to give us a sense of what the costs are likely to be.

On average, right now the government spends between $4 billion and $5 billion on information technology at large, including training and purchasing. That is just to be where we are at today. It is estimated that we spent about $1.9 billion on the Y2K transformation. There will be up-front transformation costs. The Toronto Dominion Financial Group indicated that their costs increase by $2 billion a year, and that is just to maintain the information and to try to stay ahead of the game.

Senator Spivak: Are those the costs of servicing people?

Ms d'Auray: Those are the costs of being on line.

Senator Spivak: It will cost more to be on line.

Ms d'Auray: From their perspective, it was an additional business cost rather than a direct saving. They obviously have the bottom line interest in some of these investments. That is not to say that the government does not have a bottom line interest, but we have a different concept of the bottom line, and that is the public service, the public interest, and the balancing of a range of access.

From the perspective of Toronto Dominion, the on-line environment, while requiring a significant investment to launch, maintain and upgrade, because they must remain competitive, did not replace other channels. It became a complimentary channel. Its use grew exponentially, but it was not intended to replace the phone or in-person service. It became an addition to, or a complement to, the other services, as opposed to a replacement.

I realize that I am not answering the question directly. However, I am giving examples of what others have experienced because it is too early for us to tell what will happen. Based on those examples, we will not necessarily employ fewer people, but I cannot tell you categorically that we will be hiring more. I would be inclined to say that we will be increasing the initial investment in order to provide the services and to integrate our activities.

Your second question was whether this would affect the workforce. At this point, it is hard to say. The number of people employed will be at least the same, if not more in the initial phases.

Maintenance costs will have to be embedded in the overall cost. We have asked departments to try to give us a sense of what those costs will be.

On the question of whether it would diminish the role of lobbyists, it does mean that citizens will have more information and more effective information to be able to make their own decisions about their own lives. That is a huge part of what government does.

Government helps people by providing the right information at the right time. It also supports people directly through incentives, initiatives and programs. How that translates into the day-to-day workings of government remains to be seen. However, I think we will all live through this transformation process.

At this point, no one can say how the world will change. Many futurists are throwing out some interesting ideas, but can we say definitively how much the interaction between the citizens and government will change, what the nature of that change will be and what the nature of your role or the role of an elected representative will be? That is premature. We will have to live it first.

Senator Finestone: It is always exciting to see the evolution of Michelle d'Auray. I congratulate you, and wish you well. You made a wonderful presentation. You are well prepared for it.

The concept and the big picture of this system being in place is very exciting, but the real question is: How realistic is it? How secure will I feel? How much will my private life be protected? How much of it will be affected? How has the HRDC dismantling experience that we had and the keeping of information in silos been changed so that we can cross-reference and cross-file all this information? The issue of the technology that will be used in the interests of the protection of people, information, business and business transactions, digital signing and the signing of contracts, concerns me enormously. Will the technology be wireless? That is probably the most easily destroyed, the most easily hacked and the most insecure system. Will it be copper wire, fibre optics or wireless? The U.S. Senate report which investigates the year 2000 problems, the 100-day report, gives a fascinating background on the dangers of the transmission of all this information. According to Interpol and U.S. estimates, 17 million people have the necessary computer skills to do damage and to hack open any and every system that has been devised to date. What type of encryption or other protection do we need? If it is the intention to use the SIN number, I would point out that this government has received a minimum of two, if not more, reports that express concern about the use of that number. I would like to know more about that.

First and foremost, there is the question of equity. What will be the impact on people? How many of Canadians over 25 years of age have access to a computer, know how to use it, are familiar with the Internet, are handicapped or have a level of illiteracy which will preclude their access to this technology? As you know, the illiteracy level is quite high in this country. How will they be affected by this wonderful new world into which we are recommending this government should go?

I recognize that, in the short time left to us, you may not be able to provide us with effective answers to these questions. I do not know whether or not it would be possible for Ms d'Auray to answer them or to start to address them. We may require written responses to the gamut of concerns. Quite frankly, although I have not read all the reports, I have, through the good offices of a good researcher, found many documents that have caused me great concern and have caused me to ask these questions on behalf of the people of Canada and, in particular, the people whom I have represented for over 16 years. This sounds all very well, but the "buts" are enormous and intimidating. The "buts" show that Canada has lost billions and billions of dollars worth of business. I use the term "billions" because I know where we lost it and the contracts that we lost because business information was hacked and intercepted and sold and used and we were undermined. Whether it was Volkswagen or the Airbus, or whatever, we have experienced tremendous losses because we do not know how to protect our information. Are we to use the Internet, which is wireless, or a computer, which at 400 megahertz is already using a broadcasting medium, namely, the public telephone?

For this committee which is studying these issues, the questions go way beyond the question of access and Government On-line. For example, to satisfy my needs at my age, you would have to know about me. How would you get information which I may not want you to have? I do not expect you to write a diary of my life. How would you find out what my income is? How would you know how I live, and what my health circumstances are? How would you find all of that information so that you can give me advice? Would I want you to know all that? Would I have to give you permission to search that out? How would I give you permission? Would it be written permission?

The Minister of National Revenue received a task force report on the progress of Canada. I read that report, and I recommend it to everyone. It is an executive summary of the Canada Customs and Revenue Agency, the representatives of which will be our next witnesses. I will ask them to explain how we will be doing new business and the problems Canada may encounter when doing that new business. In particular, the report states that the biggest impediment to achieving the growth of a vibrant and effective and active electronic community within Canada is a lack of imagination.

I found that to be very insulting. I think Canadians have proven that they are very imaginative and competent. It is true that they are fighting $25 billion worth of venture capital growth in the United States versus approximately $600 million venture capital growth, half of which is from labour unions who get tax credits. How do you expect us to be competitive, to move forward, and to have an equal level of productivity?

I am placing on record the questions that have troubled me about this whole issue, and I want answers from you.

How do you distinguish e-commerce from e-business and e-economy? What are the methods of examination and the development of your business structure? What are you doing about that econometric model? I will stop there, because that is more than enough.

The Chairman: I think you have given the witness enough homework for the month!

[Translation]

The Chair: Ms d'Auray, would you like to answer some questions and tell us which ones you would prefer to reply to in writing?

[English]

I cannot begin to answer in detail, because Senator Finestone has covered the waterfront in the area of issues and challenges that we face as we put the government on-line. How we determine or define what citizens or businesses will want from us, how we put those services on-line, how we receive the information that is given to us, and how we treat that information are all issues that we are grappling with and we will continue to do so.

At the moment, we have some very clear frameworks, legislative and otherwise, that preclude us from sharing information, for example, among departments, unless we are legislated to do so. Business transformation issues will arise, for example, from a new payment system, including the question of whether we can engage citizens in a discussion about information-sharing among departments. If the answer is no, we ask another question: Is it technically feasible to use technology to transmit only essential and legally-shareable information with those departments and agencies allowed to receive it?

If it is feasible to have that kind of distribution system, how do we then protect information, like personal identification numbers, pin numbers and encrypted codes? All the possible solutions will be tested at various stages of the pilot projects. We must test. As I said earlier, risk management will be a very big issue for ministers, members of Parliament, senators, and government officials. This work engages citizens and business in a way which has not quite been done before, but government will not have all the answers at the start.

Regarding equity and the problem known as the "digital divide," our government has, quite consciously and unlike any other government, set up a series of public access points to the Internet. Those access points also provide training and information, but they do not deal with the literacy gap or the divide at large. Those issues must be also addressed. Canada as a country cannot move in this direction unless we deal with the issues of access and equity.

You asked if we will deal with the handicapped access. The answer is yes. A number of groups within government are working with the private sector and with voluntary organizations on handicapped access. Some very innovative projects will be demonstrated at the Government and Technology conference to be held on October 2 at the Congress Centre. We are at the forefront on a number of these issues and we are spending a tremendous amount of time and energy working our way through them.

I do not say that we have all the answers. We have the beginnings of the answers in some areas. We also have some very interesting and innovative projects which we will use to test out and find answers. In some instances, we may need more than one right answer to allow citizens to choose the technology they prefer.

It is a mistake to look for one solution to every techological problem. The best approach is to find all the appropriate choices, be they Internet-based or network-based solutions.

How can we distinguish e-commerce from e-business and e-economy? All these systems are interlinked. They all use the Internet to provide information to complete transactions that drive the economy which in turn can provide better services and can link more citizens together.

We must build on a basis of information and knowledge. Once the information is in the hands of business or citizens or government, the economy is strengthened and productivity is assured and social structure is strengthened.

Industry Canada has a project called "Smart Communities" which examines what happens when all the services and activities within a given community are integrated. What are the benefits to be gained? Will young people stay in the regions of the country from which presently they tend to leave to find work? Can we develop new businesses? Can we strengthen community relationships?

