Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 7 - Evidence - Meeting of June 16, 2009
OTTAWA, Tuesday, June 16, 2009
The Standing Senate Committee on Agriculture and Forestry met this day at 5:10 p.m. to study on the current state and future of Canada's forest sector.
Senator Joyce Fairbairn (Deputy Chair) in the chair.
[English]
The Deputy Chair: Welcome to this meeting of the Standing Senate Committee on Agriculture and Forestry.
I will start by asking our senators to indicate who they are and where they are from. I will start with Senator Mercer.
Senator Mercer: I am Senator Terry Mercer from Nova Scotia.
Senator Cordy: I am Senator Jane Cordy and I am also from Nova Scotia. Welcome to our committee today.
Senator Duffy: I am Senator Mike Duffy from Prince Edward Island. It is great to see you here.
Senator Eaton: I am Nicole Eaton from Ontario. Welcome.
Senator Rivard: I am Senator Michel Rivard from Quebec City. Welcome.
The Deputy Chair: I am Senator Joyce Fairbairn from Lethbridge, Alberta.
The committee is study continuing its study on the current state and future of Canada's forest sector. Today, we are hearing from representatives from British Columbia who will discuss the difficulties, the challenges and possible solutions specific to the forestry sector in B.C.
Russ Cameron, President, Independent Lumber Remanufacturers Association: Good afternoon and thank you for the opportunity to speak to you. I am Russ Cameron, President, Independent Lumber Remanufacturers Association. I will refer to it as the ILRA.
The ILRA represents the majority of B.C.'s larger, non-tenured remanufacturers and some of the smaller non- tenured primaries. Our mission is to promote business conditions that result in the further processing of wood products in Canada, thereby maximizing the socio-economic benefit per cubic metre of timber harvested. Our members produce lumber, remanufactured products, prefab homes and anything else for which they think they might be able to make a dollar. They custom cut for themselves; they do custom processing for others. Some do some wholesaling and some do a bit of logging.
Our markets are all over the world but our primary market is and likely always will be the United States. The one thing that all our members have in common is that they are non-tenured, family-owned companies. ``Non-tenured'' means that we do not harvest public timber that has been administratively priced by provincial governments. We pay market price, in competition with the Americans and with the rest of the world, for all of our input wood fibre while the tenured companies have an assured long-term supply of administratively priced public timber.
Six years ago, the ILRA had about 120 member companies with over 4,000 employees and we were collectively doing close to $2.5 billion in annual sales of 3.9 billion board feet. In the last six years, we have had 32 member companies go out of business and those that remain are operating at about 50 per cent. We are used to having hurdles placed in front of us and, one way or the other; we have always been able to find our way over or around them. We presently have five big hurdles and this time we find that some of us can neither jump them nor go around them. In current order of severity, they are the Softwood Lumber Agreement, the wood supply, the U.S. market, foreign competition, and currency fluctuations.
I will deal with them in reverse order.
Regarding currency fluctuations, the higher the Canadian dollar, the higher its position on the hurdle list. Given there is nothing we can do about it, we just put it on this list.
The fourth hurdle is foreign competition. It is a growing problem, but we do have an advantage over foreign competitors due to our proximity to and common culture with the United States. We have the ability to compete because we can quickly deliver specialty products, complete with specialty service. The biggest problem that we have with foreign competition is that their governments do not tax their exports of value-added products going into the United States but ours does. In any event, the U.S. remains our largest market by far and, in spite of the new competition from overseas and the decision of our governments to tax our products, it seems that we will become increasingly reliant upon the U.S. market in the future.
The third hurdle is the present state of the U.S. market. You may be surprised that it ranks third instead of first, but here is the reason. In the March 4, 2004, British Columbia government report by Ray Schultz, director in the Ministry of Forests and Range, Mr. Schultz said:
Canada typically supplies . . . around 30 % of the U.S. commodity lumber market and has for decades been met with protectionist responses if that share of the market begins to grow. B.C. supplies only 1 % of the U.S. value added market, suggesting that a competitive value-added sector in B.C. has significant opportunity to grow.
Doubling our 30 per cent to 35 per cent share of the U.S. commodity market may be unthinkable, but doubling a 1 per cent share of the value-added market is not. The U.S. market is as bad as we have ever seen it and it is hurting our sales. However, given that we only supply 1 per cent of the specialty market, the potential to grab more is far greater than that of commodity products.
The best analysis of our sector was produced for BC Wood Specialties Group by International Wood Markets Group Incorporated. It is entitled, The Status and Potential of the Coastal Secondary Wood Products Industry, but a lot of it applies to the interior as well. In my view, it is right on the money.
I will give a quote that sums it up:
. . . the secondary wood products manufacturing industry needs to ``go custom, go high-end, go high quality or go home!''
The companies that are hanging in there right now are doing exactly that, coupled with an extremely high degree of service.
Our second hurdle is wood supply. The regional consolidation of the major licensees has turned out to be a predictable disaster for the non-tenured companies. The province is regionally run by four companies: Canfor, West Fraser, Tolko and Western Forest Products. In most areas of the province, independents have only one supplier for lumber, only one customer for logs and, for some products, one very large competitor that controls it all.
The word ``independent'' is a misnomer in the fact that we are dependent on the tenured companies for our wood supplies. Unfortunately, the tendered companies are becoming less and less reliable in granting non-tenured companies access to the public wood fibre they control.
The first big hurdle is the Softwood Lumber Agreement of 2006. This dispute is and always has been about renewable tenures and administratively priced stumpage. The U.S. system is based on privately owned timber while the Canadian system is based upon publicly owned timber. There is no right or wrong system. The systems are simply different, but these differences lead to problems when markets are soft.
In the U.S. market model, if the market goes soft, limber prices fall and the mills shut down because the owners of timber are reluctant to sell their timber at lower prices. Normally, the resulting reduction of lumber supply would apply upward pressure to prices and balance would eventually be restored.
The Americans feel that the Canadian system prevents these economic fundamentals from working. When the market goes soft and lumber prices fall, Canadian provincial governments lower the price of timber through various administrative pricing formulas and there are fewer tendencies for Canadian mills to shut down. Instead of creating upward price pressure, the Canadian share of the U.S. market simply increases. As long as we use this system, the objective of the U.S. coalition will be to increase the price of or lower the supply of Canadian lumber through duties or agreements that have the same effect as duties.
By signing the Softwood Lumber Agreement in 2006, the Canadian government effectively took over the role of the U.S. Department of Commerce in ensuring that our non-tenured value-added products will be uncompetitive in the U.S. market. This problem could be solved in a heart beat if all the Canadian tenures were handed in and everyone bought their wood on the open market as we do.
The coalition indicated in its last proposal that:
The settlement accord should provide that a province's adoption of fully open and competitive timber and log markets would automatically result in lifting of interim measures for that province. Absent fully and open competitive markets however, the nature of criteria on the basis of which interim measures would be reduced or lifted remains in question.
