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Proceedings of the Standing Senate Committee on
Agriculture and Forestry

Issue 10 - Evidence - November 18, 2010


OTTAWA, Thursday, November 18, 2010

The Standing Senate Committee on Agriculture and Forestry met this day at 8:10 a.m. to study the current state and future of Canada's forest sector.

Senator Fernand Robichaud (Deputy Chair) in the chair.

[Translation]

The Deputy Chair: I see we have quorum. I declare the meeting in session.

Welcome to this meeting of the Standing Senate Committee on Agriculture and Forestry. I am Senator Robichaud from New Brunswick, Deputy Chair of the committee. I would like to start by asking the senators to introduce themselves.

[English]

Senator Eaton: Good morning, I am Nicky Eaton from Ontario.

Senator Ogilvie: Kelvin Ogilvie, Nova Scotia.

Senator Kochhar: Vim Kochhar from Ontario.

Senator Plett: Don Plett, Manitoba.

Senator Mahovlich: Frank Mahovlich, Ontario.

Senator Mercer: Terry Mercer, Nova Scotia.

[Translation]

The Deputy Chair: The committee is continuing its study on the current state and future of Canada's forest sector. Today we are focusing on Aboriginal communities and forestry.

Today we welcome witnesses from two different organizations. First, from the National Aboriginal Forestry Association, it is a pleasure for us to hear from Harry Bombay, Executive Director, and from the Council of the Atikamekw Nation, Simon Awashish, negotiator.

Thank you for accepting our invitation to appear. Before inviting you to make your presentations, I would like to point out that we have received the presentations in only one of the official languages. Do I have permission to distribute them in only one language?

A voice: Yes.

The Deputy Chair: All right, that will be done and they will be distributed.

We will start with the presentation of Mr. Simon Awashish. Then we will hear from Mr. Bombay. Your presentations will be followed by a question period.

I am going to wait until the documents have been distributed, and then we will begin.

Simon Awashish, Negotiator, Council of the Opitciwan Atikamekw Nation: Ladies and gentlemen, senators, thank you for this opportunity to outline our perception of the future of the forest sector to you.

I am one of the 6,500 members of the Atikamekw Nation, which is divided into three communities: Manawan, Obedjiwan and Wemotaci. Our ancestral territory extends over an area of approximately 65,000 square kilometres, located in large part in the administrative region of Lanaudière and Mauricie, in Quebec.

In the early 1980s, the large-scale intensive harvesting of wood by forest companies began on our family hunting grounds. For us, that was the start of a second major disruption in the exclusive use of the resources of our ancestral territory. The first was the construction, in 1912, of the railway linking the Montreal metropolitan area to Abitibi- Témiscamingue to permit the development of the wildlife resource by other users. Before intensive forest operations began, we had calmly enjoyed our hunting grounds. The opening of our hunting grounds through the construction of logging roads attracted other users in massive numbers.

Like all those of my generation, I saw the environmental change occur suddenly in the space of two decades. From virtually intact forest coverage across the entire ancestral territory, the new environment became a barren landscape, with a few scattered clumps of softwood trees.

Today I have also witnessed a forest regeneration that has not yet come to full maturity and which is mainly the result of human intervention based principally on a silvicultural development strategy to plant jack pine instead of black spruce.

As leader and chief of my community, I could no longer tolerate having large forest companies come and harvest our forest resource to the detriment of our territorial organization and way of life. We had to react to that development. Out of that reflection came the idea of establishing a wood processing plant in our community. In the following lines, I will provide you with a brief description of the sawmill project introduced in the Obedjiwan community.

The Obedjiwan sawmill: Description of the business. The Scierie Opitciwan limited partnership operates a sawmill in the Atikamekw community of Obedjiwan. The business is mainly active in the production of lumber. The Scierie Opitciwan limited partnership was created in the fall of 1999, pursuant to a partnership agreement between the Atikamekw Council of Obedjiwan and the Donohue company. Later, that company was acquired by Abitibi- Consolidated of Canada. There has thus been a change of partners along the way.

The Project's promoters: The Atikamekw Council of Obedjiwan. The Atikamekw Council of Obedjiwan is the local government responsible for public administration of the community under the Indian Act. The community located in Haut-Saint-Maurice, an administrative region of Quebec, more specifically on the north Shore of the Gouin Reservoir, source of the Saint-Maurice River. That river flows into the St. Lawrence River, flowing over a distance of 400 kilometers through the heart of our traditional territory. The City of Trois-Rivières is located at its mouth.

The community's economic development is based mainly on the development of natural resources, particularly wood. Abitibi-Consolidated of Canada is a world leader is the newsprint and value-added papers sectors and one of the principal manufacturers of wood products. It operates a number of plants in the Saguenay-Lac-Saint-Jean region.

The Partnership: The ownership interests in the project for each of the parties are as follows: the Atikamekw Council of Obedjiwan, 55 per cent, and Abitibi-Consolidated, 45 per cent. The strength of this association stems from the complementary nature of the two partners' areas of competence. The Obedjiwan Atikamekw population has knowledge of the territory and the necessary labour to ensure mill production and the logging operation. A large percentage of the population is in the 15 to 44 age group. Abitibi-Consolidated provides expertise in milling, forestry and the finished products market.

It should be noted that the partnership is a success for the following reasons: decisions are made jointly by the two partners; strategic choices have been made by the partners to grow the business in terms of both profitability and productivity; mutual respect between the partners is very important.

Structure of the business: The legal structure advocated by the partners is the Scierie Opitciwan limited partnership. This form of association affords one major advantage for the Aboriginal partner. As the Atikamekw Council of Obedjiwan is a band council within the meaning of the Indian Act, its share in the partnership's operating profits is tax-exempt.

The board consists of seven directors, four of whom represent the Atikamekw Council of Obedjiwan and three Abitibi- Consolidated.

The board is responsible for strategic business orientations.

