Proceedings of the Standing Senate Committee on
Agriculture and
Forestry
Issue 8 - Evidence
OTTAWA, Tuesday, October 22, 1996
The Standing Senate Committee on Agriculture and Forestry met this day at 3:20 p.m. to consider future business of the committee.
Senator Leonard J. Gustafson (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, the first item on our agenda is the itinerary. I will ask Mr. Blair Armitage to take us through it. I believe we have chosen to take the second proposal, but perhaps he can take us through it. We may choose to make changes.
Mr. Blair Armitage, Clerk of the Committee: I have given committee members a fairly basic outline. I thought I would fill in a few items that I was not able to do prior to the meeting.
On Sunday, November 3, we are proposing that there be a briefing of the delegation at 3:30 in the afternoon at the hotel. We will be staying at the Hotel MacDonald.
On Monday we travel up to the Athabasca region to view the Alberta Pacific mill. Later on we tour the Alberta Pacific woodlands operation.
The next day is fairly straightforward. We are arranging panel discussions in the morning and the afternoon based on a few different perspectives.
Wednesday we have a few more meetings. They are round-table discussions. That afternoon there is a flight out of Edmonton leaving at 5:40. It will arrive in Saskatoon at 7:35 p.m. local time. We will stay overnight in Saskatoon at the Best Western since there is no continuing flight on to Prince Albert. That hotel is relatively close to the airport because the next morning we are leaving at 7:25 a.m. to arrive in Prince Albert around eight o'clock. We will then take a van to Meadow Lake to tour the Millar Western facility and the Mistik Management Limited woodlands operation. That evening we will return by car to Prince Albert where we will stay at the South Hill Inn. We have space there so that the next day we can meet with local NGOs and the Model Forest Board of Directors.
Mid-afternoon at about 3:45 p.m., a direct flight will get us to Winnipeg so we can continue to have meetings the next day in Winnipeg. We are staying at the Fort Garry Hotel where we will meet local NGOs. They indicated that Saturday would be better for them so it would not interrupt their usual work week.
With respect to Sunday, a few options have been presented to the committee that perhaps Senator Gustafson can raise with you. They will affect the eventual timing, such as how long we stay in Swan River and when we return to Winnipeg.
The Chairman: It has been suggested that we drive from Dauphin to Swan River to see some of the forests. That sounds good to me. Is there any discussion? Perhaps someone knows more about that area than I do.
Senator Rossiter: Do not forget that that is November 11, Armistice Day.
Senator Spivak: I just realized that.
Mr. Armitage: When I brought this up initially with individual senators who said they would be travelling, they said that would suit them fine. Then the steering committee discussed it and indicated that they did not have any problem with it. In fact, I think I raised at the time the suggestion that perhaps we could include a small ceremony or mark some observance of the moment at the appropriate time when we are at the mill. We can include arrangements with the mill operations people and mark the occasion in that way.
Senator Rossiter: It is just the public perception.
The Chairman: At what time will we be driving? Most services are held in the morning.
Senator Taylor: They are held at eleven o'clock.
Mr. Armitage: The morning of the 11th, we are touring the Louisiana Pacific operation. We can time the tour to conclude prior to eleven o'clock and assemble in an appropriate place to be worked out with the people there.
The Chairman: They might even attend.
Mr. Armitage: Yes.
Senator Spivak: How long does it take to get to Swan River from Winnipeg?
Mr. Armitage: It is not a direct flight; it actually stops in Dauphin. It is about an hour and a half. It is a charter plane, and the name of the company is Keystone Air.
Senator Spivak: How far is it to drive?
The Chairman: By highway it is not a long drive.
Mr. Armitage: It was indicated to me that driving to Swan River would take up to six hours from Winnipeg. The option given to us is to fly direct to Swan River, or fly to Dauphin to cut about three or four hours off and drive from there.
Senator Spivak: What sort of plane flies to Dauphin?
Mr. Armitage: The same one that goes out to Swan River.
Senator Spivak: You better check with the government people there. They take those planes all the time.
The Chairman: Should we entertain a motion on driving through the forest to Swan River from Dauphin?
Senator Spivak: I so move.
Senator Taylor: You mean drive from Dauphin to Swan River rather than fly from Dauphin?
Senator Spivak: We would fly to Dauphin.
Senator Taylor: A boreal tree looks the same in Peace River as it does in the Yukon or Newfoundland. We will not see a heck of a lot.
The Chairman: I am a man of the soil, so I would like to drive through and see it.
Senator Spivak: I would like to drive from Winnipeg.
Mr. Armitage: It was suggested to us by someone who had been on the witness list early on but was not kept on the witness list after the initial consultations that it would be an appropriate or an interesting way to view the area that is to be cut for the Swan River operations. She also indicated that the chairman will be receiving a letter from one of the witnesses who is on the list, an Eilene Lynxleg. She is a member of one of the First Nations groups there and wants to invite us to stop by.
The Chairman: Are honourable senators in favour of Senator Spivak's motion that we drive to Swan River from Dauphin?
Hon. Senators: Agreed.
The Chairman: Carried.
With respect to the itinerary, do you want to deal with the Canadian Wheat Board on Tuesday the 12th? Senator Eugene Whelan said he would like to be there. I said he could fly in.
Mr. Armitage: We have a budget item in our agriculture order of reference to visit the Canadian Wheat Board. We could have other senators who are not members of the task force on the forestry issue attend the meetings with the Canadian Wheat Board.
The Chairman: The important thing in that case is that they are made aware of the timing and the opportunity if they want to avail themselves of it.
Mr. Armitage: We need a motion authorizing Ms Dewetering and Mr. Fréchette, our researchers, to join us.
Senator Hays: I so move.
The Chairman: Is it agreed, honourable senators?
Hon. Senators: Agreed.
The Chairman: Carried.
Senator Taylor: There is the wheat board opinion, but, as you know, the debate is out there. I think we can probably absorb another half or three-quarters of an hour tops from those who are against the wheat board, pro-wheat and anti-wheat. Do you think that is doing too much?
Senator Spivak: If we talk to anyone, I think we should talk to the grain exchange. Do we really want to talk to Farmers for Justice?
Senator Taylor: I was not thinking about them. I was thinking about the Wheat Growers Association and the Barley Growers Association.
Senator Spivak: We know what we think, do we not? Maybe we do not.
Senator Taylor: We think we know what the board feels as well.
The Chairman: Do we have time to entertain this at this time? It is a very controversial issue. We can almost tell before we call the groups what their positions will be.
Senator Taylor: During the last few months, I have conducted speaking tours around Alberta. When I meet with the board people, by the time I fall off to sleep at night, I get a call about midnight saying, "Why did you not meet with the growers?" If I meet with the growers, I get a call from the board people. It spreads like wildfire.
The Chairman: You have to meet with them the same day, though. Would it be possible, given our time restraints, to deal with it at the same time?
Mr. Armitage: We have that Tuesday morning to entertain extra people who wish to speak to us on the Manitoba side who are not yet in place on our itinerary. There is some pressure on our timing. I think the committee would be better served to meet them in Winnipeg on the Tuesday morning rather than try to cram everyone in on a Saturday. I was hoping to fit a few people in Tuesday morning. You could stay over to Wednesday morning.
