Mr. Speaker, it is with great pleasure that I rise today to speak to Bill C-54. I typically speak on financial issues and I sit on the House of Commons finance committee.
I am intrinsically interested in the whole issue of e-commerce. I do not think we can deal with financial issues without considering the importance of e-commerce technology. This is particularly important when we are considering issues such as the MacKay task force because increasingly the global financial industry is being dominated by e-commerce.
We should consider how the world is changing and recognize that the changes are largely driven by information technology. We need to recognize that Canada can become a leader in cyberspace. To become that world leader and carry the title of the most connected nation, the government must conduct itself accordingly. We must be visionary. We need to strike a balance between the privacy of Internet users and the legitimate marketing efforts of Canadian businesses. If we make the right decisions Canada could be a leader in e-commerce.
Trust is at the centre of this entire exercise. Internet users need to trust the security safeguards put in place by online marketers. Canadian industry needs to trust that legislation will permit them to responsibly do business on line. Canadian taxpayers need to be assured that they are getting value for their money from their elected officials and that our work will develop a comprehensive, state of the art electronic commerce policy.
It should come as no surprise to anyone that Canada is poised to become a world leader in e-commerce. As a large country with a huge geographic mass and a sparsely populated geographic mass we have developed many ways and means to service that mass. The Canadian banking industry, for example, is largely dominated by electronic commerce and has done a capable job of meeting the needs of communities across the country.
It should not be lost on our colleagues in the House today that Bill C-54 is in many ways the first step in our developing a regulatory infrastructure for electronic commerce. In many ways this is the 21st century equivalent of the first spike.
The first spike was the free trade agreement supported and spearheaded by my party back in 1988 when members opposite tended to be more Luddite in their approaches. We understand that was not necessarily dominated by their convictions economically but instead was driven by their convictions of political survival and what was politically palatable at the time. Hypocrisy being only half a mortal sin, I guess we should be tolerant of these transgressions.
The Internet continues to grow exponentially with implications for every Canadian business, government department and Canadian resident. The industry committee must continue to work in a diligent and, I would argue, non-partisan effort to achieve responsible legislation.
The issue goes well beyond the boundaries of the industry department. As I mentioned earlier I sit on the finance committee. The issues we are dealing with today, including the emerging changes to the Canadian financial services sector, are largely dominated by technology and information technology. Just as the Y2K bug issue impacts on every facet of government, we must recognize that the legislation we are debating today will impact on every level of government and all types of business.
E-commerce will have far more implications than just privacy issues. The government needs to come up with a comprehensive plan, one which addresses uniformity in the digital marketplace, online eavesdropping by security forces, public-private online relationships, competition, the role of small and medium enterprises, and Canadian heritage and culture. The list goes on and on.
I am in the process of reading a book by David Brin called Transparent Society: will technology force us to chose between privacy and freedom . Another book I read recently was the Death of Distance which is focused on the death of distance as a determinant in the cost of telecommunications.
These global forces are shaping our economy. It is extremely important for all of us in the House to be familiar with these forces so we can ensure Canadians are prepared to prosper in that economy.
One Canadian executive made an interesting observation on the issue. I think it bears repeating in the House. He said that a fax machine was only valuable when the rest of the world has a fax and that value explodes exponentially with membership.
Extending this advise logically, the corollary would be that the government must be very careful so as not to allow the Internet industry to falter. There is a fine line between too little oversight over issues of privacy and too much oversight. A tremendous regulatory burden exists now for Canadian business. It could threaten to stifle its potential to compete and prosper in an emerging e-commerce industry if the government were not rigorous in ensuring that the costs of regulatory burden would not exceed the purported benefits of the regulations.
Many industries are immune to Internet competition. When a family in Wolfville, Nova Scotia, which is in my riding, decides to have a Saturday night barbecue, it is unlikely they would turn to the Internet to supply their hamburger buns. It is probably more reasonable to assume that given the choice they would rather step into the warmth of a bakery to purchase their rolls.