Mission of the limited partnership: To operate a softwood sawmill (fir, spruce and grey pine) oriented toward the production of lumber of various lengths; to develop and gain recognition for the Atikamekw nation's expertise in resource development and integrated forest management; and to promote the economic interests of the Obedjiwan Atimakekw people. The Scierie Opitciwan is the sole user of the volume of wood granted annually by Quebec's department of natural resources. The Atikamekw Council of Opitciwan has a forest development agreement. The Council receives annual royalties on harvested volumes.

Size of the business and number of employees. Direct jobs: The Scierie Opitciwan currently employs 60 full-time workers, including supervisory and administrative positions, in addition to some 12 replacement employees. Indirect jobs: A larger number of indirect jobs are created in order to provide the services required by the mill.

Forest workers and transport: The wood harvest, construction of logging roads and transportation of wood from the harvest site to the processing plant requires 55 or more employees to carry on these activities.

Silvicultural work and inventory: Some 10 employees work on a seasonal basis to meet the silvicultural obligations of our mill. Five more workers are employed by the Opitciwan forest services for housing purposes.

Successes and difficulties. Successes: A partnership that works. The partners have worked to make the project viable over the long term. That was one of the conditions that we set for our partner, Abitibi-Consolidated. Thus far, the business has managed to survive the current lumber market crisis. However, that crisis is not over. The introduction of a curved sawing line in 2008, a technological advance, helped sharply increase productivity and thus reduce our production costs.

Difficulties: A shortage of wood supply is still an annual reoccurrence, despite efforts made to secure additional wood volumes from the Government of Quebec to offset those shortages. An alternative solution is currently available, but it cannot be considered from an economic standpoint because it is not financially advantageous. This is an economic sector that has been hit hard by the current economic crisis. Housing starts are at very low levels, which has resulted in lower prices for products milled in Obedjiwan. The result has been operating losses since 2006.

The partnership's working capital situation is a problem. As a result of business losses and a tightening of credit conditions by our financial institution, we anticipate that we will be short of liquidity in the spring of 2011. Certain provincial programs that provide assistance to forest businesses are not available since the Atikamekw Council of Obedjiwan is the main partner in the mill. And yet there is no difference between our operations and those of our competitors. When we say the Atikamekw Council of Obedjiwan, we mean the council within the meaning of the Indian Act.

The Obedjiwan community is located on forested land. It must bear the cost to transport its semi-finished products. Drying and planing are done in Saint-Félicien, a town located 300 kilometers away in Saguenay-Lac-Saint-Jean.

Many logging companies harvest their wood near Obedjiwan. They often make strategic choices to limit access to the area for the Scierie Opitciwan. Using the nearest forest principle would be a solution that should be favoured in order to resolve our situation. The economic self-sufficiency of the Opitciwan Atimakekw depends on a guaranteed adequate supply of wood to meet our mill's needs.

In conclusion, our ancestors were able to benefit from the advantages afforded by the territory's resources by adopting an environmentally friendly way of life. There is progress in our community. The demands of modern life require us to turn to other sources of revenue to meet new needs. The development of wood is a major factor in the community's economic development. It must be carried out in a manner respectful of our culture and the environment. This is a legacy from our ancestors which we intend to preserve.

The Deputy Chair: Thank you, Mr. Awashish. Now we will ask Mr. Harry Bombay to make his presentation.

[English]

Harry Bombay, Executive Director, National Aboriginal Forestry Association: Thank you very much; I appreciate the opportunity to be here. In my role as the Executive Director of the National Aboriginal Forestry Association, I have been following the work of this committee and I am looking forward to the eventual outcomes. I have been here before. I believe I was one of your early witnesses when this process began.

In your mandated task of looking at the future of the forest sector, I have looked at some of the presentations made by the various actors in the forest sector and the experts you have brought before you. You certainly have a daunting task ahead of you in terms of formulating recommendations to the federal government.

Of course, we are here hopeful that the committee will recognize the importance of forests to Aboriginal people in this country. We think the federal government has a very significant role to play in supporting Aboriginal peoples and their values and interests in the Canadian forest sector.

The federal government has a constitutional responsibility for Indians and lands reserved for Indians under subsection 91(24) of the BNA Act. The duty to protect Aboriginal treaty rights is constitutionally protected. I am not sure if you are aware but last Friday the federal government endorsed the United Nations Declaration on the Rights of Indigenous Peoples. It is a significant move on the part of the federal government. It should help the committee in terms of defining how the federal government can support Aboriginal forestry across the country.

Those various pillars that back up Aboriginal treaty rights in this country are based on some of the recent developments, both nationally and internationally, and they clarify to a large extent how the federal government can work with Aboriginal people in the forest sector.

Laying the foundation for the future forest sector requires that a cornerstone be Aboriginal participation. It is NAFA's view, which we hope you will recognize and reflect in your reports, that the reconciliation of Aboriginal rights and interests within Canadian society will be achieved largely through the management of natural resources by Aboriginal peoples.

In broad terms, Aboriginal peoples are seeking an enhanced role in natural resource management, especially on the forested lands within their traditional territories. As well, they are seeking new approaches to economic development that promotes forest sustainability, contributes to their social and cultural well-being and responds to the major environmental issues, such as climate change and supporting measures, such as forest conservation.

Today I will address the subject of First Nation communities and forestry with a focus on community and worker participation. I would like to address this subject under the concept of capacity building. I believe the term ``capacity building'' is a more comprehensive term and better reflects the needs of Aboriginal communities. To do this and to give it the proper context, I would like to remind you of my earlier presentation to the committee, which talked about the basic pillars of Aboriginal economic development and capacity building.

Capacity building is one of the key issues in addressing the forestry interests of Aboriginal people i.e. their rights and values, and enabling their effective engagement in the forest sector. Aboriginal capacity and natural resource management is a broad and multifaceted concept involving issues that encompass governance from the Aboriginal point of view, institutional arrangements with other levels of government and Aboriginal human resource development — the necessary worker skills.

I would like to comment on what I consider the three pillars of Aboriginal capacity building in the forest sector. I will comment on institutional arrangements with other levels of governments that are key to capacity building. In the forest sector today, we see quite a bit of discussion about the need for institutional reform to support the changes in forest management across the country and to meet the shifting social demands. The most important institutions influencing forest land management are the provincial forest tenure systems, which allocate resource rights and responsibilities and prescribe forest practices.

