Proceedings of the Standing Senate Committee on
Social Affairs,
Science and Technology
Issue 6 - Evidence
OTTAWA, Monday, December 6, 1999
The Standing Senate Committee on Social Affairs, Science and Technology, to which was referred the subject matter of Bill C-6, to support and promote electronic commerce by protecting personal information that is collected, used or disclosed in certain circumstances, by providing for the use of electronic means to communicate or record information or transactions and by amending the Canada Evidence Act, the Statutory Instruments Act and the Statute Revision Act, met this day at 1:03 p.m. to give consideration to the subject matter of the bill.
Senator Michael Kirby (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, we are here for our last session of what amounts to the pre-study, effectively, of Bill C-6. Our witness, who is familiar to most of us, is Roger Tassé, former Deputy Minister of Justice. Some honourable senators have known him for a long time.
We are delighted that you are here, Mr. Tassé. I know you have an opening statement. The fundamental issue we wish to deal with today is the question of the constitutionality of the bill; that is to say, to what extent does it infringe on areas of provincial jurisdiction?
The intention today, honourable senators, once Mr. Tassé is finished, is to proceed in camera to discuss the report of the committee. Your steering committee drafted a report over the weekend, and we will distribute that once we go in camera. We will then see where we are on that subject.
Mr. Tassé, please proceed.
Mr. Roger Tassé, Former Deputy Minister of Justice: Thank you, Mr. Chairman, for your invitation to appear before your committee and to share my thoughts with you on the constitutionality of this important bill relating to electronic commerce.
In the last few years -- in effect, since I left Bell Canada, where I spent two years as Vice-President of Regulatory Affairs -- I have developed an interest in anything that sounds like Internet and e-commerce. Therefore, I will speak from the experience and the knowledge I have received in the last few years while keeping an eye on what was happening in that area.
Perhaps I should begin by providing a context for my later comments on the constitutionality of this legislative proposal. First, I note that the purpose of the legislation is set out in clause 3, where it says that the purpose is to establish rules to govern the collection, the use and the disclosure of personal information in an era where, in effect, technology has developed and simplified the collection, the use and the dissemination of information.
I can talk more about what I mean by that, and the power that the new technology, computers and the networking has meant and continues to mean for personal information. It is important to realize that the purpose of Bill C-6 is, first, to regulate and provide standards for the use, the collection and the dissemination of information.
What is the area of application of this legislation? Bill C-6 applies in respect of organizations in the area of the collection of personal information and how that information is used and disclosed in the course of commercial activities. This is very important. This is the purpose and this is the area where the legislation will apply. We are talking about commercial activities in relation to the use and dissemination of personal information. In that sense this proposal is very limited. It is not a code dealing with the protection of personal information.
The primary purpose of Bill C-6 is to protect personal information and regulate the use, collection and dissemination of personal information utilized in the course of commercial activities. Much of the information that is gathered and disseminated is not required for commercial activities. This bill does not address that issue, as we have heard from a number of witnesses regarding the use of personal health care information.
That being said, there is an important transition clause, clause 30, that provides that the legislation would not apply for three years. Thus, any organization can assume its own power to regulate the collection, use and disclosure of personal information within a province for that three-year period until the legislation can be applied. There are two exceptions to clause 30. The first exception stipulates that Bill C-6 will apply immediately for federal private sector organizations such as banks, telcos and other similar businesses. The second exception is that it will apply to the transfer of personal information from one province to another province. Therefore, the sale of information from one province to another would be regulated immediately upon the legislation's coming into force.
Clause 26 is another important clause. Paragraph (2)(b) provides that if the Governor in Council of Canada is satisfied that a province has legislation that is substantially similar to the provisions of Bill C-6, there will be an exemption of the applications of the bill for the information that is collected, used or disseminated within that province. For example, Quebec has had such legislation in place for some years; thus an exemption would apply to the collection, use and dissemination of information within that province as these issues would be within the realm of provincial jurisdiction.
That is the legislation that you have before you, honourable senators. The question that you have been debating and discussing is, "What are the constitutional underpinnings for legislation of this kind?" I note that Parliament has the authority to legislate or regulate in respect of the federal private sector -- the banks, the telcos and the like. There is a definition for the undertaking of business which pertains to the federal private sector. There is another power that is being called upon in aid of this legislation and that is the power with respect to the regulation of trade and commerce that is found in section 91.2. of the Constitution Act.
