Chair:	* Rick Thorpe (Okanagan-Penticton L)
Deputy Chair:	Evelyn Gillespie (Comox Valley NDP)
Members:	* Pietro Calendino (Burnaby North NDP) Hon. James Doyle (Columbia River-Revelstoke NDP) * Hon. Helmut Giesbrecht (Skeena NDP) * Rick Kasper (Malahat-Juan de Fuca NDP) * Steve Orcherton (Victoria-Hillside NDP) * Erda Walsh (Kootenay NDP) * Murray Coell (Saanich North and the Islands L) Gary Farrell-Collins (Vancouver-Little Mountain L) * John Weisbeck (Okanagan East L) * Jack Weisgerber (Peace River South Ind)
Clerks:	Craig James Kate Ryan-Lloyd
* denotes member present

[ Page 1159 ]

The committee met at 10:06 a.m.

R. Thorpe (Chair): I think we should try to get started here. The first thing I would like to do is. . . . We have a new Committee Clerk joining us. I'd like to welcome Kate Ryan-Lloyd and wish her all the best in her new endeavours.

Also, I received a couple of pieces of correspondence, the first one from the Deputy Minister of Finance. I believe this has been circulated to all members of the committee.

A Voice: No.

R. Thorpe (Chair): Oh, it hasn't? It has to do with the business continuation planning update. It was addressed to myself, and I see Evelyn was copied on it. What we'll do is make sure that we get copies made and distributed to all members of the committee. I was just wondering, Arn, if you had any comments with respect to that note.

A. van Iersel: None, other than to say that this is material that was requested when business continuation planning was last discussed here. We felt it important to provide it today because of the discussions that are going to take place later, when Stuart Culbertson is here, on Y2K and business continuation planning.

R. Thorpe (Chair): And that's tomorrow. Correct? Thank you very much.

Now, I don't want to err on this side. I have a copy of a report from the auditor general of British Columbia. Is it fair for me to assume that all members received copies of this?

G. Morfitt: I think it was distributed to everyone this morning by the Clerk.

R. Thorpe (Chair): Yes. I was just wondering, Mr. Morfitt: do you want any comments with respect to your three-page report?

G. Morfitt: All this is, Mr. Chair, is something that is, I hope, useful to all members of the committee. What I've done here is set out the background to the provision of lines of inquiry to the committee over the last number of years. The Chair, the Deputy Chair, myself, Mr. van Iersel and others, I suppose, are gathering tomorrow to chat about this. I just felt, given the comments that were made last week, that it would be most important that all members of the committee were fully aware of exactly the history and the context in which these lines of inquiry have been provided over the years.

R. Thorpe (Chair): Thank you very much.

I guess we should get started now. We're going to review report No. 4 from the auditor general's office on managing the woodlot licence program. George, would you like to start this off, please?

G. Morfitt: As you say, this is report No. 4 for the 1999-2000 series from our office, titled "Managing the Woodlot Licence Program." This was a piece of work that we decided to undertake after having received in the office a number of concerns with this program expressed by people who either were part of the program or wished they were part of the program and weren't. We discussed this with the Ministry of Forests and then decided to move ahead with it.

With me today is Mr. Don Kelso, audit manager for my office. Unable to be here today, unfortunately, is Mr. Russ Jones, who is our principal in charge of this audit. Mr. Jones's mother-in-law died yesterday in London, Ontario, and he has had to go back and look after affairs there for a few days. Don has agreed to lead off for our office in giving you the overview of the report, and then we have witnesses here from the Ministry of Forests.

R. Thorpe (Chair): Thank you very much. Please pass along our sympathies to Mr. Jones and his family.

D. Kelso: This presentation deals with the audit of the Ministry of Forests woodlot program. Our report was issued in August 1999. We undertook the review of the woodlot program in response to concerns raised by the public over its management and because the ministry felt it would be useful to have the program reviewed at this time. We carried out the audit between December 1998 and June 1999. Before presenting our findings, it would be useful to provide some background information on the woodlot program.

[1010]

The size of woodlots ranges from a maximum of 400 hectares on the coast to 600 hectares in the interior. Although much smaller than a tree farm licence, the contractual obligations are similar. They provide long-term security over access to timber and have similar responsibilities for roads, silviculture and planning requirements.

