Natural Resources Committee on June 16th, 2026

[Bob Larocque]

I'll be honest with you. Look at what the United States did. I can't believe I'm saying this, but it's an industrial policy. The United States' One Big Beautiful Bill Act, on the biofuels side, section 45Z, is a good way to look at it.

[Jennifer McKelvie, Liberal, Ajax, ON]

My next questions are for Ms. Sinasac.

You were speaking about supply chains. I'm wondering what the low-hanging fruit are, so to speak. What are the immediate investments that can be made that will have the biggest measurable impact on supply chain improvements?

[Cherith Sinasac]

The whole world is going through electrification at the same time. Electrical infrastructure and component parts are under significant demand worldwide. Sixty per cent of Canada's critical electrical equipment supply is imported, and 70% of that is coming from the United States, China and Mexico. We are heavily reliant on imported products and components, so it's important that we look at where we can start to manufacture those products here in Canada to help secure our domestic supply.

Again, if you want to bring more manufacturing of these critical grid components to Canada, we are asking you to expand the manufacturing investment tax credit to include grid equipment. That way we can start to incentivize those companies and compete with the U.S. so that we continue to be an exporter of this equipment, but also continue to secure our domestic supply.

[Jennifer McKelvie, Liberal, Ajax, ON]

Do you see a role for bulk purchasing particularly by the electrical utilities in terms of smart grids or more local infrastructure that could be rolled out? What role is there in bulk purchasing to be able to bring down the cost for consumers?

[The Chair, Liberal, Terry Duguid]

Give a quick response, please.

[Cherith Sinasac]

That is a strategy we have proposed and encouraged.

Right now, one of the things we're seeing is that utilities have different specs that they all like to customize. You might have a transformer with a green box or a red box. There are some good reasons for that. We do have different climates throughout the country. However, when we do specialized orders for each utility, it prevents economies of scale. Instead of stockpiling this critical equipment, we are waiting for that PO to come in and then we custom-make that product. That's where aligning codes and standards, aligning the specifications across a utility, and bulk ordering could help us to stock and capitalize on economies of scale.

[The Chair, Liberal, Terry Duguid]

Thank you.

Thank you, colleagues.

Thank you to our witnesses for appearing today. There have been good exchanges.

As Mrs. Stubbs mentioned, we welcome briefs and additional information, so please feel free to send that along to the clerk so that we can access that.

With that, colleagues, we're going to suspend for five minutes while we make way for our next panel.

[The Chair, Liberal, Terry Duguid]

Colleagues, we're now in session.

Pursuant to Standing Order 108(2) and the motions adopted on Thursday, September 18, 2025, and April 21, 2026, the committee will resume its study of the forestry industry.

I would like to welcome our witnesses. From the Canadian forest sector transformation task force, we have Ken Kalesnikoff, co-chair, and principal at Kalesnikoff; and Frédéric Verreault, co-chair, and vice-president, Chantiers Chibougamau. I hope I pronounced that correctly.

Colleagues, I'll thank, on your behalf, the co-chairs of the task force, who I know have worked hard on this report and are anxious to share their results with us. They have completed the mandatory witness onboarding test.

Let me make a few comments for the benefit of our witnesses.

Please wait until I recognize you by name before speaking. All comments should be addressed through the chair. Each of you will have five minutes for your opening remarks, after which we will open the floor to questions.

Mr. Kalesnikoff, you have the floor for five minutes.

[Ken Kalesnikoff, Principal and Director at Kalesnikoff, Canadian Forest Sector Transformation Task Force]

Thank you very much.

Chair, I'm happy to hear that you had an issue trying to pronounce my co-chair's company, because I refer to him as Nordic Structures. It's a lot easier.

Frédéric and I both appreciate the opportunity to present to you today. I'm Ken Kalesnikoff. We're based in southeastern British Columbia. Frédéric's company is based in Quebec.

Thank you for giving us this opportunity to speak to you today on the report from the Canadian forest sector transformation task force. Our membership included me and Frédéric; Jim Irving from J.D. Irving Ltd. and Kent Homes; Brad Carr, CEO of Mattamy Homes; Lana Payne, national president of Unifor; Luc Thériault, the CEO of Domtar Canada; Lenny Joe, representing first nations with the BC First Nations Forestry Council; and Don Roberts, CEO of Nawitka Capital Advisors Ltd.