We are realists. We understand that it probably will not happen. Tenured companies will not hand in their tenures and compete for fibre. That is fine if they determine that the financial benefit of retaining renewable tenure and administratively set stumpage is greater than the penalties they must pay to retain it then it will make sense for them to pay the penalties. That is clearly what they decided to do and we have no problem with that.
Where we have a problem is when those of us without tenure that must buy our wood on the open market are forced to pay part of the cost of their decision to maintain the status quo. If the benefit is there, so should be the cost of maintaining it.
I do not know what you can do about it. The Softwood Lumber Agreement prevents Canadian governments at any level from doing much of anything at all. I can throw a few ideas out, most of which you will not be able to do. You will have to wait until this current agreement is done and see if we have another round unless the mountain pine beetle takes care of it for us and we do not have the fibre to ship.
Foreign competition and the U.S. market both require that you remove the tax and quotas on the products of non- tenured companies. Somehow, we have to prevent further consolidation of wood supply because that has damaged us.
You have to restore the eligibility of non-tenured companies to bid in competitive timber auctions. We are disqualified from doing that unless we agree to pay tax on heat, light, insurance and everything else.
You could require tenured companies to harvest the public timber in their control before allowing them to bid in competitive timber auctions. Those of us that choose to log — that is probably the minority — find it difficult to compete with the major licensees in timber auctions. We have to do that because they are not harvesting the wood already under their control.
You can also help First Nations' wood to reach the market, which I am sure Mr. Atkinson will have much to say about. We ask that you continue to manage log exports. Some level of log exports is necessary in some species and grades, but they need to continue to be managed.
Regarding the Softwood Lumber Agreement, one possibility is perhaps to renegotiate for value-added products to go south in exchange for U.S. plants using Canadian fibre and getting that fibre to the U.S. without paying the $75.
You could give unlimited quota to the value-added products for the non-tenured companies in provinces on the quota system. That has a number of benefits that I can expand on if you like. Most important, exclude non-tenured companies from any of these penalties that we are incurring in the next round of negotiations in order to maintain tenures and administrative pricing.
Keith Atkinson, CEO, BC First Nations Forestry Council: Good afternoon. Thank you for inviting me here today. I am from the Snuneymuxw First Nation in coastal British Columbia. I am here as the CEO representing the BC First Nations Forestry Council.
Our mandate to advance BC First Nations Forestry interests in British Columbia comes directly from the First Nations Leadership Council whose members represent the political interest of all B.C. First Nations. Our members include those First Nations inside and outside of the treaty process.
I would like to begin by briefly summing up the current legal and political situation regarding our First Nations. As some of you will know, many favourable Supreme Court decisions over the last 12 years starting with the Delgamuukw decision in 1997 that clearly states that Aboriginal titles and rights do exist. There is an economic component to title. Aboriginal peoples have a right to harvest timber for personal use.
I would like to recognize that today is an historic day with the passing of Bill C-41, the Maanulth First Nations Final Agreement. It is a tremendous movement on the negotiating side for the province.
Further to these legal decisions, treaty negotiations and in the spirit of cooperation in the immediate wake of the Kelowna Accord, the Province of British Columbia and the First Nations Leadership Council developed and signed their own accord, the New Relationship. They have since worked to develop new approaches for consultation and accommodation, address Aboriginal concerns and reduce uncertainty, litigation and conflict in B.C.
This process has produced commitments by B.C. to develop a new government-to- government relationship based on respect, recognition and accommodation of Aboriginal titles and rights, to reconciliation of Aboriginal and Crown titles and jurisdictions. First Nations in the province also agree to establish processes and institutions for shared decision making about land and resources and for revenue and benefit sharing.
One of the first tangible results of this new relationship was the funding and incorporation of the First Nations Forestry Council in 2006. In its three-year history, the BC First Nations Forestry Council has become the leading advocate for First Nations on B.C. forestry issues. It provides leading advice and support programs to help our communities deal with governments. It is a generator of economic programs such as the Wealth from Forests project. It works with government partners to address the affects of the mountain pine beetle. It also pursues new markets — for example, through trade missions to China — economic development, diversification, capacity building, skills development, marketing and branding.
When one examines the causes of the current forestry crisis, there are two leading factors in British Columbia that need to be addressed today: the global crisis driven by an economic bottom line; and inadequate forest management practices, including the lack of development of diversified wood products.
There are 204 First Nation communities in British Columbia of which the vast majority are forest dependent and 160 have forestry tenures. We now hold annual cuts of approximately 6 million cubic metres. A total of over 40 million cubic metes are under our control currently. They have suffered from the collapse of the forest industry. However, they can play a major role in its recovery.
One of the biggest challenges facing our communities is accessing and participating in provincial and federal government funding and programs. Many of our communities lack the capacity to navigate the application business planning processes, which tend to work against First Nations anyway because they do not address the reality of the impoverished situation of the majority of our communities.
One of the advantages offered by the First Nations Forestry Council to our communities and to government is the organization's ability to serve as a single portal for the exchange of information between the two, and for accessing the administration of programs, funding and other resources. However, this is easier said than done.
In the case of federal funds that could be accessed, these monies are often spread across a variety of federal departments — Indian Affairs, Natural Resources, Western Economic Diversification and so on. As a result, we find ourselves being bounced from minister to minister and official to official.
For example, our efforts to receive adequate funding to address the mountain pine beetle's impact over the past few years has seen us whipsawed between several departments. Nearly three months ago, we thought we had finally made a major breakthrough when we received the personal support of Natural Resources Minister Lisa Raitt. Our proposal was for $60 million over three years to create jobs in our communities and nearby non-Aboriginal municipalities by engaging in forest fuel management projects such as clearing of firebreaks.
Minister Raitt directed us to her colleague at Western Economic Diversification Canada, the Honourable Lynne Yelich. We submitted our proposal immediately and referred to Minister Raitt's backing of the project. To date, we have not received a reply from Minister Yelich. Instead, we were forced to start over in late May and produce a new submission using the new criteria and format developed by Western Diversification for community adjustment funding.
We reduced our request to $24 million over two years, but we have been told this is too high, even though this amount would fund numerous projects, provide jobs and economic stimulus in approximately 70 First Nations communities and in many non-Aboriginal municipalities. We are currently working in the process with Western Diversification on this proposal.
Meanwhile, we continue to bounce from department to department in our efforts to establish an economic development project that would, among other things, build capacity, business skills and opportunities in First Nations communities. The initiatives include helping our communities accessing the demand for lumber created by First Nations housing projects; creating value-added wood projects; developing non-timber forest resources and products; and creating new markets.
There have been successes. The forest fuel management working group consists of our First Nations Forestry Council, First Nations Emergency Services Society, the B.C. Ministry of Forests and Range and the federal departments of Indian Affairs and Natural Resources. This group has done much good work in recent years to address the devastation caused by the mountain pine beetle, and has managed to administer $12.2 million to communities to perform field management and wildfire safety work. In our early estimates, this is approximately 10 per cent of the work that needs to be done for reducing the unnatural risk of fuel loading.
