Thank you, Mr. Chair.
Good morning, committee members.
Forest New Brunswick is an industry association representing the majority of forest product manufacturers in the province of New Brunswick. Our mission is to be the voice of forests and forestry.
The significance of the forestry sector in New Brunswick is often understated, but it's very obvious. We contribute the most to the provincial GDP, at 5%, which represents about $1.5 billion in economic activity directly, and roughly $2 billion if you include indirect contributions. We have revenues of $3 billion in export and domestic sales.
The association identified several issues that are constraining the sector's global competitiveness. As for our relevance nationally, if we look at our forest industry throughout the country, with 600,000 people directly and indirectly employed, we can see that it is of course extremely significant. We contribute roughly $20 billion to the economy, so it's significant on regional, provincial, and national levels.
What we're looking to bring forward to the committee today is recommendations around three agencies and areas of financial engagement with our sector.
One is that we're looking for continued funding and also an enhanced and more strategic consideration of how and where this funding is spent with regard to the Atlantic Canada Opportunities Agency and, in particular, the Atlantic innovation fund.
The second is Climate Change Canada, with their low carbon economy trust fund. I'll expand a bit on how this is applicable to our situation here in New Brunswick and nationally.
The third is phase two of the Infrastructure Canada program.
Looking first at the ACOA AIF, in New Brunswick we have a pending spruce budworm epidemic that's knocking at our doorstep. We have outbreaks that occur in roughly 25-year cycles. We're at the start of a new cycle here. The last one ended in approximately 1990. That resulted in 50 million hectares of deforestation and impacts across the country.
Currently, across the border in Matapédia, Quebec, we have about seven million hectares being affected by the spruce budworm. To put that into context, New Brunswick has roughly 6.1 million hectares of forest, so the entire deforestation that's happening in Quebec now would completely engulf New Brunswick's forests. It's fairly urgent that we deal with this. The economic loss is significant as well. Over the course of the outbreak, we're looking at $4.7 billion, with a worst-case scenario of $6.7 billion in lost economic activity for the province. You can imagine this on a national scale over 50 million hectares. There would be a considerable negative impact.
It's not all bad news. Out of necessity, I guess, which is the mother of invention, in New Brunswick we've taken on a five-year research project that was generously funded by ACOA through the Atlantic innovation fund. It was a five-year project that started in 2014 with $18 million in funding jointly shared between the federal and provincial governments and the industry. We had academia on board with that. The University of New Brunswick was a primary researcher, and the Canadian Forest Service provided in-kind support on the research as well.
The funding is due to expire in 2017. Because we're in the early stage of a potential outbreak, it's very important for us at this stage that the funding continue and the research proceed. We have three treatments that we're testing now, with very positive results early on. Within weeks, we're expecting to have a new proposal submitted to ACOA for funding. Also, we're making presentations to your colleagues in government.
Second is silviculture investment. This pertains to the low carbon economy trust fund. We feel that this is an excellent way to deal with your climate change obligations. In New Brunswick, we're looking at more intensive silviculture on crown and private lands. We believe that we have the ability to capture two million tonnes of CO2 annually, and this will contribute to our national obligations under the Paris accord. The economic impact here, especially in rural communities, is significant. These are immediate jobs, with boots on the ground. Roughly 95¢ of every dollar spent on silviculture goes into wages. It's labour intensive. We are looking for federal investment through the climate change agenda to deal with this.
Third, to reiterate comments that were made by the preceding presenters here on infrastructure, we think that infrastructure investment, especially as we look to the phase two engagement through Infrastructure Canada, has to be more strategic. From the forestry perspective, a large portion of our costs comes from the transportation of wood from forest to mill. In New Brunswick, 40% of our harvested timber has to travel on roads that are only rated to 43,500 kilograms, and that increases our transportation costs considerably.
After wood fibre costs, transportation is the biggest cost that we have. It makes us uncompetitive compared to other jurisdictions. In fact, it is 42% higher compared to the weighted average of other eastern forestry-dependent provinces.
The potential here a reduction of 54,000 loads if we can get those rates increased, but it requires investment in bridges and culverts. These are not the bridges and culverts that we see on our primary roads. They tend to be on secondary roads. Now why is this significant? This is a problem faced by many jurisdictions, but in New Brunswick it's been quite pronounced, because there's been a lack of resources to put into improving this infrastructure. I guess I can liken it to this: You are in this hotel. The elevators that you go up and down in to get to the meeting are very nice, but if it weren't for the service elevators in the back, a lot of the nice services, such as the nice rooms with the linens, wouldn't happen. That infrastructure is like the service elevator: it has to be there; it's very important.
That concludes my comments.