CROWN FOREST SUSTAINABILITY ACT, 1994 / LOI DE 1994 SUR LA DURABILITÉ DES FORÊTS DE LA COURONNE
HEARST LUMBERMEN'S ASSOCIATION
NORD-ASKI FRONTIER DEVELOPMENT INC
CONTENTS
Thursday 18 August 1994
Crown Forest Sustainability Act, 1994, Bill 171, Mr Hampton / Loi de 1994 sur la durabilité des forêts de la Couronne, projet de loi 171, M. Hampton
Cochrane Forestry Association
Jean-Paul Lajeunesse, president
Jane Fox, director
Spruce Falls Inc
Kent Virgo, manager, forest services
Town of Kapuskasing
René Piché, mayor
Joe Nadon, councillor and chair, economic development committee
Frank Albani, town manager
Hearst Lumbermen's Association
Jules Fournier, member
Town of Hearst
Louis Corbeil, town clerk
Nord-Aski Frontier Development Inc
Sylvie Fontaine, administration / administrator
Hearst Forest Management Inc
Denis Cheff, manager
Kent Virgo
6/70 Community Forest
Bill Greenaway, assistant manager
Green Forest Lumber Corp
Mark Stevens, woodlands manager
STANDING COMMITTEE ON GENERAL GOVERNMENT
*Chair / Président: Brown, Michael A. (Algoma-Manitoulin L)
*Vice-Chair / Vice-Président: Daigeler, Hans (Nepean L)
Arnott, Ted (Wellington PC)
*Dadamo, George (Windsor-Sandwich ND)
Grandmaître, Bernard (Ottawa East/-Est L)
Johnson, David (Don Mills PC)
*Mammoliti, George (Yorkview ND)
Mills, Gordon (Durham East/-Est ND)
Morrow, Mark (Wentworth East/-Est ND)
Sorbara, Gregory S. (York Centre L)
Wessenger, Paul (Simcoe Centre ND)
White, Drummond (Durham Centre ND)
*In attendance / présents
Substitutions present / Membres remplaçants présents:
Bisson, Gilles (Cochrane South/-Sud ND) for Mr Wessenger
Carr, Gary (Oakville South/-Sud PC) for Mr Arnott
Fletcher, Derek (Guelph ND) for Mr White
Hodgson, Chris (Victoria-Haliburton PC) for Mr David Johnson
Jamison, Norm (Norfolk ND) for Mr Mills
Miclash, Frank (Kenora L) for Mr Sorbara
Ramsay, David (Timiskaming L) for Mr Grandmaître
Wood, Len (Cochrane North/-Nord ND) for Mr Morrow
Also taking part / Autres participants et participantes:
Wood, Len, parliamentary assistant to Minister of Natural Resources
Clerk / Greffier: Carrozza, Franco
Staff / Personnel: Luski, Lorraine, research officer, Legislative Research Service
The committee met at 0902 in the Civic Centre, Kapuskasing.
CROWN FOREST SUSTAINABILITY ACT, 1994 / LOI DE 1994 SUR LA DURABILITÉ DES FORÊTS DE LA COURONNE
Consideration of Bill 171, An Act to revise the Crown Timber Act to provide for the sustainability of Crown Forests in Ontario / Projet de loi 171, Loi révisant la Loi sur le bois de la Couronne en vue de prévoir la durabilité des forêts de la Couronne en Ontario.
The Vice-Chair (Mr Hans Daigeler): We're continuing the hearings of the standing committee on general government regarding Bill 171, An Act to revise the Crown Timber Act to provide for the sustainability of Crown Forests in Ontario. Today we're in beautiful Kapuskasing, with the nice sunshine. I hope you're enjoying your brief stay. I'm sure the local member is pleased to have so many of his colleagues up here. I checked out his constituency office, and next door there's a bakery shop and I can vouch for the good croissants.
COCHRANE FORESTRY ASSOCIATION
The Vice-Chair: Anyway, to get back to the serious business at hand, the first presentation is the Cochrane Forestry Association, Mr Jean-Paul Lajeunesse, accompanied by Jane Fox. Vous pourrez vous adresser au comité en français ou en anglais ; c'est à vous. Il y a la traduction simultanée. Alors, vous avez 30 minutes pour faire votre présentation. Si vous laissez un peu de la période pour des questions et des réponses, ce sera apprécié. So if you'd also like to leave some time for questions and answers, you have 30 minutes. Go right ahead.
Mr Jean-Paul Lajeunesse: First of all, I'd like to introduce myself. I'm J.-P. Lajeunesse. I'm the president of the Cochrane Forestry Association. Next to me is Jane Fox. She's my assistant and she'll be reading the presentation here today.
The problem we're having in northern Ontario doesn't fix itself directly to our MPP, Mr Wood. It's a problem that we've been having for the last many years and it's not getting easier, as you probably know. We're hoping, here today, to sit down after this session and maybe you, as members, can come up with a solution. We're hoping to.
Ms Jane Fox: Good morning. What's happening to our major industry? The Cochrane Forestry Association started in April 1984 to meet the concerns of members in the forestry industry. Our association members include loggers, truckers, tree growers and tree planters. Our area varies from Engelhart, Timmins, Longlac, Hearst, Kapuskasing and Cochrane.
Our association members are worried about where the wood industry is heading. We are working and going broke doing it. We have to cut back and it's costing us jobs. The members of the Cochrane Forestry Association are owner-operators who are as efficient as you can imagine, using all species of trees to their advantage.
With high operating costs like fuel, WCB, GST and parts, it seems like the wood industry will keep them in the recession until they change fields of employment or close down their operations. Since they average from 45 to 50 years of age, some with little savings or no pension funds, things look bleak.
There's one thing I can't understand: why lumber prices have never been so good and yet many struggle. The government is saying, "It's a private enterprise and we don't want to interfere." We need some hard decisions to be made soon. Our concern is in a letter per brief/lbof questionnaire which was sent to the honourable minister, Howard Hampton, about Bill 171.
We, as independent contractors doing the work, want to know how many restrictions we can handle. It seems like we're going backwards. Some 175,000 jobs are created in the forest industry in Ontario, directly and indirectly, with a gross of $10 billion. Some of the proposals that the government is giving are not good. Trust funds with guaranteed funding for forest renewal sound okay, but the question is, how much of the stumpage collected will go directly into tree seedling planting, or will it go to another government agency?
We also see our equipment becoming obsolete in a few years. Banks are very nervous because of new equipment like processing heads which cut, delimb and slash to a desired length leaving cones and branches at the stumpage, and forwarders to bring the 16-foot logs out. These pieces of equipment cost around $700,000. Just the head of a processing unit alone costs $200,000. Those are not prices for us, especially not for three to four months of work per year.
In the 1960s, a Cochrane man invented this head. Then his patent was bought by Timmins Head and was fabricated right here in the north. The past owner told us last year that he was 25 years too early but the demand wasn't there, so the business closed, then the word "production" came in and volume was the key goal.
The government is imposing penalties for not complying with the new law; in other words, if companies are fined, we see ourselves being targeted to pay for the damage or your contract is cancelled.
Forest companies are worried that invoices sent to the ministry Forest Renewal Trust fund, that their guaranteed return revenue won't be 100%, but the government through a penalty system will establish insufficient money available to fully regenerate forest areas.
A citizens' committee will be created to say how our forests are managed. That's good, as long as we have the right people making the decisions. The ministry is now looking at proposals to develop new mills and expand existing mills in northeastern Ontario. We, as members of the Cochrane Forestry Association, would like to know why there is a sudden surplus of wood and our licences are being decreased by 20%. How about increasing our existing permits so that we could make a decent living?
The wood flow going to Quebec every year is enough to keep a mill in the north going. Will this investigation that costs taxpayers thousands of dollars about wood going to Quebec mills with no stumpage paid be made public? Companies are using Quebec workers against us to make sure that prices stay low. It's only a one-way affair. Our right to negotiate is taken away. We can't invest in this province any more.
This province has no guilt whatsoever about how it helps Quebec financially; still, they're not pleased and want to separate. Ontario was once the richest province in resources. Now it's becoming a gamble to invest here.
A lot of families come here from Quebec and some still do, but they built farms, started businesses and raised their children here and are still proud to be buried in this province. On some occasions, Quebec subsidizes businesses to compete against ours. We have two tree seedling growers in the immediate area of Cochrane. One only grew a small portion of 10% and the other at 0% capacity.
We have to encourage manual planting, especially in black spruce, because we are so close to the tundra where nothing grows. The government is saying that the cost of planting is too high, that we cannot afford to do it any longer, and companies are doing that and they're saying that less and less will have to be planted every year as contracts have already been cancelled. With careful logging, trees left standing will naturally seed, but it takes about five years just for the seedlings to appear. Fifty years down the line, trees that are left standing will be overmature and die, and those naturally regenerated will be too small to harvest.
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Some infrastructure moneys should be given to make sure that neglected areas could be planted and create jobs in the forest industry. It would also please the environmental groups and ensure long-term employment in the industry.
Our members in the trucking industry are also in for a rough ride with Roadcheck '94. Forty-two per cent of trucks were placed out of service. It might have some more enforcements and also more fines. That means that vehicles have to be in top shape and traded in every few years. This raises the cost of operation and with existing competition from Quebec, plus the cost of insurance, licensing and axle-weight regulation, tires and repairs, it makes it very difficult to stay in business.
We also feel that there's not enough support from our municipality and town businesses. It seems because we don't pay taxes directly that we are not part of the economy of growth in Cochrane. Local businesses know what's wrong, but they don't care.
Our recommendation to the committee: We would like to recommend an amendment to Bill 171 similar to the one that they have in British Columbia. It is called Bill 13, section 158.4. Section 158.4 authorizes the Lieutenant Governor to establish a mediation and arbitration system for use in resolving disputes under timber harvesting contracts and subcontracts. In addition, section 158.4 enables regulations imposing the system of mediation and arbitration for timber harvesting contracts and subcontracts that do not make provision or do not make adequate provision for mediation and arbitration.
We would like the ministry to consider an area for the association for the whole silviculture forestry process. We are willing to form partnerships with the native bands and create training programs to enable long-term employment.
For us to survive in northern Ontario, we have to work as a group and we are hoping to have the ministry working alongside us to create jobs in the Cochrane area.
The message that we're getting is that if you can't compete, get out. The Quebec government has realized that there is big bucks in forestry and millions in revenue and it's returning to their province, but Ontario hasn't realized it yet. We should be free to travel from province to province in this so-called free country, and I guess that when everyone is on social programs, the message will be sent.
I thank you for your time and your energy.
Mr Lajeunesse: Also the bill, it's already written here in this Forestry Act, Bill 140, and it was passed in 1979 here -- no, in 1993. I'm sorry.
I talked to some associations in BC. They had a bit of problems the first year. By the second year, everything works so good now. It works fantastic. There are no more problems with companies and subcontractors. It was passed because I guess there was a problem and they passed it, and we're hoping that this government looks at it very seriously because we don't see any way that we can compete without having somebody to stand for the small guys in the forest industry. Thank you.
The Vice-Chair: Thank you very much. We'll start now with the questions and answers. First, the official opposition, Mr Brown or Mr Ramsay. Mr Ramsay.
Mr David Ramsay (Timiskaming): Did I hear you correctly when you referred to the wood that's going to Quebec? Coming from Timiskaming riding, I certainly get a lot of complaints about it, but you said that it goes to Quebec without stumpage being paid.
Mr Lajeunesse: There was a big investigation about this a few years back and we never heard nothing about it any more. So we're wondering if you can look into what's happened to that investigation. We know that some people were buying private lots and transferring crown land to private lots without paying the stumpage and wood was flowing across, and nobody knew about it. It was going on for quite a bit of years. Unions and myself, as the association, wrote letters to our MPs and they did an investigation on this, but we never heard after this. It's a hush-hush story, it seems like, lately. So we would like to see why that was permitted. We feel that because of so much wood flowing to Quebec, we could subtract a little bit of that wood flow and give a little bit more to the local people. It sure would help them financially.
Mr Ramsay: Okay. Maybe when we get around to one of the government spokespeople, we could get that answer.
Mr Lajeunesse: Sure.
Mr Ramsay: The other thing you were speaking about was disputes. I just want to clarify whom the disputes you're talking about are between. I believe you're talking about the small contractors and maybe the bigger licence holders?
Mr Lajeunesse: Exactly.
Mr Ramsay: I guess some of the trouble is when some of the big companies just hire truckers and basically the price is -- you're saying the margins are real tight. They don't offer you very much and so basically you've got almost two classes of people in forestry. You've got sort of the fat cats in some of the big companies who seem to be, when prices are high, doing well.
Mr Lajeunesse: Yes.
Mr Ramsay: Yet they still say to you, "It's so many dollars a tonne to haul it down to my mill," whatever it is, and you can hardly make a living. Is that what you're --
Mr Lajeunesse: Exactly, and they use brokers. The companies use brokers to protect themselves.
Mr Ramsay: So there's no WCB, for instance, in this sort of thing?
Mr Lajeunesse: As you know, there are unions. If you ever come against a broker, the broker dismisses you completely and the company just doesn't get accused of being a bad party. We see ourselves with this bill that we could say to the broker or the company, "Let's bring a mediator in and let's see what reason."
We lost jobs, even this spring at Quebec, behind the big tree limits. We had a loss of jobs when Tembec brought in its own subcontractor with its own equipment, and we knew very well that equipment was being subsidized by the companies, and we lost five jobs out of that. We can't compete against them all the way they are operating. We see ourselves going backwards very fast.
Also, as soon as you mention price to a company and he doesn't like it, they don't call you back. You're on a blacklist. We had a protest a few months ago. Some people know about it here. We had a 16% raise and on our protest we last -- four members were dismissed with no excuse whatsoever, without any reason and they had just bought a brand-new truck and trailers and they're out in bad financial problems. We see that we've got no bargaining power whatsoever without this bill that we want passed here, Bill 13.
Mr Ramsay: Is there any more time, Mr Chair?
The Vice-Chair: Yes, Mr Ramsay.
Mr Ramsay: Okay. I'll just continue. Then what role would you see government playing then in trying to make sure that you have a fair share of the forest revenue? How would you see them getting involved in a crucial transaction?
Mr Lajeunesse: This bill explains everything. I gave a copy to her.
Mr Ramsay: The British Columbia bill?
Mr Lajeunesse: Yes. Also, MNR has an estimate of nine persons in this bill and they're just for arbitration and negotating prices and that kind of stuff. They're hired by the ministry and they would come between two parties and ask questions, and sometimes it would help us financially.
I know that with the greenhouses here, they had a problem with them because their contract was cancelled this spring because of the new bill and the companies didn't want to buy the trees. They could have brought this arbitrator in and asked questions, and this bill gives you a year --
Ms Fox: Grace period.
Mr Lajeunesse: It's a grace period.
Mr Ramsay: I see.
Mr Lajeunesse: If you ever read this bill, Mr Ramsay, you'll see that it was passed in BC because they had serious problems and we have the same problem here too.
Mr Ramsay: Could I ask the Chair if copies of that bill could be made available to committee members?
The Vice-Chair: We will take a note.
Mr Ramsay: Thank you very much, Mr Chair.
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Mr Chris Hodgson (Victoria-Haliburton): Thank you for coming this morning. This is a concern that we've been bringing up from the very beginning. The area that I'm from has independents, we don't have a lot of mills. They're jobbers and they have no security. I know the problems involved in going to the bank without any tenure or any --
Interjection: Contracts.
Mr Hodgson: -- guarantee that you're going to have a contract next year and the year after to pay down the amortized expenses. Even the cost of a truck has gotten quite expensive, with the regulations and the taxes that you mentioned and the insurance. A lot of people in our area aren't covered by WCB any more because they contracted out and that's the only way you can work. I would hate to see what you said, everybody going on social assistance. We're here in the government to try to avoid those things and find solutions.
In this bill there is a section, under section 35, and I thought it was being done consistently with Bill 13 from BC when I read this. This was one of our concerns originally.
I guess what you're saying is we should have more detail in it and more specifics in the regulations governing it. I'm interested to hear what the government side will say to this.
Do you see any other means, other than that? We've heard suggestions on tenure, if you're the contractor for the licensee of a crown block. Do you see any way to have any more security added to your business and not take away from the competitiveness or the bidding system or market --
Mr Lajeunesse: We see ourselves as an area directed through some groups. It doesn't matter if it has been an association, but some groups want to work together. It does protect ourselves against other problems and we have more powers to negotiate prices when the wood belongs to you, but it seems that the companies own about 90% of the wood in this province. It's pretty hard to sit against a company and the wood belongs on their licence and say, "Listen, we don't find this price being fair," or whatever the problem is. As soon as you mention the words, "Hey, we want to say something about it," you're dismissed and you're blacklisted and the first thing you know you're bankrupt.
Without this bill, we tried -- I already spoke to unions. I'm sure to a lot of independent contractors the wood union is a scary thing. Lots of them want to stay more independent, that's where the independent loggers are.
I met with all kinds of groups. I went to Thunder Bay. I met with lawyers there, I met with lawyers in Toronto, I met with all kinds of consultants. We met with accounting firms in order to try to set up our association to be protected. We tried every ways and areas possible without this bill, and we see ourselves not being in business very long without this bill.
Mr Hodgson: Just a final question, Mr Chair, if I may: You mentioned the competition from Quebec coming in and taking your work. Are there any advantages that they get that you don't in terms of taxes or policies or subsidies? Is it a level playing field is what I'm after.
Mr Lajeunesse: Jane can answer that one.
Ms Fox: Being as I'm a direct tree seedling grower in Cochrane, Ontario, there was just a ministry bid put out this spring, in 1994, and it was directly out for competition. We couldn't compete because the Quebec growers are subsidized by the province of Quebec with their containers. They do not have to pay for their containers that the tree seedlings grow in, and also the peat that enables their medium to grow in. So you're looking at half of the cost right up front there that's subsidized through the province of Quebec which in the province of Ontario there is no subsidization program concerning reforestation to that degree, and being as our prices then are almost double because of their receiving 50% up front, you cannot compete with that. Indirectly, this one grower was given approximately 4.5 million tree seedlings out of our direct region alone, which hurt major greenhouses as myself.
As we mentioned in here, the two that are directly involved cannot compete because of the unfair competition. There's no level playing ground at all.
Mr Len Wood (Cochrane North): Just to start off, I'd like to welcome everybody to Cochrane North and to the town of Kapuskasing. It's nice to have the committee hearings in places throughout northeastern Ontario, and we'll be going to northwestern Ontario. Welcome to Kapuskasing. I know it's going to be a short stay, but welcome and enjoy the nice sunshine while you're here.
I'm well aware of the concerns that you have, Jean-Paul, as the independent loggers, as well as the greenhouse growers. I know that in the Thunder Bay loggers' association there's some mediation and discussions that are taking place now to try to resolve some of the disputes. It's very similar there and in some other places as is happening in the Cochrane area. The feeling is that as the price of lumber goes fairly high, and it was very high, that the independent truckers and loggers are not benefitting from this. As a matter of fact, the fee that they're getting delivering the wood to the mills, whether it be Norboard, Normick Perron or Malette or Abitibi or whatever, is so low that they're all on the verge of losing their operations.
The BC amendment: I'm going to have to look further into that there and see how that can be incorporated into section 35 or whatever. There is an article there that might be able to cover that. I'm not sure. We'll have to look and see what kind of amendment we can collectively work out on that.
Your solution: Do you see a solution of pulling everybody together and collectively negotiating a price with the mills?
Mr Lajeunesse: Yes. As our association, we -- certainly with an area to create more employment and secure ourselves. As you know, we only have a certain area on crown unit, and as you know, this is only for two or three months a year. It's not enough for ourselves and not enough security for ourselves, too. We want to work for the companies with a mediator, and we can ask questions why. We would like to ask the questions why we can't compete against Quebec. Why can't we afford that equipment that Quebec has? Why can't our health and safety compare to Quebec? You know, we have a guideline we have to follow. If you compare our lifestyle as independent contractors, you just go visit Fraserdale there and you go visit Normick Perron's bunkhouse and you go visit Ontario Hydro's bunkhouse --
Mr Wood: Living conditions, yes.
Mr Lajeunesse: I mean, you wouldn't even sleep there. You wouldn't walk in. That's the difference. Are we going back to the 1930s, that we have to start living in log houses and tents to compete and live? Because our lives are -- like in the Cochrane area, it's only a one-industry town. It's only a one-industry town, and I think the government is forgetting that, that we've been doing this for four or five generations, and the natives, as you know, want to get into this too, and we don't want it to become another problem like we have in other places.
Mr Wood: Yes, and I'm well aware of the concerns that you have, and the day I got elected I was reminded that this government is going to have to do something better than what the two previous governments had.
Mr Lajeunesse: Exactly.
Mr Wood: And we haven't been able to accomplish the goal as yet.
Mr Lajeunesse: No.