We still face enormous obstacles. We have the resources waiting to be developed. We have plans drawn up and successful programs already in place that demonstrate the feasibility of our proposals. What we do not have is a system that allows us to work effectively with governments to access funding and partnerships.
Another major issue is that despite progress under the new relationship with the B.C. government, First Nations in B.C. continue to be excluded from decision-making processes that directly impact the management, use and access to lands and resources within their territories, and continue to be denied access to a fair share of the resources and revenues being derived from their territories.
We continue to see the federal and provincial governments take it upon themselves to negotiate and develop strategies on our behalf. For example, in 2007, the B.C. government developed a bio-energy strategy designed to reinvigorate, retool and provide new opportunities in the forest sector to take advantage of new markets and find uses for wood without consulting First Nations. In 2008, the federal government developed a new vision for Canada's forests without meaningful consultation or involving us.
Unresolved titles and rights undermine certainty and investment in B.C. This issue has been a major obstacle to success in the past and a contributing factor to the current ill health of our forest sector. Resolving this issue is the main long-term key to the future success of the forestry and other resource sectors. It will create certainty and establish rules, creating market confidence, promote investment in mills and in an industry that needs to be reinvented to take advantage of new and emerging markets and opportunities.
Another key to increasing the competitiveness of the forest industry in Canada is the access to free and open markets for wood products. The federal government needs to better involve and engage First Nations in British Columbia in the development of policies and practices pertaining to trade and economics and sustainable forest management.
The Softwood Lumber Agreement directly affects us as it involves resources being extracted from First Nations territories. It has an impact on our access to markets and fails to recognize the cultural significance of forested lands and resources to Aboriginal peoples.
Honourable senators, to paraphrase Henry Ford, we are not here today to find fault; we are here today to find a remedy. With this in mind, I would like to conclude with the recommendations we would like to see in your report.
First, the federal government should embrace the principles of the New Relationship and efforts to harmonize and fully engage First Nations in the forest sector through shared decision-making and jurisdiction regarding the access to and use and management of forest resources and natural resources in general.
Second, the federal government should increase, streamline and consolidate its funding programs and support measures for Aboriginal peoples in Canada. Forest-dependent First Nations in B.C. need not only opportunities, but also the capacity to seize them. The federal government needs to remove obstacles and open doors to help them get the support they need.
Third, the federal government should demonstrate good faith and commitment by joining the vast majority of the world's nations who have signed on to and support the United Nations Declaration on the Rights of Indigenous Peoples. It should also develop policies and national legislation to implement provisions in the United Nations Convention on Biological Diversity that calls for the involvement of indigenous peoples, which recognizes the importance of the use of their traditional knowledge in the conservation and sustainable use of forest resources. The First Nations Forestry Council is grateful to have been invited and looks forward to future participation in policy development at this level.
Thank you for inviting me here today. I will do my best to answer any questions you might have.
R.M. (Rick) Jeffery, President and CEO, Coast Forest Products Association: Thank you for the invitation to be here today.
Just by way of a quick introduction, I am President and CEO, Coast Forest Products Association. I represent the large pulp and paper, logging and lumber manufacturing companies on the coast of British Columbia.
I have 26 members. We are responsible for 60 per cent of the logging, 80 per cent of the pulp and paper production and about 80 per cent of the lumber production. We employ directly 12,000 people up and down the coast, and another 24,000 people are indirectly employed. We are the backbone of rural coastal communities in British Columbia.
I might add that those numbers are relevant when we are operating. Today, we find ourselves operating at about 25 per cent of our logging capacity, about 43 per cent of our lumber manufacturing capacity and approximately 60 per cent of our pulp and paper capacity. I will talk about that in a minute.
Let us get to the heart of the matter. There are two challenges facing the forest industry on the coast of British Columbia and across this country. One is the immediate crisis that we see before us, which is being caused by a collapse in U.S. housing that has led to a global recession. The second challenge we face is getting the policy set right to capture the first of future opportunities of this industry — and this industry has many opportunities to capture.
These challenges are linked and how we solve our short-term crisis and the measures we put in today, will build the road that we need to follow to capture the future, or the road that we will travel the future on.
Let us talk about the immediate crisis.
Let us be truthful about this: this is market-driven. There are no markets for our lumber; there are no markets for Mr. Cameron's remanufactured products; there are no markets for the pulp and paper products. Unless the Government of Canada in its largesse wants to start buying all of our production and warehousing it somewhere, you will not solve the problem. We have to do the things we can to bring markets back and encourage market diversification. Any short-term relief from this is truly an illusion.
There is little that the federal government can do about today's market crisis, but you can do a number of things to help us capture the opportunities that lie before us. Those are the things I would like to discuss.
First, we need to look after our workers and communities. They are in a whole world of hurt across rural Canada. We have a $1-billion Community Adjustment Fund that was announced in the last budget. As Mr. Atkinson has eloquently put to you, we cannot access that money today through Western Economic Diversification as an industry, and it is our workers that we are trying to put back to work. It is the lands that are essentially under our care and control, although some of them are under Mr. Atkinson's care and control and even fewer under Mr. Cameron's, because of the design of the program. I will harken back to the first tranche of community assistance funding that came a couple of years ago. One hundred twenty-nine million dollars of that made its way to British Columbia. It is the only province I know that set up a community development trust and used that money transparently for the purposes that it was given to them. We had a very good infrastructure setup in the province. The program had been designed in consultation with industry, unions and government. The money flowed well and got to where it was intended.
For the second tranche of money announced in the last budget, for reasons that are pretty clear — that is, the federal government was not pleased with the way the provinces other than B.C. had disbursed it the first time through — it was decided to run this money through the regional economic development corporations they have and hence we now have a problem. Unfortunately for our workers and our communities, that money does not appear to be flowing to them easily and we are sitting on the outside. There are softwood lumber implications about how to flow that money, but we worked that through the community development trust last time. It is not working to this point in time.
The second thing is EI. It is a political hot potato; let us throw it around. We have a variable system or a system that is supposed to be adjustable to the particular needs of the unemployed. In this case, forest workers across the country have been hit in a manner that sees them now running out of benefits or not having enough hours to get their benefits, so they are not being helped by the system.
I do not want to tread into the murky waters of federal politics, but if you adjust and tweak the program and you want to help forest workers, you must look at what forest workers need and not get caught up in how to use this to engender the population to elect you or whatever.
The Deputy Chair: That is exactly what we want to hear.
Mr. Jeffery: These people need help and they are not getting it. A coalition has written Diane Finley asking her for some specific things, and we will continue to work with her department in that regard. If you can help us along there, that would be useful.
The other big issue today is black liquor. That issue emanates out of the United States where they are subsidizing their kraft chemical pulp and paper producers through an alternative energy plan. Our government is about to announce a $1-billion response to that plan. That is good except that when government decides to intervene into the marketplace, it creates winners and losers, so you will have winners and losers out there. Most important, in my part of the world, is a company named Catalyst Paper, which has both thermo-mechanical and kraft pulping operations. They have closed their kraft pulping operations because of markets; ergo, they will not benefit from this program whilst their competitors will. We need to ensure that this black liquor program will create a level playing field and that it minimizes unintended consequences.