I won't take you through the history of the woodlots, but a brief description of the program and significant events can be found on pages 14 through 17 of the report. Suffice it to say, it is a popular form of tenure. At the time of our audit, there were just under 800 woodlot licences issued or about to be issued. They account for almost 1.5 percent of the total annual allowable cut in the province, and they contribute approximately $9.5 million in stumpage revenue annually.

The woodlot program was established to create opportunities for small-scale forestry in the province. Support for this type of forestry rests in the perceived benefits over large-scale forestry, such as benefits to the local communities, increased economic opportunities in the forest and more attention to environmental and non-timber values. Other strategic objectives of the program are to increase the amount of private land managed on a sustainable basis, to increase the productivity of small parcels of forested land, to promote employment opportunities and to promote excellence in forest management.

[ Page 1160 ]

First we looked at how the ministry established its goals and policies. The ministry has established short-term goals for the program, including the recent increase in the number of licences, has communicated them to the various stakeholders and has worked diligently to achieve them. However, we found that there were groups that did not share a common understanding of many of the goals and, as a result, have varying opinions on the success of the program to date. We also believe that a long-term vision -- where the program is going, the number of woodlots to be issued and a plan to achieve that vision -- is required. This is particularly critical given the reduction in the resources available to the program and the increased workload resulting from the recent expansion of the program. There is also a need for the ministry to clarify some of its administrative policies. For instance, licensed transfer policies are not adequate to cover the various scenarios which arise.

A critical and often criticized element of the program is deciding who will get a licence. The process used by the ministry is closely linked to the program goals and helps ensure that licences are awarded to eligible and suitable applicants. This is important, because numerous applications are received for each licence available. Legislation sets out the eligibility criteria, and the ministry has designed a process that ensures it considers only applicants from eligible applications. The process used to select the most suitable applicants has become more objective over the years, but we feel there are a number of improvements that could be made to make it more accurate and objective.

[1015]

There are a number of obligations that have to be met in the licence agreement with the ministry. These are clearly defined, and the ministry has developed a number of publications and provided training sessions to help licensees understand these responsibilities. The ministry does a good job of ensuring that all planning obligations are met. They also do a good job of inspecting the woodlot during the harvesting period.

The one area, we believe, that could be strengthened is making sure that the silviculture obligations are met on a timely basis. This area will require greater emphasis in the future, as regeneration on the new licences comes to the free-growing stage.

Finally, the remedies available to the ministry in the event of non-compliance are adequate. We found that, in most instances, problems were resolved without having to use the enforcement measures.

Information is needed to manage the woodlot program properly, and we found that it lacked in some areas. For example, in some cases the data was available, but the districts were not entering it into the computerized systems on a timely basis. As a result, the data was incomplete, and up-to-date reports on the status of a number of items were not readily attainable.

We also found that stand-alone computer systems had been developed in some districts to meet their needs, but these innovations had not been shared with other districts even though most districts had similar information problems.

The final area we looked at was what the ministry does to evaluate and report on the extent to which intended program results have been achieved. We found that the ministry has not developed a performance evaluation framework, although they are in the process of defining one for fiscal 1999-2000. In addition, the ministry lacks a complete analysis of the program's financial results. So it is difficult to determine the impact of the program on the government's financial position.

[1020]

In summarizing our findings, we concluded that the ministry has done a good job of addressing many of the shortfalls from the past. It has made the award process more objective and has worked hard towards achieving the short-term goals set for the program. The ministry still needs to determine where this program is going in the future and a strategy to get there. The streamlining of the administrative policies and regulations has gone a long way to reduce excessive costs to the licensees and the ministry. Efforts should continue in this area. There are still some improvements that can be made to the award process, which will further enhance its objectivity and accuracy.

Finally, the ministry needs complete and accurate information to manage the day-to-day affairs of the program. It also needs better financial information to assess the contribution to government and ministry operations and where changes are required. The public and Legislative Assembly require information that demonstrates the extent to which program goals have been achieved.

