Committee Transcript 2000-Aug-28 | Legislative Assembly of Ontario

Chair / Présidente
Ms Marilyn Mushinski (Scarborough Centre / -Centre PC)

Vice-Chair / Vice-Président
Mr Carl DeFaria (Mississauga East / -Est PC)

Mr Marcel Beaubien (Lambton-Kent-Middlesex PC)
Mr Michael Bryant (St Paul's L)
Mr Carl DeFaria (Mississauga East / -Est PC)
Mrs Brenda Elliott (Guelph-Wellington PC)
Mr Garry J. Guzzo (Ottawa West-Nepean / Ottawa-Ouest-Nepean PC)
Mr Peter Kormos (Niagara Centre / -Centre ND)
Mrs Lyn McLeod (Thunder Bay-Atikokan L)
Ms Marilyn Mushinski (Scarborough Centre / -Centre PC)

Substitutions / Membres remplaçants
Mr Steve Gilchrist (Scarborough East / -Est PC)
Mr Monte Kwinter (York Centre / -Centre L)
Mr Tony Martin (Sault Ste Marie ND)
Mr Gerry Martiniuk (Cambridge PC)
Mr John O'Toole (Durham PC)

Clerk / Greffière
Ms Susan Sourial

Staff / Personnel
Mr Avrum Fenson, research officer, Research and Information Services

The committee met at 1006 in room 151.

SUBCOMMITTEE REPORT

The Chair (Ms Marilyn Mushinski): I call the meeting to order. Members of committee, please accept my apologies for being late-a misunderstanding in my office.

We will turn to the agenda for this morning. This is a meeting of the standing committee on justice and social policy to deal with Bill 88, An Act to promote the use of information technology in commercial and other transactions by resolving legal uncertainties and removing statutory barriers that affect electronic communication. The first item of business is the subcommittee report on Bill 88. Do I have a motion?

Mr Gerry Martiniuk (Cambridge): I move adoption of the subcommittee report on Bill 88.

The Chair: OK. You need to read it into the record, please.

Mr Martiniuk: Your subcommittee on committee business met on Thursday, July 20, 2000, to consider the method of proceeding on Bill 88, An Act to promote the use of information technology in commercial and other transactions by resolving legal uncertainties and removing statutory barriers that affect electronic communication, and recommends the following:

(1) That the committee intends to meet for three days for the purpose of conducting public hearings in Toronto, Monday, August 28, 2000; in Kitchener-Waterloo, Tuesday, August 29, 2000; and in Ottawa, Wednesday, August 30, 2000, subject to confirmation of travel bookings.

(2) That the clerk, with the authority of the Chair, will post information regarding the hearings one day in a local English- and French-language daily in Ottawa, one day in a local English-language daily in Kitchener-Waterloo, Sault Ste Marie, Thunder Bay, Sudbury, North Bay and Timmins, and one day in a French-language daily that covers northern Ontario as well as for a longer period of time on the Ontario parliamentary channel and on the Internet.

(3) That interested people who wish to be considered to make an oral presentation on Bill 88 should contact the committee clerk by 5 pm on Friday, August 18, 2000.

(4) That individuals be allotted 15 minutes and experts or groups 30 minutes.

(5) That the clerk be authorized, in consultation with the Chair and the subcommittee as necessary, to schedule witnesses from the names of members of the public who contacted the clerk's office directly, and to make all arrangements necessary for public hearings.

(6) That the deadline for written submissions be 5 pm, Friday, August 25, 2000.

(7) That in Toronto, on the first day of public hearings, the appropriate staff of the Ministry of the Attorney General will provide a 20-minute technical briefing followed by 40 minutes of questions. The time for questions is to be divided equally among the three parties.

(8) That the parliamentary assistant, the opposition critic and the third party critic each shall have 20 minutes for a statement after the technical briefing and questions.

(9) That the committee meet on Monday, October 2, 2000, from 3:30 pm to 6 pm for clause-by-clause consideration of the bill.

(10) That the legislative research officer prepare a synopsis on what other jurisdictions in Canada and abroad have done with similar legislation as well as a brief, to be distributed prior to the commencement of the public hearings, on the issues of personal identification and privacy.

The Chair: All in favour of the subcommittee report?

Mr Tony Martin (Sault Ste Marie): I just wanted to comment and to put on the record that my suggestion that this bill travel into the north was blocked by the government and I found that rather unfortunate. I will expand on that somewhat in my comments this morning, in that part of the agenda where I get to have my 20 minutes.

The Chair: OK. All in favour of the report of the subcommittee? That carries.

Members of committee, we need to discuss the deadlines for amendments. It has been suggested that we try to have all amendments in by Friday, September 29. Does any member of committee wish to discuss that?

Mr Marcel Beaubien (Lambton-Kent-Middlesex): Madam Chair, is September 29 what you said?

The Chair: Friday, September 29.

Mr Beaubien: Agreed.

The Chair: Mr O'Toole?

Mr John O'Toole (Durham): Agreed.

The Chair: I need a motion.

Mr Martiniuk: Perhaps a little earlier. Considering that our hearings will be complete basically during the next few days, one would think that we have adequate time to get amendments in by September 22, which gives us at least three weeks in order to prepare and file amendments so that we can adequately consider them other than just on a weekend. I'd like to hear the suggestions of the opposition.

The Chair: And you would so move, Mr Martiniuk?

Mr Martiniuk: Yes, I would so move that the time limit for amendments to be filed before this committee shall be September 22, 2000.

Mr Monte Kwinter (York Centre): I have no problem with that date just as long as everybody knows what it is, so that they're aware of it.

The Chair: So we have a motion to set the deadline for amendments as September 22, 5 pm. All in favour of that? That carries.

There is one other matter before me, members of committee, in that I have received a request from Osler, Hoskin and Harcourt, who have asked permission to present a written submission to committee after the deadline of August 25, 5 pm. What is the wish of committee? No problem with that? All in favour? That carries.

ELECTRONIC COMMERCE ACT, 2000 / LOI DE 2000 SUR LE
COMMERCE ÉLECTRONIQUE

Consideration of Bill 88, An Act to promote the use of information technology in commercial and other transactions by resolving legal uncertainties and removing statutory barriers that affect electronic communication / Projet de loi 88, Loi visant à promouvoir l'utilisation des technologies de l'information dans les opérations commerciales et autres en éliminant les incertitudes juridiques et les obstacles législatifs qui ont une incidence sur les communications électroniques.

MINISTRY OF THE ATTORNEY GENERAL

The Chair: We'll move to the technical briefing and ask for staff members of the Ministry of the Attorney General to please come forward.

Mr John Gregory: Good morning, Madam Chair, committee. My name is John Gregory. I am general counsel with the policy branch of the Ministry of the Attorney General and have been involved in the development of Bill 88 and of the Uniform Electronic Commerce Act on which it was based. I'm basically the ministry person on this one.

What I would like to do here is give a brief overview. I know I have 20 minutes, and no doubt I'll be able to fill that time. There are, of course, in the binders a number of things that summarize the bill in different ways, including the compendium that's in the binder.

The purpose of the bill is to ensure that electronic communications can be legally effective. Sometimes we say we are making the law media-neutral; that is, neutral as between communications on paper and communications by an electronic medium.

It is minimalist legislation in that it does not go into technological details about how you have to communicate, or what software or hardware or security devices you have to use. There are a number of reasons for that. One of them is that the technology is changing so quickly that by the time you legislate it, it's likely to be obsolete. Another is that you might reduce innovation by channelling the use of technology in particular directions. Another is that the act applies very broadly to almost all rules of law in Ontario, so that to provide a special rule that might be appropriate for one use might tie the hands of someone with a different use. So what we have are essentially minimalist standards which would give legal effect to electronic communications in most legal relationships in Ontario. The act excludes a certain number of relationships and also a certain number of types of document where the policy has been that it is not appropriate to allow these things to happen with those minimal standards. We'll come back to the exceptions in a moment, but that's the general approach.

The legislation is very much in accordance with international and national principles. The basic working document and the basic expression of international principles in this area is the United Nations model law on electronic commerce, which was adopted in 1996. The General Assembly of the United Nations recommended that all member states adopt this legislation. A number of countries have done so already, and a number of other countries are in the process of doing that.

For our purpose, of course, our main trading partner is the United States. The United States has a Uniform Electronic Transactions Act which was adopted last year and which has been passed by over 20 states already. That's very quick progress, to in a year have nearly half the states adopt it. In addition, the United States has passed federal legislation as of June of this year, the E-SIGN act, for electronic signatures in global and national commerce or whatever. It promotes the same UN standards.

In Canada, the Uniform Law Conference, which is a federal-provincial legal harmonization body made up of government and private sector legal people, adopted last year a Uniform Electronic Commerce Act intended to implement in Canada the United Nations model law. Our Bill 88 is consistent with and is drawn from the UECA. Saskatchewan, British Columbia and Manitoba have introduced statutes, and Saskatchewan has passed its version, based on the uniform act, and there are at least four other jurisdictions that are likely to introduce similar legislation in the next few months, so it's definitely the national standard in Canada. The federal government has consistent legislation as well, and we can come back to that if you wish.

What I'd like to do is give an idea of the main features of the bill and then a couple of the technical details, and then I'll deal with points that may be of interest to members of the committee in response to questions.

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The basic application is, the bill applies to rules of Ontario law. It doesn't say that specifically. It basically says, "Where a rule of law requires an original signature and so on, here's how you do it electronically." It doesn't say "Ontario law" because that's all we're able to legislate about and we don't have to spell it out every time.

It basically applies to all legal relationships and legal documents in Ontario law except for the particular named documents. Wills and most powers of attorney are exempted; most land transfers are excepted; negotiable instruments, cheques and promissory notes are excepted; election documents are excepted. The reason for many of the exemptions is not to say, "You can't do this electronically; you should never do this electronically," but rather to say, "You need more protection; you need more details about the security than we are providing in this act." This act basically says, "Here you go. With minimal legislated standards you may use electronic communications, electronic signatures, and it will be as legally effective as if you were using paper documents, ink-on-paper signatures."

But for matters like a will or like a promissory note, we're saying, "Wait a minute. You need more security about that and there's not enough in this bill to give that protection, so we're not going there." With land transfers, of course, Ontario has an electronic land registry system, the Teranet system. Teranet is coming this afternoon and no doubt will tell us more, but that is supported by a statute and a whole lot of regulations, a whole lot of electronic security devices, which is quite appropriate for that kind of high-value transaction. So this act, Bill 88, won't apply to it, but that doesn't mean you can't do it; you just have to go to the special rules that are already in place for that.

Another class of exception to Bill 88 is rules of law that have already contemplated electronic transactions. We're not trying to override the existing law on electronic communications. One of the examples that occurs to me is the Electronic Registration Act, 1991, which supports Personal Property Security Act registration interests in cars. When you have a conditional sale of a car or something, the security interest there is registered electronically under a separate statute of the Ministry of Consumer and Commercial Relations. We didn't want to second-guess them. They've got their system; they've got their regulations. Everybody has already been doing it for years. We're staying out of that. We're not trying to harmonize the existing array of places where people have already said, "Yes, we've thought about electronic communications; this is how it should be done." So in Bill 88 we're staying out of places where it's already allowed, regulated or prohibited.

The other place where this act doesn't apply is with biometric information, the exchange of biometric information as an identifier, where there is not either express consent by the people knowing, basically with their eyes open, or statutory authority. That's a provision we put after discussions with the Information and Privacy Commission.

Other than that, we're covered; the act will apply. There is a provision that says other types of documents or types of transactions may be excepted by regulation. The purpose of that is not because we have a whole lot of other exceptions in mind, but frankly as a safety valve-there are 550 Ontario statutes and a whole lot more regulations-if somebody comes up after royal assent to this bill and says, "Ah, but what about the whatever act?" that we had never thought of. We have been thinking for several years about this, so I don't know of any; I can't think of one that won't work. But just in case, we won't have to reconvene the Legislature if someone comes up with it in January or something. If it's a clear exception, we can put it in by regulation. That's a safety valve rather than something we expect to use.

General scope applies to all Ontario law except for the listed exceptions. The other very important provision about scope is that it operates on consent. Section 3 of the act says that this act doesn't require anybody to use or accept electronic documents or documents in electronic form. If someone is not comfortable with electronic communications, they can simply say, "No, I don't want it. I'm not going to deal with it. Give me things on paper." This act doesn't authorize anybody to override that.

As the people who do home banking electronically have agreed already, I can agree with my bank or with whomever I deal with that we should deal electronically and that will be legally effective. Of course, this act intends to support that kind of agreement and make it legally effective. It removes the uncertainly about the legal effectiveness of that kind of agreement. But it is by agreement. If I don't want to go there, I can say "no," and that's very important.

It's important for two reasons. One, of course, is that it protects the people who are not yet comfortable with electronic communications and protects their ability to maintain documents on paper. The other thing it does is allow them to consent conditionally. That's not spelled out in the act, but I think if I can say "no," I can say "yes, but," which means, "I will take things electronically if you give it to me in a word processing program I recognize and can actually open and read," or "I will accept this electronically if you use an electronic signature procedure that I consider trustworthy, rather than anything that you might happen to invent," or "I will accept electronic documents from you of a certain kind, but not of another kind." When I say "I," it can be I as an individual, but it could be I as a private business or I as an insurance company that will say, "All right, I will take applications for insurance policies electronically, but I will not take proofs of claim," or "I will take proofs of claim electronically but I won't take the basic application." There are ways of organizing that sort of conditional consent. The consent principle is very important. It's the basic protection against people having electronic information thrown at them when they are not prepared to deal with it.

The basic rule of Bill 88 is, no discrimination. That is to say, information is not ineffective legally just because it's in electronic form. There is a double negative in there, and of course legislative counsel immediately says, "Couldn't you be positive about that and say it is effective?" The reason for that is because there are any number of reasons that something may be invalid. We can't say, "This is valid." Yes, it may be valid electronically, but it may be invalid because a person didn't have the capacity to contract, if it's a contract, or because they were a minor or because they didn't know what they were doing, or because there was duress or because it didn't have all the details in it. Lawyers are good at thinking of reasons why things may be invalid. What we're saying here is simply that just because it's electronic it isn't invalid. All the other universe of reasons that may support something being legally effective or legally ineffective remain at play.

I take you back to what I said at the beginning. We make the law media-neutral so the lawyers can play here as well as they can play anywhere else, but everybody else can deal. Of course, people are out there dealing now. There's a lot of electronic commerce being done and a lot of electronic communications being done and people are hoping it's effective. What this does is allow them to uncross their fingers a little bit. So generally, no discrimination based on the use of electronic medium, and the general consent provision, as I mentioned.

Then we go through a number of types of requirement: a requirement that something be in writing, a requirement that notice be provided, a requirement that something be signed, a requirement that something be original, a requirement that documents be retained.

The Income Tax Act requires you to keep documents for three, four or five years. There are lots of statutes that do. Basically it says, "You may do this electronically." It tends to say, "You may do this electronically if you meet these minimal criteria," so the criterion for the writing requirement is if the electronic document is accessible for subsequent reference. It basically says it has to have some durability. It's not specified any more. This paper document has durability, but I could take it outside where I'm allowed to light a match and I could burn it and it no longer exists. It's not guaranteed to be permanent, but it lasts for a while. Likewise with electronic; it has to be available for subsequent reference.

If it's a notice provision, then the person who gets it has to be able to keep it, store it and print it, so they get to decide, not the provider of the information, how long it lasts. There are similar provisions for originals and so on.

Those standards are taken very much from the United Nations' model law; they are international standards.

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There are some other provisions about copies, special rules, notice provisions and so on that we can talk about later.

I want to talk about three things very briefly. One is rules on contracts and general information, and one is on the information on public documents. Actually, I may perhaps have a very brief word on privacy.

On contracts: There are a number of provisions separate from the writing, signature, original requirements, just saying essentially that contracts may be valid even if they're electronic, and then it goes on to say they may be valid even if they are done between electronic agents, essentially software programs that automate things. So when do I consent to something? I don't have to be paying attention at the time in order for me to consent and support the contract. There are provisions about when notices are sent and where they are received so that I don't have to figure out, if I go into my e-mail when I'm in Vancouver, does that mean British Columbia law applies just because I happen to send the e-mail from there, though in fact I carry on business in Ontario? Or, if I use my Hotmail account and Hotmail operates out of a server in Seattle, then I'm suddenly caught by the state of Washington's law despite the fact that I go into Hotmail from downtown Toronto. We're trying to get rid of that kind of question, so there are a few of those general contractual terms.

The second technical comment is on public bodies. There is a definition of "public body" which essentially means government ministries, agencies, boards and commissions and municipalities. There are two or three particular provisions about government bodies. One ensures that government bodies are allowed to use electronic communications. For the provincial government that's not really a problem; for municipalities it might be, or for some kinds of agencies and commissions. So we're spelling it out. Another is that their consent to use electronic information has to be spelled out rather than implied by their conduct. Another is that just for incoming information, they may prescribe information technology standards to say, "Give us information in a particular way or in a particular format."

Communications between private parties are generally done on some kind of consent or contractual basis. If I deal with my bank or my insurance company, or Chapters.ca if I buy a book, this is a consensual relationship. There are contracts with contract terms that may spell out how I do these things. A lot of people communicate to government and send information to government, not because government has a contract with them but because it's in the nature of government to require information, because a statute requires information.

People may submit information involuntarily. An income tax return is an example. Some people would rather not be doing it, but nevertheless they have to and they submit the information, but they may not submit information in a way that the government finds it easy to use. So the government has to basically protect itself by ensuring that the information will be, to start with, compatible with its operating systems so that they can actually read it and process it and file it with the rest of the files, and that it will be reliable. If the government has to prosecute somebody for filing false information, they want to be able to prove later that, yes, that person sent this information. So they may well want to say, "We want a particularly reliable form of communication coming in." Since it doesn't have a contract with all these people, it can't simply say, as my bank will say: "All right, you used this particular software for communicating with us and you're stuck with it. If you do it, this is the consequence." It puts government into the same position that people who deal by contract are already in.

The third thing I wanted to mention is privacy, a couple of things about that. This act specifically says it does not override the Freedom of Information and Protection of Privacy Act. I don't think it would have anyway, but the Information and Privacy Commission wanted us to spell that out so that it was beyond all doubt so we didn't have any problem with that. We've spelled it out so it's beyond all doubt.

The Ministry of Consumer and Commercial Relations, as you probably know, is doing a consultation for private sector privacy legislation to cover everybody who is not covered by FIPPA or MFIPPA, the municipal equivalent, and that will basically give the privacy protection. Federal legislation will kick in slowly if the provincial government doesn't legislate, but basically privacy protection is being handled there as a separate project. This one, Bill 88, will ensure legal effectiveness of the relationships. What people do with the personal information, whether they get it electronically or in any other way, will be handled by whatever the Ministry of Consumer and Commercial Relations comes up with. That ministry is very much aware of our bill and we're aware of where they are going on it, so I think the two can run parallel very comfortably.

I think that's probably over my time, but in any case I'll put myself at the disposition of the committee.

The Chair: Thank you, Mr Gregory. Members of committee, the government side, the opposition and the NDP have about 14 minutes each to ask questions. We'll start with you, Mr Kwinter.

Mr Kwinter: Thanks for your overview of the technical aspects of the bill. I have a couple of questions.

I'm totally supportive of the idea of being able to conduct business electronically and enter into contracts. The concerns that I have are the technical aspects of it. To give you an example, you hear of these viruses and people say, "Don't open up this particular folder or you'll wipe out everything that's in your computer." When you talk about the requirement that this information must be retrievable and we're in a situation where somebody comes up with some mischievous way of wiping it all out, how do you deal with that? I'm talking about it from a legal point of view.

Mr Gregory: I think the vulnerability of electronic communications is one of the most serious questions that people are going to have to ask themselves when they decide whether they're going to conduct their communications electronically or not and store their data electronically. I don't think there is a legal answer to that in the sense of can you provide against that by statute.

If I want to be able to prove something later, which is the usual function of having something in writing-whether it's prove in court or simply prove to the satisfaction of me and the people I'm dealing with what the deal was or what we have agreed on, what we're each going to do-if I'm going to prove that later and I keep my documents electronically, then I'm basically responsible for figuring out how to keep them secure against that kind of virus. If I can't do that, then maybe I should keep my important ones on paper.

I don't think we can spell out for people any particular technology to do it, but if they are unable to keep it, then they are going to be at risk. I think that's why people have disaster recovery systems. They have backups off-site. They have various ways of protecting. They have firewalls of course against viruses and anti-virus protections and so on.

If people are going to keep records-these could be records communicating electronically or they could be the records that we are already producing, because very few things that are now printed or typed or whatever are actually generated in any other way than on word processors and there is an electronic file somewhere; so the existing files as well as those that are communicated between parties electronically-they are going to have to develop and maintain a reliable system against viruses and corruption over time and someone walking by with a strong magnet as well as against unauthorized access if somebody goes in and starts tampering with them.

The people who are keeping them are going to be at risk if somebody destroys them and they're not going to be able to prove it, so people may well want to print out their documents. We certainly hear of a number of companies where they'll say, "Oh, we've gone totally electronic. We don't have any paper any more except in our legal department." There's a reason for that besides the natural conservatism and suspiciousness of lawyers, which is that we want to be really sure about this and we don't trust our techies to protect us.

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So I think it's a serious question. It's a question that comes up with record retention as well and the archivists-you'll be hearing from some of them this afternoon, I guess-where you say, "I want to maintain this for six years or 10 years," or with archives it could be a lot longer, but are we going to be able to read the stuff later anyway, whether it's a virus or simply that we're now with WordPerfect 10 or whatever and I can't read WordPerfect 1 any more or I can't read WordStar or AmiPro or any other of the "dead" word-processing programs? What do we do about that? As I've told them when they've asked me that kind of question, fortunately, that is not a legal question. There's nothing much the law can do for them on that, but if they don't think they can keep these documents, then they'd better keep them on some medium other than electronic; maybe they'd better keep the paper.

That's another reason why the consent provision is so important. The consent provision allows me to say, "I don't trust this stuff. I read too many stories about viruses. I read too many stories about people who accidentally hit that little button over in the corner and they didn't know what it did, but it turned out that it deleted everything you'd done for the last while. I'm not going to go there; I'm going to keep my stuff on paper. I'm going to print out my contracts."

It's a serious question. I don't think there's a legal response, but I don't think the legal response is let's not make them legally effective because it would encourage people to do things in an insecure way.

Mr Kwinter: One of the other concerns I have is that you talked about these various other statutes through the Ministry of Consumer and Commercial Relations and various other things where you're saying, "We're not going there, because they cover it." The main purpose of this bill is not to provide electronic communications; it's to provide for the legality of those electronic communications. The concern I have is that I think we really have to make sure that all of these aspects are covered in one bill and not say, "Well, we've covered that somewhere else," because unless you know that it's covered somewhere else, you don't know it. One of the concerns I have is that Saskatchewan introduced their bill and then immediately had to introduce another one because they found out there were shortcomings. Again, there seems to be ample precedent. The United States federal government, lots of people, have looked at this problem. It's just really a question of-and I know you can't cover every single eventuality-whether we are able to learn from all of these other jurisdictions and make sure we have the most comprehensive bill that we can, one that will address as much as we can.

Mr Gregory: I think to some extent the answer to that is that one size doesn't fit all. Programs will have their specific requirements that they'll have to spell out to say, "All right, when you're dealing with us, we need this rather than this," because they need more security. My examples are drawn largely from the Ministry of Consumer and Commercial Relations, where they have business names registration. If I have a company called 1234567 Ontario Inc and I want to carry on as Gregory Enterprises without that being my corporate name, I have to register something as a business name so that people can say, when they see Gregory Enterprises on my truck that runs them down or goes through their store window, "Who the heck is that legally?" They can find out that legally it is 1234567 Ontario Inc. So I have to file that. What I used to do was file a little card saying that, a five-by-eight card with an appropriate fee attached for filing it, and there it is on the register.

That ministry asked, "What are we going to do about doing that electronically? How are we going to get those things signed?" They decided, "We're not going to get them signed, because we never look at those signatures and we never go behind the signatures and it will be signed with some scrawl that we may or may not be able to identify." But it doesn't really matter, because there's not much in it. There's no public benefit; there's no public legal status that you get by putting that in. It's simply a notice requirement.

On the other hand, with a Personal Property Security Act file which sets priorities between bankers and creditors and so on on certain assets, it's more important. On those ones, again, they don't have a signature but they have a system where only authorized users are able to file it so that they know where it came from. But again, it's a notice; it is not the actual document. The agreement between the creditor and the debtor is not on file electronically; it's back in somebody's office. It's only the notice, but the notice is traced in a way that the business name registrations aren't.

Take the next step, for land transfers, which is very important, where I am transferring, where the public record of the transfer is who owns the land, and a paper document that's contrary to it is invalid. The electronic prevails over the paper in the Teranet system. That one has a ton of security and a ton of rules and regulations about who gets to do it. The electronic security is much tighter because there's more value. So there's one ministry with three different programs-business names, personal property security, and land transfer-with three quite different security systems and legal structures behind it because there are three different purposes, three different risks and rules. So I don't think we're going to have a single system.

One of the challenges of putting it all into one piece of enabling legislation is simply the time it would take to go through all the laws and basically negotiate between the Ministry of the Attorney General carrying this project and every other ministry of the government to say, "All right, could you bring your commercial registration act into ours? Could you take your three sections out of the Highway Traffic Act that deal with electronic vehicle ownership records and move that into our statute?" It would have taken a long time to do that, and we thought it would be faster just to say, "Let's cover what's not now covered and enable them." We are working administratively to ensure the standards are as consistent as possible technically, partly so that the government ministries can talk to each other electronically and deal with the public so the public doesn't have to have four different kinds of software to deal with the government electronically and start to create a lot of difficulties, but I don't think we can harmonize it.

I don't want to take up other people's time, but the main thing Saskatchewan did when they withdrew their legislation and put it back in-originally they did an Electronic Filing with Government (Documents) Act in 1998. What they did when they put their electronic commerce legislation in last Christmas, the Electronic Information and Documents Act, is that they did not deal with government documents at all. They said, "We've already got a statute on that." When they came back, they withdrew that act and put one in which combined the Electronic Filing with Government (Documents) Act into the Electronic Information and Documents Act and made one statute of it. Again, it's easier to find and then the relationship between the sections was clearer, but that was only that. They didn't combine it with their personal property security legislation, which they already had, which allows for electronics.

I could speak to the American one, but it might take too long. I don't think it works, frankly. It's not a success, in my view, American federal legislation, because it overrides more than it should and they're going to run into problems as a result.

Mr Kwinter: Do we still have some more time?

The Chair: You've got three minutes, Mr Kwinter.