In recent years, several provinces have released reports acknowledging that their tenure systems are in need of reform, and some have committed action in this regard. We understand that in British Columbia, Ontario and New Brunswick active forest tenure change is occurring as we speak, and a new approach to tenure is being developed.

The major barriers to Aboriginal capacity building in the forest sector can be found in the forest management regimes of provincial governments. The industrial tenure systems have failed in the past to recognize the forest interests of Aboriginal people and have imposed conditions that have served to exclude Aboriginal people from participation in forestland management and in forest based development.

I would like to refer you to the report that I will leave with the committee. It is quite dated but still hits the key issues. It is entitled Accommodation of Aboriginal Rights: The Need for an Aboriginal Forest Tenure, published by the Sustainable Forest Management Network. I have referenced to this paper his in my presentation and it is available to the committee.

Forest tenure systems, to the extent that they enable Aboriginal engagement in forest land management, will greatly influence the rate at which Aboriginal communities and organizations develop their capacity in forest and natural resources management. If we do not have the institutional framework from which Aboriginal people can work and perform management functions within the forest sector, then we will not develop the capacity or the appropriate worker skills to be an effective partner in the forest sector.

Another pillar that I referred to is First Nation governance and forest management. First Nation interests in forest derive from the long-term relationship with the land. The lands on which most First Nations communities are located are forested. Governance is at the heart of First Nations interests in forest management and finding a balance between traditional knowledge and values, multiple use and wise utilization of forest resources, and holistic perspectives on the management of human interactions with the land within Canadian social, political and economic systems is key to rebuilding First Nations governance. The aspiration of First Nations leaders to regain a significant role as stewards of the land is based on the realization that cultural preservation and future socio-economic well-being are dependent on maintaining that relationship with the land.

The goal of First Nation governance is self-determination. First Nations today are in the process of rebuilding their systems of governance, including social, political and economic institutions. Considering various circumstances, such as the land base, title and size, population, political culture and political climate, First Nations governments, in terms of daily use, include Indian Act bands and nation governments as defined by their traditional affiliation. Examples of nation approaches by First Nations are the Shuswap Nation and Chilkowton — groupings of Indian bands that work collectively as a nation. Some have chosen to go that route.

We also see self-government being advanced through land claim settlements in modern-day treaties.

I would like to refer the committee to another document, the Royal Commission on Aboriginal Peoples, Volume 2, which talks about the various models of First Nations governance. It is important to look at the governance structures of Aboriginal peoples because it is within those structures that First Nations will undertake the role of forest management and the capacity must be built.

Authorities for First Nations governments are derived from the inherent Aboriginal right to self-government, delegated powers form the federal government, modern-day treaties, land claim settlements and intergovernmental agreements, often called co-management with other levels of government. More often than not, First Nation governments exercise authority based on two or more of those sources. Often, jurisdictional issues are an area of continuing uncertainty.

In terms of First Nation governance today, we have an unrecognized interest in the land, in particular the forest tenure systems and other aspects of forest management regimes in provinces and in federal approaches to forestry.

The third pillar is Aboriginal human resource development. Traditionally, the forest sector offered a wide range of opportunities for labourers, skilled trades' people, professionals and those interested in natural and applied sciences or in business, finance, administration and management. I am sure you have heard much testimony about the various types of profession that are prevalent in the forest sector. They include forestry professionals, such as ecologists, researchers, forest technologists and technicians, and machine operators in the processing plants. On the harvesting side, we have logging and forestry supervisors and labourers, and silviculture workers.

We have made some advances in the area of capacity development of Aboriginal people, but we have not reached a comparable skill level to that of the rest of Canadian society. There is a high need to continue to develop skills in these areas.

Looking forward, Aboriginal communities and their organizations will also need skills in professional development areas that support the new forest sector opportunities, such as forest fire material science and biotechnologies. To a large degree, Aboriginal skill needs in the forest sector will mirror those of the general population, although the gap is wider because of the lower educational levels of Aboriginal students, particularly in the sciences.

NAFA estimates that there are approximately 80 Aboriginal professional foresters in Canada and another 40 Aboriginal people with other natural science degrees and approximately 300 Aboriginal natural resource technicians. However, there remains a fundamental need for Aboriginal natural resource managers at community and regional levels. Although the Aboriginal need is not necessarily different from the forest sector in general, there is a different land ethic, a different forest value system, which must be incorporated within Aboriginal approaches to natural resources management.

I think a fundamental need will be a Bachelor of Science degree and a degree in natural resources conservation and other degree programs that integrate social science and ecology with business and economics. The fundamental need of Aboriginal communities today is to be able to map out both their role within their regions and how they interplay with other players in the forest sector. The basic need for planning land use is fundamental to communities today.

I will draw senators to the chart I included in my presentation. In this chart, we have identified the place of employment of most of the Aboriginal professional foresters in Canada today. We base this on a scan of the 72 of the 80 Aboriginal professional foresters in terms of where they work. We note from the chart that 60 per cent of all these professionals work for Aboriginal organizations; 17 per cent work for federal and provincial governments; 8 per cent work for NGOs and the non-Aboriginal forest industry; and 15 per cent at the time were unknown.

Clearly, Aboriginal professionals choose to work for their communities and for the Aboriginal forest sector. This is a reflection of the growing capacity but it also highlights the vast shortages of professionals in the forest sector. Approximately 10 years ago we did a study on labour market needs and estimated that Aboriginal communities at that time required somewhere between 500 and 600 professional foresters to manage all aspects of their forest interests in their particular areas. There was a fundamental need then and there is a greater need now and the need now has become more diversified.

The federal role in supporting Aboriginal forestry is an area, as I mentioned earlier, in which we hope there will be some recommendations. We think that the federal government could play a larger role in supporting in all of these three areas identified, for example, institutional support; that is, the manner in which, for example, forest tenures are changed in Canada. We must ensure that sufficient space is created for Aboriginal people. We must see new types of institutional arrangements like specific Aboriginal forest tenure.