For our business model, we began by working with the OECD to develop metrics and benchmarking of government effectiveness and success on line. We had previously, while wearing our electronic commerce "hat", been asking several governments around the world to benchmark the level of e-commerce development. Using some of those metrics of "connectedness," Canada was at the forefront. We have approached the OECD to develop similar metrics for "e-government."What does success mean in e-government?

Senator Oliver: I join Senator Finestone in saying that, for someone on the job for two weeks, you have made a brilliant presentation.

You have said that Canadians are well connected and that you hope to spread out this broad band across the country as the next step. I am interested in this whole concept of universality. Rural parts of Canada do not have access to some of the new technologies found in the bigger cities. Please describe this next step and how it will be deployed.

Ms d'Auray: In my enthusiasm, I referred to a next step. I should have said that this is an issue on which we must spend some time. The next step in the evolution is precisely how to spread broad bands across the country.

Senator Oliver: Can you give me some ideas?

Ms d'Auray: We talked to Canary Communications. I believe they have made a presentation to you. We have developed a public-private sector partnership, a mix which works quite nicely in Canada. If we are to take the next iteration of CA Net 3 modes beyond the research and university communities, what would be the best model? How will the private sector be engaged with us in covering that need? There is a role for government in reaching under-served areas because it often does not make good business sense to service remote areas.

We started to work through those issues with Industry Canada, with Canary and with a number of other private-sector partners. Do we have a simple solution? No, we do not, but we recognize that is the next step.

Senator Oliver: You spoke about human resources and information technology and the long series of overriding policy questions from which you enumerated four: Security, privacy, identification, and procurement. How does Treasury Board oversee the development of each of these policy areas in the various government departments around Canada. What is your role? What structure prevents overlapping and yet ensures universally applicable policies in those four areas?

Ms d'Auray: That is a very good question. Treasury Board as a management board has some very direct and legislated responsibilities. I am not familiar with all of them. Perhaps Ms Velenos could assist us. We have a number of inherent structures to ensure that policy discussions occur. There is an ADM steering committee called an information management board and a deputy-level steering committee as a subset of the Treasury Board senior advisory committee to Treasury Board ministers. I will spare you acronyms; they get somewhat convoluted. That structure encourages us and forces us to work horizontally on this issue.

The mechanisms are in place to ensure that the issues, as they are developed and raised, are shared among the key departments and agencies that have to implement Government On-line.

This is a shared responsibility across the government. The Treasury Board has a lead, or my office has a lead, if you will. However, it is very clearly identified as an item that concerns us, is of importance and a responsibility, for all.

Perhaps on the specific policy issues, my colleague will make some comments.

Ms Jill Velenos, Deputy Chief Information Officer, Treasury Board Secretariat: I cannot add too much. As mentioned, we are at the early stages. The pathfinder project that Ms d'Auray talked about involves the projects that we will use to come to discussions around some of these policy areas, such as accessibility, official languages, security, privacy, authentication and others.

We have a number of working groups in place. I think the governance structure that we have is meeting the test of time. We have forums where the business leaders in the departments come together to talk about the privacy and the policy challenges, if you like, and to work together horizontally to resolve issues. We are at the very early stages, but I think that the pathfinders will allow us to demonstrate some clear progress.

Senator Spivak: I have a few questions, although I recognize that you may not have the time to answer them all. However, I do want to put them on the record.

Senator Finestone touched on the manner in which electronic payments would be implemented. I am interested in electronic payment and how that will be done.

You also mentioned that the next step is to wire every classroom. Are you aware of the research that has shown in some quarters in the United States that the use of computers by children who are very young may indeed not help their development? Everyone is rushing towards the goal of every child having a computer, so much so that perhaps no one is considering the research that points out that it is better for very young children not to use the computer until later in life.

Perhaps you could provide an answer in writing

[Translation]

Ms d'Auray: Madam Chair, would you like me to answer certain questions?

The Chair: No, I think it would be preferable that you take the time to look into things and send us your replies. I took the liberty of asking one of the members of your team to give us a copy of your very interesting presentation. You have shared information that will be very useful to us.

I have a question to put to you in the wake of Senator Oliver's question.

[English]

This is a huge project for which you are responsible. You mentioned concisely at the beginning that the objective was to have the government on-line by 2004. Today, after only two weeks on the job, you have given us what we can expect is the model of the work that is now in preparation. Could you give us some idea of the time lines of the critical path of your work? You spoke of pilot projects and you talked about different working groups that are already organized. You can send more details on that in the form of a written response, if you prefer.

Ms d'Auray: As we organize the work in tiers, or in bite-sized chunks, so to speak, the middle tier, or tier 2 as on the slide, runs between now and 2004. We have asked departments to submit their plans to us so that we can, from those plans, get a better sense of the intermediate deadlines -- what will be completed by the end of 2001, by the end of 2002, and so on.

At this stage, we are waiting for the plans to be tabled. I would not necessarily be in a position to tell you tomorrow morning or in two weeks what the intermediate deadlines are. I can give you the assurance that we will be setting them.

We have also set ourselves some structural deadlines, if you will, by organizing the information and the services of government under the three clusters that I put forward: the business cluster, the citizens cluster and the international cluster. Based on what the departments tell us, we may be able to drive some of the deadlines as they relate to each one of those clusters, and particularly each of the top 10 in each of those clusters. In that way, we would get a critical mass of both useful pilots to test out some things that would meet the needs and demands of both citizens and business.

The Chairman: For most Canadians, the management arm of Treasury Board is the arm that approves or rejects different departmental budgets. We all know the process that each department goes through, knowing that Treasury Board is the central agency for the management of government funds.

It is difficult for us to imagine the size of that task because, according to the 1999-2000 fiscal year, the government is managing $170 billion a year. The total employment is 186,314 employees.

One of the things that I did not see in your presentation, but perhaps it is not part of the project, is how this program is going to facilitate the management of these public funds? Let me give you an example. Let us say that a minister, a senator or an elected Member of Parliament would like to know how many vehicles the Government of Canada owned last year. I know that a colleague of mine will ask that question. Will these systems have the capability of doing, as Senator Finestone was saying, cross-sectional studies to facilitate not only requests of the individual Canadian or the individual business, but also global government information?

Ms d'Auray: That issue falls within the management board perspective of Treasury Board, over and above the project office that Government On-line represents. We also have a responsibility in the chief information office to look at technology as a means of increasing transparency.

We are not the only ones within the Treasury Board with that mandate. There is a framework that Minister Robillard set out that is called "Results for Canadians". We have some clear commitments. Four major commitments are made under that framework.Those commitments are supported by six specific initiatives that are there to help deliver on those commitments, and Government On-line is one of them. Two others are accountability and responsible spending.

We are an integral part of that. We look to the departmental plans for an ability to extract from that the "crosswalks" as they relate to systems and reporting. We also look to those plans to determine what we can put on-line from a government-wide perspective that will increase the transparency and the reporting capacity. That may not come necessarily as quickly or as easily as some of the service transformation, or the on-line services that are program driven, for example. However, that is not to say that it is not part of our reflection, and it is in fact our commitment.

The Chairman: Our wishes of success are with you.

Ms d'Auray: I have taken some notes, but I would appreciate it if the clerk or researcher of the committee were to send to me the questions to which the committee would like specific answers. From there we will be able to work from a common base of understanding.

The Chairman: If you do not mind, we will do both. Both the senior researcher and the clerk will follow up with you. There are quite a few additional questions.

Senator Finestone: I would like one question to be included in that. Do you have an answer to whether or not business has increased, if our productivity has increased and, if so, is that because we are doing business in a new way?

Ms d'Auray: If you are referring to the economy at large, the short answer to that, not a complete answer, can be found in Bruce Little's column in The Globe and Mail this morning, where there is an interesting analyses of the effect of information technology and communications technology on productivity levels and the growth of the economy. It shows that a 55 per cent rate of increase in that sector alone has been responsible for driving the growth in Canada.

The Chairman: Our next witnesses are from the Canada Customs and Revenue Agency. Mr. Miller, please introduce your colleagues.

Mr. David Miller, Assistant Commissioner, Assessment and Collections Branch, Canada Customs and Revenue Agency: Thank you for providing the opportunity for us to be here today.

Mr. Rod Quiney is the Deputy Assistant Commissioner for the Assessment and Collections Branch, with specific responsibilities in relation to e-commerce and electronic services that the agency has undertaken. Mr. John Cope and Mr. Wayne Sauer are project managers within our Customs Branch, and they will be talking about some of the specific initiatives we have in the customs area as well.

The Chairman: I believe you have a short presentation for us, Mr. Miller.

Mr. Miller: Yes. Given the time, I will try to make it as brief as possible.

Before getting into aspects of electronic commerce and electronic interactions, I should like to provide some context within which our agency operates, because I think it is important for senators to understand that we view electronic service provision as an important component of our overall service initiative.

