The forest industry is one of B.C.’s most important sectors. The BC Liberals are working directly with mills, loggers, companies, workers, and other stakeholders to help the industry through this unprecedented period. The BC Liberals are working to help develop new markets, new products, and new opportunities in bioenergy and biofuels.
We opened up access to public timber through the Forestry Revitalization Plan in 2003, reallocating 20 per cent of logging rights held by the largest licensees to create BC Timber Sales and distribute volume to smaller players such as First Nations, community forests and woodlots, and provided $250 million in compensation to major tenure holders. Forest Minister Pat Bell talks about revitalizing the forest industry
We set aside $125 million in the BC Forestry Revitalization Trust to assist forestry workers and contractors affected by timber reallocation. With interest the Trust increased to $133 million and to date, over $100 million has been dispersed.
We’ve offered new or expanded community forests to 51 communities, and allocated 1.2-million cubic metres of the allowable annual cut.
We eliminated antiquated policies that prevented wood from flowing to its highest and best use and forced companies to cut wood when it was uneconomic to do so.
We established market-based stumpage prices on the actual value of timber sold at auction. As a result, since the market downturn, stumpage rates in the interior are down nearly 60 per cent and 70 per cent on the Coast.
We eliminated PST on production machinery and equipment purchased by the forest industry and eliminated the corporate capital tax.
We reduced the school property tax on heavy and light industry by 50 per cent for $50 million per year in savings – which will increase to 60 per cent and $65 million a year by 2011/12.
We reduced the corporate income tax rate to 11 per cent, the second lowest tax rate in the country, with further reductions planned to 10 per cent by 2011.
The Working Roundtable on Forestry that we established in early 2008 recently provided their report providing 29 recommendations to position the forest industry to thrive in the future.
We negotiated the Softwood Lumber Agreement which resulted in $2.4 billion returned to B.C. companies to help them remain viable and protect jobs during the market downturn.
Instead of duties going south of the border, an export tax is now collected at the border that goes to support B.C. Government spending priorities.
We launched the $21 million Coastal Forestry Action Plan enhancing the shift to second-growth harvesting, increased R&D into new technologies, promoting the value-added sector and supporting a competitive pulp and paper sector.
Our new Bioenergy Strategy, includes $35 million ($25 million bioenergy network & $10 million biodiesel incentives) to diversify the economies of forest-dependent communities, create new opportunities for forest companies and produce clean energy.
We’ve committed $640 million to fight the mountain pine beetle, create new markets for beetle wood, and diversify the economies of beetle impacted communities.
To encourage more wood construction in B.C., we changed the B.C. Building Code to raise the roof on wood-frame construction from the current four-storey limit to six storeys.
We acted on all of the Filmon Report’s recommendations to improve preparedness and response to interface wildfires.
Implemented the Forest and Range Practices Act in January 2004, enabling the forest industry to spend less time processing paperwork and more time focusing on environmentally-sound results.
Created the $4 million per year Forest and Range Evaluation Program to monitor and evaluate impact of forestry practices on the environment.
Forestry Vision Forests remain one of B.C.’s greatest natural resources and we have developed four innovative strategies to create more forestry jobs and stimulate investment.
1. Full Utilization of Fibre
To encourage increased utilization of our forest resource, we launched new lump-sum licences that set the price for a whole stand of trees instead of by cubic metre, creating an economic incentive to extract maximum value from each tree in the stand.
We’re developing a bioenergy industry to create a new market for fibre that has historically been considered waste.
Today, over 800 megawatts of clean bioenergy electricity capacity is now installed in the province, enough to power 640,000 households.
A B.C. wood pellet industry has also developed that is now producing about one million tonnes of wood pellets a year for bioenergy plants.
We have committed to developing at least 10 new community bioenergy projects that convert local biomass into energy by 2020.
BC Hydro’s recent phase 1 call for bioenergy resulted in 4 successful proponents in Prince George (2), Kamloops and Castlegar with potential to generate enough power for 52,000 homes.
Those projects are expected to generate over $100 million in private sector investment and create hundreds of jobs.
BC Hydro is now pursuing the phase 2 call for Bioenergy.
We are experts at cutting trees down, but we can extract more value and jobs from our forests by becoming a world leader in growing trees.
New forest management techniques have produced up to 30 per cent more wood volume, over an 80-year rotation.
That is why we are expanding the number of area-based, as opposed to volume-based, forest licences such as woodlots and community forests to create an incentive to employ leading forest management techniques and invest in growing trees.
