Natural Resources Committee on March 11th, 2008

[William Candline]

Projects like Kenora compete for available capital. The Kenora plant was built in 2001 and started up in 2002. If the capital situation were qualified to go over five years, there'd be other projects like Kenora that might look as attractive and proceed.

[The Chair, Conservative, Leon Benoit]

Thank you.

Now we'll go the Bloc Québécois and Madame DeBellefeuille for up to seven minutes.

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

Thank you, Mr. Chairman.

I thank all the witnesses for being here. We are very privileged to have heard very high-quality presentations. Unfortunately, we have little time to ask questions.

It is worth repeating that Quebec represents 32% of the Canadian forestry industry, that 45% of the municipalities that are dependent on the forestry industry alone are in Quebec and that more than half of the forestry-dependent jobs that have been lost in Canada since April 2005 have been lost in Quebec. These figures represent a heavy burden for Quebec. The forestry crisis is hitting Quebec, Ontario and other provinces hard. Everyone agrees that all of the towns that are dependent on the forestry industry have been hard hit in Quebec.

Almost all of you spoke of the importance of research and innovation. You talked about it as a lever and as a means of getting out of this crisis, to be able to compete and to be forward-thinking.

Mr. Asselin, could you tell me about the importance of investing in research for the forestry sectors of Quebec and of the other provinces? What practical effects could push the members on the government side to recommend much greater investment in training and research?

[Hugo Asselin]

One of the main reasons the government would have to invest in research can be illustrated by this story. When I started my master's, about 12 years ago, I was very discouraged because I could not see when the results of my work would translate into reality. I told myself that in the end, I was doing this for nothing. This was 12 years ago, which is not such a long time. Now, I have become a professor. My master's degree students are doing their work, and the following year, governments or companies—regardless of where this applies—are testing their work on the front-lines. It is very encouraging, because this means that we are moving very quickly from research to applications on the ground. It is worth doing.

In my presentation, I talked about the countries we consider as our competitors. This means that they believe things are going better for us and they invest three, four, five or six times more in research and development than Canada does. That is perhaps in part what explains their success. It is a good thing to invest money in older workers. That allows communities and aboriginals to recover. We must continue along that path, but we must not neglect the research that often is behind all of that and that provides short-, medium and long-term solutions.

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

The Technology Partnerships Canada Program provided funding to help industries develop leading-edge products. The Conservatives abolished this program when they came to power. It was a bad time to do so as, according to what all of our witnesses have said, research and development are major issues, particularly product diversification research and research on specialized niches.

Mr. Scarrow and Mr. Albert, would you go so far as to recommend that the Canadian government reinstate a program with a significant budgetary envelope—the Bloc Québécois would proposed $500 million—to help the forestry industry innovate and create new products? Would you be prepared to recommend the reinstatement of the Technology Partnerships Canada Program?

[Francis Albert]

I would agree entirely. One of the forestry industry's priorities is to invest in value-added products. If the industry does not do so, unfortunately, I don't think that in future years we will be talking much about the forestry industry in Canada and Quebec.

Currently, the existing programs at the provincial and federal level are no longer adapted to business, and particularly not to small businesses. Today, there is every indication that value-added products will not be developed by major businesses. They will be primarily developed by small businesses. That is why I was suggesting there should be refundable tax credits. Currently, there is no industry in Quebec, whether it is a major company or not, that is investing money in this because unfortunately it does not turn a profit.

Moreover, we must be able to benefit from tailored programs. The crisis is real, but it is temporary. Often, the plants are temporarily closed. Manufacturers could take advantage of this time to invest in modernizing their plants in order to develop value-added products. As the plants are hardly producing anything, it would be the time to do so. At home, NBG invested $3 million in their mill two years ago. Seventy per cent of the profits generated had been invested in the plant. Currently, in order to develop value-added products, we would need $2 to $3 million more in order to reach out to particular markets, to particular niches. Unfortunately, because of the current situation, we are not in a position to do so. It is not for lack of good will. The fact that the mill belongs to small owners allowed for 70% of the profits generated at the plant in 2004 to be reinvested, that is to say only three years after its opening.