Page 2 identifies our mission, which is to promote compliance with Canada's tax, trade and border legislation. Within that mission, we have established a vision and a series of six strategic goals. The vision is for integrity, fairness and innovation in administering high quality and affordable programs. On the following page, we identify six strategic goals: quality service and client education; responsible enforcement and border protection; fair administration; simple and efficient processes; knowledgeable, skilled people; and effective and responsive corporate support.

We also have considered the five drivers of service quality. This is another initiative of the Treasury Board Secretariat, a different group, that deals with Service Canada. Those drivers are very important to us in establishing the kind of relationship we have with our clients. The first one is waiting time, or the length of time you must wait for those services. There is also staff courtesy, staff competency, quality of information, and fairness of service. That does not necessarily mean outcome, but rather how fairly people think they have been treated in a transaction with the government. All those together equal an overall quality of service.

The next page shows a fairly complicated depiction of how these all fit together. We are trying to explain that, as you move through the establishment of a service framework, you have the mission and vision and the client service quality expectations, those five drivers, and our six strategic goals which come out of that, but we also have other initiatives such as Government On-line and external direction.

Senators may be familiar with what is identified as TONI, Tax on Income. This is what provinces -- Quebec being separate already, but the other nine provinces -- will use to calculate personal income tax. It is probably the most significant change in tax administration that we have had in at least 30 years. That will change us and force us to look at things differently as we move into this environment for this year and the following years.

Another initiative is the Financial Information Strategy, which is a Treasury Board initiative related to how the government will keep its books and records and how we will deal with items like capital acquisitions.

We then move into what we refer to as a service strategy. These concepts and principles then result in a whole series of service initiatives. We probably have over 200 in the agency. Our problem is not focussed on all the innovations and changes going on, but rather on ensuring that the people with whom we communicate know exactly what direction this is taking, why we are proceeding in certain directions, and how long and how much cost will be associated with those changes.

The following page shows the principles behind our service strategy. Obviously it is a core value of the agency. We believe in proactive client service that is getting out to people and assisting them. We would like to think in terms of a relationship management with our clients, including individuals and businesses, which is more than a transaction. It is an ongoing, responsible relationship, especially in the business side where we have so many transactions within a given year. We certainly try to listen to clients and we hear what they say. We strive for continuous improvement in the services we provide.

One of our most important features, of course, is security. I can tell you that the only section of the Income Tax Act I have actually read several times happens to be section 241, which is the section indicating that we cannot exchange or provide anyone with any information related to income tax information unless it is specifically identified in that section. The legislative implications of those provisions are very clear. There are certain circumstances in which we can provide information, normally to other federal departments and agencies, and in some cases to provinces, but they are very restrictive. We are very careful in our relationships with our partners and clients, such as other departments, that we honour, and respect the considerations of that legislation.

The next element deals with the channel of choice. The idea is that there is no wrong door. People can come to us through a variety of channels, but it is up to the client to determine that. We will not force them into dealing with us electronically or prevent them from getting service over the counter if they wish to go to one of our offices, for instance.

Again, consistent quality of services is important to us. We have over 50 tax offices, and I am not sure how many border points for customs, but several hundred, so the idea of consistent treatment across all those different locations is important.

Finally, both the clients and employees must share a common knowledge base and tools, which become extremely important as we deal with the electronic focus.

The following page deals with our strategy. We use a variety of channels. We use technology where appropriate. We do not use it always, but where appropriate we will try to apply it. We redirect our human resources to support more value-added functions. In many cases, the changes we make may change the kind of work that people do, but it will provide more value-added to the system, either in client outreach or compliance activities or some other service related function. We try to seek client input and perform ongoing consultations. Normally, at any one time we have five or six different studies, focus tests, surveys, all underway to determine people's views and attitudes on the kind of direction they would like to see us move in. Those are then looked at in relation to the six strategic goals I mentioned, the five key drivers of customer satisfaction and the service agreements we have with partners and stakeholders.

Looking at service channels, telephone service is still the service of choice. We receive nearly 30 million calls a year. I am happy to report that, since we made our latest changes to the 1-800 technology, 98 per cent of Canadians get through to us on their first call.

Senator Finestone: Without pressing buttons and numbers?

Mr. Miller: Nothing.

Senator Finestone: Do they connect with a live voice?

Mr. Miller: Yes.

Senator Finestone: It is a miracle.

Mr. Miller: We tend to regard it as that too. You have the option, when you get through to certain centres, to use what we call IVR, or Interactive Voice Response. If you press zero, you are transferred to an agent. We manage the system across Canada, and I have tested it myself.

The Chairman: They recognize your voice by now.

Mr. Miller: We rely on our phone service providers to tell us the statistics, but it is something of which we are extremely proud. It is certainly something we could not claim a few years ago. There has been incredible change. We were uncertain whether there would be an increase in phone calls. If it was easier for people to get through, we assumed that more people would phone us. People would phone and ask questions about how the GST changes would apply to their businesses, even though they had received a two-page document explaining the changes. They preferred to phone to get that information rather than reading the document. We are very proud of the progress we have made in that regard.

We have undertaken many initiatives to encourage people to provide information to us electronically -- that is, to file their T-1, their personal tax returns, and their corporate returns electronically. However, no one has requested that we send the notice of assessment over the Internet. Everyone wants it in paper form so that they can file it and, if necessary, wave in our faces if we have further questions. That is interesting for us because it points to a variety of different things that we can do without getting into a much more difficult level of electronic security. There is a whole series of things that we can undertake based on the assumption that people want to send us information, but they do not necessarily want that information to be returned electronically. That has influenced all of our service initiatives.

Another area of concern is walk-in service. We have about 1.5 million visits a year from people. We are trying to find out why they come to see us at certain locations. That does not apply particularly to rural or smaller communities. Why do people come to see us rather than use, say, the telephone or electronic methods of communicating? We do not have a good answer to that. Until we do, we will maintain a level of service that allows 1.5 million Canadians to come into our office and talk to us face to face. From our perspective, it is not efficient either for the person coming in, because they have to take the time to do it, or for us to sit down and deal with them. There is some interesting work we looked at in other jurisdictions, such as Australia, that have come to address this issue. We will be trying these kind of things in pilot projects.

The last area involves e-services. As was mentioned, this is an additional channel for us. It is not an end result in itself. It is an additional way of communicating. We have all our costs of face-to-face interactions and answering 30 million phone calls. When people communicate with us electronically, we must still offer all the other ways to communicate with us. Until that becomes a dominant way to interact with us, it will be considered an add-on. That is very important, but it is just another channel through which they can deal with us.

From another perspective, most of our transactions with financial institutions are electronic.

Our outreach service is extremely interesting. Because of the changes in the population of Canada, with the amount of immigration that we have experienced and with the aging population, we recognize that some people may not feel comfortable using some of the electronic services. I have an advisory committee with whom I met last Friday and discussed many of these issues. As a seniors' advisory committee, they may not be representative of the entire group because they are all plugged in, but they do represent communities. We try to listen and reflect their views. If there was one message I left with them, it is that we will not discourage people from seeing us and talking to us on the phone in lieu of going electronic, which is probably the cheapest option. Partnership opportunities are important to us.

The next slide indicates that, in order to achieve this integrated service delivery, the focus is not solely on what we call the front office, which is the interaction ,and what the clients see or what Canadians see as they do a transaction with us. Part of our process concerns the core operations. These are the incredibly large and complicated systems that go on behind us and make up the bulk of our expenditures for information technology in the agency. For us to update and change the front end or interaction with Canadians, we also have to update and change all the mainframe systems and all our normal infrastructure related to information technology. This is one reason why it is difficult to come up with an estimate on how much e-service or e-commerce or e-business will cost us, because it involves not only the interface but also the support and the system requirements necessary behind that in order to deal with the transactions overall or the information exchange overall in our operations.

I will not go through the following page. It indicates how it all fits together. Basically, it deals with clients and trusted third parties -- those front office themes that we talked about -- the various channels that they relate to, and the key core operations and the processes associated with them.

Again, on page 10, we have an identification of the three tiers. Since the CIO talked about it, I wish to mention that these are not a progression. We have certain projects leaping from tier one into the third tier and others that deal with the second tier. We have met the objectives for tier one, but we are dealing with all these at the same time. It is not a matter of moving through tier two in order to get to tier three. Some of the projects have moved directly to that tier.

On that point, I will turn it over to Mr. Cope to give you some idea of the specific initiatives within customs.

Mr. John Cope, Manager, IT Advisor/Business Architecture Unit, Systems Design and Development Division, Major Project Design and Development Directorate, Customs Branch, Canada Customs and Revenue Agency: In the first part of this presentation, Mr. Miller gave us an overview of the CCRA and described its service strategies and various components. In my part of the presentation I would outline some practical examples of how the customs business line of the CCRA has applied electronic commerce to improve service to its clients, namely, Canadian importers. I will outline the customs business process for clearing commercial goods through the Canadian border, describe the electronic commerce services that facilitate those processes and then describe the impact that electronic commerce has had on our clients, our operations and our government partners in managing the Canadian border.