Mr Wood: But the other question that was raised, that you raised on me, Quebec investigations that were taking place on stumpage and that back in 1988, 1989 and 1990, I don't have the end results of what transpired on that, but I know there are other questions that -- Gilles Bisson wanted to ask a question.
The Vice-Chair: I think Mr Dadamo was going to ask a quick question first, and then if there's time for Mr Bisson.
Mr George Dadamo (Windsor-Sandwich): I'll be quick, about 30 seconds. I noticed in your presentation that you were talking about how much it costs to stay in this business, and you made mention about the $700,000 for some of the equipment. Are you or some of your members working with outdated equipment at this time?
Mr Lajeunesse: We are, and we see ourselves as a new silviculture coming in with careful logging, that we have to get into it, and the banks, as you know, without that security, we can't compete. And, you see, the Quebec government is boosting those. We've got processing heads coming right over, and today we have a display in Abitibi limits, and it's Mont Clair, Quebec. It's not even Ontario. We can't manufacture this equipment, we can't even create nothing in that kind of equipment in northern Ontario, in Ontario. Why is it a problem? Why is Quebec so strongly with that kind of equipment and why can't our banks and our companies -- even prices for parts, they're going 35% difference.
Mr Dadamo: Thank you.
The Vice-Chair: A quick question, Mr Bisson?
Mr Gilles Bisson (Cochrane South): One of the strengths of the bill that we're trying to accomplish is what you talked about at the very beginning, which is to guarantee that the money coming from the stumpage fees, that a share of that goes into your trust fund so that there is money for regeneration. I see that because our weakness has been on crown units. The FMAs have not been too bad, but we've got to do something with crowns, and between what we're doing on the trust fund should take care of that.
My question, however, is in regard to the punitive. You saw the fines as a punitive way of dealing with people who do things that they shouldn't do in the bush when it comes to reforestation, or not reforestation, but when it comes to logging. If you feel that fines are punitive, I know that you're responsible loggers, I know that the industry wants to do things right, I know that you try to do everything you can in order to make sure you do things the proper way, if you find that fines are punitive, how then would you deal with people who do not do things in the way that they should be if you don't do it with fines?
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Mr Lajeunesse: I believe that fines have to be there, but we feel that if the company is fined, who does the work on the company's limits? The independent contractor. If the company gets fined --
Mr Bisson: On an FMA.
Mr Lajeunesse: Yes sir, and it's $15,000 or $20,000, what's in it for myself? I'm the one doing the work. Would they come to me and say: "Well, that's okay, you just cost us $15,000. That's okay, just keep on going. Never mind about it. We'll forget it"? We're targeted; our companies are targets as being responsible for doing the work on those limits, and without this bill we're dismissed without no reason at all.
Mr Bisson: But just so I understand -- this is a point of clarification -- are you saying that the fines should be levied on the person who did the infraction or on the company?
Mr Lajeunesse: No, the companies get fined right now, right?
Mr Bisson: Yes.
Mr Lajeunesse: The company's going to get fined and the company's going to turn around and they're going to dismiss us on those limits.
Mr Bisson: Oh, I see what you're getting at.
Mr Lajeunesse: Our company's going to be targeted.
The Vice-Chair: We certainly appreciated your presentation, so thank you very much for appearing before us. Certainly we will take your comments into careful consideration. The clerk does have a copy of the bill and he will make it available to the members of the committee a little bit later on.
Mr Lajeunesse: Thank you very much.
SPRUCE FALLS INC
The Vice-Chair: The next scheduled presenter, the mayor of Smooth Rock Falls, has cancelled. However, Mr Kent Virgo on behalf of Spruce Falls Inc, who was originally scheduled at 11:30, is here and he's willing to give that presentation now. If you'd like to come forward, you have 30 minutes. If you'd like to leave some time for questions and answers, the committee members would appreciate that.
Mr Kent Virgo: This is Mr Paul Krabbe, an assistant of mine, and he'll be helping out through parts of this presentation.
I welcome the opportunity to speak to you this morning on behalf of Spruce Falls Power and Paper Co. I have a lot to say. I would prefer not to have to read this to you, but in order to get all the information in, I'm going to have to basically go through it pretty quickly. I apologize for that, but that's the way things are.
In the way of an introduction, Spruce Falls Inc is a newsprint manufacturer with its mill located here in Kapuskasing, Ontario, where it's the primary employer, carrying a model payroll of about 800 employees these days. In 1991 the employees, and many of you already know this, of this company acquired controlling interest in the company, with members of the community and Tembec Inc holding minority shareholder positions.
Since that time, some $160 million capital dollars have been spent on modernization, quality improvement projects, environmental projects as well as diversification, with a new stud mill currently being built and expected to come on stream next February some time.
These construction projects have resulted in several hundred other people being employed over the past few years above and beyond the number mentioned above. The company's business plan calls for a number of additional capital projects to provide for further diversification over the remainder of this decade.
Spruce Falls Inc and its predecessor, Spruce Falls Power and Paper Co, have managed a forest management agreement referred to as the Gordon Cosens Forest, some 1.6 million hectares, since 1980 and have held long-term licences covering essentially the same area since the 1920s when the first mill was built.
We have a proud tradition in timber management and forest renewal that goes back decades, and we've got the results to prove it. I would invite any of you who are interested at some other time to contact me and I'd be quite happy to go out and show you those results.
Spruce Falls shares with all Canadians important responsibilities to the environment in which we live and work. We support the responsible stewardship of resources, including forest, fish and aquatic habitat, wildlife, air, land and water. Responsible stewardship of our resources makes possible sustained economic development and an improved quality of life, which of course we're all interested in. In this spirit Spruce Falls believes and has adopted a set of policies and guidelines that will govern our attitude and action in environmental matters.
Although we share a great deal of common ground with regard to our concern for the environment, Spruce Falls Inc wishes to speak on the following issues raised in Bill 171 and the associated draft regulations that cause us some concern:
(1) Inadequate opportunity for public consultation.
(2) Increased uncertainty and its impact on business decisions.
(3) Who will be in control of forest management?
(4) Process rather than results orientation.
(5) Rights of ownership of information.
(6) Inequity.
(7) Penalties: the wrong approach, the wrong message to be sending.
Inadequate opportunity for public consultation: To our knowledge, there was no consultation with the forest industry or anyone else outside government prior to the first reading of this act on June 1, 1994.
Given the importance of this legislation to the forest industry as it lays out the rules under which we are expected to operate for years to come; given the importance of the forest products industry to the economy of Ontario, especially that of northern Ontario and particularly the economy of single-industry communities like Kapuskasing; given that a significant portion of the supporting documentation, ie, the draft regulations and the four draft manuals, have only become available for review this month, and in fact given the distribution time frame, within the last week; given the volume of information involved and the importance of this information in providing details that further explain the government's intent as expressed in the legislation, notwithstanding that the release of all this information has occurred during the traditional summer vacation period when many people are away from work, there has not been adequate review time allocated through the process prior to these hearings to provide for the kind of meaningful public consultation that we believe the Legislature of the day wants and needs.
Just for comparison purposes, compare that to the timber management planning process which, following the EA board's recent ruling, takes some 300 days of public consultation to write a timber management plan. This is the legislation under which all of this is supposed to be handled, and look at the consultation period involved.
Increased uncertainty and its potential impact on business decisions: This legislation as written increases the level of uncertainty for making business decisions involving large amounts of capital in the forest industry to an unprecedented degree. We are seriously concerned that this will negatively affect the business investment climate, particularly on an international level where investors have choices to make about where to put their money.
This could be particularly critical at a time when most Canadian banking institutions are shying away from investment exposure in the forest products sector. As I understand it, that's partly because of our performance in recent years. As you know, there's been a lot of red ink floating around.
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Some examples of areas in the legislation that increase the uncertainty for investing companies and for the existing forest products companies such as Spruce Falls Inc are:
(1) Inadequate definition of what is meant by the sustainability of crown forests, sections 1 and 2, and the ramifications where the minister shall not approve a management plan unless he or she is satisfied that it provides for the sustainability of the crown forest, subsection 8(2), or he or she may stop operations, section 52, if they're causing or likely to cause loss or damage that impairs or is likely to impair the sustainability of the crown forest.
This is of particular concern if it takes in each individual element that makes up a forest, since forests are naturally dynamic entities. This lack of definition provides all kinds of recourse for challenges by the environmentalists regarding many of the minister's decisions. A similar definition problem exists regarding forest ecosystems. The use of conceptual terms is very disconcerting to forest managers, and they're not defined in terms that managers can put their arms around and manage.
(2) Proposals that will, we believe, bring about some dramatic and fundamental changes to the tenure system: These in effect remove any form of security of wood supply in the long term from companies which have banked on it over the years. To be more specific, changes from forest management agreements, that is, documents that must be signed by two parties, to sustainable forest licences, sections 23 and 72, that can be unilaterally changed by the government, sections 31 and 35, cause concern.
Security of tenure, through such things as evergreen clauses in agreements, represented a fundamental cornerstone in the development of forest management agreements. They recognize the need for security of supply through tenure, especially for mills where investments of hundreds of millions of dollars must be made regularly.
There is also some question here as to the value of a minister of the crown's signature on any form of agreement, such as the current FMAs recently signed by ministers of the current government, if they can simply change the form, intent and conditions of licensing.
We strongly recommend that the new legislation should not tamper with the existing tenure arrangements of the day. If best end use is the issue, let the market determine best end use.
(3) The fundamental move from timber management, which we spent five years and millions of dollars as an industry and government and other NGOs defending in the recent class EA, to forest management, a much broader concept, without any requirements for the government to focus on what its priorities are in what it expects to achieve from the forest, that is, separating needs from wants, and without any clear picture of who will be responsible for or expected to pay for what -- it appears that this government intends over time to offload more of its responsibilities to manage components of the forest other than timber on to the forest products industry. This is not acceptable.
Some licensees under this act are expected to write forest management plans, subsection 9(1) and paragraph 23(2)1 -- not forest resource management plans, forest management plans -- yet they only have the expertise in, direct interest in or control over the timber component of the forest. This does not make logical sense.
We are also troubled by the thought of the requirement for a new environmental assessment for forest management now, since that's something very different; in the industry's case at least, before the recent EA, it would've been different had it been forest management, but that was all argued out.
(4) The ability of government to change the manuals which detail the requirements unilaterally at any time means we are really unclear what the rules are under which we as businesses must operate now and in the future. This makes estimating projected operating costs, which are used to calculate returns on investment prior to making investment decisions, very uncertain; this in addition to the fact that we have not had a realistic opportunity to review the manuals that accompany this act.
The potentials for increased costs and reduced management flexibility are of greatest concern since they both affect returns on investment and competitiveness with other jurisdictions such as the southern US.
(5) The potential for an additional layer of appeals, section 11, above the issues resolution and appeal process already provided for as a result of the EA board ruling concerns us since it opens the door to further delays.
The changes provided for in this act will cause uncertainty which will negatively affect the business investment climate for the forest industry in Ontario.
Concerns over who will be in control of forest management on sustainable forest licences: The ability to make appropriate and timely forest or timber management decisions on sustainable forest licences will be negatively affected by changes that make it less clear who is in charge of overall management on the licence area.
Since the crown can place a licence on top of a licence, section 35 in this act, without a signed third-party agreement first, subsection 35(2), an element of control is taken out of the hands of the prime licensee. It would be very difficult, after the fact, to comes to terms on third-party agreements as suggested in this act.
The result will be a cumbersome process with frequent requirements to go to mediation, with the minister making the final decision. Management control is, in effect, removed from those mandated to manage, and timely decisions become impossible.
Overall good forest or timber management will, we believe, be virtually impossible where no one party is clearly responsible for it, for a given forest.
Process rather than results orientation: The act is too process oriented rather than being results oriented.
We are concerned that the provisions of section 13 and clause 39(1)(a.1), whereby silvicultural and operations prescriptions will have to be tracked, will become an accounting and accountability nightmare. We do not wish to increase the office work and paper pushing required for forestry staff who should be spending more, not less, time in the bush.
We do believe in accountability and as an industry support the concept of independent audits. However, we wish to be judged based on our results in accomplishing agreed-upon goals such as maintaining or increasing the sustainable timber harvest or maintaining the number of hectares in each working group. These kind of results are understandable, measurable, accomplishable and not process oriented.
Planning is one area which we understand must be process oriented to enable adequate public participation. On the other hand, we do not see the need for redundancy in the process. One example of this is having annual work schedules approved by the minister, even when everything in them must already be approved by the minister through an approved forest or timber management plan. The annual work schedule is necessary but only as a source of information for government staff and for the public, outlining when certain already approved events will occur.
Concern over the rights of ownership of information: Sections 17 and 18 concern us in that the minister has virtually unlimited powers to demand the collection, collation, analysis etc of unlimited amounts of information and it may then be used by him or her as if it were the crown's information. This is particularly disconcerting since it is so open-ended given the move to forest management and the minister's ability to change the requirements outlined in the manuals at any time, potentially increasing them. Information is a costly and valuable commodity.
Furthermore, there is concern that once this information gathered at one company's expense is in the hands of the minister, it is then essentially in the public domain and usable by others who are interested in the forest. This is neither fair nor proper from our perspective.
Inequity: There are a number of aspects of Bill 171 that will cause additional inequity among those who utilize the forest resource.
The change to utilizing total licensed area rather than productive forest area as the basis for calculating area charges is one example. The licensee who has a greater proportion of non-productive forest, that is, water and bogs etc, in his licence, will be inequitably affected. In fact the industry should pay area charges only on the land base they are permitted to harvest.
This is a really confusing part of the process, I might add, in that the package that we received for the workshops back on July 18, which outlined draft regulation summaries, talked about area charges being based on total area. Then when the regulations came out last week, it seems to have changed somewhat, at least for 1995.
But if you read regulation 31, you really can see it has been put together in a hurry. You can't even read it. It doesn't make sense the way it's written, and further, it's still unclear on this matter of what basis the area charges will be on because it only speaks about 1995. So this one's still really quite up in the air as far as we're concerned.
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Problems exist with the level of renewal charge proposed in the draft regulations, schedule 1, as they relate to aspen veneer operations, that is, 50 cents a cubic metre for poplar and white birch. For these partial cutting situations, the site preparation cost alone can be 20 times this number. Someone else will be subsidizing the renewal of these areas, and this is not fair or equitable. I have a letter from the Ministry of Natural Resources here suggesting that the additional cost of site preparation in these operations is more like $11 a cubic metre as opposed to 50 cents a cubic metre.
Spruce Falls Inc, who have a long track record of good timber management, conceptually have problems with the idea of the forestry futures trust fund funding intensive stand management, in effect subsidizing other areas of the province which have perhaps done a poor job in timber management in the past to catch up. Furthermore, the use of this fund should not be left wide open to the discretion of the minister, paragraph 48(2)4. Why bother with all the other sections outlining the purpose for this fund if everything's left to the discretion of the minister in the end anyway?
Finally, Spruce Falls Inc views the direction that the government appears to be headed in with this legislation, which will, we believe, eventually see the offloading of broader forest management costs on an industry whose expertise and interest is primarily timber oriented, as particularly inequitable. If other segments of society, or society at large, wish to manage the forest for a broader range of values, then they should be prepared to pay their share of the costs related to this management.
Increased penalties: the wrong message, the wrong approach: Given the large volume of wood and the associated large area harvested each year in this province, the industry has an excellent record of compliance with the laws and regulations related to its forest operations and concern for the sustainability of our forests.
This has been proven time and again in recent years as evidenced through such things as the results and ruling of the timber EA board; the results of the Ontario independent forest audit; the development of and subsequent implementation efforts regarding the OFIA codes of forest practice.
Looking after the forest in a sustainable way is something we have been doing for years. Among other things, the marketplace demands it today as evidenced by the push for certification. The Canadian Council of Forest Ministers is involved in this along with the CPPA and the Canadian Standards Association. They're heading in the direction of the ISO/4000 series, which is an environmental series of certifications. The financial community is also demanding it. Before large loans are made, besides having to make projections on costs, return on investment etc, environmental audits are becoming commonplace.
Finally, we are aware that the public are demanding it, because we who own Spruce Falls Inc are part of that public. What is often forgotten by those who come from elsewhere is that not only is the forest surrounding us our source of employment, for those us living in small northern Ontario towns it is part of our culture and certainly a big part of our recreation, ie, in effect our playground. We have all kinds of reasons to wish to sustainably manage this resource.
Given all of this, we are very concerned that the dramatic increase in the offences and penalties under Bill 171 sends out the wrong kind of message to the public at large and the international community. We do not deserve this treatment, and our track record attests to this fact.
At this time we would be remiss in not pointing out that given the large extent of the industries woods operations and the adverse conditions, sometimes 40 below and the day-and-night operations under which we work in deep snow, there will be errors that occur from time to time.
We feel that we're already a very heavily regulated industry and we propose, in recognition of the fact that there will be some errors that occur, that some tolerances be built into the act actually: things like control orders, where you have a line of where you'd like to be, and tolerances, and your objective is to narrow those tolerances and get down to zero, but recognition, given the conditions, that there are going to be slips.
In summary, Spruce Falls Inc have a wide range of concerns about Bill 171 and its regulations and draft manuals. We ask that our concerns be given serious consideration during the clause-by- clause review of the legislation, regulations and manuals, and that appropriate modifications be made to address these concerns. If, due to the wide-ranging nature of these concerns, they cannot be adequately addressed through amendments to Bill 171, we strongly recommend that it not be passed through third reading.
Overall, this legislation, although well-intentioned, is, as written, bad legislation that will, we believe, have a negative effect on the investment climate for the forest industry in Ontario, especially the more capital-intensive pulp and paper sector. This will hurt the economy of northern Ontario and its single-industry towns badly over the long run. Furthermore, this legislation will contribute very little to better forest management or to government credibility.
Mr Gary Carr (Oakville South): Thank you very much for your presentation. Page 10, I think, of your summary, says it all when it says if you can't get some of the changes you've talked about, the bill shouldn't be passed. I think it would be an understatement to say you've gone through a lot over the last little while. If the bill remains as is, what do you see happening to your situation?
Mr Virgo: As I think I said, it's going to become more and more difficult to get particularly the huge capital dollars from the international scene in to make major capital investments in modernization and diversification, which I think is essential for our survival in the long run. The potential for cost increases, limitations on management flexibility and so forth, we expect will increase our costs and slowly result in decline in the industry in northern Ontario.
Mr Carr: Thank you very much. Good luck.
Mr Wood: It's kind of interesting that today or tomorrow is the third anniversary of when we saved that mill from going down to about 200 people, that Kimberly-Clark and the New York Times had intended to do. We're basically just next door from where that happened.
I know I only have one question that I'm allowed to ask because of the time, but I understand that you're members of the Ontario Forest Industries Association, who were involved in writing the manuals.
The other comment I make is that I wanted to have a chance to talk to Jim Grayston concerning that letter, that he's no longer with the MNR, concerning that, and he didn't show up at the hearings in North Bay.
The regulations on area charges, I understand, have been amended in the right direction that you were commenting on. The changes that were made.
Mr Virgo: Beyond 1995?
Mr Wood: I'm talking about usable land. That's --
Mr Virgo: Still confusing.
Mr Wood: That's the change that was made. If you have any other comments, I'd be glad to hear them.
Mr Virgo: That's okay.
Mr Wood: Thank you.
The Vice-Chair: Did you want to say anything further? Mr Miclash.
Mr Frank Miclash (Kenora): Thank you very much, Chair, and thank you very much for your presentation as well, Kent.
On page 8 you spoke about other segments of society being prepared to pay their fair share in terms of the use of the forest areas. I was just wondering if you'd like to expand a bit on that as to what you mean by that particular statement.
Mr Virgo: Since we're in this act, I'm talking about licensees having to write forest management plans, and I emphasize again they're not forest resource management plans, because that's defining the act somewhat more narrowly. They're forest management plans. That covers the whole gamut, fish, wildlife, the whole business potentially, as far as we're concerned.
If people want wildlife, moose populations or fisheries, as a society they should be willing to pay what it takes to manage that wildlife. It shouldn't be the forest industry expected to pay that bill.
The Vice-Chair: Okay. Thank you very much. We certainly appreciate your presentation for the major company here in Kapuskasing. I understand you'll be coming as an individual a little bit later on after lunch, so thank you. We've received your written presentation as well and we'll certainly take it into consideration as we continue the hearings and in the clause-by-clause.
TOWN OF KAPUSKASING
The Vice-Chair: Mr Frank Albani for the town of Kapuskasing?
Mr René Piché: Mr Chairman, Mr Albani will be up in about two seconds. He's going to get some coffees for the committee.
The Vice-Chair: I understand you're the mayor.
Mr Piché: I'm René Piché, mayor of Kapuskasing. Joe Nadon, councillor, will be making the report, and Mr Frank Albani, town manager, will be with us in a few minutes.
The Vice-Chair: Did you want to start then?