You might know that the B.C. government has instituted something called the First Nations Forest Woodland Tenure, which is a new form of tenure giving the Aboriginal peoples in communities the ability to manage areas of land as opposed to volume-based tenure, where they harvest a certain volume of wood. There are movements to create areas of management so First Nations can develop their economies based not only on the traditional forest industry in Canada but also on looking at innovative ways of using forest resources. These include value-added and non-timber products, and different types of forest by-products using their traditional knowledge and their own way of developing and transforming their concepts to contemporary forest products and services.

We think the federal government could play a large role in supporting that type of change. Support must come in the form of support to Aboriginal organizations so that they in turn can work with other levels of government such as provinces, municipalities, forest companies and research institutes and other groups in the forest sector.

With respect to governance, in negotiating self-governance agreements and land treaties, for example, we do not see a sufficient level of focus on forest management in those agreements. Much of the land that First Nations are acquiring through these means is forested land and it must be managed both going into the future and for today's contemporary forest management objectives. We must see an emphasis on forest management on the various instruments that are being developed today in terms of Aboriginal governance. In capacity building, it would be great to see focused training initiatives for Aboriginal people in areas where we know there will be a shortage of skills in the future. For some of the types of skills that are needed, we should be looking at ways to get Aboriginal people into these areas because ultimately their development will be based on appropriate skills.

In closing, I would like to add one commentary on how we focus our work. I think it is important to talk about the Aboriginal forest sector as something that is quite distinct in Canada. It is based on a whole lot of different circumstances, for example, jurisdictional issues, legal issues, different values and different development objectives. When we look at putting in place space for Aboriginal people in the forest sector, we must be conscious of these differences and we have to develop institutions that are respectful of them. That must come across and it must be reflected hopefully in your ultimate report.

Those are my comments today. I would be happy to discuss any of that further with you.

[Translation]

Senator Eaton: Mr. Awashish, in your presentation you talk about the development of natural resources, particularly wood. For nine months, many witnesses have told us about biochemical products, value-added wood products and natural products from the forest such as mushrooms and blueberries. Has there been any progress in these development areas?

Mr. Awashish: When I talk about natural resource development, I am obviously referring to traditional practices. The Atikamekw Nation is one of the three communities that I mentioned and that live from hunting, fishing and gathering wild fruits. There have not yet been any technological advances in those fields. These are non-commercial activities that serve more to meet food and clothing needs.

Senator Eaton: Is it a lack of education? What do you think about that?

Mr. Awashish: No, it is a matter of development of society. We have not yet gotten to the point where we can foresee technological advances in those fields. However, increasing numbers of people are taking an interest in that. For example, picking wild blueberries is an important activity in our communities, and when picking time comes, the community disappears and heads to the traditional territories.

The use of medicinal plants is also very much a part of our communities, but there has not yet been any industrial development of those plants.

Senator Eaton: You do not do it commercially. You do it for yourselves?

Mr. Awashish: Yes, indeed. The industrial development of wood is a reality that affects us.

Earlier I was talking about large-scale operations in our territories and we saw that that had a major impact. We had to react to that situation in order to prevent the resource from escaping us. We saw the big trucks go by our communities heading south. That is why we introduced a sawmill in our communities.

Senator Eaton: I congratulate you. You are in partnership with a big business. I was wondering whether the business had more technological values, more advances to help you a little in moving forward too.

Mr. Awashish: When we chose our partner, looked for a partner, five or six companies were developing the hunting territories around the community. It used to be Canadian Pacific, CP at the time; today Smurfit-Stone is in the region. There were Donohue and Kruger. So we wrote to those people to invite them to join in a partnership. We took the time to analyze those who could work with us, who agreed with our vision. Donohue had an approach that interested us. There was a concern for Aboriginal cultural values. We entered into a partnership with them. Along the way, it was acquired by Abitibi-Consolidated. The people we worked with at Donohue continued on with us in Abitibi- Consolidated. At our board meetings, we were able to talk more about our way of looking at forest development, which has to be based on respect for the culture and the hunting grounds.

[English]

Senator Eaton: Mr. Bombay, you were talking about different values, and I wonder if our values are so different at the beginning of the 21st century. With regard to agriculture, as well as forestry, many witnesses have talked to us about how you have to keep the ecological balance in the woodland, that you have to preserve animal habitat, and that there are different products, whether it is taking the waste and making woodchips or taking other materials.

I wonder if we are not now catching up a bit to you and you are not catching up a bit to us; in other words, we will combine science with ecology. It seems to be the new way.

Mr. Bombay: I would agree that the kind of extreme positions are moving more toward the middle in terms of common values. I think the forest sector has taken a more ecological approach to their work. Much of the work is now based on forest conservation and high-value forests. For example, forest certification systems in Canada have helped move some of the companies toward forest conservation and better protection of ecologically sensitive areas.

Yes, there is some movement; however, I think there is still a significant difference. As Mr. Awashish pointed out, Aboriginal people use the forests as a source of food and materials for their own use. Aboriginal communities today continue to do that to varying degrees, depending on where they are and the extent to which their traditional territories have been encroached upon by non-Aboriginal people.

We still do that, and we still depend on it. We have different values in terms of how we make decisions on the land base. We have values that differ in terms of what plants we might want to protect in forest management. Mr. Awashish indicated he was concerned about the replacement of spruce by pine plantations in his traditional territory. Those are examples of where it comes down to forest management where some of these differences lie.

One thing that stands out is that Aboriginal communities, when they think of forest management, they are less driven by the profit motive; it is more about preserving some of the traditional and social values.

Senator Eaton: Are you not worried that we will end up creating a parallel system?

Mr. Bombay: I believe they can work together. Aboriginal people in Canada are seeking a separate path, to a large degree. They are talking about coexistence and about being able to integrate, but at certain levels, not necessarily developing our own management system so that we can manage the resources in accordance with our values, because we realize that they will never, or at least for the foreseeable future, be quite the same.