As you know, there are two branches to this power. The first, which is the narrow branch, is the power to make laws in respect of international-interprovincial trade. However, the second branch, which is not often referred to or used by the federal Parliament, but is nevertheless of key importance, is the power to make laws under the general branch of trade and commerce.
The general branch of trade and commerce was, in my view, well explained in the General Motors case of 1989. That case dealt with provisions of the Competition Act that established civil remedies; and, for the purpose of deciding whether civil remedies were allowed in the federal sphere, the court had to address whether the discriminatory pricing provisions of the Competition Act were based on the criminal law power, the international-interprovincial trade and commerce power or the power under the general branch of trade and commerce.
The court, in a unanimous decision, using previous cases, set out certain indicia for identifying the features of federal legislation that could meet the test of the general powers in relation to trade and commerce. The court identified five features that applied to competition and, in the end, decided that the competition law as we know it in Canada does not rely solely on the power of Parliament to make laws in respect of criminal law, but also relies on the power of Parliament to make laws in respect of international-interprovincial trade and relies also on the second, general, branch of the trade and commerce power.
In effect, with respect to the indicia that they had identified, the court said that meeting all of them was not a guarantee, but that Parliament could use these criteria or features as guidelines, and if you met them you were probably in. In other words, the court was fairly cautious. Some of the identified criteria stipulated that there must be a general regulatory scheme and an oversight to ensure that the regulation that is ordered by the legislation is complied with.
Another important point that has to be taken into consideration is that the legislation must be concerned with trade as a whole, rather than with a particular industry. There have been previous attempts by Parliament to legislate, for example, what the contents of beer should be; and there have been other such matters. The courts have over time struck a balance between policy on civil rights and trade and commerce. Initially in our country, decisions did not make that distinction, and, in effect, almost everything could be subsumed under trade and commerce, if care was not taken and the authority of the provincial legislators and the authority of the federal legislators was not balanced. In other words, the legislation must be applicable to trade in general and not just to one or two identified sectors.
The next criterion is that legislation should be of such a nature that the provinces, jointly or severally, would be constitutionally incapable of enacting it. That is to say, provincial legislators would be responsible for acting within their respective territorial boundaries only and would not be eligible to legislate outside that area, to legislate for the whole, despite the provincial interrelationships or the national dimension of some issues that might arise.
The fifth criterion that they identified in that judgment was that the failure to include one or more provinces, or localities, in the legislative scheme would jeopardize the successful operation of the scheme for other parts of the country. In other words, if there is an uneven field, where some provinces have good competition laws and other provinces do not, that could create a distortion in the market, and in iffect be sufficient under this judgment to allow Parliament to intervene and say, "This cannot be. We have one market and we have to have rules that apply across the land under this head of power."
As I said before, the 1989 judgment has not often been used as a basis for federal initiatives. However, it is very important. As a result of that decision, there were doubts for many years as to whether competition law could be based on federal trade and commerce power. The courts have disagreed and said that for the purpose of a scheme that is otherwise acceptable, if civil rights are created, they must be integrated into the legislation.
An example of what has not worked is that, in the trademark legislation, for a long while there was a provision that prohibited any unfair trading practices -- as a general statement, such as clause 7. The court said, "Well, maybe we are all agreed that people should not engage in unfair trading practices, but you cannot just plug that kind of section in the Trademark Act, which has another purpose. Therefore, the section was struck down because it did not pertain to the main purpose of that legislation.
Although this is not entirely clear, having read this legislation, it seems to me that this bill would meet the criteria that the Supreme Court has identified. There is a regulatory scheme, as referred to in clause 3, the purpose clause. The purpose is to regulate the collection, the use and so on, of information in a commercial activity. "Commercial activity" brings it back to trade and commerce. Then there is an oversight. The Privacy Commissioner has been extended that role for this purpose. Overall, a very powerful case could be made in favour of the legislation you have before you.
I have just one other comment with respect to provincial power. I guess if we were in a unitary state, Parliament could legislate for privacy and that would be the end of it. They could provide for commercial and non-commercial activities for the health and other sectors as well. However, we are not a unitary state, and the powers are shared between the federal and provincial legislatures. The subject of property and civil rights is an important head of power at the provincial level. This enables the provinces to enact laws in respect of consumer protection, protection of privacy and so on.
One may ask why it is that we can enact provisions federally that would result in the protection of privacy under one head of power and then the provinces could enact legislation under another head of power. Is that not an overlap? Yes, there could be overlapping. I am not talking about what will happen in programs. There is a significant amount of overlapping and some honourable senators have been involved in trying to disentangle some of these overlaps.