Mr Piché: If we could wait, they should be up in a couple of minutes.
Mr Joe Nadon: We're just getting copies of it so you'll all be able to follow up.
Mr Piché: Yes, follow up on it.
The Vice-Chair: If anybody wants to get a coffee in the meantime, maybe a break then.
Mr Piché: We'll shake a few hands in the meantime.
The committee recessed from 1000 to 1004.
The Vice-Chair: I hope everybody got their copy then. In the meantime, again, we're continuing the hearings on Bill 171. Mr Mayor, I think you were in the midst of introducing your delegation. You introduced a councillor already. Aussi, je voulais mentionner qu'il y a la possibilité de traduction simultanée. Alors, si vous voulez vous exprimer en français, faites-le. You have half an hour, and if you'd like to leave some time for questions and answers, we'd appreciate that.
Mr Piché: Thank you for this opportunity. My name is René Piché, mayor of Kapuskasing. To my right is Frank Albani, manager of the town of Kapuskasing, and of course to my left is Joe Nadon, who is a councillor and also chairman of the economic development committee, who will make the presentation.
But I would like to start, Mr Chairman and members of the committee, by certainly welcoming you to Kapuskasing. This is a real honour for us that you chose our municipality to hear discussions on such an important bill. In the north, this has to be one of the most important matters in front of all of us, and you being here today -- I see in full; there are no chairs empty -- is really appreciated.
On behalf of the corporation of the town of Kapuskasing and its economic development committee, we appreciate the opportunity to speak to the standing committee on general government and provide comments and input with respect to the sustainability -- why they put big words like this in there I don't know, but it's in there -- of our forests in Ontario through Bill 171, An Act to revise the Crown Timber Act. Maybe that particular word I should have said in French and I think I would have got away with it, since you have the service with you here.
We've decided that in discussing this document we're all going to participate, which is the way to go. I would ask now for Mr Nadon to proceed further.
Mr Nadon: Forestry resources represent the backbone of industry in our area and it is important that we are assured that our major employers will have the resources to work with. We consider these public sessions important, as the rules and regulations advanced with this bill will have a lasting effect on our forestry sector. This is not a time for quick decisions but must be a time when clear and concise steps are taken to ensure that there is a caretaker of our forests.
For hundreds of years, residents of this province have reaped benefits from the forest and we must be committed to those same benefits for generations to come.
We consider it important that others who make a living from the forest, be it tourism, trapping or recreational opportunities, also be permitted to continue in an environment where adequate protection is provided, advocated and longevity assured. This vision must be kept in the forefront when considering this bill, as the associated benefits from this important resource are significant.
The goal that was first suggested by the Canada forest accord a couple of years ago for the management of our forests rationalizes the elements of such a vision. It states as follows:
"Our goal is to maintain and enhance the long-term health of our forest ecosystems, for the benefit of all living things provincially, nationally and globally, while providing environmental, economic, social and cultural opportunities for the benefit of present and future generations."
Certainly this is a broad statement, as visions are meant to be, but it recognizes equally the importance of our forests, the need for sustainability and at the same time recognizes the benefits. The new proposed policy must reflect the circumstances and economic opportunities of today and the need for continued sustainability.
We note that some of the statements presented two years ago during public consultations have been incorporated into this proposed bill.
The local comments presented at that time included public education, reforestation, availability of funding for forestry caretaking, forest protection related to fire, disease etc, increased local input, public access, best end use and use of all species, funding for seedling planting, logical and sound environmental practices and research and development within industry, to name a few.
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We have been fortunate in Kapuskasing in that we are able to enjoy the pristine environment with our families and many households are economically stable due essentially to our main employer, Spruce Falls Inc, a newsprint manufacturer. The livelihood of the company and community relies on the forest.
Spruce Falls Inc has provided leadership as far as improvements to make its operation as environmentally sound as currently possible. The company's mission is to be a low-cost and profitable integrated forest products company while protecting the environment and creating positive long-term benefits. In the pursuit of this mission, it has established policies and guidelines in all phases of its operation, with such guidelines providing for responsible stewardship and sustained development of the resources. As a community, we are proud that this local company appreciates and recognizes the benefit it has derived from the natural resource.
The transportation of wood to the mill by water has ceased and the company has contributed financially to fish habitat improvements along the Kapuskasing River. Additionally, the company has participated in forest management by planting over six million trees, representing in 1993 more than was harvested, which is excellent.
It would be reassuring to know that other companies share the responsibility demonstrated by Spruce Falls Inc. The company's responsible stewardship of the resources makes sustained economic development possible and thus improved quality of life, as indicated in its environmental policy. Their approach to ensuring sustainability possibly exceeds that of simple timber management and addresses forest management.
Kapuskasing and area residents expect the most from our forest resource in terms of social and cultural enjoyment. We also expect to be able to raise our families in this part of the country, with many achieving that goal by working in jobs related to the forestry sector. It makes common sense that we sustain this natural resource at least at the same or improved level of usage.
The municipality does express concern with the fact that not all documentation has been made available to this consultation session. It is, however, difficult to reach conclusions because all facts pertaining to this draft regulation are not known.
Industries that manufacture from the forestry sector, such as Spruce Falls Inc, will no doubt have concerns related to this bill due to the uncertainties that have been presented, such as measurement or definition of sustainability, the change from timber to forest management and who is now responsible and, most importantly, the limitations it places on future viabilities of such companies. Will a company continue to have long-term agreements or will security become an uncertainty due to the new agreement formats?
Mr Piché: Mr Chairman and members of the committee, we only received yesterday a package containing a lot of information. Even if we had stayed up all night, there was no way that we could go through it. So we ask the committee for the opportunity, after we have had the opportunity to go through these documents that were received -- I haven't even seen them -- to be able to come back in some way, whether by written form or otherwise, to further bring our views when we have had that opportunity.
The Vice-Chair: That completes your presentation?
Mr Piché: That completes the municipality's --
The Vice-Chair: Thank you very much. You certainly have that opportunity to further contribute in writing if you send that off to the clerk. We do have another week of hearings in the north and another week in Toronto and then clause-by-clause, so there's a little bit in between. I think it's the week of September 12 that we have the clause-by-clause. You can send it to the clerk, any comments that you may have.
Mr Wood: Thank you very much for your excellent presentation. You've covered a lot of area. I would make the comment that I worked at Spruce Falls for almost 30 years before being elected as a member. There's no doubt that under the previous owner, Kimberly-Clark, during its time it has contributed to the community and the community is there to -- we can see it with our own eyes, even though, as I said to the other presenters, almost three years ago to the day we had meetings up here and finalized a deal where Spruce Falls would be owned by the employees in the community and Tembec, and we're looking forward to another 50, 60, 100 years of the company with the amount of money they've put in to modernize.
This legislation is intended to secure jobs in the forest industry, to add to jobs, create new jobs. Since the consultation started about four years ago leading up to Bill 171, over the last couple of months we've announced three new operations that are going to be able to operate from species that were considered to be weeds before, poplar and birch. So there's growth in the forest industry, and Spruce Falls has been cooperating with other companies, whether it be all the way to Cochrane, to Hearst, on third-party agreements and all working together.
I don't really have a question, other than to say that there's a lot of information out there, there's no doubt about it, but it's all as a result of a number of years -- since I've been involved for pretty well four years -- of consultation. We met with a large number of people, and the lumber industry, the Ontario Forest Industries Association, all of these groups have been involved in the drafting of the manuals that were put out to you. They will be involved in updating the manuals as a result of the hearings we're talking about. The process is open. As I say, it's an accumulation of a number of years of hearings and the environmental assessment, which we agreed to, the rules. The end result of that was that it would be binding on the government that the forest will be sustainable as an ecosystem, and we're willing to listen to any amendments that are there.
I know some of the companies are concerned about the $1-million penalty that the courts can levy if a company outright refuses to obey an order and continues to deliberately damage the forest. It can go through the courts and a fine can be levied up to $1 million.
All the other fines that are there right now are covered under the timber act. They might be a little bit larger, but they're covered under the timber act of 1952.
So what we've tried to do is to bring this all together, information and studies over the last four years that I'm aware of and maybe even prior to that, and draft it into legislation that will lead us into the next 25, 30 years. I don't know if you want to comment on that. That's the basis of my remarks.
Mr Frank Albani: With respect Mr Len Wood's comments, the concerns of the municipality and also of the local residents within the 6/70 corridor is the fact that we've all gone through a very difficult situation. I believe everyone here is aware of the situation that did occur and what finally did come out of that by the province and the citizens getting together and purchasing the company, a viable company that we have today. We do not want that jeopardized in any way. We see if there is a major concern, and there are many major concerns on the part of the company, that it could have a real impact on them. In turn, we also want to see the forest enjoyed by all the citizens of Ontario. But they must be weighed equally, and the company's viability has to be strongly taken into consideration, because without a company, we don't have a Kapuskasing.
Mr Bisson: I'd like to just follow up on that, because that's certainly a concern I think all members of the committee share, that you want to have legislation that indeed makes sure we manage our forests properly but at the same time makes it affordable and economic so we can all reap the benefits of the economics of the forest.
I want to touch on two points, because I think they need to be clarified as the result of a couple of presentations, and you touched on them yourself. The first one is the question of tenure. That's come up not only here in Kapuskasing but other communities.
What will happen under this act is basically, as it is now under the existing legislation, the question of tenure is not found within the existing legislation, it's within the agreement that is signed between the company and the crown when it comes to the forest management agreement. What happens under the new legislation is that that would then be part of the licence, the agreement that would be signed between the company and the crown. So basically one reverts to the other. It's not in the legislation, it's in the actual licence. So you still have the tenure, you still have the 20 years, the same type of evergreening clause we had under the old legislation.
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The other thing, and it was touched upon, was that there was a fear that under section 31 the minister would be able to amend a licence under section 23. Let's call that the old FMA system. The same will hold true in this legislation, that the only way that can be done is by order in council and through the Lieutenant Governor. It cannot be done at the whim of the minister without the same process that you would have now. Under the present legislation you can't do that and you couldn't do that under the new legislation. It has to do with the sustainability.
My question to you is this: You talked about sustainability, and in your presentation you've seen the term "sustainability" as something that's vague. We've purposely not put the definition of "sustainability" in the legislation. Our thinking is that "sustainability" is something that as a definition changes over time. As we learn to do our jobs better, as we understand the forests better, as technology changes, the definition of "sustainability" to a certain extent changes with it, and we're somewhat reluctant to put that in the legislation because of that. Are you arguing that we should define it in time today, or should we keep it in the regulations in order to make it reflect the changes of the times?
Mr Albani: I think that "sustainability" should be in there, but it should reflect the change of times -- with the change of the times today -- so it accommodates the fact of the use of the forest by all concerned, and also, the industry's been looked at very closely.
Mr Michael A. Brown (Algoma-Manitoulin): Certainly I'm very happy to be back in Kapuskasing again. I happen to represent a constituency that has much in common with this one in terms of our major employer in the Espanola area is E.B. Eddy, which is an integrated operation with sawmills and pulp and paper. I'm pleased to see that Spruce Falls is now becoming an integrated operation.
I think one of the key words we're concerned about is, nowhere in this legislation does it say anything about "competitive." I think in the legislation, as we heard, I think, from Spruce Falls just a few minutes ago, there is a concern that we may be so process-oriented that we're going to not end up with the result we want and the cost of doing that may not be, in a global economic market, what we need to compete.
I know that not only do a lot of your townsfolk and people in the surrounding area rely on Spruce Falls for employment, or indirectly to Spruce Falls for employment, I know they're also shareholders.
Mr Piché: That's right.
Mr Brown: They also have a great stake in the capital of this company. I'm just wondering, do people in the community understand about this bill? We've heard from Spruce Falls itself, the management level, but has there been an opportunity over the last while to discuss these issues?
Mr Piché: Unfortunately, we weren't here when Spruce Falls -- I understand they were ahead of us and made their presentation. But like all bills -- that's the unfortunate part -- unless you read the paper, even with reading all the papers, you still don't understand different bills that come in front of the Legislature. This could be another case where I don't think the people in this area -- some understand, but I think the vast majority maybe don't really understand what the bill is all about, and it's the way the system works. It's not because we're different than other areas in this province. It's when a bill is presented, and in the format that it's presented, and depending what the news media does with it, the ordinary guy on the street, including those who are municipal leaders, sometimes don't understand the effect of a bill.
A lot of times, after the bill is passed through and all that, if you become involved, then you really feel you should have been on top of it, but it's too late. That's why there has to be some way -- I cannot offer you what way it should be done, but what a bill is all about.
Even members of the Legislature like yourselves, many of the bills, if you're not personally involved, sometimes you don't understand. I know I used to be like that. Unless someone tells you what to say and what to do or you read it and then get it explained, because of the way it is drawn, you may have some difficulties with it.
Mr Brown: Well, you've hit the nail right on the head. One of the things we were hoping was that the manuals and the regulations would've been out on August 1 to presenters. They were not. They were supplied to the opposition parties on August 2, and most presenters, we are told, didn't get them till some time --
Mr Piché: We only got it yesterday; I saw that.
Mr Brown: -- through the week, so we haven't had an opportunity, and as you point out, as members of the Legislature, we're generalists. We rely on the folks who are directly involved to give us the information, because although I've gone through these manuals, I don't understand and don't claim to understand them until some people with some expertise come before us and are able to tell us that.
How many people in this community are directly involved? How many employees are there in the various operations of Spruce Falls that --
Mr Piché: Spruce Falls at this time employs approximately 800, and I am not sure how many shareholders. All of us are shareholders -- best investment we ever made. Am I safe in saying that it's about 1,000 shareholders? I go back two or three years when we needed to raise $15 million at that time, $12 million or $15 million, and it was raised like that. In fact we went over. We had to give some money back. And that was a real success. I'm hoping someday that maybe myself or others will take the time to write a book about it, because it's that interesting what happened here in Kapuskasing, and what Kapuskasing is all about right now is going way up and starting the economics -- it's changed completely. So you're looking at Kapuskasing as a success story and a company that's making money, which means that we're all going to benefit by it. And we're also getting some good dividends.
The Vice-Chair: Mr Hodgson.
Mr Hodgson: How much time do we have?
The Vice-Chair: Five minutes.
Mr Hodgson: I'd like to thank you for your hospitality in hosting us here in your facilities. It's a real pleasure. It's a beautiful old building, so I got a lot of history.
I've only really got two short comments. One is that on page 2 of your report you mentioned the vision. This vision has been put in as the purpose of this bill and it's being sold around the world as that forest products coming out of Ontario be sustainable from sustainable forests, but they're also talking about sustainable in terms of economic impacts.
For a community like Kapuskasing, you've outlined that presently you're meeting these goals, that your public are enjoying the forests, that you're rehabilitating your rivers and streams. Do you think this legislation's necessary to meet this vision? Your community and your economic plan is based on this vision, and you seem to be striving towards it. Did you need changes in the present legislation to ensure that the long-term viability --
Mr Albani: I think what we need to assure ourselves of is the fact that everyone is following those same guidelines. If we have only one mill, or if we only have it down around Kapuskasing and that is not followed through in other areas, then we talk about what the gentleman said earlier about competitiveness. It certainly has a bearing on competitiveness.
Secondly, we don't have the enjoyment of the residents of Kapuskasing in the use of the forests as what we do in Kapuskasing because we have our own community forest. So basically that's what we mean by that.
Mr Hodgson: Okay. As you realize, we're going to be asked to vote on this, and I look forward to your comments when you've read all the manuals. But we have listened to a presentation this morning from your major employer and the economic lifeblood of this area, and it's had a long history of being one of the first companies to sign on to forest management agreements with the crown. What they presented to us is, if we don't have substantial changes to this bill, we shouldn't vote for it.
What I want to know is, is the status quo better than passing this bill? We're a third-party opposition. If there aren't substantial changes, we've got to make a decision: Do we support the government or do we oppose it? I would like some direction from your council.
Mr Albani: Okay. With respect to the bill you're mentioning now, that's all the material that we had originally when we were preparing our presentation. It's only in the last day or so that we received additional data, which we haven't had time to go through. The manuals were not available to us. You have to read the manuals in conjunction with the act to find out what it all means, and we can't do that, because we didn't have the manuals.
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So to say what we have today with Spruce Falls and this legislation matching up, no, we can't agree that it does. Therefore, we're saying that extra time must be looked at with respect to analysing both the manuals and the act together so that we get the whole picture, not just half.
Mr Hodgson: Yes, everybody's in agreement with the broad strokes; it's in the details that the truth will be found.
Mr Albani: That's right, it's in the broad strokes that all these questions arise. There are several major concerns that arise from it. It's because of the broadness of it, and we don't have the detailed information that should be forthcoming to us.
Mr Hodgson: That's very unfortunate.
Mr Piché: This question is crucial and we want to get back to the committee and yourself, because it's very important. When we have read all this material, we may come out and suggest that maybe a bill like this is not necessary. If it's working, you don't fix it. I don't know. If we were in the States right now, I'd take the Fifth Amendment for this particular question.
Mr Bisson: René, you've never been known to take the Fifth Amendment. I've never known you to take the Fifth Amendment.
Mr Piché: Yes. I'm glad that you brought it up and that it's in the records. That gives us the opportunity to maybe make further comments on exactly what you said, because you've hit it right on, that there's too many bills that are sometimes being passed, not only by this government but others, that should have never been touched. Do you want me to rattle a few or not?
Mr Ramsay: Only in the last four years.
The Vice-Chair: That will be quite sufficient. Thank you very much, Mayor Piché, Councillor Nadon and Mr Albani, for your presentation. Certainly it's much appreciated. See what the wisdom of the committee will be when we get to clause-by-clause. Thank you again.
Mr Piché: Mr Chairman, we will get back to Franco. Incidentally, I used to work with Franco in the early 1980s and he was doing a fine job then.
The Vice-Chair: Were you his teacher?
Mr Piché: Yes, I think I was. I'm sure that he's still doing a good job. Franco, that's maybe an opportunity to ask for the necessary raise.
The Vice-Chair: Perhaps what he'll get out of it is another visit to Kapuskasing.
Interjection: I'm sure that's recorded on Hansard.
HEARST LUMBERMEN'S ASSOCIATION
The Vice-Chair: The next presenter is the Hearst Lumbermen's Association, represented by Mr Claude La Flamme. I understand you're not Mr La Flamme. If you'd like to give your name, please. Aussi, il y a la traduction simultanée. Alors, si vous voulez vous exprimer en français, les dispositions sont ici. You have 30 minutes. If you'd leave some time for questions and answers, it would be appreciated. Your name is Jules Fournier?
Mr Jules Fournier: Thank you, Mr Chair, members of the committee. As you clearly stated, I'm not Claude La Flamme; I'm Jules Fournier. I'm the general manager of a lumber company in Hearst, namely, Lecours Lumber. I'm here in replacement of Mr Donald Bisson. He is the president of the Hearst Lumbermen's Association. Mr Bisson, unfortunately, could not make it.
Also, I will apologize for not having copies to circulate. There's reason for that. What happened is that my secretary's father-in-law passed away yesterday. There's just no way I was going to risk, you know, that I type this myself and pass this on to you.
Nevertheless, the Hearst Lumbermen's Association represents two sawmills and one plywood plant and one particle melamine plant. This is owned by Lévesque Plywood. We are the prime industry in the town of Hearst and the surrounding communities.
This presentation will focus on some of the elements. Why I'm saying "some of the elements" is that we're all members of the Ontario Lumber Manufacturers' Association, the OLMA. They will be making a presentation to this committee. By just taking some of the elements over here today, we're not saying that the bill is A-OK as is, but like I say, OLMA will be presenting some of our points also at the end of the month or a later date.
The points which I will be discussing today are as follows. We'll be talking about the industrial forest land base. We're saying that the revised act must define Ontario's industrial forest land base if it is to reach the goal of sustainable forests, sustainable forest industry, sustainable communities and sustainable jobs. The withdrawal of productive forest area by means outside of the planning process, in an add-up way and without compensation undermines the sector. A definition of the forest base would give certainty and confidence to stakeholders to carry out their activities.
Furthermore, should there be an EA bump-up, we are saying that the act should stipulate that all activity should be stopped until the issue has been resolved, and also the act should have a user-pay concept. If an interest group pressures the minister for a land withdrawal, then they should pay similar to what the industry would have paid, plus a spinoff of all the revenue that the province would lose on account of jobs. You know, if people work, they're paying taxes.
The province of Ontario, we're saying, should not be deprived of revenue on account of special interest groups. More, if an alteration of the industrial forest land base occurs, then compensation should be automatic for those affected. I would have to say, Mr Chair and members of the committee, that the land base is very important. When we're talking about withdrawal, the possibility of land withdrawal due to pressure from special interest groups, we have the financial institutions that are seeing this and seeing the possibility, and they're saying, "How can we protect our investment?" We're scaring them away.