There are three fundamental processes for clearing commercial goods through the Canadian border. The first process is called cargo reporting. It is a requirement of the Customs Act that all transportation companies report their cargo to Canada Customs at the first port of arrival. In the paper mode, this is done through providing a copy of the cargo manifest and conveyance report. We have totally eliminated all paper-work from the cargo reporting function for the marine and rail cargo sectors. In both instances, this information may be transmitted to us using electronic data interchange.

The second process is called release. Using the Accelerated Commercial Release Operation Support System, ACROSS, importers and brokers are able to transmit commercial invoice information to Canada Customs. Our customs inspectors review the information sent to us and make a decision to release the goods into the commerce of the country or refer the goods for examination. Routine shipments are automatically released by the Customs computer, thereby freeing the customs inspector to perform such functions as examining goods for enforcement purposes.

The third step in clearing commercial goods through the Canadian border is called entry and accounting. This process takes place five days after the goods have cleared the border. It gathers all trade statistics concerning the goods and calculates the duties and taxes owing. The Customs Automated Data Exchange system, or CADEX, supports this business process and now has a participation rate of 97 per cent.

Together these three commercial electronic commerce applications make it possible for shipments to clear Canadian customs without the provision of a single piece of paper.

The introduction of electronic commerce to the customs business process has had a tremendous impact on our clients, our operations and government border operations. Many of our clients, importers, customs brokers, marine and rail transportation firms have reengineered the operations that support customs clearance as a result of the new system and process. As an example, the Canadian National Railway has centralized all Canadian and American customs clearance operations in Winnipeg. The centralization of staff has significantly improved service to their clients and reduced their operating costs. A joint initiative was undertaken with the Railway Association of Canada, the Association of American Railroads and U.S. and Canadian customs to harmonize cargo reporting for North America.

The Canadian railways estimate their savings from the re-engineered and harmonized process to be almost $100 million a year. As a result, the streamlining of cargo clearance has reduced costs to the Canadian importer, thereby improving their competitiveness in the marketplace.

Slide 14, showing the impact of electronic commerce and customs operations, is equally impressive. During the design phase of ACROSS, special attention was paid on how best to re-engineer our operations, as well as that of our clients. Two features have dramatically improved the service to our clients.

The first feature is machine release. Many shipments entering Canada are repetitive in nature, particularly for manufacturing operations. We put in the ability, in ACROSS, for the computer to recognize repetitive shipments for low-risk clients and release them literally in seconds.

The savings from removing the customs inspector from clearing routine shipments have been reinvested in our enforcement operations. The same program that releases low-risk shipments has the ability to target high-risk shipments -- high risk for drugs, weapons, and other contraband. Customs inspectors now have more time to perform physical inspections on these high-risk shipments.

Many our commercial operations, such as truck terminals, operate from nine to five, five days a week; whereas trucking firms generally operate around the clock. Customs business hours at some locations have long been an issue with some of our clients. If a truck arrived at a truck terminal at 6:00 p.m. on a Friday night, the shipment had to wait until Monday morning for customs clearance.

The introduction of ACROSS has made these operations open for business 24 hours a day. Shipments for which the customs release has been transmitted to us are cleared in the ACROSS system at the closest "7-24" site. For example, Pearson International Airport staff clear shipments after hours at the five truck terminals in and around the Greater Toronto Area.

As you can see, the introduction of electronic commerce has greatly improved both service and enforcement for the CCRA customs business line.

We are now at slide 15. Mr. Miller spoke earlier about the Government On-line initiative, as did Madam d'Auray. I believe a good example of a tier three initiative, or seamless government, is what we refer to as the ACROSS OGD Single Window. OGD stands for other government departments in the custom's lexicon. Clients using the ACROSS system for customs clearance are able to deal seamlessly with a number of government departments and agencies that have a mandate for controlling goods that enter Canada. Examples would be the Canadian Food Inspection Agency that concerns itself with food products; the Department of Foreign Affairs and International Trade that issues import permits for controlled quota goods; and Natural Resources that concerns itself with energy efficiency.

Our clients do not want to deal with two or more government entities when clearing the border. They see the government as a single entity. The ACROSS OGD Single Window provides a seamless government.

I will illustrate this by example. Imports of beef from Australia require a customs release, an import permit from Foreign Affairs, and a Canadian Food Inspection Agency approval. Using the ACROSS system, importers or brokers transmit all necessary data for all three agencies directly, and only once to Canada Customs.

This transmission is matched with the import permit in ACROSS and a copy of the data is sent to the Canadian Food Inspection Agency for their review. Notification of release for all three agencies is sent back using ACROSS. The OGD Single Window provides important electronic information to the government departments and agencies listed on this slide. This information would otherwise have been presented on paper.

Slide 16 demonstrates that Canada Customs has a number of electronic commerce initiatives that will be implemented in the next few years. We anticipate that many of our clients will take advantage of the recently introduced Customs Internet Gateway.

I should mention that this initiative is a Treasury Board PKI Pathfinder project. We are looking forward to sharing the information with the CIO.

This new communications channel allows clients to use the Internet to send and receive cargo, release entry and accounting data to and from the CCRA. Security of information is of critical importance to the CCRA. In the case of the Customs Internet Gateway, security is provided through the public key infrastructure, including data encryption and digital signatures.

The Customs Internet Gateway uses public standards. Therefore, its application may be readily copied for other similar government or private sector processes.

The customs action plan for the years of 2000 to 2004 is a major initiative of the CCRA. Electronic commerce figures prominently in this plan. As an example, customs self-assessment clients must use electronic commerce to confirm their shipments with us.

Other electronic commerce initiatives in the plan include expanding our interfaces with other government departments and introducing a new process called electronic adjustments.

I hope that these slides have provided you with some insight on how one government agency has used electronic commerce to reengineer and improve its operations and that of its partners.

Mr Miller: I have a few final slides. I would like to go over some of the initiatives that we have on the taxation side.

I should identify that on this slide we have a "phone" which we view as electronic for a lot of good reasons, and an Internet. Within that, we divide it into individual telephone initiatives and those with business, and the same for the Internet.

Looking down the left-hand side of the page, we have client assistance, registration, filing processes and filing and payment. Most importantly, we have initiatives that follow not only the telephone system but also through the Internet. We have been able to take advantage of initiatives that have started out as a business transaction and moved that on to transactions for individuals.

For example, we introduced the concept of telefile for people with T-1s so that people can phone in, and using a touch-tone pad, give us the information off their income tax return. That is the end of the process. We had nearly 700,000 people use that process in the last year.

Those who use it are extremely comfortable with it. We thought that we could apply those same principles to the over 1 million businesses that are registered for GST. If they are either saying there is no return, or they are identifying a small amount, we could process it through with a few touches on a touch-tone phone rather than process paper.

That is one pilot that we have underway. We are using that in the Maritimes. With any success, we will be able to expand it throughout Canada.

We have just recently provided another pilot project whereby people can change their address over the Internet. On our site, you can change an address for a benefit program such as the Child Tax Credit or the GST credit. People can do it on-line on the system. We will process it within one or two days.

That is a pilot project. We started that at the end of July. Thus far, 9,000 people have found and used that service. Most of these people have taken the time to fill out questionnaires associated with it to tell us what they think of the process and what improvements we could make.

At any one time, we probably have six or seven initiatives underway either for the further use of electronics through the telephone or through the Internet. We continually assess and re-evaluate their relevancy back to our service drivers and back to our goals. Most importantly, we relate it back to the kinds of services that people expect to get from us.

We look at this as a whole series of things coming together. For example, our most successful one last year was what we call net-file. That is a filing of individual tax returns over the Internet. It was a pilot project. It involved potentially 3.8 million Canadians. That may not sound like a pilot. This year we will be expanding it so that virtually every Canadian can file returns over the Internet directly. We restricted it last year because it was necessary to buy commercial software in order to process returns. That remains the case.

This will give you some idea of the different kinds of processes and projects we have. There are 70 or 80 of them underway, and we are learning from them. We are applying the lessons from the successful ones.

Finally, we are a large organization, and thus are able to do several different pilots and different initiatives at the same time. We do the T-1s, or individual taxes, for nine provinces and the three territories and the corporate tax forms, or the T-2s, for seven provinces and three territories. We have the HST, GST process with three provinces. Our benefit programs involve 70 million transactions with Canadians every year through the Child Tax Benefit and through the Goods and Services Tax Credit.

We have a joint business number registration with Nova Scotia and Ontario, both of these started this current year.

For the first time, Workers' Compensation Board payments are now combined with other source remittances such as income tax, Employment Insurance and Canada Pension Plan. Nova Scotia is our lead in that, although other Workers' Compensation Boards have expressed an interest in having us do a similar thing for them.