Credit remains a big issue in our world. Where profitability and net earnings are elusive, credit is hard to get and investment is hard to get at the best of times. In today's world, it is even harder to get. We have to say that the macroeconomic policies that the government has brought forward are reacting to uncharted waters. Because they are uncharted waters, it is hard to say whether these stimulus plans will work.
We will note that the Bank of Canada is doing yeoman's work to try to help us along the way and is being very innovative. We have to keep in mind that without that credit, the ability to invest in innovation and in our future, whether you are Mr. Cameron or Mr. Atkinson or anyone else, is severely compromised. We need to keep our focus on that.
Those are the immediate issues that face us. I would like to talk about the things the federal government can do in the short term that will help us through the short- medium- and long-terms. They are focused mostly around improving the business conditions under which the industry operates, which helps us improve our competitiveness. The more competitive we are, the more likely we are to create sustainable long-term high-paying jobs. If we are not competitive, then you will see a continuation of what is going on today.
First, notwithstanding the viewpoints of my colleagues from British Columbia, the Softwood Lumber Agreement is a critical international treaty that needs to be maintained. Without it, the industry will be facing crippling anti- dumping and countervailing duty charges by the Americans. If you think we are in a crisis now, you would think that this is nirvana. We need to keep softwood lumber and the state of that treaty in mind at all times.
Second, we need to extend accelerated capital depreciation to support investment, to facilitate investment, to allow us to be first out of the blocks when the markets turn. That program currently goes on two-year cycles. We would like to see it on a longer period so that people know it is there so that when they make the investments they know what kind of capital write-offs they can do.
Third, we need to fund innovation. Right now, the Scientific Research and Experimental Development Tax Credits only apply when companies are profitable. Guess what, folks; we are not profitable so we are not investing in research and development today, or tomorrow, for that matter. We need to ensure that those research and development tax credits are workable and available so that we can start product development or continue product development, market development and those kinds of things that are needed to drive innovation in the industry.
Fourth, we need to get the role of forest products right in our climate change, greenhouse gas carbon equation. We are looking at what our neighbours are doing to the south. British Columbia is involved in the Western Climate Initiative. We are developing protocols for offsets and those kinds of things. We need to ensure that we recognize in those systems as we build them, that forest products and paper products store carbon. They are a sustainable carbon neutral source of energy. In order for Canada and our industry to benefit from our forests and our forest products industry, we have to get this policy piece right. It has a million moving pieces and we only have control of a few of them. We need to be diligent; we need to be monitoring it; we need to have our best minds on it, and we need to get it right.
Fifth, the federal government can play a role in transforming the industry into a greener industry and a green environmental industry by providing equal types of incentives as provided to other alternative energy producers, like wind farms, solar and so forth. The biomass industry has a huge potential to drive green energy production.
However, we again have a skewed playing field that does not treat us the same and we need to rectify that situation. That will go a long way in enabling this industry to transform itself, especially on the pulp and paper side.
Sixth, you need to prioritize and extend the marketing programs that you have in place. There are the Wood First Program, the Canada Wood Export Program and the Value to Wood Program. These important programs are matched by provincial government dollars and industry dollars. In partnership, the three parties put money into these activities. These activities help us open markets in China.
I am the chair of the Canada Wood Group, which is an organization of associations from across the country. We have offices in Tokyo, Shanghai, Beijing, Seoul, Brussels and London. These offices are there to ensure there are no non-tariff trade barriers in place and that our products can be used in those jurisdictions. We also promote and develop markets, which is critical for our going forward. As we have seen, being too dependent on the United States market is not a good thing. Those programs are critical to helping us capture those opportunities.
We also need to fund innovation or, as we like to put it in the industry, fund the ability for us to take things from the laboratory to the marketplace. It is a hard road to get there, so the federal government can play a role in pre- commercial research and development product development in concert with the industry. We do that through FPInnovations, UNBC, Laval University and a number of places across the country. We have good people and good scientists. We need to capitalize on those people to drive that agenda. That is particularly important on the coast of British Columbia, as we move from old growth forests to second growth forests because in those second growth forests, the new generation of wood products will be key to the development of those forests. If we think we will take those forests and make them into two-by-fours and compete, that is the wrong business model and we will fail.
Eighth, British Columbia has a wood first policy. All buildings being built by or for the provincial government will be required to have a wood component. We urge the federal government to do the same thing. Again, from a greenhouse gas and carbon perspective, it is a good thing and from a product development perspective, it is a good thing.
The non-residential market is a big marketplace of which we currently capture 6 per cent. If you can think of strip malls made out of cinder blocks and steel girders being replaced by buildings made out of lovely, energy efficient wood, then we are growing the marketplace and making the pie bigger for our products. That is key. A wood first policy by the federal government would go a long ways to helping that along.
Last, Mr. Atkinson spoke eloquently about the challenges around First Nations. In our world in British Columbia and in the forest business sector in British Columbia, until we find a win-win solution where our First Nations share in the economic development of the industry, we will not succeed. We need to figure out how to get there. Mr. Atkinson mentioned a number of noble initiatives that need to be looked after. We are working with our provincial government and would love to work with the federal government to find those win-win solutions.
There is a great future for this industry in this country. There are demand shocks out there, from climate change, things like the mountain pine beetle, to increased demand for sustainable forests and prohibitions against illegally logged wood that are taking timber and lumber wood off the marketplace.
We have the greatest wood supply in the world. We have the highest level of sustainable management, certification and protected areas in the world. We have the greatest people in the world. We have great expertise, knowledge and we have a culture of manufacturing forest products. If we capture all of those things and focus them, we truly have a great future.
The Deputy Chair: Thank you very much. I thank all of you. You have been very astute in bringing forward your exact concerns, which is what we need to hear. We are very glad you came.
Senator Mercer: Thank you, gentlemen, for appearing. I do appreciate your time. I do not know where to begin because you have raised so many questions. I will try to address a question to each one of you, but if the others would like to comment, please feel free because most of the questions apply to all three of you.
I found one supporter of the Softwood Lumber Agreement and two who are not so strong on the support of the agreement, which is interesting.
Mr. Cameron, what is the level of tax that we put on your export products to the United States? You said that your competitors, who I assume are from China, India and Indonesia, do not tax their export products.
Mr. Cameron: The Softwood Lumber Agreement taxes our products 15 per cent going into the United States. Given that we are dealing in high-end value-added products, it equates to $75 per thousand on a $500 cap because we are almost always over the cap. It puts us $75 offside with our U. S. competitors. The concept of first mill is not that useful because there are very few American value-added guys that use Canadian wood. They are using U.S. wood, for which they do not pay any tax. The $75 that we have to pay if we manufacture our wood in Canada can be avoided if the products are manufactured in China, for instance.