We made a total of 19 recommendations under the five areas that we looked at: establishing program goals and policies, choosing the right licensees, ensuring licensees meet their obligations, gathering program information, and evaluating and reporting program results. These recommendations can be found on pages 10 and 11 of the report. The ministry has responded to each recommendation. These responses can be found on pages 59 through 63 of the report. This concludes our presentation.

[ Page 1161 ]

D. Konkin: I'm Doug Konkin, executive director, Ministry of Forests. As you should have, I hope, you have a handout that we provided, which is a copy of our responses from page 59 and also adds some actions that we have taken since the report was delivered to us. I'll quickly run through that.

Before I run through that, I would like to note that the Ministry of Forests definitely supported the audit. We think it was well carried out, and we definitely appreciate the guidance and support that we found in the audit. As you'll see in our responses, we do definitely intend to use the audit to guide us in the future.

If everyone's got that handout, in terms of the actual recommendations, the first one is:

"1. The ministry should continue its efforts to ensure that all stakeholders share a common understanding of the program." We definitely concur with that recommendation, and we are trying to build on what we consider is a good working relationship with the provincial woodlot association and to work with them to improve communication. In our response, we committed to modifying our web site, and that has been done. We committed to developing an article on what the woodlot program is all about and to developing common understandings of that. That article has been written, and we have copies here that we can provide to you and leave for you to look at. Hopefully, that article will be published in the next edition of the woodland almanac.

Lastly, and something that's ongoing, is that henceforth when we do our legislative changes, we intend to work with the association and make sure that those changes are simply and completely communicated to the different woodlot operators. So that's an ongoing thing. We've started it with some of our more recent changes, where we expanded the term of the woodlots, and we intend to continue doing that.

"2. The ministry should develop a long-term vision for the woodlot program. . . ." As indicated in the auditor general's report, we do have some strategic objectives. We agree that it is timely to review those objectives, and we intend to start that process. We have committed to doing that by the fall of 2000. We realize that that timing. . . . We put that off a bit. Our intent in doing that was to allow the forest policy review -- which has started -- to continue, believing that there may be some strategic direction coming out of that, which we would incorporate into our woodlot initiatives.

The other things to be aware of, of course, are that in order to really finalize our strategic direction, (1) there has to be AAC, or allowable annual cut, available to allow expansion of the woodlot programs; and (2) we also need sufficient resources to do so. At this time the ministry does not believe it has adequate resources to expand the woodlot program, and we intend to complete our simplification. Hopefully, that will enable us to do so sometime in the future.

"3. The ministry should formulate a clear policy on woodlot licence transfers." A paper has been written on that. It is currently being circulated internally for discussion amongst our staff. We hope to finish that in the very near future and involve the association and woodlot operators in that. We anticipate that it will be a fairly controversial policy -- there's a lot of different opinions about what kind of guidelines we should put around transfers -- but we hope to have that finalized by the end of the fiscal year.

4. The ministry should continue to streamline woodlot administration. As noted in the auditor general's report, we believe we have made significant progress on that. We definitely intend to continue with that progress. We have developed some current legislative proposals and regulatory proposals to allow additional streamlining around things such as cut control, ability to issue the actual permits earlier and some provisions around timber marking. We would also note that the woodlot associations are very much involved in our results-based code pilot legislation initiative. That initiative allows us to basically suspend the provisions of the code in a controlled manner to experiment with regulatory simplification, and we hope and expect that we will have some pilots with woodlots. We'll have some results from that, which we can incorporate into the larger woodlot program.

[1025]

6. "The ministry should ensure that licensees meet all performance expectations before granting woodlot top-ups." As I mentioned, we do have a policy on that. We have to recognize that this decision is a statutory decision by the district managers. Our policy provides guidance for them that they should consider. We have taken the step of bringing this to the attention of the statutory decision-makers through conference calls, etc. We do expect a follow-up audit from the auditor general. We also, hopefully, expect to follow up on these recommendations ourselves and do some further reviews to ensure that district managers do consider the policies and are in fact looking to see that people are meeting the performance expectations.

7. "The ministry should consider ways to deal with the administrative limitations caused by the current woodlot licence size maximums." Basically there's the issue that we have a legislative limit to the size of our woodlots. In some cases, where the cut is constrained by other values -- for instance, winter range for deer -- the cuts are quite small, and there is a concern that those cuts may be uneconomic. We are working on possible legislative changes to address that. Due to other priorities, we do not anticipate that going forward at this sitting, but we will definitely continue to pursue that.