This problem is difficult to avoid in creating legislation, as powers very often overlap. Different levels of government may look at situations from different perspectives. The provinces will look at privacy from a protection of property and civil rights point of view and will enact legislation. The Province of Quebec has done that and others are proceeding to enact legislation to this effect.
From another perspective, one could see that electronic commerce is exploding in this country at present. One key factor is that the consumer must trust this new means of commerce and trading. Unless we have ways of ensuring not only privacy, but that consumers can make their purchase and buy services and products in a way that is safe and would protect their personal information, trust will not be built. Missing this opportunity will mean missing the opportunity to provide jobs and compete with other countries as well.
More Canadians are buying goods and services on the net in the U.S. than they are in Canada -- 63 per cent. Of course, there may be all sorts of reasons for that, but I understand that this proposed legislation is part of government's strategy to create an environment where people will feel confident when they go on line in order to buy products and services. In effect, a user's personal information such as credit card numbers must be protected.
One last word about the double aspect of legislation. There is provincial legislation and there is federal legislation that overlap, for example, in company law. There are provisions in the federal Companies Act with respect to insider trading and there are provisions in the provincial securities legislation that apply to federal companies, and when you put them side by side they are almost the same. The courts have said that it is possible for pieces of overlapping legislation to live together so long as they are not in total conflict with one another.
Perhaps I should stop there and answer your questions.
Senator Murray: I am sure you will agree with me, Mr. Chairman, as another layman, that it is always reassuring to laymen to have an expert confirm their own biases. We thank you for that, Mr. Tassé.
I have a few questions on the rather specific area of the Constitutional issue. Let me read to you a few sentences from a witness who appeared before us on December 1. Mr. Ian Lawson, a lawyer from British Columbia with an interest in privacy issues, had this to say by way of preface:
...it is an understatement to say that there will obviously be a constitutional challenge to this legislation, at some point. The constitutional issue is alive.
Then he speaks about the discussion that we had in the Senate at one point about separating Part 1 from the rest of the bill -- the privacy sections from the e-commerce sections. He says:
In my view, that is definitely not a recommended step. I say that the two parts cannot be separated because the Constitutional foundation for Part 1, the privacy protection, is found in the new regime for facilitating electronic commerce and the creating of enforceable and provable documents under the Canada Evidence Act. Part 2 is one of the first steps in building a proper information infrastructure for Canada.
Later, in answer to a question, he said:
If Part 1 were passed by itself it would be extremely vulnerable in my view. The only reason we have it is in order to connect to the undertaking of designing a playing field for electronic commerce. Without that connection, it is pretty tenuous.
Leave aside the fact that Part 1 relates to information, however collected, electronically or otherwise. Is it the case, in your view, that the constitutional foundation for Part 1 rests on Part 2?
Mr. Tassé: That is not my understanding of how constitutional law operates. Every provision of a statute must be constitutionally valid.
I referred to an example of the trademark legislation, where they struck out one section of the act. Whether these are five separate bills or one bill, I do not think that one portion is less constitutionally responsible than another. Each part must stand on its own with respect to the constitutional validity issue.
Senator Murray: I heard what you said about the health sector in particular and that part of it on which the federal government can legislate in a bill such as this. We have had evidence from more than one witness from that sector as to the impracticability, indeed the impossibility, of disentangling commercial activity, which comes under this bill, and non-commercial activity, which does not.
Under these circumstances, could we be justified in applying the privacy provisions to the entire sector, acknowledging that it is not practicable to separate the commercial from the non-commercial? Senator Finestone was suggesting an amendment to the definition section that would define "commercial activity" as including non-profit, and so on and so forth.
On that issue, the contention by the government is that, while commercial activity in the health care sector applies obviously to such matters as labs that are in business and charge a fee, and pharmacies and so on, they say that the doctor-patient relationship and the hospital-patient relationship is not a commercial one. If you or I go to a doctor or to a hospital, money does change hands. It is done indirectly, but the hospital and doctor are paid a fee by the government. Why could that not be caught under a definition of "commercial activity"?
Mr. Tassé: Senator, I would bring you back to my earlier point. What is this legislation about? It is about standards relating to the collection, use and dissemination in commercial activities. This is key to this legislation because of the constitutional constraints I mentioned. The definition of "commercial activity" is key. You would be creating a basis for a constitutional challenge if you were to say that commercial activities include non-commercial activities. That would not follow. This is not a comment on the need for some protection. It is a comment more on the limits of the federal authority to enact this legislation.