In the interim, we have to look at how we can manage to preserve certain elements that we feel are important. Yes, there will have to be a separate system. When we talk about a First Nation forest tenure system in Canada, we are talking about a system that enables Aboriginal people to put value on traditional use and on the harvesting of materials for their own needs, and to practice silviculture with that in mind, for example.

There are various differences. Small scale versus big scale, and a value-added process rather than commodity production, are examples of some of the differences. When it plays itself out; Aboriginal people will go more toward value-added rather than large-scale commodity production. This makes sense economically and from a values point of view.

Senator Mercer: Mr. Awashish and Mr. Bombay, thank you very much for your interesting presentations. I have only a couple of questions for each of you, all along similar lines.

Mr. Awashish, you spoke about the number of people working in various areas. I tried to add them up as we were going along, and I came up with 144. Have I missed some people? What is the ratio of Aboriginal versus non- Aboriginal people working in the industry? What is the split?

[Translation]

Mr. Awashish: At the plant itself, we said 60 persons, 55 of whom are Aboriginal. In the five key positions, we do not yet have people trained to occupy the plant manager and accounting positions. Our objective is to reach 100 per cent. We are talking about five non-Aboriginals who occupy top plant management positions, such as the plant manager and the top foreman for operations.

In forestry, silviculture, all the workers there are Aboriginal. The approach used as an economic development plan in the community was to draw a distinction between community projects and individual projects. The mill is a major investment in the order of $10 million. No individual or group of individuals had the financial capacity to establish a partnership with a large company. That is why the Atikamekw Council of Obedjiwan got involved and the project was designated a ``community project''. Other community projects are planned in the community and the same approach will be used.

With regard to individual projects, that is interesting as well because our approach was to acquire knowledge in the fields in which individuals invest. With regard to transportation, buying a large wood transport truck is a $500,000 investment. We had to find a way to help the individual acquire the knowledge and the financial capability. We established a program to partner with non-Aboriginals in the region to operate a business to transport logs, chips and saw dust by truck.

We established programs to assist these individuals in partnering with other individuals in the region. That is the meaning of the approach we have used to operate the plant.

[English]

Senator Mercer: One thing we have learned is how expensive it is to be in this business: $500,000 for a truck and $500,000 for another piece of equipment. It is an expensive operation.

You mentioned the tax-free status. It is tax free, but you have a partnership. Are your partner's earnings tax-free as well? We understand the tax status of Aboriginal people, but does it carry over to your partners?

[Translation]

Mr. Awashish: That is why we chose this legal arrangement which is called the limited partnership. By comparison with an incorporated company or another form of company, an incorporated company is taxed on its profits, whereas a partner in a limited partnership receives its share. If Abitibi-Consolidated receives 45 per cent of the profits of the limited partnership, it will pay its taxes, whereas we pay no taxes on our 55 per cent. That is a new legal structure in the forest industry. It was a bit more complicated convincing our partner, which was a big company, but they ultimately understood why we wanted to register in that way. And the example was followed for other partnership projects. I remember that Hydro-Quebec used this arrangement with Aboriginal partners.

[English]

Senator Mercer: You guys were pretty smart in setting it up that way and protecting your tax status, which is a great advantage.

Neither of you mentioned the word ``certification'' when you talked about the forests. If you did, Mr. Bombay, I missed it. Mr. Awashish, are your forests certified, or are you working to certification of the forest? We have learned that the market out there is changing and people are starting to demand that wood comes from certified forests.

[Translation]

Mr. Awashish: We received our certification five years ago, I believe.

[English]

Senator Mercer: That is good.

Mr. Bombay, you said that there are about 80 foresters, 40 natural scientists and 300 natural resource technicians, for about 420 people. You also told us later that 10 years ago, you had identified the need for 500 to 600 foresters, but we only have 80. How are we addressing the shortfall? We know there are not a lot of people in any community going into forestry these days. How are we addressing this? It must be becoming critical as we move along, if you only have 80 foresters and you have identified that you need 500.

Mr. Bombay: As Mr. Awashish pointed out, we often have to hire non-Aboriginal people. Particularly on the business side we find that we engage non-Aboriginal people to work with our companies, in key positions, often, as Mr. Awashish pointed out. That is how the shortfall is being addressed right now, is through hiring non-Aboriginal people or contracting with, say, forest management companies.

Many of them now have developed this Aboriginal forestry practice within their companies and so there are several companies that have worked with Aboriginal communities and helped them in running their businesses, developing the forest management plans for the tenures they may hold. On the Aboriginal side we have been able to define for these types of companies the key aspects of forestry that we want built into our forest management plans; for example, the values that we discussed earlier. Some of these companies have become quite sensitive to our needs in that respect, and so have been key in assisting us in building the Aboriginal forest sector. We have several companies like that.

However, as Mr. Awashish pointed out as well, the intent over time is to build our own human resources in those areas, and that is what we have to address. It is a problem, as you mentioned, attracting the right students to study in these fields.

Senator Mercer: We talked about the federal government having a unique role in the Aboriginal community as opposed to other communities. Is this one of the areas we should be addressing in our report, focusing on education of people for the forestry sector? You have identified a number of needs specifically, but should that be one of our focuses?

Mr. Bombay: Yes, that is true. I think I indicated that at the community level we have a real need for forest land managers — not only land managers, but people who can manage our interests. We should be mounting some type of campaign to get Aboriginal people into those schools.

We know there will be other areas of need, too, like wood science, for example, and wood science technologies. We know that Aboriginal communities, when they develop their resources, want to develop value-added processing types of businesses. Wood science backgrounds and skilled trades that support value-added processing would be another area where we should be looking. We should look at focused types of training and programs to address that need.

Senator Plett: I also have a few questions for each of you and probably will not get finished, so once I have exhausted my time, the chair will let me know and I will go on a second round as well.

Mr. Awashish, you talked about having problems with credit. I think this is probably along the same line as where Senator Mercer was going. You talked about problems with having credit. Senator Eaton suggested that you have a fairly large partner in what you are doing, yet one of the problems you are having is getting credit to expand or develop your operation.