8. "The ministry should ensure that the cut control policy is applied fairly and consistently to all licensees."

[ Page 1162 ]

Nine through 13 are a number of recommendations around choosing the right licensees. As mentioned in the introduction for the auditor general's report, this is one of the reasons that the public requested an audit. It is one of the more controversial things we do. We are definitely always looking to improve our award process. At the same time, as mentioned, I must note that we do not intend to expand the program at this time due to a lack of resources and until we complete our strategic planning process. Currently there are no advertisements for new woodlots out there. We do not expect that there will be a significant amount of advertising over the next few months. Consequently, this is not a high priority for us. At the woodlot AGM, we committed to working with them to look at resolving and improving our process, and we will definitely do that. After, we will look at resolving some of the other recommendations contained in the report.

14. "The ministry should ensure that licensees are held accountable for significant promises made in their applications." We definitely agree with that recommendation. We recognize that in the past, through our award process, people have made what I would call ambiguous and perhaps vague commitments. We have notified and discussed this with our staff. There's an increased emphasis on ensuring that commitments are more concrete and quantifiable and deliverable. Managers have all been given a copy of the report. We've reviewed all of it with staff. As I mentioned, we have looked to restructure the application process to ensure that when we do start to advertise woodlots, they are provided with communication and understand that their commitments should be hard and concrete. As mentioned here in our response, we have some benchmarks. As we come up to replacement and are renewing management working plans -- those kinds of things -- we will work with the different woodlot operators to ensure that we do have mutual understanding of the commitments and that they are enforceable and measurable.

[1030]

16. The ministry should ensure that its staff are properly trained and monitored and that only essential data is entered into systems in an accurate and timely manner. I would note that we have brought our systems up to current data. Again, I have a copy here that is available to you, which shows basically that we spent some time and effort, and our systems are current now. There are always resources and energy required to maintain systems. Frankly, the ministry directs its resources, first of all, to ensuring that activities on the ground are carried out in an environmentally responsible way and, secondly, to ensuring that those resources are proper recordings, so it is a bit of a resource issue. However, now that the system is up to date, we are confident that we can continue to maintain the system. We actually have put processes into place. For instance, when they do transfers now, there are checks at the headquarters level to ensure that they have actually entered transfers into the system.

A. Waters: Just to add a bit of a comment on this particular one. . . . My name is Al Waters. I'm the senior woodlot licence forester. There are basically two major computer systems that the Ministry of Forests uses to track data. One system called the forest tenure administration system, which Doug has talked about, is a system that as the audit was ongoing, it was identified that we had some serious problems with in terms of data entry. It was not current. We made a major review of that program, and we got all the districts to update and check their information to ensure that it was accurate.

The second system that we have is a system that's used to collect and monitor information on silviculture obligations. For each cutblock that a licensee harvests and has an obligation to reforest, there are standards that have to be met. Those standards need to be recorded into the system, and then we monitor and report when those standards have been achieved in the various activities that are carried out on each cutblock. That system is a system that needs some more work. So we have one of the two major systems that we have kind of cleaned up.

We're in the process of working on the second system. We've produced a set of instructions on how to fill out the information for the system. We've done another report comparing the forest tenures administration system -- identifying cutblocks that exist in the forest tenures administration system for which there is no comparable record in the integrated silviculture information system -- so that we can go back to districts and key in on districts that haven't done a good job of entering their information. That's a project that we'll be working on over the winter.

D. Konkin: Thanks, Al.

"17. The ministry should develop a program evaluation framework for the woodlot program and periodically evaluate the program's performance." Again, we concur with that. In your handouts you have a copy of some draft performance measures that we have been working on for the woodlot program as part of the accountability for performance initiative. We hope to initiate that soon, although it is currently under discussion with staff. Right now the ministry has an ongoing strategic and accountability planning initiative where we are trying, for all programs in general, to put more emphasis on establishing benchmarks and measuring performance around those benchmarks.