The fact that money changes hands is not sufficient to create a commercial activity. I do not think that to this day the professions are engaged in commercial activities. A pharmacist who sells all kinds of other things as well as providing prescribed drugs is probably partly engaged in commercial activity, but insofar as his profession is concerned, I would think he is not. That may change because many things change with time, but, as we talk today, it seems to me that the concept of commercial activity is fairly clear.
Senator Murray: It does not include doctors.
Mr. Tassé: I do not think it would include doctors or lawyers.
Senator Oliver: What about doctors who own equipment, such as CAT scans and others, for which there is a fee?
Mr. Tassé: That is a good point. Years ago, they were not engaging in those types of activities. More and more, as the years progress, they are getting closer to engaging in commercial activities.
The Chairman: Do you mean that if I go to hire a lawyer and I ultimately pay the lawyer some outrageous fee --
Mr. Tassé: That does not make it commercial.
The Chairman: It may make it usury, but it is not commercial. You are saying that is not a commercial transaction?
Mr. Tassé: I would not think so. When I provide advice or appear in court for a client, I do not think I am engaged in a commercial activity; I am engaged in the practice of a profession.
However, we were talking about e-commerce. More and more you find on sites, especially in the States, all kinds of pro forma forms such as wills. You have a choice of all kinds of forms you can get on line. You pay, and you fill in the blanks. Perhaps at some point the court would ask, "What is the primary activity involved here? Is it the professional advice or is it the sale of a form for commercial gain?" You may find that in that kind of situation the court will say that you are really engaged in commerce.
Senator Murray: No one knows the Charter of Rights better than you do, Mr. Tassé. You held the pen, as they say, back in 1981-1982 as Deputy Minister of Justice. More than one witness has suggested that the powers accorded to the Privacy Commissioner under this bill are excessive. The investigative powers of the commissioner include the ability to enter premises and to examine and extract records without a warrant, the power to speak to individuals without benefit of legal counsel, et cetera. The suggestion has been made that these powers may be contrary to sections 7 and 8 of the Charter. Furthermore, apart from the Charter, they believe that the powers of this commissioner in the case of a complaint are quite excessive. They do not believe that you can say that the respondent, typically a business or an employer, is being afforded the basic natural justice and procedural fairness rights that we have come to expect. Would you care to comment on that?
The Chairman: The illustrative example used was equating it to the search and seizure powers under the old Combines Investigation Act, which under the Charter were thrown out in the Edmonton Journal case.
Mr. Tassé: The Southam case.
The Chairman: The Southam case, yes, although the paper in question was the Edmonton Journal. The question is whether or not these powers are likely to be subject to the same kind of challenge.
Mr. Tassé: I doubt it very much, senators. You are right to refer to Southam, which was the first decision rendered on the Charter. The powers of the Director of Combines had to be restructured.
The courts have since made a distinction between criminal matters and regulatory matters. They have, in effect, been much more open to investigatory powers of the kind we have here with respect to the compliance or enforcement of regulations that do not lead to criminality or are not involved in the enforcement of criminal laws.
I have a number of cases here in which the courts have said time after time that there is a distinction to be made between criminal law and the regulation of activities. One case relating to B.C. went to the Supreme Court regarding the enforcement of the Securities Act. They have accepted that Parliament and the legislatures can provide more leeway and do not require the trappings that you would need in terms of the enforcement of the criminal law.
It is to be noted that, in a way, the powers are fairly restricted. The commissioner cannot enter a dwelling house. The courts would not accept legislation permitting, without authority, that a dwelling house be penetrated or entered just on the simple decision of the regulator. Here, you do not have anything like that. You cannot force your way through. My reading of this is that, if there was some resistance, such as where the commissioner says, "I would like to have a statement under oath from one of the officials that might be involved here," and the official does not want to give a statement, he would have to go to court to enforce that.
I do not see these provisions as being vulnerable to a challenge on this basis. They were modelled on the existing Privacy Act, which does antedate the Charter, but there have been no challenges.
