Natural Resources Committee on March 4th, 2008

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

Thank you, Mr. Chairman.

Thank you to all of you for your presentations. My question is for Mr. Roberts and Mr. Allan. At the present time, every Canadian province is reflecting on its own as to ways of mitigating the forestry crisis. In Quebec, last fall, we had the Forestry Summit. The government of Quebec tabled a green paper on forests. I know that in New Brunswick a report is expected to come out in the spring. Every province is doing its own thinking in the hope of finding solutions.

Many witnesses have told us here that one very concrete way of helping the forestry industry would be to quickly set up a carbon credit market and to quickly organize this market in order for industries to be able to use this tool, this economic lever, to overcome the crisis.

Do you share this opinion with regard to the establishment of carbon credits, Mr. Roberts?

[Don Roberts]

It's one positive step, but it's not your single solution, partly because we do not grow trees fast enough. But it will help.

One thing to bear in mind as we look at pricing carbon, whether through a cap and trade system or a tax, is if everyone else does it among our competing partners, this sector will benefit. But the problem is if just one region goes into it and does it and the other competing regions do not, you can be at a real competitive disadvantage.

So it is coming. The worst thing we can do is drag our feet and create a lack of transparency in what the rules of the game are. But in general, I would move toward it as one of a number of things. It's not our single solution.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

If you were Minister of Natural Resources, would you say that Canada should really make haste? Do you consider that the efforts being made at the present time are sufficient or do you believe that more could be done to accelerate the establishment of this market?

[Don Roberts]

In my view, we should do more at a national level, and to some extent we will follow the lead of the United States.

I draw your attention to the Lieberman-Warner act in the United States. It's a bipartisan piece of legislation that has already essentially set the framework for a cap and trade system in the United States. That bill won't pass per se, but that set of rules will be in place when the next U.S. administration comes in. When that happens we will have to follow suit.

It is important to get a handle on this carbon issue, because if we look five years down the road, we could well see carbon tariffs being put up by the United States, especially on places like China and India. We want to make sure we're on the right side of that--not in front of it but behind it.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

Mr. Allan.

[John Allan]

On what government can do in the short term, all levels of government should wring costs out of this system—regulatory costs and process costs. Under the softwood lumber agreement you are not allowed to subsidize industry, so let's just take that as a given and move on.

I think we need to provide for the most competitive policy framework possible for when market recovery does happen. Markets will recover. We will get out of the crisis we're in at the moment.

On the carbon side of things, let me flip it around. Let's not implement a carbon system that's going to make us less competitive. For example, in British Columbia we were going to have a cap and trade system and a carbon tax. The government has indicated that if you are caught by the cap and trade system you will not be caught by the carbon tax. How that's going to work is yet to be known, but it is a difficult challenge to make sure there isn't duplication and overlap in both systems.

In B.C. we're up and running. We're going to have a carbon tax in July and a cap and trade system later on this year. So I would encourage anyone who is interested in how these efforts might work to just keep their telescope on British Columbia, because we seem to be leading the nation in this regard.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Allan.

Merci, Madame DeBellefeuille.

Mr. Harris, you have asked for 20 minutes and you get four. Go ahead.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Thank you, Mr. Chairman, and thank you, presenters, for your excellent presentations.

Five minutes is not enough, but I'll start with Ms. Granskou.

How do you view the mountain pine beetle threat to the boreal forest? We know where they have advanced to now. How do you see that?

I'll ask you all to be quick in your responses.

Mr. Allan, I know you made representation to CN Rail regarding the car shortages. How have they responded to you? From that, we'll know how we can help.

Mr. Roberts, I appreciate your conversation. To what extent are North American forest companies now in Russia, notwithstanding the difficulties there, or to what extent do they have their eye on Russia because of their vast resource?

Ms. Granskou.

[Mary Granskou]

Those are great questions.

On the mountain pine beetle, I'd say our partners around the table are focused on it for two reasons. It's very much the way Mr. Allan has spoken about the impacts to the industry and communities.

One of our first nations leaders was in a meeting with the premier of B.C. this last week about the need to recognize and compensate for the social capital cost to communities. That is one area we are focused on.

The other is on the opportunities side and on carbon. Please recognize that 75% to 90% of the carbon values are not in the trees; they're in the underlying soils and peatlands. B.C. has recognized that they want to look at carbon values. There may be some areas that are hit hard by the beetle that might actually have economic values for carbon.

[The Chair, Conservative, Leon Benoit]

Mr. Allan.

[John Allan]

My comments on CN were based on a survey I did recently. There is still frustration out there. Having said that, CN says they are trying their best. The context is that mills are taking downtime all the time, and mills are closing with very limited notice. So in fairness to the railroad, conditions are changing rapidly in terms of demand for cars. I think the bottom line is that more dialogue is needed with that company to indicate what better terms of service could possibly be achieved.