Senator Taylor: I do not want to hear both sides that bad.
Mr. Armitage: You can then extend your stay for a few more days if you wish. It is a question of how much energy you will have at the end of a fairly arduous trip.
Senator Spivak: Some of us will have been on the previous trip with the Energy committee and all week now with this trip. I think we will probably have to come to the Senate Tuesday night. Whatever arrangements you make are fine, but the plane out of Winnipeg to go back to the Senate leaves at six or seven o'clock.
Senator Rossiter: We will not be sitting that week.
Senator Spivak: You are right; we are not sitting that week.
The Chairman: In terms of farm groups, I was wondering if they will not be appearing before the Standing Committee on Agriculture and Agri-food in the House of Commons. Usually when they come, they ask for a slot in the Senate. Do we have any information on what has been done there? You will have the pools, the wheat growers, the barley growers and the western grain producers. They will all appear. I am sure they will appear before the Standing Committee on Agriculture and Agri-food because they have concerns. Would it be better that we entertain them here in Ottawa after we have heard from the wheat board and then ask them to appear at the Senate? It will then also be open to more senators on the agriculture committee to attend and hear from them.
Senator Taylor: That is okay by me.
The Chairman: Does that sound reasonable?
Senator Taylor: Yes. I so move.
The Chairman: All in favour?
Hon. Senators: Agreed.
The Chairman: Carried.
Senator Taylor: I have a question about Monday night, between the 4th and 5th. Is that in Edmonton?
Mr. Armitage: That is correct, both days.
Senator Taylor: That was not clear to me. It does not show us coming back to Edmonton.
Mr. Armitage: Sorry.
Senator Taylor: That is all right. As a matter of fact, you come right past my place. I might put some good agricultural products out.
The Chairman: The second item on the agenda relates to the composition of our delegation. We need a motion to include Senator Corbin.
Mr. Armitage: Senator Corbin's name has been forwarded by Senator Taylor as someone who has expressed a desire in accompanying the delegation. Since he is not a member of the committee, I think it would be appropriate to have the committee move a motion to cover his expenses, if that is your desire.
The Chairman: Is there any discussion?
Senator Spivak: It is not unusual, is it?
Mr. Armitage: Nothing prohibits it.
Senator Spivak: He can become a member of the committee for that purpose, I think. I so move.
The Chairman: All in favour?
Hon. Senators: Agreed.
The Chairman: Carried. The composition will be the chair and Senators Hays, Anderson, Corbin, Spivak and Taylor. Is it agreed?
Hon. Senators: Agreed.
The Chairman: Carried.
For those senators who have not met Barbara Robson, Barbara is in charge of media relations. She has prepared a news release. I will turn it over to Barbara, and she can go through it.
Ms Barbara Robson, Communications Consultant: Senators, I drafted this release primarily as a fact-finding tour release rather than a release for the whole study, in part because I think you want to answer some questions with respect to the study, Ottawa hearings, written submissions and other things you may wish to consider, and you can do a second release later on. This one meets what is generally regarded as the duty to inform the public and the media of the expenditure of public funds and to interest them in the work of the Senate.
In the report of the communications strategy, I suggest further elements of dealing with the news media, the public and interested parties. However, I suggest this go out to the distribution list that is attached. It would cover when and where you are going and why you area going with respect to the national goals of sustainable forestry and protection of biodiversity, acknowledging that both industry and governments in many jurisdictions have attempted to deal with this and have taken steps recently, and that the committee hopes to further that work through this study.
You could then give the jurisdictional mandate. Minor attention has been paid to the question of the Senate looking into provincial concerns. I think we should fairly address that issue. What I used in the main for that paragraph at the top of page 2 was the framework agreement for federal, provincial and territorial cooperation on forestry.
I am open to word changes on any of this, senators. This is a draft for your basic consideration. It would be sent, as the distribution list suggests, to all Members of Parliament and the Senate, and then the prime government departments provincially, forestry organizations and environmental groups which have focused their attention on forestry, all of the people who will be members of the groups or witnesses you will be meeting informally, and then a limited news media distribution.
If it was going on the Canada NewsWire, it would require further expenditure, and the committee may wish to consider whether it wants to spend funds on that. It costs nothing to fax a copy to the Canadian Press and the Southam News Service. Then it is up to them to distribute it if they choose. The advantage of Canada NewsWire is it goes directly into most news rooms of daily newspapers. Having been in a news room, I know they do not pay much attention to the Canada NewsWire, but you may wish to consider whether you want to spend funds on that kind of distribution.
Mr. Armitage: As an anecdote to the Canada NewsWire, I used it recently with the Special Joint Committee on a Code of Conduct. For $1,000, I think we got two appearances out of it. You can judge whether that is good value for your money. We issued a press release for $1,000 and were picked up by two different media outlets.
The Chairman: I understand that a motion is in order.
Senator Spivak: I have a slight problem which probably no one else will agree with, and that is, does the Constitution actually say "forest resources"? Even if it does, do we want to say that? It says, "While Canada's Constitution assigns exclusive responsibility for forest resources to provincial governments," but of course everything related to trade is federal, and industrial and regional development and environment is a shared thing. I do not know what the Constitution says. However, I wonder if the word "exclusive" needs to be in there. The reason I say that is because this is a touchy area. Why do we want to stress that even if it is true?
The Chairman: "The Senate comes snooping", said the Alberta Report.
Senator Spivak: We wrote a response. We sent you that letter.
The Chairman: I read it.
Senator Spivak: Do you feel we should take out the word "exclusive"?
Senator Hays: I am not sure that is right. As you know, a federal department of forestry existed, then did not. It was then recreated in the late eighties. I am not sure, but is it not an area of concurrent power, such as agriculture? I am not sure whether it is specifically referred to in that section of the Constitution, but perhaps you could check.
Senator Spivak: Perhaps we can rewrite that paragraph so it does not look like we are coming to snoop. Even if it is true, we do not want to emphasize it because we are walking on eggs here with respect to perception. I am not the least bit defensive about studying the area of forests which comprise $90 billion of exports and have so many uses other than just logging. The provinces want to log them. I am worried about perception. What do you think?
The Chairman: Would someone make a motion that we accept that release as it is and leave it up to Ms Robson?
Senator Taylor: I do not want to make a motion. I want to continue.
First, I would like to compliment the communications people for a letter signed by Senator Spivak which appeared in the report. I think that was a very good job. It is a lot better than I write because I have a faculty of always pouring water on troubled oil.
I want to get to this paragraph. I share Senator Spivak's concern about the phrase "exclusive responsibility". It sounds a little more pointed than I think we should be.
Second, in that paragraph, we do not mention anything about the federal responsibility for fisheries and the environment, which are closely linked to forests. As a matter of fact, fisheries are the only hook most environmentalists have in our provinces now in trying to stop excessive lumbering practices. It is the fishery hook we use. It is a federal responsibility for even fresh water fish that we are using.
Senator Spivak: Forests and fisheries are related.
Senator Taylor: That is right. I thought perhaps we should enlarge this to include the environment and the fisheries. I would leave out the word "exclusive". I so move.
The Chairman: All in favour?