Senator Murray: I have one final question about whether the Quebec legislation is substantially similar to Bill C-6, as has been indicated by the minister and officials of the government. One witness here, whose business works happily under the Quebec legislation, drew quite a distinction between that legislation and Bill C-6. According to that witness, Bill 68, the Quebec legislation, permits the collection of personal information without consent; Bill C-6 does not. The Quebec legislation allows comprehensive databases to be compiled and Bill C-6 does not. The Quebec legislation has an ongoing mechanism to make exemptions with respect to disclosure. Bill C-6 has no ability to do that. Under the Quebec legislation, you can collect comprehensive databases and then disclose them under the guidance of the Commission de l'accès à l'information, whereas under Bill C-6 all such collections will require patients' informed consent, et cetera.
Of course, the issue is not whether the witness lives happily under the Quebec law and could not live happily under the proposed federal law, but the witness seemed to indicate that, from the point of view of a user, the two laws are substantially dissimilar. Have you looked at the Quebec legislation and compared it to this bill?
Mr. Tassé: I have looked at that law in a general way. I read with interest the witness' comments in that regard. It is important that the same goals are achieved, although the mechanics may be different. I got the sense that the witness was saying that the mechanics are different. Consent must be obtained in the federal bill, but the route followed by Quebec is different. They do not insist on consent on collection; they rather insist on consent on dissemination and disclosure.
It is important, in my opinion, that all consumers have effectively the same level of protection. That is the key and that is the nice thing about this legislation. If the government had proposed to Parliament a bill that required that, in every minute detail, the mechanics of federal and provincial laws should be harmonized, then passing such a bill would have been very difficult. Here, I would focus on the goal of the legislation and not on the similarity of the various steps. In terms of the eight or ten principles involved here, I would say they are substantially similar.
Senator Murray: Ontario has a draft bill, which I believe is in the public domain. The word around is that the federal government, or at least the officials responsible for this bill, have signalled that it would not be substantially similar. I do not suppose you have seen the Ontario draft?
Mr. Tassé: I have heard reference to it, but I have not seen it. There is an interesting precedent. There is a big debate going on between the European Union and the United States. The European Union has come up with a directive on privacy stating that their European companies will not be allowed to transfer data to foreign companies unless the other country also has substantially similar legislation to protect privacy. Different wording may have been used, but that is the intention that I read here. The minister has said he would consider Quebec law as meeting the test. The EU has also recognized the Quebec law as meeting their test.
Senator Carstairs: Mr. Tassé, we could spend a long afternoon debating whether professionals are engaged in commercial activity. I happen to think they are so engaged, perhaps because I am not a lawyer, but let us put that aside for the moment.
In this particular bill, the definition of commercial activity is very broad. One issue that has come up consistently, particularly from the medical profession, is the point at which activity becomes commercial. They want to know what protections and guarantees exist for their patient-doctor relationships to guarantee privacy.
I do not know whether you have seen the Heenan Blaikie opinion. It contains the classic scenario of information that goes from place to place to place. At what point do you think this transfer of information falls into the realm of commercial activity?
Mr. Tassé: This may be a simplistic answer, but it happens when a commercial activity is engaged. When the activity is for financial gain, you engage in commerce and then you are caught by this bill. It is true that a simple doctor's visit does not generally involve commercial activity, unless the doctor provides certain services that required the investment of money in equipment. That service may bring the doctor into the confines of commercial activity.
This bill does not provide any protection unless the doctor is engaged in a commercial activity for gain. A not-for-profit corporation is not engaged in commercial activities unless it sells a service that is covered by the bill.
This is quite an important issue that you are raising, Senator Carstairs. If you look at all of the issues relating to privacy, this bill does not provide the protection needed by Canadians. I understand a lot of work is taking place within the provinces regarding the protection of privacy. That protection is very much a provincial responsibility, particularly in health care. We can only applaud when we hear Deputy Minister Dodge saying that the minister has set up the committee and they are working with the provinces to determine whether they can come to a consensus on what that protection should be.
As I am currently advised, the federal government has not found a way to deal with the question of the trade and commerce power where there is a commercial activity for gain. There is still a lot of work to be done before we can say in this country that personal information of all kinds is well protected, but this is a very important first step.
I read the opinion prepared by Heenan Blaikie and I was impressed by their detailed narration of all the different steps that could be found in some scenarios. At the same time, I hear other representatives of the health sector saying that they can live with this bill and that they do not have those problems. The deputy minister says they have considered whether this bill would create such problems in the health sector and he is still looking for that evidence.
This bill provides for four years. It will take one year for proclamation and then three years before the legislation comes into effect so that these issues can be looked at. This will provide a good deal of time for the federal Minister of Health, with the help of his colleagues, to try to iron out a way to deal with this to supplement the legislation.