"18. The ministry should gather information about all costs attributable to the woodlot licence program to allow an assessment of financial results." Resources permitting, the ministry is selecting sample districts. I believe we have a couple of sample districts that have stepped forward and volunteered to be part of the initiative. We don't think we

[ Page 1163 ]

[1035]

"19. The ministry should provide comprehensive program performance information to stakeholders and the Legislative Assembly in a timely manner." The ministry has begun to initiate an annual reporting system. We definitely intend to follow through with that. Your handout identifies a number of different items that we intend to continue, or start, measuring and that we definitely will be reporting on in the future.

That completes our response. Again, I'd like to thank the auditor general for the report. We found it very valuable, and we welcome any questions.

R. Thorpe (Chair): What is the information on page 38 of 38? What is this information on the last page here?

A. Waters: That's the last page of this 38-page report. It itemizes every woodlot licence in the province -- when it was issued; the schedule A allowable annual cut, which is the allowable annual cut that's associated with private land; the allowable annual cut that's associated with Crown land, which is called schedule B land and is identified in schedule B of the licence agreement; and the total allowable annual cut. It also indicates the schedule A area, or the private land area, in hectares, the Crown land area in hectares and the total area of each woodlot licence in hectares, and then it provides a summary down at the bottom. So this is just one page of the report.

J. Weisgerber: I guess my questions are around the sort of historical patterns of the awarding of licences. Many of the people I deal with believe that historically there's been a bias in licence awards, towards -- I guess I would describe them as professional foresters -- either retiring Forests ministry staff or management employees of the large licence holders. I wonder whether or not the auditor general or the ministry has done any kind of analysis of the woodlot licence holders to identify that profile.

A. Waters: That's exhibit 3 on page 19 of the report. It basically shows that as of December 31, 1998, 6.3 percent of the woodlot licences in the province were held by registered professional foresters that are currently working for a major company. Another 6.7 percent are held by registered professional foresters who are consultants. It identifies ex-ministry employees as 3.8 percent, and there's one warehouse man in Vanderhoof who currently holds a woodlot licence. He is a current ministry employee, but he has really nothing to do with any of the day-to-day administration or work on woodlot licences, so it's deemed not to be a conflict of interest.

J. Weisgerber: So within the designation here of "Technician -- independent. . . ." You're telling me that these folks are neither ex-employees of the ministry nor management people within the major licensee group?

[1040]

J. Weisgerber: Where would that group of "Technician -- independent" come from, then?

D. Konkin: For instance, I know of an individual who did work for industry and retired recently. He still considers himself a technician capable of going to work, but he's no longer employed. He's actually trying to make a living from his farming and the woodlots. So he may be part of that number.

J. Weisgerber: Well, with all due respect. . . . I mean, 32 percent of them -- that's a third of them that fall into that category.

G. Morfitt: No, you're looking at the wrong one.

J. Weisgerber: No, I'm looking at "Technician. . . ." Oh, I'm sorry. My vision is failing me.

R. Thorpe (Chair): If the auditor general could note that some of the members are getting older and that we need a little larger type. . . .

P. Calendino: Obviously, before awarding licences and posting the advertising, there are criteria that you develop. Are the criteria constant for all the woodlots that you put out, or are there some changes in the criteria depending on the area? If it's some depressed area, then is more consideration given because of unemployment, etc.?

D. Konkin: Al can maybe comment on the specifics; I can comment. . . . As a district manager, I would change the weighting of the criteria in response to the location of the woodlot and potential issues around the woodlot. For instance, in an area where it might be more controversial -- around a lake or something -- you would potentially give more weight to the management commitments, as opposed to contribution of private land. In practice we have varied it.

Al, you may. . . .

A. Waters: I'm not sure if I understand your question.

P. Calendino: What I'm saying is that you have criteria that you put in place before you advertise a woodlot -- right?

D. Konkin: Right.

P. Calendino: Once the criteria are there, then the decision is based on that criteria. But it's not a fixed criterion for every woodlot that you put out. You change the criteria depending on where the woodlot is, the needs of a certain area of the province, etc. -- right?

[ Page 1164 ]

We can vary the percentage that is assigned to the weighting of each of those three factors. Normally what happens is that if it's a fairly complex woodlot with some high visual quality or other things, where a professional manager is probably going to do better, then we would weight more for the experience of the applicant and more for management intent. If it was a relatively straightforward piece of timbered land that didn't have a lot of constraints or potential for negative implications, then we wouldn't put as much weighting on those two factors. Does that answer your question?