I'll start off by providing a bit of background on how this all came together. Then I will turn it over to my co-chair. I'll try to get through this quickly and leave Frédéric as much time as I can on the detail.

We were invited by Minister Hodgson to take on this role last December. We were given a 90-day mandate to identify priority actions to accelerate the transformation of Canada's forest sector. This group came together on a volunteer basis. We each brought our own perspectives and diverse but complementary expertise on what goes into attracting capital investment, on transforming operations in large and small enterprises, on first nations economic development, on the importance of Canada's skilled workers and on what is needed to fast-track affordable housing in Canada. We spent 88 days engaging with dozens of stakeholders and experts, including senior officials from federal, provincial and territorial governments. We reviewed 176 submissions by interested parties.

The report was released a few weeks ago. The title, “Competitive. Relevant. Resilient.”, stuck with us right from the beginning. It was suggested by Frédéric and is a very relevant name for the report.

This is what we are seeking, not for ourselves and our personal interests but on behalf of Canadians and communities whose livelihoods depend on the health of our forest sector. We're all facing many external pressures—the ongoing trade dispute with the U.S., global market shifts, the collapse in markets for communications paper, and record-breaking wildfire seasons. As a task force, we deliberately chose not to focus on these things, as they are, frankly, outside our control.

For too long, we in the forest industry and in government have sought to deflect attention away from the problems we have created for ourselves by blaming distant others. The fact remains that global demand for forest products continues to rise. Canada's forest products are world class, sustainably harvested and manufactured with some of the highest technologies and rates of renewable energy used globally. But by and large, major investments are not being made in Canada. They are instead being made in Scandinavia, the United States and Brazil. This is largely because of poorly adapted systems and regulations that are in our control but that we have failed to change.

However, while transformation and modernization will require a huge lift, we were heartened to look at the facts and confirm the extent to which this really is in our hands, as Canadians, to do better. It has been an incredible experience. People we spoke with were generous with their time, their insight and their data, which ultimately allowed us to get specific about what needs to change and how we might go about doing so.

I'll pass it over to Frédéric.

[The Chair, Liberal, Terry Duguid]

Please proceed, Mr. Verreault.

[Frédéric Verreault, Vice President, Corporate Affairs, Chantiers Chibougamau]

Thank you, Mr. Chair.

Thank you, Mr. Kalesnikoff.

The mandate took shape with the ambitious directive from Mr. Hodgson, Minister of Energy and Natural Resources to consult, listen, work and deliver a report in less than 90 days. We accomplished this in 88 days.

From the outset, we established that our task force members would proceed on a consensus basis, and that if ultimately only three recommendations garnered consensus, we would submit only those three to Mr. Hodgson.

We're quite satisfied with the solid report that we submitted. This report needed to establish a diagnosis. We wanted this diagnosis to be factual, solid and sustainable.

The conversation on forestry in this country is all too often split among groups pulling in different directions, even though the facts are crystal clear. That's why we wanted this type of solid diagnosis. We wanted to lay the groundwork and to properly identify the needs and issues, but also the potential of this very modern sector, based on the action plan that we'll submit at a later date.

Over the course of this work, it quickly became clear—and we hope that your review of the report will lead you to the same conclusion—that the forestry sector is primarily a manufacturing sector. The most modern and ambitious economies—such as President Macron's France or the United States with the economic policies of the current American administration—are taking steps to reindustrialize and to build on a strong industrial manufacturing base. We may have taken it for granted and we have undoubtedly forgotten it, but the Canadian forestry sector is primarily a manufacturing sector. It serves as a remarkable backbone of this country's economic strength.

However, like any manufacturing sector, the forestry sector needs a strong, predictable and competitive supply chain in order to produce goods that will, in turn, be competitive. This quickly became the elephant in the room during the consultations. Given the different regimes in place across the country's provinces, Canada has lost some of this competitiveness as a result of supply chain issues. In public policies and regulatory frameworks, we've collectively lost sight of the fact that, just as an aluminum company needs green energy as a raw material and as critical input to operate, perform effectively and remain competitive, a forestry company needs cubic metres of wood. This wood is its raw material. Like any manufacturing sector, it must rely on a solid supply chain.

