Natural Resources Committee on Jan. 29th, 2015

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Thank you all four for being here, but I think I'm just going to direct questions to Mr. Mason and Mr. Jones.

Mr. Mason, you have talked a lot about the cooperation between government and industry. I'd like to ask you a question about cooperation with the federal government and the provinces.

My riding is Thunder Bay—Rainy River. You know that northwestern Ontario, and northern Ontario in general, has been particularly hard hit by the downturn in the forest business. Just off the top of my head, I think we're looking at about 40,000 jobs that have been lost since 2008. That's a lot in a part of the country that covers a large area with a relatively small population.

If I could just key in on Fort Frances, Ontario, which is one of the small municipalities in the west end of my riding—and just for reference, my riding runs along the northern border of Minnesota, just to give you a sense of where that is—there was a recent acquisition attempt to keep the Resolute mill open. It's my understanding that one of the main issues was provincial land tenure. I know that's a problem in Ontario, and it probably is right across the country.

Let me ask you if you feel that the federal government could have a role in working with the provinces on these sorts of acquisitions that are hung up on one major point, like provincial land tenure, to try to clear the way so mills like the one in Fort Frances would not have to close.

[Glenn Mason]

Thank you for that question.

First, let me say that you are right that northern Ontario was probably the hardest hit part of the country in the last recession and is the slowest to recover. You can appreciate that that bothers my minister, who's also from your part of the country.

In fact, in the IFIT program, which in its first iteration actually had no projects in northern Ontario, in its final outcome we actually did have two big projects in northern Ontario, and in both of those cases, it was the private sector that pulled out. They pulled out in a couple of cases very, very close to the end of the fiscal year, which was problematic for redirecting the funds. There are issues of confidence in northern Ontario. There are issues of the role of the private sector and what it's doing or not doing and its relationship with the provincial government, and while the Government of Canada has, I believe, played the appropriate role that we can play, we cannot solve all of those issues.

The issue of tenure, as you rightly pointed out, is absolutely not an issue which the Government of Canada has any responsibility for, and we would not normally get involved in any way in a transaction like that. My sense of that is it's fairly complicated, and in practice, the sale of the mill was a private company selling an asset that it owned to another private company, and I think even in the case of the Government of Ontario, it would have had a limited role. That was a transaction between two private companies. Certainly, it would appear to be unfortunate that that transaction did not go through, but I do not see an appropriate role for the Government of Canada in a case like that.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Okay. Thank you very much.

Mr. Jones, did you have something further to add on that?

[Robert Jones, Director, Industry and Trade Division, Policy, Economics and Industry Branch, Canadian Forest Service, Department of Natural Resources]

I just wanted to add on the collaboration which the federal government and the provinces have, there is certainly a lot of collaboration on the market programs, and in Ontario specifically, the federal government works very closely with the Ontario provincial government in supporting the WoodWORKS! program. This program is designed to increase the use of wood in non-residential applications. The two governments work hand in hand in funding that particular program.

Mr. Mason mentioned the building codes. As you are aware, Ontario changed its building code as of January 1. We've been working very closely with the provincial governments to ensure that there is the information out there. One of the things that is a big concern is fires. We're working together with the Province of Ontario in supporting fire education programs.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Thank you, Mr. Jones.

If I have time, I do have a question about building codes, but let me move on to one of your slides which says that there's a commitment to the Chinese lumber market. I know that Canada exports raw logs to China. You're an economist, I think, and one of the things that has happened, of course, is that Chinese pulp and paper has certainly undercut Canadian pulp and paper and North American pulp and paper in general in terms of price. Does the federal government have any idea about whether or not the exports that are leaving Canada for China are in fact being used for Chinese pulp and paper, which in return creates that nasty cycle that perhaps undercuts our pulp and paper mills?

[Glenn Mason]

I wouldn't suspect that we would necessarily know what those exports are used for.

The export of logs is primarily a provincial matter, and it's really only an issue in British Columbia. The Government of Canada has a small regulation covering about 2% of the land base of the private ownership in British Columbia.

The lead on that is the Department of Foreign Affairs. There's an MOU between the Government of Canada and the Government of British Columbia to collaborate, which effectively means that the Government of Canada will follow B.C.'s lead on the log export issue. The log export issue is very sensitive on the west coast, so it's one that reasonable people can disagree on.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

All right.

Let me go quickly to insects. You talked very briefly about the spruce budworm as an upcoming threat, and you talked about the pine beetle. You probably know that the emerald ash borer is right on our borders. Certainly, Minnesota has identified the emerald ash borer as being present in that state.

What's the federal government's role in terms of its ongoing watchdog role, perhaps, with regard to insect infestation and helping to ameliorate some of the problems that are probably going to happen with the emerald ash borer for one?

[The Chair, Conservative, Leon Benoit]

Could I get a very brief answer, please.

[Glenn Mason]

I was going to launch into a long answer.

[Voices]

Oh, oh!

[Glenn Mason]

Quickly, yes, we do a lot of research. In fact, my scientists have invented something called triazine, which can be used to inject the ash trees. That's actually an invention of the CFS. More broadly, we work very closely with all the provinces, increasingly with the cities and also increasingly with the United States Forest Service to monitor pests on a continent-wide basis.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Rafferty.

Ms. Sgro, go ahead, please, for up to the seven minutes.

[Judy Sgro, Liberal, York West, ON]

Welcome.

It's been a long time since I sat at the national resources committee and it's fascinating to see the turnaround of the industry. It's an important industry for Canada and for the world, frankly, so I'm really pleased to see how well it's doing.

As we move forward into the challenges of both the impact of the low oil prices and the low Canadian dollar, have you done some analysis on the impact it will have over the next hopefully short while that we'll be dealing with these low issues, and the impact it's going to have on your industry?