This year the T-1 net-file will be available to all Canadians, as I mentioned, and the corporate tax e-file for the federal provisions of the corporate tax will be available to seven provinces. As well, in partnership with Alberta and Ontario, the idea of having corporations file their T-4s over the net will also be a pilot, and there will probably be several others involving interactions with Canadians with different responsibilities and in different areas of tax administration.

Senator Spivak: I compliment you on your very impressive measures in eco-efficiency, or eliminating paper, and for giving us this interesting information on the benefits of electronic communication and computers. You will have a more efficient system in that information will not require to be copied by hand. It will be done instantaneously through rational use. Although you are saving paper, is there an additional cost to doing this? I assume there must be some cost for people to maintain this system and to process this information

The part of your presentation I did not understand was related to the OGD Single Window. It seems to me that you rely on the companies to give you accurate information. How can you check whether that information is accurate? For example, the importation of food into Canada by the Canadian Food Inspection Agency is a highly sensitive area. We might even compare it to the "have a cup of coffee and pray" system. Eliminating the personal inspection of meat carcasses as much as possible is not something I see as an advance, but as a rather a step backwards.

Mr. Miller: As to the first question on the additional cost, there is no question that we must now look at our business cases differently from the way that we did in the past. I spent most of my career in the Treasury Board Secretariat, and it was very difficult for me to make a transition from looking at an impact on the bottom line, or whether we could save resources or people, to recognizing that we have to offer this as an alternative and be willing to understand the implications of that.

As an example, people are quite happy about the fact that we can offer individuals the ability to file their income tax returns over the Internet. That is only the data entry part of the tax return. We only spend about $35 million on data entry of T-1 returns. The total cost of processing T-1s is closer to $140 million. That is without the information technology. We spend more on requests from people who want to adjust their taxes when, say, they have forgotten to include an information slip or they think the accounting is wrong because they say that we have applied credits to the wrong year. We spend more on that than on data entry.

Until we get to a point where people are comfortable doing things over the Internet and we have the level of security that makes us comfortable with doing those transactions, then we will always be stuck dealing only with data entry. My objective is to get to those other elements of cost in order to change that. That will not be next Tuesday, because there is an evolution in the way people use the Internet or use electronic transactions.

Senator Spivak: It will not cost us less money.

Mr. Miller: No.

Senator Spivak: It may cost more money, but it will be a more efficient way of doing business.

Mr. Miller: That is right.

Senator Spivak: I know Senator Finestone will ask about the personal aspect, so I will not touch on that.

The second part of my question is related to the single window. How can you possibly know what is going on if you rely on the businesses themselves to give you information and it is all done through a single window? I do not understand that.

Mr. Cope: One of the tenets of customs' reporting is voluntary disclosure. Our fundamental assumption is that importers and customs brokers who operate on their behalf and who get paid well for providing a service, provide full and complete information. When these systems are pulled together, there is a negotiation process in which, for example, the Canadian Food Inspection Agency, the CCRA and our clients work together to define the information that must be provided. When that information comes in, there are some very rigorous edits within the computer system to ensure that the information is provided to us. That information is then sent electronically to a customs inspector, and it is only when that customs or the agriculture inspector has actually taken a look at the information and made a decision based on risk analysis and proper review can the shipment proceed forward.

I should mention that not all shipment crossing the border is inspected. We have 10 million shipments across the border, and probably 3 or 4 per cent are inspected. The electronics allow us, using sophisticated algorithms, to inspect the highest-risk shipments.

Senator Spivak: Why am I not comfortable with that answer? You must have some material. Could you clearly outline for the committee exactly how this works and what the verification process is, if any? I do not expect you could look at 10 million shipments, but you could consider spot checks. There are many sensitive issues surrounding the importation of food, not to mention nuclear devices and all kinds of things. I think the Canadian public is most interested in this. I am not sure that the electronic method that you are describing would even begin to address any of those concerns. I will leave it there.

Senator Finestone: I must say it was a very good presentation. Perhaps I will understand it when I read it.

I am concerned about the safety and security of the information. I am concerned about people robbing me blind and about my personal security if the encryption system does not work and there is the risk of fraud or espionage. I want to know how you are going to protect against that. Where does PKI fit into this? What is it?

I am excited to see that we are becoming so electronically sophisticated. What is the impact of that on the Canadian workforce? How are we, in any way, shape or form, either upgrading or updating their training and education, and to what extent is all this efficiency affecting the workplace and the workforce? How many people have lost their jobs? How many have gone away only to have you say to them, "Come back as a contract employee or work from your house"?

I am a long-time member of Parliament with a long line of people at my front door and at my desk. I am concerned about the number of jobs that have been lost and the fact that many people are re-hired under contract and that they have no employment protection, no pension, no dental plan, or many other things that employees used to take for granted when they would make a lifelong commitment to the Government of Canada to serve their country. Those people no longer exist.

Mr. Miller: I will try my best to answer the first question about safety and security. I can explain PKI the way I understand it, which may not be technically correct. I will leave that to my colleagues to straighten out. The best way I can describe PKI and security is that we have different levels of transactions on the Internet. PKI is representative of the highest level of security. It must meet objectives such as non-repudiation. In other words, people have to acknowledge that they are the originators of that information, and they have to identify themselves and state that the transmission of the information is secure. Effectively, it allows for what I would consider a two-way dialogue of data, similar to what would happen in a telephone conversation.

The difficulty in the past was that to obtain that level of security, for PKI -- which is public key infrastructure and it is matched with a private key -- it takes two keys to operate. I forget the exact amount of security associated with it, but it would be extremely difficult to crack. No one has as yet cracked that. The problem is that it is extremely cumbersome to use.

Senator Finestone: Are you saying that Echelon and all those other monitoring ears and eyes out there have not cracked this PKI?

Mr. Miller: To the best of my understanding.

Mr. Cope: My understanding with respect to the algorithm for encryption is that it is estimated that it would take the best computer in the world about 100 years to go through all the different combinations and permutations for which the data has been scrambled to actually come up with an answer. The physical computing limitation and all the different combinations simply make it impossible to unscramble the information. That is what encryption does.

Mr. Miller: I should qualify that by saying that the PKI is a method of transmitting information back and forth. Where a lot of the hacking occurs is getting into a particular location, a mainframe, and then accessing the data that is resident there. Incredibly efficient firewalls have been put up to prevent outside hackers from getting in.

I do not have to worry about data security. I have an entire branch looking at that. My concern is: How do I get to that data at a point where the average Canadian can find out what information we have or change that information if it is appropriate? We have spent 30 years building these firewalls to make sure that no one can do that, so to put in a system, which PKI represents, to allow them to do that is extremely cumbersome, and rightfully so. There are versions that allow for a little bit less data security in the sense of the way you operate. What we use for our transactions is something called secure socket layer 128-bit encryption. That is the same as the banks use. That is the standard we use. That allows people to transmit information to us, and for us to acknowledge that, yes, we got the information they sent, but we will not transmit any restricted information back to them. We will just acknowledge receipt of the data and then rely on Canada Post by sending them documents such as their assessment notice or the actual output from a GST remittance.

We expect the problems associated with PKI to be overcome by the industry, because they know it is there and that it is an incredible market that they can tap into. There are some products now that have some real potential for addressing that issue, but until we are positive that sufficient security exists, we will not use that.

Canadians want to feel sure that CCRA or Revenue Canada will ensure that our data and our transmission of information is secure above any other organization in Canada, private or public, so we have a responsibility and we do not want to lose that.

Senator Finestone: I am delighted and pleased to hear that. I would recall to memory the Privacy Commissioner of Canada's report on HRDC and the fact that Revenue Canada information was found. You had my tax return, you knew my age and all the intimate details of my private life. As I said, you have written my diary, thank you very much, but what you have just said -- and I believe every word you are saying -- seemingly is contradicted by all this information that was in the longitudinal file at HRDC. How did they get information on my income tax other than from you?

Mr. Miller: They got it from us and returned it to us.

Senator Finestone: Why and how did they get it?

Mr. Miller: Section 241 of the legislation stipulates under what conditions and for what purposes we can transfer information to HRDC. I do not pretend to be an expert on it, but it was not a question of them holding it legally. It was a question of the moral responsibility of having that information. When they returned it to us, the question became: What did we do with it? For our purposes, we did not need it, but it was a public record. Could we destroy it? It is fairly awkward for us. Certainly, under the provisions of the legislation, HRDC was given that information, and it was really a question of how the use of that evolved over what amounts to a long period of time.

Senator Finestone: It is such a breach of trust. Canadians feel that Statistics Canada with the census and Revenue Canada have a responsibility to keep our information in a personal file that is inviolable by anyone else. Now you tell me about section 241. I remember that discussion with the commissioner. I remember what Bruce Phillips had to say. He told us that legally the government has the right. Nevertheless, Canadians feel that banks and the government have a moral obligation to the people. Is your agency guarding the moral honour of Canada?

