Thank you, Mr. Chair.
I'm Rick Connors, president and CEO of Gitxsan Development Corporation. We're a first nations for-profit company out on the west coast, in northwestern B.C.
There are four areas that we've identified, and we've been working with these four areas for a great number of years now. I have a little over 40 years of experience in forest products since I worked for Canadian Pacific Forest Products up in Thunder Bay, back in the 1980s.
One of the areas is easing log export restrictions. A lot of these are very specific to the west coast, but they're endemic from the perspective of what we're dealing with on a continuous basis here. Ninety per cent of the logs harvested in B.C. are milled domestically, with the remaining 10% exported in their raw form. The primary reason is that for certain grades of logs, the economics do not support their being sold domestically.
Due to log export rules, companies are forced to make deals with local sawmills whereby mills will not block their log export applications, but only if the logging companies agree to sell to them at discounted rates. Generally, there is a significant loss here. They put up a bid on the logs and we must sell those to them at a loss. This results in all kinds of detrimental effects to the logging company, including, obviously, losing money.
Easing log export restrictions would provide greater certainty to log producers and licensees, giving them a greater incentive to increase investment and stimulate growth in the industry. It's one of the areas we're very passionate about out on the coast.
The second area is stumpage reform. Timber is a Crown resource, and forestry companies must pay the government stumpage based on the volume of timber harvested. It's also important in the context of the ongoing Canada-U.S. softwood lumber dispute to prove Canadian companies are not subsidized versus their U.S. counterparts, who operate primarily on private lands.
Stumpage is meant to be reflective of the value of the timber and the operating costs for the area, but unfortunately in many areas of our province the stumpage amounts being charged are much too high and sometimes exceed 50% of the total delivered cost. That's without taking into consideration the appraisal areas. We require some appraisal reform in that area, which is like moving a mountain.
By reducing stumpage rates, companies would be able to harvest more timber, stimulate growth in the industry and carry on a very healthy stimulus from silviculture programs and reforestation.
The next area is the need for streamlined and clear first nations consultation. Even though we're a 100% first nations-owned corporation, we manage a 386,000 cubic metre forest licence. In terms of getting permits, each permit for logging must go through the first nations consultation process.
Unfortunately, the consultation process is a moving goalpost. It's not fair for either the first nations or the logging companies, because it simply is not strict and defined enough to clarify all the fuzzy areas around the permitting process, and there's no defined context in terms of how long it will take to get a logging permit—a cutting permit—approved. As a direct result, you cannot put down timelines for this and it's hard for a company to lay that down. It's not fair to either party.
The government needs to resolve these issues to provide licensees with the certainty they need regarding permit issuance, so that they can make further investments and stimulate growth.
Last but not least is the pulp and the low-value timber. There is a presence of high quantities of pulp and other low-value waste fibre. In the past, it was utilized by the pulp mills, but with the demise of pulp mills in the local area here, it's a constant challenge for many of the licensees. Each year, millions of cubic metres of material is burned in waste piles, so there's a wildfire and forest fire management aspect to this, not to mention the positive implications in terms of utilizing that fibre for alternative resources.
The government needs to invest more money in this, into next-gen technologies like torrefied pellets and bioheat for rural and remote communities, because that's literally where it rests.
These types of initiatives not only reduce the use of fossil fuels in Canada, but they also begin to optimize the utilization of our forests, making better use of what has been considered waste stream product, turning one man's garbage into another man's gold. It's critical so we can turn the forestry waste stream into a revenue stream for licensees.
I appreciate the opportunity to speak today. There's much more information. We have white papers on each of the subject matters if requested.