Mr Kwinter: The other issue I want to address is the whole area of privacy and confidentiality. You don't really refer to it specifically because it's covered in C-6, and that's sort of a given. Again, there has to be some sort of continuity between not only the United Nations, the United States and Canada; we really are into a global economy and we have to have uniformity with the legislation so that you're not jurisdiction jumping, where you say, "Hey, we found this particular place that doesn't cover this. Let's put our business through there." You talked about that, when you're in Seattle and you're using Hotmail.

I feel the legislation here should address the area of privacy and confidentiality. I think there has to be a specific recognition that this is going to be one of the major concerns people have when they're dealing electronically. When they're dealing with hard copy, hard paper, they sign it and they send it by registered mail, "Personal and confidential." They have some kind of assurance, not absolute assurance but some sort of assurance, that this information is going to go only to the person it's intended for. Although there are always people who may open up mail that doesn't belong to them, it's not the norm.

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I really think there has to be that provision in the legislation that we're contemplating. For people who are wired now, this is just a matter of course; they do it. But more and more people are getting electronically literate; more and more people are going on-line. I think one of the major concerns people would have is, "I'm sending this thing off into cyberspace, and how do I know who's getting it?" There should be provisions in the act to address that. Can I have your comments on that?

Mr Gregory: There are two parts to that question. The first is harmonization of standards, the privacy rules, and the other is the legislative vehicle, should it be here in Bill 88?

The standards for protection of personal information and privacy legislation are in fact pretty uniform in the world. The Organisation for Economic Co-operation and Development, the OECD, developed guidelines back about 1980 which influenced a lot of our legislation, including FIPPA, influenced federal legislation and has influenced the Canadian Standards Association Model Code, the Quebec privacy legislation for the private sector.

Really the basic principles of data protection of privacy are pretty standard. The OECD has expanded those further in recent years. Bill C-6 was intended-except for the CSA code-to reflect those standards. The European Union's directive on personal information and protection reflects the same standards. The proposals that are made by the Federal Trade Commission in the United States, for example, are based on the same standards. So I think the underlying principles are the same.

If you look at the consultation document that the Ministry of Consumer and Commercial Relations has published here, they're talking about the same standards. So the basic principles, what you have to do, that the person should consent to the information, they should know what it's being used for, the person who collects the information shouldn't use it for some other purpose without telling them and getting the consent to that, etc-there are eight or 10 principles, depending on which version you look at-are all pretty consistent.

I don't think you are ever going to be able to prevent the existence of data havens as it were, places where they sort of ignore the law, but there are ways to not give your information to people. It's an evolving field.

The second question is, though, should there be something in Bill 88 about this, rather than something separate? There are a number of reasons that we didn't do that. One of them, again, is that we are trying to deal with the legal enabling of electronic communications, making it legally effective, where people consent to do it. If people don't want to consent because they're nervous about privacy, they don't have to, the same as they don't have to do it if they're worried about viruses or if they're worried about simply, "I don't know what this stuff is. It's going to disappear. I'm going to mess it up." For good reasons, bad reasons, sensible reasons, whatever, they don't have to deal with it, but we want to make it legally effective. We're not trying to solve all the problems.

We are dealing with electronic communications. One of the big threats to personal information has nothing to do with electronic communications; it simply has to do with the maintenance of the databases. All the Visa transactions that are done are sitting in banks' databases. They don't need Bill 88 for people to keep it. They take the information off my little paper slips that I sign in the restaurants and at the gas station and various places where people sign Visa, MasterCard, American Express or whatever paper. That information is given on paper, but it nevertheless turns into a database. The question is, what are they doing with their database, whether they collect it electronically or on paper.

The Chair: Mr Gregory, I'm going to have to ask you to sort of wind up or down.

Mr Gregory: Sorry, Madam Chair.

So that's a question which doesn't deal with the subject of Bill 88 but which needs to be dealt with possibly in privacy legislation, which is where MCCR is going with it.

The other thing I should say is that by most surveys I've seen, about 80% of electronic commerce is done business to business and doesn't deal with personal information at all. We're trying to ensure that those people can relax, are given some more legal certainty about the effectiveness of their communications. So it doesn't apply to personal information at all, but it deals with the legal effectiveness of the communications.

Mr Martin: I wanted to follow up a bit more on this issue of privacy, because it is one of the key issues where this piece of legislation is concerned. I think we need to have more assurance than the comment you just made that the privacy issue will be covered by whatever the Ministry of Consumer and Commercial Relations comes up with.

I know that the ministry is into, or is intending to get into, some public discussion about this; there was an announcement a couple of weeks ago that that's going to happen. But given that the complaints last year in the area of e-commerce increased by some 1,000%-that's what we're told-do you not think it makes more sense to have a more coordinated process here that would see us not moving as quickly as we are proposing, perhaps, to be into clause-by-clause by the first of October and to in fact be waiting to see what the Ministry of Consumer and Commercial Relations comes up with in terms of privacy, so that we do this right from the beginning and not expose anybody any more than we have to to the possibility of misuse of their information or to be abused in some way?

Mr Gregory: Obviously the timing of different pieces of legislation or possible legislation is up to the Legislature, but there are a number of arguments for proceeding with Bill 88 as it is, without trying to tie privacy in. Privacy legislation is very complicated. If you try to read Bill C-6, part 1, on privacy, it is not an easy read for a number of reasons, but one of them is the complexity of the subject. If you look at the draft legislation that was proposed for consultation by the Ministry of Health on health information privacy and protection a couple of years ago in Ontario, again, a very complex document because of the nature of the subject. It's not something that is simplifiable.

So the timing could be difficult. Certainly you risk slowing down the current legislation considerably, but that's up to the Legislature. From my point of view, I see them as two related but quite separate initiatives. Saying you may do something electronically and it is legally effective, even in the face of a writing requirement or a signature requirement, or if I do a contract with a Web site and click "I accept" and it essentially goes to some robot at the other end-because there is nobody sitting behind the Web site at Chapters or Amazon.com taking my order; it's simply a computer program-to say that it is legally effective is a big step forward and very helpful both to the individual and to the business that is doing that kind of communication, whatever happens to the personal information.

If personal information needs protection in the private sector, and certainly there is a lot of pretty good argument that it does, then it needs that protection wherever it is collected from, however it is collected and whatever is done with it. But it doesn't help that protection, it doesn't promote that protection to say, "Meanwhile we're leaving you uncertain as to the legal effectiveness of communications"-including, as I said, a lot of business-to-business communications, but even business-to-consumer communications or consumer-to-government communications-to say, "We are leaving it open. We're not telling you whether these are legally effective and we're not telling you how to do it."

One of our experiences in developing this legislation within the government is to have a lot of other ministries come to us and say, "We want you to be doing this. Otherwise we have our own plans for legislation, because we need to authorize our own programs that we're doing electronically. But if you do it in a generic piece of legislation like Bill 88, we won't have to amend whatever act to do it." That is one of the big benefits of doing it, for the purpose of government: to avoid adding to the constellation of different authorizing statutes that Mr Kwinter was talking about. There are a number out there, and we're not trying to say, "Bring them into the fold in this bill," but we do want to prevent their proliferation by saying, "This is how you do it." So for both government use-and of course government use is already covered by FIPPA and MFIPPA, so there is already privacy protection-and for private sector use, I think it's important to get on with it and say, "This is legally effective if you do it this way. If you get personal information, then you may have other rules that apply to you."

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It has certainly been the experience in the States as well as here-there seems to be more information about what goes on in the States-that people are refusing to deal with business Web sites that don't protect information. There's a lot of concern and growing sophistication about how you protect your personal information, or saying, "If you don't persuade me you're protecting my personal information, I'm not doing it." Of course, our Bill 88 is based on the same consent provision: "If I don't want to deal with you electronically because I don't know what you're doing with the data about me that I would be giving you, then I'm not dealing with you electronically. So persuade me."

There's a lot of private pressure on people to conform, but there is increasing legislative pressure both through Bill C-6 and through MCCR. I think they're separate concepts although they're not completely unrelated.

Mr Martin: So what you're saying, in effect, is that because actually moving and trying to get a handle on and to be doing something parallel on the area of privacy is very complicated and sophisticated, we're in fact not going to do it, we're not going to put the effort and the time and energy into doing that. That would seem to me to be somewhat disappointing, and I'm sure, for folks out there who at some point will find themselves caught up in this, quite troubling. Whatever we do as government, because we're giving leadership and laying out the groundwork, the framework within which a lot of this will happen, it behooves us, from the very beginning, if we recognize that there's a difficulty or challenge, to move to respond to it.

If what you're saying is that it is just too sophisticated and complicated to do it now because we want to move this through quickly and get it done, that to me would be a huge problem and a huge mistake.

I want to also just ask you a question-again tied into a question that Mr Kwinter asked you-about this business of trying to harmonize the various pieces of legislation. I was in Ireland in late June of this year, and certainly there's a country that is moving very quickly and aggressively into this whole area. Given the world out there that we're working in, it seems to me it would be intelligent for us as a country to try to harmonize, not only within our own jurisdiction but with the various provincial statutes that are out there where this is concerned, and also to harmonize what we're doing with the federal government so that no matter where you go in Canada at least there's some familiarity and continuity, and when we deal with the rest of the world-and a lot of what we do by e-commerce now is outside of our own jurisdiction-at least to have some common vehicles within our own country.

Is there any effort being made, as we move with this Bill 88, to conform with what's going on? I know you said that within our own jurisdiction we're not doing that; we're putting this in place and then I guess we'll deal with whatever evolves from there. But is there any effort being made to conform with other jurisdictions within Canada and with the federal government itself?

Mr Gregory: Two things: One, if I may comment on your interpretation of what I said to the previous question, I did not say we're not going to do this because it's too technical. I said there are two different conceptual areas. One is legal certainty of the effectiveness of legal communication. The other is what you do with the parts of that information that may be personal information. That is being worked on separately, but there is no reason-and it's not even a half a loaf is better than none. It's probably, given that 80% of communications is business to business, that consumers in the other 20% are going to want legal certainty.

If I order a book from Amazon.com, I bloody well want them to send me the book, not to say, "That's not a binding contract because it wasn't in writing." So maybe 90% of a loaf. Let's have the legal certainty about the communications and the transactions, and what they do with the personal information is a separate issue. So it's not a matter of the government not doing it; on the contrary, the government is doing it. The government has a consultation document going on; you can read what it says.

On the conformity side of it and the standardization, in fact this is a harmonized body. I've read the Irish document. If you read the Irish statute that they passed this year, it's very consistent with the United Nations model law. There's language that looks very much like Bill 88, and like the American uniform act, like the Australian, like the Singapore act, like the Indian act that was introduced this year, because it's all drawing from the United Nations work. Everyone is very aware of the globalization, and as you say, you should be able to have the same expectations wherever you are that if I create an electronic document that has certain characteristics, it will be legally valid in those legal systems. We're doing that. Within Ontario, one of the major purposes of this legislation is to harmonize so that every ministry won't pass its own legislation.

Certainly we've been pushing within the ministry within the last year or so to say, "Don't legislate on this because we're going to," and we've got a number of ministries that say, "OK. As long as you do within a certain reasonable time, we won't put in our legislation about electronic communications for our particular program." It's one thing to say that from here on we are going to have harmonized standards that are not only harmonized within Ontario but are internationally consistent with what's going on elsewhere. It's another thing just to go back and say that for the last 15 or 20 years various ministries have been passing various things in their statutes about their programs and we're going to make them all conform to this standard. That is a very different operation. It's not to say that won't be done over time; I'm sure it will be. In fact, over time I think everybody's going to be using off-the-rack, over-the-counter software and hardware for a lot of their purposes. There are a lot fewer word processing and spreadsheet programs around today than there were in 1980 or 1985 or 1990. Standards are becoming more accepted and more global, and government buys it off the rack the same as business buys it off the rack, the same as consumers buy it off the rack. What I have at home and what I deal with in my bank and what I have at the office tends to be the same software.

Standardization is happening, but to say we should hold up this until we can persuade every other ministry to change the way they've done things for their programs-and their clients, their customers and the people they deal with are all used to their programs and have all bought software and whatever to deal with it-to say they should change that or not to pass our legislation until they get there I think is maybe an ideal situation but I don't know if it's a real one. I don't know of any other jurisdiction that's done that.

The Chair: Two more minutes, Mr Martin.

Mr Martin: You made a comment that there is no discrimination based on medium, and I think I understand what you mean by that, in that one doesn't supersede another. But-and this may be a political question at the end that you may not be able to answer, but at least I want to ask it-by moving now in this way into the area of e-commerce and making it sort of the norm, or at least enhancing it so it's a possibility that it will become the norm, I suggest that there will be some discrimination. It will be discrimination against those who cannot participate because they don't have the hardware or the knowledge or the access.

I tried to talk the ministry into taking this piece of business into the north, for example, where a lot of smaller communities are being hammered because those few people who do have access are now buying by computer and so small businesses in those communities are finding it difficult, given that their margins were so narrow in the first place. I guess I'm afraid, first of all, that they won't understand the impact of this on their local economy and won't be able to respond to it because we haven't gone in there to talk to them about it, to educate them, to raise their consciousness around this. Ultimately, in the end, if some of the businesses that are there close down because they don't have the level of business any more that makes it profitable for them to continue, then these folks will no longer have access to some of the materials that the folks on the Net will have. Any comment on that?

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Mr Gregory: I think the question of access and comprehension is a very important one. I know that the Ministry of Energy, Science and Technology and the Ministry of Economic Development and Trade have both been working on programs to expand the access to communities outside downtown Toronto or outside the main communications networks.

There is no question that there's a challenge. There's also an opportunity in there, but it's not really a Bill 88 question. Making the legal consequences of using this communication certain rather than uncertain I don't think disadvantages them. It may well allow the people in remote places to get information that will help them be competitive.

As someone put it once, we're importing customers. By putting our wares out into an electronic universe it reduces some of the economies of scale. But on the other hand, you do have to know more or less how the system works. So there are two sides to that coin. But the whole economic development and regional equality or equalization program is not the agenda of Bill 88, which is not to say it's not an important agenda; it is.

The Chair: We'll turn to the government side.

Mr Martiniuk: First of all, Mr Gregory, I'd like to congratulate the ministry and yourself for meeting the concerns, as I understand it, of the privacy commissioner and others in regard to this legislation.

My good friend and colleague John Hastings, member for Etobicoke North, presented a bill which passed second reading and was referred to this very committee, as a matter of fact. It unfortunately did not meet some of the privacy concerns, even though I understand it was based upon the Uniform Electronic Commerce Act. I would like you, for my purposes, referring to specific sections of Bill 88, to point out where you have met privacy concerns where the bill presented by the member for Etobicoke North was deficient.

Mr Gregory: "Deficient" might be putting it strongly, but there are certainly places in Bill 88 where the government amended what we had as our draft, which was, as I said earlier, based on the uniform act that Mr Hastings's bill was based on. We amended that to meet some concerns of the Information and Privacy Commissioner. There were a couple that dealt with matters of access and matters of consent but didn't really deal with privacy as such. In section 15, for example, which is on page 7 of the printed copy of the bill, we've put in subsection (4). Basically, that prevents government from compelling people to go electronic if people are concerned about the threat to privacy, as Mr Kwinter and Mr Martin have suggested-are we encouraging people to do something that is more risky? I think that is one of the concerns expressed by the Information and Privacy Commissioner as well.

Section 15 generally authorizes public bodies like government to deal electronically and it repeats the consent provision, which is one of the main protections you have about going somewhere you're not comfortable going. "Nothing in this act authorizes a public body to require other persons to use, provide or accept information or documents in electronic form without their consent." That basically reflects the general consent provision of section 3, but it's specifically tied in to government uses.

More specifically with privacy, you have section 27, dealing with the application of the act. This is the one I mentioned earlier, saying we do not override FIPPA or MFIPPA.

"Nothing in this act limits the operation of the Freedom of Information and Protection of Privacy Act," the equivalent municipal statute, "or any other provision of law that is intended to protect the privacy of individuals," which is your question, Mr Martiniuk, or "provide rights of access to information held by public bodies or similar entities."

Subsection 27(2) really goes to protecting access rights rather than privacy. Section 29 deals with biometric information specifically, and carves out biometric information from the universe of information that might be communicated electronically. It says:

"This act does not apply to the use of biometric information as an electronic signature or other personal identifier, unless another act expressly provides for that use or unless all parties to a transaction expressly consent to that use."

You can't use the implied consent rule to justify the use of biometric information, say as an electronic signature. You'd have to spell it out very clearly: "This is what you're doing. Do you agree?"

The commission certainly took the view with us, and we were prepared to accept it, that people are particularly nervous about biometric information-finger-scans, iris scans and things that are part of your own body, the way you do things personally-and people are nervous about giving that up. So we're saying: "You can't use the general authority of this act to do that and sort of slip it in on somebody. You have to spell it out."

Those are the main provisions on privacy that were not in Mr Hastings's act and in fact a couple of them that make us not uniform with other provincial legislation. I know that in British Columbia they did speak with their equivalent privacy commission and that body didn't ask for the kinds of amendments we gave, but Saskatchewan and Manitoba did not make that kind of provision.

Mr Martiniuk: Thank you, Mr Gregory. My friend Mr Beaubien has a question.

Mr Beaubien: Mr Gregory, I'd like to go back to Mr Martin's question because that's where I'm concerned. The concerns I have with this bill are on the potential discrimination, the lack of accessibility for people in northern and rural Ontario and certainly the impact it potentially could have on the competitive aspect.

Let me paint the scenario for you that there are many municipalities in Ontario that will not be able to access the competitive advantage this bill may provide to some businesses, individuals or whatever the case may be. I don't feel the same way Mr Martin does. I think people in northern and rural Ontario understand the system. The only reason they can't use it is because they cannot access it. The fibre optics are not there, the infrastructure is not there.

Let's say this bill receives royal assent on November 25. From a legal point of view, what is your opinion if somebody comes from northern or rural Ontario on November 26 and challenges the government as to the competitive disadvantage they may have with regard to this bill? Where does the government stand?

Mr Gregory: I think the answer from the point of view of the Ministry of the Attorney General in saying, "Here we have Bill 88 which we have now passed," in your hypothesis, is to say, "This act reduces legal uncertainty about the impact of these communications and the effect of these communications." It is not regional economic development legislation. So the people in northern or rural Ontario who say, "We need the infrastructure," or "We need the education," or "We need the facilitation here so that we can use this material which can give us a competitive advantage, but only if we're connected at sufficient speeds and have sufficient services in support"-that is a different part of the government that should be doing that.

I think it is a perfectly fair question, and the government as a whole needs to be able to answer that question: What are you doing for the people who don't have the facilities they have in the big population centres? But it is not an answer to that absence to continue the legal uncertainty about the effect of these transactions. If I have a writing requirement, whether I'm in Lambton county or northern Ontario or downtown Toronto, I need to know how that writing requirement is satisfied electronically, and Bill 88 will help me answer that question. It's a separate question of: I can't get a fast Web site in Grand Bend because I'm working with the local communications system and it hasn't got the infrastructure yet. That's a serious question, but it doesn't-I don't think delaying giving legal certainty about communication is a way of solving that problem. That is a different problem which Bill 88 can't address.

Mr Beaubien: I'm speaking on behalf of my constituents, because some of them would be able to access the potential benefits from this bill while others wouldn't. I know my friend Mr Kwinter always told me we're all born equal. Sometimes I wonder whether that's true or not, because the more we delve into some of the new technology, and I agree that it's difficult to service all areas of the province, I think there's an element of unfair competitiveness for some people. I think they are placed in a undue, unfair, disadvantaged position because some people in Ontario have the infrastructure available to them. From a legal point of view, I don't know; I'm not a lawyer. But I'm sure, as you pointed out in the opening statement, that lawyers will always figure out a way to put their case or their point in front of a court, in front of a judge, in front of anybody. So, from a legal point of view, it does create some concern as far as I'm concerned.

Mr Gregory: I know the federal government has an e-commerce or an electronic commerce strategy, and one of the messages in that is very much, let us have everybody wired, let us have universal access for exactly that reason. As I said to Mr Martin and Mr Kwinter, it's a very valid point that you have to equalize that opportunity. From the point of view of someone looking at Bill 88 and saying this will answer some legal questions about whether or not this is legally effective, I don't know how that vehicle can be made to carry the regional economic development weight. There's a lot of work being done by the government to ensure Internet access to the schools, for example, so that people, wherever they go to school in Ontario, are actually familiar with the concepts and the vocabulary in a way they wouldn't be without that kind of initiative.

There are smart-communities projects going on with federal and provincial money in them to help develop that kind of thing. I think it's activity that needs to be done, but from my point of view, as someone responsible for a bill that essentially gives legal effectiveness to communications, I don't think not doing it is an answer. I don't think the government is legally exposed to a challenge saying, "What you have done is invalid because it affects the people in rural or northern communities differently from the way it affects people in the downtown Toronto or Ottawa because of the infrastructure available to them." I don't think it's legally challengeable for that reason. Politically or socially it may well be challengeable, but that's a different question.

The Acting Chair (Mr Gerry Martiniuk): Mr O'Toole, you have only two minutes.

Mr O'Toole: I'd like to thank you for bringing this forward and also, it's been mentioned, Mr Hastings. I also want to comment as the parliamentary assistant to the Minister of Consumer and Commercial Relations. I'm sort of familiar with the discussion paper that's out there and, as you said, it is a kind of cross-ministry issue on the whole issue of privacy. I think the privacy issue has been addressed in our briefing notes as well, that the Privacy Commissioner said she is comfortable with the bill in the form it has taken after discussions with your office. So at least we're cognizant of it.

But I guess it gets to the bigger issue of risk in whatever forum or format it takes place. It would be wrong to assume that information in another format is more secure. Certainly, having worked in procedures and that area with a large corporation, information is accessible in paper form and, I suspect, most recently in the news you had Jane Stewart, HRDC, the income tax information database which was exposed to be at some risk to privacy, and there are all the resources of our federal government exposed.

Quite often in the House, not to be flippant here, the opposition and the third party introduce what they wave around as a leaked document, whether it's on environment or finance, saying that they have information which relates to-and most often this is in paper format. So it would be wrong to start with the premise that what we have is perfectly secure. I think the risk is most important in this format. I think the option of the consumer being able to opt out is very important, and their ability to interact and how they interact I think are widely protected by the biometrics; the lack of requiring that to be a component of the electronic signature is very important.

But then if I look at the broader issue of the document as I see it, and it's consistent with the United Nations piece and the American jurisdiction and other jurisdictions that have addressed this, the importance, for the right reasons that I think Mr Kwinter mentioned, is that in the e-world having harmonized standards is absolutely critical so that our systems are compatible. For example, a very controversial area would be health care. We're probably dealing with that as we speak; I know that somebody in some ministry is dealing with that issue of the smart card technology. Take, for instance, the idea of organ donation and organ transplants. There's a sort of preeminence of the collective good that somewhere has to enter this argument without risking people's privacy. I'm sure that the protocols, whatever they are, whatever system-there's always the risk of invasion, whether it's hackers or other misusers of information. I don't think we're there yet. I think we'll be talking about this 10 years from now, personally.

I just want to wrap up. All of us feel vulnerable, when we log on anywhere, that some trace, some fingerprint, some footprint, some e-print is left regardless-

Mr Beaubien: DNA.

Mr O'Toole: -a DNA kind of footprint, if you will.

This is more empowerment legislation for B2B transactions to take place in a legally conforming way. Would you say that's about as far as it goes? As to the other subordinated issues, I'm sure we'll hear much about that with Minister Runciman's discussion paper. Just a quick comment.

The Acting Chair: I'm sorry, Mr O'Toole, but we've gone over two minutes. You took four minutes for the question-

Mr O'Toole: That was the preamble.

The Acting Chair: -and there's no time. We're running behind. I apologize to Mr Gregory. I'm sure he had an answer for that rather prolonged statement. However, thank you very much, on behalf of the committee, Mr Gregory.

We are running behind. We have 20 minutes per party in regard to remarks, which would take us over into the lunch hour. We're returning here at 1 pm, so be guided accordingly. However, there is an allocation of 20 minutes per party.

Mr O'Toole: Mr Chair, I would ask, if we could have unanimous consent, that we move it down to 10 minutes, unless we want to pontificate for an hour or something.

Mr Kwinter: I have no problem with that at all.

Ms Marilyn Mushinski (Scarborough Centre): I have no problem.

The Acting Chair: The third party is not present, but two of us are in agreement.

Mr O'Toole: Great. Thank you.

Mr Kwinter: Mr Chair, if I could, I just want to reiterate some of the points I made in my questioning and tell you where we are as an opposition party. We are certainly supportive of this bill in principle. We think it's important and we will be supporting it. Having said that, I do have some concerns and I just want to make sure the government side in particular understands the concerns.

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One of the areas I'd like to talk about very briefly is one I didn't get a chance to ask Mr Gregory about because we ran out of time. This bill is basically enabling legislation to enable transactions that take place electronically to be recognized in law. It is not meant to go in and totally restructure how we do business and economic development and all of those things. That's got to be done somewhere else. But it really does provide legal certainty that if in fact you are conducting your transactions electronically, it will have the same legal force as it would have if it were done with hard copy on paper, and because of that there are some problems. I just want to refer briefly to what Mr O'Toole was talking about, where people leak documents or when things happen. There are provisions under the law to address that. If you break into an office and steal documents, break and entry; if someone transfers documents illegally, you can call in the OPP to do an investigation and do something about that. I don't know whether or not there are provisions under those criminal statutes to deal with somebody doing that electronically.

The more significant part of that is that usually there is a cause and effect: somebody breaks in because they want something; somebody transfers or leaks a document because they have a particular grievance with somebody, and that happens. But there are more and more instances where you have these young people who grew up on computers at the age of 18 months and two years who are hacks and they do it for the fun of it. They do it to see if they can do it. They do it to see, "Can I actually access the Pentagon records? Can I do that?" Every once in a while a story comes out where someone has in fact entered that kind of documentation.

The purpose of my bringing that up is that if you give enabling legislation to allow it to be done, then I think you must also provide penalties if someone abuses it. That is not someone who, as I say, is knowingly trying to send information they have been given in confidence and that they subscribe to under whatever privacy and confidentiality statutes there are, but if some party out there, for whatever reasons, decides they are going to be mischievous, they are going to access this documentation, and they figure out a way to do it. Notwithstanding assurances that everybody has all of these safeguards to ensure their documents, we know that any time somebody does something, there is someone else who will find a way to get around it. It would seem to me that none of the legislation I've seen deals with that. I don't have an answer to it. I just wanted to make sure I raise that issue.