The Chairman: Senator Oliver, did you have a question.
Senator Oliver: No, Mr. Chairman, I do not have any questions. First, Mr. Tassé was so clear that I think I understand, and second, the two questions I did have have been asked by my mentor, Senator Murray, on commercial activity and whether there is a possibility of a Charter challenge. So I have nothing to add.
Senator Beaudoin: I do not have any problem with the General Motors decision. While it is true that it has enlarged or created a new corridor, if I may use that expression, for general trade, what I am more worried about is the definition of "commercial activities". That comes pretty close to being a contract, and contracts fall primarily under provincial jurisdiction.
I understand the purpose of the bill and I have no problem with that. However, I do have a problem with the way it is done -- that is, the mechanism. For example, the provinces are supposed to occupy the field. However, if after three years the provinces have not occupied their field -- of course, Quebec and some other provinces have already done so -- by what right can the federal government say, "If you do not act in your provincial domain, we will do it in your place"?
I suppose it is one way to legislate in the area of general trade, and I accept that. In fact, I am one of those who think that the trade and commerce clause has not been interpreted liberally enough for the federal authority, although they corrected that mistake in the General Motors case. But is this an application of the General Motors case? It not obvious to me that it is, unless you think that the part played by the provinces is so short, so weak or so narrow that it is better for the federal authority to occupy the whole field, in which case it is debatable.
However, if we accept the law of Quebec in that field, for example, the law of contracts, under what authority can we refuse to act for the other provinces, in the sense that we may say to them, "You have not occupied your field. One province has done it but the others have not. Therefore, we will occupy this field because this act has to work and has to be alive."
I agree with that, but if we do that how can we reconcile this with the division of powers?
Mr. Tassé: I would describe the bill you have before you slightly differently from what you have just described to the committee. The legislature has not said, "We will come in, if you do not." They have said, "We are in." This legislation applies from day one, except that there is an exemption order that could be used after three years. The application of the legislation is delayed. That is an important qualification, because Parliament is proposing to use the general branch of the trade and commerce power, with respect to which the court has said, "If you meet these five criteria, you can do it, even if you affect provincial matters."
Senator Beaudoin: I accept that.
Mr. Tassé: You referred to contracts. In the Competition Act, we are dealing with contracts. People are making all kinds of deals and Parliament is saying, "You cannot do that." So contract law is very much involved, and contracts are, obviously, a matter of provincial jurisdiction.
In the General Motors case, the court was very specific, because the Quebec Attorney General had argued that, while Quebec accepted that Parliament had the authority to make legislation in respect of competition under international-interprovincial trade, the first branch, nevertheless, Quebec wanted to exclude intraprovincial or combines legislation. The court said, "No, no. In this type of legislative approach, under the general branch of trade and commerce, it is possible for Parliament to legislate and regulate intraprovincial matters."
Here, I see the same thing. Parliament is saying that, right from day one, we have a blanket legislation that would regulate all commercial activities that involve the collection, use and dissemination of information, except that it will not apply for three years in terms of the intraprovincial activities. In effect, that is what they are saying. That is what I read in this bill. In my opinion, the General Motors case is a powerful authority in support of this kind of legislation.
Senator Beaudoin: I follow all that. If we use the philosophy of the General Motors case, we may occupy everything. I agree with that and I do not have any problem with it.
Mr. Tassé: I would not go that far. I think there are very specific conditions under which Parliament can legislate in respect of trade and commerce. Perhaps that is one reason why it is so difficult to legislate in these matters under that head of power and why we have not seen more initiatives at the federal level.
Senator Beaudoin: If I read the proposed section 26(2)(b) correctly, it means that the federal authority -- that is, the Governor in Council -- may exempt organizations or activities of a given province, if the federal authority considers them essentially similar to the federal legislation. That is a new and an interesting technique. I am not too sure under what authority it may lie, but it is very interesting. In other words, they say, "You may do that. We occupy the field, but it is general trade." I have no problem with that. "However," they say, "if you, the province, make legislation that is very similar to what we want to obtain with this bill, we may exempt the application of our legislation in your province."
That is a new technique that is both imaginative and interesting. However, why do we do that for one province but not for the others?
Mr. Tassé: It would be done for all the provinces that have substantially similar legislation.
Senator Beaudoin: Yes, but if they have not, what happens?
Mr. Tassé: If they have not, this bill applies.
Senator Beaudoin: To the others?