Mr. Miller: I would like to think so. One of our most important provisions, and one that every employee is familiar with, is the responsibility associated with disclosure of tax information. In many situations provinces have a provincial law that allows them to collect information, and we collect that same information through income tax records. We will not share our information with them, even though they have their own law to do it, because we would have obtained that information through an income tax return. I am referring to even such information as a name and address. We will not necessarily share that with the provinces.

Senator Finestone: That is all very well, but there are always exceptions to every rule. If I am a parent who is divorced and I need to find the other parent for child support, and that other parent is now in British Columbia and I live in Quebec, and I know that the access route is through you at the Canada Customs and Revenue Agency, I know that you will not give that information to me. You will, however, give it to HRDC. I find that strange.

We need to look at the kinds of questions of public policy that indicate that there is a need for a response and then find the mechanism to do that. Where there is a will, there is a way. We should be able to give information where it is necessary for the well-being of Mr. and Mrs. Toutlemonde, but in other situations we should not. Maybe that would be a good rule of thumb.

Mr. Miller: I can only say in response that we are very respectful of the way in which the law has been passed by Parliament. Because we have a lot of accountants and other people extremely interested in how that is applied and under what circumstances, we are extremely careful about the application of section 241 of the Income Tax Act and extremely careful that we respect the intentions of Parliament in the passage of those changes. If there are exclusions or items of information exchanged that should not be in that legislation, then the route is to get that legislation changed. We are here to respect the wishes of Parliament.

Senator Spivak: I was under the impression, perhaps falsely, that there is legislative approval or there has been legislation passed to deal with delinquent parents. Am I mistaken?

Mr. Miller: That is correct. There are certain provisions, I think under the Family Law Enforcement Act, that allow for the exchange of information, and again we would respect that under those conditions.

Senator Spivak: It is possible for someone in Quebec to trace someone who is living in British Columbia for payment of support. Is that provincial or federal law?

Mr. Miller: It is federal. I can give you a specific example where we could use it. If a spouse has not made the child support payments, then we can, through the legislation, identify the person, hold back on a tax refund, and put that towards those child support payments.

Senator Spivak: Can you also provide that information for the enforcement of garnishing orders?

Mr. Miller: I am not aware of that. I do not know. We do not deal with that part. However, again, if the legislation indicates that we can do it, then we can. I am just not familiar with it.

Senator Spivak: This is part provincial and part federal. Let us say you have the information on the spouse in British Columbia. Where does that information go? Does it go to the person in Quebec who is seeking payment? Does it go to the law enforcement officer in British Columbia? What is done with that information?

Mr. Miller: I should not speak about this because I am not sure of the sequence of events. We can find that out for you.

Senator Spivak: Please do.

Mr. Miller: Certainly if the law provides for it, then we give information to the Department of Justice. I do not know what they do with it from that point.

Senator Spivak: We would like to know that.

The Chairman: In 1997 a Senate subcommittee studied policy issues in the 21st century regarding the whole convergence aspect of social trends. As Senator Spivak will remember, we met with a group of professors who had been doing research for the last 25 years at Harvard University. Just before we left that interesting session, I asked them a question: Over and above all your research, what will be an individual's key objective in this communications technological revolution? The answer was: simplification.

My question is based on the objective of every Canadian citizen who wants to simplify his or her life. In your presentation you say that you have multiplied the number of channels by which people can reach you to deal with revenue and, therefore, taxation matters. Are you also looking at facilitating how older Canadians, who may be on fixed incomes, can report back to your agency on tax matters? Will we see a simplified income tax form for those citizens so that they need not hire outside help or a third party to deal with you?

Mr. Miller: We already provide a simplified return in larger type for seniors.

The Chairman: How many pages?

Mr. Miller: The tax return itself is only three and a half pages long. It is almost the same length as it was 50 years ago. However, the number of schedules to support that group has gone up.

The Chairman: The total package has increased.

Mr. Miller: We are approaching the Year of the Volunteer. We have a volunteer program that prepares about 400,000 returns. The program is manned by volunteers from the private sector, by accountants and by others who have a minimum amount of training. This program is for seniors who have an income level below a certain threshold. We now visit the community centres where citizens actually congregate and that has caused the program to grow dramatically in recent years.

Senator Finestone: What happened to my question on staffing?

Mr. Miller: Staffing is one of our most important considerations for the changes being made within the agency. We have approximately 43,000 employees. In my area, there are about 16,000.

I meet with the unions twice a year to discuss the evolution of our programs. We are not dealing with a reduction. We know we are evolving from things like data entry into assessing tax matters at a more valued-added level, and we will provide the training opportunities for our own staff to make that transition. We will give them the opportunity to deal with computers so that when a person phones up and wants to know the implications of filing a return, our staff will be able to tell them from first-hand knowledge just how these things work.

We cannot achieve this overnight, but I feel very encouraged about our dealings with the unions. They understand where we are trying to go. They understand that training is required, and they are willing to make adjustments as we go along.

Senator Spivak: Following up on the simplification question, if we had a cashless society and a flat tax, could you foresee eventually eliminating returns and just electronically deducting tax at source?

Mr. Miller: Countries like Denmark have done that but their whole structure is based on everyone reporting all sources of income upfront. The banks provide details of all transactions, as do stockbrokers. The government groups it together and sends it back to the taxpayer to see if the taxpayer agrees.We decided that Canadians probably will not want that route. We watch the different jurisdictions but their processes are very different from ours.

Our tax system is complicated for the most part by the social structure and the social implications of the tax and not just income level. Adjustments are needed to reflect personal circumstances like age, disability, dependents, and spousal income. All of these things have social implications in our tax system and they complicate the system.

The Chairman: Our next witness is Mr. Reg Alcock, MP for Winnipeg South, an individual witness. Mr. Alcock has great expertise on everything touching on the new information age. He graduated from Harvard University with a Master of Public Administration. He is still working actively with the university and also with different public administration research organizations here in Canada and around the world.

Please proceed.

Mr. Reg Alcock, Member of Parliament: Honourable senators, it is novel for me to be here sitting on this side of the table, but I am genuinely pleased to be asked to come here. I think the Senate can play a very important role in this debate.

I have been writing on this topic for some time and it is always difficult to describe it efficiently.

I am of a generation who did not grow up with this technology. I was well into my career before the first personal microcomputer hit the market. It is only by fortuitous accident that I ended up with what was then a state-of-the-art desktop computer. It was a Radio Shack TRS48, I believe, with 48K of processing power, 150K of storage. The programs and all data management could run on 150 kilobytes. I became fascinated with it then.

I was a public manager with the provincial public service in Manitoba where I ran an institution for children. Largely on the basis of the information that I was able to extract, I began to get a broader view of what was happening in the system and was eventually promoted to the director of child welfare for the province. As I was a convert to this technology -- and this occurred in 1983 -- I launched a file management system. We were going to build a records management system for all the children in child welfare. Since I was the director I actually had some budgets so we went to work. It was a spectacular failure, but it was not a big budget, so perhaps it was not that spectacular. We assumed that we had simply not spent enough money so we got some more money and launched a second project. That one also failed and I left the public service. Those two things were not necessarily related, but there has certainly been a long history of this.

I went into private business and continued to build databases. I was interested in how this technology allowed you to model social problems and to get a sense of what was happening within communities. I felt that I needed to get more education, so I went back to school in 1987. I went down to Harvard University to study, in part because of the proximity of Harvard and MIT at that time. I met a fellow there who is a professor at the Kennedy school and who runs a program called Strategic Computing in the Public Sector. He had been the budget director for the City of Boston and before that he had been in New York. When he started in 1987, he felt that this whole issue of data management and how you handled information was an important public policy issue. He wanted to start a research program at the school. The then dean of the school stood up and said, "We don't do this. We are a school of public policy. We don't teach typing. If you want to teach computers, go to the technical college. Go learn about it over there." That was very much the attitude towards managers then and it still is today, namely, that these are problems that need to be dealt with some place else. However, that same person gave a speech last October in which he said that these issues are the defining issues for the next two decades. These are the issues that will drive government in all its forms for the next two decades until we figure them out and understand what is really going on.

When I went back to school, I was a convert. Having had some experiences on my own, I simply assumed that we did not have enough policy freedom to purchase the equipment or enough technical expertise or a large enough budget to drive program development. I conceptualized it all the time as simply being a technical problem. We began looking for best practices, primarily all over the U.S. but also internationally. We discovered that the kind of failures that I had experienced in my own work were being repeated all over the place. This was not something new.

In the public service, it is hard to talk about failure. I would argue certainly in the work that I have done here that our public service is equal to any in the world. Some of the things I say tend to be seen as critical of the public service, but I am not at all critical of the people who work in it. I think we have a talented group, and I think they are wrestling with some very difficult issues.