As far as research is concerned, there obviously remains a great deal to be done on biofuels and biomass. Scandinavian countries have done a great deal. We must find solutions for uses of the unused fibre, which at the same time would decrease greenhouse gas emissions.

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

Thank you.

And you, Mr. Scarrow?

[Jim Scarrow]

Yes, I would agree with that and more. Much is at stake. Our industry is $33 billion, the largest by far in the world. It needs that assistance at this time for all the reasons stated here today.

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

Do I have any time left, Mr. Chairman?

[The Chair, Conservative, Leon Benoit]

Your time is up now.

Go ahead, Ms. Bell, for up to seven minutes.

[Catherine Bell, NDP, Vancouver Island North, BC]

Thank you, Mr. Chair, and thank you to all the presenters this morning.

I have to apologize; I have a bit of a cold and I can only hear out of one ear.

I found it very interesting to hear the presentation of Your Worship Scarrow, because I come from an area where we're about to lose a sawmill and potentially a pulp mill right next door, after the sawmill closes, after they've run out of their commitment to supply the fibre. The impact on the community and the loss of jobs over a period of time and then the spinoff impacts in social services and education are things we have to take into account in all of our communities. It's something that's happening across this country. Indeed, you paint a very stark picture of the crisis that's hitting a lot of our resource communities, and others have said similar things.

We've been hearing from other witnesses throughout these meetings about those impacts and also about what can be done, that there is hope and we can turn this around. It's going to take a huge commitment by our federal government. Yet we didn't see that in this budget, as is my understanding from hearing all of your comments. I want to thank you for painting that picture and laying it out for everyone.

I have some specific questions for Chief Bill Williams with regard to opportunities for first nations. We've heard from other witnesses as well about land use planning and the treaty process and where things are going. When you said most of your communities--the 103 communities in the impacted pine beetle areas--are remote areas, and then remembering that approximately 80% of first nations live in forested areas, it seems to me there's an awful lot of economic opportunities to be had for first nations. I just wonder how any treaty negotiations are going that are increasing participation of first nations in training opportunities, research and development, innovation--that kind of thing. Is there anything within the treaty process to address economic opportunities for first nations in forested areas?

[Chief Bill Williams]

Thank you for that question.

The problem with the treaty process is that it does not guarantee long-term jobs. The treaty process guarantees the ability of the governments, provincial and federal, to talk to the business world if the land question is settled.

The economic problem in regard to the forests in British Columbia is exactly the same right across Canada. There are problems worldwide with the ability to ship product to different countries. B.C. faces the same problem of shutting down the forest industry, moving and consolidating their mills in southern British Columbia and Washington State.

I am president of our forest company. We no longer have a mill to process our product, so we have to export 90% of the trees. Only 10% of the trees remain in our area, going to three different mills that specialize in one product—red cedar.

The industry has shifted completely, and the mills have shut down. Because of the mills shutting down, in 109 communities in remote areas of British Columbia, 70% to 90% of employment has been lost. There's no economy there at all. Right now, because they're remote, because there are no jobs there, the treaty process won't help.

We need a shift in the economy. Then we could retrain and get new opportunities that would benefit our communities. One small example would be the Canada House in Torino, Italy. That Canada House was visited by 200,000 to 300,000 people. I had the good fortune to visit it. It is built of pine beetle logs. We want to try to get other products, to get the logs before they're completely decayed and unusable. The land we're looking at is absolutely huge—135 million hectares.

Thank you.

[Catherine Bell, NDP, Vancouver Island North, BC]

I've travelled up in that area, driving along the highway. You stop and look, and as far as the eye can see there are reddened trees from the pine beetle. It's quite stark, quite devastating.

The federal government gave $200 million in pine beetle money. When you said that the provincial government gave $200 million, was that another $200 million or a transfer of the $200 million from the federal government to the province?