They're just going to walk away from our industry, and not only this. If you do have some potential investors willing to come into your community and invest, they're simply not going to do it if this possibility is there, is very real and exists.
The second point that we want to bring up is the best end-use policy. We're saying that this policy should be in the act and should prevail. The use of sawmill chips as pulp furnish should be fully utilized before roundwood is used. This would ensure that our limited and perishable forest resources be used in their full and effective way. It would also ensure that the sawmill industry maintain a current level of jobs in the community which it supports. I believe that this was a recommendation in the FIAG report.
The third point is the stumpage. The residual value tax should not be introduced as it will negatively impact the forest industry's ability to reinvest in business and to create jobs. By wanting to share in profit and not in losses, the government will scare away investments and will force companies to decrease costs in order to stay profitable. Industry will be forced to find technologically superior methods of production which will result in a reduction of jobs. This means less revenue for the province and an increase in social program costs.
If the government comes in and puts in this tax at a certain level, it's going to drain our cash. That's what's going to happen. In order for us to stay competitive, we'll have to find ways to reduce jobs, in order to decrease our costs. Our competitive position will be reduced as the increased costs will be passed on to consumers, therefore making Ontario lumber less attractive at home and abroad.
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Our forest industry does not need another tax. As you all know, our markets are cyclical. There are ups and downs. The residual value component will be a drain on capital needed when the markets are down.
There's one thing that the bill also should address. Bill 171 should address, and support, some zone-based stumpage that recognizes distance from the market. This would make distance producers such as Hearst more equitable with competitors located in Nairn Centre or New Liskeard.
Also, we could get into the quality of the forests. Some forests are easier to access than the forests that we have in Hearst. But I will let the OLMA deal with this one.
Silviculture: The Hearst Lumbermen's Association supports the funding mechanism for the forest renewal. We believe that this is an excellent way to ensure our wood supply and long-term survival. We do have some concerns with some guidelines and regulations, but this will be addressed by the manager of Hearst Forest Management Inc, Mr Denis Cheff.
This concludes my presentation. Are there any questions? Don't make them too hard.
The Vice-Chair: Thank you very much. You don't need to worry, Mr Fournier.
Mr Ramsay: Mr Fournier, thank you very much for your presentation. I found it very informative and right to the point. I must say, I agree with all your ideas you have here about improving the sustainability of the forestry industry in northern Ontario. I'm very pleased that you've brought up some of these points. I'd like to reiterate one.
I think one of the main lines of this act should be, "Thou shalt not harvest fibre if fibre exists somewhere else." You talked about it with the chips. In some mills we've got mountains of excess, surplus chips sitting there. Yet another company down the road, within very manageable transportation distance, is busily out there in the forest cutting down very big trees to put through chipping operations. There's got to be a rational system if we want sustainability. That's how we can sustain our forests, is just make sure we use the wood as we come upon it and strike a balance within the different industries so that if the sawlog industry is doing well and is allowed to extend its cut and there's a surplus of chips, then those chips should be absorbed by the other companies that could use that product for their processes. That would add a lot.
I don't know if you want to comment any more about how strongly we should have that in the legislation.
Mr Fournier: What I have to tell you on that is that we've lived back in 1990 where 7,000 metric tonnes shut us down for eight weeks. This was absolutely ridiculous. We didn't need that. When you start looking, that 7,000 tonnes of chips -- and maybe Mr Len Wood, being that he worked in pulp and paper in Spruce Falls, in Kapuskasing here, could expand more on 7,000 tonnes of chips, how long that's going to last. That's seven days' work for a mill in Kapuskasing. In order to produce 7,000 tonnes of byproduct, which is chips, you need 14,000 cords of wood, because 50% goes into wood and 50% goes into chips. In order to cut 14,000 cords for a pulp and paper company, you could be looking at 21 days' work, but for us, for 14,000, you could be looking at a month.
With all of this, I'm saying that we don't want to shut down the pulp and paper companies. We need these people, but we'd like to be recognized also as being needed. We're saying that we could have a happy median over here, that if we are to produce chips, they use chips and we use the sawlogs.
Mr Ramsay: Mr Fournier, explain to the committee why the 7,000 tonnes of chips shut you down.
Mr Fournier: Because we had no markets, because the pulp and paper companies would not take them, because we understand that they had problems, in a sense, with market and they were still cutting in the bush.
Mr Ramsay: The point being, you were not allowed to stockpile more or you just couldn't afford to go on without the cash flow coming in from the sale of chips?
Mr Fournier: I guess it's a combination of both. There's limited space for 7,000 tonnes. We're not equipped to carry inventories of 30,000 tonnes, like the pulp and paper companies. Also, cash. The other thing is the quality of the chips. If you stockpile chips for too long, they deteriorate and they're no longer useful for pulp and paper companies.
Mr Ramsay: So not only does it stop your production, but the potential is there that we may lose the fibre from the forest that's been harvested because of the deterioration of the chips in the stockpile if they're not used up in a timely manner.
Mr Fournier: True. Yes, you would lose part of that for sure.
Mr Hodgson: How much time to do I have, Mr Chair?
The Vice-Chair: Five minutes.
Mr Hodgson: Thank you very much for your presentation. I enjoyed that. I'd like to follow up on this best end use and then ask another question on your idea for this compensation for the alteration of the landscape.
First, I'm uncertain on how you would implement a best end- use policy. Does it have anything to do with the tenure or the licensing of the FMAs? If somebody has a licence on it, how do they ascertain where the lumber goes? Do they not use the best end-use policy?
Mr Fournier: I'm not sure I'm getting your question quite right.
Mr Hodgson: How would we change this act to implement the best end-use policy?
Mr Fournier: The best end-use policy is that we should be looking at sawing material size. Define the sawing material size. In all FMAs -- for instance, we're in Hearst and we have the Kimberly-Clark forest, which is west of us, and then we have the Gordon Cosens Kapuskasing forest, which is east of us. What we should be looking at is having sawlogs going to sawmills and pulpwood, a certain size, going to pulp and paper companies. That should be a best end-use policy, and the chips derived from these sawlogs should be directed to pulp and paper companies.
Mr Hodgson: Just put that in the regulations? Is that what you're suggesting?
Mr Fournier: Yes, that's what we're suggesting.
Mr Hodgson: Second, can you just explain to me in a bit more detail -- we've heard a lot about compensation. I don't know if you've been following this committee, but there was one suggestion that tourist operators and that should pay for area charges. Then there was another suggestion from tourism operators that maybe they should be compensated for a change in their landscape, that it affects their business plans. Now you're suggesting that compensation be given if -- what's your idea of compensation again?
Mr Fournier: The idea of compensation, for instance, is that -- and we've lived through this with some of the outfitters that exist. They say, "We have a lake here and we're requesting that we get five miles around that lake that's being protected." That's within our forest. That's within our FMA. We're saying that we're losing part of this forest.
Where are we going to get that? We need that timber. Where are we going to get it? Nowhere. If there's nowhere, in that case -- we have capitalized, we have invested into our industry, our sawmill -- we find out that we have to shut down a shift or we have to shut down the mill for a month or two months. This is lost revenue for us.
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If the minister, for instance, says, "This lake over here should be taken off," in that case they should be compensated because they've lost, the outfitter has lost. A good example of this is that being a good member of the Ontario Lumber Manufacturers' Association, we're looking at the Field sawmill. We all know what happened there. This mill is no longer there. I'm not going to get into great detail of this, but all that I know right now is that there was discussion and a fight over the forest. Unfortunately, there is no more wood for that mill to operate.
Mr Bisson: Thank you very much, Mr Fournier, for your presentation. You talked about investment and about how your fears were that this legislation, or any change, I guess -- correct me if I'm wrong -- to the status quo would threaten the future investment. I wonder on that statement because this policy has been discussed for a while. We've been sitting down with industry for at least six to eight months. In that time we've seen hundreds of millions of dollars of investment to northern Ontario when it comes to new mill expansion or new mill construction or upgrading of technology and knowing exactly where we're going with the policy.
I just wonder when that kind of statement is made. I can understand industry saying: "Listen, we have a problem with the change. We think there need to be amendments. We don't like the way certain legislation is going." But I think to make statements like that is a little bit stretching the imagination. I don't want to badger it, but I just had to make that point.
I want to come to the point of residual value, because that's really the crux of this, that your association is opposed to any kind of a residual value arrangement with the government. What we're trying to do, as you're well aware, is that we're in the process of negotiating with your industry what a fair value is, because we recognize that you have to make sure that you have a return on your investment to pay your bills, you have to make a profit, you have to pay your shareholders, and all of that comes into play. I can only tell you that we're interested in making sure that's done in as fair a way as possible, recognizing the needs of your industry.
I certainly don't see at the end of this whole process the industry being affected to the degree that you talk about. I would hope at the end of this the $6 for the stumpage on conifer that would go to the trust fund and the dollar on the base and the residual value on top of that would not be exorbitant or out of line to what you're paying already. So if that reassures you, you know, that's certainly where we're going.
The best end use: I want to follow up on what Mr Hodgson had raised. You made that sound very simple, but it ain't as simple as you made it out to be, because you well know there are a lot of people like you competing for that same roundwood.
There's not only you but there are all kinds of other mills and operators along the highway, Highway 11, who want access to that wood. If we develop the best end-use policy in the legislation that says what you said to Mr Hodgson, how would you then determine to what mill it goes? Should it be on a competitive bid system or should it be based on the needs of the economics of the area? How would you see that working? Because that's the part that I think is unclear.
Mr Fournier: Well, especially, let's take this area over here where we always said that we were treating from Pagwa, which is west of Hearst, right down to Fauquier as one community region. That's an economic region. We're saying that part of the KC forest should address the requirements for the sawmills in Hearst and part of their pulp and paper mill. Also, from Fauquier the Gordon Cosens forest should address all of the mills in Hearst, including their own.
Mr Bisson: We all agree on that point and we're trying to address that to a certain extent in the legislation, but the question I have for you is, if it's deemed that there is the sustainability in that forest to be able to do what you want to do, how do you decide what mill it goes to? Because there's not only you competing for that roundwood. There are other mills and other producers around Highway 11 and other areas that want it. Should it be up on a competitive bid system or should we be saying, "These people have 300 jobs, they have a whole community" -- how do you decide who gets the wood?
Mr Fournier: The thing is that it still comes back to what you're licensed for. If you're licensed for 458 cubic metres, in that case this is what you need, this is what you get and the forest could sustain that.
Mr Bisson: What you're saying then is that if there's excess wood, then what we should try to do is try to give it to those mills that already have licences that say you're going to get an x amount of wood and you have such production capacity, and you go from the one that needs it the most to the one that needs it the least? Is that what you're --
Mr Fournier: Basically, what we're saying is that we're trying to run to capacity, two full shifts. The one that has the wood will run two full shifts. This is the way it is right now. But the one that hasn't got the wood will run one shift, but his investment is as great as the next one.
Mr Bisson: We understand that.
Mr Fournier: This is what I'm saying: Yes, you could come down and look at the requirements of each individual mill.
Mr Bisson: That obviously would have to be done with industry. You wouldn't advocate just the ministry making that decision.
Mr Fournier: The ministry could support or could implement this best end-use policy, and within the industry, sure, it could be done.
Mr Wood: Welcome to the committee. I just want to go back into your mind and back a number of years, at least the last four years and maybe before that, as to the all of the different policies and consultations, including the environmental assessment. Your mill and the Ontario Lumber Manufacturers' Association, including the pulp and paper industry, have been involved in the consultations, the processes that have taken place leading up to Bill 171, involved in assisting to write the manuals, the draft of the manuals. I just want to know how much involvement you've had in northeastern Ontario around those.
Mr Fournier: To answer your question, I myself personally did not have very much involvement in this, although we do have a committee with the Ontario Lumber Manufacturers' Association that did help write manuals. But for myself personally, I didn't.
Mr Wood: But the committee was involved in the manuals, the draft regulations and aware of the legislation, including the Carman exercise?
Mr Fournier: Yes, and I understand that even more so at a later date the OLMA offered to help to write the new manual.
Mr Wood: You're aware that the manuals were coming out some time after August 1, prior to --
Mr Fournier: To be quite honest with you, I have not received a copy of that as of yet. I know that a lot of people did get a copy.
Mr Wood: So we've got to go after the Liberal government and Canada Post in Ottawa. Okay, thank you.
The Vice-Chair: I don't think we're going to enter federal matters here.
Thank you very much for your presentation. It's certainly very much appreciated that you came here. The committee will take your concerns into serious consideration. Thank you very much.
TOWN OF HEARST
The Vice-Chair: The next presenter is the town of Hearst. I understand that Mr Louis Corbeil is here to speak on behalf of the town. Comme vous avez pu constater, nous avons la traduction simultanée. Si vous voulez utiliser le français, vous êtes le bienvenu. You have half an hour -- no, I'm sorry; you have only 15 minutes, because we have a plane to catch later on in the afternoon. You will have 15 minutes, which is of course not very long. If you can leave a little bit of time for questions and answers, it would be appreciated.
Mr Louis Corbeil: I believe everybody has a copy of my presentation. I'll go through the presentation.
The letter from the Honourable Howard Hampton dated April 11 which announced the new legislation was presented at town council. Further to that letter, council adopted a resolution, of which you have a copy on the last page of the document. It expresses council's support for certain aspects of the legislation and also some concerns. I will go back on each one of those points that you see in the resolution and I'd like to make a few comments.
The first one is that the council supports the principle of a grantee for forest renewal. This is something we believe should have been done a long time ago. We believe that the Hearst forest in fact is a victim of some questionable forestry practices and of lack of regeneration efforts in the earlier years -- the 1930s, the 1940s. In those years many of the logs were shipped directly to southern Ontario or the United States without any processing occurring in our region. We know by studies that the Hearst forest generates only 52% of our local mills' requirements.
Also, according to a study by the Ministry of Natural Resources, which was updated in the last TMP plan, the Hearst forest will have a severe shortage of mature trees suitable for sawlogs in about 30 years. This shortage will last for about 40 years before natural regeneration and more recent regeneration efforts bear fruit.
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We believe that one of the shortfalls of the proposed new legislation is that it does not address this middle-term problem for areas such as Hearst, which will be facing serious wood shortage.
The legislation should do more to promote the best end use of fibres. That means to us, ensure that whenever possible large trees are used for lumber production, and chips and smaller trees are used for pulp and paper.
Furthermore, council believes that the proposed residual value charges will in fact be an incentive, or could be an incentive, for the paper mill industry to chip their own sawlogs on which they will not be required to pay said charges, instead of purchasing the excess chips from sawmills. This aspect of the proposed residual value is clearly against the principle of the best end use of fibres and therefore, to us, this aspect is not acceptable.
Council also supports more local decision-making. Again, the municipality agrees with this principle. This of course means more responsibility locally. The municipality supports the principle that the forest industry be responsible for regeneration of the forest and that they carry a good part of the financial burden that this entails.
However, we do recognize certain concerns expressed by the local forest industry. First of all, tenure: We recognize that the industry is required to contribute to reforestation, but there is no ensuing tenure or guarantee, which amounts to, for them, a considerable investment. Furthermore, other stakeholders in the forest, such as tourist outfitters, anglers and hunters etc, use the resource and in some instance intervene in the forest management process and may even restrict logging operations in large areas, but do not bear any of the responsibility or cost for the management of the forest.
Another concern: the state of the forest. As I mentioned before, the industry must now compose with errors of the past. Also, we believe that in some areas fertility of the soil, type of terrain and other adverse conditions result in harvests that are less per acre in some areas than others. These factors maybe should be taken into account when determining how stumpage fees are set.
Finally, the regional forest: We believe that in order to ensure sufficient middle- and long-term supply of sawlogs for our local mills in the Hearst area, management of the forest must be looked at on a greater scale than just the FMA boundaries.
This concern for adequate supply, and therefore the survival of local sawmills, is of paramount importance to the municipality, since the local sawmills are the basis of our local economy and the raison d'être of our community. We believe it must also be a concern of the province, since it's the province that invests and continues to invest so much in the excellent municipal and school and hospital infrastructures that we have right now, so I believe this has to be taken into account. I don't think we can afford, as was mentioned, to base it strictly on competition. There are, especially for best end use, factors that must be taken into account to permit the communities to survive.
Another concern of council is the residual value charges that are proposed. This new imposition, we believe, will deprive local mills of capital dollars, since it is tied in to profit margins, and I guess it's with profits that companies get their capital dollars. We believe this could seriously cripple the capability of the industry to remain competitive, by investing in modernization.
Furthermore, this drain of capital will weaken its capacity to weather the storm during lean years and they have been pretty frequent, let's say in the past decades.
Of course, we fully support, like I mentioned before, the concern for best end use. We agree that to us also it's a concern. I think it should be that, whenever possible, large trees must be used for lumber and smaller trees and chip for pulp and paper. It's a question of logic. We believe the best end use of fibre principle dictates that, in our region, the management of the forest must be looked at on a wider territory in order to ensure that the supply of large trees is available to our local mills. Of course, it must also be noted that the best end use of fibre is environmentally sound.
The last point, efficient and timely community involvement: The municipality supports this concept of what in the legislation is called, I believe, "local citizens' committees" as proposed.
In fact, we already have a stakeholder committee in Hearst which was established in April 1992. The mandate of the committee is to ensure input from all Hearst forest stakeholders and to assist the Ministry of Natural Resources in the development of policies, guidelines and projects that affect the Hearst forests. That's their formal mandate.
In our experience -- right now we have 30 members in the stakeholder group and they represent the forest industry, the FMA, anglers and hunters, natives, tree growers, cottage owners, union, outfitters, trappers, snowmobile clubs and many others. The Ministry of Natural Resources, who spearheaded the formation of the committee, also gives us administrative support. I believe it's worked well. In fact, I'm president of the stakeholder committee so that's why I'm elaborating a bit on it here.
I believe it's worked well in the past two years, especially in conflict resolution, namely between outfitters and local anglers and hunters. These resolutions have avoided several bump ups which would have entailed environmental assessment and caused costly delays in road construction projects.
It's interesting here at this point that the conflict really was between the outfitter and the local angler, and the company was caught in between because they're the ones who needed the road. I think this is something that, when you develop how these committees will work, should be looked at.
Even though I think we had some successes, it has become apparent that stakeholders who share in the decision-making through the committee should also share in the responsibility. We must find a way to responsibly advise them.
Presently, the threat of bump up affects mostly the forest industry. Other stakeholders do not have as much, if anything, to lose. This does not foster responsible decision-making.
Finally, I'd just like to note that the stakeholder committee has proven to be a very effective community educational tool. It generates a lot of interest just by the 30 members who report to their group and the media is involved. I think it's a good endeavour. Thank you very much.
The Vice-Chair: Thank you for your presentation.
M. Corbeil : Si vous avez des questions en français aussi, ça va me faire plaisir de répondre en français.
Le Vice-Président : Alors, il y a deux minutes par caucus pour des questions et des réponses.
Two minutes per caucus, seeing there's only 15 minutes allocated.
Mr Hodgson: Thank you very much for coming in. In general, I enjoyed your presentation. I just have a couple of small questions I'd like clarified. They might be obvious -- very simple.
When you talk about the residual value charge -- as you know, as a party we're opposed to any further tax increases on individuals or companies. We feel we're losing our competitive advantage to create jobs in the long term and the short term in this province. When you tied this in to the best end use, and you used an example that the paper mill industry will chip their own sawlogs and won't buy the chips --
Mr Corbeil: The way I understand it is the paper industry would be -- the tax on the paper industry, the residual value -- it's not a tax, it's a charge; okay?
Mr Bisson: It's not a tax.
Mr Corbeil: It's not a charge?
Mr Bisson: It's not a tax.
Mr Corbeil: It's not a tax; okay. The residual value charge for the paper industry would be based on the price of the tonne of paper.
Interjection.
Mr Hodgson: Mr Chair, I can't follow this.
The Vice-Chair: Yes. I'm sorry, Mr Bisson. Have you finished your response?
Mr Hodgson: No, I didn't catch his response at all.
The Vice-Chair: Could you please, without interruption by Mr Bisson, repeat your response for the benefit of Mr Hodgson?
Mr Bisson: I'm only clarifying.
The Vice-Chair: I think we'll let Mr Corbeil clarify his own remarks.
Mr Corbeil: The way I understand it is that the paper mill industry is -- the residual charge will be based on the price of a tonne of paper to determine where the threshold is, where the --
Interjection.
Mr Hodgson: Don't worry about him. I'm the one who wants to know the answer.
The Vice-Chair: He will have his chance afterwards.
Mr Hodgson: He follows after.
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Mr Corbeil: Of course, when the charge kicks in for the lumber industry, it's going to cost more for them to do the chips because you have to -- so if it's going to produce more, the cost of the chips coming from the lumber mill is going to be higher, which can have a negative effect on their capability of selling the chips to the paper mills which of course also cut logs themselves and could decide to chip it in the forest or -- I'm not saying it's happening right now. I don't have enough knowledge of the industry for that, but I'm making that point.