Hon. Senators: Agreed.
The Chairman: Carried.
With respect to the Ottawa hearing, it has been suggested that there is not enough time to have them before, and we would be better informed if we were to have them after. Is there any discussion? We would be better informed and it would also allow time for people who want to bring themselves abreast with what is going on and give them an opportunity to apply to appear before the Senate.
Senator Spivak: Yes. I so move.
Mr. Armitage: We are also looking for perhaps an indication from the committee as to how much time they would be willing to put towards this. It has been suggested, in conversations with the researchers, that we could need up to two full days of hearings on this issue. I am wondering whether the committee would be interested in setting aside days in a specific week that are not normal Senate sitting days, for instance a Monday or a Friday or something of that nature.
Senator Taylor: I like the idea. We have to cover Ontario and Quebec, which is a large part of our boreal forest. I think if it needs two days, we could start out with one day and see. If we get the same response down here that we had in the west, we will need two days. Maybe they would not fit into one day. Perhaps we could leave it with you: One day full, and if we need more than that, we can go to two.
Mr. Armitage: Is there a day of the week that meets your preference?
Senator Spivak: Monday.
The Chairman: Are we agreed, then, that we will try for a Monday?
Senator Rossiter: Consecutive Mondays or Fridays.
Senator Taylor: I hate them all. Can we not pick a Wednesday or a Tuesday?
Senator Spivak: We will see.
Senator Taylor: Actually, we are even, are we not, as to representation from both sides of the house? We would need special permission, though, to sit.
Senator Gustafson: The next item on the agenda is future business. We had some discussions earlier regarding a trip to Washington and the agricultural policy of Canada and other members of the OECD and food security. We could deal with Washington first.
Senator Spivak: Too bad we did not go --
The Chairman: Earlier?
Senator Spivak: No, just during the election. When we go to Washington, is that to look at the new farm bill primarily or is it to get an update on the trade issues? What are you thinking of? I know we can do all of them but what is your basic thinking?
The Chairman: If you are asking me specifically, I think the trade issues are the most important. What I am hearing from across the line is that Canadians have not been promoting that idea yet, but their grain prices are falling like a stone. I get that from farmers over there.
Senator Spivak: Why?
The Chairman: I do not really understand why. They say that Argentina has a good crop and Australia has a good crop. It may be that countries buying the grain do not have the money, but farmers across the line tell me that their grain has dropped from $7.81 on durum to $3.80, and that has stayed consistent for the last seven or eight months. We are still not getting that from the wheat board. We have seen articles in the papers where they are asking those questions. I think trade will be important as well as this whole issue of the global market. It does not sound to me like there has been much change in the approach the Americans are taking.
How have you followed that, Senator Hays?
Senator Hays: Mr. Chairman, with respect to grains, I suggest that we still have ongoing issues that need some work. I noticed in the Western Producer of last week that Congress is looking at an international trade or an ITC type of investigation into beef imports from Canada. We have a whole bunch of ongoing things in the U.S. in terms of what I think is called planned production as an alternative to their marketing orders, which are equivalent to our supply management initiatives.
There is always a lot to be learned about the farm bill, and we have some interesting NAFTA-GATT issues. I do not think we have a final decision from the extraordinary panel on tariff phaseouts in the feather industry and the dairy industry, plus a whole bunch of other things. There are always many issues on the table with the U.S. This time is no exception.
On the food security issue, the World Bank has its office in Washington. A number of other agencies are involved in food security. This would be an opportunity to do something on that.
The Chairman: I do not think there are a lack of issues. The question will be timing and having the opportunity to meet the right people. Quite frankly, on that point, I would like to see us meet with Eugene Moose again. Remember him?
Senator Hays: Yes.
The Chairman: They tell us that if he decides the U.S. is going to sell grain, they will sell it, and if he says that they are not going to, they will not. I found him forthright, interesting and somewhat impulsive.
Senator Hays: Eugene Moose is the Undersecretary of Agriculture responsible for the Export Enhancement Program.
The Chairman: I happened to ask one of the congressmen whether Eugene Moose had all the authority he was purported to have, and he said, "Look, if he decides we are selling grain, we sell grain; if he decides we are not, we do not sell grain."
What about timing?
Mr. Armitage: The steering committee suggested late February might be appropriate.
We could work with the parliamentary calendar and use the idea of working in some briefings ahead of time.
Senator Spivak: Is there a break in the parliamentary session around that time?
Mr. Armitage: You will just be getting back in February from the Christmas extension. It usually goes into the first week of February.
The Chairman: I hear Senator Hays suggesting that we call an election for February.
Senator Hays: I did not hear that and I did not say that.
Senator Spivak: I heard it was April. What about going during the week that is the break, perhaps the first week in March, rather than taking a whole week away during the time that we are supposed to be here?
Mr. Armitage: Or an extended weekend?
Senator Spivak: That is fine.
Mr. Armitage: It depends on the availability of people in Washington.
The Chairman: On a standard weekend, can we meet people there? Are they in Washington? Will the people we want to meet be there then?
Mr. Armitage: The steering committee asked staff to prepare a work plan on this. We will present it before Christmas. It will be based on contact with Washington.
Senator Spivak: I suggest if we are just coming back in February that we not take a whole week off from the Senate but that we go when there is a break.
The Chairman: That is a good point. Will the committee be struck? If the existing administration stays in place, there probably would not be much change. If there is a change in government, there will probably be lots of change.
Senator Hays: The inauguration is in January. Assuming there is no change in the administration, I would not think there would be much of a change, although there may be a change.
Mostly we are dealing with congressional people, although not exclusively. Certainly Eugene Moose's position may change if the administration changes.
In terms of the Congress, November 5 is election day for them as well. I do not think there is any equivalent of a delay to an inauguration for them, so I imagine they will be back in business.
Senator Spivak: Could I make a suggestion as to one more issue we might pursue there? I know you are dying to pursue this issue. There is quite a concern, as you know, about pesticides in food. I met with Theo Colborn at lunch. The House of Commons committee was kind enough to include me. That committee is talking about the endocrine disrupters and pesticides. Apparently, part of that is under the agency that administers -- I do not know which agency administers it.
Senator Hays: The food and drug agency in the U.S.
Senator Spivak: I would ask if we could possibly arrange to sandwich that in. I know they are trying to work here with pesticides. There is an act coming down, a piece of legislation coming down, which is taking a long time. I do not know what it is called.
Senator Hays: Is it the pesticide registry?
Senator Spivak: It is something like that. I cannot remember the name of the piece of legislation, but I know it has to do with food and pesticides.
The Chairman: You are suggesting that we meet with someone in that area.
Senator Spivak: In Washington, yes.
The Chairman: Any other discussion?
Senator Taylor: Just so you do not think it is unanimous, I do not feel bad at all about going to Washington while the Senate is sitting, in case you are trying to decide whether to go on weekends or during the week.
The Chairman: I think we would have to respond when it would be convenient to get the proper hearings there. There is no point going if we cannot get proper hearings and meet the right people.
Senator Taylor: As well, lumber quotas spill over from agriculture and eggs and everything else. We could be talking about lumber quotas as well.
Senator Spivak: You are right. We have to remember that.
