Calling it a disruptive technology with huge potential, Canada's transport minister says when it comes to self-driving cars, Canada is doing its best to try to keep up with the pace of innovation.

"From a regulatory point of view, we are running hard to keep up with this developing technology. It is absolutely critical that we do it," Marc Garneau told CBC News.

Garneau said the technology behind autonomous buses and vehicles promises to reduce collisions, cut emissions and make road transportation more efficient.

"What we don't want is to slow down this technological development, but at the same time, we have to make sure that our streets remain safe," the minister said.

The best way to do that, according to industry, is to expand pilot projects beyond test facilities.

To date, Ontario is the only Canadian jurisdiction issuing permits to groups that want to pilot autonomous vehicles on public roads. Since November, Ontario's transportation ministry has issued seven pilot approvals.

That pales in comparison to the United States, where 17 states permit testing on streets and highways. In Ann Arbor, Mi., which is one of North America's autonomous vehicle research hubs, Dominos Pizza has started testing people-free pizza delivery.

Sen. Dennis Dawson of Quebec says Canada needs a national regulatory framework to help all levels of government — municipal, provincial and federal — prepare for the future.

"The process of legislation, the process of federal-provincial cooperation is a long one," he told CBC while aboard an autonomous bus on Parliament Hill. "We're going to try to make it as short as possible because, like I said, the technology is much faster than we are."

CBC's Alison Crawford interviews the chair of the Senate transport committee on board an autonomous bus about what the government must do to prepare for driverless vehicles. 6:42

Driverless Audi coming next year

Dawson chairs the Senate Transportation Committee, which is studying a myriad of technological, ethical and safety questions associated with the new technology.

He says there are lessons to be learned from the Liberal government's promise to legalize marijuana: everyone knew it was coming, but less than a year out, no level of government has yet passed any legislation.

"The provinces and the cities have to adapt to the fact that they are coming down the road," he said.

Indeed, car manufacturer Audi is among those planning to launch vehicles as early as next year.

Spokesperson Cort Nielsen said Audi is planning to launch its semi-autonomous A8 model in Canada next fall. The car is advertised as being able to take over driving in slow-moving highway traffic and heavy congestion up to 60 km/h.

"However the technology will not be active, as the regulatory framework is not in place to use it," Nielsen explained in an email.

The new Audi A8, a semi-autonomous car that can take over driving in slow-moving highway traffic and heavy congestion up to 60 km/h. (Audi.com)

This week on Parliament Hill, international public transit company Transdev is showing off a red shuttle bus that can drive around a pre-planned circuit with no one at the wheel because there is no steering wheel.

Transdev's Canadian CEO Dominique Lemay says expanding testing to public roads outside southern Ontario would help companies such as his develop autonomous vehicles that can navigate in colder, icier and more rugged conditions.

"If transit authorities and companies like us who operate transit also can test their vehicles, then all the economy around that will be able to be developed in Canada instead of in other countries," he told CBC.

As a start, Senator Dawson says the federal government can provide leadership by encouraging provinces and municipalities to permit more testing on roads.

The federal government can, meanwhile, continue its work on some of the tricker questions arising out of the new technologies, such as a driver's right to privacy. Dawson describes a scenario in which a vehicle's computer has come to understand its driver's patterns and preferences and starts to interface with advertisers.

"When you're driving down Highway 20 and you're close to a McDonald's and they say, 'We have a special on your favourite coffee and there's a McDonald's in five minutes', it's cute but it's an invasion of your private life," he says.

The insurance industry also has a lot of questions.

Desjardins Insurance has invested $150,000 in the University of Michigan Mcity self-driving research facility with the goal of getting a jump on the future.

An automated vehicle drives on Parliament Hill during a demonstration Wednesday. (Sean Kilpatrick/Canadian Press)

Question of liability

"Who is going to be liable if something happens with an autonomous car, whatever mode it is in, as this technology advances?" asks John Bordignon, Desjardins spokesman.

"Is it the manufacturer that's going to be liable for any death, injuries or property damage, or is it still going to be the person behind the wheel".

Big questions aside, in an environment today where collisions involving drivers distracted by texting and calling are outpacing impaired driving, Bordignon says robot vehicles might be the only solution for distracted driving.

"I'm thinking that maybe 100 years from now, we're going to have people saying, 'I can't believe people were driving cars.' It could be something that significant."