[Glenn Mason]

Thank you for that question.

You did say in the immediate term, and in the immediate term it's all positive, actually. It would be in the medium term to the long term where there would be larger questions.

It's positive because lower oil means lower transportation costs. For a typical mill, they'll tell you that 60% of their finished product cost is getting the fibre to the mill gate. Increasingly, a lot of that is in trucking as the fibre is farther and farther from the mill, and diesel is used in the machines and in the industry, etc. Then there's rail transportation and trucking transportation with the finished products, so having lower transportation costs will absolutely help the industry.

The lower Canadian dollar means that if your products are priced in U.S. dollars, you make a bit of a windfall profit while that lasts. For now, that's very positive, actually, but in the medium term, we don't know what the low price of oil, for instance, might do to different segments of the U.S. economy and how that could shift economic growth. It could be negative or it could be positive. It's the same for Canada.

As I mentioned earlier, probably more strategically, as we think about the bio-economy and transforming the industry, it becomes harder to make some of those investments, and to make the argument for some of those investments, when you're in effect replacing oil and the oil is so cheap that the replacement just makes no economic sense. This could slow down innovation.

[Judy Sgro, Liberal, York West, ON]

Yes, and we don't want to see that happen.

[Glenn Mason]

No.

[Judy Sgro, Liberal, York West, ON]

We appreciate all the innovation that's moving forward.

You were talking about using wood rather than steel for buildings, but there are concerns, as you know, with fire. There are safeguards when it comes to houses, but certainly when we meet the representatives of the fire department, they continue to be more and more concerned about the use of wood and about fire.

Can you tell me with regard to using it for buildings, and you said for the tallest buildings and for industry, are you able to do anything in particular to safeguard against fire?

[Glenn Mason]

I'll ask Bob to answer the question, because he has been working with this for years. The key thing to keep in mind here is we're not talking about stick building. We're not talking about two-by-fours. Yes, two-by-fours burn in a hurry. We are talking about mass timber. In this case it's typically engineered wood, but mass timber doesn't burn. Mass timber will char and then protect itself. That's the secret to using wood in large buildings.

Bob, could you speak a little bit to some of the work we're doing?

[Robert Jones]

We've done quite a bit...we funded a lot of research for the National Research Council to actually have fire tests of these larger buildings. As Mr. Mason said, in the heavy timber buildings, with some of the new engineered wood products, for example, cross-laminated timber, what essentially that is, is it's a number of two-by-four dimensional lumber pieces glued together. They can form a panel. They could be anywhere from four inches to six inches or eight inches wide but they can go up to about 40 feet or 50 feet long. These are quite significant pieces of panels.

I like to use the analogy of a campfire. You have a lot of single small pieces, and that's how you start your fire. If you ever try to put a big log in, it just doesn't burn. It chars, as Mr. Mason said. We've done a lot of research and funded a lot of research with the National Research Council that will designate the fire safety ratings for these new engineered wood products.

There has been a lot of press about fires in buildings under construction. That is a big difference. These are construction fires. There is no gypsum sheathing around. I'm talking about the smaller buildings that are built out of two-by-fours. Under a construction scenario there are no safety measures yet to protect the wood, although in the new version of the national building code there will be some provisions that will have certain parameters that a company must follow when it is constructing on site. Once the building is completed, with all of the different products that go around the individual stick pieces of wood, fire ratings are tested and verified by the building code officials to withstand fire and to allow people to get out of the building. Every product in every application has a rating system that's per code and per the specifications of the national building code.

[Judy Sgro, Liberal, York West, ON]

With regard to the time to burn, there's a certain period of time as well in there. Can you elaborate on that?

[Robert Jones]

Depending on the application and the size of building, there are certain safety regulations. A number of fire safety measures have a 60-minute fire rating. Some have a 90-minute fire rating.

I should also add that as buildings are getting higher there is the mandatory use of sprinklers, so all buildings have to have sprinklers at a certain height too. These are all specifications of the new building code that is looking at taller buildings.

[Judy Sgro, Liberal, York West, ON]

What is the tallest building that's been built with wood, to your knowledge?

[Robert Jones]

Currently, the tallest existing building is about a 10-storey building that's in England, but there are a number of buildings under construction. These are the massive heavy timber. In Norway there's a 14-storey building under construction right now. Australia has a few 12-storey buildings.

These larger and larger buildings are becoming more and more common around the world.

Mr. Mason mentioned that we are looking at building larger buildings in Canada too. I would expect that within the next few years we will see buildings in that range of greater than 10 storeys.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Sgro.

We go now to the five-minute round, starting with Mr. Leef, followed by Ms. Crockatt and then Ms. Duncan.

Go ahead, please, Mr. Leef, for up to five minutes, as soon as you admit that Yukon is not the warmest place in Canada.

[Ryan Leef, Conservative, Yukon, YT]

It will; it's bound to be.

The chair gave it away. I am the member of Parliament for Yukon. I'm looking at the map here, and there are lots of triangles and blue dots and red dots, none of which exist in the territories. Nunavut I think I understand, but in Yukon, of course, about 57% of the territory is covered with boreal forest. That represents about 281,000 square kilometres of forested land, with white spruce and lodgepole pine. That tends to create a pretty close-knit, hard-grained timber, and that's good, but obviously there's not a lot of stock up there. Market access is a bit of a challenge.

We went through an experience of devolution 10-plus years ago now. The federal government had forest management control at that time. The Northwest Territories has just gone through that. Nunavut's outstanding, although there's not much in the way of forest there. In terms of the two territories, is there a federal forestry approach? Is there anything left outstanding in the Northwest Territories in terms of devolving forestry control, or is that done? Is there a specific look at territorially based involvement of the federal government from a territory forestry strategy?