The Kennedy School of Government has a program called the Innovations Program which started in about 1986. The Ford Foundation and the school collaborate and give a $100,000 cash prize to public service ventures. They can be government departments or private not-for-profit entities that deliver public services. They give them a prize for innovative practise. It is a big deal. Whoever wins this prize gets lots of publicity. In 1989, they broadened the criteria to include technology projects. Since then, a number of projects have won the prize. After the first five years, I undertook to do a review of the projects that had won. Not one of them was still in existence. These were projects that had been juried and were considered to be excellent examples of leading edge innovation, yet none of them survived. We began struggling with this. Up to then, we could conceptualize this as a technical problem. For example, we did not have proper PKI or good methods of security, or the case-building tools to create the software programs and integrate them were not strong enough.

We held a workshop in 1997 that brought together senior managers in the U.S. from the federal and state governments where they had done collaborative projects. We were looking at projects that involved data sharing because to get the real value there needs to be data sharing. If you define the kind of value added service that you will bring to Canadians as being faster, better, more customer-sensitive service as one aspect, you must share access to information in some fashion.

What came out of that was not only another litany of good projects that had failed, but also a statement was made by one of the program directors who said that the problems that we are facing today are 2 per cent technology and 98 per cent management.

The public sector is a different creature, as we all know. It is a more complicated creature to work within, but the things that are driving the whole attempt to accumulate and utilize information in a different manner or the things that are impeding it are issues of policy. They are not simply driven by the way in which you accumulate and use the information.

In 1994, I was asked to participate in a project with the Treasury Board by looking at different ways of reporting to Parliament, accumulating information and providing reports to Parliament for the working committees. We got into a series of discussions and an incredibly talented group of people from the departments came together to talk about how we might do that. They were from the Auditor General's department, Treasury Board, Finance and other departments. For example, I chose the issue of cars. I asked: "How many cars did we buy last year?" I use it all the time now because it is a simple example. It is not exactly the most earth shattering piece of information but a car is a pretty hard thing to lose. It is a big, solid good. Presumably, it has a financial code in the government. I do not know of any departments that hand write cheques any more; they are almost all produced electronically. There is a record somewhere. I asked: "How many cars did we buy last year? Tell me." The estimate was that it would take about two and one-half to three weeks to get the answer. If I asked a question, they would say, "It is hard to accumulate all that information." I spoke about that publicly at one point and I received all sorts of e-mails from many former public servants who said, "Keep going because the information is all there." You cannot dignify that as evidence before a Senate committee.

In a series of workshops that we are doing right now, the finance department, in starting their discussion, hung up a picture of a car. They have now addressed this issue that I raised and they are building department-wide financial systems that will allow them to quickly generate the answer to that question. They will be able to give me reports on cars in a day and one-half, that is, by department. What about the government-wide number? Why do I have to request a report? Why can't I just access the data? I will write my own report, just let me have the information. All this information is public information. None is protected by privacy, and all of it is accountability information. Why can't I just access it?

In 1994 there was talk about building those instruments for reporting to Parliament, but that was cut short.

Senator Spivak: Why?

Mr. Alcock: I think that there were all sorts of reasons. I would speculate that, if you had that information accumulated in that way, it would demonstrate things that you may not want demonstrated. It would be transparent. The government does not necessarily function well in absolute transparency.

I do not want to be too glib about that. It is true that there are serious issues here of privacy protection, and other issues that need to be addressed. I do not want to play light and fast with that. However, this issue of information and what information represents in terms of power and control is a much bigger issue than I think we give it credit for. We keep running around the ends talking about services.

There is an article in this week's Hill Times about the appointment of Michelle d'Auray as the CIO. She is an incredibly able person. She worked on the e-commerce privacy bill and understands these issue. However, I think she will fail.

I do not think that we will meet our deadline of having government on-line by 2004 unless we change our definition. If by that we mean a number of departments will have Web sites up by 2004, that is fair. If it means that we will deliver more services through those Web sites than we do now, it is probably true. However, unless we confront the policy issues that underlie this, we will never meet the Speech from the Throne commitment of one portal.

Part of the problem is the people in control. The management and leadership tend to be of an age, tend to be our age, and did not grow up with the technology. They know that it is important and that it is powerful. The first order of the change seems pretty nice. You get a nice Web site up and running. It flashes at the right time and has nice colours on it. Many people cannot use it, so you must have many doors. They will either learn eventually, or die. However, I believe that we will make the transition. There are more people coming on-line than we realize.

Once the Web site is up, the questions will start. People realize that there are many things that can be done through a Web site. You can make your service that much more efficient if you partner with the service next door.

We held a series of round tables on this. I rounded up seven departments that had an interest in this, and many people were working on these problems and understood them cold. However, if a person in department X is working on the IT strategy, and thinks it would be a good idea to share the information with the next department in order to enhance the kinds of service offerings they can provide, there is no mandate to do that. A person who tried to do that would get nothing but grief.

Many problems are created as we move up towards the cabinet and the House. There is no mandate to address those problems.

In 1992 the U.S. began to struggle when the new administration took office. The Internet was Vice President Gore's toy. President Clinton was interested in other things. Vice president Gore took responsibility for the Internet. This entire government service to the citizen initiative was driven out of the vice-president's office. In late 1999 it moved to the president's office because Vice President Gore realized that they could not drive it out of the vice-president's office. There were too many policy impediments, too many interactions between departments, too many turf wars and too many policy issues that needed to be resolved that could not be resolved. The problems could only be resolved in one place, and that was in the president's office.

I went to Britain in 1994 and looked at their systems. At that point the responsibility for the Internet was in the office of the Chancellor of the Exchequer. Where is it today? It is in the prime minister's office because they realized they could not fight all the interdepartmental battles in order to get these agreements hammered out and to obtain the efficiencies extracted from true reform.

In Australia, responsibility for the Internet sits in the prime minister's office. I do not like to use Singapore as an example. It is also in the president's office there, but Singapore is not a democracy. This is more an issue in democratic countries.

I have been saying to our Prime Minister and to those around him that I think that if we are going to be successful in this, it must be driven from the most senior office in government. There is just no question about that.

We must become engaged, we being the House of Commons and the Senate. I think that the work that Senator Finestone is doing on privacy, and the work that this committee is doing on convergence, is very important to these questions. The value for citizens comes out of the collapsing functions, simplicity. The value for citizens also comes out of greater transparency and accountability. Those things will only be driven with strong political oversight.

There is tremendous value there. The witnesses from CCRA talked about savings. We have all these transactions taking place on-line. If everyone is filing on-line rather than on paper, surely, there are some savings.

In the transition period there are not a lot of savings. You must maintain all doors because you have people at different levels of expertise. There are huge savings and productivity gains down the road, and not that far down the road.

Privacy and access always go hand in hand. It is not just a matter of dealing with privacy legislation. It is also a matter of reviewing access to information because the transparency issues are extremely important. There are huge debates on this topic. Senator Finestone will recall that I did not understand the privacy issue, I must confess, at first. I had conceptualized the privacy issue as a security issue.

I think that PKI is a very cumbersome system. We have complex security systems in the House of Commons so that people cannot read my schedule. My system is nearly unusable for any interaction with the outside world. That is foolish.

The bank can keep my money safe. I can put my card in the machine in downtown London and receive my money out of my account in Winnipeg. If they can keep that transaction secure, surely they can keep my birth date secure. There would probably be less disbursal of information about me than occurs now.

We discovered in our work that people conceptualize privacy as a right. It is part of the discussion of one who is relative to the government. What is my right as a citizen? That changes the debate substantially. It made me wonder about the government that we have, and this ethereal thing called democracy.

Articles are being written on whether democracy was only a passing moment. Was it just a transition on the way to another world? It was particularly disturbing to me while sitting at a table with some of the most senior and well respected public servants, present and former, discussing whether Parliament is merely a waste of time. It must be endured.

There is the sense that those things that give form to our democratic rights have been devalued and downplayed to such an extent that we are at risk of losing something. It has taken me from what was initially an interesting discussion of how do we combine services in order to better facilitate my mother's life on-line, to a more fundamental examination of how our government works and needs to work in light of these new technologies.

In many ways, government is an ideal candidate for computers because it is rule-based. Senator Finestone talked about people lined up in front of her office. We all have them. What is it they are most often there for? It is because of the rigidity of some simple program, the current rigidity, never mind the rigidity of a computer, but the inability to have all the bureaucrats sitting in one room. Bureaucrats in Manitoba and bureaucrats in Ottawa believe that that this question should be solved, but nobody has the mandate or authority to do it. That kind of rigidity is built into our rules-based system. The fact that there are rules means that they are perfect candidates to be written into algorithms. As I was writing this, I was thinking about rules and the structures, and it occurred to me that we were taking a very rigid tool, such as a computer, and a very rigid set of rules, and what we are going to get out is a very rigid, insensitive result.