We found that there is a fair bit of wood that used to be remanufactured in British Columbia. It goes over to China, it is remanufactured over there and it comes back to the United States. That $75 per thousand provides what you might call a ``freight subsidy.'' It will pay the freight on getting the wood to China and back to about Hawaii, and then you have to cover the rest of it on the lower labour rates in China.
Although I am certainly no fan of the Softwood Lumber Agreement and I wish it were never signed and consider it to be not a good deal, one of the things that it prevents you from doing is cancelling it. Mr. Jeffery is right; we cannot tear it up. The coalition just says to my face, ``Do that, and we will have 30 per cent to 40 per cent anti-dumping on you and some amount of countervailing duty.'' They do not even bother mentioning a number.
Senator Mercer: You mentioned managed log exports. It always amazes me that we export the logs to some other place where they do the value-added stuff. They then ship it back and we rush off to Wal-Mart, Costco, or The Bay and buy it back.
Mr. Cameron: In my view, if I had my way, if I were king, there would not be any log exports to the United States at all. However, I believe that we are in a situation where there are many stands that are not harvested because they have too high a percentage of hemlock and balsam, and some of that has to go.
Senator Mercer: Are these quality logs? Are they pine beetle affected logs? Are they first stand logs?
Mr. Cameron: They are good logs.
Senator Mercer: We cannot find anybody to whom we can export the pine beetle logs.
Mr. Cameron: A few companies that build log houses do not mind them because they are nice and dry, so they can build good log cabins out of them. Most of the log export in B.C. is off the coast, and we reluctantly acknowledge that some level of log export is necessary. We would like to see it confined to preferably hemlock, balsam and the lower grades.
The tough question is, if you do not allow some degree of log export, then a guy looks at a block of timber and says it does not work. If you allow it, then maybe 15 per cent or 20 per cent of that block will be exported, but it leaves the other 80 per cent to 85 per cent in B.C. for local consumption.
Mr. Jeffery: I represent manufacturers. We are not terribly interested in exporting logs. However, we should be thinking about diversifying our forest products' basket of goods and that is everything from salal to mushrooms to logs to lumber to pulp and paper to energy and to carbon credits. To restrict one thing or another does not make any sense to me.
You should also be aware as federal government folks that your sole jurisdiction in this area is on private lands only, and they are private lands pre-1906. British Columbia is the only province in Canada subject to federal log export restrictions. Such restrictions do not apply anywhere else in Canada. It is an artifact called Notice 102.
We find it a little perverse that one region of the country should have its logs restricted from export while Quebec, Ontario and the Maritimes can export all the logs they want.
Senator Mercer: Welcome to Canada. We do find ways to complicate simple things.
Mr. Atkinson, you made a quick reference to the Kelowna Accord. I was a big supporter of the Kelowna Accord. If it had not been scrapped, would it have changed your situation? Would you be better off today? I may be exposing a good program to some criticism. Would it have helped you through what we are going through now?
Mr. Atkinson: Unfortunately, my time with the First Nations Forestry Council at a political level only began a year ago, so I was not involved in the Kelowna Accord. I do not think I could properly answer that question.
Senator Mercer: You did make a statement, however, that First Nations have been excluded from decision making. Is it any different than it always was? I look at your colleagues sitting with you; is the decision making any different for them, excluding not just First Nations? I am guessing and I am looking for their answers that everyone feels excluded from the decision making.
Mr. Atkinson: Yes, and it is not any different than where we have been in the past. Some of the agreements, the way First Nations have organized themselves under the leadership council in bringing together our main political bodies, is a tremendous advancement for First Nations leaders. It has been recognized by the province under the New Relationship, and that is part of what is moving us forward. I think with the strength of that kind of leadership being shown, we want to see the federal government acknowledge it and participate at that level as well.
Senator Mercer: You mentioned that Minister Yelich has not responded. She is the Minister for Western Economic Diversification. I was hoping my colleagues opposite might have made a note of that and they will have an opportunity —
Senator Eaton: We are not partisan.
Senator Mercer: I understand that, but you will be in a meeting with her tomorrow that I will not be in, which will be partisan. You might give a little nudge to her. It would be nice to see if she would respond to those folks.
I have never been a big supporter of the Softwood Lumber Agreement for the very reason of the money left on the table and not the money that was taken. We have done it to ourselves again; we are funding the guys on the other side who will challenge us as we go along.
Again, this is like your problem with the different legislation concerning the exportation of logs. It amazes me that we have done this. Mr. Jeffery, how do you reconcile the money that was left on the table?
Mr. Jeffery: That is water under the bridge. That was the cost of the deal. There are many positive things in the deal. Some of that money was redirected to the binational panel and the panel is using the funds for good works in forestry. That was the deal. No one liked it, and we all held our noses.
The fact of the matter is, in response to your earlier question, the effective tax rate that a coastal producer pays today under the agreement, which is 15 per cent, is actually between 7 per cent and 11 per cent, depending on the product mix. That is because of the high value cap and those things.
That is a lot cheaper than the 40 per cent that we would probably be looking at. I cannot imagine if we had won the case, gone on and then all of a sudden had this crisis hit us, where we are selling lumber into the United States at one point for $128 per thousand board feet. That is way below the variable cost of production, so they would have a case for anti-dumping. They would bring that case against us, and we would be paying huge duties today. In retrospect, it was good that we signed the deal and the $1 billion that we left down there was not such a bad deal.
Senator Mercer: To all three of you, are you aware of a new government program — I met with officials today — that I understand is just coming into effect, the Operating Line of Credit Guarantee? It is a new program of the BDC where four lenders — the Bank of Montreal, RBC, Scotiabank and Desjardins — will extend a line of credit and it will be backed by a government guarantee. Are you familiar with that program? Everyone mentioned the difficulty of access to credit.
Mr. Cameron: I saw the briefest mention of that the other day.
Senator Mercer: I would follow it up with the Business Development Bank, and there are several branches in British Columbia.
Senator Eaton: Mr. Atkinson, a while ago, we heard from an interesting First Nations PhD student who was talking to us about building community-run forestry products. Have you looked into that or thought about it? He was talking about extracting not only wood from the forests but other products as well.
Mr. Atkinson: Yes, one of our main programs with which we have had success over the last couple of years began as a wood products technical support program. It is primarily capacity building support to our communities where we bring money. It was sponsored by the British Columbia Ministry of Forests, Indian and Northern Affairs Canada and Western Economic Diversification. We partnered with FPInnovations with their expertise and value-added consulting support and made that kind of expertise available to our communities that wanted to get into remanufacturing value- added concepts.
Senator Eaton: Have you put together any pilot programs involving community-based forestry industries? I ask that question because I have found so often in this country that we create pilot programs at one end but no one talks to anyone.
Mr. Atkinson: There is a handful of First Nations that hold community forest licences, one of the small land-based tenures in B.C. They are managing a fixed land base of wood. We are supporting them in the development of remanufacturing opportunities for value added use of wood that comes off those lands. Our role is one of capacity building across the spectrum for our communities. We are trying to support the communities and the best practices of the woodlands and tenure management for logging practices, followed by the value added use of wood, which we have begun. It is working and we wish to continue it and to provide that support.