The Chairman: Our research people have heard the discussions there. I am sure they will come up with ample suggestions.
The next item on the agenda is "Other Business." A number of things will come forward in agriculture once we get this trip arranged. We will have a number of issues.
In talking to the Minister of Agriculture from Manitoba, with the Crow rate gone, they are very concerned that they will face increased freight rates of 300 per cent. It is a very serious issue. For Alberta, it is a very positive issue because they get to ship their grain cheaper.
In Manitoba, the minister suggested that they may have no other alternative but to ship through the U.S. because of the increased costs. He had numbers on that. The number I remember was a 300 per cent increase over the existing freight rates. He drew a comparison to Calgary, for instance, where Calgary had a net benefit of cheaper freight by comparison. Roy Romanow from Saskatchewan has been on this as well.
Senator Spivak: Mr. Chairman, do you think we should write a letter to the minister stating our concern once we get some of the facts about Manitoba?
The Chairman: I would like to get the facts. I would like to get the numbers from these people, both the Minister of Agriculture in Saskatchewan and in Manitoba where it appears that Alberta is not too concerned because of the distance to the lake --
Senator Taylor: I think there might be a number of concerns from Alberta. You must remember under the old system that the cattle feeding and fattening all moved into Alberta. With cheaper grain now in the centre of Manitoba, Albertans could be looking at a certain shift in the centre of finishing and feeding cattle going to Manitoba because grain would be a little cheaper and they have good water. Meat packing may even go closer to Chicago.
It might not be as bad as the use of grain on the ground in Manitoba for feeding. I would think that would be good. You might lose some, though.
The Chairman: After the end of November, it might be advisable to call some of these people and hear from them.
Senator Spivak: I would like to know, by the way, whether that shift is taking place or going into hogs. I have a feeling it is going into hogs in Manitoba.
Senator Taylor: Is that right?
The Chairman: The hog industry in Manitoba is big.
Senator Spivak: It is big and it will destroy the water system in Manitoba. I would like to look at the freight rates. I would like them to be better so we can grow grain and not pigs.
Senator Taylor: Do not be so prejudiced, now.
Senator Spivak: I am not prejudiced. This is a problem with the water table.
Senator Taylor: We are all cannibalistic and we are eating beef and pork. Manitoba would be a logical place to feed them.
You are talking to a family that pioneered the industry.
Senator Spivak: Meat stinks! Sorry. I am with k.d. lang on this.
Senator Taylor: The senator's father, way back in the 1930s and 1940s, was one of the first people to discover the optimal feeding area in Canada. I think your father and uncle established feeding way down as far as Toronto.
The Chairman: Senator Taylor, lest this gets out of order, let me bring a semblance of balance to the discussion.
Senator Taylor: I just wanted to point out that your grain prices control your feed prices.
The Chairman: Certainly there are a number of issues out there.
Senator Taylor: Senator, you have to get off that tractor and start feeding cattle.
The Chairman: I do.
Senator Spivak: I suggest we ask our researchers to get the facts for us. Once we have the facts, we can write a letter to the minister saying that this committee has a concern. I think we should get that out to him and see what they are going to do about it. They have to do something.
The Chairman: Is that acceptable?
Senator Spivak: I suggest that we ask our researchers to look at the facts. Were you talking about northern Alberta?
Senator Taylor: The south is where the feeding is.
Senator Spivak: We are talking about freight rates. It might be a problem in the Peace River area, as well as in Saskatchewan and Manitoba.
The Chairman: More particularly, the problem is in eastern Saskatchewan and Manitoba. Moose Jaw is in fact the halfway mark between Thunder Bay and the West Coast.
Senator Spivak: We might also discuss that with the wheat board when we are in Winnipeg.
The Chairman: I am sure they will be informed on that.
The committee adjourned.
OTTAWA, Thursday, November 28, 1996
The Standing Senate Committee on Agriculture and Forestry met this day at 9:30 a.m. to consider its order of reference to study the present state and future of forestry in Canada and to consider the Fact Finding Mission on the Boreal Forest in the Prairie Provinces.
Senator Leonard J. Gustafson (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, the purpose of this meeting is to brief members of the committee on the fact finding trip on the boreal forest to the prairie provinces. Senator Taylor, Senator Spivak and myself were on the trip. Unfortunately, Senator Taylor is not here. I understand he is in Greenland. I also understand he is very well informed on the industry, having been the critic in the Alberta provincial government on the forestries.
We visited three major plants, Athabasca, Meadow Lake and Swan River. Two of them are pulp plants, and the one in Swan River, Manitoba is a span board plant for chips. All are new plants, built within the last four years. Most have been operating for only two years. They are extensive.
The one in Athabasca, for instance, owned by Alberta Pacific, cost $1.5 billion. It is mainly owned by Japanese interests.
Senator Rossiter: There was a fair bit of controversy about the building of that.
Senator Spivak: There was lots of controversy.
The Chairman: The size of the plant was controversial. At the time we were there, there were 75 trucks going 24 hours a day delivering logs to that plant. The output is tremendous.
Senator Rossiter: Where do they get the logs?
The Chairman: They truck logs hundreds of miles, even from Saskatchewan. Most of the logs are harvested from government lands, and some from private lands.
Senator Rossiter: Were any logs coming from British Columbia?
Senator Spivak: I understand from our assistant that the cutting area is smaller than New Brunswick. It is the Alberta private wood lots that are being cut supply wood in B.C., because that province is short of wood, not the other way around. The private wood lots are practically depleted. They are clear cutting to feed the mills in B.C., because B.C. has more restrictive regulations.
The Chairman: It is a mammoth operation.
Everything is automatic, including the tying. We were told that only 35 people run the whole plant. It is all computerized, with two or three people watching a room full of computers. The technology is something to see; there is no question about that.
The main question relates to sustainability.
We also met with aboriginal people, environmentalists, and people from the universities who are knowledgeable in the area. Some very impressive witnesses came forward.
I would ask Senator Anderson to give the committee her impressions.
Senator Anderson: Since I have not yet received all my papers, I cannot give a full report. However, I do want to make a few comments.
I agree with Senator Gustafson that the three mills we visited are very impressive. This was my first visit to such a mill.
I have heard that there is an Eagle Brand Industries Limited, orient strand board plant in Miramichi, New Brunswick, 10 per cent of which is owned by 12 Indian bands.
The hearings gave us lots to think about it. The issue is somewhat controversial; perhaps that is putting it mildly.
For example, in Athabasca, some of our witnesses indicated that forest management there is not sustainable, and that Alberta Pacific's mill is buying logs from great distances, even from Saskatchewan. We were told by a forester that the annual allowable cut in Alberta is too high. We also heard that forest development has given the northern areas of Alberta a tremendous economic boost. This particular forester thought that Alberta Pacific was ahead of the provincial government in forest management practices.
We were told by a member of the Alberta Fish and Game Association that his group was strongly opposed to the federal government giving jurisdiction of the fisheries to the provinces.
We heard from a group of First Nations people, from reserves very far north of Edmonton, that the population in that area will double in 20 years, and that unemployment is exceedingly high at 95 per cent. Another interesting figure was that 87 per cent of the population remain on the reserve. There is very little out-migration.