P. Calendino: It gives me some information and makes me ask more questions. Doesn't that create some concerns among applicants, if you do that changing of a criterion once you've published the criteria -- once you've received the applications, you as ministry staff decide that perhaps you want to put more weight into elements of the criteria?

A. Waters: The criteria are part of the advertisement, and they're not changed once the advertisement comes out. The district managers are encouraged to discuss with the local woodlot association what they feel is appropriate as far as the weighting of the various criteria.

P. Calendino: Let me go to the silviculture aspect of licensees. I think part of the criticism is that there is not strict monitoring on the responsibilities regarding the silviculture aspect of the licensee. I'm wondering whether you people have any idea of how delinquent the licensees are in meeting the ministry's expectations.

A. Waters: I think that for the most part, most licensees are fairly current with their silviculture obligations. There are always one or two bad apples in any group, and people focus on those. But where we have monitoring taking place, it is showing that the majority of licensees are current with their obligations and meeting their legal obligations.

P. Calendino: You said "where there is monitoring." Is that a spot check here and there, or do you do regular monitoring of all your licensees?

[1045]

P. Calendino: Again, you're saying "some districts." This is a huge province, and forestry, basically, is the mainstay everywhere outside of Vancouver. You're telling us that some districts do the monitoring, but you don't know who and where and how many.

D. Konkin: Each district is required to do a risk assessment plan for their compliance and enforcement activities. They will look at all the different operations they have in the district, evaluate them in the sense of economic and environmental risks, divide those into various categories and then schedule inspections based on those risks.

To a large degree, woodlots fall into a lower risk. They are area-based tenures. In many cases, we've had a history of inspections with them, and we know how they perform -- those kinds of things -- so the frequency of inspections is reduced. Of course, we have resourcing problems that cause us to prioritize in that way. Not every woodlot is inspected all the time, but there isn't a framework to determine the risk and inspect accordingly.

A. Waters: The other thing is that with woodlot licences, the cutblocks are very small. Larger cutblocks are more difficult to regenerate naturally, so there's more of a tendency for natural regeneration to happen on these small cutblocks. The other areas where we're having problems with reforestation provincially are high-elevation areas. There are virtually no woodlot licences in high-elevation areas. A lot of them are in forest types that have a tendency to regenerate naturally. A lot of them have some sort of a partial cutting system that leaves seed trees on site, which assists in natural regeneration. So the risk is, as Doug says, relatively low compared to some other situations where regeneration would be much more difficult.

P. Calendino: Okay. One more question in awarding of licences, and I want to refer back to what Mr. Weisgerber was saying. Who tends to get licences? I'm basically wondering how you guys award them and what qualifications applicants have to have to receive a licence. You alluded to a couple of things, but I'm aware of a number of small businesses or small mills that have been in operation for years and years and years, and they've been attempting every year to obtain a small licence -- and very unsuccessfully. Yet they are successful operations. Then sometimes you get some new operator coming into the fray, and they are awarded a licence without any track record to rely on. So that's a little bit of a mystery to some people.

D. Konkin: The thing to keep in mind is that it is a competitive process. There are no points for how long you have tried; it's simply looking at the criteria we discussed previously. In some cases, it's a relative matter that a logger with very few other skills in terms of forest management may be successful based on who he's competing against; and other times a logger may not be successful, because he's competing against people who have been in forest management or silviculture for a long time. I don't know if Al has anything to add.

A. Waters: No, not really.

P. Calendino: I'll keep harping on this one more time. The issue here is that there are operations that have been in existence, that have been successful, that have a track

[ Page 1165 ]

[1050]

J. Weisbeck: You made the comment earlier that one of the reasons why the program wasn't expanding was the lack of resources, and I was curious to know. . . . I understand that FRBC, at one point in time, supplied some of those resources. What happened to that funding?

A. Waters: FRBC supplied funding over a period of four years, and that was used to advertise some additional 350 new licences and provide extension services to existing licensees and new licensees through contractors and training courses and things of that nature. So it provided funding for 47-1/2 full-time-equivalent staff in the Ministry of Forests to carry out the expansion -- to select new areas, advertise them, evaluate applications and carry out all the work associated with referrals and everything else that's necessary to establish new woodlot licences.