Mr. Tassé: To the others who do not have similar legislation.
Senator Beaudoin: And for the province that is occupying the field in a way that is substantially similar, you say, "That is all right. We will exempt you."
Mr. Tassé: By using that technique, Parliament remains in charge of the application of the law within the territory, except that it has given to the cabinet the power to say that, "If certain conditions are met, we will not insist on the application of our laws; we will allow the provincial law to apply intra the province." In an area where the authority is shared, that is a welcome technique, and one that might be applied in other areas as well.
Senator Beaudoin: As we say in French: Il y a chevauchement de l'application.
Mr. Tassé: Yes, and I think the bill recognizes that there may be duplication, because there is a clause that allows the commissioner to meet with his counterparts in the provinces to develop model contracts when personal information is involved in international or interprovincial trade. I think that is a very important provision. I am referring to subclause 23(2)(c), which would be another technique for avoiding or reducing the potential for duplication.
As I said earlier, in a federal system, it is very difficult. Following 1867, when our Constitution was first enacted, it has been difficult to pigeonhole all of these powers. I think, today, globalization makes pigeonholing society, culturally and economically, very difficult. You cannot live under that kind of system. We need techniques that would allow for a cooperative approach to some of these issues. They cannot be just pigeonholed. You cannot say it is all in Ottawa or all in the provinces. Some things are in Ottawa, some are in the provinces; but, as you said, there is a lot of chevauchement, and we need techniques for that.
Senator Beaudoin: It is obvious that today it is very different from 1867 in that field.
Mr. Tassé: Yes, e-commerce did not exist.
Senator Beaudoin: All governments, federal and provincial, are intervening more and more because we ask them to do so.
My last question is on commercial activity. What kind of distinction do you make between commercial activity and commercial contracts? The question raised by my colleague is important for this bill because, while contracts are primarily provincial, more and more contracts are interprovincial and international, and everything is increasingly international. Do you make a distinction between commercial activity and commercial contracts?
Mr. Tassé: I would start by saying that it is clear to me, on the basis of the General Motors decision, that Parliament can affect intraprovincial contracts. To me, that is clear. It can affect them under this head of power.
Is there a difference between commercial activity and commercial contracts? I would tend to say that a commercial contract is narrower than a commercial activity. Usually a commercial activity entails entering into contracts, but it is probably broader because there may be some activities that are for a commercial purpose that may not by themselves entail the entering of a contract. I am not sure that I am making sense, but it seems to me that a commercial activity is broader and does not necessarily always, in each and every step that is involved in the commercial activity, involve the passing of a contract.
Senator Beaudoin: Yes, I agree with that. It is broader. There is no doubt about that, in my opinion.
Mr. Tassé: But do not press me to give a more precise definition.
Senator Fairbairn: My question is a supplementary, Mr. Tassé, to those asked by Senator Beaudoin and Senator Carstairs, with respect to the question of definitions of commercial activities and contracts. It has to do with certain activities currently being contemplated in my province, Alberta, in the health care field. We have not seen the proposed legislation yet, but it could involve the health authorities contracting certain surgical services out to the private sector. I am wondering where that fits in with the privacy provisions of this bill, or whether you have a view on that.
Mr. Tassé: I am not familiar with the developments in your home province, but I should just say that the threshold is "commercial activity," and commercial activity is really the point of contact with this legislation. It may be, as I have read the transcript, that there will be situations -- and maybe that is what you are alluding to as well -- through which some people involved in the health sector will be caught by this legislation, while others will not be caught, such as those who are not involved in commercial activities -- most hospitals and some clinics and so on.
I would see this as a kind of transition. It is a piece of legislation that is a first step that will lead to other, hopefully more complete, comprehensive legislation that would cover all of those who are involved in the health sector administration, and not only those who are doing it for a commercial purpose. That is the challenge that I think the provinces, together with the federal government, have been trying to tackle. In the meantime, however, they need this legislation. What is the "meantime"? The meantime is not the next year before this bill comes into force, nor the three years that would follow, because this bill would not apply; it is after that. There is a period of time that is provided by the decision not to proclaim before one year has elapsed. There is a three-year period covered by the transition. That means there will be four years where, in effect, those who have responsibility in government for these matters at the provincial level, with the assistance possibly of the federal authorities and the stakeholders, can come up with a more comprehensive regime.
I do not know whether I have addressed your question, but that is how I feel about this. In effect, there are still some very serious problems that must be addressed.