From the social point of view, it was disturbing to hear that the men in these communities have little or no purpose in life, that the women still do most of the work.
We were also told that the Métis were left out of the Alberta forest conservation strategy, which we will discuss later.
After our 10-day trip I am now familiar with the concepts of clear cutting, selective harvesting, silviculture plans and contaminants in the water supply.
I was particularly interested in hearing about the centres of excellence that have been set up across the country, funded by NSERC, the provinces, and the federal government. There are 23 universities involved, although none is in New Brunswick or P.E.I. We heard that there is a great absence of a data base relative to forest practices. For example, we were told there was very little data as to whether 40-hectare cutting blocks are better than 200-hectare cutting blocks.
We were told that intensive management training will be a high priority for these centres of excellence. These centres of excellence will train graduate students to prepare them for work in the forest industry and in forest management.
Senator Rossiter: Which centres are doing the most work in forestry?
Senator Anderson: The one we heard about was connected with the University of Alberta. As to the other provinces, I have no information since I did not have access to that information.
The Chairman: Thank you, Senator Anderson, for a very good report.
Senator Spivak: First, I was absolutely stunned by the fact that almost every square inch of land has been accounted for. Living in Manitoba, I had this notion of wide open spaces, but that is not the case. Almost every square inch has been allocated.
Second, logging is going on even in areas which are supposedly to be set aside. The scale of the operation is just breathtaking. I do not know how many million cubic meters of pulp comes out of them, but they operate 24 hours a day. We were told that this mammoth place could be run by 45 people. I am talking about the plant itself, not the loggers. That was a revelation.
We hope our report will model Senator Sparrow's report, Soil at Risk, which is still talked about everywhere in Canada.
What struck me was the fact that everyone, the forestry companies, the foresters, the researchers and the environmentalists, say that they do not really know what they are doing. By that, I mean they do not understand. I do not mean they do not know about forestry, but they do not understand how to manage the forest so that it will be sustainable, that it will protect the environmental process, and that it will grow back to its original form. They do not want clear cutting, which is the two-pass system and the checkerboard system. They do not think that is appropriate. They now want to mimic fire or practice natural disturbance logging. However, they do not know what they are doing. They are experimenting, but while they are learning, they are cutting down the whole forest. The scientific information is not available to them but they are going ahead with it anyway.
Senator Rossiter: You said every square inch has been allocated. What do you mean by "allocated"?
Senator Spivak: There is the green area. For example, 58 per cent of the province of Alberta is called the "green area".
Senator Rossiter: How do they allocate the forestry area?
The Chairman: Alberta Pacific has 10 per cent of the land mass of Alberta.
Senator Rossiter: Are they allowed to cut under certain circumstances?
The Chairman: They have the cutting rights.
Senator Rossiter: Are there any restrictions?
Senator Spivak: In all provinces, except British Columbia, the government stipulates that they can cut according to sustained yield. They can cut as much every year as they expect will grow back. However, the problem is that they have never cut boreal forests. They do not know whether they will grow back. They do not even know how to cut, but they are doing it anyway.
The Chairman: They did admit that this is a learning experience for them. They should follow the patterns that fires take or the patterns of cultivation. They acknowledge that it is a learning experience for them as it is for everyone.
Senator Spivak: They are very open about it.
The Chairman: We heard different numbers from different people on reforestation time periods, varying from 80 years to 220 years. Some say it will take 200 years, and others say it will take 140 years for a forest to replenish itself after a fire.
It seems a popular idea is afloat out there now, both in the universities and with people in the industry, to pattern cutting after fires because they believe that nature had a way of looking after itself before man became involved.
Senator Spivak: Yes, but they do not know how to do it.
The Chairman: Where they had gone through the bush and planted trees, the trees did not look too healthy. I was not impressed.
Senator Spivak: The provincial governments do not have anyone checking on them. We are talking about thousands of acres.
We spoke to native groups in Manitoba. The provincial government looks at a map of Manitoba, and to them it is blank; there is nothing there. However, the natives told us that in 1942 the government recognized their trapping and traditional use area. They have now all the modern equipment. They use global positioning techniques. They show how they are using the land. North of The Pas, there is the most intensive use by native people of the land in North America. They live on the land. They are not coming into the cities. The provincial government says, "Oh, this is for Louisiana Pacific or for Repap." The federal government tells them that they gave jurisdiction over natural resources to the provinces in 1932 and that they should deal with the provinces. The provinces, in turn, tell them to deal with Repap, but Repap does not want to deal with them. There is an interesting question of fairness and injustice to the native people. We have our work cut out for us.
This study will be of great value to Canada if we just concentrate on and understand the facts before we reach any conclusions. We should not form any opinions until we have the facts.
We want to know the provincial legislation, the annual allowable cut and what are the stumpage rates. We want to know what is being cut. We want to know what kinds of major plants and processes there are in each province. We want to know the terms of agreement with the major companies. For example, what task concessions and subsidies are they receiving. What kind of agreements are in place and how permanent are they? Want we to see the employment picture, because there is a lot of unemployment in forestry. Jobs have declined drastically in the forestry industry because of automation.
We want to know how the various laws, whatever they are, are being enforced. What is the rate of compliance?
We should like to know what is known about the kind of logging that is going on. Those involved in forestry claim they know what they are doing and there is no need for the "tree huggers" to be involved. However, they told us they do not know what they are doing. We want to know the state of their knowledge.
You all received copies of these requests. We want our researchers to follow up on this. Mr. Armitage has suggested that the Library of Parliament should assist us.
The Chairman: On that point, the committee asked Senator Taylor and Senator Spivak to come up with some guidelines by which the committee could be governed. We thank you for that.
I was pleased not only with the guidelines but also with the cooperation of the Senate standing committee members. They put their hearts into this. I want to thank Barbara Robson, Blair Armitage, as well as Susan Corey who is not here.
If there are no further comments, next on the agenda is "Future Action". Mr. Armitage, would you bring us up to date on the steering committee meeting.
Mr. Blair Armitage, Clerk of the Committee: The steering committee met earlier this week and agreed that the time of the year was not right for them to pursue plant visits in Ontario and Quebec, although it is their intention to do that as soon as possible. They may do so independently and on an informal basis. They also suggested that the committee should pursue a series of meetings to meet with the federal departments implicated in this study, namely, Foreign Affairs; International Trade; Indian Affairs and Northern Development; the Environment, Natural Resources; and Fisheries and Oceans. We also wanted to hear from representatives of the appropriate provincial departments in Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, and any other provinces which may be suggested.
Senator Rossiter: Why not Newfoundland?
Mr. Armitage: Yes, we would include Newfoundland and B.C.
We should also hear from the national umbrella organizations for the environment, industry and native groups, as well as bringing in the witnesses from whom the delegation heard in the provinces -- that is, the local groups who have a different hands-on perspective on the issues.
We talked about bringing in a Library of Parliament coordinator for the balance of the study. There was a suggestion that we try to meet on either consecutive Mondays or Fridays, as well as at other time slots during the week. Before Christmas is a busy legislative period and other committees are also trying to wrap up their work.
Senator Rossiter: We usually do not resume until some time in February. Would there be any objection with meeting in late January for, say, two three days in a row to hear from a number of witnesses?
