Good morning. As mentioned, my name is Corinne Pohlmann. I am the director of national affairs for the Canadian Federation of Independent Business. With me today is our policy analyst, Lucie Charron, who will be supporting me through the question and answer period.
I have been in this position for about a year, and for the six years prior to that I was in Alberta as CFIB's director of provincial affairs. In my experience there I was involved in the implementation of the Personal Information Protection Act and saw its impacts on Alberta's small and medium-sized companies. In fact, until my departure about a year ago, I was a member of the ministerial advisory committee on Alberta's privacy act, providing feedback on how well SMEs were adapting to the legislation in that province.
First I'd like to share just a little bit about CFIB. We're a non-partisan, not-for-profit organization that's 100% funded by our 108,000 members, who are independently owned and operated small and medium-sized businesses from across the country. Our members come from all sectors of the economy, and they're found in all regions of the country.
You should have in front of you a slide deck. The first slide shows the profile of our members. You'll notice that our membership is a pretty good reflection of the general business population, which as you know is dominated by small and medium-sized companies.
The chart at the top of the next page illustrates the fact that more than 97% of Canadian businesses have fewer than 50 employees. These businesses represent approximately 45% of Canada's GDP and employ almost 60% of all Canadians. They also continue to create the bulk of new jobs in our economy.
As you can see on the next chart on that page, using Industry Canada findings, of the almost one million jobs that were created between 1993 and 2003, close to 80% were created by small firms, which they define as those with fewer than 100 employees.
Why do I show these to you? It's to emphasize the growing importance of SMEs and to encourage you to always think about how government decisions can impact this integral part of Canada's economy. What may seem trivial to a larger firm can be of great significance to a smaller firm. It can add more cost, confusion, and paperwork, thereby adding more stress for the average small business owner.
So what is top of mind for SMEs? The chart on the next page shows you the issues of highest priority for our members, which we collect on an ongoing basis, face-to-face, through a survey process. We then aggregate those results every six months. This information provides us with direction on which issues we need to take on as an organization.
I'd like to highlight the second highest issue of concern for Canada's SMEs: government regulations and paper burden. This really comes as no surprise when you realize that the cost of regulations tends to be much higher for smaller firms. As you'll notice in the smaller chart, this is illustrated quite well using both CFIB and OECD data. It has been supported by data out of Quebec and the United States that the smaller the firm, the higher the cost per employee to deal with regulations.
That is why we have been so pleased to see commitments being made by provincial governments such as British Columbia, Quebec, and Newfoundland and Labrador to tackle this issue and commit to measuring and reducing the regulatory and paperwork burden on business. More recently we were very pleased to see the federal government also make a commitment to a 20% reduction in the paperwork burden on business.
This leads me to the issue of PIPEDA. Our members in all provinces and territories without their own provincial law are expected to comply with PIPEDA when it comes to dealing with public and consumer information. You should know that we are not legal experts on the technical aspects of the law. Rather, we are here to provide you with some feedback on what we have learned about how SMEs have dealt with this legislation.
First, our members are consumers as well as business owners, so they're concerned about making sure their own personal information is protected. As a result, they are also conscious of protecting the privacy of their clients, customers, and employees.
As far back as 1996, we asked our members about the need for the federal government to introduce a national privacy legislation. Based on more than 10,000 responses, you will see on the top slide on the last page that our members supported the notion of a national law protecting personal information right across Canada. As a result of this finding, CFIB has never argued against the national law. In fact, we believe that for this law to be truly effective it must be adopted by SMEs across Canada. In order for that to happen, it cannot be complicated or onerous to comply with. So the focus of our work has been to ensure that the legislation is simple to understand and does not impose a significant burden on small businesses.
We do actually view PIPEDA as workable legislation from a small business perspective because it avoids prescriptive solutions and allows for flexibility in how businesses can respond to its requirements. The act understands that not every business manages huge amounts of personal information, and that the types of information can vary substantially from sector to sector, and from business to business.
We also like the balance it achieves between protecting consumers' interests while understanding that businesses need information to provide products and services. As mentioned, our members support national privacy legislation--after all, they are consumers too--but they're also business owners who may sometimes need to ask for personal information to be able to offer the public or its employees what they demand.
We also support the fact that it is a complaints-driven process. Regulations and paper burden can be stressful for small business owners, who tend to wear several hats in their business, from human resources to sales to marketing--you name it. It's usually the owner who's responsible for protecting personal information as well. We do believe that most are already doing what they can to protect personal information in their possession as a matter of good business practice. They may simply have not yet put it down on paper and formalized it.
Keeping the process complaints driven removes the level of stress for the SME owner who may otherwise fear being inspected or even fined if they've not complied to the exact letter of the law.
We also believe the ombudsman model works well. It is less intimidating for a small business owner to approach the commissioner's office to ask questions about their own privacy compliance issues.
Since its implementation on the broader private sector three years ago, CFIB has handled hundreds of calls from small business members across the country looking for direction on how to comply. To handle the questions, we've created a dedicated page on our website with links to where they can get more information. We've put together a handout summarizing their obligations, of which you have a sample in front of you. We also offer our members an online course for free on how to manage private information under PIPEDA.
While most calls came during the first phases of implementation in 2004, we continue to get inquiries on a regular basis. By far the most common calls we receive are questions on how to comply--specifically, how to put together a privacy policy for customers and for employees, and whether or not a template is available for them to use. We know a template was developed in Alberta and British Columbia specifically for SMEs, so we've been encouraging and we will continue to encourage the commissioner to consider producing something similar for PIPEDA.
Finally, you may be curious to know how well SMEs are complying with PIPEDA. While we do not have specific information for PIPEDA, we do have...members in Alberta who were asked this question in relation to the provincial legislation introduced at the same time.
On the last page you'll find a table of our findings, which were that most business members in that province, between 70% and 80%, were aware of the legislation, but far fewer had developed a formal privacy policy. The good news is that compliance is increasing, with 40% saying that they had a formal written policy in 2006, which is substantially higher than the 31% who said they had such a policy in 2005.
So what does all this mean? Well, at this point we do not see any need for substantial change to the act and request that PIPEDA be given more time so that SMEs can gain more experience with the law in its current form. Making changes at this early juncture could needlessly complicate the process and make it even more difficult for SMEs to comply. In other words, we believe more time is needed to really understand the full effect of this law on SMEs and consumers.
In the meantime, CFIB will continue to do what it can to help our members and the general small business population understand their obligations under the law.
Thank you.