Senator Fairbairn: And that may well be before the four-year period is up?
Mr. Tassé: If this is as constraining as some people have been saying, particularly Heenan Blaikie, I think that that will be an incentive to try to come up with another proposal that would meet their interests and other sectoral interests.
[Translation]
Senator Poulin: I must say, Mr. Tassé, that you do answer all our questions in a very precise, clear and concrete manner which helps us to understand the impact of Bill C-6.
In your statement, you said that you were speaking from two perspectives, that is to say from the perspective of a lawyer considering the constitutionality of Bill C-6, and from the perspective of the previous Bell Canada Vice-President who was involved with all manner of modern communications
According to you, with Bill C-6, is the federal government fulfilling its responsibility to protect Canadians' personal information in the context of commercial activities?
[English]
I am also hearing you say that Bill C-6 is the enabling legislation for the commissioner to receive complaints.
The Canadian Bankers Association appeared before this committee in support of the legislation. However, when I chaired a subcommittee of the Senate whose mandate was to review Canada's position in communications, and our report was called "Wired to Win", privacy concerns came at us from every angle. It became obvious to us that the success of e-commerce is dependent on the trust that Canadians have in the system.
How does this bill provide Canadians with the assurance that they can do business using the new, modern communications systems? Everyone says the most important confidential information after your weight and age is the number of your banking account.
How does this legislation compare with legislation of the same nature in other countries? As more and more business is done internationally, will this bill have any impact or will its provisions extend outside our country in any fashion?
Mr. Tassé: Your first question has to do with whether Canadians will feel more secure using e-commerce. That is only one piece of the puzzle. I have participated in many conferences and discussions about e-commerce and what it means in terms of productivity and choices for customers. There are several important issues, and privacy is at the top of the list of those issues. When Canadians go on line, they are concerned that the information they provide will not be used for all kinds of other purposes.
I read this morning in an American newspaper that another way of dealing with cookies has been discovered. You have discussed cookies here. The article stated, as you may know, that up until now those who distributed these cookies were anonymous. The address of the sender could not be traced. However, there is now a new program that makes it possible to have access to the name of the sender. Microsoft has been making all kinds of statements to reassure people that they will do something about that. They know that consumers who use the Internet for e-commerce need to have confidence that their private information is protected.
There are issues involving identification, signatures, liability, jurisdiction, and I could go on. This is one important piece. It really addresses one of the key issues, which is: What do they do with my personal information?
I have referred to the directive issued by the EU on this issue. The OECD is about to release a draft directive on consumer protection, which may include issues of privacy. They believe that the guidelines we had in place that led to the adoption of our Privacy Act are commendable for on-line transactions.
There is a concern in the western industrial world about these issues. One notable exception is the U.S. The U.S. believes that it should be left to the marketplace to provide guidelines as to how these matters should be addressed. I have been impressed by some of the initiatives taken by the private sector, but there will be another time to talk about that.
In any case, there is a push toward better protection, not only because it better protects consumers but because companies themselves are saying, "We need it because we want to get these consumers. We want them to trust us. If they do not trust us, we will not be able to do business with them." That is a sea change. It is fabulous to see that private sector companies are saying along with consumers, "We need this bill." It is unprecedented to have the private sector say, "We are prepared to abide by these rules." Previously, they would say, "Leave us alone. We can do it for ourselves."
Senator Murray: I suspect that that has something to do with the EU dictum that they will not do business with companies that have not adopted a privacy code.
Mr. Tassé: More so for the U.S. than for us. In the U.S., it is a big issue.
All the other initiatives that are under way, including this bill and initiatives in other places, could make Canada a kind of leader in this area. I do not think that the U.S., or other countries, will necessarily buy our model. We could develop an interest in the way Canadians do business. If Canadians believe that they can deal on line in confidence, then perhaps they will be more prompted to buy on line from Canadian Web sites than from U.S. Web sites, as they do now. I think that is very positive. Others might say, "Well, in the U.S., we do not have protection of privacy, but they do in Canada." They might come to think that a Canadian Web site is a site that you can trust.
All of this is beyond law. However, it is worth keeping in mind that this is a global phenomenon that we are talking about and that Canada can make it more attractive for its citizens to buy in Canada. I find it a bit discouraging that 63 per cent of Canadians, when they buy on line, buy from the United States. I hope that answers your questions.
The Chairman: Thank you very much, Mr. Tassé. You have been most informative.
The committee continued in camera.