I would like you to explain the reasons. You suggest that, at least on 55 per cent of your operation, you pay no taxes. That suggests to me that you have a bit of an advantage certainly over companies that have to pay tax on 100 per cent of their profits. You are associated with a large company that, I would think, has good access to credit.

When you go for credit, you have a 55 per cent ownership. Most credit institutions simply look at a bottom line and, if you are viable, they give you credit. It has nothing to do with where it is. If it is a viable operation, most companies offer credit. I am interested in knowing why you are running into these problems.

[Translation]

Mr. Awashish: I left the board of directors about four years ago. Consequently, I cannot answer your question accurately. Obviously, our partner had a role to play in negotiating with the financial institutions. The financial situations of the partners were examined, but they relied more on the project's viability in granting credit.

The project was profitable in the first five or six years of operation. Then the crisis hit the forest sector, and as you know our partner, Abitibi-Consolidated, has had financial problems in recent years. I assume the banks have carefully analyzed the situation, as they do when they grant credit.

As a result of the crisis, we have posted losses since 2006, which must trouble the financial institutions. What is more, the other company had to seek protection under the Bankruptcy and Insolvency Act.

[English]

Senator Plett: Thank you, sir. My next question then, along that same vein, is you have suggested the problems but I have not heard you suggest the solution. What are you asking for? Are you asking for federal government involvement in your operation? Do you want to take over more of the operation? What is your investment? I am asking many questions here at the same time, but what is your investment? Is your investment 55 per cent in this company? You own 55 per cent. Could you let the committee know at least what you would like to see happen, other than obviously making more money and having more credit.

[Translation]

Mr. Awashish: At the start of the project, we did obtain federal government assistance. In 1999, the National Bank for Economic Development granted a loan of approximately $2 million to support our 55 per cent share. Initially, if the project cost $7 million or $8 million, we had to find funding to assume our 55 per cent share, while our partner assumed its 45 per cent share. In addition to the federal government loan, there was also a contribution from the community.

We agreed with our partner to establish a reserve fund, out of profits, for future investments.

The project was to enter its third phase. The lumber that comes out of our mill is neither planed or dried. It is forwarded to Saint-Félicien, in the Saguenay-Lac-Saint-Jean region, where it is dried and planed at a plant belonging to our partner. The costs to transport the semi-finished product are very high.

We tried to build the infrastructure for a road in cooperation with the Government of Canada. Discussions were conducted with the federal government for a tripartite agreement to build a 160-kilometre gravel logging road that would link the Obedjiwan community to the provincial highway between Chibougamau and Saint-Félicien. Given the high transportation costs, we tried to improve the road by seeking federal government support. At first, the Department of Indian and Northern Affairs told us that the matter did not come under their mandate, that the department's mandate was to invest in the community and that other matters were under the province's jurisdiction.

With the Infrastructure Program, I believe it is now possible to obtain federal government support for infrastructure projects, in cooperation with the province, to promote Aboriginal economic development. However, the file has not moved in that direction.

In addition, a third phase of the project was planned in order to plane and dry the wood in the community. However, the softwood lumber agreement blocked our efforts and we were unable to go ahead with that third phase. That has put a damper on our future investment projects.

[English]

Senator Plett: I have one question for Mr. Bombay. You mentioned in your presentation that the Aboriginal people have not kept up with skill and professional development, something along those lines. If I am wrong, correct me. That is not the question, but am I correct in that statement?

Mr. Bombay: I would change the word ``kept'' to ``caught.'' We have not caught up. We were never at the same level of skill development. It is not a matter of keeping up; it is a matter of catching up.

Senator Plett: I will use the phrase ``caught up.'' The company I owned for many years that my father started back in 1957, now being run or owned by my two youngest sons, over the last 40 years has worked largely in Aboriginal communities in Northwestern Ontario, Northern Manitoba and Northern Saskatchewan. In many of the projects we have done, there were clauses in the tendering stages stating we were required to use a certain amount of local labour, Aboriginal people in the communities. It was part of the contract. We have always tried to do that. The problem there, as I think you have here, was finding the people with the skills to do the work. We are a plumbing and heating contractor and so needed people with certain skill sets. We did not want to put people on a shovel; we wanted to use people with certain skill sets and it was difficult.

In Manitoba I believe we have done an excellent job with some of our northern colleges to allow people to come, for example, to The Pas and receive training and become tradesmen and so on. It has improved. One of the communities, and I want to speak a little bit about that, is Norway House where Chief Ron Evans, now Grand Chief, did an excellent job of moving the community forward and encouraging his younger people to go and get the training they needed. It has gotten better, but we are still struggling with that.

I think that one of the issues is that the young people — I live in a rural area — in our village seem to want to move into the larger cities. It is more exciting, and so they move there and do not necessarily come home. I have felt that maybe that has been some of the problems in some of the Aboriginal communities. I may be wrong.

The point I am making is this problem seems to be widespread.

This is not just a problem in the forestry sector. I am not sure what the answer is. I think that over a period of time the Aboriginal communities, along with government, have tried to develop some solutions, for example, building colleges up north so that the young people do not have to come to Winnipeg to get their education. They can go to The Pas, they are an hour's flight from home, and, in some cases, they can drive home. However, it has not seemed to resolve all the issues.

I think the problems in my company are the same problems that we have in the forest industry. I can identify with them, but how do we solve them?

Mr. Bombay: I do not profess to have all the answers. Governments have faced that fundamental and difficult question for years, as well as the labour market issues. Urbanization is occurring and probably will continue to occur over time.

We have to appeal to the Aboriginal youth and link it back to some of the values we have. We have to develop campaigns that make things relevant for them. I have often thought that one of the problems with Aboriginal people acquiring modern-day skills is that they do not see the relevance of the training or the profession to them. They might come from communities with low educational attainment levels, so they do not see it playing out in their parents or the people around them. Developing relevance is important.

We have seen examples in Canada where, if you get a certain amount of momentum, it snowballs over time. If certain people develop in a community, it will influence how some of the youth develop over time.

It is important to develop programs that attempt to create this snowball effect. In other words, get a certain number of people into these programs and then communicate in a campaign about their achievements, what they are trying to do and how they are trying to serve their communities to then create momentum in that area.