I wrote a little piece called, "Could Orwell have been right after all?" As I was thinking my way through this, I was looking for references. I came across a researcher writing out of the Netherlands, the European Community, who had been over here in Canada a few times. He sent me one of his books entitled "Orwell in Athens." He talks about this very effect. In part, because the public sector has a desire to deliver equity, we are rigid in the structure of services.

If we want to extract productivity and savings, one way to do so is to make the systems relatively idiot-proof and put them in the hands of the classic pimply faced kid at a computer screen or with a headset answering questions from citizens and that will take any personalization out of the picture.

You will get lower-cost delivery of services, but the danger is that you will get a much worse kind of service as opposed to a model that would see you empowering public servants at the local level to deliver services within a properly-described policy and accountability framework, both of which can be managed by the machine.

I will slow down at this point so that you may have an opportunity to ask questions.

Senator Spivak: At the time you were Director of Child Welfare, I was working at the Social Planning Council. It was well after the multi-services project, which I am sure you know about, and we had people in the core area who had 15 care workers. I was at conferences with these care workers, 15 of them, and they told me that the service was not available. We need a database which can help people provide service.

Perhaps we should change the title of our study. Instead of "Outcome for Consumers," we should use the word "citizens."

You have illuminated the relationship between transparency and empowerment. When you look at, for example, the demonstrations which have been facilitated over the Internet around institutions like the WTO and the IMF, you realize that whether they are misguided or not is not the issue, the issue is that people are trying to deal with forces which they feel are beyond their control. You have crystallized a very important policy issue for us.

I wonder, Madam Chair, whether this is not something which requires a separate examination or whether it can be incorporated here.

Mr. Alcock, you have illuminated something which is very important to all the other issues we have to deal with, such as privacy. I thank you for that.

How do you think we can grab a piece of this? Here in the Senate perhaps we do not have the constituency pressures that you do, but we do have, hopefully, resources and a lot of bright people. Maybe we could chew off a piece of that. Do you have any ideas?

Mr. Alcock: The very fact that you are one step removed from the day-to-dayness of the political process is good. You have a lot of people who understand politics well, and who have a tremendous amount of expertise. This is going to challenge the system in many ways. It is a bigger issue than I think most of us realize.

Just one of the things that the WTO demonstrations showed is that part of what is happening there is that information now is leaky. A Canadian economist was the first one to write about the relationship between power and information, at least in a modern context.

Senator Spivak: The priests knew about it in the ancient world.

Mr. Alcock: But they just kept it. Computers do take enormous amounts of information and make it, not simple, but possible to manage and extract information. The Internet makes that information leaky, so things move very fast.

I was talking to a judge the other day who says it used to be, in the good old days, that if the Supreme Court made a decision, it would be three to six months before that decision would show up in front of him. Now, if the Supreme Court makes a decision on a Monday, people will be quoting from it on Wednesday, so he better have read it. The Internet moves information in different ways, but that makes it harder to control.

I am eventually going to be able to know how many cars there are. I will build the instrument myself if I have to. Once it is built, it will be easy to replicate. It is going to happen anyway. We had better lead it rather than be overtaken by it.

Senator Finestone: It is exciting to have thinkers like you. There are not too many of them, even in the House of Commons.

Mr. Alcock: I have been nice to the Senate.

Senator Finestone: You have been nice to the Senate, to the House, and to the general population of Canada, and I think that is good. That is what I mean, if it is not what I said.

However, I have a degree of scepticism to attach to the rosy portrait. I told Michelle d'Auray that I think this is a wonderful idea. However, it is unrealistic. It is like pie in the sky. Canada will be first to do what? How does it affect our population? How is it going to address the different stratas in our population? You have to think about equity and equality. You have to think about hiring and firing and skills development. You have to think about business, business safety, and information as power. Who has power? Those who have information. Therefore, it is business and business interests and wealth concentrated. Is this what Canada is going to stand for so that we can say, "Hooray, we are number one"? I am not so sure that is what Canadians want if it means that business and power and Internet and computers equal the top line. That is where the power will be when information is power. Government does not create jobs; business creates jobs. The question is: How many new jobs and how much new GDP will we have as a result of those new jobs? Are we just using this new toy for the time being so that it will show an increase in the number of people using it and an increase in supposed dollars? A bank, an insurance company, a mutual fund and the brokers are all under one net, but if they all report, it looks like there is more business, but is there really? No one has been able to say that in our econometric model we have really that much more business. I could be totally wrong, but this is how it strikes me. Is it efficiency? What is the cost of the efficiency? If it is in the prime minister's office, is that guarantee any better in the Canadian constitutional structure? I do not know.

Have you thought about some of these things? Frankly, you know perfectly well that we are busy cutting and carefully spending every single dollar. Will the Department of Finance be willing to shell out billions of dollars to make this happen?

Mr. Alcock: Billions of dollars? That is a lot of money. Let me be laborious, as I always am about these kinds of questions. Bill Gates, in his book Business at the Speed of Thought, starts off by saying that the 1980s were about quality and the 1990s were about re-engineering. This decade will be about velocity. What he meant by that was that the initial arrival of relatively low-cost computers allowed you to build feedback mechanisms into your supply chains and allowed you to manage quality. You could make a change and watch the result in real time. You could adjust your inputs in order to get ever higher levels of quality.

When you look at some of the business models as they began to accumulate the information from that process, it allowed senior managers to look at the organization and see it differently. That led to the restructuring of the next decade. That restructuring produced huge savings for the corporations although there were huge costs involved in the investment in the technology initially. Corporations did not go through this incredible downsizing with all the attendant social problems. I am not making light of those at all but there is value there. There is value in terms of lower cost and faster operation.

The world has been increasing in speed for a very long time. What has been government's response to that? I would argue that what has happened is because the deliberative values -- that is, the setting and clarifying processes of a place like the House of Commons and the Senate -- are much slower moving than what is happening outside. In our operations, we have tended to remove things from the House. We have taken more things into executive decisions in cabinet and in centres like the PCO. We have also privatized an awful lot. I led the arguments for privatization in the ports. I was in transport and was saying "We are doing this because they have to be able to make decisions fast and innovate and play in the real world."

This organization must be separate from government in order to be effective in today's society. We are saying that government cannot be. We are not tackling the beast, we are not tackling the thing that is at the centre, which is us.

Senator Finestone: I am not so sure about that. I think the kind of leadership we have in the public sector are people who are just as bright as those in the ordinary business workforce. I would not sell us short for one second.

Mr. Alcock: Absolutely. I would support you in that. A lot of the information that I am chasing down is coming from them. They are as frustrated by this as we are. They can see some of the savings, and they can see the opportunities. The folks on the technical side who are comfortable with the technology and can see the opportunities are frustrated. They just cannot enact them because we are not there yet.

The Chairman: We sense that there is a strong political will that the objective of 2004 be met. If you were sitting in our shoes and had to make recommendations for public policy, what would be the three things that you would recommend to us to ensure that it will work so that, in the year 2004, we can have government on-line?

Mr. Alcock: My cynical recommendation was to redefine the objective.

Senator Spivak: That is right.

Mr. Alcock: My other concern is not an easy one to resolve, and I am not sure it helps with reaching the objective by 2004. Pursue privacy and access vigorously. Mr. Phillips argues that they are not the ying and the yang, but they are related.

The Chairman: We heard from both commissioners back to back at committee. You have hit it right on. We saw the need for the balance between privacy and access.

Mr. Alcock: We have debated that a lot. The kinds of value you will extract by allowing data sharing need not interfere with people's rights as citizens. We have to reconceptualize that. Those two are part of it. It must be lead from the top = that is, from the point in government that can resolve the battling between departments and agencies.

The third issue is -- and this is particularly for the Senate -- to help us with this issue of political reform. By that I do not necessarily mean campaign-type reform, but accountability and transparency. That is to say, the role that Parliament occupies in the lives of Canadians.

The Chairman: That is interesting. The Senate is often regarded by Canadians as the house of sober second thought on one hand but, on the other hand, the new communications systems are increasing the speed with which we are expected to deal with all issues. We are taking a step back, as a subcommittee and as a full committee, to look at the different issues that Canadians have to live with within this explosion. We thank you very much for your input. The quality of our report will reflect the quality of our witnesses.

Mr. Alcock: One final matter. I have brought copies of two reports. One is a report we did from our first set of round tables, and the second is the introductory document from a report that the Harvard policy group is doing, offering advice to governments on how to move on these issues.

The Chairman: We have them.

Mr. Alcock: They are in English only. One report is available in French; the other, unfortunately, is not, although some groups around here might help us translate it.

The Chairman: Honourable senators, this brings an end to our meeting. Next Monday I hope we can meet again at the same time, at 2:00 p.m. We have a long list of witnesses who will be appearing before us.

The committee adjourned.