Madam Speaker, today we begin the process of crafting legislation to catch up with technology.
If Canada is truly to become a cyberspace world leader and carry the title of most connected nation, government must conduct itself accordingly. Indeed if a balance is struck between the privacy of Internet users and the legitimate marketing efforts of Canadian businesses, we could face a situation where Canada is the world leader in e-commerce importing.
Trust is at the very centre of this entire exercise. Internet users need to trust the security safeguards put in place by on-line marketers. Canadian industry needs to trust that legislation will permit them to responsibly do business on-line. The Canadian taxpayers need to trust that they are getting value for their money from their elected officials and that out of their work will come a comprehensive state of the art electronic commerce policy.
It should come as a surprise to nobody that Canada is poised to be one of the world leaders in e-commerce. Unlike almost every other nation in the world, our massive geography has dictated that we seek innovative solutions to draw our population closer. This should not be lost on my colleagues in the House today.
Bill C-54 is the first step in developing an e-commerce structure. In many ways it is the 21st century equivalent of the first spike. The Internet continues to grow exponentially with implications for every Canadian business, government department and indeed every Canadian resident.
It will be a privilege for me to work with my colleagues on the industry committee in a diligent and non-partisan effort to achieve responsive legislation. However, this issue goes well beyond the boundaries of the industry department. Just as the Y2K bug impacts every facet of government and what we try to accomplish in this House, so does the Internet.
E-commerce will have far more implications than just privacy issues. This government needs to come up with a comprehensive plan which addresses the issues of uniformity in the digital marketplace, on-line eavesdropping by security forces, public private on-line relationships, competition, the role of small and medium size enterprises, Canadian heritage and culture, and the list goes on and on and on.
One Canadian executive made an interesting observation on this issue and I think it bears repeating in this House. He said that a fax machine is only valuable when the rest of the world has a fax. Value explodes exponentially with membership. Extending his advice to its logical conclusion would see government treat this very carefully so as not to allow the fledgling Internet commerce industry to falter. Possibly this is legitimate advice but there are other ramifications to this.
There are industries that are immune to Internet competition. When a family in Markham decides they want to have a Saturday night barbecue, it is unlikely they will turn to the Internet to supply their hamburgers. It is probably reasonable to assume that given the choice, most people would rather step into the warmth and smell of a bakery to buy their rolls than to order on-line.
Many consumer choices remain which can be reviewed and ordered in a visually pleasing format on a computer screen. Perhaps the message here is that the butcher and the baker are safe but the candlestick maker should beware. There is no doubt that my analogy is simplistic but it does lead me to the discussion of the pending showdown between downtown and cybertown.
Incentives are a very intricate balance in the marketplace. Some are intrinsic such as the desire to be self-employed. Others can be nurtured through regulations such as those that favour the use of tax implications. The important issue to note is that there are artificial incentives created by legislation. It is almost certain that an equal and opposite disincentive is created as well. The job of legislators should be to determine what is a disincentive and debate it rationally.
Recently the federal revenue minister announced that the government is not interested in creating new taxes for e-commerce. I wish to commend him for that position. Canadians have spoken loudly and clearly that they do not have the stomach for any new taxes. Instead we should be looking for ways to cut taxes. The question we must ask ourselves is how we apply existing tax legislation in a fair, predictable, revenue neutral fashion.
At the present time a situation exists whereby online retailers, set up in Prince Edward Island as an example, ship to other provinces like Ontario. They are not required to collect sales taxes. Instead consumers are responsible to remit their own sales taxes to the provinces in which they reside.
This may come as a shock to the revenue minister so I ask him to brace himself, but by and large these taxes are not being remitted. It is not an insurmountable problem. Time and time again Canadian industry has shown its willingness to comply with the necessary regulations which allow government to collect the revenue needed to provide the services Canadians demand.
At issue is the interim situation. There appears to exist a marketplace where those who open storefronts, employ sales clerks and pay commercial property tax will also have to endure a competitive disadvantage. They are required to collect sales taxes that their online competitors need not collect. I suggest that this situation be addressed sooner rather than later. There should not exist a timetable for when tax regulations will be fair. Fairness must remain an inherent fundamental.
I have dealt with a purely domestic Internet tax issue, so now I turn my attention to taxation and the international marketplace. At the recent OECD e-commerce ministerial conference held in Ottawa much of the focus was on the principles of e-commerce taxation.
There was fundamental agreement in five areas. They included the following. The first was neutrality. This would see that taxation would seek to be equitable and fair as it pertained to both e-commerce and traditional forms of commerce. The next was efficiency. This would target compliance to ensure that it would meet the dual objectives of limiting costs in administration. Next came certainty and simplicity. This would ensure that taxation levels and collection procedures were transparent and predictable. Then came effectiveness and fairness. This would limit the potential avoidance and evasion and guarantee that the right amounts of tax were collected at the right time. Finally there was flexibility. This provision was included to assist legislators in the attempt to keep pace with emerging technology.
Fair minded, far reaching in their scope, even highbrow, all these terms could be used to describe these principles. The dilemma is that taken together the principles seek to equalize a world of incongruent tax regimes. Perhaps they could be implemented in a single nation state or even negotiated for a long term phase-in within the realm of a free trade agreement. However this is not the world we live in today.
Quite frankly there is no international formula for taxation that could possibly balance the playing field. If we were trying to negotiate such a treaty we would be beginning a long arduous process which would entail all the same pitfalls as currently are being encountered with the MAI. How do we respond to this?
The House is charged with the duty of protecting and fostering Canadian interests. As far as I can see we have to choose to be a player in a liberalized trading world or we can follow the path of protectionist policies, a trail that most assuredly leads to a dead end.