We are also creating a commercial forest reserve that will preserve our commercial forest land base and set aside areas for intensive silviculture.
The new Forests for Tomorrow program has already planted 17 million seedlings, and is on track to plant 60 million seedlings by 2013.
We now spend $17 million on forest health activities a year (separate from Mountain Pine Beetle).
These investments and area-based licenses will increase the volume of fibre on our land base maximizing economic opportunities and jobs.
If half the low-rise housing units being built in China used wood-frame construction for the top four floors and roof, 25 billion board-feet of lumber would be used – the equivalent production of 100 large sawmills.
That is why we opened B.C.’s first lumber trade office in China in 2003. Since then, lumber exports to China have tripled.
Our November 2008 trade mission produced sales of 83 million board-feet – if those are annualized – we could be selling one billion board feet into China by the end of 2009, or the equivalent of four large B.C. sawmills.
Shanghai has now formally adopted a B.C.-designed wood truss roofing system as part of its plan for renovating 10,000 apartment buildings in preparation for Expo 2010.
We are increasing investments in marketing - $11.5 million this year for market and product development research aimed at boosting demand for B.C. wood products in Asia-Pacific countries.
Wood is currently used in only 19 per cent of commercial & institutional construction, so clearly there’s huge market potential.
That is why we have amended the building code to increase the use of wood. We’ve moved from four to six storey wood frame construction to reduce the cost of new construction and create greater demand for B.C. wood products.
We have adopted a new, “wood first” policy that will require wood as the primary building material in all new publicly owned and provincially funded buildings, consistent with the new B.C. Building Code.
We’re showcasing the beauty and durability of wood to the world during the Olympic Games in the Richmond Speedskating Oval and other Olympic venues including: Trout Lake Arena, Percy Norman pool complex, Whistler Olympic Park, and the newly expanded Vancouver Convention Centre. View Premier Gordon Campbell at an innovative Vancouver Island woodworking company that helped build the Vancouver Convention Centre.
The carbon footprint of a wood-frame home is 26 per cent lower than steel, and 31 per cent lower than concrete.
We’re building a New Wood Design & Innovation Centre at UNBC in Prince George to educate architects and builders on how to effectively use wood in structures and the environmental benefits of using wood.
Forest Worker Safety Worker safety is best achieved when government works in cooperation with industry and partners to develop safety regulations that deliver real results with strong enforcement and stiff penalties.
We established the Forest Safety Task Force in July 2003. As a result of its findings, the BC Forest Safety Council (BCFSC) was founded in 2004, and remains dedicated to promoting forest safety. It includes all of the major forestry organizations.
WorkSafeBC launched an Integrated Forestry Compliance Strategy in January 2006, to focus on increased compliance of the owner, licensee and contractor/employer.
On May 1, 2008 WorkSafeBC made new provisions to address the ability of employers to stay current with new equipment and technology and ensure that a falling supervisor is present for all manual falling activities.
Overall enforcement complements have been increased by 35 per cent from 199 positions to 268 positions.
We’ve increased enforcement capacity in forestry – 29 safety officers are dedicated to forestry activities and inspections have increased 63 per cent.
We established the Interagency Committee on Forest Safety to address recommendations made by the Auditor General in January 2008.
Industry Challenges & Mill Closures We’ve put in place forest policy to allow the private sector to build a diverse and globally-competitive forest industry that can withstand market downturns and sustain well-paying jobs without red tape and government interference.
Over the past year, B.C.’s forest sector faced a “perfect storm”- a devastated U.S. housing market, the lowest lumber prices since 1991, and a high Canadian dollar. More recently they’ve suffered a further hit with the global economic downturn.
Despite the global recession, positive opportunities do exist within the forest sector through bioenergy and ensuring full utilization our forests which can in turn provide jobs in the sector.
We acted in early 2008 by establishing the Working Roundtable on Forestry which recently produced their report providing the forest sector with 29 recommendations to position the industry for the future.
We’ve maintained our market share of the U.S. market at 18 per cent, whereas other Canadian provinces have seen their share decline from 16 per cent to 13 per cent.
Lumber production volume in B.C. was down 10 per cent between 2006 and 2007, but the U.S. is down 11 per cent and Eastern Canada is down 15 per cent.
Our exports were down 9 per cent between 2006 and 2007. Ontario is down 17 per cent and Quebec is down 14 per cent.
In 2007 exports were $12.3 billion, down 19 per cent from 2004, representing a 10-year low.