The Vice-Chair: Thank you.
Mr Corbeil: I'd welcome Mr Bisson's comments if he's --
The Vice-Chair: Now it's his time for --
Mr Bisson: I will gladly comment --
The Vice-Chair: Two minutes only, Mr Bisson.
Mr Bisson: I want to make sure everybody understands this. First of all, the current system as it stands now for conifer, you pay a stumpage to the crown, and that's $11.37 based on current price right now. Under what's being proposed in Bill 171, it doesn't really change the amount of money we pay. It ensures that the money that's paid goes into the trust fund so that we can ensure in the end that there's money to do reforestation, not only for people on FMAs, but people on crown units as well which would affect you.
There's $1 that's in the base, there's $6 that goes into the trust fund itself, and the part that's under negotiation now is the residual value that you talk about. It will be based on two things. It will be based mainly on the profitability of your sector. If your sector does not make money, you will not pay residuals, but you will not pay residual value. If it makes money, then that's what we're negotiating. There'll be a threshold at which point that starts you will pay.
It is expected at this point, and I would imagine that's the position of your association in negotiations, you would try to negotiate so that you start -- at this point if we make the transfer, that you're somewhere in the same ballpark of what the actual stumpage is now so that you don't end up paying more. We're not interested in making it unprofitable, we want to make sure that there's money there for the future to be able to do the replanting and reforestation. That's basically what the plan is and we can talk about that a little bit later.
Je suis curieux, avec -- est-ce qu'on a le temps ?
Le Vice-Président : Pas beaucoup.
M. Bisson : Une question de Comité de citoyens. J'ai entendu bien des affaires dans mon coin, à Timmins, concernant votre comité. Est-ce que vous recommanderez que le comité soit formé, basé sur votre expérience que vous avez à Hearst et partout dans la province, tel que proposé dans le projet de loi 171 ?
M. Corbeil : Oui, je crois aux avantages d'avoir un comité local qui regroupe tous les intervenants de la forêt et qui donne une possibilité de résoudre des problèmes parfois avant qu'il n'y ait un «bump-up» ou qu'on se ramasse en cour etc. Je pense que c'est le principe de base qui justifie les comités.
Il reste que ce sont des comités qui marchent par consensus présentement parce qu'on n'a pas de cadre légal, et je présume que ça va peut-être venir avec ça et je pense que ça devrait se développer. Mais j'aimerais surtout faire le point, par exemple, qu'il va falloir trouver une façon à la fois de ne pas restreindre la participation de tous les groupes, parce que chacun a le droit de participer et chacun a son point de vue et son point à amener, mais par contre, il faut éviter le piège où tu as des groupes où il y a peu de conséquences financières ou autres ou qui peuvent débalancer un peu le débat ou rendre les discussions moins responsables face à ça. C'est surtout ça.
Par contre, la réponse que tu m'as donné au sujet du «residual», je trouve que tu n'as pas touché l'aspect de --
M. Bisson : Je peux le faire.
M. Corbeil : Parce que nous autres on est entièrement d'accord avec toi, comme je l'ai dit dans le premier point, avec le «guaranteed forest renewal». Le fonds, on appuie ça à 100 %, et moi, je représente une municipalité, une communauté.
Le Vice-Président : Peut-être que vous pourriez continuer ça après et peut-être aussi avec le Ministère.
M. Corbeil : Okay.
The Vice-Chair: Mr Miclash for the Liberal party.
Mr Miclash: Thank you very much for your presentation. I'm interested in your stakeholder committee. You've given a fairly good explanation of who it belongs to and the use of the Minister of Natural Resources, I'm more interested in how your agenda -- like who brings the items to the agenda, how often does the committee meet and who decides on the actual agenda of those meetings.
Mr Corbeil: I guess what spearheaded the creation of the committee was mostly the conflicts between different users which were affecting the wood industry because, as I said, they were getting threatened by bump ups, and sometimes negotiations were hard. Also there were times when they weren't really directly involved in the problems. There were conflicts between the outfitter and the local anglers and hunters. The local manager thought this committee, which brings everybody to a table, could foster better understanding. I'm sorry; I forgot the first part of your question.
Mr Miclash: So, in essence, your recommendations are made to the minister.
Mr Corbeil: Any member of the committee can bring something to the agenda. It's studied by an executive. We meet once a month during the winter; maybe five or six times a year.
The Vice-Chair: Thank you very much. We certainly appreciate your presentation, both the written text that you left with us and your answers to some of the questions. So thank you again.
M. Corbeil : Merci beaucoup.
NORD-ASKI FRONTIER DEVELOPMENT INC
The Vice-Chair: The next presenter is Nord-Aski Frontier Development, Sylvie Fontaine. On m'a informé que vous êtes bien la fille de M. René Fontaine, qui bien sûr est bien connu par quelques-uns de nos députés.
Mme Sylvie Fontaine : Oui.
Interjection: His granddaughter.
Ms Fontaine: No, no. He's not that old.
The Vice-Chair: We'll strike that from the record. You're here to speak to us on behalf of Nord-Aski. I think you are familiar -- you have 15 minutes, if you'd like to leave some time for questions and answers, et aussi, vous pouvez bien sûr faire la présentation en français. Please go right ahead.
Mme Fontaine : Bonjour. Merci de m'accueillir ici aujourd'hui. Je ne savais pas qu'il y aurait de la traduction, ce qui fait que mon mémoire est en anglais, mais je vais parler en français.
Nord-Aski Frontier Development Inc est un organisme régional de développement économique communautaire qui rejoint les communautés de Hearst, Hornepayne, Mattice-Val Côté et Constance Lake First Nation.
Étant impliqués dans le développement économique communautaire, nous sommes tout le temps concernés sur la durabilité de nos industries locales, que ce soit la forêt, le transport ou le tourisme. Comme vous le savez probablement, l'industrie forestière est l'épine dorsale de notre économie dans la région Nord-Aski. En juin 1993, nous avons fait une analyse économique. Cette analyse indiquait que l'industrie forestière représentait 990 emplois directs, l'équivalent des emplois à temps plein.
En utilisant le multiplicateur conservateur de 1,584, parce que certaines communautés vont utiliser 2 ou 4, ceci représente un total de 1 568,5 emplois. Pour ce qui est des revenus générés par ce secteur, ça représente 32 967 000 $ de revenus directs, et en utilisant toujours un multiplicateur un petit peu plus conservateur que l'autre, ceci totalise 48 millions, près de 50 millions de dollars.
Dans l'économie totale de la région Nord-Aski, le secteur forestier génère, côté emplois, 43 % de nos emplois et 42 % pour les revenus. Le deuxième secteur, c'est le transport, qui génère 26,3 %, côté emplois, et 34,5% côté revenus. Mais je dois souligner que dans ça, on a aussi le CN qui, sur ce pourcentage-là, est à peu près à 23 %. Il y a 400 emplois directs à Hornepayne.
Nord-Aski Frontier Development appuie en principe le projet de loi 171. Étant donné qu'on est un organisme de développement économique communautaire, on n'est pas seulement concernés de la durabilité de nos forêts, mais aussi sur la durabilité de notre industrie et des emplois.
Il y a certaines provisions dans le projet de loi 171 pour établir une forêt à long terme avec les deux fonds, soit le fonds de reboisement et le fonds de réserve forestier.
Par contre, le projet de loi doit s'assurer la viabilité financière de nos industries locales. Ceci, en retour, assure l'existence de nos communautés. Sans l'industrie forestière -- vous n'êtes pas sans savoir qu'on a perdu une industrie en 1992 qui a été la perte de 400 emplois. Si on n'a pas une durabilité de ce qui existe actuellement, on ne pourra pas survivre.
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En fait de viabilité financière, je fais référence à l'introduction de la taxe de valeur résiduelle pour déterminer les frais de coupe. Nos industries locales, comme vous le savez, viennent de traverser l'une de leurs pires périodes économiques et elles commencent seulement à démontrer un certain profit.
S'il faut commencer à taxer le profit de nos industries locales, nous croyons que ça va les décourager à créer de nouveaux emplois, à investir dans la modernisation et à être plus compétitives sur le marché global. Donc, nous suggérons fortement au gouvernement de réviser cette taxe proposée, et M. Bisson a quand même réitéré tout à l'heure que ce n'était pas final, que les pourparlers étaient en cours pour qu'elle soit plus équitable et qu'elle assure la durabilité de notre industrie locale et de nos emplois.
L'introduction du Comité de citoyens pour aviser le ministre sur différentes questions est en ligne avec les principes de développement économique communautaire. Nous, on est une agence de développement économique communautaire et on a consulté la population quand on a fait notre plan stratégique économique, et ça va vraiment de pair avec ce principe-là et on est entièrement en accord.
Par contre, il faut s'assurer que ces comités-là ont des procédures, des politiques qui les rendront plus efficaces pour prendre des décisions. Ces comités doivent avoir les outils nécessaires pour conseiller, du mieux qu'ils le peuvent, le ministre et doivent avoir une représentation équitable des dépositaires d'enjeux de la forêt et de la communauté.
Tous les efforts devront être faits pour qu'il y ait une transition la moins chambardante possible, si on peut dire, quand ce projet de loi va être en cours, et les recommandations du rapport Carman, étant donné que ça va changer beaucoup la manière dont l'industrie va agir avec le gouvernement.
Finalement, on aimerait réitérer le fait que le projet de loi 171, avec toutes ses politiques et procédures, même s'il assure une durabilité de la forêt pour notre industrie locale, doit aussi encourager nos industries locales à être financièrement viables et à être plus compétitives. Merci.
Le Vice-Président : Merci pour votre présentation.
Mr Wood: Thank you very much, Sylvie, for your presentation. I'm looking forward to some meetings in Hearst tomorrow morning.
I just want to comment on page 4 of your recommendations, where you're saying that you're looking for "a smooth transition of the Crown Forest Sustainability Act" from the present Timber Act. This is the intention of the government, to have a transition over a two-year period and up to five years for some portions of it.
Moreover, Bill 171 is intended to sustain the communities, the jobs that are there, create new jobs, as we've announced three new mill operations in the last number of months, and we're expecting more announcements in the very near future involving poplar and birch. Bill 171 is intended to sustain the communities, sustain the jobs, create new jobs and sustain the forest on ecosystems.
We're looking for ideas and suggestions from the various groups that have been involved over the last four years in helping to develop the manuals, the policy and the legislation that we're talking about today. Those are the comments I wanted to make. Thank you for coming forward, Sylvie.
Mme Fontaine : Si on regarde le projet de loi 171, oui, il assure la durabilité de nos forêts. Moi, ce qui m'inquiète, c'est cette fameuse taxe-là qui, semble-t-il, va s'introduire, tout dépendant si elle va être équitable. C'est ça, je pense, qui va aller contre la durabilité de notre industrie et de nos emplois.
Le Vice-Président : Une brève question, Monsieur Bisson.
M. Bisson : Je fais attention de ne pas répéter ce qui a déjà été dit. La vision du gouvernement, c'est d'être sûr que la viabilité des compagnies ce n'est pas seulement face à la forêt elle-même mais aussi sur le point économique. Les négociations qu'on est en train de faire sur ce qu'on appelle le Carman exercise, ce sont des négociations qui vraiment touchent à ce dont tu parles quand ça en vient à la valeur résiduelle, et on veut faire sûr qu'à la fin de la journée, les compagnies sont viables. Alors, vous avez notre parole sur ça.
Je fais rien que demander si j'ai la chance de poser une petite, petite question sur le Comité de citoyens. On essaie toujours. On est tous d'accord ; on pense tous que c'est une bonne idée. Oui, il va avoir une bonne représentation de tout, mais à ton idée, qui doit être responsable pour faire sûr que tous les stakeholders sont représentés ? Comment te dépannerais-tu ?
Mme Fontaine : Bonne question. Nord-Aski, on siège sur le comité dépositaire d'enjeu de la forêt de Hearst. Je pense qu'il y a un appel qui a été fait à la population par le ministère des Richesses naturelles à savoir qui devrait venir s'asseoir autour de la table. Donc, je ne sais pas vraiment quel mécanisme. Soit c'est fait par le Ministère ou le ministre lui-même, un peu comme les genres de commissions ou de comités de ministère. Mais il faut s'assurer quand même que ce soit équitable, que ce ne soit pas juste un côté versus quasiment personne de l'autre côté.
M. Bisson : Okay.
Mr Brown: Good morning. You bring up the residual value tax. We have some concerns and I think you and the previous presenter both brought a new complexion to the debate, and that is how it affects wood movement through the province.
As it was pointed out, chips may be not very viable from a lumber operation if we're talking about very high residual value taxes in that sector because of strong lumber prices, not because of strong chip prices.
Ms Fontaine: No.
Mr Brown: Over the years, a continuing problem for the province of Ontario and the industry in general is how those chips move in the most effective way between the mills. I know in my area anyway, and I suspect here, at times in the lumber industry the real product is the chips, not the lumber, if prices are very low.
Ms Fontaine: Yes.
Mr Brown: So I appreciate that and any thoughts you might have to expand on that.
Ms Fontaine: I'm not an expert on the chip movement. I have no comments, really. I don't want to --
The Vice-Chair: Any other questions there?
Mr Brown: No, I think that's the primary one because --
Ms Fontaine: My main concern is that if they're going to tax, charge, whatever -- or if they don't want to call it a tax or a charge --
Mr Brown: You pay money.
Ms Fontaine: Yes. It's still money out of your profits. The government knows it's a boom-and-bust industry and when it's a bust, they need the money to keep continuing operating. So if they're going to --
Mr Brown: One of the things that surprised us about the residual value tax is that it doesn't come back to the forest industry at all.
Ms Fontaine: No. That's also a main concern.
Mr Carr: Thank you very much for your presentation. Recognizing there are some concerns -- I don't know if you were here when Spruce Falls Inc presented, but basically, they outlined some of their concerns and they said that if the bill doesn't change, they requested members to vote against it. Recognizing that you'd like to see some changes and depending on what happens, there may be some amendments come forth from the government -- but if the bill remains the same and you were recommending to myself how I should vote on the reading on this, would you recommend that I vote in favour of the bill or oppose the bill?
Ms Fontaine: The bill itself is not where my beefs are, it's in the regulations. I received the draft form this week and there are about 1,000 pages, so I haven't really read them. But the charge I'm talking about, the residual value, is in these regulations, it's not in the bill.
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Mr Carr: I know the concern, in a lot of bills, is whether they should put it in the regulation or in the bill. It's harder to change when it's in the bill. Recognizing that this government probably won't be around nine months from now, after the next election, we don't have an option of voting on the regulations, we have to vote on the bill as is.
Knowing that and knowing that they're in the regulations and the broad regulations are very powerful, how would you recommend we vote? Should we trust the government and vote with it, or would you rather have the status quo?
Ms Fontaine: Jeez.
Mr Carr: Well, that's my choice. That's what I have to decide on the vote. So that's why I'm asking you.
Ms Fontaine: I would vote for it because there are a lot of good elements in it. The best part is the trust and that it ensures the viability of our forest. I mean, if we don't have the forest, we're not going to have the communities.
Mr Carr: Good. Thank you. Good luck.
The Vice-Chair: Thank you very much for your presentation, et de nouveau merci pour votre présentation.
Interjections.
The Vice-Chair: Could we have some order here, please. We're not quite finished yet. Even though the list of presenters for the morning is now completed, we do have the last presenter who's here. If we move him up, this will give us a little bit more time to get ready for the plane if that's agreeable with the committee.
HEARST FOREST MANAGEMENT INC
The Vice-Chair: Next is Hearst Forest Management, Mr Denis Cheff. If you'd give the copies to the clerk. You have half and hour, and I think you heard the previous presentations. If you'd leave some time for questions and answers at the end, it would be appreciated. Go right ahead.
Mr Denis Cheff: Mesdames, messieurs, I'm Denis Cheff, manager for Hearst Forest Management. Hearst Forest Management Inc is a company that was set up in 1986. It's a private company. Shareholders are Lecours Lumber and Malette Inc. It has been entrusted with 12,000 square kilometres of forest west of here, and it's responsible for planning of all activities on the forest as well as the actual work responsible for the various programs that are done on what we call the Hearst forest.
Hearst Forest Management supports in principle Bill 171, which is An Act to revise the Crown Timber Act to provide for the sustainability of Crown Forests in Ontario. We cannot but support legislation that advocates sustainable forestry, legislation that provides for better provincial standards, legislation that guarantees community involvement and legislation that introduces a more reliable funding mechanism for silviculture. It was inevitable that we be directed to focus on the forest as a whole instead of just concentrating on timber. Although not yet well defined, we have to somehow come to grips with concepts like ecosystem. This bill also addresses issues that previously tended to remain in the background, issues like underutilized forest resources, timber surpluses, third-party licences, independent audits and enforcement.
Although in the right direction, the act is not quite delivering what we were led to expect through the Carman exercise. The concepts or principles developed by industry with Carman seemed more positive and more progressive in some aspects than some contained in this bill. Instead, the bill seems to have adopted the tone of the recommendations from the environmental assessment report which advocated a more guarded and sceptical approach for dealings between industry and the ministry.
The Carman approach was promoting a significant reduction of MNR staff for the new business relationship with industry. Through a climate of trust and cooperation between industry and the ministry, we were convinced that as much as 25% of MNR staff could be reduced and that the savings could be directed towards silviculture. Through this trust and cooperation, the ministry would have slackened on the monitoring activities and judged industry's performance on the results achieved in the forest. Building on trust and cooperation, we were confident that the private and public sectors could meet the challenge with less red tape and less documentation.
Judging by the tone of certain sections of the act, it seems that industry still needs to prove that it is honest, competent and responsible. In spite of more than 15 years of industry and the ministry working as partners in managing the forest through the forest management agreements and in spite of numerous independent audits and reports that have shown, without a doubt, that we have been doing an exceptional job as a team in regenerating the forest, the act seems to imply that industry is basically untrustworthy and incompetent.
Instead of reducing staff, it is likely, with the introduction of this bill, that the ministry will be adding personnel to watch, to guard and to monitor. The act refers to a lengthy section of remedies and enforcement. This has to mean more monitoring, more policing, more controls, more ministry staff. Therefore, instead of savings, we see more expenditures. We don't see this lean, mean machine that could have been to manage efficiently the forest. It is apparent that for government, big and large is still beautiful.
The act refers to the development of a series of five manuals: Forest Operations and Silviculture Manual, Forest Management Planning Manual, Scaling Manual, Forest Information Manual, and it introduced also a regulation manual. These manuals will adapt existing regulations and guidelines to the new realities highlighted by this bill. It will now be forest management instead of timber management.
We appreciate having been consulted, even if it was at the 11th hour, to review the draft of these manuals. One of our staff has been involved with the exercise of preparing these, and he has been swamped with documents. He left yesterday for the Sault for another session, and so much is being thrown at this work committee that he gave me the impression that he was lost and that he was really pressured to put something together at the last moment. We hope that the ministry will take the time required to refine those manuals and make sure that they reflect correctly the intentions of this bill as well as the needs of all involved with the forest.
We expected planning to be less tedious and less expensive. A five-year timber management plan presently requires two years of serious work and it carries a pricetag of over $350,000. We expected that the period of preparation could have been reduced and thereby affecting favourably the costs of planning. The impact that the environmental assessment report seems to have had on this bill assures that the planning process will be longer and more expensive, thereby imposing more on the limited resources of industry.
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One of the most positive elements of this bill is the introduction and implementation of the forest renewal trust fund and of the forestry futures trust fund. The creation of these funds will make life much more bearable for the managers of the forest. They will be able to rely on these funds to execute the programs that have been planned for the forest. Managers will know at all moments how much funding there is available in the fund and will no longer have to rely on approximate funding established by vague formulas at the whims of the civil servants. Since each forest management unit will have control of its own trust fund for silviculture, the incentive will be there to do efficient and cost-saving practices in the forest. We will no longer be faced with providing services or programs with partial and insufficient funding as is occurring this year for our forest.
The weak part of this particular section is in the formula used to collect the funding. We have no qualms with the ministry setting aside a portion of the crown dues to build the forestry trust fund, but we do have serious reservations about the residual value stumpage formula. Others previous to myself have addressed this and elaborated earlier.
We must emphasize that we are terrified of the probable negative impact of that measure. We are all aware of the roller-coaster nature of the economics that relate to the lumber market. The lumber industry has experienced a profitable economic period in the last year, but let us not forget the three or four years preceding that period of prosperity. Things were very grim, and we all know that these times will return. The only question is when. The pattern of the last 40 years is clear and quite predictable from period to period.
The minimum stumpage that has been established, the $6 per cubic metre towards the forestry trust fund and the $1 base for government, will be very hard to meet during the hard times. The depressed lumber markets of a few years ago could have never generated enough money for sawmill companies to survive with today's obligations. A sawmill strapped with today's crown dues, reaping yesterday's lumber prices, could not possibly make it: the minimum stumpage is too high and so are the area charges. Area charges doubled last summer, and this bill does not introduce any mechanism to control or prevent the ministry from doubling them next month.
