Earlier this month, the Conference Board of Canada released a report analysing the economic costs and benefits of privacy regulation in Canada. The Conference Board’s report was prepared with financial support from Google Canada Inc.
The report is an attempt to frame the discussion relating to privacy regulation in terms of a cost-benefit analysis. The report is timely given that there are proposed legislative amendments to Canada’s Personal Information Protection and Electronic Documents Act (“PIPEDA”) pending before Parliament and given that PIPEDA should be up for a legislated five-year review.
As the Conference Board report notes, the Federal Cabinet Directive on Streamlining Regulation requires (among other things) that policy options be evaluated on a cost-benefit basis and that proposed regulations must impose the least possible cost necessary to achieve the intended policy objectives. In assessing the costs of privacy regulation, the Conference Board stated that:
- It estimated the total cost of administering privacy regulation in Canada is approximately Cdn. $3.8 billion annually (estimated using a privacy cost-to-revenue ratio derived from a U.S. study and a privacy sensitivity analysis by industry sector).
- Most of these costs are “hidden in process and administration costs, changes to business processes, and impacts on innovation and market efficiency”.
- Of the more transparent costs, the Conference Board estimated that federal and provincial privacy offices cost approximately Cdn. $40 million annually and many large Canadian companies have set up dedicated privacy offices that incur costs estimated by the Conference Board to be approximately Cdn. $67.5 million annually.