The value of softwood was down 18 per cent between 2006 and 2007, Ontario was down 27 per cent and Quebec 20 per cent.
Capital investment in B.C. wood products has boomed every year between 2002 and 2006 - $4.9 billion in private sector capital was invested to make B.C.’s mills more competitive.
That $4.9 billion includes over $1 billion in 2005 and $1 billion in 2006, and even $630 million in 2007.
To compare, between 2002 and 2007, Ontario only saw $3.3 billion in investment.
We are also supporting workers and communities by dedicating the entire $129 million Community Development Trust to forestry workers and forestry-dependent communities:
$17.25 million for tuition assistance to upgrade skills (up to $5,000/person).
$85.5 million to help older workers transition to retirement.
$26.25 million to assist workers and communities through new employment programs in silviculture, fuel management and ecosystem restoration.
Includes $2 million for Mackenzie and Fort St. James.
Log Exports We believe in a log export policy that gives priority to B.C. bidders/buyers. Log exports are the last resort, but should be considered when there is no other option in B.C. because they allow loggers to continue to work when there is no local buyer.
We prefer timber harvested in B.C. be sold in B.C., but the reality is that allowing some exports creates jobs that would not otherwise exist.
It was only because of exports that about 2,000 forest workers in the Northwest were working in 2006, who otherwise would have been unemployed.
Log exports controlled by the province (from crown land) have actually declined by 25 per cent since 2001.
The overall policy on exports has not changed from what it was when we took office.
Most of the timber harvested in B.C. is processed in B.C. Log exports amount to less than five per cent of the total harvest.
74 per cent of B.C. log exports come from private land that is regulated by the federal government and is not controlled by the province.
Log exports controlled by the province (from crown land) continue to decline: in 2007 exports were 17 per cent lower than in 2006 and down 52 per cent on the coast.
Log exports to date in 2008 continue the decline seen in 2007.
Restrictions remain on the export of cedar, yellow cedar, hardwoods or high-grade logs from Crown lands.
The Working Roundtable on Forestry report of March 2009 concluded logs that are surplus to B.C.’s manufacturing needs should be exported until such time as local manufacturing capacity exists.
The mountain pine beetle infestation is an unprecedented natural disaster which is directly the result of climate change and the NDP’s failure to act in the 1990s. Unfortunately, the only cure is a series of very cold winters.
Today there are 13.5 million hectares where the pine has been killed to varying degrees - an area more than four times the size of Vancouver Island.
It’s predicted that by 2013, 75 per cent to 80 per cent of B.C.’s pine forest will be affected.
As of Fall 2008, the volume of dead pine is 640 million cubic meters – that’s 15 million logging truck loads and bumper to bumper they would circumnavigate the Earth nine times. View Premier Campbell at the opening of the Richmond Olympic Oval, highlighting the roof made from pine beetle-killed wood.
That volume would provide fibre to all interior sawmills for 18 years.
We’ve committed $642 million since 2001 towards battling the beetle and mitigating future impacts.
We’ve secured $340 million from the federal government since 2002 and a commitment for an additional $800 million to fulfill a promise of $1 billion over 10 years (starting in 2006) to mitigate the beetles’ impact.
Provincial Funding Breakdown - $642 million
$185 million Northern Development Initiative Trust to help northern communities diversify their economies - $30 million specifically for pine beetle mitigation.
$50 million Southern Interior Development Initiative Trust.
$161 million for Forests for Tomorrow over four year for reforestation activities to ensure long-term timber supply.
$120 million to mitigate the impacts of increased logging on roads.
$17 million for Geoscience BC to explore Central Interior mineral potential.
$2.5 million for research lab to explore additional uses for beetle-wood.
$107 million for spread control from 2001-04.
Federal Funding Breakdown - $340 million
$100 million in 2005/06 for investment in spread control, wildfire protection, research and economic diversification.
$200 million in 2006 for a Mountain Pine Beetle Program targeted at activities designed to recover economic value, protect resources and strengthen the economy in the epidemic area.
$40 million in 2002 for research and to remediate federal/private forestlands.
Old Growth Management We believe in consensus-based land use planning that protects old growth forest ecosystems to meet biodiversity needs while also ensuring our forest industry continues to have access to fibre to support jobs and communities. Forests Minister Pat Bell talks about managing our old growth forests.
As a result of consensus-based land use planning processes, since 2001 we’ve established 57 new parks, 143 conservancies, one ecological reserve and nine protected areas.