It is important to make forestland management or Aboriginal forestry an area to which youth can relate and why it should be important to them, their communities, their children and future generations. That kind of message has to be done, and resources should be dedicated to fostering that kind of campaign or targeted effort at influencing youth.

We have Aboriginal leaders across the country who say the land is important and that our relationship with the land has to be maintained. Then you ask how do you do that. You have to become trained in an area that enhances your ability to maintain that relationship with the land. In Canada, that means getting involved in forest management. Those messages have to come across. Organizations like ours have attempted to do that in the past, but we have never had sufficient resources to do it well.

[Translation]

Senator Ogilvie: Mr. Awashish, you talked about a shortage of wood and you are in the middle of a forest. Could you explain this shortage of wood volume?

Mr. Awashish: It was a predictable problem, the more we looked at how the forest was being developed, and here I am talking about the Province of Quebec and especially my corner of the country. In my presentation, I talked about the massive increase in logging, and I believe that the government of the Province of Quebec adopted a new forest system around 1987. Forest development contracts were granted to the major forest companies. Before that, more forest concessions were made for development purposes. With those changes, wood volumes were granted in the form of forest development; there were a lot of requests. A number of logging companies, big ones and medium-size ones as well, got volumes of wood.

When we came up with our project, we had difficulty. Fortunately, there was some willingness on the part of the minister of Indian Affairs at the time. He made a political decision and gave us an annual volume of wood in the order of 60,000 kilometers. We managed to increase it to 120,000 kilometers. Since that time, we have reached saturation. The answer we were given was that there were no more available volumes of wood. They had all been granted to companies, even though we were surrounded by forest.

Senator Ogilvie: You also mentioned a problem of land access. You attributed that problem to the other forest companies. Give us a little more information on that situation.

Mr. Awashish: I said, at one point, that the people in the territory, even if their residence was in the community, continued to use their territory, even though large forest companies were established there. They knew the territory very well. We already knew there were virgin forests that had not yet been developed. We were headed in that direction in order to secure wood volume there. As soon as we began operating the mill, we saw at one point that there was a kind of strategy at work. The companies quickly moved in to cut there so they could go after forest more quickly because that was where we wanted to develop our wood.

[English]

Senator Mahovlich: This committee visited Chibougamau. I was very impressed with what they have accomplished, for example, a sports centre and a new museum, all built out of wood.

Do you encourage this type of community? Does Abitibi encourage the Obedjiwan nation in their arts and handicrafts? Are the traditions still kept? Are we losing that tradition, or are we encouraging our youth in the Aboriginal tradition?

Mr. Bombay: I have not had the opportunity to visit Chibougamau.

Senator Mahovlich: It is only 100 kilometres away.

Mr. Bombay: It is a little farther than that. We should be making hockey sticks there.

Senator Mahovlich: That is right. We need more hockey players.

Mr. Bombay: I have heard of the community. I have read articles about the community, and I understand a lot of the construction is wood. Many Aboriginal communities, when they build their structures, prefer to build in wood.

If you look at the West Coast in particular, the communities out there use a lot of cedar. They also use totems to authenticate the types of structures they build today. You see a lot of that and wood is a material that Aboriginal people prefer to use. It is evident in the communities where they have been able to acquire the resources to build such structures and to process the wood to build them.

That is the type of thing we have to keep doing to encourage our youth to build on the traditional skills around the creation of contemporary wood products. We have to encourage them to use the knowledge they have about carving and producing those traditional wood products, while bringing them into a more contemporary type of use and appealing to a larger market out there in terms of that wood.

It is one of the ways we can use traditional knowledge and some of our traditional skills in advancing Aboriginal forest product development.

Senator Mahovlich: You mentioned plantations. Abitibi would probably like to have more softwood plantations. Softwood trees grow quickly and are put to use quickly. After all, they are in the business of the bottom line and this would quadruple their profits.

We had witnesses this past week who said there were two or three plantations in the province of Quebec. Do you encourage this type of plan?

[Translation]

Mr. Awashish: Earlier I mentioned that I have witnessed a regeneration of the forest that has not yet reached full maturity. I noticed that more grey pine was being planted. That pine grows more quickly than other kinds of softwoods such as black spruce, among others. I also heard that genetic improvement research was being conducted. Research is being done to develop this kind of softwood, which is more weather-resistant and grows more quickly. There is obviously a major financial concern there. For our part, around 1985, we established a forest services company, which belongs 100 per cent to the Obedjiwan Band Council, to do planting. Our immediate concern in that regard was that large forest areas had been cut. It was not necessarily a major concern for the companies; it was more a responsibility of the government's programs; there was an obligation to replant where wood had been cut. It was in that area that we got involved. Obviously, our politicians definitely denounced that kind of approach, which consisted in favouring only one species of tree, the grey pine, over the entire territory. We said at the time that it would no longer be the same territory as it was before the big logging operations.

We are concerned about the current forest development approach.

[English]

Senator Mahovlich: That is true because certain animals like certain trees. I had a poplar growing on my property and once it matured, a beaver came along and cut it right down. A bear will like a certain tree and a moose will like a certain tree to scratch against. You need to have a variety of trees. This could be a problem when a corporation comes in and creates a plantation. It will affect the whole animal system.

Senator Kochhar: It was a learning experience for me, trying to learn more about the Indian way of life.

I was a little struck, Mr. Bombay, when you made your presentation and you said that for most of the businesses, you are not profit oriented or motivated, you are value motivated; values are more important than profit. In my culture, unless you have a profit, there is no other motive except to have good values. Profit is the underlining principle of any business because you cannot expand without profit. You cannot buy a $500,000 truck without a profit and you cannot employ more people without a profit.

You also talked about the obligations of the federal and provincial governments, but I heard nothing about the obligations and responsibilities on the other side. When you go into a partnership, you give and take, just like in marriage; you give a little bit and take a little bit. Yet in all the presentations I have heard, it is what other people can do to enhance the values and culture and how you can preserve it. I just want to get a little more educated, so if you can elaborate on that, I would appreciate it.

