Madam Speaker, I will be splitting my time with my colleague, the member for Abitibi—Baie-James—Nunavik—Eeyou.
When we think of forestry, Saskatchewan is not necessarily the first province to come to mind. However, the northern half of our province is almost completely forested, as is very well represented on our provincial flag. My grandfather, Mike Kalmakoff, was the general manager of the Saskatchewan Timber Board under the government of Premier Tommy Douglas. The goal of that provincial timber board was to get the best possible price for Saskatchewan's resource and also to encourage processing in the province, such as sawmills and also the development of a pulp mill.
I would like to talk about the importance of forestry to Canada in terms of those same two concepts, collecting revenue for the people who own the resource and also encouraging processing activity and the good jobs associated with that.
Under the first point of revenues from forestry, provincial governments charge stumpage fees for the timber. Of course the systems vary a bit from province to province. It is subject to provincial jurisdiction. However, certainly as Canadians, we would want to be collecting the best possible return for this resource. Stumpage fees are also at the heart of the current softwood lumber trade dispute. The American allegation is that Canadian stumpage fees are too low, that they are below the market value of the timber, and that they are an unfair subsidy to our industry.
Anytime this has been adjudicated by an international trade tribunal, Canada has won. Canada needs to be prepared to stand up to the United States on this issue. It was disappointing when the former Conservative government capitulated to the United States after all these tribunals victories.
However, the bigger point I want to make is that the reason we should want to optimize our stumpage fees is not actually to make the Americans happy in a trade dispute. First and foremost, the reason to ensure we have the best possible system of stumpage fees is to ensure that the Canadians who own the resource are getting the best possible return on it.
A side benefit of doing that might be to satisfy the Americans, although it is not clear the Americans will ever be totally satisfied. They probably have a desire to try to protect their own industry regardless of what Canada does.
Our first goal should be to ensure we collect as much revenue as possible from this resource that belongs to Canadian citizens through our provincial governments. Different provinces have tried different things in this area. Some have better systems than others. The federal government definitely needs to respect provincial jurisdiction.
We also need to recognize that having stumpage fees in provincial jurisdictions creates the risk of competition between the provinces and a race to the bottom on stumpage fees, where provinces are giving away their timber at lower and lower prices to try to attract investment away from other provinces. Inn the end, this does not increase the total pool of investment. It simply shifts investments and jobs around between provinces, ultimately leaving all provinces with less revenue from that economic activity.
There is a role for the federal government to try to coordinate between the provinces to maintain stumpage fees at some sort of reasonable level, and to try to discourage this sort of race to the bottom among provincial governments. There is a constructive role for the federal government to play in ensuring that all Canadians, regardless of which province they live in, derive the greatest possible revenue from our timber resources.
The second thing I want to talk about is the benefit we derive from forestry, not simply as revenue but also through processing that timber into lumber or into pulp and paper products. This is a major contribution to Canada's manufacturing sector as well. It is worth recognizing that it is a particularly important contribution to many forestry communities. There are many rural communities where the forest industry accounts for a majority of the local economy.
Therefore, it is important nationally but it is really important locally in some instances, and we need to have policies in place that encourage the processing of timber in Canada.
One major problem has been raw log exports, timber being taken out of our country in raw form, processed offshore and then maybe sold back to us as a finished product. To some extent, provincial governments can address this by putting processing requirements on the timber at source. The Government of B.C. had not been doing this. I am optimistic that now we have a progressive government in power in B.C., it will start requiring more and better processing of timber and that this problem may be resolved.
However, another aspect of this whole question of raw log exports, which is very relevant to us at the federal level, is the environmental question. Clearly, it is not very good for the environment to be shipping raw logs across the ocean, processing them in China or in some other offshore jurisdiction with lower environmental standards, and then using a bunch more energy to ship them back to North America as finished products. This obviously is increasing greenhouse gas emissions and worsening climate change. One of the potential unintended consequences of the federal government requiring a carbon price in all provinces would be to create a further incentive for that processing activity to happen in some other jurisdiction that fails to price carbon.
Fortunately, there is a policy solution to this problem, and that is for the federal government to also extend its carbon price to the carbon content of imports from countries that do not have carbon pricing and rebate it on Canadian exports. Right now, sawmills and pulp mills in Canada will have to pay a carbon price. That does create an incentive for them to reduce their emissions. The problem is that lumber or paper products coming in from the United States, or from China or from other jurisdictions will not be paying that same carbon price. However, the federal government has jurisdiction over international trade and the federal government can and should apply that same carbon price to the carbon content of these products coming into our country.
Of course, our forestry industry is not just about serving the Canadian market; it is also an important export industry. Therefore, another aspect of the border adjustment I am talking about would be for the federal government to rebate that carbon price on exports from Canada to ensure our forest products are competitive and have a level playing field when they are sold in other parts of the world.
Ensuring that the federal government's carbon price is adjusted at the border would allow us to use it as a tool to reduce emissions in Canada, while at the same time ensuring it would not create an incentive for industry, including the processing of timber, to simply relocate to other jurisdictions that fail to put a price on emissions.
We have seen a major challenge with raw log exports. That challenge could actually be aggravated by putting a price on carbon in Canada that may not exist in other jurisdictions. The federal government can and should solve that problem by extending its carbon price to the carbon content of imports and rebate it on exports. This is a solution that would allow us to ensure that carbon pricing reduces emissions in Canada, without pushing jobs and pushing industry outside of the country.
What have I talked about today? Forestry is an extremely important industry to Canada. One aspect of that is collecting revenue from our timber resources. This is done through provincial stumpage fees. The federal government can and should play a role in coordinating between provinces to ensure there is no race to the bottom, to ensure that all provinces are collecting the best possible return from their forest resources.
Second, we have talked about encouraging the manufacturing and processing of timber in Canada. There are things that can and will be done at the provincial level to require processing. The federal government also needs to ensure that its carbon pricing system does not create an incentive for that processing to leave the country and apply the carbon price fairly at the border.