The Chairman: I would have a problem with that in January.
Senator Anderson: We did discuss meeting during the first week in February.
Senator Rossiter: Yes, but that depended on when we would resume.
The Chairman: We cannot schedule meetings unless we have commitments to attend.
Senator Spivak: Perhaps our plans should include asking the senate for an extension on the reporting date, since that always seems to happen. Presently, we are to report back to the Senate in March.
Why do we not try to hear from a few witnesses now? Instead of travelling during the first week in February, perhaps we should hear from witnesses that week, and then consider travelling the second week. Taking a whole week might be difficult for people.It may even take longer than that, but that is unavoidable because it is important to have the input of the rest of the country, now that we have been in the west.
The Chairman: That is an excellent idea. To try to cram this all in and come up with a report in a very short time would probably be a major mistake.
We heard about the Indian band that has a working company. We should seek some information from them also.
Senator Spivak: If we hold some meetings with only two or three members present, the transcript of the proceedings will be available to anyone who cannot attend.
Mr. Armitage: You have the power to take evidence without a quorum.
The Chairman: What about research?
Mr. Armitage: You need the authority of the committee to work with the steering committee to book witnesses and to coordinate with the Library of Parliament, and so on.
Senator Rossiter: I so move that.
The Chairman: All in favour?
Hon. Senators: Agreed.
The Chairman: Carried.
Mr. Jean-Denis Fréchette, Economics Division, Research Branch, Library of Parliament: To clarify what you expect from the research branch for what will be forthcoming, do you want the research branch to support the research of the committee for the eastern part of the report?
Senator Spivak: No. Mr. Dan Shaw has already given us statistical information. However, we should have someone who has been with the forestry or the environment committee. We could use two or three people.
Mr. Fréchette: That is fine.
Mr. Armitage: The researchers who are with us, Barbara Robson and Susan Corey, are preparing summary notes for us. They could be consulted.
The Chairman: Is there any other business?
I have a briefing by the Department of Agriculture on Bill C-34.
According to our house leader, that has not yet had first reading in the Senate.
Senator Rossiter: It went to the committee of the other place, was concurred in at the report stage, received third reading, and was passed on November 5, 1996.
The Chairman: I believe the expectation is that it will be passed by Christmas. We may receive that in the next day or two. Bill C-34 concerns cash advances. The government has had some problems with the collection of cash advances. I believe that approximately $90 million is outstanding. Some smaller amounts have been outstanding for six years. Passage of this bill will assist in the collection of those cash advances.
I made enquires about the legislation which deals with crops damaged by snow and other weather conditions. Up to $25,000 or $15,000 -- depending on acreage -- will come out of the $50,000. The farmer will pay no interest on that. However, he will pay interest on anything based on the $250,000 figure. There are provisions in the bill concerning arm's length agreements between families. I went over that quite thoroughly with them. It does not penalize the legitimate farmers. The two main purposes of the bill are to deal with cash advances and some legal aspects.
Senator Rossiter: Why are they in such a rush, seemingly, to pass it before Christmas? It will not come into effect until the 1997-98 crop year. Does that not start in August?
The Chairman: I did not ask that question, but the department did say they would like to have it by Christmas.
Senator Rossiter: Maybe the department said it without knowing what the rest of the world is doing.
Mr. Frechette: The main reason is the budget. They want to include that in the Estimates. The interest-free concept will now be included. It was not before. That is one of the reasons they want it, but they do not really need it before Christmas. The bill can be passed after and they will still have the money.
As the chairman said, it is not a controversial bill, except for these two issues. I worked on the bill on the other side. Witnesses were quite happy with what the bill contained.
Briefing notes had been prepared by the research branch of the library. However, the bill has not been referred to the Senate at this time. I do not know if the clerk can obtain those notes, but they should be available,
The Chairman: Would it be the wish of the committee to call some of the witnesses on Bill C-34 next Thursday while the Senate is sitting?
Mr. Armitage: If the bill has not been referred to us before that time, we will not be able to do that.
Perhaps we could hear from a witness on the forestry next week.
The Chairman: Do we want to call witnesses on the forest industry next week?
Senator Spivak: Yes, perhaps on Thursday morning.
Mr. Armitage: It may not be possible for the Library of Parliament to prepare a background paper and questions by that time.
Senator Spivak: Well, let us try.
Mr. Armitage: With that caveat, perhaps.
The Chairman: Are there any other suggestions?
Senator Spivak: Do you expect any other bills to be referred to the committee before Christmas?
The Chairman: Senator Rossiter been following Bill C-38, concerning farm debt regulations. Apparently, it deals with regulation and the cost of regulations.
Mr. Frechette: Bill C-38 is the proposed Farm Mediation Act. Farmers who get into trouble can go to the Farm Debt Review Board. They can then downsize or acquire help from the government to restructure their corporations.
Under the new act, instead of a review board, there will be a mediator between the banks, the creditors, and the farmers who are in financial trouble.
There is a problem with the bill, because there used to be what we called "service". Before a farmer was really in financial trouble, he could receive help from the Farm Debt Review Board. That will now be eliminated with the passage of this bill, and some farmers do not like that. However, there are some farmers who believe that, if you need the government's help, you should be out of the business.
Senator Rossiter: It is being eliminated.
The Chairman: I have a problem with that. Once you are out of business, it is too late. Farmers cannot afford the legal costs involved in that.
Senator Spivak: At one time, we were prepared to stand by the concept of the family farm. Is the federal government holding to that policy?
Mr. Frechette: When the bill was presented to the House of Commons Standing Committee on Agriculture, the committee sent the bureaucrats back to their blackboards and asked them to return with something that would satisfy the requirements that were referred to by the witnesses who appeared before the committee -- that is, a service that helps farmers before they find themselves in too much trouble.
Senator Rossiter: It was referred to the standing committee before second reading.
Mr. Frechette: That is correct. The committee is studying the bill clause-by-clause today.
The Chairman: This raises another very broad subject. The committee was approached by representatives of the banking association who want a bigger share of the agriculture business. They believe that farm credit is being given special privileges and they cannot get in. However, I cannot help but comment on the profits the banks are making today. They are making more now than in the history of the country.
Senator Spivak: I should like to know why.
The Chairman: At the same time, farmers are going broke. As you know, the cost of grain went up a few months ago, but now it is dropping. The banks jumped on the bandwagon and they are taking most of the profits. They are making exorbitant profits. Yesterday, the Bank of Montreal reported several billion dollars of profits. This is a very serious situation.
Senator Spivak: I am sure there must be some information to support the increase in input costs which we read about in the newspapers.
Apparently, the costs of maintaining roads across Canada will be $18 billion. That is what one of the newspapers reported. That is directly attributable directly to the elimination of the Crow rate and the abandonment of the rail lines. There has been an increase in value-added plants in Manitoba which, of course, is a good thing, but there is this consequent increase in the number of tractor trailer trucks on our roads. I believe the increase is about 52 per cent.
Do value-added plants require tractor-trailers to bring in the grain?
It seems that we have a catastrophe of our own making. Our roads were never designed to carry those huge trucks. To put in a new network of roads is beyond our capability. Will we be faced with costs several times the cost of the Crow rate to keep those roads maintained?