We’ve also expanded more than 50 parks and six ecological reserves, protecting more than 1.8 million hectares, an area almost three times the size of PEI.
As a result, 14.26 per cent (more than 13.5 million hectares) of B.C. is now protected, more than any other province in Canada. It’s an area equal to the size of Nova Scotia, New Brunswick and PEI combined.
Another 10 per cent of B.C. has an increased level of protection for conservation values, thus 25 per cent of B.C. is either fully protected or managed for conservation.
By law, old growth forests must be maintained in each of the province’s ecological units to meet biodiversity needs.
Over 40 per cent of B.C.’s forests are considered old growth – that’s 25 million hectares or an area about the size of the United Kingdom.
Almost four million hectares – 15 per cent of the province’s old growth - is now protected, a further 11.5 million hectares of old growth is expected never to be harvested because it is uneconomic.
That’s more than 60 per cent of B.C.’s old growth forests that will likely never be harvested.
Only a fraction of one per cent of B.C. Forests are harvested each year.
Despite more than 120 years of logging, almost 80 per cent of our forests remain untouched.
B.C. has roughly the same amount of forested area as it did before European settlement – only two per cent of forest land base is permanently converted.
In 2008, B.C. committed to establishing a net-zero deforestation law by 2010.
Prior to the Softwood Lumber Agreement, B.C.’s forest industry was forced to pay export duties ranging between 20 per cent and 27 per cent regardless of the price of lumber.
Under the agreement, Canadian exporters received refunds of the anti-dumping and countervailing duties paid to the U.S. over 2002 to 2006.
The duties amounted to over $5.4 billion USD, of which $2.4 billion has since flowed back to B.C.’s forest industry.
The Agreement ended costly and complicated litigation and provided B.C.’s forest industry with market certainty over the next seven to nine years.
Under the Agreement the export tax rate depends on the lumber prices, and increases as lumber prices fall to a maximum of 15 per cent. Without this Agreement industry would pay in excess of 40 per cent.
B.C.’s forest industry pays no export tax when lumber prices are high as opposed to a 20-27 per cent export tax prior to when the agreement was signed.
High value cap greatly reduces the tax burden on the value-added sector by eliminating the tax on any dollar value over $500 (from example, tax on $1,000 product at 15 per cent would be $150, but the value cap means the tax is now $75).
Non-tenure holders in the value-added sector can use the first mill price to determine the tax to be paid (for example, when a re-manufacturer purchases product from a mill at $250 and makes a product worth $400, the tax is based on the $250 price, saving the manufacturer $22.50).
All export tax revenue collected now flows back to government – $569 million expected over three years. Prior to the Agreement all export tax revenue flowed to the US government and $1 billion went to the U.S. forest industry.
Tree Farm Licenses (TFLs) Private forest landholders should be treated fairly when the market changes and government should respect the rights of private property owners to make choices that make sense for their investments while protecting environmental values.
In the 1940s & 1950s, companies agreed to have their private land included in a Tree Farm License (TFL) in return for access to Crown timber.
Since then, governments have been asked to revisit these decisions as the forestry industry has changed.
Founding TFL documents clearly state that companies always retained the right to request that their private land be removed from TFLs.
The priority in considering all land removals is to ensure the proper balance between private property rights, competitive needs of the forest industry, and the public interest. These are difficult decisions to balance.
All decisions are made on the best facts available and the advice of professional forestry civil servants.
Before approving requests for private land removal from TFLs, many issues are considered including First Nations’ concerns, old growth management areas, ungulate winter ranges, water quality, recreational and road access.
Successive governments have approved private land removals from TFLs.
In 1999, the NDP government deleted 53,000 hectares of private forest land from TimberWest’s tree farm licences on Vancouver Island.
In the case of Jordan River on Vancouver Island, on the advice of professional ministry staff in 2007, the Minister of Forests approved Western Forest Products’ request to remove 28,283 hectares of their private land from three TFLs.
In the case of TFL 23 in the Arrow Lakes (October 2008), the Minister approved the removal of private land from TFL 23 (Arrow Lakes) that secured payment of over $4.3 million to over 90 unsecured creditors – this meant 98.2 per cent of the money owed to logging contractors in the Arrow/Boundary region was recovered for them following Pope & Talbot’s bankruptcy.
Private land removed from TFLs remains subject to environmental regulation and local government zoning.
Democratically elected local governments have the right to zone what land uses they believe should occur on private land.