The other thing I still have concerns about is to make sure that every effort is being made to address all of the technical difficulties with this kind of legislation: the fact that it's got to be harmonized; the fact that there are concerns and that every time you think you have it settled, someone brings up another one. Maybe during the presentations that are being made during the tenure of this committee, we'll hear some of them. I am hopeful that the minister and the ministry and the government side will be cognizant of these particular potential problems and make sure we do it right the first time. I don't want to be in a position where we are like Saskatchewan.

Without trying to be partisan, we've seen this happen within this government's tenure. They introduce a bill, they find that it was introduced in haste because it seemed to be a requirement that we have to do something, the bill gets introduced and suddenly everybody says, "Why didn't you do this? Why don't you do that?" They say, "We'll have to withdraw the bill and we'll bring it back again." Then it happens once, twice, three times and sometimes even four times. I'm just suggesting that there are overriding statutes, certainly with Bill C-6, that give a certain amount of legality to electronic transactions, and basically what we're being asked to do is to make sure that the provincial statutes, where there is provincial jurisdiction, conform to that particular legislation. I think it's important that we really take a look to make sure that when we do it, we do it as right as we can. We'll never do it absolutely right because this is a moving target and there is new technology emerging every day. This is a work in progress. It's going to have to keep evolving, and as these new technologies come up, we're going to have to make sure that our legislation is able to deal with that.

Then of course I still have some very serious concerns about privacy and confidentiality. Notwithstanding that there are provisions in C-6, I think it's important that they be incorporated into this act. I think it's important that this act can stand alone, that it isn't necessarily dependent on other jurisdictions' legislation and other people's responsibilities. I think there has to be a statement, there has to be an assurance that people who are dealing electronically have a certainty that what they do is confidential, what they do respects their privacy, as data, whether it's biometrics, which is specifically addressed, but that personal data that may not be necessarily under the category of biometrics is protected and that people understand that when they deal electronically they have that assurance.

In the interests of time-and I know we're going to cut it a little shorter-I just wanted to make sure I put that into the record, and again, we will be supporting the legislation.

Mr Martin: I hope you will be somewhat flexible if I go just a wee bit over in that I've put a lot of effort into preparing for today and would like to put on the record as much as I possibly can.

In light of this bill, I think first and foremost we need to make sure we have consumer protection to ensure privacy rights are not violated and to protect against e-fraud and cybercrime. Regulation is one thing; enforcement is another. We need a third-party watchdog that has the power to investigate e-complaints, press charges and enforce the laws. Consumer protection rights ought to be real and enforceable, not virtual. We need to make this consumer-focused, not business-focused.

Minister Runciman has suggested the term "consumer" be expanded in this context to protect small businesses. I agree. Small business should be protected under separate legislation that combines protection with accountability and specific guidelines. Business owners and consumers are two separate entities, and this legislation should maintain that separation.

Recent studies show e-commerce has been a bust in Canada. We need to consider the reasons for this: lack of trust among consumers for e-commerce as well as lack of coordination and accountability for business initiating e-commerce transactions. Proper e-commerce legislation should protect the consumer from abuses, as well as outlining clear, specific rules for business use of e-commerce as a marketing and sales tool. Consumer complaints about e-commerce have risen by 1,000%. We need to know those complaints are being investigated swiftly and with assurance. We also need to know that consumers have legal recourse.

Privacy protection should be key in e-commerce legislation. It should be illegal, period, for any company to share your personal information for marketing or any other purposes. Buying goods via Internet should not in any way be a licence for business to exploit the use of your personal information. Consumers should not have to fill out a form saying they do not want their personal information shared. It should be embodied in the law that such information should never, under any circumstances, be shared unless under police investigation.

We need to develop regulatory frameworks for cybercrime, e-commerce and the social and economic impact of the digital revolution. We need to set up a body to review the impact of any e-commerce legislation within three years of its enactment. E-commerce is a new beast, and we need to make sure that any legislation speaks to the reality of this new concept.

On a social commentary note, we need to recognize that e-commerce represents a small fraction of how most Canadians do business. Many low-income Ontarians are frozen out of e-commerce because they do not have the money to buy a computer and surf on-line, many businesses do not have the resources to set themselves up in e-commerce, and jobs could be jeopardized if we tried to turn the real economy into a virtual one.

The real economy is where the majority of consumers do business in Canada and it will remain that way for a good long time to come. While we need to make sure regulations and enforcements are in place for this new way of doing business, we should not fall into the trap of overvaluing e-commerce over real commercial transactions. Also we need to consider the impact of developing a dot-com economy that further deepens the divide between the rich and the poor. The whole debate on e-commerce centres around maximizing the consumers around this new technology and keeping up with others, companies, countries, in growth. We need to be thinking further ahead to the impact of a growth-based society on the environment and we need to look at the very real problem of jobless growth. With greater and greater use of new technologies, we need to have some broader discussions about how we can help the economy produce jobs.

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By way of some background now, Stats Canada released a benchmark study on August 10, 2000, that found that e-commerce has been a complete bust for the Canadian economy so far. This was the first ever study in this area by StatsCan. Internet sales in Canada are just a fraction of total market activity. Goods and services ordered by Canadians on the Internet in 1999 represented only 0.2%, or $4.4 billion, of total economic activity. In other words, out of every $100 of sales in Canada last year, Internet sales accounted for a mere 20 cents. The study was based on a survey of 23,000 private firms and public organizations between October 1999 and March 2000. The leading sectors for Internet selling of goods and services were the information and cultural industries: 20% of business in these areas used the Internet. Next in line was the private educational services sector, at 17%. In contrast, only 1% of companies in the forestry, logging and supportive activity sectors did so.

Contrary to popular belief, more Canadian businesses are using the Internet to purchase rather than sell goods and services, suggesting stronger business-to-business Internet commerce in Canada than the continually talked about business-to-consumer commerce. This is especially the case in broadcasting, telecommunications and publishing, where more than half of all firms purchase services on-line.

Canadians are far less likely than American consumers to buy on-line: 0.4% of shopping was done on the Internet in the fourth quarter by Canadians versus 0.6% for Americans. Of those, the study found the majority of on-line spending by Canadians is flowing to the US and other foreign countries. A different study by the International Data Corp Canada found that Canadians spent much more on the Internet, $21 billion, than the Stats Canada study found, but the IDC study measured complete spending, not just spending in Canada, and the difference between the two studies could mean that Canadians are spending on e-commerce, but not in Canada.

As the Star outlines, for every dollar Canadians spend on the Internet in Canada, they spend $3.77 on purchases on-line from the US. Canada's public sector is making more of an effort than the private sector to sell on the Internet. Business needs to catch up. If Canadian companies don't offer consumers virtual stores as good as those in California with the push of a button, Canadians will travel to the US to do their shopping.

The Star concludes that we are not keeping pace with the US in investing in new technologies. One US-based analyst warned that Canadian retailers better move quickly to attract consumers to their Internet sites or they could lose the electronic market to competitors south of the border.

Commenting in the aftermath of this study, analysts have concluded that Canadian firms have to get their act together if they want to stay competitive in the digital economy. They recognize that Canada is behind the US, but momentum is building to what they believe will become an economic tidal wave. The survey did not answer questions on how companies are doing with their returns on investment in e-commerce or whether e-commerce is lowering their costs. Questions of jobless growth certainly come to mind because of the technology involved in e-commerce.

Ann Cavoukian, the Information and Privacy Commissioner, said about e-commerce that it is based on the very technology that has led to a renewed concern around privacy for individuals-Internet technology. E-commerce will have to work with consumer confidence and trust because with competition only a mouse click away, trust will help win business. Growing numbers of Internet users are fibbing about themselves because they have serious concerns about on-line privacy. In a survey of 200 people in BC by market explorers they found that more than a third falsified personal data, and in a survey of 10,000 two thirds had serious privacy concerns.

These fears are affecting e-commerce because consumers fear being tracked on-line if they buy over the Internet. Companies need to provide upfront privacy policy agreements and compensation programs in order to motivate on-line consumers to voluntarily give accurate information. Some companies are clueing into this. YOUtopia and BizSmart say they are open about how the collected data will be used and provide comprehensive on-line privacy agreements. They also give away incentives such as being entered in a draw for a PalmPilot or collecting YOU dollars that can be exchanged for music, movie passes or clothing as you use the site. It will come down to companies developing better, customized reward programs or services to entice users to share personal data. Just because there is a privacy policy doesn't guarantee a company will honour it. One example is Toys "R" Us, which has a privacy policy but forwarded personally identifiable information to a US marketer.

The federal government has passed a law, the Personal Information Protection and Electronic Documents Act, to come into effect in January, that would make it illegal for a company to go against its privacy agreement. Companies will have to get consent from the individual before collecting or disclosing personal information. Consumers have to be told what data are collected, how they're used and that they have the right to veto the sharing of data with third parties through an opt-out clause. But the law does not apply to non-identifying or anonymous information, it is not retroactive and it can't stop stuff that emerges from other countries.

As I mentioned earlier, Minister Runciman announced on August 10, 2000, that the government is planning to revamp the province's decades-old consumer protection laws and have legislation ready next summer. Consultation hearings will be held across the province in the coming months, and he says he is committed to public input. The government has come up with 14 suggestions to update the legislation that harmonize with federal and provincial standards developed last fall at a meeting of Canada's consumer ministers. It seems to me, if the Minister of Consumer and Commercial Relations is going to go out across the province for public consultations, that we should have done that as well with this bill, not limited ourselves to three of the larger areas in the province but willing to go to northern Ontario and rural Ontario.

He specifically mentioned the growth in e-commerce and the surge of complaints by people doing business on the Internet as necessary reasons for the revamp. Apparently, consumer complaints have increased by 1,000% in the last year in the area of e-commerce. Proposals include giving people the right to back out of a deal if the goods they've bought over the Internet are not delivered within 30 days and a 10-day grace period for people to back out of high-pressure sales strategies for real estate time-sharing deals. The problem will be, how can you get this law enforced outside Canada?

Runciman said he also wants to expand the government's definition of "consumer" to include small businesses because they are just as vulnerable to deceptive practices as those buying for their families, and I agree with that.

With on-line banking and on-line investing, I wonder if regulations are adequate to protect people against terrible financial mistakes. For example, the Bank of Montreal's direct investing firm announced on August 16 that it is offering fixed income on-line, a service that allows investors to search, buy and sell a wide range of fixed-income products such as bonds, treasury bills, debentures and coupons. They say the service is for experienced investors and that they have on-line access to knowledgeable representatives to answer questions. There is a quick-picks function where the user identifies the amount of money he wants to invest and is presented with a selection of investment options. The investor line is part of the Bank of Montreal's private client group that focuses on wealth management.

The Chair: You have about a minute to wrap up.

Mr Martin: OK. As greater amounts of financial transactions and business can be conducted over the Web, do we unnecessarily expose people to greater risks of losing savings, fixed income etc if there is inadequate regulation and monitoring of these sites and transactions? With telephone advice, you are receiving information from qualified, certified financial planners, and there likely are monitoring mechanisms in place.

These are just a few of the concerns, with some background information, that we have as we work with the government on this piece of legislation. We think it is necessary to be moving in this direction but to be doing it in a coordinated manner that recognizes what is happening across the board in the various ministries that will be affected or have effect here, that we need to be doing it in co-operation with other provinces and with the federal government, and that we need to be taking the time, if it's necessary, even though it may be complicated or sophisticated, to make sure we have in place all those privacy protections that are necessary if this is in fact going to be a good piece of business for the people of this province.

The Chair: Thank you, Mr Martin. Mr Martiniuk.

Mr Martiniuk: Thank you, Madam Chair. As agreed upon, I will be less than 10 minutes. First, I would again like to recognize and congratulate John Hastings, the member for Etobicoke North, for showing the initiative in presenting his e-commerce bill, which received second reading and was in fact referred to this committee.

Bill 88 would encourage public business confidence by providing clear laws that regulate and safeguard consumer and business electronic transactions. This would allow business, including small business, to be as creative, modern and competitive as possible. Enhanced confidence in e-commerce provides opportunities for small businesses to compete more effectively than big businesses as e-commerce reduces the advantage of scale of existing plant and inventory.

Enhanced confidence means ensuring consumers are protected. By giving on-line transactions the same legal validity as traditional off-line transactions, Bill 88 would ensure that consumers and their electronic dealings are legally enforceable.

Bill 88 would ensure that consumers would receive directly any notices that have to be provided to them. Senders of notices would not be able to consider their notices as delivered to consumers by simply posting them on a Web site.

Bill 88 would also give consumers a right to get out of transactions entered by mistake with an automated computer. We believe this rule would encourage on-line merchants to set up systems to avoid mistakes or seek confirmations before treating a deal as final.

Importantly, Bill 88 would give people the right to say no. It would not force individuals or businesses to go electronic. Simply having the capacity to receive an e-mail or a fax would not be enough to constitute consent. Bill 88 would also give people the right to say, "Yes, but...." In other words, people could set conditions for using electronic communications, such as using acceptable word processing or signature methods, or people could agree to using electronics for some kinds of documents, such as household bills, but not others, such as insurance policies.

Bill 88 would give each individual user of electronic communications the choice of what he or she is comfortable with. Security of information and protecting individual privacy is paramount. Bill 88 responds to input from the Information and Privacy Commission. For example, Bill 88 would not apply to the use of biometric information, which is based on measuring physical characteristics such as fingerprints and iris scans. That's "iris," not "Irish," Mr O'Toole.

Interjection: Close, though.

Mr Martiniuk: This information can be used if it is specifically authorized by any other legislation or expressly consented to by the individual. The Information and Privacy Commissioner has said that she is comfortable with Bill 88 in the form it has taken after amendments resulting from discussions with her office. Federal law also safeguards use of personal information used in e-business.

The Ontario Ministry of Consumer and Commercial Relations is consulting with the public on this issue in an Ontario context. They released a consultation paper on July 20 of this year, and you can submit comments to that ministry by September 15.

I believe that this Bill 88 does in fact protect and give confidence to the public and I am pleased to support it.

The Chair: Thank you, Mr Martiniuk. We will recess now until 1:30. We've had a cancellation, so we've moved the first delegation to 1:30. So see you then.

The committee recessed from 1154 to 1330.

The Chair: I call the meeting to order. Good afternoon, ladies and gentlemen. This is a continuation of the standing committee on justice and social policy to consider Bill 88, An Act to promote the use of information technology in commercial and other transactions by resolving legal uncertainties and removing statutory barriers that affect electronic communication.

ANDERSEN CONSULTING

The Chair: The first representative we have to address the committee this afternoon is Mr Paul Brown, senior manager of Andersen Consulting. Each delegation has up to half an hour for their presentation with questions. Good afternoon.

Mr Paul Brown: Good afternoon, Madam Chair, members of the committee. My name is Paul Brown and I represent Andersen Consulting. Thank you for this opportunity to speak with you this afternoon and to support Bill 88, the proposed Electronic Commerce Act.

Attorney General Jim Flaherty has accurately observed that the future of e-commerce will, in part, depend upon consumer confidence and trust. The proposed legislation provides a much-needed framework of standards for electronic contracts, signatures and transactions that will greatly assist in securing that confidence and trust.

We believe it's an excellent first step and commend the government for recognizing that electronic commerce is global by nature and must conform to international rules and standards. The minimalist nature of this legislation is also a positive factor in that it recognizes the reality that the e-commerce marketplace is rapidly evolving and that we are seeing fundamental changes in consumer and commercial behaviour. Bill 88 is the beginning of a long process of legislative and regulatory change that is needed if we're serious about encouraging the successful evolution of the digital economy while at the same time protecting participants in what is largely an uncharted new marketplace, the new e-commerce frontier.

My colleagues and I are heartened to hear the Attorney General say that his government "places a high level of importance on the development of e-commerce in Ontario and is committed to seeing Ontario play a leading role in the development of the on-line economy." We too are committed to playing a leading role in the development of e-commerce in Ontario and have established a dot-com Launch Centre in Toronto where we help fledgling Internet start-up companies seed exciting new business ideas and grow them into successful business operations. We believe that Ontario is well positioned to be a leader in the digital economy, but the road ahead is not without obstacles.

Andersen Consulting, which has operations in 48 countries and employs 65,000 people around the world, is recognized by industry experts as the leader in Internet strategies and the operational transformations needed to implement those strategies. We have worked with the world's most innovative companies and governments to help them realize their potential in the new economy. It's because of our experience that we recognize the importance and relevance of Bill 88.

Here at home, the 1,300 professionals we employ work with clients such as Nortel, Alcan, Canada Post, the government of Ontario and many others. Quite simply, we understand e-commerce and we understand the Canadian marketplace. Furthermore, we are a committed participant in electronic commerce as a supplier, a customer and an investor. This legislation will pave the way for many new entrants and greater participation in the digital economy and help us carry out our business more effectively.

As we noted in our e-commerce survey of Canadian business, completed last year, technology convergence has done more than change the way we do business today. It has changed the very economic assumptions on which business has long been based. It has changed the industrial economy into a new, electronic economy.

No longer are interaction and collaboration costs high for business. No longer do physical assets play the central role in value propositions. No longer does size ultimately limit returns. No longer is access to information restricted and expensive. Most importantly, it no longer takes years and deep pockets to build a business with a global presence.

Winning in the e-economy requires more than just creating Web sites and virtual channels, automating customer service and building new skills.

When Attorney General Jim Flaherty introduced this legislation on June 13, he referred to the exploding digital economy when he stated, "For Ontario, that means the creation of new jobs and the potential sale of millions of dollars in goods and services." The opportunities for economic development, job creation and revenue generation are immense. However, there are a number of threats implicit in the digital economy.

In an industrial economy, critical mass, economies of scale and proximity to the marketplace are three of the more important elements of market dominance. Ontario, more than any other province in Canada, has prospered in the industrial economy. In the digital economy, proximity to the marketplace has been virtualized, meaning that every Web site, regardless of where it is located, is virtually present in every home.

In the mid-1800s, the value of manufactured goods surpassed agricultural products for the first time as part of the gross domestic product. It was a revolutionary development. But there is another revolutionary development on the horizon. In the very near future, the value of intangible services will surpass that of manufactured goods. More and more of the industrial engine will be used to produce goods at much lower margins in support of the higher value, intentions-based services provided on Internet. The threat to Ontario is that these services, which are tailored to the individual, can originate anywhere in the world, and bring with them the very real potential that the most valuable part of the transaction will occur somewhere other than Ontario.

In an industrial economy, moving the locus of economic power could take decades. In the digital economy, it can happen virtually overnight. The government of Ontario must remain vigilant to ensure that the Ontario economy remains balanced in the provision of goods and services. Economic development efforts need to be focused on ensuring that e-businesses can continue to grow and prosper in Ontario so that we can ensure economic prosperity and jobs for all Ontarians.

In the new economy, borders are obscure and jurisdictional sovereignty is unclear. The purchase of goods and services on the Internet does not require the buyer to know or even care what province or country the goods or services come from. The primary considerations will be the price and speed of order fulfilment. For many services, fulfilment is instantaneous, and cost and quality are the only considerations. This creates an interesting challenge: Who should be responsible for collecting and remitting sales taxes? If the buyer is responsible, non-compliance will become the norm rather than the exception. If the seller is responsible, as is currently the case for the majority of businesses, inequities will begin to occur that could ultimately affect the competitiveness of Ontario businesses.

To understand this phenomenon, you need to picture the Internet as a giant department store. Similar goods and services can be compared as if they were sitting next to each other on shelves. If an Ontario buyer was required to choose between two comparable products or services of equal base price, and the one sold by the Ontario company has an 8% sales tax surcharge which the one sold elsewhere does not, the natural assumption is clearly that the majority of Ontario buyers will purchase out-of-province goods and services, all other things being equal. Because goods and services on the Internet will look like they are from the same giant mall, differences in taxes from jurisdiction to jurisdiction will in fact cause consumers to see artificial price differences. Given the heightened competitiveness of e-commerce and the ability to serve a global customer from anywhere, low- or no-tax jurisdictions will have an advantage in attracting digital economy business. I don't believe that's a big problem today, in part because of the confidence and trust issues that Bill 88 is going to address. As the volume of trade increases, however, this will become a much bigger issue, and steps to address the solution should undertaken as soon as possible.

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One of the more exciting promises of electronic commerce is its ability to allow an organization to improve the level of service it provides while at the same time reducing the cost of providing that service. As governments across Canada face increasing budgetary pressures brought on by escalating health care costs, an aging population and rising education costs, providing better services at lower cost will become an attractive counterbalance to increased deficits.

The government of Ontario has already established a very broad presence on the Internet. All ministries and agencies have Web sites, and a huge amount of information is available to the public through these Web sites. Notwithstanding this breadth of information, the number of services available on-line for businesses and consumers is limited, although some of those provided are excellent. The Ministry of Consumer and Commercial Relations is a good example of excellent service delivery.

A recent survey noted that access to government information was the number two target for individuals using the Internet. Citizen and business interest and willingness to receive information and services from government through the Internet provide a tremendous opportunity to use the Internet as a vehicle to improve and expand services, increase access and position Ontario as a leader in e-government. At the same time, the province can position itself fiscally for potentially leaner years ahead.

The Internet provides an opportunity for the Ontario government to both spur economic development and streamline government services through its own use of the Internet. As I mentioned earlier, Ontario government ministries already make extensive use of the Internet. However, the ministries have not implemented their Web sites as part of a broad, integrated strategy specifically directed to achieving policy, program and economic development objectives. Alignment of Internet functionality with overarching objectives could have a profound effect on the quality of services offered, the cost of service delivery and the perception of an accessible, connected government and long-term economic development, particularly as it relates to small business.

The two opportunities of greatest benefit to the government of Ontario are integrated service delivery and electronic procurement.

Integrated service delivery is a means for the government to present itself that reflects the way citizens and businesses would like to see it. Currently governments are organized along ministerial or departmental lines with a program-centric focus. Citizens and businesses, however, have needs that cross these organizational boundaries. The process of navigating through the government maze is confusing and not aligned with client needs.

The Ministry of Consumer and Commercial Relations has done an excellent job of beginning the process of satisfying the regulatory requirements of business through a single access point. This excellent example should be replicated throughout government to deliver a wide array of additional services to both citizens and business.

The Internet provides a unique opportunity to overlay a new service delivery model on top of the existing organizational construct. Ultimately it also provides the opportunity to rethink existing structures and to redesign government to be more efficient, effective and accessible. A redesigned government could be operated with far less expense, freeing up funds and resources for the fiscal challenges that we all see on the horizon.

Restructuring will not be simple to achieve. Being able to see a citizen or business as a unified whole across organizational boundaries will require a higher level of information sharing between ministries. This will raise questions of privacy and confidentiality. Notwithstanding those potential difficulties, the benefits for both the government and the citizen over the long term make integrated service delivery an important consideration.

It is important to note that as government services become more common on the Internet, the Ontario government will not be compared with other governments as much as it will be compared with other private sector delivery organizations. The perceived relevance of government to its constituents will be in part based on how well government service delivery compares with the best on the Web.

Electronic procurement is a vehicle through which goods and services are purchased electronically. Businesses around the world have embraced e-procurement as a means of reducing the cost of purchased goods, significantly reducing the administrative costs and delays normally associated with purchasing, and increasing control over the procurement process. The Big Three auto manufacturers recently announced the largest e-procurement project ever undertaken. Typically, the overall cost of procurement is reduced by 10% or more, including the cost of goods. E-procurement also benefits the supplier by reducing costs and providing access to new markets.

Last year, Ontario government ministries spent more than $3.4 billion on goods and services. A large number of Ontario businesses benefit from their ability to provide goods and services to the government of Ontario. E-procurement provides a vehicle to allow smaller businesses more opportunities to sell in this marketplace.

Many small businesses cannot sell to government today because of the high cost of tendering. E-procurement could eliminate much of the red tape associated with tendering and provide a much more inclusive opportunity for small businesses to participate. Equally important, moving the government to an e-procurement model will create incentives for more businesses to do likewise. By bringing more businesses into electronic trading relationships, the government will help expand their marketplace from regional to global, ultimately making Ontario business more competitive and successful.

In conclusion, I would like to reiterate our support for Bill 88 and our desire and commitment to, as the Attorney General stated, see Ontario "play a leading role in the development of the on-line economy." We encourage the government of Ontario to continue in its efforts to reduce red tape and create a safe environment for the expansion of electronic commerce. We also encourage the government to more effectively use its position as one of Ontario's largest purchasers and service providers as a vehicle for economic development and electronic service delivery so that both the people of Ontario and the world see us as leaders in the digital economy.

That's the end of my prepared presentation. If you or the committee have any questions, I'd be pleased to answer them.

The Chair: Thank you very much, Mr Brown. There's time for perhaps one question from each member.

Mr Kwinter: Thank you for your presentation. I just have a question because I have been following this issue very closely and I've seen the failure of dot-com companies where the young guys have made millions, if not billions, of dollars, never sold a product, never delivered a service, but just on the assumption of some of the things you're talking about.

When it comes to the final analysis, someone is going to have to make that product, to make it competitive, to get it to wherever that e-commerce customer is. So when you talk about the effect on the economy, I agree there's no question that it's going to speed up the economy, but basically when you talk e-commerce, it's an information transmission system. There isn't a product that can travel over the Internet, other than a service product or an intellectual property. Physical goods are still going to have to be manufactured; they're still going to have to be competitive.

Because of your experience-you say you're in 47 different countries?

Mr Brown: In 48.

Mr Kwinter: In 48, sorry. Without question, e-commerce is going to speed up communication, but do you really think that it, in itself, is going to transform the nuts and bolts of business?

Mr Brown: I don't just feel that and our firm doesn't just feel that; most of our clients feel that. One of the real challenges they are dealing with now, and you alluded to it directly, is that somebody has to fill the order. It's not like going to a retail store where you pick it off the shelf and take it with you. Many of our clients are working very hard to redesign their logistics systems to move the fulfilment of the order into much more real time. As it's more and more possible to deliver goods next day or same day from warehouses spread around the country, there is going to be a major change in how people buy goods, and many of them are going to use the Internet rather than retail as their chosen option to buy things that they don't need right now.

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Mr Martin: One can't but help get excited about all the possibilities that are here, and it certainly is interesting to be part of all of that when you sit down in front of your computer and realize the world that's in front of you. The difficulty in all of this, of course, is how you protect people who will not be able to participate or who may be taken advantage of or who may get hurt by the information that they, in all good intention, deliver by way of the Net or whatever. I look at the new economy that's blowing in Ontario, but it's not affecting everybody equally. Those who are furthest away from the centre are still struggling to get into the tailwind of that, so to speak, and will, I suggest, for quite some time.

The Minister of Consumer and Commercial Relations has recognized that there are going to be problems because he's now launched out on a discussion with the people of Ontario about issues of privacy and the protection of consumers. He's including in "consumers" small businesses who are consumers of goods and, in the world that we seem to be moving into, seem to be more and more the prey of the bigger, multinational corporations who are only ready and willing to take advantage of opportunity to make more money at the disadvantage of somebody else.