The Chairman: I am sure Senator Sparrow has some idea of what is happening in that regard. I was inevitable that there would be more trucks on the roads. However, there are some shortline operations but, to my thinking, that will be only a short-term transition. Those railroads will not be maintained.
Senator Spivak: We talked about this when the Crow rate was eliminated. It would interesting to know the extent of the subsidy for trucking. If it is more than the Crow rate, then we have been really stupid. The reason for removing the Crow rate was to reduce the deficit.
The Chairman: All of the elevator companies are building terminal-type elevators. It is hard to say how how many are there in Saskatchewan right now. They are on major rail lines.
Senator Spivak: Do they connect with the shortlines?
The Chairman: The trucks will bring the grain from areas 100 miles away.
Senator Spivak: Formerly was it only 30 or 40 miles?
The Chairman: Formerly it was 9 miles to 15 miles. There was an elevator every 9 miles on the Sioux line, and then, in our area, there was another line over 10 miles further with elevators every 9 or 10 miles. There have been major changes.
Senator Spivak: Could they not have rail cars onto which those cargoes are loaded and shipped?
The Chairman: The rail companies do not want to be shunting into small towns to pick up two or three cars; and the companies will not maintain the elevators there.
Senator Spivak: I want to know whether the subsidy has been shifted from the railways and the farmers to the trucks. It was predicted that would happen.
The Chairman: It is already happening.
Senator Spivak: People in Canada are under the impression that the deficit is being reduced because of the elimination of the Crow rate. However, the farm communities are suffering.
The Chairman: The oil seeds such as mustard, flax and canola are all moved by trucks to processing plants whether in the United States or to the new one built by Cargill near Saskatoon.
Senator Spivak: I cannot understand that. Winnipeg is a city that was built on rail. The products from their factories are shipped by rail.
I think the policy should have been to eliminate the CN, put in shortlines, and still have a system of transportation. We asked for that, to make a comprehensive system of transportation which would use truck and rail, so that it would not cost us a fortune. Why is that not possible? Other countries have a comprehensive system. They use trucks where appropriate, rail where it is appropriate, and air where that is appropriate. Why can we not do that?
Senator Sparrow: The cost for moving the grain has not increased. Who pays for it has changed.
Senator Spivak: That is not true. In Manitoba it has gone up three times.
Senator Sparrow: The cost has shifted from the government to the farmer. The costs are basically still there.
The small elevator system has been disappearing for several years. The small elevator, or the wheat pools, or the national grain companies closed those elevators. Instead of having to haul grain 5 miles, it went up to 10 miles, and then it became 15 miles as these elevators closed. As the elevators closed, the rail lines closed. A trucking system was created by the farmer himself. He would truck long distances.
As that extended over a period of years, the distances started to become 20 miles and 30 miles. That then necessitated commercial truckers. The farmer did not have a big enough truck, so he bought a tractor trailer and he would haul his grain.
Then we got into marketing pulse crops directly to the plants.. The crops would then travel 100 miles to the processor.
In the interval, the rail lines closed, certainly across Saskatchewan and Alberta. The small lines were shut down because the small elevators did not have enough grain to move.
Ecouraged by farmers, terminals were built in places such as Weyburn. The railroads are happy to move that grain from that terminal to B.C. because they do not have to use the shorter lines.
Senator Spivak: I understand that. My question is: What is the Canadian taxpayer paying for that change? The other question is: Was this inevitable or could a system have been devised where the costs would have been lower? This will cost billions of dollars of taxpayers' money. The provincial governments are saying that they cannot handle it and that the federal government must share the responsibility.
The Chairman: To give you an idea of the cost, senator, we ship canola from our farm 150 miles to a crushing plant in North Dakota which is owned by a Canadian company out of Lloydminster, called ADM. We are paid in Canadian dollars from a company in Lloydminster, but the crushing plant is in North Dakota.
When they pick up grain from my farm, they pay for the trucking, but the cost actually comes out of the price of my canola. They are charging me 38 cents a bushel to truck it 150 miles. As the farmer, instead of receiving $9.12 a bushel, I get around $8.80. That is how the system works.
Senator Spivak: What is road maintenance costing us? Newspaper reports claim that it is $18 billion across Canada. Is that accurate?
Mr. Frechette: I do not know if it is accurate. The Crow rate is no longer allowed under GATT. They shifted the subsidy to taxpayers for the use of roads and the roads are available to be used by everybody. You could consider that to be a subsidy.
Senator Spivak: They are not. First, those roads are dangerous. Second, who is using them? A few farmers are using them, but the vast majority of people live in cities. They are not benefiting from that.
Senator Rossiter: Are you saying that farmers, are not entitled to have roads built because the vast majority of people live in the cities?
Senator Spivak: Senator Rossiter, I am not saying that, not at all. I am happy that the family farm is being maintained. We have taken the subsidies of the Crow Rate and put it into the trucking business and the roads. We all pay for roads, but now it will cost $18 billion more, because these big tractor trailers are travelling on roads that were not designed for them. That is the point.
The Chairman: The average farmer will say that he cannot afford to own a truck that is capable of hauling a load 150 miles. He will hire a commercial trucker who does this on a regular basis. This is a fact of life in rural Canada.
Senator Spivak: I understand that. However, I think it is important to know what it is costing and where the money is going. We were sold a bill of goods. We were told that when the Crow rate was eliminated the deficit would be reduced as would the burden on the taxpayer. The burden on the taxpayer is increasing.
The Chairman: The farmer bears the burden now.
Senator Spivak: Had they thought the matter through and done what many people suggested, which was, before removing the Crow rate, done a comprehensive study of the future transportation policy, maybe we would not be in this pickle.
Senator Sparrow: The Crow rate does not really affect how grain moves.
Senator Spivak: It does.
Senator Sparrow: Not much. The shift is on who pays the cost. The movement of gain was subsidized. That subsidy was eliminated and the farmer is now paying that cost.
Provincial governments, and Saskatchewan is no exception, say that, with a budgetary deficit, they cannot spend money on highways. They point to the reduction of federal grants not the Crow as being part of the reason for this.
In Western Canada, road system planning must change to get rid of the multitude of roads we have. We must have a high standard on the roads which will reach the highest number of farmers and not spend millions of dollars to satisfy one farmer. Not enough has been spent on the arterial roads that they knew would be required to handle the traffic.
Senator Spivak: Why did they not think of that?
Senator Sparrow: Why did who not think of it?
Senator Spivak: We need a comprehensive transportation system plan. We heard from the potash people, the coal people and others, that the taxes on railways, which they must have to ship their products, were excessive. It is not a level playing field. We did not do our homework.
Senator Sparrow: You are probably right. We have never done our homework very well.
Senator Spivak: I want to know what it will cost us.
The Chairman: The municipalities are using oil roads which do not stand up to usage by big trucks.
Senator Spivak: In Alberta they were talking of converting a rail line to a road for big trucks.
The Chairman: The rural municipalities have been struggling with this for years.
Senator Sparrow: The roads must be upgraded. If there is insufficient money within the provinces to look after roads, then federal money should go into the maintenance of or building of provincial roads.