It also quickly became clear that New Brunswick has an extremely inspiring forest management model. A hectare of forest isn't treated as an expense in a government's books. Instead, it's an asset that can generate returns, perform well, remain productive and optimize value, while also benefiting from modern and relevant conservation policies to ensure the preservation of biodiversity. Otherwise, many situations across the country reflect this duality where a forest is treated as either an asset or an expense. The phrase “asset versus expense” quickly emerged.

Our priority has been to look at this issue and at how to secure more raw materials; better protect biodiversity in an intelligent, sensitive and measured way; build greater resilience to the risk of forest fires—which obviously lie at the heart of climate‑related disruptions—through forest management; and increase the contribution to Canada's gross domestic product, or GDP, by province. Moreover, as we showed in appendix D of the report, we believe that the GDP remains the most factual and pragmatic high‑level metric for measuring the sector's potential contribution to the country.

There are significant issues, challenges and threats. Quebec and Ontario are grappling with threats, including the demise of the newspaper, which served as the foundation for the entire interconnected industrial system. We're moving on to something else. It's happening right before our eyes. Now we don't necessarily have the tools to handle this.

The bioeconomy is taking shape on a global scale.

As Mr. Kalesnikoff pointed out, investors around the world are losing confidence in the domestic conditions necessary for the success of ambitious projects in the forestry sector. As a result, we're recommending a substantial investment fund of $10 billion over 10 years.

Time has flown by. Of course, we'll have a question‑and‑answer period, so I don't want to take up too much time.

Nevertheless, I would like to point out that we consider this matter extremely important from a regulatory standpoint. We've seen regulatory duplication. In many cases, the provinces had credible and legitimate regulatory frameworks in place to govern industrial forestry activities. The federal government was adding its own layer of regulations in far too many situations. Simply respecting the credibility and integrity of the provinces would have improved the business environment.

These are a few ideas in order to lay the groundwork.

We're ready to continue the conversation with you.

[The Chair, Liberal, Terry Duguid]

Thank you both.

We will now move on to questions and comments.

We're going to start with Monsieur Malette for six minutes.

[Gaétan Malette, Conservative, Kapuskasing—Timmins—Mushkegowuk, ON]

Thank you, Mr. Chair.

Mr. Kalesnikoff and Monsieur Verreault, you are the co-chairs of the transformation task force on forestry. It was certainly a very challenging task that you had to do. I've read the report, or, I should say, I've studied it. It gave me hope as a Canadian to read through the report.

Looking at the vision in the next 25 years, how do we bring Canada back as a world leader? It starts now, but actually, for you it started six months ago. I would like to give you the opportunity to go through the report and take us through the four or five key steps that will start us in the right direction. This will help the committee make the proper decisions.

I will leave it to both of you. I'm sure you both know how to work together now. Maybe you could share your time. Walk us through it, and help this committee make the right decisions and move this forward to our colleagues.

[Ken Kalesnikoff]

This is really easy for me. I'll pass it on to Frédéric to start.

[Voices]

Oh, oh!

[Frédéric Verreault]

Thank you, Mr. Kalesnikoff.

The list of priorities begins with analyzing or diagnosing the issue. This means that we must acknowledge that this industrial sector is by no means relegated to our heritage or folklore. It's a thoroughly modern industry. The primary driver for cutting down and processing a tree is the production of construction materials. Given the unprecedented housing crisis, we need to understand that the cornerstone of housing affordability is the two‑by‑four, meaning lumber. That's the first point.

Second, we must recognize that we've experienced a rather unusual disruption in the North American lumber market in recent months. Mr. Kalesnikoff and I described this phenomenon in our report using graphs of North American lumber consumption.

The lumber market has always been self‑contained. Canada and the United States produce lumber. Canada and the United States consume lumber. Since the invasion of Ukraine, a phenomenal amount of European lumber has become available. This lumber has been shipped to meet North American needs.

We also have the whole trade environment and the current global trade chaos. We've lost sight of this rather fundamental aspect needed to fully grasp the current challenge. The direct outcome of this is that North America has always had excess lumber production capacity. Lumber is a key material in housing construction and residential construction.