Given all of that and the rosy picture that you painted-and I agree the government needs to move forward on this front-how do we make sure that everybody is included and that we minimize the damage to people and communities?

Mr Brown: If I could paraphrase, I think there are a couple of questions there. One question was related to large multinationals putting smaller companies and citizens at a disadvantage based upon their economic power. Another was based upon the fear that this evolution may cause some problems around privacy and confidentiality and leave some people behind.

I'll start with the first question. In fact, trends are showing us that it is actually the larger companies that are the most threatened by this because the ability to do business on-line with very small capital investment to get started and a change in the view of services versus products on-line has positioned hundreds, if not thousands, of small companies very successfully, which they couldn't have done in the industrial economy. So this is very much an opportunity for small businesses as opposed to a threat to them.

In terms of the privacy and confidentiality, I don't think there has ever been a technological or sociological change of any magnitude that doesn't have impacts that we have to be concerned about. The digital economy does have issues that we're going to have to address around privacy and confidentiality. Part of the reality is not about whether or not people have information about me that I didn't give out. If I didn't give it out, nobody would have it. The issue is around sharing, and those are issues that we're going to have to deal with. That's part of the evolution of this new opportunity.

Mr Martin: Thank you.

Mr O'Toole: Thanks very much, Mr Brown. I just wanted also to commend you for recognizing the work that the Ministry of Consumer and Commercial Relations has done and is doing as part of their consultation document that's out. I just want to be on the record as recognizing your expertise in that, and I'm certain you're one of the consultation groups.

You mentioned a couple of words that are quite important: the integration and harmonization issues. Really, that ultimately will be my question after I finish with my 15-minute preamble.

I just want to bring a couple of things down to reality. Having worked in General Motors for 30 years, and my riding of Durham, of course, is part of that, I like the analogy and the question Mr Martin asked. Right now I know, for instance, that with the just-in-time and the whole logistics issue, the model now is the customer actually pays for the car before General Motors ever pays for the parts. It's 30-day billing. The inventory pipeline is so short now that between order and delivery and payment, they've never even touched the money. So it's quite a profound revolution, as you've described it very effectively.

My question has to do with more of the harmonization and integration issues. I'm somewhat puzzled, when I look at the whole model based on the UN model-and obviously the largest economy in the world is the US economy, and perhaps Japan in there somewhere-as to who should take the lead. It comes back to, what's the format? Who's talking to who, and in what language? Of course, then the protocols of privacy and confidentiality, not to be subordinated, should be the same everywhere because the transaction occurs in cyberspace. It really doesn't have a home. I log on to buy a book, I'm actually talking to Plano, Texas, and I'm getting the book from Taiwan. Who collects the tax is a very important issue.

So I'm saying, who should take the lead here? Is the federal government far enough ahead on this issue or are they, I hate to say it, lagging behind? What's happening?

Mr Brown: I think the issue is that even though the promise of e-commerce is huge, the reality of it today is quite small. Nobody is seeing any erosion of tax revenues based upon Internet sales at this point, not to an extent that troubles anyone. There are a number of governments who are looking at this. I think it's a sovereignty issue. I think that taking the lead is not as important as making sure you're not buried in the aftermath.

Mr O'Toole: It's very good, but it's profound with respect to-

The Chair: That is your question, Mr O'Toole. I limited each member of the committee to one question.

Thank you very much for your presentation, Mr Brown. We appreciate your coming this afternoon.

CANADIAN BANKERS ASSOCIATION

The Chair: The next presenter is Shameela Abbas, legal counsel, and Bradley Crawford, QC, of McCarthy Tétrault, representing the Canadian Bankers Association.

When committee members have completed their cross-floor dialogue, perhaps we can hear from the presenters.

Mr Bradley Crawford: Thank you for giving us the opportunity to appear and present a few comments on Bill 88 on behalf of the members of the Canadian Bankers Association.

The bankers association and its members are convinced that the key to continued growth and international competitiveness of Ontario's economy depends on the ability of Ontario's population to adapt to the communication and business methods of the Internet and the 21st century. Antiquated laws that might inhibit the shift from paper-based systems and methods will impede citizens and local businesses in their efforts to change and keep pace with developments elsewhere. The Electronic Commerce Act is a step in the right direction. It seeks to eliminate all antiquated rules that would tie us and our transactions with each other and the rest of the world to outmoded technologies.

We support Bill 88 and would like to propose a couple of issues on which you might consider improving it in order to make it an even more effective tool for development. I believe members have a copy of our short brief, and delivered with that is a small pamphlet that is available on-line if you wish to test your search skills. Actually, we make it very easy by giving you the URL. The pamphlet is available to the public and has been widely distributed. It is background information for members of the public on demystifying e-commerce for those who need it. Of course, there are decreasing numbers of those who need it. On page 5, you'll see some figures that indicate that between November 1999 and January 2000 we think that 56% of Canadians used the Internet in some way or another; that's 12.5 million persons. Other figures on page 7 indicate that one estimate of the value of the Internet economy to Canada is in the neighbourhood of $28 billion and that it's possible to link about 95,000 jobs to the Internet. So we're not talking about a peripheral development, and I'm sure you've heard the same kinds of information from other people.

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The first point that we make is one to commend the general approach of the bill, which is to make the minimum changes in the existing law required to facilitate transactions expressed in new media and new technologies.

We also commend another policy found in the bill, but not quite so evident, that with one exception it does not endorse any particular technology. We think this is a very wise policy, particularly when new technologies are being developed as rapidly as they are. We think it's best for market forces and scientific developments to govern what is made available and for businesses and consumers to make their own choices concerning what they will use and what they want.

In that respect, we're sorry to see section 29 in the bill. It is very specific in addressing biotechnology-biometric information as a unique identifier. Some scientific evidence is that biometric information may be undesirable for a number of reasons. A lot of people distrust it, and it may not turn out to be a winning technology. We think that section 29 is a misstep in the general direction of the bill and that it would be better left out. All the other technologies are not addressed, and we think that's the right way to go.

Our second point is that we would very much favour some recognition in the bill of the quasi-public nature of the process that will be necessary in going forward to implement this law by new regulations. Much of what is in the act now can't take effect of its own force in text because it lacks the implementing regulations. We think the normal process of regulations, where the government consults such persons as it considers worth consulting and then comes forward with proposals, might not be the most effective method in this case because of the range of technologies available, the choices that are available and also in recognition of the state of readiness of the market to support new technologies and, to be frank, the sunk investments of participants in old technology.

I don't think public hearings would be the way to go, but we have to envision a quasi-public process in which consultation by the ministry would be of industry groups and consumer groups with a proven interest in the topic and something useful to say to get the right balance in the regulations and make sure we continue to move forward and avoid back steps or steps in the wrong direction.

A third point is much more narrow. It concerns section 8 of the bill, which purports to give the same force to any electronic document that the original would have in any legal requirement concerning an original. We support this in general terms. There is no reason to continue to venerate one piece of paper over another when the information can be certified to be the same in all the replicated copies. But a contract or custom or usage or business practices may need to be accommodated in making an exception to that. There are some forms of commercial documents-I'm thinking of cheques, bills of exchange, warehouse receipts, letters of credit, documents that are called chattel paper that express an interest in a specific chattel and a promise of someone to pay its value. These documents have unique value when they are proven to be originals. In fact, much of the law of commercial financing requires that parties deal with originals. Of course, bills of exchange are not within the act; that's not a concern. But the other documents I mentioned-warehouse receipts, letters of credit and chattel paper-are clearly within the scope of the act. By their terms they commonly require the delivery of an original as proof of the right to demand performance. If you have a document that requires the surrender of the original, it's a valuable piece of paper. You can take it to a bank and borrow money on the strength of it.

We will develop new business methods that allow us to use electronic documents in new ways, but until that comes along there is still a considerable body of financing based on paper that requires the delivery of an original. You can see that if a law were to be passed in the strict terms of section 8 that would substitute any electronic copy, the bank would not be safe in lending money on the original because it couldn't distinguish its claim to demand performance from the claims of any other person who might be holding an electronic copy of the instrument.

Section 26 takes certain documents out of the scope of section 8, and we recommend that 26(2) be looked at again and that amendments be introduced to make it clear that legal requirements found in contracts or in documents by the consent of the parties that give special value to an original be a recognized exception under the act. We think this is a transitional step that will preserve existing methods of trade finance without inhibiting the development of more sophisticated electronic methods in future.

Our fourth point concerns the meaning to be attributed to a phrase in the bill. What does it mean to "provide information" to someone? Sections 6, 7 and 8 contain requirements that certain information be provided. It's to be provided "in an electronic form that is accessible by the other person so as to be usable for subsequent reference and capable of being retained by the other person."

Section 10 is the source of the difficulty. It says that for the purposes of those three sections, electronic information "is not provided to a person if it is merely made available for access by the person," and then the words appear, "for example on a Web site." As a general rule, we support the thrust of the bill in allowing information to be provided electronically where it can be shown to be "accessible by the other person," "usable for subsequent reference" and "capable of being retained by the other person."

We think that some methods of using Web sites may satisfy those tests. We think, for example, that two very different cases may be caught by section 10. I believe some members of the committee have already done this. Maybe you've logged on and opened a bank account or purchased a term deposit or some other service from a bank on its Web site. On the sites there is a great deal of information given, a good deal of information elicited, but it's not all to be found on one page. There are often hot buttons or hyperlink text buttons to press. One of them may say, "For the legal terms governing what you are about to do," if you want to see a copy of those, "press here." When you do that, the screen immediately displays the legal terms. That's available for anyone capable of manipulating the mouse and understanding what to do, to click on "print" and get a copy of that, and they can keep it for as long as they want.

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We think that's not what section 10 was intended to address. We think that information is made available to the person on the Web site in a way that section 10 ought not to disparage. We agree with the general thrust of section 10. It shouldn't be enough for a merchant, on being brought into court by someone, to say, "Well, that buyer ought to have known the terms on which I was dealing. I posted those on some Web site a year ago. He should have been more careful. He should have gone looking for that." That's the kind of case that section 10 was intended to address, and we agree that would not be a defensible practice.

We think the basic idea of providing information to a person normally would include some actions of assembling it and addressing it, or getting it out there, pushing it out to the person, but not in all cases. The case we would make an exception for and would ask you to look at section 10, again with a view to amending, to provide for is where the very Web site that is being used by the parties as the medium of communication to create their legal relations has available for the taking information that the customer can download, store in electronic form or print.

Section 5 contains the same three tests. It says, "A legal requirement that information or a document be in writing is satisfied by information or a document that is in electronic form if it is accessible so as to be usable for subsequent reference." We think those terms should have the same broad meaning that we've tried to show with our criticism of section 10 and our approval of section 10 in certain applications.

The final technical point is perhaps again a small one but we think it may have considerable importance: the use of corporate seals. There is some troubling law in the Ontario Court of Appeal decision in Royal Bank of Canada and Kiska, which is now more than 30 years old but still I think represents the law on the topic, as to what is required to seal a document. Sealed documents have not disappeared from commercial financing, and will not. In fact, they haven't disappeared from a lot of financial and commercial transactions. Some lawyers' practice in some major firms in Toronto is to advise that wherever a corporation acts outside the ordinary course of its business, some sort of representation from a responsible corporate officer that this has been duly authorized by special action of the board of directors is prudent. In fact, you may be taking a risk that you're dealing with an unauthorized officer or dealing in an unauthorized transaction if you don't get some representation of that nature.

The Ontario Business Corporations Act has made corporate seals optional for 20 years, so not all corporations have them. Where it is the case, you're probably familiar with the ritual where a lawyer will produce from a box somewhere a little red wafer and put it on the paper and then there's a signature, an acknowledgement of the seal. A case in the Ontario Court of Appeal said that's fine, you can do that, but just the fact that it says "legal seal" on the document, or "LS" or some representation, is not by itself enough. What happened in that case was that the person was asked to sign a document. He did so and handed it over, and later someone came along with the red seal and put it on there. He said, "That wasn't on there when I signed it." The court said, "Well, it isn't a sealed document."

Moving forward to the 21st century, we may want to communicate in the course of business transactions electronic documents and be satisfied that we have the same protection in that medium that we have on paper. We want the corporation to say, "This is my sealed document." If Kiska is to be relied upon, they can't do it just by having the words "legal seal" there. We've got to have some way of sealing, some electronically secure signature. Something has to be developed. We don't have a concrete recommendation, but maybe the definition of "signature" could be expanded somehow to include a seal where it's appropriate and the data content of the secure electronic signature permitted it. That would change the law as represented in the Ontario Court of Appeal judgment and allow sealing by electronic media.

Those are the technical points we wanted to make. I hope I've been clear. If not, Madam Chair, do we have some time for questions?

The Chair: Yes, we have time for about one question each, given the length of questions from each member. We'll start with Mr Martin.

Mr Martin: I appreciate your coming and giving us some suggestions as to how we might improve on this piece of legislation, because that's ultimately what this exercise is all about. It certainly helped me get my head around a couple of issues.

Just for further clarification, the issue you raise in number 1, not identifying one particular technology over another, could you expand on that, using the example you have here? The biometric versus what?

Mr Crawford: Who knows. Biometrics information would be, for example, a fingerprint or a retina scan. Some of these methods are in experimental use now. Some people feel some discomfort about putting their eye up to a machine that's going to blink a little laser in it for the purpose of reading the unique pattern of lines or marks on the retina as an identifier of them.

Section 29 says, "This act does not apply to the use of biometric information as an electronic signature or other personal identifier, unless another act expressly provides for that use or unless all parties to a transaction expressly consent to that use." Fine. It's enabling and it's not going to force anybody one way or the other. It's just that to us it's not justified as an exception to what we approve of as the general principle on which this bill is based: to be technology-neutral. This goes further. It's not just neutral; it says biometric information is OK too. It's trying to help along the development of one technology over others. We don't see the justification for that because we anticipate that biometric information technology may never develop as the leading identifier of humans because of the concerns about measurement and risk and invasion of privacy.

Mr Steve Gilchrist (Scarborough East): Thank you both for the presentation. We certainly appreciate the detail you've put into it. There are lots of questions to be asked, but given the limited time, I am curious to know whether you would like to just take a second to further refine your fourth point about when we would make a distinction between the provision of data on a Web site and when that wouldn't be acceptable. Do I gather from your comments that only when the Web site itself is the start and finish of the execution of a contract would you be comfortable with providing, or are there any other circumstances where, for example, in the course of some other means of negotiating, you are specifically directed? It's no different than if I told you, "For further reference, please see our written booklet on the laws applying to this contract." If it said all of those details are on a Web site, would you be equally comfortable with that as long as you were expressly told to go to that, at which point of course it would be up to you to say, "I don't have a computer" and some other means would have to be provided, presumably?

Mr Crawford: I guess we're more interested in the point itself than in trying to define the extent to which it might be pressed. We think you will hear from other groups that 10 is all wrong and should be removed. We don't think that's quite a justifiable position. We agree there are some reasons for concern, and consumers and business people ought not to be sent on a wild goose chase to get information that they're entitled to, particularly where there is a legal requirement which says that someone must provide it to them. So we think that 10's real purpose is to prevent sharp practices being developed around very lenient interpretations of what it means to provide. "Oh, I provided that. I posted it to some Web site." We think that is its primary purpose and we support that, but when we look at the applications that some of our members already have up and running on the Web, we find that the use of hot buttons, hypertext links and so on does provide potential customers with all the information they want. You can download an awful lot of information from these sites if you choose to do it.

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While the basic idea behind the verb "provide" in any legal requirement would be that something has to be done to assemble the information and push it at you, we think there are parallels in the physical environment that we are more familiar with that would show the point of what we're trying to get at. If you order a credit card from a bank, they must provide you with a confidential PIN, and they do that by sending you a piece of paper with the number printed on it but covered over by security tape. That's to prevent bank employees from peeking, or if somebody who intercepts the letter sneaks a peek at the PIN, you can tell it's been tampered with and it's been corrupted so you don't rely on it. If a person chooses to use the card without looking at the PIN, no one could say that the bank failed to provide the PIN. It was there; he just chose not to avail himself of what was readily available information.

What we're reaching for is some way of getting to you the idea that the same kinds of judgments may be made by consumers on the Internet. If you've done all you can to make the information available, and all he has to do is click and download, then you should have done it. The fact that it's on your Web site shouldn't matter. So 10 seems to us to overreach a little bit in trying to solve a real problem.

The Chair: Thank you, Mr Gilchrist.

Mr Kwinter: Thank you very much for your presentation. I think you raise a couple of really interesting points. One in particular is the one about consultation. You've raised a very interesting legal point and that is the issue of the seal. You know of course that the little red seal represents consideration in the law of contracts.

Mr Crawford: It takes the place of.

Mr Kwinter: Yes. So it represents that. In a contract, in order to be legal and enforceable, there has got to be consideration, and that's what that little red seal does. Without it, you have a problem. I'm not saying there isn't a solution, but I don't know what the solution is when you're doing it electronically. There has got to be some sort of a protocol, there has got to be some sort of almost internationally recognized substitute for that consideration. Do you have any suggestions as to how that could be done?

Mr Crawford: I've made one proposal and let me just make a clarifying comment to see if we can agree on the scope of the problem. The seals I was referring to are not necessarily those that made the presence of consideration unnecessary. You may have a simple contract or a contract under seal. Only a simple contract has to be supported by consideration. The document under seal is enforceable whether there is consideration or not. It's called in England a deed poll because it was cut in a certain way.

We were really addressing the kinds of documents that are given routinely in financing transactions where a corporation has to certify, under seal, that its bylaws authorize the president to do certain things, or the secretary and president signing together. Every corporation has to make available to its bank the names of the persons who are authorized to write cheques on that account, and they have to do it under seal. The reason they have to do it under seal is it's accepted legal practice that if it's an act outside the ordinary course of business, you've got to take an extra step to be sure that you're getting the right information, otherwise you're not protected.

We think the definition of "electronic signature" could be amended slightly to add an element of sealing as part of the formality of execution. Right now, it just talks about the means by which a person creates or adopts to sign a document that is attached to or associated with the document. We think that could be amended to include the element of sealing. The reason we raised it is that the Ontario Court of Appeal, when it last considered the issue, said that in the absence of some law to the contrary, the common law cannot say that someone on a telephone can say, "That's my sealed document." He can't do it at a remote. He's got to be there and add the element of formality to his execution.

We're saying, why don't we try to remove that constraint by saying that an electronic signature may include an extra element that indicates that the document is sealed? It's not so much to get rid of the problem of consideration but to give the document an added level of reliability because there was an extra element of solemnity in its execution.

Mr Kwinter: May I have one more second just to get a clarification?

The Chair: Thirty seconds.

Mr Kwinter: Again, the idea behind the seal is to assume that that seal is under lock and key, that someone has the ability to bring it forward and seal a document and that gives it the authenticity it requires. When you do it electronically, how do you get that assurance? There's a representation that there's a seal. Who put it there, and how did it get there?

Mr Crawford: I don't know. All I can say is that everybody who is associated with this new technology is impressed with the need to keep electronic signatures confidential. When there's any suspicion that they are compromised, they're abandoned and new ones are put in place. I suspect that would be the case whether we add an element of sealing or not. You probably have more assurance that you're dealing with the person you purport to be dealing with when you deal in electronic media than you do on paper because it's so easy to forge or copy a seal or apply it without authorization. The electronic environment actually contains more safeguards for the public than paper, which is why a lot of transactions are migrating to that environment. We just see the practice and the law dealing with seals as inhibiting that movement to electronic media, and we want to try to remove that inhibition.

The Chair: Thank you very much, Mr Crawford and Ms Abbas, for your presentation this afternoon.

Mr Crawford: Thank you for hearing us. Good luck with your deliberations.

TERANET

The Chair: The next presenters are Susan Elliott, director of marketing and general counsel, Bonnie Foster, vice-president, corporate communications and government relations, and Juliet Slemming, privacy officer, for Teranet. Good afternoon, ladies.

Ms Susan Elliott: Good afternoon, Madam Chair and members of committee. I am Susan Elliott, the director of marketing and general counsel for the legal line of business at Teranet. To my left is our privacy officer-

The Chair: Excuse me. Could we have one conversation, please, in this committee? Thank you. Carry on, Ms Elliott.

Ms Elliott: To my left is our privacy officer, Juliet Slemming, and to my right is Bonnie Foster, our vice-president of corporate communications and government relations.

I understand we have approximately 30 minutes. We have handed out a package which contains my remarks. Having listened to the previous speaker and half of the one before, I'll try to add in to my remarks points you've already raised, where appropriate. Particularly, Mr Kwinter, on the matter of seals, you may find it interesting when we talk about digital signatures and PKI, which is a way of addressing some of those issues.

We have divided the remarks into three areas:

(1) A brief explanation of the e-commerce business at Teranet is in, to give you our background and perspective as to the way we come at looking at this legislation and the practical input I hope we can make to your deliberations;

(2) General comments about the bill-we too support its passage and believe it will facilitate the growth of e-commerce in Ontario, and we think that's a good thing;

(3) A few specific comments actually about two sections of the bill with suggestions for some possible wording changes-different sections than the Canadian Bankers Association but similar concerns about some possible language that you might want to look at again.

If I may, let me give you some background about Teranet. I know some of you will already be familiar with Teranet. It was formed in 1991 and is a unique public-private partnership, jointly owned by the province of Ontario as represented by the Ministry of Consumer and Commercial Relations and by a consortium of private sector companies led by Teramira Holdings Inc. It includes the now combined EDS/SHL, Intergraph and KPMG among our participants.

Teranet's mandate originally was, and in fact still is, to automate Ontario's land registry system, which is a 200-year-old paper-based system characterized, I think most politely, by numerous different methods of record-keeping. Tracking the ownership of land from county to county across the province, you experience a lot of variety.

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Our business is in many ways, we think, ahead of Bill 88 as we have already launched what is actually a world-leading on-line application in partnership with MCCR. We have built a secure electronic database which is one of the largest in the world. It's hard to get statistics on that, but we believe it's one of the largest. It contains three million parcels of land and, I think, 250 million images at last count. It's an enormous database with the land records from the province in it-not all the records, because we're still automating, but about three quarters.

This database is called Polaris, and it is accessed remotely by our customers through software that we call a secure electronic gateway. The access is granted through the use of a special security credential, which uses for registration purposes, which I'll talk about in a moment, an encrypted digital signature. Through these credentials we know, first, that the people who submit documents to attempt to amend or update the land titles in the province are who they say they are and, second, that the documents they have sent have not been altered or tampered with en route.

There is no other country or state in the world with such an advanced system. Indeed, many states and countries come knocking on our door and MCCR's door for a demonstration of the system, as it is under consideration around the world, but we've actually implemented it.

Through Teranet, Ontario now has the world's first paperless-a key word for this committee-land registry system. They have electronic registration of land title documents, using our e-reg software, and they do carry the full weight of law and involve not a piece of paper. The documents are created on-line. They are then digitally signed-and that digit is not the finger; I'll explain the digital signature-and they are submitted electronically for review and acceptance.

At various times, each of the three parties represented here has had a hand in implementing this electronic records access and on-line registration system.

Just to bring you all up to date, in case you have some previous knowledge of Teranet, electronic registration is now used for the majority of land title documents in Middlesex county, which is London, Ontario, and it has been since March 7 of this year. Since then, well over 90% of all land title registrations in that county have been submitted electronically. That's fully electronically: as I say, created on-line, signed on-line and submitted on-line.

The counties of Halton and Wentworth also have electronic registration available to them now, and we expect that Peel will follow shortly. In fact, within two years the vast majority of all land title records in the province will be created this way.

At the heart of this system is a digital signature, and it may help you in thinking about seals and sealing documents as well. Without knowing that would be a question, let me spend a few minutes on digital signatures. Bill 88, as you know, deals with something called electronic signatures. An electronic signature and a digital signature are different. An electronic signature or a facsimile copy of a signature is not at all the same as a digital signature. We're not, as I say in the presentation, suggesting that digital signatures be substituted for electronic signatures by any means. Quite the contrary. I think some commercial activities and interactions will simply require an electronic signature. But there is often a higher standard required, and the definition of the way the bill is structured would allow you to have a digital signature within your electronic signature.

There is a lot of flexibility in this legislation. I think it will be up to the marketplace and the parties to decide how to implement it appropriately, perhaps with some government assistance down the road. Having the ability to provide the right level of security to reflect the nature of the transaction is very important in keeping costs down as a supplier and in making e-commerce affordable. I think the bill provides this flexibility very well.

What we are missing in the marketplace, and I think one of the main reasons for the bill, is the legal underpinning to give effect to electronic documents in a world that still does require paper and relies very heavily on it. The words "writing" and "signatures" have long been part of commerce, and they're used to evidence a party's intention to be contractually bound. But technology and worldwide market forces have moved ahead of the law. Digital signatures are a good example of this. As I say, we're intimately familiar with digital signatures. They are in common usage, but without Bill 88, or in our case special legislation which we have for the land records, they're not legally valid. Bill 88 I think helps realign the market forces and what's taken place in the market with where the law is, and I understand that to be one reason for its implementation. I think that's needed.

To get to the meat of it, a digital signature is really a concept. It's not based on a hand-signed image. It's not like faxing something. The words get used in tandem often but they're very different. A digital signature is really a complex mathematical formula, and it allows me as a sender, for example, to send a secure message over an open computer network such as the Internet. It's encrypted with what's called a public-private key, and the private key is unique to me. There's a public key that goes with my signature that then allows others to read it. It's uniquely identifying the sender and connects me to the message.

The electronic signature, by comparison, is really any electronic means. Typing your name at the end of an e-mail is an electronic signature, as used in the marketplace anyway and by the technology people. Facsimile transmission with my handwritten signature is an electronic signature-very different than a digital signature. A digital signature is unique, encrypted. It's a complex algorithm and it uniquely ties me and whatever I'm sending together, and the recipient knows that it hasn't been tampered with.

So the digital signature really is technology-specific. It's not precluded by the bill but, as you know, not required at all, whereas an electronic signature is extremely technology-neutral. Since the bill does not require any particular technology to create the electronic signature, the parties are left to determine the most appropriate means. For example, if a document in the banking system, to get to the last presentation, ought to be under seal, then the version of electronic signature that they may require in that commercial setting could well be a digital signature. But to send e-mail back and forth to discuss the terms of a contract and culminate in a contract that the parties are comfortable doesn't require security could easily be done by e-mail. They'd both be electronic signatures but one is a much higher standard-the digital signature-and that's why it's carved out and spoken about separately.