The Progressive Conservative Party, as the author of the greatest, most successful free trade agreement in the nation's history, is not about to turn its back on free trade. However we must be realistic about the competition that exists out there.
The cold reality is that Internet commerce cannot help but be brutally efficient. Price comparisons will be performed in a matter of seconds, eliminating what used to be an entire Saturday of window shopping. Price as a determinate will become the overriding decision maker on the Internet. When we understand this and couple it with our knowledge of our completely uncompetitive situation, when we compare our tax system to our neighbour's to the south, the situation is a serious one.
If the success story of the Ontario provincial government has not provided the Minister of Finance with enough evidence that tax cuts create growth, perhaps the uneven environment may spur him on. By and large regulation of the Internet has been a failure in every jurisdiction that has tried to overstep the boundaries of common sense.
On November 23, the CRTC will begin hearings into what kinds of regulations, if any, are needed for new media and the Internet. The commission has been vilified for this and has been accused of empire building. The Progressive Conservative Party believes that this is exactly the kind of exercise we must engage in. Certainly that is not to say we will support any move to censor the Internet. In fact quite the opposite is the case. The private sector must determine what the future holds for the Internet. However the public sector has a role to play in facilitating the debate.
One of the realities we must accept is that the Internet is expanding at a rate which far exceeds our ability to respond with legislation. The biggest impediment to any regulation is the fact that rules can only be imposed through national laws. Yet the medium itself is global in scope. Therefore government will have to rely on the private sector to produce new technology which individuals can use to access or eliminate specific Internet content as they see fit. Government's role will be greatly curtailed in the exercise.
The expansion of this technology that was originally devised as a research tool for academics has surpassed all of us. Recently an IBM executive referred to the phenomenon as a digital revolution and labelled its impact as being no lesser in scope than that of the industrial revolution. Like the industrial revolution the Internet and e-commerce have the ability to change the way business is done, the way governments are organized, and the way economies are structured. The major difference though is that this revolution is happening 10 times faster than the industrial revolution. Beyond that the Internet is doubling in size at a rate measured in months rather than in years.
I am certain that the CRTC will generate many worthy submissions and be provided with volumes of advice. However it seems clear that any attempts to control levels of Canadian content on the net would result in abject failure.
Instead it is time for government and the Canadian industry to work together in this pioneering venture. As model users of how the Internet can be adapted to the needs of Canadians we will have the greatest impact. Uniformity of policy from nation to nation will become a much touted idea. By responding early we have the greatest opportunity to leave a lasting Canadian imprint on this emerging technology.
The challenge before us is no less than monumental. Perhaps the most daunting realization we have to come to as legislators is the elimination of our influence. Instead of imposing our will we will have to become more proactive in our spheres of influence. The days of paying lip service to providing incentives must come to an end. There is no way to legislate others to invest in Canada. Thus we must back up our knowledge based economy with incentives and access to capital, something which the industry minister failed to do when he recently tabled the revamped Small Business Loans Act in the form of Bill C-53.
Recently the Liberal newsletter, otherwise known as the Toronto Star , offered up some free advice on how these incentives might be implemented. The suggestion was that the Income Tax Act be amended to provide incentives for Canadian businesses to advertise on Canadian Internet services.
Whether this suggestion has merit or not is a point for debate. However the overriding principle that we need to grasp and incorporate is the need to pursue e-commerce legislation with an eye to the carrot and not the stick.
The OECD estimates that by the year 2003 e-commerce transactions will reach $1 trillion, a number so large in scope it represents 54% of the U.S. direct marketing sales industry. Governments and business need to develop solutions which will make this bulging phenomenon available to all.
Computer costs have come down dramatically in recent years. However personal computers are still out of the reach of many households. If this gap is not addressed now, it will only result in a larger chasm in the future.
One of the greatest reasons for the rapid growth of the Internet is its ability to allow expression which goes right to the heart of what it is to be alive, to be human. Knowing this we cannot accept that some might be disenfranchised.
This is not a subject which should fill us with fear. Predictably many in the union movement have reverted to their Luddite ways and decried the potential loss of jobs. There is no basis for such fears. Instead the reality is that many new high salary positions have been created and in fact remain unfilled as demand continues to outstrip supply. These same positions are ones which traditionally have not leant themselves to trade union affiliation. Perhaps those in the labour movement who engage in such fearmongering should examine their own motivations. It seems that job losses are not their greatest worry but instead it is their own influence which worries them.
Other issues that need to be addressed include law enforcement for serious egregious offences which are committed over the Internet. Bill C-54 begins to deal with this issue in its amendments to the Canadian Evidence Act. The proposed amendments would create an admissible provision which defines electronic signatures. This will make it difficult for online fraudsters to lurk behind some perceived anonymity. It is also my hope that this provision will assist in the identification of hate promoters that will continue to permeate the Internet.
This issue will continue to be revisited as long as this virus continues to exist in Canada. Whether it is on line or otherwise it strikes me as ironic that tools such as the Internet, which has so much power to unite the planet, continues to provide a haven for blatant distorters of truth. I call on all my colleagues in the House to work together so we can begin the process of eliminating this plague.
Copyright infringements are a serious concern which cannot be successfully addressed by one nation. Canada needs to show the same leadership on this issue as we have exhibited in the past when it comes to protecting creative capital. A point that we all need to be reminded of, plain and simple, is that copyright violations are theft and there is a victim.
The head of the digital crime unit, the Federation Against Software Theft, FAST, recently confirmed that Internet crime is growing. The Internet is a primary tool used for software theft. It is also used increasingly for the distribution of counterfeit software and other intellectual properties such as music. It is imperative that we give law enforcement officials all the tools they need in this battle.
I have spoken to some very large picture issues regarding e-commerce. Now I would like to turn my attention to the specific provisions of Bill C-54.