[Chief Bill Williams]

That's what we're trying to find out. All we know is that $5 million has actually been released to municipalities, and the municipalities are using the money for projects like airports. Maybe they want to shift their economy to tourism. It's certainly not helping the aboriginal community.

As for the $200 million, from what I understand, the federal government has promised $1 billion, and the provincial government has identified $200 million to complement it.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Bell.

Mr. Harris.

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

Thank you, Mr. Chair.

Thank you, presenters. I appreciate your presence here this morning.

I have a quick question for Chief Williams. Thank you for coming, by the way, all of you.

Chief Williams, in your particular Squamish Nation, what percentage of the forest that you control is lodgepole pine?

[Chief Bill Williams]

I'm fortunate in that the Squamish Nation is in the coast range, so we do not have pine.

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

I was just a little confused, because Ms. Bell said she'd driven up the road in your area and saw the reddened trees.

[Chief Bill Williams]

In the area--British Columbia.

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

Oh, okay, I just missed that one.

Mr. Asselin, you have a really good phrase in your presentation, which best addresses the situation we have now, when you say it seems as though the comfort zone that our forest industry enjoyed has now become a discomfort zone. That's of course acknowledging, like many, that the heady days of the forest industry, which we all enjoyed, are not with us right now, and we have some new and significant challenges.

That begs the question. There's been a lot of blame thrown around, not by you folks this morning, but in the media. Most often, the blame seems to get thrown at either the provincial or the federal government for getting us into this position. The thought I have is shared by many. When the good times were rolling, the mills--both the pulp and paper mills and the mills making dimension lumber, softwood, etc.--weren't much interested in looking at new products because things were going pretty darn well.

Mayor Scarrow, you sent out a letter, which I received, thank you, and you talked about the shortage of tissue paper in China and how it would be great if the mill in Prince Albert could change its technology--and I agree with you--to satisfy this market. But here's an example. That shortage of tissue paper in China has been around for about 15 years that I know of. At one time when the mill was operating in Prince Albert, the opportunity was there to take advantage of that big shortage, but it didn't happen because things were good. So we have to live with that and now see where we go from there.

I'll just let that lie with you for a second and I'll try to get back to you, because I have a couple of other questions.

Mayor Compton, most folks are saying the community development trust is a pretty good project. You expressed some concern about how to access it. It's my understanding that there are about five good community projects, including first nation projects, going on in northwestern Ontario at the present time. I don't know if you're aware of those or not, but if you're not, you might want to talk to some of those community mayors and find out how they've managed to secure those funds.

[Leonard Compton]

Mr. Harris, maybe what I can just say is that no matter what money the federal government puts out there now, it's not much help to the Kenoras of the world when they're bulldozing the last building down in the next few days. There's very little infrastructure left in Kenora, and you can give us all the money you want, but that mill will never start up.

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

Right. That's a reality that many communities across the country are facing, Kenora included.

[Leonard Compton]

It's too late for us.

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

That's why so much focus is on economic diversification in the communities. That's what the community development trust is for, and in areas that can continue in the forest industry, I think there's a $127 billion or $128 billion forest product innovation fund that's made available now, and I think there's more funding coming from the government.

I'll get back to Chief Williams. I just had a couple of questions on your brief.

Incidentally, the former Liberal government did give $100 million, no strings attached, to the Province of B.C. I think it came in December 2005; that's when the cheque was cut. In fact, there was no further promise of funding, because I was the forestry critic for our party at that time, and I questioned the government many times. So the $100 million, although good...the present government made a commitment of $1 billion over 10 years, and we've advanced $200 million, as you know. You're quite correct. All of the funding is in cooperation, and the decisions are made with the Province of B.C. And likely we'll continue that way because we're all partners in this.

I just want to ask, because there was a large contingent of money in that $200 million for wildfire protection, to protect our communities both inside and outside, if you knew how many applications from first nations were put in to secure some of that wildfire funding. If you don't, perhaps you could find that information. I'd be very happy to try to assist you in that respect.

[Chief Bill Williams]

Thank you for that information. I have no idea how many have applied to that, because I personally do not know about that contingency fund.