Many consumer choices remain which can be reviewed and ordered in a visual pleasing format on a computer screen. Perhaps the message is that the butcher and baker are safe but the candlestick maker should beware.
There is no doubt that my analogy is somewhat simplistic, but it leads me to a discussion of the pending showdown between downtown and cybertown. As we balance our policies to protect the interests of downtown, we need to ensure that we do not prevent Canadians from participating in opportunities in cybertown.
There is a fine line between protecting Canadians against the risk of a global knowledge based society and preventing Canadians from participating fully in the opportunities of a global knowledge based society.
Incentives are a very intricate balance in the marketplace. Some are intrinsic such as the desire to be self-employed. Some are dominated by quality of life issues. For instance, with the death of distance as a determinant in the cost of communications, communities in places like rural Nova Scotia become increasingly attractive for people to live in.
People can choose where they work and where they shop. We must recognize they do not have to be in those places physically. I would promote that this represents an unprecedented economic development opportunity for remote communities. Information technology for Atlantic Canada could be the equivalent of what the shipbuilding industry was to Atlantic Canada during the age of sail, if we make the right policies.
The important issue to note is that where artificial incentives are created by legislation there is almost certainly an equal and opposite disincentive. The law of unintended consequences kicks in as government policy kicks in. The job of legislators should be to determine the disincentive and to debate it rationally.
Recently the federal revenue minister announced that the government was not interested in creating new taxes for e-commerce. Tentatively I wish to commend him on that position. Canadians have spoken loudly and clearly that we do not have a stomach for new taxes. Instead we should be looking for ways to reduce taxes and reduce the complexity of our current tax system.
The question we must ask ourselves is how we apply existing tax legislation in a fair, predictable and revenue neutral fashion. At the present time the situation exists whereby online retailers who are set up in Prince Edward Island and ship to provinces like Ontario are not required to collect sales taxes. Instead it is the consumer who is responsible to remit the sales tax to the province in which they reside. This may come as a shock to the revenue minister so I ask him to brace himself if he is listening. By and large I suspect these taxes are not being remitted.
This is not an insurmountable problem, however. 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 Canadian 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 taxes will also have to endure a competitive disadvantage. They will be required to collect sales taxes that their online competitors may be able to escape. This situation should be addressed sooner rather than later. There should not exist a timetable for when tax regulations will be fair. Fairness must come as an inherent fundamental cornerstone in tax policy.
I have dealt with a purely domestic Internet tax issue. Now I want to turn our attention to taxation in 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 following areas.
The first was neutrality. This would see that the taxation would seek to be equitable and fair as it pertained to both e-commerce and traditional forms of commerces.
The second was efficiency. This would target compliance to ensure that it would meet the dual objectives of limiting costs and administration.
The third was certainty and simplicity. This would ensure that taxation levels and collection procedures are transparent and predictable.
The fourth was effectiveness and fairness. This would limit the potential avoidance and evasion and guarantee that the right amount of tax was collected at the right time.
The fifth was flexibility. This provision is included to assist legislators as they attempt to keep pace with emerging technologies.
These principles do not only apply to e-commerce but should apply to all types of taxation. Consistent with the Mintz report presented in June to the finance committee, we need to develop a fairer, flatter, simpler tax system in Canada and help to eliminate what I consider to be a regulatory burden, that is an egregiously excessive tax burden and a complex tax system that penalizes legitimate businesses. Fair minded, far reaching in their scope, these high brow goals could be used to describe the principles necessary in taxation to create not only fairer e-commerce but any area of business.
These principles seek to equalize a world of incongruent tax regimes. Perhaps they could not be implemented by a single nation state or even negotiated over a long term phase-in within the realm of a free trade agreed. However that is not the world we live in today. As borders become less and less consequential in global trade in many ways we need to demonstrate consistency and co-operation between countries both in terms of tax policies and tax co-operation to avoid avoidance.