Senator Spivak: The provinces do not want the federal government to interfere. I disagree with you. I do not think the federal government should go into building roads. There is not one solution to a problem.
The Chairman: We have gotten into an interesting subject.
Senator St. Germain: Mr. Chairman, I raised the issue of the softwood lumber agreement which has been reached. To be totally fair to the federal government, I think they were forced into a situation by extreme pressures by the majors in the industry and by the province of British Columbia who really wanted an agreement for their own protection, as a result of actions that they have taken.
This is not a question which flies in the face of, or is contradictory to, or is in opposition to environmental standards which should be met. This is a question of the government becoming involved and capitulating to the United States due to the pressure from entities like Louisiana Pacific. They and Georgia Pacific formed a coalition and they were going to bring another action against Canadian lumber producers. They have forced the government to sign an agreement with the United States. As a result, various areas will be hampered because there will be no growth.
About 80 per cent of our wood goes to the United States.
The Chairman: Are you speaking only of B.C.?
Senator St. Germain: I am talking about Quebec, Ontario, Alberta and British Columbia. The other provinces are not considered significant players in the forest industry. Although they have lumber production they, for some odd reason, were excluded from the agreement. Only these four major producing areas are affected by this agreement.
They have established a quota system similar to the system in agriculture which is designed to protect the family farms. The only difference is that the chickens, turkeys, eggs and dairy produce are for a domestic market whereas this affects shipments to the United States. Georgia Pacific and Louisiana Pacific have private tenure on land. Their private lands have gone from $10 to $100 an acre because lumber has gone from U.S. $200 per 1,000 to U.S. $475 per 1,000. This is because we now have a quota system in the lumber industry.
The big companies in Canada are happy because they are guaranteed high prices. They can cut less wood and lay people off. Ten or 15 people will be laid off at Christmas time this year, whereas only 5 at the most used to be laid off. If you have no quota to ship to the United States, you will not open a new mill.
The price of logs has been driven so high by this quota system, mills such as the sake and shingle mills in the Fraser valley are trying to optimize the use of a log. Rather than chip it and waste it, as they used to do, they now cut out the best portion of the log and use it for lumber. A major portion of the remains goes into cedar shakes and shingles.
A mill owner who decides to go this route to optimize the resource because of dwindling supplies and high costs may apply for a quota. He may spend $500,000 on a mill in which he can cut 1.5 million board feet per month. However, his quota may be 2 million board feet for the whole year. In theory, he would be out of business.
I think Mr. Eggleton and the Prime Minister were forced into signing this agreement. They could have stood their ground or gone to another tribunal.
The major industries set the criteria as to who gets quota. It is like asking the foxes to supervise the chickens.
They kept a small percentage of quota. I think 8 billion feet was asked for in the surplus. They had less than 1 billion feet to dispense to new growth.
Custom cutters will be out of business and, down the road, wholesalers will be out of business. It is a nightmare.
This inhibits anybody from getting into the business.
The Chairman: In theory, you have the same situation in the chicken farming business in Saskatchewan, with 13 producers in Saskatchewan, and everybody else out of business.
Senator St. Germain: We are dealing with a renewable resource, but there are some who are glad we are cutting fewer trees.
I believe that, if we had been doing proper forest management over the last 50 to 100 years, we would not now have a problem. Trees grow very fast in British Columbia.
I know my own province of British Columbia quite well and I know forestry practices. If they are enforced, then we will have no problem with the management of resources there.
We now have a situation where government wants to create jobs. We should be creating jobs and providing hope for the future. We will not create jobs when cartels are established or a megalopoly exists that inhibits the ability of anybody to get into the business.
One of the majors was asked about future growth or future expansion. He was of the view that there will be no expansion. If there are no jobs in building sawmills, no jobs in upgrading sawmills, you have a situation where they can cut virtually half as much wood and make as much money.
The whole program is slanted. This is a five-year agreement.
The worst part is that we have capitulated to the United States on this major issue. We signed a free trade agreement in the spirit of free trade. The Prime Minister goes abroad to promote free trade and, at the same time, we are signing this Draconian agreement which flies in the face of everything we are trying to accomplish in free trade.
We won three cases against the coalition. Believe me, Louisiana Pacific and Georgia Pacific are not our friends. If we do anything for them in the boreal forest, it should be to kick them out. They triggered the coalition.
Senator Spivak: We welcomed them with open arms in Manitoba.
The Chairman: Are you saying that they have monopolized the quotas?
Senator St. Germain: Louisiana Pacific and Georgia Pacific formed the coalition in the U.S. They have continually said that Canada's lumber industry is unfairly subsidized through lack of proper stumpage charges. They forced the situation in the U.S. Now they come up here and play "goody-goody two shoes". They own private lands down there in the forest industry sector that are larger than the publicly owned lands. It is the opposite situation in Canada.
When they got this quota system, it increased the value of their private land holdings in the U.S. tenfold. The values of their property has skyrocketed by virtue of the fact that they are restricting the entry of product that traditionally competed against them in the U.S. by forcing Clinton and the U.S. government to come after us, in spite of the fact we had won three cases in which it was found that we were not unfairly subsidizing our industry in Canada.
Senator Spivak: Is there any legal recourse?
Senator St. Germain: Not once you have signed an agreement with your largest trading partner.
Senator Spivak: Is the government aware of this?
Senator St. Germain: The government was being told: We are into an election year and Clinton will have to capitulate.
I have lived through the 35-per-cent tariff on shake and shingles. I had 90 per cent of that industry in my riding when I was in Parliament. That was the most unfair and stupid tariff. It totally killed our industry. Yet, the U.S. does not produce shakes or shingles.
Senator Spivak: They have cornered the market and increased their holdings tenfold, and we have allowed this to happen. What can we do?
Senator St. Germain: I am no lawyer. I am a chicken farmer turned cattle rancher.
Senator Spivak: I would take it to court or cancel the agreement. What can they do?
Senator St. Germain: Canadians who have been looked after in terms of quota are saying we should rely on the GATT. By the time we get anything through the GATT tribunals, I will be in the happy hunting ground.
The Chairman: The ironic situation here is that marketing boards in Canada will be phased out in five years, according to GATT, and we are now moving on to the forestry industry.
Senator St. Germain: The larger producers, in British Columbia, especially, got the quotas they wanted.
Senator Spivak: The same applies to the fish plants. The larger fish plants get what they want and the smaller ones are forced out of business.
Senator St. Germain: This agreement will cost us jobs, and it is inflationary because the increased price of lumber will affect house values.
The homebuilders associations in the U.S. are whimpering and crying because they were not prepared to go to the wall and take on the coalition. Now they are saying that it will hurt the housing industry because it will be inflationary. We agree. However, it is too late.
The Chairman: Is legislation necessary to implement this?
Senator St. Germain: It is done. The agreements were signed in April. My concern was centred on the fact that the moment we capitulated to the Americans, they would say they had a precedent.
If we are to have free trade, let us be free traders not restricted by special agreements.
Senator Spivak: Where is the information on all of this? Is it with External Affairs?
Senator St. Germain: Yes.
Senator Spivak: Do you have a file and can we get a copy?
Senator St. Germain: I have a file. I will get it to you.
The committee adjourned.