Sections in this proposed bill clearly promote fairer agreements with the communities and with licensees, and they advocate better access to underutilized forest resources. We were still hoping for clearer sections dealing with land tenure and wood supply for the industry. With the introduction of this bill the ministry is stressing even more than ever industry's financial commitment to the forest. Industry is directed today to pay more dearly for the wood fibre through increased stumpage and area charges and it is obligated to regenerate, tend and protect a forest with no guarantees of being able to harvest tomorrow. We are constantly reminded that it is not the intent of the ministry to revise the license area boundaries -- of this we are fairly reassured -- but we were expecting some measure to prevent the constant erosion of our land base.
In spite of the high rent, areas charges, that we pay, and of the silviculture obligations that we have, we continually lose to reserves and other interests. We lose 15% to 25% of our land base to moose corridors, to stream, river and lake reserves, to squirrel and caribou, to outfitters, to angler and hunter interests, and there are more. If government expects industry to invest, prosper and survive, it will need to protect it. If government needs to remove land areas because of public pressure, it will need to redress the losses through exchanges or direct financial compensation. Also, to discourage interest groups from asking for anything and everything, government must promote the user-pay concept. It might be more acceptable to the taxpayers of Ontario to have large areas of the forest frozen by moratoriums if the other users were required to pay the same area charges as industry to protect these specific areas.
Finally, we have no difficulty endorsing the section that deals with the setting up of local citizens' committees. Through the years, we have worked in close cooperation with the surrounding communities and, more specifically during the last two years, we have managed the forest by consulting the other stakeholders in a more formal and organized manner.
Through the Hearst Stakeholder Advisory Committee we have collaborated with the other users of the forest to resolve conflicts, promote education and better planning. However, this bill does not specify how the members of these committees will be selected. It does not describe their terms and conditions and is quite vague as to their mandate. Although this measure will mean more meetings, more preparations, more presentations, more follow-up reports for management, we realize that consultation warrants it. The general public might rejoice, but it should realize the magnitude of the work and the weight of responsibility that come with the right to consultation.
To conclude, we reiterate that we support the broad principles elaborated in this bill. We just find it deplorable that the wind of trust and cooperation of the Carman exercise was swept by the blizzard of the recommendations of the environmental assessment review. Thank you for giving us the opportunity to vent our concerns.
The Vice-Chair: Thank you for appearing before the committee and speaking at this time rather than later on in the afternoon. There are some questions by the members of the committee. Mr Brown.
Mr Brown: I first must say I found this brief to be one of the most well prepared and informative ones that we've received to date. You might want to tell the members a little bit just about your organization and how it works as it operates the FMA, as I understand it, in Hearst, even though there's a number of companies operating under it. I think it's a model that could be used in other parts of the province.
Mr Cheff: We are now the only cooperative FMA in the province. Chapleau used to be in the same bag as we were. We have a mandate to address MNR directives for a set of operators. We have two major conifer operators, Malette Inc and Lecours Lumber, and we also have a directive to provide timber to Constance Lake First Nation which is located nearby for 5,000 cords annually. We also need to find poplar for Levesque Plywood and also for Weldwood.
We are in the particular situation where we have to shuffle more than the one-operator FMA because there are quite a few parties there to satisfy. In that sense we're quite different, I think.
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Mr Brown: It appears to work well. We've heard this kind of problem discussed in other areas, and this may be a solution at least for some, where we have a lot of talk about third-party operations and what not.
Just to come back to the residual value tax, to my mind, this mechanism, if it was dedicated to the forest, may have some advantages to you. For example, if the base rate could be lowered slightly and kind of a median where you would be at the same level and during good times you would pay more, that would provide an opportunity in the bad years to maintain your forest renewal programs at a suitable level and yet not be paying so much fees into it in a time of reduced lumber prices.
Mr Cheff: Right. There would be some consolation there for sure, and some reassurance. That matter of residual tax is a bit hard for us to fully comprehend at our level, because really the industry and the ministry are still negotiating that part and the perceptions vary. The industry perceives it as a double tax; the ministry perceives it as an adjustment.
If it were established that it was really one or the other, I think we'd have it a bit more clear in our minds in the end. If it's a tax, then you can offset the bad years with the good years. Apparently this formula wouldn't permit that, so it's a matter of definition and establishing exactly what it is, but at the moment we're preoccupied because industry, sawmills in particular, is quite adamant about not accepting it at its face value.
Mr Hodgson: We've mentioned before this residual tax or whatever the government wants to define it as. One of the reasons why they want it to go into the consolidated revenue fund is the government needs revenue. I was interested to read the first page of your report -- this was brought up by Mike Brown, who spoke first on the first day of our committee hearings -- that there's no cost-benefit analysis yet for us to look at, in terms of what will this bill cost Ontario taxpayers for the ministry to administer it. You've stated here in your report that you were led to believe or maybe you have documentation for this that there would be a 25% reduction in MNR staff and the savings could be directed towards silviculture. Was that directed to you in writing?
Mr Cheff: No.
Mr Hodgson: We've asked for the ministry to give us a cost-benefit analysis.
Mr Cheff: The 25% may be the more optimistic picture, but the basis, when we were negotiating or exchanging rather with the Carman people, was that the direct contribution of the government would be in savings through the elimination of a certain percentage of staff, and to do that, you needed as a basis a climate of trust and cooperation.
This is part of the recommendations of the roles and responsibilities committee, one of the subcommittees of Bob Carman. This is the way that it came out. Industry participated in that subcommittee, and we were quite pleased to see things going in that direction, but we don't see --
Mr Hodgson: Mr Chair, if I may, this committee should be made aware of what's going on with the Carman exercise. I realize it's a confidential negotiation, but it will play an impact on what should be in this bill. If government's truly just to set the standards and the policies and let industry do the actual work and the government enforces the standards and does the enforcement, then we should know the savings on that, where the ministry wants this to go.
The Vice-Chair: I take it that that's a request to the parliamentary assistant.
Mr Hodgson: Yes, it is.
The Vice-Chair: Actually it has been mentioned, although it wasn't within the meeting that perhaps at some point we should reserve some time for some discussion with ministry officials and the parliamentary assistant, and if that's agreeable with the committee, perhaps when one of the cancellations are happening, we'll do that, and perhaps the parliamentary assistant and the officials will be able to answer some of these questions.
Mr Hodgson: I appreciate that. Thank you.
The Vice-Chair: Any further questions?
Mr Hodgson: In the interest of brevity, no.
Mr Bisson: First of all, I'd like to thank you for your presentation and I would like just to say up front that I come from the community of Timmins and I'm very much aware of the work that your forest management agreement has done. Actually, it's probably one of the models when it comes to the way that forest management should be done, and I think that should be recognized.
I think far too often in the industry we're not very quick at pointing out in the forest industry some of the good stuff that we're doing and we get branded with a bad name as people who go out and just cut trees and don't do nothing about it. You guys have been quite proactive, you've been quite good at what you've done, and I think that needs to be recognized and I'd like to do that through this committee.
In saying that, Bill 171 is not intended to be an affront or intended to be a punitive thing towards the industry. What we recognize is that we've learned a lot over the years. The private sector has learned many things about how to do its business better. Your business is not only cutting trees. You know as well your business is regenerating the forest, because without that you won't survive.
I think we need to look at Bill 171 as a piece of legislation that enables us to do that in a more sustainable way, when it comes not only to the sustainability of the forest but to the economics of it. I want to come to the point -- the other thing I want to say is in reference to your 25% of MNR. One of the things that's happened over the last couple of years is that MNR staff in this area has already been reduced by about 25% through the expenditure control plans, attrition and others. So a lot of the reductions that you talk about, unfortunately for MNR staff -- I'm sure that they would like to see more staff -- is that there's already been a 25% reduction in the overall size of that bureaucracy.
Mr Cheff: But we were hoping that these reductions would be converted and directed towards silviculture.
Mr Bisson: That's part of the attempt of what we're doing here. I want to come back to the point that not only you but many people have made from your industry, and that is everybody paying their fair share for the use of the forest.
The value of a hectare of forest for you and the lumber industry is obviously worth a lot more money, if you take a look at your resale value of that forest, than it would be, let's say, for a hectare of land used for the tourism industry. I wonder how we rationalize in the end that everybody pays the same area charge, $102, because the amount of money you get on that hectare in actual money generated is far more than the tourism industry. How would we set that up?
Mr Cheff: But we adjust that with the crown dues afterwards, you know, when we cut the fibre. No, I think it's not exactly the same, but I think we have to peg a number there and if we're going to be freezing areas of interest, people should know that it's going to cost. Otherwise it's very easy. Presently you can jam the whole system just by showing up at an exercise and talking about the pleasure of looking at such a tree at such an angle. The process is stopped, and no one can go in. There has to be a clear message that to be able to do that, there's a cost.
Mr Wood: Thank you very much, Mr Cheff, for coming forward. I'm pleased that you're saying you've been able to support the broad principles of the legislation.
I just want to go back. I'll address some of the concerns that the PC Party has brought up at a later point, but I just want to point out that on page 6 you're saying that you're not sure what the committee's role will play and how they will be appointed. This is spelled out pretty clearly in the environmental assessment ruling that came down, I believe, around page 30, and the government is bound by that.
Now this came down, I believe in the middle of May, and the Bob Carman exercise, the negotiations that were taking place, were in the process of happening. The environmental assessment, the ruling had come down, and a lot of the studies that had been out there, the consultations that had been out there, were all brought together along with the Carman exercise, and as a result, we end up with Bill 171. The regulations, the manuals, and the Bob Carman exercise is still proceeding, and we're looking to have some agreements in place in a very short period of time.
Mr Cheff: But there's still a place for interpretation how far: it's going to be advisory, it's going to be more than that. It's still not as clear as maybe it should be. I think we have an opportunity here with the bill not finalized to put in a few more strokes.
Mr Wood: Yes, and I agree with you that during the next sessions, I believe they're going to be the end of August or early September, another working session on going through the manuals and seeing what changes have to be made, these things can be clarified in the manuals and the regulations, I'm sure.
Mr Cheff: To get back to one of Mr Bisson's comments, just during the previous presentation, I don't think we have to regulate these committees too much. The community just comes forth almost naturally. The formation of our particular stakeholder committee, it depends on the issue that's on the table. Basically we have 30 members but we don't have 30 different members around the table at each of our meetings. It depends on the issue that's on the table that particular month or day, and the interested parties come forth and they make themselves aware.
The Vice-Chair: Thank you very much, Mr Cheff, for an excellent presentation. You have stimulated the debate, and we're getting some briefing, I understand, from the ministry at some point in response to some of your remarks. Again, thank you very much and good luck with your work.
We'll be back at 1 o'clock. This committee stands adjourned.
The committee recessed from 1202 to 1305.
KENT VIRGO
The Vice-Chair: Okay, this committee is in session again. We're continuing our hearings on Bill 171. Mr Virgo has given a presentation this morning already on behalf of Spruce Falls. This afternoon I understand you're here as an individual, and certainly we appreciate your presence again. You know what the process is, so please go right ahead.
Mr Virgo: Thank you very much, Mr Chairman. I'm very pleased to be here this afternoon and speaking to this committee. I'm speaking, as the Chair has said, this afternoon from a different perspective, really two different perspectives other than the perspective I was speaking from this morning. One is as a professional forester and one is as a family man and a northern Ontario resident in a single-industry community.
I am a registered professional forester with over 23 years' experience in managing timber resources in this area, 22 of them in Kapuskasing and just over a year in Timmins, where I started out, and during that time I've utilized and been involved, employed the Crown Timber Act, if you will, from both sides of the fence. I've gained insights both from the government side, where I spent 10 1/2 years with the Department of Lands and Forests and then the Ministry of Natural Resources, followed by 12 1/2 years from the industrial perspective managing a large forest management agreement area. I was involved with the development at a field level of an FMA in the first place and have been very involved in implementing the forest management agreement on the Gordon Cosens forest.
I was also very deeply involved in the timber class environmental assessment, which many of us spent about five years of our lives on, a process which -- I'm not sure it ended recently, but it gave some results recently. I was involved from an industrial point of view in that regard through involvement with the Ontario Forest Industries Association.
Secondly, I'm a family man with a lovely wife and two near-adult offspring, both of whom were born in Kapuskasing and raised here for their entire lives, one aged 22 and another one 18. I own a home and a cottage in the Kapuskasing area, and with 23 years invested in northern Ontario, after a lifetime of building equity in these properties, they almost became worthless in 1991, and you all know the story behind that, when it appeared that our major industry would essentially disappear. I don't know whether any of you who don't live in small, one-industry towns can picture this, but during that two-year period, if you drove up or down the streets of Kapuskasing or out the highway in either direction, literally every second house or third house had a for sale sign up.
Now I own shares in a company with a potentially great deal of promise and I do not wish ever again to go through the kind of hell, the kind of experience we went through in that two-year period. That's why I'm speaking before you today. I've read the act very carefully and there are obviously elements of it that I feel very strongly about professionally and individually, and I could not pass up the opportunity.
Professional concerns first of all: I'm concerned about the process, which I believe is lipservice consultation.
I don't know; I've been raised basically, in terms of my working life, in an environment where I've been told regularly that consultation was the name of the game as far as government and acts and the way things are going, and certainly the way the timber management planning process has gone that's been the way.
I think it was mentioned earlier today, as a result of the EA hearing, the length of consultation process to write a timber management plan -- a timber management plan, not a forest management plan -- as dealt with under the EA has gone from about 180 to 200 days to over 300 days. That's the amount of consultation that goes into one of those.
Especially, the lack of consultation with regard to the regulations and the draft manuals, which we've only received recently, and even then only as a result of my working environment. Even though I was on the list as an individual to speak here, I never received any information in that regard as an individual. There's been very little review of the manuals or regulations by professionals with a cross-section background of resource management. As I say, it suggests to me that the government is paying lipservice to this consultation.
Len Wood this morning alluded to the fact that the Ontario Forest Industries Association was playing a part in writing these manuals. Well, that didn't even begin until the last week of June. So they've been involved in writing the manuals for a total of five weeks, and some of the people who have been involved in writing those manuals were thrown together and thrown out to meet the deadlines of August 2 so quickly that some of the individuals didn't even have the opportunity to read the manuals before they went out. People were working on little parts and it was thrown together like a soup and nobody got a chance to taste the soup.
The second professional concern I have is with the conceptual nature of the legislation. Although we can all probably agree on the desirability of the concepts around which this legislation is built, that is to say, the sustainability of crown forests and the move to forest management as opposed to timber management, ecosystem-based management etc -- every one of us can agree with these -- once we leave the concepts and begin the process of defining them in such as way as to manage them, the various factions of the public, and professionals for that matter, will part company. The fact that these terms and the intentions of the government with respect to this are not well defined in the act -- in the act -- so that they can't be changed on a whim from time to time causes those of us who may be expected to manage under this legislation real gas pains. The definitions must be non-conceptual and in terms that can be enumerated, delineated, evaluated and managed.
The move to forest management is premature for legislative action. We are years, if not decades, from being in any position to carry out the broader concept of forest management.
The second document I passed out to you, which you should have, is an excerpt from the decision summary of the Environmental Assessment Board that came out in April.
Remember, the EA was a timber management EA, not a forest management EA. There were a lot of NGOs that would have preferred that it be forest management and there was a great deal of argument -- you can go back to the transcripts for that if you like -- that the EA should have been a forest management EA, not a timber EA. But the board ruled that it was a timber EA, that it couldn't change what the proponent had argued that it be, a timber EA, and in its ruling -- I would refer you to "The Future" section of this document, down to the latter half of the second paragraph and beginning of the third paragraph -- the board, which listened to all of this argument -- and remember, this was a hearing that took place over four years and 70,000 pages worth of testimony and reams and reams of exhibits -- says:
"There appears to be a consensus in the forestry community that integrated forest management is the most suitable long-term approach, but realistically much work needs to be done on exploring its feasibility in Ontario before it can be fully implemented.
"Although MNR is committed to integrated forest management, before its practice becomes a reality we need answers from the scientists. The first important question is sorting out the means of conserving or maintaining biological diversity."
I'll leave the quote there, because my point is that we're not there today in terms of being able to carry out forest management per se. We haven't sorted out the mechanisms for tradeoffs. We haven't sorted out how to manage the black flies, which are a component of the ecosystem, to lean to the ridiculous side of this.
What parts of the forest ecosystem are we going to manage? The entire province of Ontario is a forest ecosystem. So is each individual forest management unit, so is each region, so is each stand, so is each working group. Which ones are we going to manage? These kinds of things haven't been sorted out.
Processes and mechanisms for determining who does and who pays for what elements of forest management and how must be worked out. It's not fair to expect the forest industry to bear this entire burden, as seems to be suggested in this legislation. Science and technology must advance a long way first, as stated by the timber EA board. Trust must be built between the various stakeholders interested in the future of our forests. Many of us are working very hard for that to take place. The community forest venture here in Kapuskasing is an example of that trust-building that has to take place, but it's not something that happens overnight.
Simply changing the word "timber" in "timber management" to "forest" will not bring about these changes. In fact, it tends to add to the government's credibility problems, no matter what side of the equation you look at it from.
I'm concerned, as a professional forester with management experience, that this legislation will put many professionals in an untenable position of not being able to fulfil expectations, not being to deliver forest management, which under the act we would be expected to do.
I'm also very concerned, as a home owner in a single-industry town and a shareholder in that industry, that this legislation will over time lead the forest industry towards a slow decline, bringing many northern Ontario citizens and towns down with it. Again, I don't want that to happen again. It certainly hurts both the investment climate and our ability to compete with other jurisdictions, such as the southern USA.
This is well-intentioned but poorly written legislation and it has been developed in a hurry to meet a political agenda. It's bad legislation and it should be opposed. It should not be passed.
Mr Hodgson: Thank you very much, Kent, for coming back again. I've really enjoyed your presentations. This bill's designed, you say, as a political document where they can say: "We're going to sustain the jobs in northern Ontario. We're also going to sustain the forest ecosystem so that we can tell Europe and tell people who are concerned about that that this bill's the cure-all for all their problems as well."
Concerns have been raised since June on what they're trying to sustain should be done in such a way that there should be quantifiable amounts. For instance, if you know the timber supply that's going to be required to keep jobs available in this community, maybe that should be detailed in one of the manuals for this project.
What concerns me, and you've said it better than I could ever say it, is that science isn't up there. We don't have a benchmark or a base to measure where we're going with this. But you're suggesting that we not approve it at all.
One of the concerns we've run into from groups that we've heard from is that the status quo in terms of legislative powers isn't working very well, yet from the forest industry they've said there are a lot of studies that show that you're doing a good job. Do you have any comments on that? You're suggesting that we not pass this legislation the way it's presently presented and poorly written, but is the present situation very good?
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Mr Virgo: Well, I would say that the present situation was not very good, particularly as it pertained to timber management, and the current bill is currently focusing on timber management and the funding of timber management. Recently, the Budget Measures Act and revisions to the existing Crown Timber Act brought in provisions for the forest renewal trust fund and so forth, and I think those measures addressed the key concerns about timber management.
I believe, as I've stated, that we should be heading towards forest management. I think that perhaps should be government policy, that we head towards forest management. But you set policy, in my view, to direct the science and the technology and the mechanisms, the building blocks, to be created before you put it into legislation and expect it to be implemented. The EA board ruling sets up provisions for that kind of thing to occur.
The industry suggested a provincial policy advisory committee be set up -- it's not even mentioned in this act -- involving a cross-section of stakeholders, including the environmental groups and the native interests and everyone else involved in forest management, and it could help set the stages through policy direction towards the building of those blocks that will eventually lead us to the situation where we can carry out forest management. I think once the science and technology gets there, then I'll be all for legislating forest management.
Mr Carr: Yes. I think the people of your community deserve a great deal of credit. You mentioned some of the problems you've gone through. To see how everybody pulled together and to make it a success I think is a true model and it goes to show what people can do, and for that I think everybody in this community deserves credit and people in Queen's Park can look to this as a model of what can be done.
Having said that, I can appreciate your big concern. You say in here that the bill shouldn't be passed. If during clause-by-clause, some of the amendments address some of those problems -- and it's along the lines of what Chris asked -- do you think we can still take this bill and make it good enough that you would say to me, as a member, "I think you should vote for it now"? Is it that far out that we should start all over, or do you think there can be some amendments made that will make it acceptable for you to say, "I'd like you to pass it"?
Mr Virgo: The difficulty I have is that the act is built on concepts and that, as a manager or a professional, I can't manage concepts. If changes to the act can be made so professionals and land managers or resource managers can manage and they have specifically laid out the rules of the game so that it's clear what they're managing, then yes, it could be accepted.