At this time there is no international formula for taxation to balance the playing field. If we tried to negotiate such a treaty it would take a long time. It would be a very long and arduous process. It would entail the same pitfalls that have currently been encountered with the multilateral agreement on investment. While the agreement is not necessarily inherently bad, the process of its negotiation has been far too exclusive. As such Canadians and other citizens around the world have not been effectively engaged in the discussion.
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 will most assuredly lead us to a dead end. The PC Party is the author of or a founding partner in the most successful trade agreement in the nation's history. It 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 minutes, eliminating what used to be an entire Saturday of window shopping. Price as a determinant will become the overriding decision maker in the Internet.
When we understand this, coupled with our knowledge of our completely uncompetitive situation, we must recognize that our tax system, our regulatory burden and the inherent structural deficiencies that we have in the Canadian economy need to be addressed.
Improving productivity needs to be the goal for every government policy, not only for Bill C-54. Any government policy debated in this House needs to have as its principal goal the improvement and the augmentation of Canadian competitiveness in the global environment in the 21st century.
By and large, regulation of the Internet has been a failure in every jurisdiction that has ever tried to overstep the boundaries of common sense.
On November 23 the CRTC will begin hearings on what kind of regulation, if any, is needed for new media and the Internet. The commission has been vilified for this and has been accused of empire building.
We believe that this is exactly the kind of exercise we must engage in. 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 and the public sector has a role to facilitate this 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. In fact, if we were to promote and pass legislation that creates an excessive regulatory burden, I would argue that we would not be able to put in place a regulatory infrastructure that would be capable of enforcing legislation passed in this House or developed by a committee. We have to be careful that we not only create a regulatory structure that is fair, but that is in fact enforceable.
Government will have to rely, frankly, on the private sector to produce new technologies which individuals can use to access or eliminate specific Internet content as they see fit.
The role of government will be greatly curtailed in this exercise if we do our jobs properly. In fact, we can create a relatively self-regulating e-commerce industry that can both achieve the goals of helping Canadians access the levers of economic opportunity in the global environment while at the same time protecting their privacy.
The expansion of technology that was originally devised as a research tool for academics has surprised all of us. Recently an IBM executive referred to the phenomenon as the digital revolution and labelled its impact as being no less 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.
Let us think for one moment of how the Internet and technology have changed our role as parliamentarians. Twenty years ago we would have had as parliamentarians greater access to information than our constituents. Today our constituents have access to the same information that we have and at the same time that we have it due to the Internet and technology.
I would argue that for us to remain relevant individually as parliamentarians and collectively as a parliament and as a government that we need to become more rigorous. We will not be judged on what information we have, but increasingly we will be judged on the quality of the decisions we make with that information.
That is very exciting because I think the demand will be on us to become more relevant and to make decisions that are sound and not necessarily purely politically palatable in the short term sense, but the right decisions from a public policy perspective in the long term.
This represents a significant democratization of democracy. It will affect the way we do our jobs. It is another way that technology is changing the way we are living as Canadians and the way we do our jobs.
The challenge is to ensure that we balance these various goals, as we pursue these somewhat inherently incongruent goals, treating the complexity of what is an extremely complicated public policy issue, with the maturity that I believe our constituents deserve. We cannot relegate this to three-second sound bytes. It is not going to be reduced to that if we pursue this in a mature way.
The subject of global e-commerce should not fill us with fear. Many people would urge that we move in a Luddite way. One of those individuals is running for the leadership of my party at this juncture, but hopefully that will be put to bed on Saturday and Mr. Orchard will continue to destroy windmills or to pursue Luddite-type activities in other parties. I would suggest that he has a natural home in a party that now sits on the far right in this House, ironically.
In any case, there is no basis for the fears of the Luddites in my opinion. The only fear that can be legitimized is if governments and members of this House lack the courage to attach Canadians to the levers of a global economy which can provide unprecedented—