Today, we're relying on lumber from outside North America to meet the construction needs of Canada and the United States. This is completely unprecedented. This means that we're just a few percentage points away from the consumption level of 2021‑22, when prosperity reigned for everyone. For consumers and builders, it was also a period of shortages and high inflation.

Let's get back to the basics. When it comes to public policy, government guidance and the allocation of public funds, lumber becomes absolutely strategic. Given that critical and strategic minerals are part of this country's future, forest resources are just as critical and strategic for this country's future. We have a rock‑solid foundation to propel us forward.

However, there are challenges. We talked about capital. We need this $10 billion fund to begin the modernization [Technical difficulty—Editor] who lost confidence in the country's forest conditions. We need to review the regulatory framework and to clean up a few things. This isn't about creating a lenient environment for the forestry sector and forestry activities. Companies have a vested interest in ensuring that clients and markets trust our forestry practices in this country. We have every reason to trust in the integrity and credibility of this country's forest resources.

Let's talk about market access. The Canadian railway system isn't working. It's a barrier to interprovincial trade. Across this country, it's a barrier to competitiveness that prevents us from expanding into foreign markets. This is certainly true for the United States, but it's also true for other markets. To remain relevant and competitive in foreign markets, we must move goods from factories to seaports. We must urgently address the railway system—which isn't working—right here and now. That said, I don’t mean to criticize the two companies that hold this monopoly. However, the system clearly isn't working.

I'll come back to the priorities. For the past 10, 15 or 20 years, the National Building Code has been calling for more wood‑based construction. Yet the real momentum hasn't kicked in. In the United States, states such as California and Colorado have adopted regulations that cap greenhouse gas emissions per new square metre of construction. Canada wants to achieve this by 2030. We have an opportunity to speed things up and boost the market. Ultimately, a series of measures to increase domestic wood consumption are being proposed to replace up to a quarter of the American market.

[The Chair, Liberal, Terry Duguid]

Thank you both.

We will move on to Mr. Guay for six minutes.

[Claude Guay, Liberal, LaSalle—Émard—Verdun, QC]

Thank you, Mr. Chair.

Mr. Kalesnikoff and Mr. Verreault, I will take this opportunity to address you in French. I'd like to thank you and all the members of your committee for the work you have done for Canada and the Canadian forestry industry. We're very grateful to you. The report you produced contains a lot of good material. That said, it raises a few questions that I'd like some clarification about, on behalf of Canadians.

If I may, I'm going to start with a theme that comes up often in the report, which is that access to fibre is the main challenge. Is that an issue in all provinces, or are some provinces disproportionately affected by the issue? What is blocking fibre access in Canada?

[Frédéric Verreault]

Quebec and British Columbia definitely have greater challenges in terms of ensuring access to competitively priced fibre and a stable quantity of fibre over time. This is also a component of our recommendation to create a $10‑billion investment fund. We aren't recommending throwing Canadian tax dollars out the window. Just as a banker would require of any manufacturing company, forestry sector investment projects—to get a new mill or to transform and improve a mill—have to be based on a robust supply chain.

For us, it was important to have that financial and business integrity in our recommendation to the Government of Canada. Accordingly, we're advocating for access to these funds to be conditional on access to predictable, competitive and stable raw materials for the next 10 years. That will make it possible to transform or modernize an existing mill. When it comes to new mills, we're talking about 25 years. That's what's normal around the world and in manufacturing.

For that reason, regarding the provinces where improvements are needed, we have adopted a position that's meant to be not at all accusatory but instead constructive. What we're saying to the provinces is that it's not our mandate to examine their plans. The federal minister has obviously mobilized a task force. We're very mindful of provincial jurisdictions, but we can't, on the one hand, solicit a capital injection of $10 billion and, on the other hand, not correct this dysfunction in the supply chain. Over the past few days, we have submitted to the provincial ministers, with all the tact in the world, that this is an opportunity not to be missed. We're currently at a crossroads, and now is the time to correct things to stabilize the sector as a whole.

[Claude Guay, Liberal, LaSalle—Émard—Verdun, QC]

I think it was the right choice to appoint a representative from Quebec and a representative from British Columbia as co-chairs.