We worked with about 37 communities over the last couple of years. Our largest role was about getting a sawmill going. They wanted to get a small, portable sawmill going in the community because they had access to fibre. They wanted to do more with it and create jobs and do things in the community. There is a stumbling block there with the capacity. We were linking with FPInnovations to help us get through those obstacles and to see how to move forward. The third piece that evolved immediately was this: What will you do with those products? Where will you sell those products? That is the problem in B.C., as Mr. Jeffery pointed out, namely, we do not have the marketing and the branding. We are trying to develop a program to find where the value of First Nations branding of products might fit into the landscape and we are working with the marketing initiatives of the province to get our communities involved.
Senator Eaton: What about education? Another thing that was raised by some of our past witnesses was that First Nations do not have the education or the support they need in getting more forestry education combining natural and academic knowledge.
Mr. Atkinson: If I hear you correctly, it largely relates to our incorporation of traditional knowledge and the values and principles that our communities hold and how that can work on the landscape with the Western science model of forest management.
Senator Eaton: You do not create a parallel system but a system with bridges.
Mr. Atkinson: That is right. From the First Nations Forestry Council's perspective, we are trying to partner with groups like UBC's faculty of forestry, where we have a protocol. We are working with them and with the provincial forest sciences program. We focus on harmonization strategies. That is, how do we harmonize and bring in First Nations' traditional knowledge to the Western science models; how can they coexist; and which are the best models to move forward?
Senator Eaton: You talked a lot about government. I can see how frustrated you are that you are not consulted or that they come in and impose something on you. Do you think that is a matter of evolution in that it has been done one way for so long that it takes a generation to evolve methods of dealing between the two?
Mr. Atkinson: I truly hope so. I am part of a very small crowd of First Nations professional foresters acting in B.C. I am a strong advocate to having more First Nations youth engaged in the traditional forestry, as well as trying to link and capture the traditional knowledge from our elders. As time marches on, and with the breakdown in our social fabric of language — that is, with the loss of our language and trying to maintain that traditional knowledge — we are trying to find ways to fund that kind of research.
As a First Nations forester, I am outweighed by my Western science knowledge. I have gone through kindergarten and grade 12 and obtained my university degree at UBC. That part of my education was focused on Western science theories and models; my partial education from my elders in my community brings me my First Nations values.
We are trying to bring that balance into the whole education system. For example, this fall, UBC's faculty of forestry is starting an Aboriginal and community-based curriculum. The First Nations Forestry Council is working hard, along with many of the First Nations foresters in the province, to try to influence it and bring that harmonization into that kind of training. The future is definitely about co-management, recognition, sharing and finding the best practices that will work on the landscape.
Senator Eaton: I hope you end up sharing your best practices across the country.
Mr. Jeffery, you were talking about wood first. In this country, that seems to be an obvious thing. You obviously represent a powerful association of people. What is your association doing to help themselves?
Mr. Jeffery: I am not sure I understand the question.
Senator Eaton: British Columbia has a wood first movement, which is a wonderful thing. Are you working with other associations across Canada to promote those initiatives in other provinces?
Mr. Jeffery: Yes, absolutely. Q-WEB is a member of the Canada Wood Group, which I chair. Q-WEB has successfully encouraged the Quebec government to go to a wood first policy. As a matter of fact, the Quebec government has put a lot of money behind that initiative.
We have been talking with Ontario, and the Ontario Wood Products Export Association has just joined. They are engaging their government in that regard. Our premier is probably one of the largest wood advocates out there. He is chatting with his provincial colleagues and federal colleagues are pursuing that as well. We have an active lobby out there.
We also have funded internally something called the Canadian Wood Council. I believe Mr. Love appeared before you. The Canadian Wood Council is responsible for promoting the use of wood in non-residential industrial applications across the country. There is an active effort across the country to promote the use of wood. We also work across the border with our American friends, through the Wood Products Council, to do the very same thing. The binational panel on softwood lumber is funding work in that regard. There is a concerted effort.
We have learned from the Finns, who, about six or seven years ago, embarked upon a wood first equivalent program. One of their objectives was to double the amount of wood per capita used by their citizens. We are trying to do the same thing, learning the best practices and lessons and applying them here. There is a very active effort to promote the use of wood.
Senator Eaton: Finally, a question about the government. You all deal with governments. I do not think it is a matter of us or them — I think it happens generally in any government, namely, the silos that happen between Western Economic Diversification, Indian Affairs, Natural Resources, and so on. Do you ever say to ministers, ``Could you talk to your counterpart or do I present the same thing to both of you?'' Is there any mention when you see a minister?
Mr. Jeffery: I do not know about my colleagues, but I spent about 27 years of my life as a lobbyist. That is lobbying 101. You never talk to one minister or to his ADMs or to executive directors without figuring out who else has skin in the game, and why and what are their interests. If you do not show up and say, ``Here is a solution and this solution works for department X, Y and Z and for stakeholder A, B and C,'' you are dead in the water.
We spend a lot of time doing cross pollination and working with different ministries. For instance, this black liquor issue, which I mentioned earlier, was spearheaded from Natural Resources Canada. However, DFAIT is involved because it has softwood lumber implications and the Prime Minister's Office is also involved. You have to ensure that you are talking to all of those people as you push the stuff through. If they were more streamlined, maybe I would not have a job.
[Translation]
Senator Rivard: Thank you, Madam Chair. My first question is to Mr. Jeffery. Earlier in your presentation, you suggested — I am not sure whether this was a joke — that the Canadian government might want to buy all of your production and warehouse it somewhere until the markets recover. If you were serious, we should try to determine how long the crisis will last: a year, a year and a half, or two years? What volume of timber and, more importantly, how much money would that involve? I was surprised, and I wondered if you were serious or if this was a joke. If it's serious, I suppose you have already figured out how much money the government should come up with.
[English]
Mr. Jeffery: Our best estimates as to the length and duration of this current economic downturn is hard to make. One of my CEOs told me how it was impossible for him to go in front of his board of directors with a business plan and a forecast because he would inevitably be very wrong. We are truly in uncharted waters. We do not know how President Obama's Homeowner Affordability and Stability Plan will work in terms of future foreclosures. We do not know how credit will flow in the U.S. We do not know how stimulus packages there will affect consumer confidence.
All of those things are required to come into line in order for the housing inventory to start to drop. Every analyst and economist that we follow says that until the U.S. housing crisis is solved, the global recession will not go away. That is the critical piece of the problem.
I will give you my best guess: We are planning that it will probably in the third or fourth quarter of 2010 before we will begin to see our way out of the trough. I have told everyone that 2008 was the worst year on record. It will be an even worse year in 2009. However, we think that 2010 will be a better year than 2009 and we will start to approach some level of normalcy in 2011.
Regarding my comments on the Government of Canada buying our wood, I was trying to illustrate through an absurd example that there is little the federal government can do to help the forestry industry. The federal government does not have enough money and I cannot imagine the political argument you would make to buy wood and not use it.