Mr. Bombay: When I was speaking of profit, I was looking primarily at the forest management side in the forest sector, as opposed to the forest-based businesses that operate. A division we make very often in the forest sector is the management of the resource and the downstream utilization of the resource. There are two sides. When I was talking about less profit focused, I was talking more about the forest management side in terms of how we manage the land.

However, I think there is some truth overall in the statement I made from the perspective of First Nations, that we are less profit motivated. We do, however, seek means to address our social needs, some of which are employment related.

One of the best known forest management regimes by a tribe — this is in the United States — are the Menominee people. I am not sure if any of your previous presenters talked about them as a case study in terms of how to run a forestry operation. In many cases, the Menominee have avoided going to higher technology in their milling processes to increase the amount of employment in the mill. If they had brought in different types of technologies into their mill, they would have had to lay off probably two thirds of their workforce.

There are tradeoffs to be made, so the value becomes one of employment as opposed to profit. In Canada, we see the big mills going to the latest technologies. This technology is costly and tends to reduce the employment in the plant. I know some pulp mills today run with 18 or 20 people on a shift compared to 30 or 40 years ago, when there were 200 people on that shift.

We know that while the technologies have been good for the bottom line, they may not have been good in terms of the benefits you derive. Those are the balancing things you have to make in terms of running a business and a forest operation.

In some cases, Aboriginal people may choose to forego the profit and instead share the benefit in terms of employment. That is not always the case. Everyone has to make his or her own decision on that at a business level. Overall, we have to be aware on the business side that we have to make money to stay in business.

My home community is Rainy River First Nation in northwestern Ontario, and we have operated a mill on our reserve for 30 years. It has changed in terms of its product mix over the years but we have been able to keep that mill afloat. This small mill makes more money than AbitibiBowater does in terms of the profit and loss statement. We have profits when many of these big forest companies are losing money.

We have to focus on the profit and the bottom line, as well. There is no question about that. Our businesses have to be profitable and sustainable; that is something we have to build.

My statement had to deal with the balancing of benefit, both on the forest management side and on the business side.

Senator Plett: Mr. Awashish, how much of the land that you forest is reserve land and how much is leased? I assume the rest is leased from the Quebec government. This goes back to what Senator Ogilvie already touched on; namely, someone was encroaching on your forest. I would consider someone coming in and cutting down my trees to be poaching. Therefore, why is that happening?

[Translation]

Mr. Awashish: To get a clearer understanding of the situation, first I am talking about reserve land as defined in the Indian Act. When I talk about the Obedjiwan community, that is the reserve land. As there is not enough forest to operate a sawmill on that land, we therefore had to look outside the community.

[English]

Senator Plett: Is that leased?

[Translation]

Mr. Awashish: It is in that sense that I also refer to traditional lands, family lands that are frequented by large families.

When I approached the government, I told it: ``I am not coming to negotiate my land rights; I am coming to see you to solve a problem. Major operations are being carried out on our hunting lands; would there be a way to agree to start up a sawmill project, to operate a sawmill?'' I said: ``This is not a claim, but a business venture. I am asking you whether that is possible.''

As I told you earlier, it stemmed from a political wish. Despite the scarcity of the resource, the Quebec government made a positive decision. From there, they granted us a certain volume of wood to operate the sawmill.

However, the way Quebec's forest system operates, they have developed units. They grant volumes of wood per development unit. In a development unit, there may be two or three forest supply contract recipients. There were two forest supply contract recipients in the development unit: a large company that was not Abitibi-Consolidated and the Scierie Obedjiwan.

I mentioned that to you earlier; they were targeting a specific area of our traditional lands, and when the other company realized we were coming into the picture, we got the impression they quickly went after that volume before we got there.

[English]

Senator Plett: Mr. Bombay, you referred to creating an area of land for Aboriginal tenure. You said the First Nations would use their own style to develop that land. Could you explain those two comments to me?

Mr. Bombay: I am not sure of the leasing situation in Quebec, but forest tenures in most provinces grant different types of tenure: It is either area-based or volume-based tenure.

Senator Plett: Which is what you have, is it not?

Mr. Bombay: Yes. Mr. Awashish referred to the small size of reserve lands. I do not know if people appreciate that Indian reserves in Canada are very smaller. They are smaller than most private farms owned by Western ranchers. The Royal Commission on Aboriginal Peoples made a statement about the size of Indian reserves in Canada. At that time, you could put every Indian reserve in Canada in the Navajo reserve in the United States.

The land base Aboriginal people have to use in home communities of reserve lands are not adequate to develop a forest-based businesses. The wood is simply not there.

When we talk about tenure, we are seeking tenure on what is known as Crown land. We have rights on those lands; we have Aboriginal treaty rights to use of land in our surrounding territories. That is reflected in treaties and the concept of Aboriginal title in British Columbia.

Taking what is granted in treaties and the concept of Aboriginal title into something that is usable today in terms of management structure, forest tenures have been the means to do that. It is an interim measure, more or less, to any final reconciliation of Aboriginal treaty rights. Therefore, forest tenure becomes important as a step along the way. Forest tenure, is the way in which you grant resource use on forested land. It is vital to First Nations developing in the forest sector. We have to have access to resources.

It is more about the management of that land and basing that management on our values. We do not have many good examples of how we take traditional knowledge and apply it in a commercial sense and whether, in some cases, we want to do that. There is a lot of sensitivity around say, medicinal use of forest resources in terms of what needs to be disclosed in the form of traditional knowledge. Those are sensitive issues around forest use.

It is important that Aboriginal people have a say in the management and development of the land. Gaining tenure enables them to do that, if the tenure arrangements are flexible enough to reflect those Aboriginal values.

[Translation]

The Deputy Chair: The time allotted for our meeting with the witnesses is unfortunately over, and I would like to thank Mr. Awashish and Mr. Bombay, on behalf of all the committee members, for your presentations and for your answers to our questions. Good day to you.

We will now take a brief break, and the committee will reconvene in camera.

(The committee continued in camera.)