You have published the report, and the government has already drafted an action plan to transform the forestry sector. There have been recent announcements of additional funding. Do these announcements directly respond to the report's recommendations? What can be done? If you had been given more time, what would you have liked to accomplish? I'm not talking about the $10 billion, of course, since that hasn't been announced and discussed yet.

[Frédéric Verreault]

The action plan addresses many of the things we recommended, but not all of them. For example, in terms of wood consumption in Canada, there's an opportunity to improve the quality of infrastructure and construction, but the preliminary action plan from the past few days doesn't currently include any inherent components. Yes, changes to the Business Development Bank of Canada program were announced at the same time and are moving in the right direction, but we recommend program changes to support innovation.

Today, some calls for projects are very administratively rigid, including when it comes to project submission windows. However, the innovation trajectory doesn't align with a public servant's work schedule. I say that with the utmost respect for public servants. Businesses that pour their heart and soul into innovation projects do so over several weeks, several months and, in some cases, several years. When the time is right, it's the program that has to adapt to the business, not the business that has to adapt to the administrative procedures. That kind of aspect is missing.

No rail transportation initiative has been announced yet. Obviously, we're working on a very tight schedule. It's barely June. Our group was sitting before a blank page on January 19, 2026, so the pace is good.

Moving forward, once we have tabled our recommendations, it's up to the minister and the government to make the decisions. We remain available if we can help.

[The Chair, Liberal, Terry Duguid]

Thank you.

Mr. Simard, you have the floor for six minutes.

[Mario Simard, Bloc, Jonquière, QC]

Mr. Verreault, it's rare for an opposition member to point out something positive in what the federal government has done. Although, this industry report actually comes from you, not from the federal government.

It's fair to say that many people in the forestry sector and the politicians involved in this issue have been waiting for this type of proposal. I think it's good for everyone to see that the government's response seems to be favourable. Like you, I hope that this $10‑billion investment fund will be set up.

I don't want this to be a discussion among Quebeckers. However, we have to see how we can move this forward in a context where Quebec City sometimes has reservations around measures that may appear to infringe on jurisdictions. I understand what you're saying, and it makes perfect sense to say that an investment fund should be tied to a 10‑year supply guarantee.

However, I would like to know how we can be facilitators and how we can present this in a way that's acceptable to the Government of Quebec. What actions could we take very quickly? Perhaps we could benefit from an election campaign. I don't know.

[Frédéric Verreault]

We don't get involved in politics, so we'll let you be the judge of the right tools to make things happen.

Still, we were aware of the need for an approach that was firm and consistent from a business perspective, as well as constructive. That's why we're recommending a number of financial measures related, for example, to the ways that forest land is governed, where there is clearly room for improvement. We propose making envelopes available to the jurisdictions, the provinces, that would be willing to try new things. It's very much a carrot approach rather than a stick approach.

As for the workforce-related elements in our recommendations, we made sure to be mindful of partnerships and of co-operation to respect the agreements between the federal government and the provinces, as well as provincial leadership, including that of Quebec.

There are some thirty measures that we recommend implementing in the report. There is one that's naturally more sensitive regarding the eligibility of a jurisdiction, such as Quebec, for robust supply. I think we can do more than one thing at the same time. There are a lot of things that need to be implemented right now to improve the competitiveness, resilience and relevance of the forestry sector. Indeed, the home run here is that Quebec can get things moving quickly to ensure its eligibility for this significant capital that's on the table.

To conclude on the subject, I would say that when we talk about converting a newsprint mill, for example, it doesn't cost $20 million; it costs hundreds of millions of dollars. Newsprint mills play a stabilizing and critical role for the entire forestry industrial ecosystem. Yes, Investissement Québec is doing a good job in Quebec, but the Canadian government has to be able to follow suit.

Those are our recommendations.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

I'd like to continue on the topic you just ended with.

There will be a necessary transition. I'm thinking of my riding, where the Domtar Kénogami mill can't maintain its current model. The minister has said numerous times that he wants to retool the forestry sector. That necessary transition takes time to implement. The time horizon is such that, even if there were a $10‑billion fund tomorrow morning, it would take a long time before production was redirected to a more attractive manufacturing sector than the current pulp and paper sector.

Have you also spent time thinking about support methods to preserve what people have now, to maintain what has been gained?