I was simply trying to use that as means to point out that the marketplace needs to return. When the marketplace returns, they will start buying our products. That will be the solution to the problem.
[Translation]
Senator Rivard: Thank you. In the case of Employment Insurance, you said that many of your workers do not have enough hours to get benefits or have already run out of benefits. Could you suggest a minimum number of hours for the unemployed that would be acceptable to the government in view of the present crisis?
[English]
Mr. Jeffery: We wrote to Minister Finley on behalf of coastal employees. I can only speak about the coast.
Currently, in order for them to qualify, the threshold is in the range of 360 hours. I would have to look that up to confirm the correct number.
What has essentially happened in the coastal business is that we have had what we call lurch logging. Logging starts up and then it stops. It goes for a week and then it stops for two weeks. Employees do not accumulate enough hours.
The EI system is adjustable and is supposed to reflect regional variations in employment. We should look at a forestry package much like we did for the fisheries industry on both the East Coast and the West Coast in earlier decades. This is an industry-specific issue. We need to set criteria to ensure that those who have been paying into this system get the support they need for the length of time they need it. You have just heard me say that mid-2010 is when we are likely to see some turn around on this downturn. Therefore, we should ensure they have that safety net available to them through that period of time.
If you like, I will forward a copy of the letter with the details of what we asked of the minister. You can see the specific issues we are facing on the coast.
The recommendation is to look at forestry across the country and see if there is an EI package we can put forward to help forestry workers.
[Translation]
Senator Rivard: We heard many representatives of the forest industry from across the country. So I was very surprised because I thought the spruce budworm was a disease specific to the forests of Quebec and part of New Brunswick. Does this mean that apart from the mountain pine beetle, B.C. forests are also affected by the spruce budworm?
[English]
Mr. Atkinson: Yes, we have spruce budworm in B.C. It is not exclusive.
[Translation]
Senator Rivard: So you have all the diseases! Is there a part of your forests that is still healthy? It seems Sweden, among others, is doing a lot of research and is recommending production of wood pellets for home heating. Was this considered in British Columbia? Is there a substantial market for this product or is it insignificant?
[English]
Mr. Jeffery: There are a number of pellet producers in British Columbia. They produce pellets for export to the EU. The reason the economics for that work is that the EU is subsidizing the production of biomass-generated energy to meet their greenhouse gas emissions under the Kyoto Protocol. A big subsidy is involved.
We do not have that subsidy in Canada although we will have a cap-and-trade system and British Columbia has a carbon tax. As the true value of carbon is increasingly reflected in our marketplace, you will see the marketplace move not only to pellets, but also to biofuels generated from biomass and biofuels generated out of the pulping process. You will also see different forest practices to reflect the value of carbon in management strategies. From a lumber perspective, if we ensure that the carbon stored in forest products is recognized in the offset markets and, potentially, in the price of the product itself, it will drive a new generation of investment in forest products.
There are many dimensions to the carbon piece around forests and they are all positive. My earlier comment is that I think we need to get them right.
There are many moving pieces. We have the Copenhagen conference coming up in the fall. We have the Obama administration and the Waxman-Markey bill. We have the Western Climate Initiative, to which British Columbia, Ontario and Quebec belong. There are many different stages where this is being played out, and we need a consistent message and approach that recognizes the value of carbon in our forests.
Mr. Atkinson: From a First Nations perspective, I mentioned our bio-energy plan that is being developed in B.C. From our community's perspective, we see the forest sector at its lowest point. However, it is being reinvented. This investment, although it might not be enough, provides the opportunity for reinvention using bio-energy as a component.
We have looked at some of the economics. Our communities have looked to our organization, asking how they can participate and get involved. It is very difficult for First Nations communities to be involved in a leading-edge innovation, with new development and design.
It is part of the sector in the future. I am sure it will play a role. From our community's perspective, we are trying to find out how we can participate and be involved in a meaningful way.
[Translation]
Senator Rivard: It was mentioned earlier that Quebec, among others, wants to promote the lumber industry, perhaps over the steel and concrete sector. Last week, the Quebec government announced it would contribute to the development of a so-called PEPS multifunction centre. This project has been under consideration for five or six years. The main material that will be used for construction is wood. We also intend to build a new arena, and again it is proposed to use wood as the main building material. We only hope the steel and concrete lobbies will not insist that this is a mistake. After all, the forest industry is in much poorer shape that the steel or concrete sectors.
[English]
The Deputy Chair: Thank you. I think we agree.
Mr. Jeffery: My one comment is you will never build these non-residential buildings completely out of wood. There will be concrete and steel, as well as wood. If we build them properly, we will build green buildings that are energy efficient and maximize the use of our natural materials.
Senator Cordy: You have all been very open and frank and we appreciate that because it gives us good information.
What we have heard from you today, and from others, is that there are two things we have to look at. We have to look at short term solutions to help the people who are losing their jobs in the forestry sector; and then we also have to look at the long term to ensure that when the markets do come back, the forestry industry is ready to get back to work.
First, I would like to look at the short term because 20,000 jobs were lost in 2008. I think Mr. Jeffery said we could expect higher numbers for 2009. In 2010, it should start to rebound but I am a little nervous that before 2010, we will have lost many businesses that will never come back.
I would like to discuss Employment Insurance and the challenges that unemployed forestry workers are experiencing. You talked about the variable entrance requirements and you said it was regional. Even within regions, in Nova Scotia, which is where I am from, if you are living in Halifax, it takes you longer to become eligible to receive EI and you receive your benefits for a shorter period of time than if you live just outside of the city limits. Therefore, for two people working at the same job who are both losing their jobs, one can collect the benefits with fewer hours and collect them for a longer period of time even though they have both been employed by the same industry. I am sure you must be finding the same thing within the forestry industry. What are your comments on ensuring that there is uniformity of the hours required across the country?
I also would like to ask you what else we should be doing. I think it was Mr. Jeffery who talked about correspondence with Minister Finley. I am wondering whether the correspondence and the discussions have been one way or whether you have heard back from her as to whether she is at least willing to consider some of your proposals for people who are in a situation in which they would prefer not to be. No one wants to be collecting Employment Insurance; people prefer to have a job.
Could you tell me, from the people you see who are unemployed, what we should be doing to make things better in the short term?
Mr. Jeffery: First, the proposition we put to you today was let us look at forestry across the country and figure out how EI should be tailored to meet the needs of forestry workers.
Let us not forget that one of the reasons the forest industry has not been acting like it makes automobiles is because we know we have more capacity than we have markets. Part of this downturn will be the permanent removal of capacity, whether it is obsolete or whether it is overcapacity, from the system. That means the people that are affected by that need to be looked after.
One way you can do that is to provide them with some Employment Insurance until they can find another job. That was the proposition we had for Minister Finley and yes — I am not taking your bait — she did reply back and we are working with the department.
Senator Cordy: That is a good thing.