J. Weisbeck: Was there any reason given why that funding was withdrawn?

A. Waters: Just because of reduced resources available to FRBC and a need to sort of prioritize their core business.

J. Weisbeck: I'm curious to know what sort of demand for woodlots. . . . I mean, given the fact that they were available, what is the demand out there?

A. Waters: For every licence that's advertised, we normally get five applications on average and sometimes up to as many as 20 applications for a single licence. So there are lots of people that would still like to have a woodlot licence -- would still love to have a woodlot licence -- in most districts in the province.

J. Weisbeck: You talked about increasing the size of the woodlot from 400 to 600 or to whatever. I should say that you're reviewing it. Is there any concern about the tenure? Is 15 years workable? I'm sort of interested to know what your definition of sustainability is and if it requires a longer period of time.

A. Waters: I should note that on September 24 of this year, we increased the term of the woodlot licence from 15 to 20 years. Essentially, the licence is now replaced every ten years as opposed to every five years. There is tremendous security for these licensees. As long as they are doing a good job of managing their licence, there really isn't a legal mechanism for us to take the licence away without providing compensation. So there are some licences that have been in existence since the late forties on the coast, and they've been repeatedly replaced. They were originally farm woodlots, and they've been repeatedly replaced over and over again. And there's every intention that they would continue to be replaced. The only way that a licensee can lose his licence is if he sells his private land that's part of the licence without the minister's permission, or he does something very significantly wrong that contravenes some of the legislation or requirements of his operational plans.

The sustainability. . . . Each licence area, both the Crown and the private land portion. . . . The district manager looks at timber inventory information that the licensee assembles, the amount of merchantable timber that's on the land and the growth rates of immature timber that will occur on those types of sites and puts that through a computer model called WOODLOT for Windows, which calculates a sustainable harvest rate that you could continue to harvest every year and never, ever run out of merchantable timber on that licence area. And that takes all the constraints of the Forest Practices Code into consideration -- things like visual quality, where you're only going to cut a portion of the standing timber; ungulate winter range, where you're going to have to maintain a certain level of canopy closure; reserves around streams and lakes that are required by the Forest Practices Code; and a certain amount of area for wildlife tree retention, for biodiversity and other factors.

J. Weisbeck: Is there a higher percentage of selective-type logging on woodlot licences than there would be in sort of normal tree farm licences?

A. Waters: Generally there is a higher percentage of partial cutting -- maybe not true selection but systems that are leaving some of the timber on woodlot licences.

[1055]

S. Orcherton: First of all, I should say that I don't think there's a woodlot licence in my constituency, so I'm not even close to being an expert on this question. But I do find it interesting. This may seem somewhat of a na�ve question really, but it just occurred to me, and I thought I should ask. There are woodlots where people can harvest lumber. . .

A. Waters: Timber.

S. Orcherton: . . .and we allow these licences to go forward. What kind of revenue do they generate for government?

A. Waters: Last fiscal year they harvested 875,000 cubic metres of timber, and they generated $10.5 million of stumpage revenue.

[ Page 1166 ]

A. Waters: There are a number of fees when you apply. There's a $200 deposit with your application, which, if you're successful, the Crown will retain. There's annual rent, which you pay annually at a rate of 25 cents per cubic metre cut from the Crown portion of the land, but not your private portion. Then there's stumpage that you pay on the timber that you harvest from the Crown land in your woodlot licence. That's calculated using a stumpage appraisal system, where you evaluate the quality of timber that you're harvesting, the species and grades of lumber or logs that are going to be produced from that timber, factoring in the costs associated with building roads, harvesting, transporting it to a mill and processing it and the value of those products that would be produced.

S. Orcherton: So where do those moneys go? Do they go into the. . . ?

A. Waters: Consolidated revenue. A portion of the stumpage goes to FRBC.

S. Orcherton: Okay. It seems, in looking at this diagram on page 17, that from 1976 through to 1984 there were very few woodlots, and then it became a much more popular thing for the government to do, I guess, and for people to pursue. Has your funding to operate this program, which is not a lot of money -- $1.9 million -- gone up a little bit?