When holders of our security credential put their digital signature on a land document-a deed or a mortgage, for example-we know who is signing the document and that they are authorized to do so. We know this because we start with an application and an approval process before we issue the digital signature credential, what's called the certificate or the credential. But the ironic sidebar to us when we were considering this legislation is that while we've built this leading-edge wholly electronic system, we have to use paperwork to issue the security credential to enable access to the system, and it is paperwork. The main reason for that is because the law does seem to require handwritten signatures on legal documents, at least until this bill is passed. I say "seems to" because nobody's quite sure whether a facsimile signature is binding. There is a Court of Appeal case that says that facsimile signatures can bind parties to a contract if that's common business practice, but when you're entering into a relationship in which a lot of transactions are going to occur, you want to have a good, solid contractual foundation to begin, and if there's any element of risk you're not going to take it. So Bill 88 will actually be a godsend to us because we'll be able to put on-line the starting point of our otherwise completely automated process. It's a little difficult to explain to our clients, "We've got this neat, totally paperless system, but will you please fill out all these forms and sign and mail them to us before we can get you started with it?" So I'm looking forward to that very much.

There are other applications, of course. As I take it, you know the on-line marketplace is not just chat rooms or auction sites, stores or magazines. You may not realize that a lot of professional services and support for those professions is moving on-line quite rapidly. We have some e-commerce initiatives: one called BAR-eX, which is also known as the Lawyer's Portal, where we've partnered with the Law Society of Upper Canada and the insurance company, a lawyers' professional indemnity company, where lawyers can go to a secure area on the Internet and conduct research, exchange documents, store documents, take legal education courses, buy their supplies, advertise jobs, conduct title investigations, search for writs of execution to enforce court judgments. The sorts of things they do in their day-to-day business are now being made available on the Internet to lawyers. This is all done safely and securely in this private network, and we think it facilitates and encourages the on-line transactions while protecting the integrity of the information. You get to use the speed and flexibility and relatively cheap cost of on-line commerce.

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In that portal, there are different levels of security. Sometimes you'll need what's called the PKI and the digital signature; other times you'll only need an electronic signature. Sometimes you won't need any signature; it depends on the business you're conducting.

We also have something called GeoServer, which is a virtual warehouse of electronic geospatial mapping data. This can be accessed by municipalities across the province. It permits the local municipalities to make their data available to citizens and professionals in ways you could never previously imagine. They can take multiple databases and show layered views so that people can see what's going on in the community, just like laying transparencies over each other, and combine a lot of information. It's very useful to land-use planners, of interest to emergency services, certainly business entrepreneurs-anyone conducting an activity in the community is interested in this sort of information. It integrates content, applications and delivery systems. So there's a lot happening on the Internet, on the Web, that is affecting every citizen in the province.

Safe, secure transmission of this information is important. But some sort of climate of legal certainty and the structure of rules for on-line commerce is really long overdue. As I say, the marketplace is ahead of the law and it's most welcome to see the law starting to catch up. Privacy, which I'm sure you're all concerned with, is of big concern to us. There are common elements among all our e-commerce activities and they're pretty basic. We believe that e-commerce is not just another way of buying or selling things. It is in fact a major shift in the way businesses, governments and consumers relate to each other. First off, it's not face to face at the moment. But like any relationship, it depends on good communication, security and respect for privacy.

To ensure privacy is respected and is at the forefront of our initiatives, earlier this year we created the position of privacy officer, which Juliet Slemming, here with me today, holds. Juliet's job at Teranet is to provide advice and recommendations concerning our businesses so that when we engage in some brilliant marketing scheme or some hot new development activity, we run it by Juliet and make sure we're complying with Bill C-6 or, hopefully in future, Ontario's privacy act and the Canadian Standards Association guidelines. Juliet is presently reviewing MCCR's white paper, as are we all, and the Ontario privacy act. We do take very seriously safeguarding this information. I think it's an important part of on-line commerce and it's one of the reasons people are hesitant to use the Internet for business. We do have some practical day-to-day experience with protecting privacy and providing on-line commerce services, and we hope that at the time that bill is before committee we'll be able to contribute to that dialogue as well.

We do applaud the intent and the scope of Bill 88. We think it begins to fill that vacuum in which e-commerce has been operating. I think business, especially small business-I'm also a small business person-and their customers have viewed that vacuum with a certain amount of uncertainty and scepticism. They're always reading things in the paper and nobody really knows what's going on in e-commerce. I think it's absolutely crucial that the government take a lead in this area and set some groundwork, set some rules so that the citizens' businesses and customers have the confidence that this has come from government, it hasn't come from the private sector, it hasn't got the self-serving purpose that is always attributed, sometimes wrongly, to the private sector. We're very pleased to see the rules start to take shape. We know, for example, in the recent Statistics Canada survey that at the moment only 0.2% of the total retail sales of Canadian companies has been on the Internet. We know that lags behind the United States, and I think a lack of understanding or appreciation of rules and the lack of rules in general is part of the reason for that.

Certainty in contract is a fundamental business and legal requirement, and has been for centuries. What we see in Bill 88 is that it removes all the traditional legal barriers to electronic contracts-the ones that I've just spoken about in our own case where we're not sure we can take a facsimile signature. Maybe we can, maybe we can't. Why take a chance? Certainly in the year 2000, the word "writing" includes electronic documents, when you're out in the real world as we call it, and signatures tend to simply be an expression of intent to be bound. That's why you sign something: you want to be associated with it and bound by it.

Recognizing that through the provisions in Bill 88 is a huge step forward which we believe will help on-line commerce start to realize its full potential. Certainly the fact that the bill is based on the Uniform Electronic Commerce Act means that conducting international business will be simpler. There will be variations in the wording, no doubt, in the various pieces of legislation, but the concepts will apply in all the jurisdictions that adopt that same standard, and that's important to us.

However, and I think the speaker before spoke of this, I don't think Bill 88 would be considered the final word on the subject, any more so than any particular law is on any matter these days at the speed at which commerce in particular moves and evolves. E-commerce, as you know, is a relatively new frontier, and it's often compared to the Wild West. It's still growing and changing. It's not possible today to foresee all the legislative structure that will be required to enable those safe, secure transactions for consumers and for business. That's why you need companion legislation such as the new privacy act. In the interim, Bill C-6 fills the void.

Again, two points that we would draw to your attention in terms of the bill. We think laws need to be created by the political process representing the people and not set by the private sector and frankly not built up on the ad hoc basis that you get through legal judgments. To be sure the bill can keep up with technological developments that might yet arise, we would recommend that the regulatory powers in section 32, right at the end of the bill, add words and certainly address people who come up with their own version-I've taken words from the Saskatchewan legislation which would add the ability for the Lieutenant Governor to define, enlarge or restrict the meaning of any word or expression used in the act but not defined in it. There's a very short definition section in this bill compared to the legislation in other jurisdictions. I guess it depends on your view of making law, whether you'd like to go back and amend legislation or have a regulatory power. But if you're going to keep up with the speed of e-commerce and technology in general, we think it would be prudent to let a regulatory power exist to keep your definitions and expressions fresh and current as new things are invented that we can't even think of at all today. I mean, five years from now the Internet may not exist. I know it's not named in the bill, but it's certainly underneath the heart of the bill.

The ability to keep your legislation current in terms of the technical language and the concepts that exist is something we would certainly recommend. It can be accomplished the way the Saskatchewan legislation has it.

The other thing we wanted to speak about briefly was-and this does concern me a bit more-the contracting on-line in section 21. In section 21 of the bill there's a provision that states in effect that an on-line transaction has "no legal effect"-to me, that means it's void-if an individual or company made a material error in the transaction.

There are a couple of things about this. A material error is not defined. Does it include a typo such as I put in 4 Main Street and I'm really at 44 Main Street? Could someone intentionally make a mistake, lead everyone to believe there's a contract, and then it turns out it's not valid? That's one aspect of it.

I'm more concerned with the legal repercussions of having something said to be of no legal effect. Those repercussions are extreme and I think perhaps unintentional. The risk to each side is that the deal you think you've concluded doesn't exist, certainly in the case of an individual to an electronic agent if the individual has made what can later be considered a material error. If I think of an on-line tendering system, for example, I can envision a third party relying on a material error where the two parties to the contract think there's a contract and there's a material error. The third party comes along and says, "Oh, that contract was never of any legal effect; it's void." For people with a legal background, to me it's void ab initio, as opposed to voidable.

Being of no legal effect means, practically speaking, the contract never occurred, so it's incapable of correction even; it doesn't exist. It's a bit of a technical legal point. I don't think this kind of risk is what was envisioned, and when we see the explanatory notes to the bill, it expressly indicates that the transaction is voidable if an important mistake is made. So I would suggest that you might want to have people look at that language, assuming the explanatory notes are correct, which would make more sense, that a transaction be voidable, cancelled by the parties after the fact, rather than void from the beginning for something they didn't intend. That would make more sense.

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Again, in Saskatchewan the way they've handled that is very simple. You've got a subsection (a) in section 21 and if the (a) is moved up to the body of the sentence it says, "an electronic transaction between an individual and another person's electronic agent has no legal effect" -same words-"if the individual makes a material error in electronic information or an electronic document used in the transaction;" and then you get into your subsections (b), (c) and (d). Those have to either not have existed-you didn't give an opportunity to correct to the party-or they failed to rely on it, having been given the opportunity. The way the Saskatchewan wording is turns this whole language into a voidable contract, just by moving that (a) subsection up.

The reason that's important to us is again I go back to wanting so desperately to have a completely paperless system for those of our clients who do wish it and have that on-line contract at the beginning where we issue a security credential.

I don't know what a material error is and I can probably live with that and let the courts and the "reasonable person" test look at that. But if the impact of material error is that I've never had a contract, I think that causes a huge ripple effect that I'm reasonably sure is unintended here, especially looking at the explanatory notes. So I would encourage you to look at the language in the Saskatchewan legislation on that section, or there are other ways to word it. But I think the import should be it's voidable, not void.

In conclusion, having raised those two caveats, we would again congratulate the government for the foresight demonstrated in introducing Bill 88. I thank you for allowing us to present our thoughts on what the legislation means for Ontario business. We think the bill adds legal structure and creates more choice for consumers. It allows on-line businesses such as ours to put that final piece of the puzzle in place by completing all processes electronically with those of our customers who wish to do so.

E-commerce saves money for consumers, for business and for government, money that's now spent on lost travel time, on manual bill-processing and on lineups at counters. It also is an entirely new economic horizon for small businesses which otherwise have a tremendously difficult time finding a level playing field for their endeavours. We've recently been conducting some business on our Web site, hiring somebody to build part of a store on our Web site. The people are in BC and they have a great product. I won't name it, won't give them a plug, but I keep wondering, is this just two guys in a garage or is it a big corporation? I honestly don't know and it doesn't matter to me, frankly. It probably is better if it's two guys in a garage somewhere building it.

That's the sort of power of the Internet. As long as you assess what you're getting and you use it and you put it through the hoops and you keep your wits about you as a business person, you don't have to deal with a major corporation. It is a great leveller.

I think where small and big business certainly need a boost from this bill is to set up that structural set of rules that everyone can rely on. Small businesses don't want to go out and hire lawyers every time they need to conduct business on the Internet. Having a basic set of rules gets them started.

We know that just over one half of private sector businesses used the Internet in the last year, and I know many more will use it as it develops and as the appropriate legislation is in place. We think Ontario can continue to lead in on-line commerce once legal validity is added to that on-line business practice. We feel that the potential for economic success for Ontario business and for Ontario consumers is virtually limitless.

In our experience, I can tell you from Teranet's perspective, electronic commerce with the appropriate legal underpinning is a necessity if business in Ontario is to thrive and prosper. We have visitors from all over the world. We're comparing notes all the time with how people are conducting business elsewhere, and I know the government has the same exposure. I know the ministry we deal with has it.

Speaking from our experience we know e-commerce needs to be carefully managed, it needs to be thoughtfully executed and to have things like a privacy officer in place, but it really is a winning proposition. We think that Bill 88 once again puts Ontario business in the lead. It strikes a good balance between establishing rules to create certainty on the one hand, and not weighing everyone down with cumbersome procedures on the other.

It is harmonized with other national and international laws being developed in the area and it doesn't get in the way. It sets a really sensible standard. We think it will evolve. We think there is some tinkering needed. That's normal for any law and that's obviously why you have these committee hearings. We do look forward to its passage.

Thank you for your time. If there is time for questions I am happy to answer them. I could talk about this all day, as you may have gathered.

The Chair: Thank you very much for your submission. You have taken the full half-hour so unfortunately there won't be time for questions.

Ms Elliott: Just the way I planned it. Not really.

The Chair: But I do appreciate your presentation, and thank you for handing in your submission as well. We appreciate it.

CANADIAN ASSOCIATION OF INTERNET PROVIDERS

The Chair: The next presenter is Margo Langford, board member for the Canadian Association of Internet Providers. Good afternoon, Ms Langford. Please proceed.

Ms Margo Langford: I'd like to thank the honourable members who have remained in the room of this committee for an opportunity to say a few words about Bill 88, the Electronic Commerce Act, 2000. I've been asked to start by informing you about my involvement in the electronic commerce industry.

I have been working in the Internet industry for about five years, since 1995, as both in-house counsel and external counsel to Internet enterprises. For two years I was chairman of the board of the Canadian Association of Internet Providers and I'm still the longest-serving director and chair the fair practices committee. I drafted the first Internet code of conduct on the globe in 1996. I've served on at least 12 government-industry committees dealing with Internet policy, including some international initiatives in relation to network access; consumer protection; Internet service provider codes of conduct; cybercrime, including illegal content; infrastructure protection; taxation; privacy; legal framework; and general e-business readiness. I advise companies about the issues surrounding their decision to choose a particular jurisdiction to locate their e-enterprises and advise governments on the requirements for an e-friendly environment that will attract new businesses to the region. Finally, I am also very recently a co-founder of a dot-com company, an on-line dispute resolution services company.

For the record, on behalf of my clients, including IBM Canada and many other Internet enterprises, and on behalf of the Canadian Association of Internet Providers, I'd like to express our support for Bill 88 as drafted. It's an important cornerstone in building the required legal framework for e-business readiness.

I'll first wear the CAIP hat to explain why I've made this statement. CAIP members include both large and small independent Internet companies as well as the major telecom enterprises and some of the cable ones. Collectively we often refer to them as ISPs. The well-being of ISPs also impacts on suppliers to the industry and on employment in Ontario, especially in the skilled technology workers area. I can inform you that ISPs in Ontario number in the hundreds, if not thousands. It's very hard to tell what an ISP is, because virtually anyone can acquire and align to the Internet and begin to offer hosting services and other value-added services from very small premises. Industry Canada has I think identified about 1,200 in the country. Many of those are in Ontario, and they're very concerned obviously about their future growth. Their survival depends on being able to host Web sites that store and exchange large amounts of data or Web sites that involve multiple economic transactions. Selling these businesses further innovative, value-added services required to operate such Web enterprises will be the primary activities in the immediate future for Internet businesses in Ontario. In particular, it's widely thought hosting electronic commerce transactions and Web sites delivering entertainment products on a fee-paying basis will be where the money is.

There must be a positive environment in Ontario to attract these enterprises and encourage the location of storage computers, generally called servers, in Ontario, hosted by Ontario Internet companies.

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Right now there are emerging statistics and plenty of anecdotes to provide evidence that things may not be progressing the way they might for Ontario ISPs. Many of the most well-known e-commerce sites, such as TD Waterhouse, just one example, have chosen not only not to locate in Ontario but not to locate in Canada. There of course are a number of factors that go into this decision. But when assessing the advantages of various possible regions, having the right legal framework is on this checklist. As mentioned, e-signature legislation must be in place in the event that there is a dispute over the electronic transaction.

Several studies have emerged this year which indicate that although Canada started off with a very strong Internet industry, take-up rates are slowing and Canada is lagging in e-business adoption. The Report of the eBusiness Roundtable states that "Canada currently lags the US in both business-to-consumer and business-to-business e-commerce. While Canadian consumers are browsing, they are not yet buying as much on-line as their US counterparts. Similarly, fewer Canadian businesses use the Internet to conduct business with their suppliers and customers. Canadian companies need to move quickly and decisively to protect their home markets and expand into new markets. We are already seeing too many Canadian consumers and businesses relying on US Internet sites, too few Canadian businesses migrating on-line, and too many Canadian Internet entrepreneurs taking their ideas, talents and businesses to more dynamic, congenial markets."

I have also provided you in my notes with some stats that were released last month from StatsCan, again showing not that sterling a record. I have also included the full StatsCan report with my material.

Business groups are addressing the issue of accelerating e-business transformation and will continue to encourage firms to e-engineer and keep up the pace with their American counterparts, but there are some things governments can and must do. Creating the right legal and business environments are two such measures if we are to promote Ontario as a place to conduct e-business.

Last fall I was engaged with a group of business people out west. We undertook an assessment of British Columbia. What we were doing was basically looking around Canada and figuring out where would we spend some money to promote an e-business hub, and BC looked like they had most of the ingredients. One thing they didn't have was e-signatures and e-documents legislation. Of course, last month they tabled that.

So let's not be in any doubt here: this is a race. Companies and other enterprises are looking around, and they're getting to choose where they are going to be. As such, many governments are also looking at what they can do to encourage e-business, and everybody wants to win. Ontario is obviously well positioned as well to attract e-businesses but should not be complacent about preparation for e-business readiness. We are tracking what every region is doing, and we are advising our clients accordingly.

Attached with my notes today is also the latest report from McConnell Foundation, one of the several studies using similar criteria to measure the capacity of nations to participate in the global digital economy. Bruce McConnell is a former director of the International Y2K Cooperation Centre. McConnell used five criteria to study 42 nations from all continents. He used connectivity, technology leadership, information security, human capacity and technology business climate as his measures. Of the 42 countries studied, the report states that Estonia, South Korea and Costa Rica, to name three small areas, are well positioned to compete with some of the most wired nations, including Japan, North America and European countries. The point is that size does not matter but key ingredients do. Provinces are in a position to be competitive in the same way that smaller nations can.

Similar studies have been conducted by Harvard and IBM so that regions can self-assess. That's actually the tool we used for e-business readiness in BC, based on a checklist. I do mention that I attached the report; however, I didn't. I'm sorry. I will give it to the clerk if anyone is interested, or you can find it through the IBM Web site.

Tracking e-business readiness is a commitment that IBM has made to its customers and, in addition, e-business policy people from IBM around the world are working with governments to get them ready for the networked world.

Now I'm going to speak just for a few minutes on the actual special features about Bill 88, if I have time, Madam Chair-

The Chair: You have plenty of time.

Ms Langford: -and why it should be passed, in my view, without significant amendments and why in a hurry. Perhaps you have been encouraged today to add various provisions or to use this legislation to achieve things that may go beyond its scope. I urge you not to do so and to pass Bill 88 swiftly. It's needed now; in fact, it was needed yesterday.

I was involved in the informal legal group that reviewed and considered the Uniform Electronic Commerce Act. It was a lively, active process and there were many possible approaches that could have been taken to every single clause and, for that matter, every word. However, the minimalist approach that has been taken by the Ontario government is the correct one for these reasons:

Bill 88 is consistent with the widely held view that all law and regulations apply to on-line business. So the bill does not attempt to override provisions already in effect relating to electronic documents.

Bill 88 creates confidence for all parties to conduct on-line transactions in a manner that is permissive, requiring consent by the parties, and not prescriptive, forcing all businesses to accept or use electronic means to conduct business.

Bill 88 is consistent with the national Uniform Electronic Commerce Act and international UNCITRAL standards for electronic signatures and documents. This is important because on-line enterprises want to know-the very first question they ever ask you-"What do I have to do to be compliant with the laws all around the world?" The more normative standards we have, the more we're going to make it possible for people to get over that first hump and actually embrace this technology.

It's obviously very costly to comply with even the smallest differences in legislation if somehow you have to do an extra step in Ontario that you don't have to do elsewhere. How would you ever write the program that suggests you're doing business with somebody from Ontario at this minute and somebody from Saskatchewan at the next? It's very challenging for making these systems automated.

Enterprises themselves obviously are looking for normative standards or benchmarks for on-line enterprises and consumers to use and measure compliance and competence. Quebec, Saskatchewan, British Columbia, the US, Australia, Singapore, Hong Kong, Ireland, India, Argentina, Colombia and, last month, Germany have all announced legislation based on similar consistent standards, and I congratulate the government on its choice to follow this trend.

Bill 88 has been created as a flexible standard, and that's also important because technology, as I'm sure you've heard many times today, is continually changing, especially with respect to the way a document can be linked to an individual and specified and certified and encrypted and so forth. These things are constantly on the change. Bill 88 gives the ability to use any technology, and that's an absolute must in any such piece of legislation.

Bill 88 also does not attempt to address legal rules about when documents are received. It doesn't address consumer protection issues or privacy concerns except as they relate to electronic signatures and documents. All of these issues, while very important-in fact, perhaps critical-to electronic commerce are better addressed in a separate set of initiatives. I note that the government has introduced consultations on both consumer protection and privacy this summer, so I'm expecting that they too recognize that these are important issues, but this bill is not the place to address those.

Bill 88 will promote the acceleration of e-government in Ontario. This is one of the critical stepping stones to a progressive economy, and showing that kind of leadership will help e-business take off in Ontario.

Bill 88 solves some typical concerns of on-line shoppers and the kinds of questions we get all the time, like, "What is the impact of filling in this form?" whether clicking "yes" binds them, what happens if they make a mistake, click the wrong box, have a typo? How are they protected against any alteration of electronic documents is another question that is often asked, and then, "Why am I bothering to use encryption technology?" Now, with this piece of legislation, we have answers that we can use with customers.

Similarly, Bill 88 also answers some concerns for on-line sellers. As early as five years ago, which was very early days on the Internet, ISPs were some of the first to actually sell electronic digital delivery of anything on-line. In those days they were the first to embrace the sale of software on-line. I can tell you that it was a very frustrating experience, because so often they would deliver the software but there would be repudiation. The people would say, "We didn't get it," or "We couldn't use it," whatever, and they would charge back to the ISP, who would lose the money because of course they still had to pay the software vendor. It became a very costly enterprise. What this does is give the merchant the ability to actually tie the authorization to an individual and prove that he did indeed sign and purchase the software. This will aid the sale of digital goods on-line and that, in the end, helps people who want to sell particularly their cultural products in Ontario on-line.

Members of the committee, Madam Chair, that's the formal part of my address. I certainly thank you for your time and encourage you, if you have any questions, to address them to me.

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The Chair: Thank you, Ms Langford. We do have time, about five minutes for each member.

Mr O'Toole: Thank you for your presentation. It seems you're heavily involved in this process. I'm sure we're not looking for the perfect solution here today; there never will be one.

I'm just wondering-you did it in sort of short form on the second page of your presentation. You were quoting a recent study of an e-business round table and there were some statistics here that Canada's lagging behind. There are two questions here really. How is Ontario doing in terms of the Canadian scene? Perhaps you may want to address or explain what we could do, if not just this. And how is Canada as a country doing in terms of its position? Some, like New Brunswick, have made some noises about they're on-line and friendly, but they don't have this legislation. I guess it comes back to, myself included and my family-children use this very freely buying records and stuff like that, and I have an e-trade account. But I'm just saying I'm uncomfortable myself. I think it's for the privacy and the protocol issues that you say should be exempted from this. I'm also the PA to the Minister of Consumer and Commercial Relations, so I'm involved in that consultation paper, but I still don't know what we need. We have to have teeth to reassure the consumer specifically, whether it's a business or an individual, that my information is going to be used this way once I give them my social insurance, my bank account, whatever. That's why people are reluctant-and Canadians are very conservative. I mean conservative in their thinking, not their politics. Could you just respond to that?

Ms Langford: Absolutely, and you've hit it right on the head. This is the consulting group report called Fast Forward, and they highlight actually the three things you've hit on as the reasons. In addition to investment and other infrastructure issues, the three things consumers are the most concerned about are security, privacy and redress-what happens if the stuff doesn't show up. In all of those things there are initiatives underway. So I am certainly not minimizing those. Industry more than anybody was engaged in this process. This was an e-business round table of industry leaders, together with some government people, and they recognized that we have to solve those three problems for sure to give consumers the confidence they need. I actually do sit on a government-industry-consumer group, stakeholder working group, whatever, that is devising not only guidelines for merchants on-line but also now something they're calling the trust mark program, which will be a seal of approval that goes on Web sites to indicate that they have taken care of all of those issues. So you're absolutely right. It's just that electronic signatures are one of, as I say, the checklist. We really have to go through and say, "Yes, we have one of these and we have one of those and we've got one of these."

I've advised clients a number of times actually to go elsewhere than Ontario because they didn't have this legislation in place. In my mind, wearing both business and lawyer hats, it would be unconscionable of me right now to suggest that anybody go in any territory where you couldn't prove that the contract you made on-line is valid.

Mr O'Toole: Ontario's lagging, leading? Where are we?

Ms Langford: There are no specific stats that I know of for Ontario. We have that assessment tool. I haven't actually been engaged in an exercise doing it for Ontario, but having done it for BC, I would say Ontario's probably on par, particularly because there are some of what are called hubs. Silicon Valley in the Ottawa area is kind of an e-business hub where there's activity that's spawning new innovation and new companies, and that's one of the signs of a maturing business market: are you starting to keep the R&D at home and are you creating things here, the ability to train people so the quality universities-certainly Ontario has those. Infrastructure in Ontario is probably better positioned than British Columbia, for instance, on having the right infrastructure in place. But you have to have everything. So this is just one of those things that we have to get done here to try and mix apples and oranges.

I'm absolutely convinced that the privacy legislation is going to have a profound impact, beginning in January, on how people who aren't already thinking about privacy are going to start to do so. Certainly e-businesses have done things like hire privacy people within their companies. They're thinking about e-mail and in most cases reconfiguring their databases in order to comply with the federal legislation etc. One of those unknown things is whether an ISP, for instance, will be caught by the federal legislation, because we don't know if they're federal undertakings or not. But they're sort of assuming at this point that they're going to have to be ready and so we're making them ready. We have had a privacy code for the Internet providers for more than a year now that matches basically the federal legislation. So privacy is essential but I'm not sure that-certainly the pieces of privacy that Bill 88 addresses are appropriate, but going beyond that in this bill I think is not the place to do it. Sorry, that was long-winded.

Mr Kwinter: Thank you very much for your presentation. I found it interesting in that you've been involved with this industry for five years and I think that basically Bill 88 is really a bill to bring Ontario into compliance with C-6 by covering those aspects of Ontario legislation that are the sole responsibility of the province. The question I would like to ask you is that it would seem to me that in a matter of time, and hopefully sooner than later, every province will get on-line so that everybody who deals in Canada will have a seamless jurisdiction when it comes to using the Internet. Is that a fair-

Ms Langford: Absolutely, sir.