[Don Roberts]

With regard to Russia, International Paper is the only major public company that has gone in--$650 million. They're on the ground. Generally speaking, Canadians would have difficulty, because we're too small. If you go there, you are assuming some political risk. We're not big enough. If we take a hit, it can sink the company. I would say that no public company in Canada will go in. However, there could be some private companies that do look at it, and are looking at it, with some encouragement.

The Russians are not short of money; they are short of expertise. The Russian oligarchs have more than enough money to finance this. Again, I would bear in mind that Putin wrote his master's thesis on how to use state control of natural resources to regain national prominence. They explicitly want to create national champions in the forest sector.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

He's gone to a 25% export tax, I understand. How far away do you think we are from him going up to the 80%?

[Don Roberts]

I think they've postponed it for probably a year. In 2010 or 2011, my guess is they will go to 50% to 80%. There is no question on the direction. They will go, and they are willing to take a chance on WTO entry on that.

This is also a question of pride to them. We have a unique advantage, because they don't trust the Finns. They feel they've been lied to. We're seen as a bit of an honest broker, and this is one of the reasons they're looking for our expertise on helping them get there.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Harris.

Unfortunately, we are out of time. We have a motion to deal with.

I'd like to thank all of you for your presentations and for answering questions, and also the committee members for your good questions. Again, thank you very much.

We'll continue with the meeting rather than suspend it.

I will ask the guests to leave as they are ready. Thank you from all the committee members.

We'll go right to dealing with the motion.

Yes, Mr. Anderson.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Prior to dealing with the motion, I'd like to clear up something the opposition was asking about earlier. Mr. St. Amand and I walked through one of the committee rooms downstairs, and he was taking great exception to the fact that he felt someone was attacking a colleague there. I felt my colleagues were being attacked here. But I didn't have all the information at the beginning of the meeting.

I want to read into the record excerpts from the news release that did go out from these two members. The other members can decide how much of it was used accurately in the media report.

The headline on it was “Harris And Allen Lead Government Side For Standing Committee Study On Canada’s Forest Industry”. It was sent out on February 28 and reads:

Federal Members of Parliament, Dick Harris (Cariboo-Prince George) and Mike Allen (Tobique–Mactaquac), will lead Conservative government members of the Standing Committee on Natural Resources in an intensive study of the challenges and opportunities facing Canada’s forest industry.

Then it goes through a couple of quotes. Members can look those up. I don't think I need to read them all in—from Dick and from Mike.

Then Mr. Harris is saying:

I thank Minister Gary Lunn for the confidence he has expressed by designating me and Mike Allen to lead the government side in this important Standing Committee study. A report will be presented to Parliament upon completion of our work.

I hope that clears it up for the opposition members.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Anderson.

We do want to get to the motion.

Mr. Alghabra has indicated a very quick response. Then we will get to the motion.

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

Thanks for the clarification.

I did indicate earlier that maybe there is some misinformation. Now that it's clear, I hope the honourable members can write to the paper and ensure that their constituents understand what's going on so they don't assume there are two parallel studies.

Thank you.

[The Chair, Conservative, Leon Benoit]

Madame DeBellefeuille, all members have your motion before them. You have indicated you'd like to move it. Would you like to discuss it briefly?

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

Mr. Chairman, I hope that I will not have to debate this at length, because it seems evident to me that our first responsibility, as parliamentarians, is to examine the estimates that are submitted to us. Since my being elected, I have made it a duty of mine, on Committee and at each supplementary estimates request, to ask the Minister to come and meet with us in order to answer our questions.

It seems to me that this is part of our work and that it simply makes sense. I therefore believe that there will not be much debate if colleagues around the table are in agreement with my motion. It is a perfect opportunity to question the Minister with regard to this supplementary estimates request. I therefore invite my colleagues to agree with me to our asking Mr. Anderson to request of the Minister that he make himself available to us.

[The Chair, Conservative, Leon Benoit]

Thank you, Madam DeBellefeuille.

Mr. Anderson, you have something you can put on the table regarding this issue.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Mr. Chair, we don't oppose the committee inviting the minister to come before the committee. I know he has a busy schedule over the next couple of weeks. He's appeared here several times already and he's been more than willing to come.

I know he's planning on coming back for the main estimates. So I would be glad to extend an invitation to him without making any commitment for him that he would be able to be here by March 14. I know he is willing to come later for the main estimates, so he will be here at some point.

[The Chair, Conservative, Leon Benoit]

When the minister comes it's widely accepted, I would say by committees, that questions can be asked on any subject. We certainly could deal with the supplementary estimates at the same time as we deal with the main estimates, if you would like. I understand there is a deadline for the supplementary estimates. You made that point.

But again, whether the minister can come or not is really in question.

Mr. Anderson, the clerk will in fact put out an invitation to him and we'll see what he can schedule.

I don't know if there's a need to go to a vote on this. We can just ask for agreement that we pursue this.

[Some hon. members]

Agreed.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

Yes.