Mr. Jeffery: One of the features that we had in the community development program in British Columbia that worked very well was that we had three buckets. One bucket was to transition older workers out of the industry by giving them an incentive to maybe look at early retirement. There are still opportunities for those kinds of things. There was a large chunk of money put aside for training and retraining to allow workers to be able to train themselves in other skills so that if they were not working in the forests, they could go do something while they were not; or they could just get out of the industry and apply those skills somewhere else. Training needs to be a big component of what we give and help these folks with. The last thing that we did was create a number of projects, which put them to work in their community in the forests — stuff like Mr. Atkinson talked about.
There are billions of dollars worth of shovel-ready infrastructures in the forests. There are silviculture projects, processes around thinning, spacing and fertilization that all put people to work and grow our forests healthier and faster and all those things. We need to look at how these programs are rolling out now and ensure that we capitalize on those projects.
Our frustration today — and Mr. Atkinson is the poster child for that frustration — is that it does not appear that the design of phase two is working terribly well. We need to engage with the folks and say if we are not getting money in the ground, how can we? Those are the three areas I would focus on.
Mr. Cameron: Our business does not do a lot of lurching. We kind of ramp down or ramp up.
This business of work-sharing is a good deal. I do not have any comments about whether there should be different qualifications for Employment Insurance in different areas, so many hours here and so many there. The work-sharing plan works well for us.
Mr. Jeffery mentioned the early retirement opportunities. Somehow or other, when that program came out, our workers were not considered forest workers and only forest workers were eligible for it; our people missed that program. I am not sure how that happened but hopefully it will get fixed next time, as we do pay softwood lumber tax the same as the other people.
Senator Cordy: Are you not considered a forestry worker?
Mr. Cameron: No. Some people applied for the program and they were told that in order to qualify they would have to either be logging or running a sawmill or both. Hence, there were situations where a person working in a reman plant belonging to a major licensee who wanted to retire was eligible for the bridging; the person making the identical product down the street in a family company was not entitled and is not entitled to this day.
Senator Cordy: I did not know that.
Mr. Atkinson: From the First Nations community perspective, we really struggled with the program on early retirement, bridging, training and retraining. We did find some room within the community projects and some funds to support work. In particular, where we were making our largest connection was getting labour dollars for work in the fire break clearing for the mountain pine beetle and the fuel management treatment work. That is the main program for our communities in terms of work. It really is shovel-ready.
The $12.2-million investment I talked about in First Nations preparation and planning for the fuel management treatment work has helped organize our communities, 103 communities of the 204 affected. We are ready to start doing the treatment on the ground, which is forestry work. It is fire break clearing.
We will do as much of it as we can with First Nations, but we will rely on the communities around us as well. There is tremendous opportunity for jobs in that field to the tune of $20 million a year. We are ready to implement. That is where we are trying to go with that kind of make-work project.
Senator Duffy: Thank you all for appearing. We share your pain and the pain that your workers are feeling. I appreciate some of your suggestions.
The federal government has put money into silviculture in Atlantic Canada. Have there been any similar federal- provincial arrangements for British Columbia?
Mr. Jeffery: Not recently. The last round came through the Forest Resource Development Agreement.
Senator Duffy: Is there a reason why we would be engaging in silviculture in the East and not in the West?
Mr. Jeffery: That is a good question.
Senator Duffy: That sounds to me like one of our priority recommendations.
Mr. Jeffery: There is a lot of room for silviculture improvement in our forests.
Senator Duffy: Presumably it would get people working right away and it would be an investment for the future when your much-talked-about recovery comes, Mr. Jeffery. I am encouraged by that comment from you.
Senator Mahovlich: You people are very thorough. Several weeks ago I was in Finland. We stayed in a village way up in the Arctic Circle. It was all made of wood: the hotel, the community centre, everything was wood.
I visited Vancouver last month and saw the new dome rink where they will be doing the speed skating. It was the hugest arena I have ever seen; 10 hockey rinks could fit in that one building. The roof of that arena was made of pine beetle kill wood. This wood could be used if we could get it across Canada. It is very attractive to have ceilings of wood in hockey arenas. I have seen it in Davos, Switzerland. There were one or two arenas up in Northern Ontario that had wood ceilings. The sound is good; the acoustics work really well. It is a positive outlook if we can use this wood across Canada.
I would like to ask a question of Mr. Atkinson. In what ways has the federal mountain pine beetle program helped affected Aboriginal communities managing the economic impacts of the MPB infestation?
Mr. Atkinson: The best example within the First Nations Forestry Council was some work we did with our communities, asking them what is the significant impact of the mountain pine beetle. We talked to the communities most affected, 103 of our communities. The results of our work were, yes, the threat of fire risk was a very high priority and they wanted that reduced, but it was not the only priority. The other one was economic diversification. Our people wanted to know what will happen in our traditional territory when it is drastically changed by this dying pine tree element. The reliance of our communities on their territory for traditional harvesting of foods and medicines and just the use of the land were significantly impacted. Some of the money that we received went to getting a clear understanding that fuel management is significant; there is a huge risk of loss of life and investment in those lands. How the communities socially and economically move through this transitional landscape needs to be worked on.
One of our forestry council programs has evolved into mountain pine beetle fuel management and trying to deal with the treatment. It has tremendous economic development opportunities built within it by doing the work that needs to be done. The other program involves the capacity building, the stewardship and sustainable planning that needs to happen in the territories, including the restoration. How do we do that silviculture investment and restore our traditional territories? These are all things that can be planned for but finding the resources can be extremely challenging to do the work.
Senator Mahovlich: When you speak to your elders, have they ever experienced anything like this pine beetle phenomenon?
Mr. Atkinson: No.
Senator Mahovlich: Is this new to them?
Mr. Atkinson: I would say the way the elders recognize an issue and discuss it or debate it, it is still ongoing. Something is happening and we are trying to recognize the level of impact, and how we deal with it is going through our elders' communities the best we can for the recommendations that come back. That is bringing a lot of it to realizing we cannot do much of this on our own. This is something we must be doing in concert with the province.
Senator Mahovlich: What are the fiscal measures that the Government of Canada could put forward to stimulate capital investment and put an end to this vicious cycle?
Mr. Jeffery: I touched on a few of them. You can help on the green energy side. You can help on the market development product innovation side. You can help on the research and development side. Those are all fiscal measures that are in the current budget and should be continued in future budgets.
There is $40 million going into marketing and another $70 million going into product development. These are not big sums of money, but they are very valuable sums of money in terms of helping us build that road for the future.
Of course, capital cost allowance depreciation and schedules would be very important, as well as continuing to ensure that our corporate tax or personal tax rates are low. That is a good fiscal measure. The Bank of Canada is pursuing what we think are appropriate monetary policies at this time, so that is helpful. We are trying to get credit moving. We will make sure our members try to tap into the program mentioned by Senator Mercer. The EDC has been making money available.
A number of things are ongoing and need to be continued on into the future. If you as a committee can recommend that those things are good things and that future governments should continue them, that would be very useful for us.
The Deputy Chair: Thank you very much. We have the bus waiting for us to get to our vote. We want to thank the three of you so much for coming. You have provided very interesting information.
(The committee adjourned.)