The problem is that the premise of this act is so conceptual in nature and there are three or four ecosystem management -- forest management as opposed to timber management, the sustainability of crown forests, whatever that means, are so conceptual in nature that the minister, for example, who under this act has to be satisfied that a forest management plan provides for the sustainability of the crown forest -- since that's not defined, he can be challenged at any point in time that he's not meeting that measure. How can any professional meet that measure if the minister can't?
Mr Carr: Thank you very much. Good luck. Good job.
Mr Wood: Once again, thank you for your presentation, Kent, that you've brought forward.
You mentioned in discussions that you had with me there are going to be further workshops within the next short period of time to review the manuals and make sure the manuals and regulations are what should be there now and into the future to be able to have a sustainable ecosystem the way we could define it today, with the assistance of the professional foresters.
You're saying in number 3, and I don't know how to interpret this, that we are years if not decades ahead to carry out forest management. Are you saying that the government is ahead of what the professional foresters are able to do at this point in time, that legislation like this should have waited for another 10 years?
Mr Virgo: I'll go broader than that. I'll say the government, with respect to forest management, is ahead of what any group can do. The science and technology and mechanisms, the building blocks, other than the timber management equation, are not in place to carry out broad forest management. And you can change the manuals and regulations all you want for now, but since they can be changed unilaterally from one side any time all the way along the line, it becomes a matter of trust: trust in the government. It becomes a matter of credibility, and frankly I'm not sure the government has a great deal of credibility right now, if you want to be --
Mr Wood: I visited Spruce Falls' woodlands operations on a number of different occasions and visited the original forest, visited the forests that had been harvested and the ones that had been planted back in the early l950s, and there's no doubt about it, Spruce Falls, under the old Kimberly-Clark, New York Times, did a fantastic job of making sure their second growth and the third growth are going to be there for years and years to come. But not every operation throughout Ontario has done that, and this is what the legislation is intended to do, to address some areas. You go 50 or 60 miles away from here, we had a presentation this morning saying that there's not going to be any trees to run sawmills because it wasn't managed properly. Our children and our grandchildren want to see something on a sustainable basis. Maybe it's not perfect, but I would like to see you present us in more detail what you think you can live with in Bill 171 and what you think should be amended by all three parties.
Going back to when the legislation was introduced, I believe it's the first time in the Legislature, maybe ever, that all three parties had a chance to make comments, and supportive comments, on first reading of legislation and they were very favourable leading into the process that we're doing now, going out for public hearings and looking for feedback from the community saying, well, Bill 171 is maybe not what has to be there. There might be some sections that have to be amended, but we have to head in this direction if we're to solve the concerns that there are that other countries might say, "Well, you're not harvesting your forests on a sustainability basis; we're going to block your products from coming across," as they threatened to do with the chlorinated paper, and we've heard the softwood lumber arguments that have happened in BC and in Ontario; a number of these things.
We had to do something with the results of the environmental assessment, and this is a step in the right direction. As I said earlier, I think either now or before the hearings end, we could get some comments on what you think we can live with.
Mr Virgo: I'd like to respond to what you just said, and I would respond in three areas you just addressed.
Number one is with respect to other areas as you defined it, other companies. My response to that is that the marketplace and the financial communities to invest will look after that far better than intrusive legislation ever would.
I bring out again certification. In the States, for example, and this is growing and it's growing very rapidly, basically to sell your lumber you have to get it certified and tracked all the way through the system that it's coming from a sustainably managed forest. The same thing is happening very rapidly with respect to pulp and paper products. I think, Len, you're aware of the combined efforts of the CPPA and the Canadian Council of Forest Ministers and the Canadian Standards Association where they're beginning to work very rapidly towards leading the way in the world scene to certification of Canadian forest products, to standards that we all have to meet that will certify our products as coming from sustainable forests. If you don't get certification, you aren't going to sell your product. Likewise, if you're not environmentally sound, financial institutions aren't going to loan you the money to modernize. Those things are far more effective than government legislation ever will be.
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Furthermore, in response to your concern, and you raised the example that was raised this morning about loss of timber, again my response to that is that the kind of shortage of resources that caused that problem has been rectified, in essence, in the existing Crown Timber Act, through the Budget Measures Act and the bringing in of the forest renewal trust funds, and those concepts I can certainly go along with, but that's now part of the existing Crown Timber Act. That's why there were not comments made by me earlier in that regard, because it's part of the existing equation.
Furthermore --
Mr Wood: I would just --
The Chair: No, I'm sorry.
Mr Ramsay: He can take some of our time.
The Vice-Chair: Okay, fine. Go ahead.
Mr Virgo: You spoke of the environmental assessment. The environmental assessment was a timber environmental assessment, it was not a forest management environmental assessment, and in terms of concepts, that's what this act has changed.
Mr Wood: The only comment I wanted to make was the fact that I've been informed that the province, no matter who's in government, is the landlord of the crown forest and crown land that is out there, and I'm sure the Liberal Party wants to make comments on that.
The Vice-Chair: Your time has expired.
Mr Brown: I understand the kind of difficulties Kapuskasing's been in. I represent Elliot Lake, and the result in Elliot Lake wasn't nearly as happy as it ended up being for Kapuskasing. The devastation in the community with for sale signs, not on every third house, on virtually every house in the place, is something that nobody wants to live through.
We, I think, have had some of the same difficulties you have. This act is like trying to get a firm grip on Jell-O. You just really don't know what it means. We've had groups from both sides -- from industry, from environmental groups -- come in and say, "Well, gee whiz, what do you guys mean by sustainability?" There's no definition of that in the act, and a bigger one in my mind is the definition of ecosystem, and you made that point. I don't know what ecosystem they're talking about, and I'm not sure what ecosystem they're trying to either maintain, which is not necessarily the thing to do, or to achieve, because, for various reasons, we all know the forest goes through various rotations. Which one do you want? Is it the one today or is it one that was here 20 years ago or is it one that you want 40 years from now?
Mr Virgo: Exactly.
Mr Brown: So we've had the same kind of difficulties you've expressed in terms of, what does this act mean? In some ways, it's been suggested to me that this is kind of a greenwash. We've used all the bright and nice buzzwords to make people feel warm and fuzzy, but at the end of the day, have we really achieved any of it? I don't know.
The Vice-Chair: A brief response?
Mr Virgo: I don't think so. I think you've done just that, and it detracts from government credibility because it's clear that you've done it, that that's what's been done. Regardless of what group you are looking at, it hurts credibility, because you've tried to fool people by changing, in "timber management," the word "timber" to the word "forest."
Mr Wood: The EA says we have to do it.
The Vice-Chair: Thank you very much for your presentation. It's appreciated that you share your experience as a, how do you say, Kapuskasingite? I'm not sure.
Mr Virgo: I'm not sure either.
The Vice-Chair: As a resident of Kapuskasing.
Mr Virgo: Very good.
The Vice-Chair: And as someone who makes his livelihood right up here.
6/70 COMMUNITY FOREST
The Vice-Chair: The next presenter is Bill Greenaway. He will be speaking for Community Forest. Perhaps you can tell the committee what the Community Forest is. You have half an hour, and if you'd like to leave some time for questions and answers, please. Go right ahead.
Mr Bill Greenaway: Good afternoon, Mr Chairman, ladies and gentlemen. I'm a registered professional forester and assistant manager of the 6/70 Community Forest pilot project. I am here speaking in my capacity as assistant manager of this community-based group. Our pilot project is one of four Community Forest pilot projects that the Ministry of Natural Resources initiated in 1992. Each of these pilot projects is part of the community forest initiatives within MNR's sustainable forestry program.
My comments regarding the proposed Crown Forest Sustainability Act focus on elements that I feel will affect the sustainability of our forests and the future of groups such as the 6/70 Community Forest. My comments do not reflect the individual opinions of any specific stakeholder interests within our Community Forest. Each of these interests may have its own opinion on the proposed legislation. Some of these opinions will differ from mine.
The 6/70 Community Forest pilot project believes that all people have the right to become actively involved in discussions and to participate in shared decisions about forest resource issues. We believe that shared decision-making increases awareness and understanding of the importance of sustaining the local forest resources. We believe it encourages communities to become more accountable and responsible for the local resources, and will ultimately lead to empowering communities to produce forest resource plans that will address local needs.
With these beliefs in mind, I welcome the specific provisions within Bill 171 that will formally recognize local citizens' committees and allow the creation of forest management boards. Establishing local citizens' committees and forest management boards under Bill 171 will give local groups a greater say in how their forests are managed. These provisions within the bill are essential if our group is to move beyond the pilot project stage. Our goal is to include forest stakeholders within the Community Forest area in making decisions regarding sustainable resource management. As a forest management board under Bill 171, our group would be able to meet this goal through delegated decision-making authority.
As several provincial forestry initiatives have been ongoing during the last few years, it is difficult to foresee how these will come together. Bill 171 could allow our group to make forest management decisions as a forest management board. I am concerned, however, that the defined functions of a forest management board and the definition of "forest resource" under the bill will not allow our group to make all the types of decisions we wish.
Many of the interests that are represented on the Community Forest have a different definition of forest than what is implied in Bill 171. Anglers, hunters and trappers, for example, view the forest as including wildlife, trees, water and other components that are found within a forest. Under section 2(1) of the bill, "forest resource" is defined as, "Trees in a forest ecosystem and any other type of plant life prescribed by the regulations that is in a forest ecosystem."
The Community Forest is presently interested in lake planning, wildlife management and land use planning as well as forest management. We definitely want to become involved in planning for all aspects of the forest. Not knowing whether other legislation will grant the powers of delegated authority, I am concerned that this bill will not allow our group to make decisions in areas outside of what we formerly called "timber management."
As assistant manager of the 6/70 Community Forest pilot project, I recognize first hand the amount of work that will be involved in supporting groups such as local citizens' committees and forest management boards. The draft Forest Management Planning Manual under the bill states that a local citizens' committee will develop its own procedural matters. I am concerned about the adequacy of support given local citizens' committees under the draft Forest Management Planning Manual. Not all those who will be interested in serving on such groups will have previous experience as a chairperson or committee member. Both local citizens' committees and forest management boards will require proper support and adequate training to be effective.
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An effective local citizens' committee or forest management board must also have a means of communicating with the public. These groups cannot advise or make decisions in a void. They must have a system of communicating with the general public so that their views represent the majority. As local citizens' committees are now required, more thought has to be given to situations where there will be difficulty forming an effective committee.
Forming such a group will not come easy in all areas. Now a requirement, will a forest management plan be held up when such a committee cannot be struck? Some areas may not want or need one. A token group will just be a waste of time and money. Local citizens' committees will have to write reports, yet it can be difficult to get some members to attend meetings. I believe that if these groups are to become permanent institutions as stated in the timber class environmental assessment, they must have their own independent support.
I am also concerned with the wording under section 12 of the proposed Crown Forest Sustainability Act. The bill states that the minister "may" establish local citizens' committees; however, the Environmental Assessment Board's decision on timber management states that the minister "shall" establish at least one local citizens' committee for each district and, where needed, one for every management unit. The word "may" implies that the minister has a choice as to whether or not to set up these committees.
From my position with the 6/70 Community Forest and as a registered professional forester, I generally support Bill 171. With regard to sustainable forestry, I view the proposed legislation as a major step in the right direction. The provisions for trust funds under part V are essential to ensure that forest managers have the dollars to effectively renew our forests. Forest sustainability depends on sustaining adequate levels of funding. I believe that these provisions will provide incentive for cost-effective forest renewal and ensure that a suitable amount of the forest revenues go back into regenerating our resources.
I believe that this bill will lead to easier and more equitable access to surplus forest resources through the provisions of joint licensing under section 35 and through the provisions under section 21 calling for a competitive process for the disposition of surplus resources. These measures will distribute the demand for resources more equitably among management units and allow for improved utilization. I feel that a competitive process will ensure that the licensee that gets the forest resource is the one most likely to use the resources in an efficient and sustainable manner. This will help to ensure a strong forest industry as well as a properly managed forest.
I believe that the provisions under section 13 concerning forest operation prescriptions will ensure that the public and forest managers have a basis to judge the effectiveness of specific harvesting and renewal practices. This information will allow successive managers on a forest unit to know what works and what doesn't. This will help ensure that the future structure of our forests will provide the projected needs of our mills.
The proposed enabling legislation is a practical tool that will allow the Ministry of Natural Resources to adapt to information and the changing needs of the public. I support a concept that will require changes to regulations and manuals in order to keep the legislation in line with sustainable forest management. Changes and additions that can be made without obtaining prior legislative approval will save time and money, while allowing for better forest management. However, legislation that will offer the Ministry of Natural Resources greater flexibility should not add unnecessary administrative steps to other forest users. The committee should listen attentively to the views of all forest users. This legislation should strike a balance between Ministry flexibility and a stable business environment for the forest industry and other forest resource users.
In concluding, I believe that the proposed legislation reflects the decisions of the Environmental Assessment Board on timber management. In addition to providing provisions for a group such as the Community Forest to move forward to delegated decision-making, the bill is a positive step towards achieving sustainable forestry. The proposed enabling legislation will allow the ministry to adapt to new information and the changing needs of the public. It will ensure that funding is available to renew our forests. It especially allows for greater public involvement by giving formal recognition to local citizens' committees and by allowing the creation of forest management boards.
Although I am in support of many provisions within Bill 171, I believe that several terms still need to be redefined and clarified. These include the definition of "forest ecosystem" and the meaning of "forest" within the context of a forest management plan. I also believe that more time should have been given to review this bill and the accompanying regulations and manuals before these hearings. This would have allowed for better and likely greater public scrutiny and would more than likely result in a better and more widely supported piece of legislation.
Mr Derek Fletcher (Guelph): Thank you for your presentation. As this committee travels around we sort of get into a quandary. I just finished listening to a professional forester, a registered forester, who's totally against this bill. Now I'm listening to another registered forester who generally supports this bill. I think one area that you agree on is the definition of the concepts. I think that's what the other presenter was talking about also.
As we go around, we have heard quite a bit about definitions and it has been explained that with the changes that are going on in technology and everything else it's hard to put the definitions into a concrete, written-in-stone sort of way in the legislation because of the changes. I don't know if I agree with that or not, because I think that you can be flexible in legislation.
I'm just wondering: When it comes to sustainability, what kind of a definition do we look at, and when it comes to ecosystems, what do we look at, how far do we go, how far abroad do we go? Any comments on where we start?
Mr Greenaway: I think both of those terms still need to be further defined, both "forest ecosystem" and "forest sustainability." Within the proposed legislation the definition of "forest ecosystem" could just about include any area within the province including my backyard, and I think that the comments on the part of the forest industry are valid in that they have to have some quantifiable parameters put on things that they're expected to manage.
Mr Fletcher: I know, yes. A tough one, isn't it?
I'm done, thank you.
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Mr Wood: Thank you for the excellent presentation that you've come forward with in written form and delivered today. I just want to go back to page 3 where you're saying that there seems to be a misconception that the environmental assessment ruling says the word "shall." The government did not appeal that ruling and the word "shall" is in there and that the minister shall or must have local committees is binding on the government, so the word "may" -- we should take a good look at that in the amendments.
You're saying that you're pleased with parts of the bill that will lead to easier and more equitable access to surplus forests through provisions under section 35. What do you see developing in this particular area? I know you're involved in the economic development of the Community Forest. If there is a surplus of, no matter what it would be, poplar, birch, spruce, what would you like to see developed in this particular region along the 6/70 area?
Mr Greenaway: It's difficult to comment specifically in this area. I think that the northeast hardwood project is a good example of how resources should be allocated using a competitive process and I'd give the ministry the powers to look at different proposals and decide on the basis of which proposals are going to lead to the best management of our forests as far as sustainability. But sustainability still has to be defined before those types of decisions can be made.
Mr Brown: This competitive bid process has intrigued me somewhat in that we have been looking for the criteria upon which the competitive bid will be assessed. Could you give us some idea of what criteria should be in the bid? Obviously it's not just who can pay the most money for the particular wood.
Mr Greenaway: I'm not referring to who can pay the most money for the wood when I'm talking of the competitive process. But I think in a competitive process there are several things that have to be considered. One is the need for that wood and the ability of individual companies to utilize those resources in an efficient and sustainable manner. There may be limited resources in certain areas and there may be 10 different companies vying for those resources. It would make the most sense for the sustainability of jobs and the forest to give that wood to the company that's in the best position to utilize those resources. If you give the wood to a company that is going to be bankrupt in a year, in two years both of those companies could be bankrupt.
Mr Brown: I guess the point I was making: If I'm going to be making the bid, I would like to know the criteria upon which the bid is going to be evaluated, and so far we've seen none of them. Mr Ramsay has a question.
Mr Ramsay: I enjoyed your presentation, Bill, and I really agree with your idea that we really have to make the community advisory committees a mandatory part of this legislation. The problem we would have, though, before we'd make such an amendment, would be that we would like to know what the makeup would be. So I would ask your advice today as to how your community forest group works. Who's on it? How do you arrive at decisions? How does that flow through to the final decisions of cutting and timber management?
Mr Greenaway: We're still in the pilot project stage and we're struggling with those issues all the time. We haven't come up with a solid structure. Right now a lot of the interests that are represented on the community forest are the same interests that are suggested for a local citizens' committee within the Forest Management Planning Manual. We attempt to make decisions on a consensus basis, but failing that, it's a majority vote. One of my main concerns is that within the Forest Management Planning Manual, it's asking local citizens' committees to develop these procedural matters themselves.
We're a pilot project. We've been in existence almost three years and we still haven't worked out all those matters. So I think it's a lot to expect of a group when they are volunteering their services on the weekends and in the evenings, to work out a lot of that. I think they need adequate training. They need advice on how these types of committees should operate.
Mr Ramsay: I guess you would agree that it's important, obviously, to get all the interested groups together around the table. We need, actually, all the extreme views at the table so we can start to try to find some common ground.
I'd just like to suggest that there are some working models in Ontario already. One of the biggest, I guess one of the first, forestry disputes, where people collided in their ideas of how the forest was to be managed, was 20-25 years ago with Algonquin park. Of course, now we have the Algonquin Forest Authority that's been running fairly successfully. It shows that it can happen, and there's lumbering even in the park.
I would hope that through this and other means we can get people working together and keep a sustainable forest industry going, because it's very important for the north. I wish you well on your project.
Mr Carr: Thank you very much for your presentation. A lot has been made regarding the definition, and there's two reasons that I think the definition is difficult. One is it makes it easier to get a government bill through: If you don't define it, you don't have too much opposition. Everybody comes in and you can tell both sides whatever they want to hear.
The other reason is that you can't really come to a consensus with all the groups: the community groups and the industry concerns and all the different players. It's very difficult to come to a consensus so that everybody could say, "I would like this, but I can live with this," and really come together.
Do you think it's possible to get a definition, knowing all the players involved, that everybody can agree to -- not necessarily everybody. But do you think we can ever come to a consensus that we can really, truly say all the players are a part of?
Mr Greenaway: I think it's possible. I think it has to be something that's quantifiable. It can't be a vague definition and open to interpretation. For example, the definition of "forest ecosystem," if I can read it, means "an ecosystem in which trees are or are capable of being a major biological component."
Being "capable of being a major biological component"? Trees can be a major biological component in many areas. I think it has to be further defined if people are going to work around those types of definitions.
Mr Carr: Have you had a chance to go through some of the regulations in the manuals at all?
Mr Greenaway: Very briefly.
Mr Carr: It's hard to comment on, I guess.
Mr Greenaway: It's tough to comment on. I've read the act. I don't profess to be an expert on the act. I think that if there had been more time to actually go over the manuals along with the regulations and forest policy, I would be able to get a better picture of how all of the different pieces of the puzzle fit together.
Mr Carr: I think the parliamentary assistant has stated there'll be another workshop where you can have some involvement. So hopefully, with the work that you do now and staying up nights and reading it, you will have the input.
You're pleased with the overall thrust. If some of the amendments are made that tighten up some of the things that you've talked about in the presentation, then you're going to be happy with this bill and would recommend that we pass it, then?
Mr Greenaway: Today I'm trying to present a perspective on a range of forest interests. I see a lot of good things in the legislation. I think that it can be made into a good act, but a lot of the concerns of the individual stakeholders need to be addressed.
Mr Carr: Thank you very much. That's very helpful.
Mr Greenaway: Thank you.
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GREEN FOREST LUMBER CORP
The Vice-Chair: The final presenter for the afternoon will be Mark Stevens speaking for Green Forest Lumber Corp. We have all received a copy of your brief, for which we thank you. You have half an hour with some time for questions and answers. Please go right ahead.
Mr Mark Stevens: Thank you very much, Mr Chairman and members of the committee. I welcome and appreciate the opportunity to share a few of my views with you this afternoon and, in doing so, I've tried to keep it concise and focused on a few issues, although given the topic at hand, it's not always that easy and my thoughts go well beyond those few subjects that I address this afternoon.