Mr Kwinter: So when you get that, and Bill 88 is out of the way, then we have all of these other issues. You talk about TD Waterhouse not coming to Ontario. I know this may have been one issue, but that's really a technical issue and this bill is really a technical bill to bring Ontario into compliance. I'm thinking about what Mr O'Toole was saying. For example, you've raised a specific corporation that convinced TD Waterhouse to go somewhere else. What were the advantages they were looking for that we don't have here?

Ms Langford: I would say that cost is probably the first one, and that's strictly the fact that so many people are on-line in the United States, so many companies that they can offer these big Web-hosting facilities where you have enormous kinds of services for very little money.

Personally, we have now this dot-com company that I'm involved in, and when we looked at the costs around this province and elsewhere, the best deal that we can get right now is in a server farm in Colorado; you know, an all-in package deal. Definitely, the US is beating us on costs, so it's kind of chicken and egg. The more people we can get on-line in Canada, the more ISPs that can host and create bigger Web farms up here, the more services they can offer at a lower price. It's one of those where we have to build the momentum.

What do we have to do to create the difference on price? We might have to do other things. We might have to have incentives to stay in Ontario. We might have to do tax things. We might have to overcome the cost difference right now. Certainly we have to look at that as our own company and say, does it make much sense to go anywhere except Colorado when we have to scale up right now? But what could other provinces do to make this an environment for us to stay in? I think there's lots of room there for creativity.

Mr Kwinter: So to take it to the next step, once you get rid of this administrative hurdle of getting Bill 88 into effect, then you're competing with other jurisdictions. You're competing anyway, particularly in the United States, but let's just use the Canadian content: you're competing with other jurisdictions in Canada, and the whole argument that I've heard all day today is that the Internet is a leveller and it doesn't matter where you are, so Ontario loses all of the advantages it has in the old economy and is on a level playing field in the new economy with anyone who's got the initiative to do it.

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Ms Langford: Yes. You have to look at tax optimization as well. A lot of the offshore jurisdictions right now are getting very aggressive, because they have another thing they can add in terms of incentive: no business tax. There are all of those factors that people weigh in. My checklist is pretty long when I go through it with clients, and we think about where they want to be. Sometimes the administrative hassle, quite frankly, of moving a company offshore is not worth it, but you can move your intellectual property offshore, for instance. This is going to happen to Ontario, definitely, and this is the reality of a mobile global economy-very mobile. The decision can be made to stay in Ontario this year and to move the company next year. It's not like having to pick up the plant and move it. It's quite simply flicking a button and moving the whole Web site from Ontario to Colorado.

Mr Martin: It seems to me that there are two things here: one is certainly all of the environmental things that make it friendly for new companies to establish in Ontario. Also, though, as you talk about developing these Web farms, you need to develop a sense of confidence in consumers. There are people up in my part of Ontario, northern Ontario, who are looking at this and don't quite understand it and certainly want to be brought in, but they're not going to unless we can assure them that there are some precautions and safety measures in place.

You've come today to encourage us to move quickly and get this on-line, yet what if in doing that we then engender some difficulties in sending a message out? If we haven't put the safety precautions in place, if we haven't done the confidentiality stuff at the same time, and people get in because they've been assured that it's OK now because it's legal to do contracts by the Internet and they find that because we haven't done this other, which is taking care of confidentiality and privacy issues, we may be creating a false sense of security which could blow up in their faces.

Ms Langford: I don't know a single Internet company that doesn't take privacy very seriously, and any time there is a breach from any company that you read about in the paper, obviously it hurts the whole industry. Everyone is working very hard at measures to protect privacy, and a lot of people equate privacy and security as the same thing: "Can my data be hacked? Will people get my credit card number?" those kinds of things. Privacy and security are sometimes interchanged.

The use of personal information in a specific way is what C-6 addresses, starting in January, for federal undertakings, and sometime after that for provincial ones. I'm also confident that that regime is an effective one that companies can comply with and that consumers can feel comfortable about, that you have to get people's consent to use their personal information. Most companies are doing that already because they don't want the kind of feedback you already get from people when you use their information. When I was general counsel at an Internet company as many as five years ago, we already had people who were extremely unhappy when they got unsolicited commercial e-mail from some bulk e-mail house, and they would complain to us. The burden on us and the load of handling those kinds of complaints was enormous even then, and it has only expanded since then. Definitely, Internet providers and Web companies who are commerce-enabled by those providers all share the same common view that we have to take care of these issues that people are concerned about. That's why this report came out this year to sort of announce from on high, "This is the way we're going, folks."

There's another international initiative called Global Business Dialogue of Electronic Commerce, and 60 top IT companies, Bill Gates and Lou Gerstner and Steve Jobs and so forth, of the world get together and they've come up with identical recommendations to this one on the kinds of things that have to be done, including privacy and security and redress-on-line dispute resolution is one of them-and others.

Everyone is working on that. That in a way changes the fact that you also need to make an electronic signature valid, and I'm not quite sure how making an electronic document valid in any way sends a message about the other issues. To me, they're not at all related. This is probably how it's sold when it gets to the media, but I don't think we're saying that just because a document is legal means the systems you're using have been certified or anything like that as, say, having the right privacy policy. Companies are dealing with that right now as to proprietary standards. There are companies that are putting seals of approval on sites. Companies called Web trust and trustee and all of these enterprises are going through and certifying sites. Consumers' groups this summer are doing a survey of Canadian Web sites, and they're going to come out with a report at the end of the summer or early fall, which is going to highlight which sites are compliant with the guidelines that we've come out with, the consumer protection guidelines that include privacy, security and redress.

I think public awareness definitely has to increase on what to look for when shopping on-line, banking on-line, doing brokerage transactions on-line or whatever else. The problem right now is both sides can't be sure that what they've done is legal, and I think that's even as problematic.

The Chair: Thank you very much, Ms Langford, for coming this afternoon and for your presentation.

ONTARIO CHAMBER OF COMMERCE

The Chair: The next presenters, representing the Ontario Chamber of Commerce, are Mr Doug Robson, president and chief operating officer; Atul Sharma, chief economist; and Mary Webb of Scotiabank.

You have half an hour, Mr Robson. If you can wrap up a little early, we may be able to entertain some questions. Thank you.

Mr Doug Robson: Good afternoon. Thank you all for taking the time to meet with us today. With me, as you heard, are Mary Webb, on my right, who is the senior economist of the Bank of Nova Scotia and chair of the Ontario chamber's finance and tax committee. On my left is Atul Sharma, whom some of you may recognize, who used to work here and is our chief economist.

The paper I'm going to refer to is the culmination of an effort by the members of Mary's finance and tax committee, which includes: Jim Vincze, who's a partner at Deloitte and Touche and was a senior person for many years in treasury; Wayne Munday, who has a CA firm in St Thomas; Pam Jeffery, principal in the Jeffery Group; and Ryan Clarke of Glaxo Wellcome-all people who have a fair association with public life in Ontario. I'd like to acknowledge their contribution to this presentation.

We're in the midst of preparing a written submission. Today we'd like to make our oral presentation, and later this fall we'll issue a more comprehensive discussion paper on some of the issues we raise today. We'll spend a few minutes talking about our issues and, as we said earlier, I'd be happy to answer any questions with the help of Mary and Atul afterwards.

In today's presentation, I'd like to structure our discussion in the following manner: first, issues arising out of the legislation and, secondly, laying the foundation for the future.

With regard to Bill 88, issues from this legislation: Overall, the Ontario chamber believes that Bill 88 lays a good foundation for future development of electronic commerce and electronic government by strengthening the public and private sector confidence in electronic commerce.

The Ontario Chamber of Commerce supports the basic principle of the bill outlined in section 4 of the act: "Information or a document to which this act applies is not invalid or unenforceable by reason of being only in electronic form."

The functional equivalency rules set out in sections 5 to 13 seem to be adequate in setting out the parameters within which electronic communications would operate. Sections 14 to 18 set out the rules that would be applied to public bodies. Those sections of the act clearly state that public bodies must give express consent for the use of electronic communication and transactions. The legislation also states that additional rules beyond those covered in the act may be imposed by the public bodies.

If we are interested in moving into the future, and if the provincial government is committed to utilizing available technologies to improve the relationship with its citizens, then the Legislature should consider changing that section. To clearly state its intent to embrace the future, the government should enshrine in legislation that public bodies give automatic consent to communicating and transacting in an electronic format using a common platform or protocol. Exceptions to this rule must be explicitly stated. The way ministries display their news releases on the government's Web site is an example of how different parts of government are using different platforms to convey information. If you go to the main page of the province's Web site and click on "News Releases," you are redirected to the Canada Newswire site to search for the news release that you are looking for. If you go to the Ministry of Finance's Web site and click on "News Releases," their releases are available within the site itself.

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Section 18 of the act states that payments may be made to the government electronically. We applaud that move and encourage moving forward further in that direction. The Ontario Chamber of Commerce does not have any major objections to the act and believes that the efforts to remove the legal barriers to conducting electronic transactions is a step that's important to making Ontario a leader in e-commerce.

With regard to laying the foundation for the future, I'd like to now spend a few minutes raising two issues that the OCC believes we need to address as the province moves down the electronic path. They are taxation of Internet-based transactions and, second, electronic government in improved efficiency. These two issues are not addressed in this legislation and likely should not be. However, they should be part of the overall debate on how we want to see Ontario evolve as one of North America's most competitive jurisdictions.

With regard to taxation of Internet-based transactions, the challenges of taxing Internet-based transactions are raised by many members of the Ontario Chamber of Commerce. Their overriding concern is that any taxation of Internet-based transactions be efficient and neutral. The taxation of Web-based transactions should be neutral in the sense that it is applied equally across the province, among industries and between countries. The taxation should be efficient in the sense that it is the same type of taxation as applied to companies currently. As the members of the committee are well aware, just in the past five years the nature of the relationship between buyers, sellers and intermediaries has fundamentally changed. The long-held distinction between a good and a service has become blurred and is likely to disappear within the next five years. All of these changes will have a profound effect on how all governments collect tax revenue from commercial transactions.

As noted in a recent report by Deloitte and Touche, one of the most serious issues arising from the electronic commerce revolution is the disintermediation process. This is the removal of an intermediary in the supply of goods, services and information to the consumer. Electronic business has prompted a reduction in the number of people standing between a supplier and a consumer and has raised uncertainty as to where a supplier actually stands. Manufacturers and producers are dealing with consumers directly. The physical location of manufacturers, producers and consumers has become irrelevant. Web sites can be accessed from anywhere in the world and goods and services and information can also be delivered to almost anywhere in the world. A trend toward electronic purchases appears to be most prevalent in the areas of software, music, books and similar products.

Where consumers once purchased on a floppy disk or CD-ROM, they are now able to download the software over the Internet without the need to transfer it into a physical medium and deliver it. Goods that were once tangible have now become intangible. The removal of intermediaries reduces the number of tax collectors and points of collection for tax authorities which, in turn, limits their control over the flow of commerce. In addition, the digitalization of products such as music, books and software has converted what were once physical goods into services or intangibles. Since the taxation of services and intangibles differs from the taxation of tangible goods, the characterization of supplies has become another e-commerce issue.

The Deloitte and Touche report also noted that different governments have taken different approaches to the taxation of e-commerce transactions. The governments of the European Community, Japan and Thailand have all announced an intention to tax e-commerce transactions involving digitized goods. The United States House of Representatives, on the other hand, recently approved a five-year extension to the moratorium on taxation of e-commerce transactions which was set to expire in October 2001.

The common factor among most industrialized jurisdictions is the desire to develop a uniform policy on the taxation of e-commerce. Despite current differences, many countries, including Canada, are waiting for the Organisation of Economic Co-operation and Development, OECD, to formulate a policy to govern the application of taxes to e-commerce.

Canadian tax authorities began to formally address the taxation of e-commerce in April 1997 when the Minister of National Revenue established an advisory committee on electronic commerce. The advisory committee released its report in April 1998. The report contains 72 recommendations concerning income taxes, consumption taxes and customs, duties and tariffs.

The advisory committee recommended that the guiding principle governing the development of Canadian policy include the following: First, electronic and non-electronic transactions that are functionally equivalent should be taxed the same regardless of their form; second, governments should avoid placing undue regulation and restrictions on, and should avoid undue taxation of, electronic commerce; last, electronic commerce over the Internet should be facilitated on a global basis with nationally and internationally coordinated and compatible government policies.

In September 1998 the minister responded to the report and its recommendations. A major part of Revenue Canada's response was to form four e-commerce technical advisory groups, or TAGs, under the auspices of Canada Customs and Revenue Agency, which were to focus on the following areas: first, taxpayer service; second, compliance in administration; third, interpretation and international co-operation; fourth, consumption taxes. Although many of the recommendations were left for further consideration by the Department of Finance and the TAGs, the Revenue Canada group indicated that Canada would work with the provinces, OECD and other countries to establish a common approach to tax e-commerce.

As the provincial government considers how to best establish taxation policies for electronic transactions, we urge the provincial government to establish provincial technical advisory groups, or TAGs, to assist in establishing a policy that will not unduly affect the competitiveness of Ontario business. The objective of taxing Internet-based transactions should be to enable electronic commerce to be taxed on a consistent basis throughout the world in order to ensure effective tax treatment and to avoid double taxation.

In many cases, the application of tax has been determined by way of specific rulings, rather than through legislation or written public policy pronouncements. As most Canadian jurisdictions appear to be waiting for the establishment of international standards, it appears that there will not be a significant framework in place for the taxation of e-commerce in Canada any sooner than 2001.

As far as consumption taxes are concerned, the unanswered critical problems surround the questions regarding collection points for the sales taxes and characterization of revenues as stated. This shortening of the chain enables the consumers the opportunity to obtain product directly from suppliers without the need for intermediaries such as wholesalers and retailers.

As a result of Internet technology, non-resident persons are able to solicit sales to Canadians and Ontarians without having a physical presence in Canada or in Ontario. Since the bricks-and-mortar business model is not applicable to these e-businesses, there are problems applying the test traditionally used to determine whether a person is a resident in or carrying on business in Ontario.

For companies operating in Ontario, this means they face a disadvantage related to companies that are established outside of Ontario. Companies outside of Ontario do not collect the required provincial sales tax nor the federal goods and services tax. This essentially means a 15% price reduction for consumers if they purchase from a supplier not collecting the requisite taxes. For the government, it would mean the loss of significant provincial sales tax and corporate income tax revenues.

As a consumer of computer software, the OCC itself has been made aware of the discrepancies between pricing of companies that operate within Canada and those that operate outside of Canada. The Ontario chamber also understands there may be Canadians and Ontarians who may be taking advantage of another country's taxing policies in the same manner. There is no doubt that the potential for a virtual underground economy and multiple tax havens are enormous. The Ontario Chamber of Commerce recommends that the provincial and federal governments work in an expeditious manner to establish the rules of the game in line with international conventions as they are released. The Ontario Chamber of Commerce would also like to offer its services to the provincial technical advisory groups, should we have them as we recommended earlier.

Another issue we want to talk about is electronic government, or what they call G2C, government-to-citizen interactions. An area the OCC is beginning to look at is the structure of government in the new economy. The Internet has revolutionized the way business is conducted. It is now on its way to revolutionizing the way governments operate and interact with their citizens. The Ontario Chamber of Commerce believes that this new technology will change the way governments are structured and the way public services are delivered.

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The potential for increased efficiencies is enormous. The provincial government, when it was elected in 1995, laid out in the Common Sense Revolution a number of objectives it wanted to achieve and the areas of government that it wanted to change. Overall, the government has achieved or is on the verge of achieving many of these goals, but one area where the government has fallen short of its target is the restructuring of government. There have been positive changes around the edges of government. Each ministry is required to submit annual business plans. The target for the number of public service employees has probably been achieved, but the way government operates has not fundamentally changed. The new technologies available to us today can help facilitate the change.

There are indications that the government is moving in that direction. The establishment of the office of the corporate chief information officer is positive. Certainly on the information technology side, it appears that the government is clustering the various ministries according to the CCIO's office. The clusters would be community service, economics-business, finance, human services, justice, land resources, and transportation. The natural extension of this type of clustering would be to actually combine the ministries into these seven areas.

Initial evidence suggests that a large proportion of the population would support interacting with government electronically. A recent study benchmarking the demand for e-government services by citizens and businesses found that almost two out of three on-line adults, or 65%, have conducted an e-government transaction at least once. Almost one of five adults, or 20%, who use the Internet have conducted an e-government transaction in the last 30 days. Almost half of the citizen users, 47%, reported that they would like to use the Internet to renew their drivers' licences, vote in major elections-38%-and access one-stop shopping for all government services regardless of jurisdiction-36%. Almost half of the business users, 43%, reported that they would like to use the Internet to obtain or renew their professional licences and access one-stop shopping to apply for new business licences and permits-39%. Business users express a strong preference for a single federal e-government portal.

There is a definite demand for changing the way government operates. The report also found that e-government is widely accepted and seen as a growing trend and value to citizens and businesses. Citizens and businesses are more satisfied with their e-government experience than with traditional service delivery. Citizens and businesses understand and expect certain e-government benefits such as efficiency, time savings and cost-effectiveness.

The Ontario Chamber of Commerce will be surveying its members on the issue of electronic government and we'd be happy to share with members of the Legislature an Ontario perspective on this.

A 1998 study from MIT showed that companies that invested heavily in information technology showed higher market valuations than companies that did not invest substantially in IT. The study also showed that computer investments overlaid on to old ways of doing business often lead to disappointing results. The greater positive results came from companies that invested heavily in information technology and substantially restructured the way they operate.

The lesson for the provincial government is that it should not only look at utilizing available technology as much as possible, but in order to be effective it must also look seriously at restructuring how it operates.

As the provincial government embraces the new technologies available, one of the key advantages will be a greater sharing of information within government departments. Departments will no longer be able to say that they are unaware of what the other department is doing. This will lead to a reduction in wasteful duplication and even contradiction from one department to another. Government procurement is likely to be an area where the government would see a substantial cost savings. Recent studies by business and the public sector showed that procurement costs could be reduced by as much as 50% with e-commerce.

The Ontario Chamber of Commerce encourages the government to seriously look at how it can utilize Internet technology to increase its effectiveness and efficiency as well as to enjoy cost reductions. The provincial government has made a good start with Ontario Business Connects on-line service and through the Service Ontario kiosks. However, we feel much more can be done.

While many of the issues that we have raised are not strictly covered by Bill 88, we believe that Bill 88 is a step, an important one, in making Ontario a leader in e-commerce. We encourage the government to work quickly to resolve the issue of Internet taxation and to look at ways that Internet technologies can be utilized for better government.

Thank you again for your time. We're available for questions. I think we have a few minutes.

The Chair: Yes, we do have about 10 minutes for questions so we'll start with you, Mr Kwinter.

Mr Kwinter: I listened with interest and also a little bit of uncertainty. You're absolutely right; many of those issues that you raise are very important. Unfortunately, they're not the responsibility of this particular committee. What we're really dealing with is Bill 88 and the legality of using an electronic signature and electronic commitments to make it legal. I see that you don't have too many concerns about that. You sort of applaud that particular initiative. Having said that, let's talk about the things you did talk about that I have a lot of interest in.

One of the concerns-and I raised it at the end with Ms Langford of the Canadian Association of Internet Providers-is that we keep hearing that the Internet is going to change business as we know it; it's going to level the playing field. One of the other presenters said they do business in British Columbia and they don't know whether it's two guys in a garage or a huge corporation. They don't really care as long as they supply what they want. That is one of the big advantages of e-commerce.

The strength of Ontario is planning but also a great deal of accident; propinquity, as they call it. We happen to have this huge infrastructure next to the largest market in the world where we can really be competitive. We can be competitive because of our low labour costs, our health care, all of these things. My concern is that we really have to address how that is going to change with e-commerce, with the ability of countries all over the world to compete on a direct basis, with the ability to, as you say, circumvent the retailer, circumvent the distributor and create a totally different playing field.

As representatives of the Ontario Chamber of Commerce, you have obviously given some thought to this. What are your solutions? You say that we can be in the forefront, but at the same time I hear all of these other factors that could in fact make us less competitive rather than more competitive.

Mr Robson: I think we're doing very well in the electronic economy. The big loser could be government, but our people are going both ways. The Americans are selling here, there are international people selling here and we're selling there.

If I can quickly digress, many of you are familiar with our awards which we give every year. In one of the awards last year, the runner-up was Jenny's Floral Studio in Sarnia. They were the first group to be on the Internet. When you go on Jenny's Floral Studio you get a virtual bouquet free when you tune in. I went down to Sarnia to present the award, because it was the runner-up award, and they were telling me how the day before, for example, a fellow in Houston had ordered some roses for his wife who was right down the block. So they are facilitating from here, I assume tax free, a service several hours' flight away from Sarnia. I think that's an example of the fact that our people can certainly compete. It's just that we want to make sure there's a level playing field in terms of taxes, because as we outlined and as you all know, you can be in a garage in the Caribbean doing business. You don't have to be in Vancouver. So we're at a competitive disadvantage by that 15% of provincial sales tax and GST. I'll defer to Mary and see if you have a comment for Mr Kwinter.

The Chair: I'm sorry, we're starting to run out of time. Sorry, Mr Kwinter.

Mr Martin?

Mr Martin: I have no questions.

The Chair: Mr O'Toole?

Mr O'Toole: The chamber is always an important observer of what's going on and how we can remain competitive. I'm sure you're supportive of this legislation, which is positioning us to be competitive.

I wouldn't mind perhaps giving the person with you-Atul, is it?

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Mr Robson: Atul is our chief economist.

Mr O'Toole: Atul, with respect, the tax question isn't in this bill, as you know, but it is one of the recent questions in everyone's mind about who gets the money and how. It's a very small part of the overall economy at the moment, but we're all positioning ourselves-the whole world is, I guess-to say that's where a lot of the transactions will occur. What is the general tone, while addressing, perhaps at the same time, the issues of privacy and confidentiality and use of the information itself-like what is the ultimate database going to do for me if I go to sell that database I've developed?

Mr Atul Sharma: You've raised a number of issues there, and I'll ask Mary to give some comments as well.

I think you're right. Right now we are in the infancy of our e-commerce revolution. I think there will be a point in time where you can't have a company in Ontario which does not have an Internet presence. Certainly the way the Internet operates will fundamentally change over the next four or five years. Currently, Web sites are simply locations of information. Web sites are on the verge of becoming interactive, so if you went to, say, a travel Web site and you wanted to book your flight or you booked your flight and you wanted to make sure that, if you're visiting your sister, your sister knew when your flight was, the Web site would automatically forward the information. If your flight was delayed, it would be able to interact with whatever computer you were using and tell you, "Hey, your flight's been delayed by 20 minutes. Don't show up when you were planning on it."

That's certainly where it seems to me the future is headed, that there's going to be greater and greater interaction and connectivity between consumers and producers and people who are selling services.

One of the areas we have raised in our presentation is certainly that government needs to be aware of it and get involved in this as well because there is a fundamental change in how government operates with its citizens. I think that's going to lead to a restructuring of the way government is established. We've outlined seven clusters that are currently available in the IT area.

With respect to the privacy issue, as your previous presenter said, there probably isn't an Internet service company that doesn't take that issue very seriously and they wouldn't stay in business very long if security and privacy weren't their first concerns. Mary might have a few comments on that as well.

Ms Mary Webb: I think when we have a development, such as e-commerce, that is potentially so widespread and so hard to define, the importance of Ontario remaining on top of all the international developments is extremely key, particularly development in the States. We're seeing the US wrestle with this as well. You don't want to hamper the development of e-commerce, so do you put a moratorium on the taxation, which is what was suggested by Congress, a three-to-five-year moratorium? But then that's unfair to the traditional methods of business. I think this is an area that requires regular review to see where our main competitors are going, and the input from business is just very key.

Mr O'Toole: Again, without prolonging the debate, there's a discussion paper with the Ministry of Consumer and Commercial Relations. Many of the same issues will be discussed, I'm certain, but it may delve into the consumer aspect and their responsibilities or lack thereof. I'm sure you'll be making presentations to those as well.

The Chair: Thank you very much, Mr Robson, Mr Sharma and Ms Webb. We appreciate your submissions this afternoon.

Mr Robson: Thanks again for having us.

CANADIAN BAR ASSOCIATION-ONTARIO

The Chair: The next presenters are Jim Blake and Gabor Takach. Mr Blake?

Mr Jim Blake: Yes.

The Chair: Oh, you're Mr Blake. OK. Mr Takach, did I say your name correctly?

Mr Gabor Takach: Takach is one of the pronunciations. You'll hear another one I think later on this afternoon in a presentation given by my cousin from McCarthy's.

The Chair: And is that the same pronunciation?

Mr Gabor Takach: No. It's the same name; we just happen to have adopted a different pronunciation. There is no right way to say it. At least, we have agreed to disagree.

Mr Blake: Ladies and gentlemen, at this point I believe you have been handed out a fairly brief presentation paper from the Canadian Bar Association. Does everyone have one? We recognize that you are going through a series of lengthy hearings. We've tried to distill this to something very brief.

First of all let me say, for the benefit of some who may not know, the Canadian Bar Association-Ontario is an association of lawyers, judges and law students in Ontario. One of our many purposes is, obviously, to present positions with respect to reform and improvements in legislation and law, and obviously as stakeholders we have a very real interest in a successful and prosperous economy in Ontario. That's the basis upon which we're making a presentation today.

We've split this presentation into three parts. Part one deals precisely with Bill 88. Although today you may have heard legislation dealing with various aspects of substantive law, the function of Bill 88 is enabling legislation to facilitate the effective use of e-commerce or electronic communications. We must say that this is a most welcomed step forward and in our view is strongly supported by the legal community and our clients.

It's very fundamental that laying down a clear and general framework to cover certain aspects of e-commerce leads to legal certainty and the resulting confidence of both business and consumers, which I think is fundamental to the growth of e-commerce. One of the key things we've all heard is confidence in the system.

The other aspect, of course, is the mystery of whether or not and to what extent it is effective as a legal document or as legal documentation. We regard Bill 88 as being most welcome.

Secondly, it does achieve the goal of harmonizing e-commerce rules across Canada, because it's based substantially on the Uniform Electronic Commerce Act which was adopted by the Uniform Law Conference of Canada in 1999.

That being said, as we all know, this legislation is framework legislation and there will be substantial areas that will be covered by regulations as we go down the road. Those regulations are very important, and so we regard the drafting of those future regulations as being a work of some effort that we would hope would result in draft materials being published in time for all stakeholders to have a look at the words just to make sure there isn't some difficulty that may have been unforeseen by the drafter.

So what we're really here to do is urge speedy passage of this legislation. On the other hand, the publication of regulations, which will have to happen before the legislation comes into force, is very important, and we think it's important that the community and the stakeholders have a chance to look at that material just to ensure there is not some oversight that the drafter may not have considered.

