Special Report

Breaking down Ottawa’s new digital charter

Prime Minister Justin Trudeau and Innovation Minister Navdeep Bains at a summit to discuss stopping the spread of extremist content online in Paris in May 2019
Prime Minister Justin Trudeau and Innovation Minister Navdeep Bains at a summit to discuss stopping the spread of extremist content online in Paris in May 2019. Adrian Wyld/CP
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The federal government is proposing a new digital charter laying out 10 high-level principles that will inform future legislation on the innovation economy, but is not taking any immediate steps to regulate tech giants.

On Tuesday, Innovation Minister Navdeep Bains announced the charter, whose principles include fair competition between tech companies, personal control over data and limiting hate speech online.

He also said the government will review several pieces of legislation, including the Personal Information Protection and Electronic Documents Act (PIPEDA), the Privacy Act and the Competition Bureau’s mandate.

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Talking Point

The federal government’s new digital charter lays out 10 high-level principles that will inform future legislation and promises penalties for tech companies that don’t comply. However, there are no immediate steps to regulate tech giants, and no new laws are likely to be passed before the October federal election.

However, the charter is light on specific changes to laws or regulations, and most of the proposals and reviews underway won’t be implemented or finished before the October federal election.

It’s taken a long time to get to these principles. Industry associations like the Council of Canadian Innovators (CCI) have been calling for a national data strategy since before the 2018 federal budget. The government’s own consultations ran between June and October that year. Roundtables led by six executives selected by the government—including former MaRS CEO Ilse Treurnicht and ex-University of British Columbia president Arvind Gupta—as well as others with senior government officials attracted 536 participants, according to documents obtained through an access-to-information request. The government also received 1,293 email submissions.

“We do want to make sure that we have an ambitious data plan that speaks to both the issues around trust and privacy that [have been] expressed, and at the same time making sure that we boost innovation,” Bains told The Logic in an April interview. “And so, this data strategy will address both issues in a meaningful way.”

Consumer protections and rights

The digital charter principles state that Canadians should feel safe using online services, have control over what data they share and be able to transfer data from one company to another without “undue burden.”  

The government’s proposals for PIPEDA include requiring organizations to give consumers plain-language information about how their personal data will be used, and banning them from bundling consent into a bigger contract. It also requires individuals be informed about when and how their personal information will be used in automated decision-making systems. And, consumers must be given the right to share or transfer their own personal information.

Data portability is something fintech companies have been calling on the government to implement. Portability could help promote competition in legacy industries like financial services; the ability to transfer personal information from traditional banks to fintech companies could give consumers access to cheaper services. The government is currently reviewing what open banking regulations would mean for Canadian consumers.   

The proposals also include creating a “regime for use of de-identified data,” which would enable the creation of data trusts that would allow companies and research institutions to access stores of information and developing new data standards.

The government also said it’s studying unspecified changes to the Privacy Act, which deals with internal use of personal information.  

Competition

The charter’s sixth principle states that there should be “a level playing field,” which involves working to “ensure fair competition in the online marketplace” that will help Canadian businesses grow while protecting consumers.

As part of that goal, the Standards Council of Canada is leading a collaborative effort between government departments, think tanks, companies and industry associations to “identify priority areas within data governance that could benefit from standardization.” Notable early participants include Innovation, Science and Economic Development Canada (ISED); Statistics Canada; the Centre for International Governance Innovation; Element AI and Borealis AI.

Bains has asked the Competition Bureau and the department to review whether the Competition Act is keeping up with economic and regulatory trends including “the impact of digital transformation on competition.”

While the timeline for that is “not fixed,” the government would need to go through a formal legislative process to implement them, a senior official at ISED told reporters on Tuesday.

In December 2018, the House of Commons Standing Committee on Access to Information, Privacy and Ethics called for the government to expand the bureau’s mandate so it could look into data-driven mergers. The antitrust watchdog itself said the legislation that guides it doesn’t need to change for it to be able to investigate those types of mergers. There’s “little evidence” that the emergence of data requires “a new approach to competition policy,” it said in a February 2018 report.

Industry associations have also proposed rules aimed at minimizing data monopolies. In its submission to the consultations, the Business Council of Canada (BCC) suggested that the government require companies to make information available to others if “exclusive access to certain data undermines competition.”

Enforcement

The ninth principle states that Canadians can expect digital platforms to not foster or disseminate hate, violent extremism or criminal content. According to the 10th principle, penalties will be incurred if any of the laws or regulations set to be changed because of the charter are violated.

Announcing the charter last week, Prime Minister Justin Trudeau said during a speech in Paris that companies will face “meaningful financial consequences” if they don’t significantly improve their handling of disinformation.

On Tuesday, Bains did not specify how much the penalties will be.

The PIPEDA proposals do include enhanced powers for the federal privacy commissioner, allowing the watchdog to order organizations it’s investigating to preserve records. They would also expand the kinds of violations for which the privacy commissioner can issue fines to include consent requirements and rules limiting the use, disclosure and retention of personal information. The government also proposed “substantially increasing the range of fines,” though it does not specify what that range would be.

Current commissioner Daniel Therrien has long called for the power to fine non-compliant companies and proactively investigate firms. Liberal MP Nathaniel Erskine-Smith also sponsored a private member’s bill to allow non-compliant organizations to be charged up to $30 million, which has yet to be debated in the legislature.

What’s next

In his Tuesday speech, Bains framed the document as a starting point for further legislative changes. “The principles are the foundation for a made-in-Canada digital approach that will guide our policy thinking and actions and will help to build an innovative, people-centred and inclusive digital and data economy,” he said.

With the House of Commons scheduled to sit for just four more weeks this summer, the government has limited time to pass legislation or implement new regulations—and aside from the PIPEDA proposals, there are no specific changes to legislation outlined.

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Bains told The Logic in April that the principles would be a continuation of the Liberals’ Innovation and Skills Plan, branding that the government has used for all its talent and growth-related programs and proposals. “We’re going to put forward a very clear timeline of the legislative agenda,” he said, but noted that the plan will “require another mandate to execute.”

The CCI said it’s hoping to work with the government as it turns these principles into policy. “While our members are pleased to see the government is concerned with issues posed by data-driven economy, more work is needed to ensure data collection, use, monetization and data flows serve the interest of Canada’s economy,” said Ben Bergen, the group’s executive director.

The BCC also welcomed the proposals, but said more consultation was needed. “Today’s announcement represents a step in the right direction to update Canada’s data policies,” said CEO Goldy Hyder. “We’re ready to work with the government to make sure we get them right.”

In April, Bains said the government’s aim with the principles is to “create predictability and certainty for businesses.” Now, firms will likely have to wait until after October’s election to see what, if any, new rules they’ll have to follow.