I represent the sawmill division of Green Forest Lumber. Green Forest Lumber owns and operates two sawmills in Chapleau, Ontario, and is also a major wholesaler of forest products throughout North America and abroad. We're also a member of the Ontario Lumber Manufacturers' Association.
Generally, we support the principles of the bill: to sustain our forests, our industries, our communities and our jobs.
Our industry provides thousands of meaningful, well-paying jobs in the north and, in many cases, such as the town I come from, Chapleau, it's the backbone of the community.
We see this bill as the framework of a series of reforms that we think will benefit our industry, our communities and our forests for the long term. In some ways, we don't expect the bill to necessarily answer all our concerns and address all our problems. So much of what we do actually happens at the field level and requires the good judgement of those charged with the task at hand.
Two general comments about the following issues I'll discuss briefly: One is that I, myself, hope that the act, the regulations and the manuals and the implementation of those will help do away with some of the inefficiencies and avoid some of the inefficiencies that we presently have in our forest management system. Nothing frustrates me, or those I work with, more than undergoing a process that appears to provide no meaningful results.
The second general comment I wanted to make before I start is that production of the manuals, as you've heard from others, has been done in very short order. You can see that quite easily from the duplication and the spelling mistakes throughout, and I am somewhat concerned that an issue of such importance is being rushed through rather quickly. I have been known to be a critic of MNR for a slow review and approval process, and it certainly appears that they've done just the opposite in this case.
On to some specific concerns I have, and my first point is one that you're probably not going to hear too often, if at all, throughout these hearings, but it's one that I wanted to address, and that deals with the forest industry's use of aggregate resources. Presently, those resources are dealt with and governed by the Aggregate Resources Act and it's our belief that that Aggregate Resources Act was designed and legislated primarily to control the extraction of aggregate by large commercial aggregate producers who use the aggregate for sale and profit.
Given some recognition of that, royalty and rehab deposits for those who use aggregate for the construction of crown forest roads has been waived. However, there are other onerous obligations. We go through one heck of a process to be able to use aggregates and our biggest concern with that is it really serves no meaningful purpose. Therefore, I would hope that the Crown Forest Sustainability Act could possibly address this issue and take governance of the use of aggregates by those persons or companies that are licensed under the Crown Forest Sustainability Act.
Pre-harvest silviculture prescriptions: Actually, in going through the present draft of the manuals and the act, the term "pre-harvest silviculture prescription" doesn't come up, but it's a term that has been used throughout the Carman exercise and appears to me now to be replaced by the term "operations prescriptions or forest operations prescriptions." Actually, it's rather vague in here right now, and I really don't know what it means, but it concerns me because of some of the previous discussions that I've heard with respect to pre-harvest silviculture prescriptions. I think they're an inefficient use of our time and money. They serve little purpose, particularly when silviculture treatments and outcomes are normally predictable in the boreal forest.
Again, one of my concerns stands out here in that I feel that we must streamline our processes and eliminate those processes that do not offer improved results. I feel that the needs some people are assuming will be addressed by operations prescriptions can be met by the use of silviculture ground rules.
The allowable harvest or the calculation thereof is an issue; I'm not sure if it's of concern or not. It's somewhat addressed in section 26 of the bill and again in the Forest Management Planning Manual. Presently, harvest levels are determined on an area basis. It appears in section 26 that it might be suggesting that harvest levels be governed on a volume basis and if that's the case I have some concerns. I feel it's most appropriate to maintain control of harvest levels on an area basis.
Timber supply and best end use: I don't have all the answers, I just have some concerns but, quite simply, surplus timber -- and there obviously has to be a process for identifying timber that might be surplus -- should be directed to those mills that have a shortage of timber, and an effort should be made to do that. I think in the past, essentially, it's been a lack of effort to do that. Sawlogs should be directed to sawmills and pulpwood to pulp mills; best end-use philosophy that our company and the Ontario Lumber Manufacturers' Association have long promoted. You shouldn't have sawlogs going to a pulp mill when there's an abundance of chips or pulpwood that could satisfy the needs of the pulp mills.
Penalties -- I believe this used to be within the regulations and now I see it in the Forest Operations and Silviculture Manual -- and wasteful practices: The two go somewhat hand in hand. We have concerns that the present penalty system, as was defined and prescribed in the former Crown Timber Act, is outdated, and we feel that new penalty systems should reflect the relative frequency of infractions per hectare harvested, and I'll just elaborate on that for a minute.
Presently, a penalty system recognizes frequency but in a very simple sense. If you've got one infraction or two infractions or three infractions, the extent of the penalty increases in that sense, but if you're a small operator versus a bigger operator, there's an inequity there, because a small operator that cuts 100 hectares a year is going to have -- let's say a small operator and a big operator cut 10,000 hectares a year and both have three infractions. Let's say they have one infraction for every 100 hectares they cut; in a relative sense the small operator is only going to face the minimum penalty. Maybe that's fine, but if the big operator is having a lower relative frequency of penalties, given the amount of area that they're operating in, managing, they automatically go up -- the extent of the penalties increases -- without regard for the actual amount of area being covered by that operator. You can have a pretty darned good operator covering 10,000 hectares a year and you're bound to have some infractions and penalties. The problem there is that they're going to get to the maximum in a hurry.
Whenever penalties are assessed or whenever infractions are reviewed, I feel there should be a recognition of the impact upon the value. In some cases now because of restrictions on cutover size, where we're drawing arbitrary lines through the bush to limit the cutover size and there's a trespass across the cut boundary, you're essentially cutting timber that is identical to the timber you're cutting, it's really not serving to provide for any value other than to limit the size of the cutover. Although I recognize that as an infraction, I don't consider it as serious an infraction as if you trespassed on an AOC, a water-crossing or other similar circumstance and I don't think the impact upon values is appropriately addressed by the penalty system.
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The magnitude of the infraction: Obviously, if it's a very small infraction that someone recognizes right away, it was unintentional and the attempt is made to stop immediately, I think there should be some consideration given for that, as opposed to a large, flagrant infraction which obviously resulted from a total lack of concern.
A reasonable cost for the infraction, in terms of penalties -- the penalties should match the infraction to some extent. One of the problems we have right now is that the cost of crown dues for the sawmill industry has quadrupled in the past three years and if we're assessed a penalty of five times the cost of crown dues, all of a sudden we're paying $50 or $60 per cubic metre of wood harvested, as a penalty. That's a heck of a lot of money and I'm not certain if those who have drafted the wording for the penalty section have considered that.
With respect to wasteful practices, my only concern there is that presently one example of a wasteful practice can be not harvesting a tree that is 10 centimetres outside the bark, regardless of its height or length. In many cases, I believe that such small timber is better left to provide for habitat, aesthetics and seed sources, and by being forced to harvest such a small-diameter tree, it really serves no purpose to the industry itself.
Sustainability: Obviously, it seems that everyone is asked about a definition for sustainability and it's a buzzword more than anything, in my mind. It's a concept; a positive concept. As we try to improve the way we manage our forests and achieve some of the concepts, like sustainability or maintaining biodiversity, we have to be sensible about it. We can't change from black to white overnight. These processes are slow and it's going to take time; even with the best of intentions, it's going to take some time.
I guess my real concern is that if we set targets for ourselves that are far too high and that we never have a chance of truly reaching, too soon we're bound to fail and we should be setting targets that we can achieve. Hopefully, those targets will progress in the direction in which the government and people of Ontario want to progress.
Sustainability of the forest industry is obviously something that's of great concern to me because I'm employed by the forest industry, but also because I live in northern Ontario, having been born, raised and living here and I see what the forest industry does to contribute to the way of our lives in northern Ontario. I constantly see -- and I probably am sensitive to it because my job is within the forest industry -- threats to the sustainability of the forest industry by people who truly have good intentions, but some of those threats include essentially land base withdrawals. Parks, remote tourism, recreational users, old growth preserves, Keep it Wild areas and various types of reserves are all good things in their own right, but as you implement all these new good things, you have to be concerned about the impact upon the forest industry -- or at least, I should say, I hope you are concerned about the impact on the forest industry.
If you have a concern about the sustainability of the forest industry, as you remove these portions of the land base you should be recognizing that there will be some impact on the industry, some impact on jobs in the communities and hopefully trying to quantify them. If that type of assessment is not done or considered, you could see the forest industry suffer and 10, 20 years from now you might wonder why, but by then it's going to be too late.
There are also some invisible withdrawals that concern us in the forest industry in terms of our ability to sustain our current operations and those are some of the issues, such as biodiversity, habitat management, new silvicultural practices and the harvest prescriptions, all of which have an opportunity to remove timber volumes from areas that we presently, or have in the immediate past, had the opportunity to access. If our ability to access the volumes which we have counted on, which we have used in the decision-making process to invest in new mills, we could quickly find ourselves short of the required volumes that were planned to go through the mills.
I think I've already addressed my final point. The implementation of new legislation, regulations and manuals must consider the potential impact upon the existing forest industry. The government and the people of Ontario must know what impact this new legislation will have upon our jobs, our community and our industry, as well as the benefits that will be provided to our forests and the province as a whole.
Mr Ramsay: Mark, nice to see you again. I enjoyed your presentation and some of the positive ideas you put forward.
I'd like to get your view on an idea that was presented to us yesterday in trying to work out the timber supply problem, best end use and third-party agreements, because in a sense they're all kind of related to the same thing: How do you get proper direction of the wood in a rational way and in a sustainable way?
The idea that was presented to us yesterday was that if you're looking at third-party agreements, rather than give those out on a per-species basis, do it on a working group basis so that you work in your area and you collect your poplar and your birch and your conifer, whatever it is, in that particular area, and then you'd sort out with the companies the other wood, rather than everybody trampling over each other saying, "Okay, my poplar's over here." So you run your truck down over and across the other person's area to get your poplar. I wondered what you thought about that as an initial idea of trying to maybe sort some of this out.
Mr Stevens: Initially my first comment would be that I don't really expect this piece of legislation to address the specifics of wood supply problems, and these are the kinds of things that have to be done at the local level. But I would hope that the legislation would provide the concept for best end use and proper use of our forest resources.
There are pros and cons to pure species licences versus working group or area licences. You can look at it either way. I think those decisions really have to be addressed best at the local, perhaps regional, level because so much depends on the players involved. If you have an operator who's only capable of harvesting jack pine and spruce and they don't recognize birch veneer when they see it, you're not doing a good thing to put them on an area licence or a working group licence, yet at the same time if you have an operator who on the other hand is very efficient at making maximum utilization of all the various forest products within his area and you only license him jack pine and spruce, you're not taking advantage of what he has to offer. You have to look at the mills in the area and what their needs are, what their own infrastructures are for managing and harvesting the resources. I don't think you can deal with it in a broad-brush approach, it has to come at the local level.
Mr Ramsay: So what you're saying is we need flexibility in order to work that out on an area-by-area basis almost.
Mr Stevens: Yes.
Mr Ramsay: Okay. The other point you made, and I think it really needs emphasizing, especially for my urban colleagues because, as you say, many of these ideas that people have such as new parks or expansion of existing provincial parks -- certainly at first glance it's a great idea. We all believe in parks, but I think many times it's not understood by many people, especially the people in southern Ontario, what this actually does and the impact this has on the forest industry. If we're going to ask the industry from time to time, like we are now through this legislation, to accept a fairly major new package of new rules, there has to be some certainty of tenure of what the land base is. I think that's a message MNR, from the parks branch, has to understand. There's not much room for more withdrawals of the land base in northern Ontario. We've had quite a bit of this and I think this is a message we have to get out and I'm sure you're concerned about that as a forester.
Mr Stevens: I'm very much concerned. Not that I would necessarily be happy with it, but inevitably there will be more withdrawals. All I can possibly hope for is that if any withdrawals are proposed, they be carefully considered to ensure that they are indeed serving a purpose that is greater than a loss of opportunity provided for timber harvest.
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At the same time I think there are areas out there that are reserved in one fashion or another that could possibly provide timber volumes that could be done without impacting on other values. It's the pendulum going one way. In some ways it's gone too far and we should go back; in other ways it's going to continue to go. I guess what I'm really asking for is that a careful assessment be done to ensure that if something is being withdrawn, it certainly fulfils a required value. And at the same time in those other areas that are presently reserved, we should go back and look at them and see if we can't get some timber out of them without impacting the values.
Mr Ramsay: Just a quick statement, Mr Chair: I really agree with that because I proposed that in 1986, that instead of total withdrawals, you could get into some very sensitive areas with a bit of horse-drawn extraction, for instance, right down even to a shoreline and take out some of the pines that are going to be going down and probably keep it pretty pristine the way the people who look at that shoreline would like to see it, but at the same time add some value to the forestry industry. I think we have to be flexible --
Mr Wood: Was that before or after you crossed the floor?
The Vice-Chair: Please, order.
Mr Hodgson: I'd like to thank you. I found this very interesting. I just have a bunch of little concerns, but I might run out of time so I'll ask you the bigger issue and that is: In your conclusion you're saying that policies must consider the potential impact upon existing forest industry. This bill, as you know, has been billed to sustain jobs in our communities up in northern Ontario and throughout Ontario. The forest industry has huge spinoffs for the whole economy of Ontario.
Under this act, section 19, it states, "The Minister shall from time to time prepare a report on the state of the crown forests." Are you suggesting that maybe we should do a forest audit and report to the House on the state of the forests? Based on that report, we could do a cost-benefit analysis to what impact this act will have before we take it to third reading.
Mr Stevens: I think some impact analysis should be considered before third reading. I think if the government is proposing legislation that's going to have an impact, the government and the people of Ontario have a right to know what that impact's going to be. I don't know if the government's actually going to do it. I'm probably sceptical in that sense.
If it's having implications on jobs and industry -- and I really don't know right now if it's going to or not, it's kind of hard to read the act and interpret whether or not it's really going to impact on jobs in the industry. I strongly believe we should have some assessment done before --
Mr Hodgson: The benefit to that would be we could define goals and set targets and move towards that.
Mr Stevens: Definitely, goals and targets -- I was going to perhaps address this if anyone wanted to know what my thoughts were on the definition of "sustainability." Sustainability's such a fuzzy target, such a fuzzy concept. It's a positive concept, but we all have a hard time coming to grips with what it really means. I'd sort of suggest that we back up and ask ourselves -- well, we're saying of course sustainability is desirable -- what do we really want in our forests? We should set some goals and some targets and get more precise in terms of what we really expect to get. In that way you can also more precisely understand what the impacts are going to be.
Mr Hodgson: So the forest audit idea before we go to third reading would be agreeable to you.
Mr Stevens: I'm not entirely certain what you're meaning by an audit. I guess perhaps I twisted your question; I'm sorry if I did.
Mr Hodgson: No, you answered it correctly. I'm not certain either. It's spelled out in the manuals, but it's under section 19 of the act. Maybe that could be done ahead of time.
I had a couple of other just small questions on the silvicultural section. You've gone through the manuals, obviously.
Mr Stevens: To some extent, yes.
Mr Hodgson: Yes, and you'd like to see the process streamlined and have it results-oriented, so the ministry would set the standards and measure the results.
Mr Stevens: Very much so.
Mr Hodgson: And you find that the present manual doesn't do that.
Mr Stevens: The present manual has actually changed its form several times over the past month and it's been hard to keep up to it. I am sensing that a year ago when we were discussing the changing in our business relationships with the Ministry of Natural Resources it was lending itself to a much more results-oriented approach.
What I'm seeing now is less of an end result, results-oriented approach to a monitoring, monitoring, monitoring approach and unnecessary bureaucratic processes along the way.
Mr Hodgson: You realize we've asked for the MNR to give us a cost-benefit on their budget as a result of this act as well. I'm glad to see you mentioned that.
Mr Wood: Thank you for coming in from Chapleau to make a presentation in front of the committee. From what I've been able to gather, you're saying that the manuals, the way they're being proposed and updated -- when you'd use the words "sustainability" and the "ecosystem" you feel they should be able to update them and make changes as required as we move over the next while?
Mr Stevens: Yes, I see that as a positive aspect of it. I think the term "adaptive management" is used. We have to be not only flexible but willing to change our approaches as we learn from our past.
Mr Wood: Okay. Along the same lines, the feeling from the number of people I've talked to is that as there is surplus forest available, surplus wood available, the announcements that we've made over the last number of weeks concerning Wawa, Thunder Bay and Kenora is the right approach to take to helping to sustain some of these communities, create new jobs and help out the different communities with the wood that is sitting out there that nobody can make use of.
Mr Stevens: Mixed feelings on that, perhaps, because we're one of the proponents that has not had our desires satisfied in that regard, and also not knowing all the process that the ministry went through to assess the various proponents. It's hard for me to say. There has to be some type of analysis and system in place. Obviously, I think one of the biggest irritants in this whole recent northeast hardwood proposal is that one person had the jump of the gun and had the support of the ministry prior to a competitive type of assessment of opportunities. I think the way the ministry ended up was probably the right or appropriate way of doing it, although I don't have all the inside knowledge to know what it based its decisions on.
Mr Wood: The point I was trying to make is that if there is surplus wood, the approach of trying to create jobs in other communities or add to an operation of your kind would be the right approach to take, rather than just leaving it sit there as surplus in some cases.
Mr Stevens: Absolutely.
Mr Bisson: One of the things I just wanted to make you aware of is that you make the point, as a follow-up to the Conservative question, in regard to quantifying what exactly we have in the forests in regard to timber, and I think that's a legitimate concern in the sense it has never been done in the past. For whatever reasons over the years, ministries and governments of time past have never tried to quantify that.
One of the things we're trying to do, and there is a process now you should be aware of, is to get a better sense on what's out in the forests so that we're in a better position to make decisions about how we go about, not disposing, but sharing the resources out there.
I want to come back to your best end use point, because it's one that's been raised by a lot of people, especially in this area, because I think here we have a bit of the same problems that you have in Chapleau in regard to allocation of timber.
There are basically two ways that can be done, as I see it. If, let's say, there is surplus wood on a crown unit or on an existing FMA that is sustainable in the sense that the existing licensee doesn't have need for that timber, they have more than they can handle, there would only be two ways of doing it: You can put it up for tender, at which point people within a sort of an economic zone around that forest would basically bid on it, or you would have a system by which you would have to have proponents put forward proposals of why they need the timber and be able to demonstrate the largest degree of need.
How would you see that process working? We all agree on best end use, but nobody can quantify exactly how to do that.
Mr Stevens: I don't really think that strong-arm tactics are required to achieve best end use by taking someone's surplus and putting it up for tender. I really think that best end use can be achieved with government support for the concept and encouraging parties to enter into those types of agreements.
Mr Bisson: Let me try to clarify that. We agree with the premise that if you've got sawlogs, you want to use them for sawlogs. You don't want to use them for pulp.
Mr Stevens: Right.
Mr Bisson: We all agree. We think that's great stuff. The problem is that there may be four or five different people out there, different organizations, who need that timber for all kinds of different reasons.
Mr Stevens: Right.
Mr Bisson: In my area, I can think of three or four mills that would like to be able to get some of that timber. If we agree that we have to have best end use, what's the best way to determine who gets those logs?
Mr Stevens: Okay, you're talking about two subjects at the same time. You're talking about best end use; you're also talking about timber shortages.
Mr Bisson: Yes, I mixed two things and I should have said one.
Mr Stevens: How do you decide who's going to get the wood when there's not enough wood to go around?
Mr Bisson: What I'm saying is that if we're --
The Vice-Chair: Any thoughts on that? I guess we'll have to conclude.
Mr Stevens: No. Give me the job and I'll come up with an answer for you.
The Vice-Chair: Well, that's probably as good an answer as any.
Interjections.
Mr Bisson: Seeing that you are unable to answer, the point I would like to make out of this is that as you pointed out in your answer, these are not simple issues as easy as saying best end use is a good policy. We all agree, but they're difficult things to deal with because there's a lot of competition out there for the same resource.
The Vice-Chair: Okay, thank you very much.
Mr Stevens: Could I just add a little bit?
The Vice-Chair: Okay.
Mr Stevens: Mr. Bisson, really you're talking about timber supply and sawlog shortages, as opposed to best end use, okay? It's imperative that the government understand best end use and ensure that, regardless of whether there's a shortage or not, sawlogs go to sawmills and pulpwood goes to pulp mills.
The Vice-Chair: Okay, thank you very much for your presentation, it's certainly appreciated. As you can see, it stimulated quite a bit of interest. There will be taxis waiting here at quarter to 3 and I understand the local member would like say a little something, and I think we can grant that to him.
Mr Wood: Thank you, everybody, for coming to Kapuskasing; we were able to work that out through the subcommittee. I hope you enjoyed your stay here even though it was short. Have a safe trip back and we'll see most of you in Thunder Bay on Monday morning.
The Vice-Chair: Thank you very much and thank you to all the people who are here and who are following the proceedings. I hope you learned something from it. This committee stands adjourned until next week.
The committee adjourned at 1432