Although we're urging speedy passage of this bill, and I always hate to suggest any amendments, we would suggest one small amendment. That relates to clause 12(2)(c). That paragraph in the legislation deals with the retention of electronically generated documents. You'll notice that (c) talks about retaining identifiers of the origin, destination, date and time when it was sent and received and so on. This is obviously a very desirable standard and we fully agree with it. But water under the bridge is water under the bridge, and we would simply ask that the words I have indicated in the paper, the words "after the day this act comes into force" be added in the second line right after the word "received," so that electronic transactions that are already on the books and have already occurred-people may not necessarily have kept that sort of evidence of time of transmission, when it was received and so on. We fully support the legislation on a going forward basis, but we suggest there be some protection to this retention obligation with respect to transactions that have occurred prior to this legislation coming into force.

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The second part of the paper deals with what I would call the next, or the second, electronic commerce act. I just pause for a moment to re-emphasize that what we have before us is Bill 88, which is enabling. It's welcome and we're strongly urging speedy passage. But it is necessary that we continue the effort to keep Ontario at the leading edge of e-commerce; we think that's important to Ontario-based businesses. And there are some things that are substantive law and changes to substantive law that should be considered.

We're not suggesting any particular solutions but you'll notice the first one I talked about was spam. The sending of unsolicited commercial communications by electronic mail is probably undesirable for many consumers, businesses and service providers. As we all know, when it's sent in heavy enough volume, it may even disrupt the smooth functioning of interactive networks. Certainly, as a very minimum, unsolicited commercial communications by electronic mail should not result in any additional communication costs for the recipient. I think that's a fundamental thing that we should give consideration to in future legislation as soon as possible.

Another thing that might be considered is whether we should provide for an opt-out register where citizens and businesses could establish themselves on a register where they would say, "We do not want to receive unsolicited materials." These are future considerations, but I think they're important and I think they should be dealt with speedily.

The second general area is the question of error correction. When I talk about this next item, think of a person sitting down before his computer screen and he's about to place an order for stock electronically. When a person places an order through an electronic agent, which we know is not a human on the other end, it's a computer, should there be a statutory requirement that the proposed order be once again restated on that window so the person knows how many shares of company X has he really ordered and overall cost is this, and given a second chance to confirm or cancel that order? Now many businesses in fact follow that practice as a good standard, but the question that should perhaps be considered is whether that should become a statutory requirement. That's a consumer protection bit of legislation that should be considered as we go down the road in a second e-commerce bill.

A third consideration is place of establishment. Place of establishment is important not only from a conflicts-of-law point of view of where the contract is made; it's probably also very important for the tax folks when they get around to it. As we all know, a Web site can be totally offshore, the supporting technology can be totally offshore. I think there probably will need to be a statutory provision that establishes that the place of business of a business providing services through the Internet is not the place where the technology supporting the Web site is located or accessible but instead is the place where the actual economic activity is pursued: where is the factory, where is the office from which the goods are sent and things of that sort. This has both a conflicts-of-law aspect to it and a tax aspect. At some point, future legislation is going to have to address that.

Quickly, although I'm sure the list will go on and on, the final thing that occurred to us was that you might consider whether consumer protection provisions are necessary with respect to contracts that really amount to games of chance, lotteries and betting transactions. We all know that there are many betting sites in various offshore locations-I'll not mention them but they tend to be in the Caribbean-and whether there should be some consumer protection legislation to cover that type of contract-that's a class of contract-is something that should be considered.

And then I'll take us to part three. We've all seen the need for Bill 88 and the speed with which our economy has been changing and the increased use of electronics for everything from contracts to security registrations, even land registrations. Everything is coming on stream quite quickly. I'll just do a little further aside. The Ontario government is now at the front edge and has commenced incorporating companies electronically as well. So increasingly we are doing more and more things, which is good. It keeps us at the front edge of what the business community is looking for and it keeps us competitive. But there is one particular area where Ontario has historically, in Canada at least, been a leader, and that has been in the area of personal property security legislation. As you know, many national lenders are based out of Ontario and it's important that we keep our PPSA legislation at the front edge, just as we're bringing in a Bill 88, which is generic enabling legislation. PPSA legislation of course is specific. But I think it's very important, and our two committees think it's very important, to keep that legislation as sharp and as close to the front edge as possible because it will give our Ontario-based businesses a distinct advantage, certainly throughout Canada.

Those are the submissions we are making as a formal presentation. We'll open it up to questions. Before I do, I just want to mention that we're making this presentation as a joint submission between two sections of the Canadian Bar Association. One section is the business law section, and the second section, which Gabe is representing, is the information technology and electronic commerce section. But our interests are very much in step on this and we thought we'd make this paper together in a way that hopefully you would find helpful.

The Chair: Thank you very much, Mr Blake. That was a nice, concise, very short presentation, so we do have enough time for some questions from committee members. We'll start with Mr Martin. You have about seven minutes.

Mr Martin: I appreciate your presentation and some of your thoughts on both the bill and some of the context and future considerations that perhaps we should be looking at here. I suggested in some of my opening comments this morning that we ought to look at this as well in the context of the evolving economy in which we all have to work because everything is interrelated these days, I guess.

I want to ask you, from your experience in the legal profession, given that we have your presentation here, is there anything in this bill, moving as quickly as we are to make it legal to sign contracts via the Internet without the attendant, we suggest, attention being paid to issues of confidentiality and privacy, that worries you?

Mr Gabor Takach: Mr Martin, we see this legislation as essentially following the evolution of communications and contract law and relationship establishment in the legal sense moving from the written word to electronic communications. We see our clients proceeding in this area whether or not they are essentially ahead of the law, and they are in fact making decisions on their own with or without this kind of legislation. So we see this legislation as being extremely important to catch up, effectively, with the current practices as they are evolving. The legislation is extremely helpful to the profession in allowing us to advise our clients with certainty or at least to confirm with certainty, the advice we have been giving to our clients with respect to the evolution of this area in the ordinary course.

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There are clearly some issues that are arising in terms of privacy and the movement of information which probably have been there with the written aspects of communications and relationships, but not to the same volume and not with the same speed as they are being facilitated by this new instrument, and they will have to be looked at. But we don't see any reason why we should be holding up this stage, which is essentially the first step in making sure everyone understands what we see is practically being done by sophisticated users of the electronic communications means and in fact given the certainty that's needed for all.

Mr Blake: I'd also mention, as you know, that there is a specific privacy study underway in Ontario mid-September. It's a consultation paper, and we as the Canadian Bar Association were invited to make submissions on privacy issues as well. But that's separate legislation, and the federal folks have done theirs and Ontario is going to do its in a way that will cover the non-federal aspects of our business in social communities. That's a very strong and perhaps difficult topic, but that topic is being dealt with in separate legislation and a specifically dedicated consultation is underway starting I think September 15-just to underscore your concern about privacy. We're all alert to it, and that is probably going to be a much more difficult bit of legislation than this. We regard this as beneficial and relatively non-controversial. It's the privacy stuff that is going to be more difficult.

Mr Beaubien: More of a commentary than a question, but if you want to respond to it you're more than welcome to: I certainly agree with the vision you have with regard to this bill. Not only are you looking at Bill 88 but you're looking past that, and I think that's important. In part two you mention spam, and there's one individual in the province of Ontario I'd like to spam a little bit. At this point in time I guess I don't have legal recourse to do it.

All afternoon I've heard buzzwords like "critical mass," "economies of scale," "proximity of market," and then one other presenter made the comment in their conclusion that e-commerce saves money for consumers, for businesses and for government, money that's now spent on lost travel time and lineups at counters. Being from rural Ontario, I still have the phone with the box under it. You're too young to remember those.

Mr Martin: No, I'm not. I was one long, two short.

Mr Beaubien: The point I'm trying to make is that in many parts of rural Ontario, and as for my colleague across from northern Ontario, we do not have the infrastructure and we see governments closing offices, services, we see banks closing services and they say, "Well, go on the Internet," use their e-mail. People don't have access to these things and consequently are faced with driving long distances. As one presenter said, it's not cost-effective. You're losing time.

There's a trend in this society that we provide a lot of services for the urban centre but the small, backward-and I don't think northwestern Ontario is too backward, but the reality is that we do not have the infrastructure in many places. Consequently, we're expected to drive the long distances, we're expected to be as efficient as that person in urban Ontario. So the mood, the atmosphere, is not conducive to being very competitive. How do you respond to that?

Mr Blake: Well, there are two things. The first response is that this is enabling legislation. It applies equally throughout the province.

Interjection.

Mr Blake: No, but it's enabling. Nobody has to use electronic commerce if they don't want to.

Mr Beaubien: Why would you?

Mr Blake: Nobody has to if they don't want to or if it's not convenient. However, I do believe there is a fairly serious effort to upgrade the telephone communication systems in more rural areas. For instance, I'm from the 705 area code myself, and I know that the connection speed in our area is being upgraded. It hasn't happened yet, but it's close. But it still works reasonably well for me. I believe there is an effort to upgrade the speed of connection throughout the province, especially in rural areas, and I believe there is a government initiative to that effect. It's certainly the case in Simcoe county. I know you don't regard that necessarily as being-but it is area code 705; it sort of counts, you know.

Mr Beaubien: But this is the point. We can kid about it, and we can talk about protecting people and making sure that people are treated equitably, but in many situations in Ontario people don't even have access to that. It's funny that I'm listening here to you people talking about, "We've got to protect these people," and these people don't even have the chance of being taken advantage of.

Mr Blake: I understand your point, but in my view that doesn't have anything to do with the enabling legislation. First of all, I believe most places certainly have the telephone. So the only thing you need beyond that is the computer at the end of the telephone and then you're away.

Mr Beaubien: Unless you've got a party line.

Mr Blake: Did you say "party line"?

Mr Beaubien: Yes.

Mr Blake: Yes, I recognize the problem of party lines, because it doesn't work. But if you remember a few years back-and it hasn't been that many years-the first step was to increase the area where it was not a long-distance call. That was very important so you wouldn't have a long-distance call to get to your service provider.

I'm using myself as a guinea pig. At one time, it used to be a long-distance call for me to get to Barrie, and Barrie was the only place where I could get a service provider at that time. It would have been a long-distance call every time I went on the Internet. One of the things that happened about five or six years ago was that the area codes expanded so that most areas are able to get to a place where there is a service provider as a local call, in which case your cost of communications throughout the world is free. That was an important step, and that was a few years back.

The next step that's happening is that many areas of Ontario are being updated. It doesn't happen instantly everywhere, but it's being progressively implemented that the speed of connection is being upgraded so that you have a much faster connection. If the rate of change continues the way it has in the last few years, I would think there would be very few people with serious complaints.

On the other hand, we are faced with a situation where there is a large population base in Toronto. I'm talking about the future of legislation now. There are issues of protection which will arise, and they should be dealt with. It's not a question of waiting until the last person has got his last computer. I guess that would be my only real answer.

Ms Mushinski: Mr Chairman, I have just one question, and it deals with spam. The whole issue of unsolicited commercial communications has certainly been a serious one for my constituents, in terms of junk mail which they receive on a regular basis. It would seem to me that electronic means or electronic equipment that one has would provide an advantage to blocking unsolicited mail.

Mr Blake: It does, but let me tell you what happens. You block it. They've got a computer at the other end and they change one little element. You get the same organization, but they've changed it. As soon as you block it, they go to the next combination and just go click, click, click, and they keep shooting it at you. That's the problem. Blocking is wonderful if you've got ordinary folks. But then you've got really dedicated people who want to get their message out, or whatever it is.

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Ms Mushinski: OK, so how do you protect the consumer?

Mr Blake: When I go to my mailbox, you see, I get this wad of stuff and I could-

Ms Mushinski: Annoying as hell.

Mr Blake: Yeah, I know. One of the things I could do is, apparently there is a system-I'm talking about stuff coming through the post, that kind of mail, hard copy. There is a method where you can call up and register and say, "I don't want it." People who observe the rules-it's voluntary-will take your name off the list. The same thing is true with these calls that come through on the telephone at night. You can request that your name be taken off the list, and they're supposed to do it, but it's all voluntary. This is just another method of receiving this stuff.

All I did was pose the question. One is, for sure it shouldn't cost you money to say no-that's the first point. Although it costs you time, for sure it shouldn't cost you money. The second thing is whether there should be the ability to create a register which perhaps is at a higher standard than just voluntary. I'm just raising it.

Ms Mushinski: I appreciate that.

The Acting Chair: Mr Kwinter.

Mr Kwinter: Thanks for your presentation. Your organization is key to this whole thing. As you said, Bill 88 is framework legislation and then you've got to build on that. It's going to have to come from the Canadian Bar Association, the Ontario bar association. They're going to identify what the problems are and how to make your particular activities comply with that.

I'll give you an example. We had someone here from Teranet. I was the Minister of Consumer and Commercial Relations back in 1985 and had the responsibility of introducing Polaris as a pilot project. Immediately, I was besieged by title searchers who said: "You're going to put us out of business. You can't do that." There was a big debate that went on, and I was telling the presenter, who left here, that it was quite gratifying to see that 13 years later Teranet is a fact, a fait accompli, and that's how you do your title searching. You don't have to go to two different places to do it, and it's all coordinated. You really have to bring everybody along with you to do that.

The other thing, another issue I had to deal with, was PPSA. I don't know whether you remember Fred Katzman or if he's still around, but he chaired this advisory committee to the minister. It was like a make-work project. He was in for years; for years they would come to me. One day they invited me to sit in on a meeting. I sat there and they spent an hour debating one word, actually debating one word. When I left, I said to my assistant, "This is cruel and unusual punishment. No one should be compelled to sit on that kind of meeting." It would seem to me that if you're bringing forward these various initiatives, you're going to have to get yourselves onside first and then come forward to the government and say, "Here is a problem we've identified. Here is the solution."

Mr Blake: If I may, isn't that what we did today? We even gave you a few little words to insert, if you recognize that question of grandfathering as being a politically realistic issue. Basically, as you can tell, our thrust was that we support this wholeheartedly and agree that it should be passed right away. But we have one little quibble, and we gave you the words. The whole point is whether you're going to grandfather electronic transactions that have occurred before now, before the date this comes into force. We agree with it fully as a going ahead thing. When people know the rules, they'll keep those records of when they got it, the proof of receipt. Obviously you keep the main document, but now you're going to keep the main document plus how you got it and the proof of receipt.

Mr Kwinter: OK. Can I ask you something about that? When you say you're grandfathering it, are you recommending that the only part is the retention of the transmission information?

Mr Blake: Yes, only that very last little bit.

Mr Kwinter: Not the document itself, just the information of the transmission.

Mr Blake: Just how you got it and what time. A lot of people don't have those time stamps any longer. That's our only comment, just that time stamp stuff, and the change that we propose would only grandfather that. It doesn't grandfather any other retention rules. On going forward, the whole thing of course is in place and we support it. It's just that water has gone under the bridge for keeping those time stamps. That's the only point.

Mr Gabor Takach: Mr Kwinter, I wonder if I could just try to address what I thought was part of your question as well with respect to the PPSA. The point we were trying to make with item 3 or part 3 of the presentation was that there is a revolution going on in terms of the asset mix of various companies which requires attention and it requires input from the legal community, the user community, the banks and the borrowers. But first and foremost it probably requires a vision or a recognition and some leadership probably coming from government to the following effect.

I think it was in 1998 where there was a Globe and Mail headline which suggested that as of June of that year over 50% of the capital cost of capital assets acquired by companies in the US and Canadian economies consisted of soft assets; over 50% of the capital cost. These are assets that you can't touch, you can't mortgage in a traditional sense-

Mr Kwinter: And you can't put a lien on it.

Mr Gabor Takach: You can put a lien on it, but there isn't the credibility that's associated with it. The point we're trying to make is that where there are assets such as real estate and machinery located in any particular province, that's the province whose rules will apply as to the effectiveness of the security that's placed on it for the purposes of borrowing and providing capital for the growth of that business. With respect to the intangible property, the general rule is that the various jurisdictions cede the rule-making jurisdiction with respect to borrowing on the strength of soft assets to the principal place of business of the borrower. That's an existing state of affairs. That's the uniform commercial code in the US, and most of the provincial statutes in Canada provide for that ceding of jurisdiction.

We see that as a framework which will ultimately allow the enlightened jurisdiction, the one that picks up the ball in this process, to come up with a set of rules that will make it easier for businesses to raise money on assets which are soft assets because they ain't got any other assets. If the borrowers are located in Ontario and are coming to Ontario simply for the purposes of being able to take advantage of raising funds in Ontario with enlightened rules, that will attract business to Ontario. So the point we're trying to make is that we should take a look at that state of affairs, form a partnership between government, industry and the legal community to recognize it and then come up with a plan as to how to make ourselves the Delaware of the PPSA regimes. Delaware has been so successful in attracting businesses to incorporate there. That's really the whole point.

The Chair: Thank you, Mr Takach and Mr Blake. We really appreciate your presentation this afternoon. Thank you for taking the time to come and address us.

Mr Takach, I was just going to suggest that if you wanted to stick around for half an hour, you might see your cousin.

Mr Gabor Takach: Say hello for me.

COMPAQ CANADA INC

The Chair: The next presenter is Mr John Challinor of Compaq. Good afternoon, Mr Challinor. How are you?

Mr John Challinor: Good afternoon, Madam Chair. On behalf of the senior management team at Compaq, we want to thank you for the opportunity to address this committee of the Legislature about Bill 88, the government of Ontario's proposed Electronic Commerce Act.

As many of you know, Compaq Canada is a major information technology and services supplier to the province of Ontario. The province has been a valued Compaq customer for more than a decade. What you may not know is that Compaq is the largest electronic commerce supplier in the world. Together with our strategic e-commerce application partners-Microsoft, Oracle, SAP, i2 and Siebel-we power 90% of the world's security transactions, 77% of the world's lottery transactions, 60% of the world's interbank transactions, 50% of the world's 911 calls, 50% of the world's cell phone billings. We support the top 32 of the world's largest telecommunications companies, 106 of the world's largest stock exchanges, 34% of the US Web server market, which are basically ISP providers, Internet providers, twice that of our nearest competitor.

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We market the full spectrum of systems, partner applications and services that support the implementation of e-commerce solutions. These integrated solutions allow our customers to Internet-enable shared business processes across their customers, partners, suppliers and distributors.

When it comes to e-commerce, we have a vested and knowledgeable interest. When government at any level proposes legislation dealing with e-commerce, we want to ensure that our interests and those of our customers are understood and, if necessary, protected.

In principle, mirroring its colleagues at the Information Technology Association of Canada, Compaq Canada is supportive of this legislation. Any legislation that is characterized as "enabling," "minimalist" and "harmonized" and is described as "removing barriers so that other government program-based initiatives can proceed without needing individual enabling legislation" has our support. As the proposed act is written today, it largely passes muster.

However, we do wish to ponder how forward-thinking in nature the proposed act may be. For example, it does not apply to such documents as wills, personal powers of attorney, most negotiable instruments, most land transfers or election documents. The reason given for excluding these kinds of documents is that they require more detailed rules or more safeguards for their users than can be established by a general statute. The context for our questioning this missing component of the proposed act is not today's environment but the future, and the near future at that.

According to a report released by Nortel Networks Corp, the global Internet economy will grow sixfold to $2.8 trillion by 2003-that's three years from now-accounting for 7% of world gross domestic product. Canada's Internet economy could climb to $155 billion in revenue and create 180,000 incremental jobs.

Canada and Ontario are certainly well positioned to benefit from this new economy. According to a study prepared by the Canadian e-business round table entitled Fast Forward: Accelerating Canada's Leadership in the Internet Economy, Canada is already a leader in global e-commerce. Its strengths lie in a strong infrastructure-although Marcel Beaubien will disagree with that comment-high levels of Internet penetration and an early lead compared to other countries on the policy front.

For example, Canada is one of the most wired nations on earth and its Internet access costs are the lowest among the G7 countries. What's more, Canadians have been quick to adopt Internet technology. The most recent figures show that Canadians, on a proportional basis, access the Internet more and stay on-line longer than Americans do. But we have been slower to embrace the Internet as an e-commerce mechanism than the Americans. International Data Corp, for example, predicts that Canada's business-to-business e-commerce will be only 7.7% of US levels by 2003, down from the current levels of slightly less than 10%. At this rate, in the Internet age, the individual growth and future prosperity of Canadians is threatened.

Governments at all levels should be looking at new legislation that creates an environment where greater use of e-commerce is encouraged. Governments at all levels should be rescinding legislation that discourages use of e-commerce in any way. No more is that more fundamental, in our view, than those basic components that the proposed act chooses to exclude.

We don't wish to oversimplify the challenge faced by government in dealing with privacy matters. We at Compaq fully understand the issue. But we want to assure you that the technology exists to overcome these challenges. We believe that the only stumbling block to full empowerment of Canadians in their use of e-commerce is legislative, and inherent in that, gaining their confidence that their most personal and privileged information can be competently managed by various public and private sector institutions.

Further, the act does not override existing provincial laws and regulations that already permit, regulate or prohibit the use of electronic documents. Given our earlier thoughts, if that is the case, just how effective is the proposed act in truly cutting red tape?

In closing, we at Compaq acknowledge that new provincial and federal privacy legislation is probably required to respond to the matters we have raised and which you have excluded. Let me assure you that these are not sticking points in gaining Compaq Canada's support for Bill 88. You have our support, and you also have our thanks.

If I might, Madam Chairman, Marcel Beaubien asked a question of the previous presenter about his particular situation and I might be able to assist in answering that question.

The Chair: Would you like to offer it as a part of your presentation? You have lots of time.

Mr Challinor: Sure. He has an infrastructure challenge in his community and it's not enabling his constituents to use the Internet for whatever purpose they choose to use it, be it education, e-banking or just basic communications with their families, friends and so on. This is not an uncommon situation in this province or in fact across the country. I can only offer a personal observation, as well as a professional one.

On a personal level, in another life I am a councillor from the town of Milton. This is my third term. Just recently we worked with the CRTC and Bell Canada to expand local dialing into our community. The effect of that has saved millions of dollars both for business and for private citizens in terms of use of the Internet and obviously use of the telephone with their various customers.

I would suggest, based on that experience, that your community or the communities you represent make contact with Bell and get into partnership with Bell to work on expanding the infrastructure they currently have in your community. That's about the only way it's going to happen. Legislation is not going to make it possible. It's going to require an investment by Bell and an investment, quite frankly, by your community.

On a professional level, once you have the basic infrastructure in place, you'll find service providers who will come into the community to offer a service. But I think they recognize that the current situation in some of the communities you represent just doesn't present itself as a business opportunity for them. It takes time. It took us about three years. Ten years before we finally received CRTC approval, we held a survey in our community and expanding the service was rejected because of the costs associated with it. I should mention that the cost 10 years ago was about $10 for a basic subscriber; it dropped to $7 in a matter of 10 years, and we now have the service.

The Chair: Thank you very much, Mr Challinor. We have about seven minutes from each member of committee. I guess we start with Mr Martin.

Mr Martin: Thank you very much.

The Chair: No, I apologize, Mr Martin. We don't. We actually start with the government side. I believe, Mr Martiniuk, you indicated you wish to ask some questions.

Mr Martiniuk: Yes. Thank you, Madam Chair.

I am just interested in your conclusions, because they seem somewhat inconsistent. On page 2, in the second-last paragraph, you state that the statistics show that on a proportional basis Canadians access the Internet more and stay online longer, so we seem to be familiar with it-and I've seen statistics that would show that-but for some reason our business-to-business e-commerce, I take it from reading between the lines, is at the present time only 10%, proportionately, compared to the United States. To what do you attribute that?

Mr Challinor: I should have brought a copy of Fast Forward with me, but the study concluded that Canadian business was slow to adopt e-commerce. They didn't feel it was a business priority. They felt that their customers today were quite satisfied with buying products and services through the traditional bricks-and-mortar method. However, in a survey that was done for the study group, 84% of them felt it would be a priority to embrace e-commerce and have that capability within the next four years.

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Mr Martiniuk: I'm just curious as to why they're slow. Is it that we have more small businesses, for instance, or medium-sized rather than large businesses in Canada compared to the United States?

Mr Challinor: I think that's a common sense conclusion to draw: we have many more small businesses.

Mr Martiniuk: On the top of page 3, you talk about governments encouraging business e-commerce, among others. What steps are you suggesting?

Mr Challinor: Government has to show leadership principally, Gerry. I think the province of Ontario is demonstrating that, although the government and the staff of the province wish they could move faster. It's time and money. But it's the use by government of e-commerce to provide services for consumers and taking leadership in regard to actually providing services.

Mr Martiniuk: You're talking about leadership rather than tax breaks or a legion of other possible things?

Mr Challinor: Yes. I think that tax breaks are not the answer. In today's environment, government really needs to provide the environment as opposed to the actual tax incentive itself. Although that said, we certainly were supportive of the last budget, which provided incentives for ISPs.

Mr O'Toole: Just very quickly, I wanted to put on the record that you refer to section 31 in your presentation, that is, the exclusion of certain business or transactions. My first reaction would be, if it's enabling legislation, if it isn't required legislation, why would they exclude certain options? There are certain kinds of groups in the public sector that aren't included, as well as powers of attorney and negotiable instruments or codicils. Again, I'm putting it on the record, and you did make the comment that you're surprised those were excluded.

I'm going to tie it to one little thing. The whole issue I've heard is the issue of trusting the environment that we're operating in, the confidence. This is trying to establish a framework for that confidence. Maybe this sends a signal that there isn't trust, because you won't, to some extent, transact financial or legal kinds of commitments over this electronic means. If you want to respond, then do.

Mr Challinor: Clearly the conclusion we draw is that changes have to be made to the privacy legislation federally, and whatever falls out of that provincially, to enable those kinds of transactions to take place. But along with that there has to be confidence expressed publicly and demonstrated to the public that they have no need to be concerned, that in fact you can conduct this business in an e-commerce fashion. Today you can't.

Certainly the last presenter was quite correct. We do it ourselves: contracts are done electronically and you're not physically signing the document, you're sending an e-mail attachment. We certainly have the ability to attach an electronic signature, but it's a different kind of relationship than we're used to.

To answer your question, you're going to require a different kind of legislation. If I might comment on public confidence, the government and the banking system have a fair degree of confidence from the public with respect to their ability, and I think that the technology industry has the technology to inspire that confidence. We have it in place today. We're using it ourselves. The banking institutions are using it. A number of our customers are using it. In my view, it's a question of how quickly the legislation can catch up to the technological reality.

Mr Kwinter: I want to follow up on that because that seems to be your basic comment or criticism of the legislation, that it specifically excludes certain activities, where you think this thing should be totally inclusive if that's where we're going.

The question I have for you is that E-SIGN, the US statute, has basically the same exclusions-not exactly, but they certainly exclude wills or testamentary trusts, most of the Uniform Commercial Code, court orders or notices, notices that utility service is to be cancelled, and it goes on and on. Why is it that all of these different jurisdictions seem to exclude these things when your opinion is that there's no need for anyone to be excluded? Do you have any comment on that?

Mr Challinor: I think it comes down to the sense of confidence that staff within a government jurisdiction have and elected representatives have in the technology and their sense of the confidence the public would have if the service was provided a different way. I think it has to be demonstrated by government, perhaps in partnership with ourselves, that in fact it can be done, that it is being done in many ways already. In many ways we are well ahead of the legislation today. It's being done informally and accepted.

Mr Kwinter: I also noticed that in our legislation we exclude the Election Act or the Municipal Elections Act, and that's an area where certainly in some jurisdictions they try to have electronic voting, with various degrees of success-some highly successful, some not so. There's got to be a reason why these have been specifically excluded. Maybe the challenge your industry has is to address those concerns and to get the assurance that the technology is there and it can be done.

Mr Challinor: I agree with you 100%. We have conducted pilots across North America with various pieces of security technology to demonstrate our ability to provide this service to the public, with varying degrees of success. I think one of the things you're seeing move quite rapidly today is the use of smart cards, some of which does cross into this area of legislation. I know this province is looking at it and has looked at it for some time. I think discussions have taken place at least since 1988 about smart card technology.

So I think, Monte, it's a question of a partnership where we pilot certain services that perhaps may not provide as much public angst as others might. I think the comment you made to the last presenter about the necessity of involvement by the Canadian Bar Association and the Ontario bar association is right on. I think they have to be involved in some of these things, particularly in the area of wills, living wills, powers of attorney, those kinds of things. It's pretty key stuff, but again, we've got the encryption technology, I believe, to manage that process. It's a question of how we educate the public and the law profession and others that's acceptable.

Mr Kwinter: OK, thank you.

Mr Martin: You certainly paint a very exciting picture of the present circumstance and the future for e-commerce in Ontario and Canada, I think somewhat different from the presenter two before you who said that Ontario is not an attractive place, Canada is not an attractive place; she herself is setting up a dot-com company and she's looking at Colorado, I believe. We had other presenters today suggest that our tax regime is one of the biggest obstacles to some of these companies setting up and actually doing business here.

It seems to me that what we've trying to do here is enhance our opportunity in Ontario to be part of the action that's happening out there that's actually quite exciting and has tremendous potential. Mr Beaubien mentioned some folks in his area; I look at the folks in my area trying to get into this. It's not that they don't want to, it's not that in some instances they don't have some of the hardware or the software or the knowledge; it's that they need education, they need to be encouraged, they need to be brought into the discussion about how you get involved and I think more than anything they need to see that we're winning, as opposed to losing.

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Take a little town like Wawa, for example, which has lost its major industry. Now a lot of the small businesses that used to do business there are finding that with the major industry going and the lack of employment that has created, some folks are beginning to discover that they can buy stuff cheaper via the Net. They're not buying it from the local store and the local store is at a point where it may go under, which could in the end kill the community. What we're trying to do is set up opportunity for some of the smaller indigenous companies in that area to begin to sell via the Net. They haven't been able to make that quantum leap yet. That's what we're about here, I would think to some degree, in terms of this legislation that would allow for contracts to be signed from a place as far away as Wawa, with people in the larger market areas.

Then there is also the experience that people have. It says here, "Consumer complaints about e-commerce have risen by about 1,000%." This is from the Ministry of Consumer and Commercial Relations. That's why they're doing the study that they're doing. There was also a StatsCan benchmark study released that says, "E-commerce has been a complete bust for the Canadian economy so far."

Putting all that together, is there more that we could and should be doing at this particular point in time: first of all making it legal for people to do this kind of business via the Net, considering some of these stats and the reality that's flowing out there?

Mr Challinor: I haven't seen the research work that you're quoting but I can only think that e-commerce is a relatively new phenomenon to the Ministry of Consumer and Commercial Relations. I have to assume that the number of complaints is up considerably because it's a new thing. Maybe in a couple of years we can revisit that, you and I, and see just how many complaints there are relative to other ways of doing business with consumers.

E-commerce has not been a bust in Ontario or in Canada. I can't tell you right now the number of new companies that have been created or frankly the number of existing businesses that have been saved because they have adopted e-commerce as a way of doing business with consumers.

As with traditional businesses, Tony, some will come and some will go. We will lose some dot-coms and we will gain new ones. We are losing existing businesses-sadly, the announcement about Knob Hill Farms last week-but there are others that will come along. Grocery Gateway, for example, is a totally e-commerce-driven grocery business based in Toronto and it's doing very well. All of its customers purchase their products and services off the Web.

In terms of Ontario or Canada being competitive to start an e-commerce business or a dot-com business, the tax situation, certainly the personal income tax situation, could be better; there's no question about it. But I don't think it's a show-stopper. I think the show-stopper for new businesses that wish to go public is capitalization. The market in Canada does not value a dot-com company the same way the US economy does. It is more advantageous for entrepreneurs who wish to start that kind of business to capitalize on the New York Stock Exchange as opposed to the Toronto Stock Exchange.

But there are other advantages to remaining in Canada as well and one of them is our people. We have about the best-trained workforce in the world when it comes to IT. We certainly have a shortage of skilled people, but it's a relative thing. I think we have an excellent college and university system across this country that is turning out top-notch people every day. Compaq continues to invest in Canada, as do our competitors. It's unfortunate that you heard that, but there are others who are doing very well in this country.

I'm glad that you're encouraging businesses in your riding to do e-commerce. It will not be the saviour for them; it will be yet another way to provide their products and services conveniently.

People who typically buy off the Internet today are not looking to save money; they're looking for convenience. You're not likely going to save an awful lot of money at the end of the day but you are going to get the product that you want. And that's the advantage.

Mr Martin: I don't doubt that for a second and I think that we absolutely have to be part of that. It's just a question in my mind of how you do it properly. What do you do first and what do you do second? We've had people come before us today to say that we're looking at the issues of cybercrime and e-commerce and the social and economic impact of the digital revolution, some of the privacy issues and those kinds of things. The industry is actually way ahead of us in that they're dealing with that already. I suggest here that that's probably one of the big reasons that a whole lot more people aren't jumping on and getting involved, that there is that concern, that very real concern. I'm just beginning to dabble myself a bit in this whole area. I certainly use it for my work, but in terms of my own private, personal business, every time I get on it and I do something, I think, is this going to be OK? As soon as it takes off, is some of my information going to go to somebody that it shouldn't? Is all this going to be fine in the end? I worry and I'm sure that others do too.

We're told to go ahead and quickly approve this bill and that following suit thereafter will be consultation re the whole question of confidentiality and privacy and some of the other things that people are concerned about. What if we give the go-ahead, the green light to doing business legally, signing documents on the Internet, and we find, in short order then, where now we have-it says here consumer complaints about e-commerce have risen by about 1,000%. All of a sudden, the lid blows right off it completely.

The Chair: You've probably got about 30 seconds to answer that. We're a little over time.

Mr Challinor: Just very quickly, this legislation is not going to assist in that regard. It's the privacy legislation that comes afterward, both from a federal level and a provincial level. As long as you've got people conducting business in the public domain, whether it's e-commerce or traditional means, you're always going to have issues of fraud. I think the 1,000% increase really is more a reflection of the growth of e-commerce generally as opposed to the growth of fraud in e-commerce. All I can say is let us both, in government and in the private sector, work together and develop faith with the public that this is the next wave, the new way of conducting both personal and professional business.

The Chair: Thank you very much, Mr Challinor, for coming in this afternoon.

MCCARTHY TÉTRAULT

The Chair: The final speaker for today is Mr George Takach, cousin of Gabor, and he's with McCarthy Tétrault. I should tell you, Mr Takach, that your cousin wishes to express a hello to you.

Mr George Takach: We didn't compare notes so I'm curious if you think that we have a feud in the family or something about one or other section of the proposed bill.

The Chair: I would imagine you too are a member of the Canadian Bar Association.

Mr George Takach: Yes. Thanks for having me. I'm delighted to come and share some thoughts about what I think is very important legislation. I'm here as a, quote, "expert," I believe, though also somewhat in a personal capacity. I practise law at McCarthy Tétrault, and we have in that firm 31 lawyers doing technology and e-commerce-related work. So we're dealing in the trenches day to day with clients who are moving into the Internet world, they're doing e-commerce, and I can tell you that literally daily questions arise that this Bill 88 will help with.

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In terms of credentials, I teach a course up at Osgoode Hall Law School, and have for about 10 years, in computer law. So it has been a fascinating scene to watch the Internet come on relatively recently, six or seven years ago, as a commercial vehicle and to watch the law reform movement adjust to it and address it.

I've also written a little book-I brought a copy with me, not that I hope to quote from it-but even though it's only two or three years old it speaks to precisely this kind of legislation. We were all hoping it would come sooner, but better late than never.

As a general statement, I'm extremely supportive of Bill 88, both personally-it'll make me go home earlier at night and be with my family because the kinds of questions that are keeping us up late at night the bill will help resolve-but also professionally in terms of the clients I work with.

If we really believe that we want to make Ontario right up there with the leading jurisdictions in the world in terms of being amenable to e-commerce and being attractive for doing e-commerce, if we want to be able to say with a straight face to our dot-com start-up companies and our more traditional companies that are moving on to the Web that Ontario is a good place to do e-commerce business, then we simply need this kind of legislation, because we're falling behind internationally and it's embarrassing.

I deal almost on a daily basis with our counterparts in the United States, and as they come to do business up here one of their questions is, "What's your legislative regime?" Currently we can't point to one, and this will set us quite a way along to making us one of that select leading group of industrial countries that gets it.

Having said all that, of course, as a good lawyer I've got to have a few additional wrinkles and nuances to suggest to the committee. I've asked dispensation from my good friend John Gregory, who of course is a prime directive behind this legislation. Just as a quick aside, I think John has done a superb job of law reform here. The process-I don't know if anybody has talked about this, but as a quasi-academic, the listserv over the Internet that John uses to elicit commentary and input and so on is a fascinating example of just how democratizing a force the Internet can be and how inclusive it can be and so on. I think much of the work, even pre-dating Bill 88 to the Uniform Electronic Commerce Act, again that John was part and parcel of, the UNCITRAL law that came before that-it's a fascinating case study. If at some point members of the committee wanted to stand back and look at law reform generally, it's a very interesting example of how the Internet can be used for this sort of thing.

Having said that, let me turn to just a couple of suggestions. To put it in context, if the committee said, "We're in a real hurry and we're going to pass this next week because there's a little window in the legislative agenda," then I'd tell you to scrap everything I'm about to suggest and get this bill through as it is. But if you have an extra week or two, then I'd offer up some of these suggestions. But seriously, if my remarks or anybody else's delay this past the fall session, then I'd humbly encourage this group to kind of ignore, at least for the moment, all of these considerations, comments and suggestions for improvement and put those into phase 2. Actually, I'm going to end on a note about law reform and how this committee should view Bill 88 as really not the end point. Because the Internet is moving so rapidly, because of the kinds of issues I heard you talking about as I came in, I'd encourage this committee to revisit Bill 88 almost annually to see how it's working, how it's addressing new technological challenges and so on. We shouldn't get caught up, hopefully, that this is the only shot we'll get at it for the next decade, because that's not good law reform in the Internet space.

Some humble suggestions: section 10-and I don't know how granular you want to get, but let me get pretty specific with you-has a concept, and I think it's an important one. Again, as we move into an electronic environment, we want to functionally recreate what it's like to do business with paper. One of the principles in the statute will be that, to the extent that you have to provide information to someone in an electronic form, as long as it's accessible to them and with a few other requirements, then you've functionally recreated what you would have, had you delivered paper.

Section 10 is a gloss on that principle and says essentially that merely making it available through access is insufficient, for example, on a Web site. The concern here is that if you have to give notice or if there's a statutory requirement that certain information be delivered and so on, simply posting it on a Web site with nothing more shouldn't suffice, and I'm comfortable with that. But one business, frankly, that we're starting to see growing up in Ontario and elsewhere in the Internet world is the concept of an "infomediary," somebody who makes it their business to take all sorts of information and then make it accessible to people in a very simple, straightforward way. One of the problems we're finding on the Internet is information overload, there's just too much, and so a whole group of parties is going to come into the Internet world. One currently is called an aggregator. If you do Internet banking and such, it's not beyond the realm of the foreseeable that you would have 10 or 12 different bank accounts, other accounts and so on and then you bookmark each of those, and it becomes actually a fairly complex exercise just to keep track of all that.

For instance, one of my clients is an aggregator. What they do is, they give you a single dashboard behind which they then link to the Bank of Nova Scotia, your investment adviser and so on and so forth. Really, that intermediary takes care of providing you with information, making sure you get your annual meeting notices and so on. One concept that I think would be very useful-but again if it doesn't make it into this go-round, maybe it's next year's go-round, and I'll just raise it in a generic fashion here-is this concept that you can appoint an agent to take delivery electronically of certain things for you and that may not have to be direct.

Another concept that we're seeing, for instance, in the securities disclosure area is that the Internet could be actually a very great way of providing all sorts of financial disclosure in a fair and effective way. Rather than sending you huge files that will then clog up your computer and cause it to crash, what a lot of companies are doing is saying, "Look, the information's on our Web site, so we'll post it to our Web site." But as long as they tell you in an e-mail, "The quarterly report is now available for viewing" and as long as technically it's crystal clear that you can view it, that should be enough to meet the provision test. A little bit of loosening in section 10 or a little bit of clarification that these intermediaries and agents can satisfy the point behind this kind of legislation could be very useful, so that, again, the legislation is keeping up to this rapidly changing business model.

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A couple of other points-I'm happy to take questions, if there are any, as we go along. One provision-just to jump around, because I think these are in order of importance in my own mind-if you turn to 20 and 21, particularly 21, this is a section that is a little bit unusual in that, for instance, I don't believe you will find it in the recent US legislation that just got passed. John may correct me on this, but the last time I looked it wasn't in there. It essentially allows someone who's ordering, let's say, something from Indigo or Chapters, if they make a mistake and they push twice on the number 1 and order 11 books instead of one, to correct that mistake or to get out of the deal if in fact they made it inadvertently.

These things do happen on the Internet. There's a story of a French bond trader in Paris a couple of years ago who came in in the morning, was having his coffee and was sort of leaning on the sell button on his trading machine terminal, until a colleague came by and said: "What are you doing? You're selling our position and losing money." "Oh, I didn't notice; my elbow." So these things can happen.

The concern I have with 21, though, is that it does present the prospect for abuse. So I order 100 widgets and I think about it the next day and the market has gone against me, or I'm buying some shares and the market goes the wrong way and then I think, "Oh, gee, I guess I want to get out of that." If we keep some additional onus on the user-for instance, just to be very specific, in 21(c) it talks about "on becoming aware of the error." For certain types of relationships on the Net, it might almost be time-sensitive, just as in some of our consumer protection legislation there's a cooling-off period of time now. The retort to that is, "But, George, you have to become aware of the error first."

The concern I have is that this will force Indigo and Chapters and everybody else to always have a confirmation mechanism on the site. That may not be a bad thing: "Are you sure you wanted to buy 11 books and not just one?" and so on. I'm particularly concerned that because it doesn't appear in the US statute, there will be this asymmetry on the two sides of the border and certain Canadian sites, for instance, that don't need to build that functionality into their site for US orders will find that they're now having to meet a higher standard. Again, it's not a big point, but we are standing out. On the other hand, if we do want to send a consumer protection message, then perhaps this is a useful message to send.

The alternative is to not put it in, monitor the situation and see just how many problems do arise, and then put it in if we have to. By the same token, if you leave it in, let's monitor it to make sure there isn't abuse surrounding it and people trying to get out of agreements just because they're using this as a pretext. That's one to keep an eye on.

I mentioned the US statute. Frankly, in an ideal world, because the Internet is so global, it really behooves us to be as harmonized as we possibly can with our major trading partners. As we all know-I don't know what the figure is-80% or 90% of Ontario exports go to the States. I'm as much a Canadian nationalist as the next person and I don't think we should kowtow to Washington just because they've done a thing a certain way, but to the extent we can sync up our rules, there really is some benefit in that.

Another rule in ours that's a little bit out of step is in section 3, the consent provision. If you look at the American statute, they have something similar but only for consumer sales, and yet we require this across the board. Again, the concern I would have is that for business-to-business interactivity over the Net, I would have thought that you don't really need a consent provision like this. The whole point of the statute is simply to say that information from a legal perspective is now media-neutral, and if companies are doing business over the Net they should have certainty that their agreements formed over the Internet are enforceable; so again a consideration to tone this down just to consumer situations, because you can rest assured that when Americans study this statute closely they will be comparing it for ease of doing business on both sides of the border. That will be another one that they're going to be looking at.

Two or three other quick points and then I think I'm done. Toward the back of the bill, section 29 is on biometrics. For those of you who may not be aware, I actually think biometrics hold a very important role in the Internet.

One of the problems we have in the Internet is anonymity. From the perspective of doing business, that's actually not a good thing. We really do want to know that you're Harry and I'm George and we're going to do business together. One of the ways that one can promote authentication over the Internet is through these so-called biometric devices. We've all seen the fingerprint scanner or the retina scanner in the James Bond film and so on, but these aren't just James Bond. These devices are happening and they're turning into relatively widespread use. Over the next four or five years you'll see them everywhere. In fact, there's a next-generation fingerprint scanner that doesn't just track the little ridges on your finger but tracks whether your finger is warm or not, to make sure nobody has severed it and is using it in a counterfeit kind of way. That's how sophisticated these devices are becoming.

This section 29 in the bill wasn't in the model law. I don't know exactly where it came from. My guess is that it might have been the federal privacy commissioner or somebody worried about the privacy dimensions of biometric devices, because there are some interesting issues there. When this committee looks at privacy initiatives legislatively, that will be a very interesting area to keep an eye on.

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But I really wonder whether you need to have anything in this statute about biometric devices. What I take away from section 29 is that biometric devices aren't as welcome as they might otherwise be and that strictly speaking you have to have express consent to use such a device as opposed to the inferred consent that generally operates for the statute. We will in fact have all sorts of these devices being used right at workstation level or PC level to tell who is who over the Internet. Again, if I had my druthers I'd probably scrap section 29 and leave this for a privacy statute down the road.

My final suggestion is on section 31, documents to which the act does not apply. Essentially it goes to the scope of the statute. Where is it operative and where are we saying, "No, there are a couple of documents that are so intrinsically part and parcel of a unique original-a will or a power of attorney-that we don't really want to get into the electronic version of those sorts of documents"?

I've got a couple of suggestions here. First of all, I think it's very good that the draftspeople for this statute took this list, which in the model law was right up front and set a pretty negative tone to the whole thing, and stuck it in the back. That helps. But I'd go even further. I would take this list out of the statute and put it into regulation, because I'd bet anybody around this table dollars to doughnuts that not just my generation but my parents' generation in a few years time will likely be completing their wills over the Net, that you likely will be doing powers of attorney over the Net and that law firms, for instance, will interface with clients for doing up a will electronically. You call up the screen, you enter key questions and details and then a will gets generated. Again, as long as that's done sensibly and carefully-and the regulations might stipulate some additional rules for those sorts of documents.

Again, I have every expectation in the next three or four years that a business of these infomediaries will emerge. I don't know about you, but I have a dickens of a time filing all my personal documents, my birth certificate and this and that and the other thing. Just to give you an example, what my brother does-he's a bit of a techy. He's bought a scanner for about $60. Life insurance policies, the Visa agreement you sign with the bank-all that stuff-he just scans. It goes into a hard drive on his computer; he also keeps a very important backup of it. If you really think through accessibility and understandability and consumer protection from the perspective of making things available and accessible to people, if you could actually see your insurance policy and your other key documents on a Web site that you would never lose and that's always kept up to date and so on-how many people lose their wills and so on? Yes, you keep it in a safety deposit box, but there are all sorts of people who don't. They get lost, and which one is the most recent? You will see services coming out over the next couple of years where all that will be aggregated and organized in an Internet environment. I just wouldn't want this list of exceptions to preclude our going there. Putting it into the regs and having a more flexible system, I think, would help.

Let me end on a note I mentioned right at the outset, that frankly whatever the committee does with Bill 88 in terms of revisions and fine-tuning, this is one statute that I'd encourage all of you to view not as, "Well, there it is. We've got the Electronic Commerce Act, 2000. I guess we can forget about that area of the law for the next five or 10 years, and let's move on to other things."

In my little book there's actually a request from legislators that because the Internet moves so rapidly, because the technology races ahead, because the law traditionally is conservative and reactive-small-c conservative, not big-C-it really behooves both the people in the House of Commons for their jurisdictional areas federally, as well as each provincial Legislature, to stay on top of this and, I think, to annually review and fine-tune. I don't think it will be an embarrassment three years from now, when we look back at this statute, that we'll find parts of it pretty quaint.

Again, I think the A-G's office has done a very good job of making it technology-neutral, keeping it simple. I think their phrase is that it's minimalist, less is more. But having said all that, there will simply be new challenges and new technologies to address. What happens in a number of areas, for instance in the copyright area federally, is that we're not used to doing more changes incrementally. So what happens with the copyright statute, because we know we're only going to get a shot at it once every 10 years, is that everybody kind of gangs up and gets polarized and kind of brings out the heavy artillery and raises the stakes. Then we have a really angst-ridden statutory amendment session, and everybody so exhausted that nobody wants to look at it for another 10 years.

What I'd encourage you to do here is to deal with it on a much more regularized basis-annually is not too soon-to have the Attorney General's office keep a running tab of new issues so that when you fine-tune this next year, that's not an embarrassment. It doesn't mean we didn't get it right in the fall of 2000. It just means we're being very amenable and responsive to new developments. Really, the only constant in this Internet space is that there is continual change.

The Chair: Thank you very much, Mr Takach. You have taken your full half hour, so unfortunately there is no time for questions. We appreciate your submission. Thank you for coming.

Mr George Takach: My pleasure.

The Chair: Members of committee, before we adjourn to go to Waterloo tomorrow, I did indicate to each of you that we need to discuss options for Wednesday, in that we have received a cancellation. I think there is some consensus among committee members that perhaps we deal with the two other delegations we have from Ottawa either through some form of conference call or electronic means, although it may be a little premature to do it by electronic means, or by inviting them to Waterloo tomorrow.

I'm looking to the committee for direction. Is there consensus that we perhaps cancel Ottawa on Wednesday and try to accommodate the two outstanding witnesses in another form, either by inviting them to Waterloo, a conference call in Waterloo, coming back here on Wednesday and either having a conference call or paying for their trip to Toronto?

What is the preference of committee?

Mr O'Toole: With your permission, Madam Chair, I suggest that we put those three choices to the persons who made a request to appear. In no event should 13 people be travelling to see two people. Whether it's Waterloo-maybe that may be inconvenient for them tomorrow on such short notice-we could easily have a conference call set up at their convenience. I could be in my constituency office. I participated in many conference calls from my home. I think that's an excellent suggestion.

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The Chair: We do have the technological means by which to have a conference call in Waterloo, for example. I believe the last delegate is speaking at about a quarter to 2, so we could tack on another hour to Waterloo to accommodate the two. Unfortunately, until I have direction from committee, I can't offer those suggestions.

Mr O'Toole: I move that we bring to them three choices.

Mr Martiniuk: There's a fourth choice, Madam Chair, if I may, and this would be their choice: that a written submission from them, if they deem it adequate, could be given to us. In lieu of that, I would move that the Chairman be authorized to set up a conference call.

The Chair: The only problem with a written submission is that it wouldn't be read into the record unless there's a specific request to do so and unless there's general agreement on behalf of committee that a member of committee could read it into the record if requested by the delegate.

Mr Martiniuk: A very good point. I would certainly agree to that, that it be part of the record and they be told that.

Mr Gilchrist: I think practically that's not an impediment. We've done that in the past, where it has simply been deemed to have been read into the record. It's certainly within the purview of the committee to pass such a resolution. If you're going to offer them these choices there should at least be a ranking. It seems to me, based on past practices, the first choice would be to invite them to simply send a written description of their concerns or their suggestions and offer them the guarantee that that would be circulated to all members and carry exactly the same weight as an oral submission. Secondly, if you're ranking them and you've already taken the time to go to Waterloo and you're set up with Hansard and sundry amenities, the conference call might be the next most appropriate choice. The third option, if in fact you wanted to invite them down to Toronto, should be your last resort. There's still an expense, and more than that, there's an inconvenience to those people. A conference call allows them the same opportunity. If I might offer a suggestion, to offset any inconvenience that's caused to them, you might offer them a slightly longer time for the question-and-answer period or to make their views known. Given the relative paucity of submissions tomorrow, perhaps you have that option-not going silly, but maybe give them 40 or 45 minutes. I would think that if you're looking for a motion, you should at least put a ranking to the choices you're going to give them. It protects the Chair as well, makes sure that she's seen to be doing the right thing.

Mr Kwinter: Is this facility you're talking about a teleconferencing call or just voice conferencing?

The Chair: It would just be a voice conference. We don't have the means by which to establish a teleconference.

Mr Gilchrist: Not in Waterloo. It would be back here in Toronto.

Mr O'Toole: We've teleconferenced right from this room.

Interjection.

Mr O'Toole: Yes, we have. I've been involved in it. Right from this room we had teleconferencing.

Mr Kwinter: That begs the question. If you really have teleconferencing you never have to go anywhere. You just have them stay there, you stay here, and do it all the time.

Mr Gilchrist: We'll take that as a friendly amendment.

Mr Kwinter: One of the things you have to do is contact them and tell them the situation, and in your mind know what your options are and see how amenable they are. They may, for whatever reason, feel that they did everything they were supposed to do. It was publicized that they were going to have the ability to address this committee and it's not their fault that these people have cancelled and there isn't enough interest or availability. I would certainly support a motion that gives the Chair the ability to negotiate the best deal possible.

The Chair: Are you in agreement with that, Mr Martin?

Mr Martin: I am. I'm just looking at the little brochure that we were given re the University of Waterloo Conference Centre. It seems to me that you should be able to facilitate a full-blown teleconference.

Mr Kwinter: The big problem is not at our end; it's at their end.

Mr Martin: Anyway, I'm OK with what's been suggested.

The Chair: If it comes to that, let's see what we can arrange. If you'll leave that with me, members of the committee, you know I will do the best I possibly can to accommodate the two witnesses. Thank you for your patience.

This meeting is adjourned until tomorrow; I'll see you at 12 in Waterloo.

The committee adjourned at 1736.