A. Waters: It went up during. . . .

S. Orcherton: Some of the recommendations from the auditor general require resources to be applied to this particular question. I'm wondering if the resources have increased over the last few years or if they're, say, since 1985. . . .

D. Konkin: As Al said earlier, funding went up and was supplied by FRBC when we were into the expansion program, and that's fairly resource-intensive -- finding woodlots, clearing them, checking them and those kinds of things. Since then, funding has gone down.

S. Orcherton: Okay. But FRBC came in, if I recall, in 1994. Is that right?

A. Waters: That's right. In 1994 they contributed an additional $1.1 million; in '95-96 they allocated the Forest Service an additional $6.8 million. It was $8.5 million in '96-97 and $7.6 million in '97-98, and it dropped to $3.1 million in '98-99. FRBC funding in '99-2000 was nonexistent.

S. Orcherton: So the woodlots really started to increase in popularity, I guess -- from both the public's point of view and the government's point of view -- in 1987. What kind of revenues did you have to maintain the levels of monitoring this program from 1987 through to 1993-94, in relation to what is currently -- the $1.9 million to monitor? Do you know?

A. Waters: I don't have a clue. I've only been in the program for two years. I'm sorry.

D. Konkin: We can get those numbers, but we don't have them with us.

S. Orcherton: As I said, I'm not an expert on this at all. It just strikes me that there's been an ongoing problem here perhaps in terms of some of the issues that need to be addressed, according to the auditor general, since about '87-88 potentially, given the level or number of woodlot licences that are out there. . . . This is not a new issue, I don't think. But like I said, I'm not an expert.

[1100]

R. Kasper: In your handout, the ministry response, it says that the woodlot program has an estimated budget of $1.954 million.

A. Waters: That's correct.

R. Kasper: That would have been for '98-99. Or is that '99-2000?

A. Waters: That's '99-2000.

R. Kasper: Okay. So how did '98-99 compare?

A. Waters: It was somewhere around $3.7-3.8 million.

R. Kasper: So $3.7 million, and then your actual revenues were $10.5 million.

A. Waters: That's right, for the last fiscal year.

R. Kasper: In short, I guess your administrative costs represented 30 percent of the program.

A. Waters: It's hard to say. That was sort of direct wages for staff and identified contract expenses. But you have to understand that a woodlot licence is something that a great many people in a district office will play a part in administering -- everybody from the receptionist to the people working in silviculture, cruising, scaling, compliance and enforcement, the people that issue cutting permits and collect annual rent. There's a multitude of people that will have woodlot licence transactions. The expense associated with their work isn't necessarily reflected in those numbers that are sort of earmarked as being money that's for the key person, that one woodlot licence forester who does the bulk of the work in the district office.

[ Page 1167 ]

R. Kasper: So it's 30 percent administration based on $10.5 million in total revenue?

A. Waters: Direct allocation -- but it's probably closer to 50 percent, when you look at the other costs associated with everybody who plays a role in administering the program.

R. Kasper: That's something I wouldn't be bragging about.

The other question I have is. . . . This year it's $1.954 million, so it's just a little better than half of what your previous costs were. Right?

A. Waters: Yes.

R. Kasper: What is your revenue?

A. Waters: For this year?

R. Kasper: Yeah.

A. Waters: I haven't got those numbers yet.

R. Kasper: Well, there must be some anticipated amount.

A. Waters: It should be more than. . . . You've got to remember that we were in the process of issuing a lot of these new licences in 1998-99. So there's additional expense over and above the day-to-day administration of the licences once they are issued.

D. Konkin: Right, and that's what I would point out. When it was 30 percent or whatever, our expenditures were high because we were trying to expand the program. The revenue didn't reflect that, because we hadn't issued a number of those licences yet. So the ratio should gradually improve. The other thing I would note is that the auditor general has identified that we should simplify the process. It was, historically, a very resource-intensive process for both the woodlot operators and ourselves. We have definitely recognized that. Again, I would expect that our costs will be dropping as we simplify.

R. Kasper: Okay. So what did your branch budget as far as anticipated revenue from stumpage for '99-2000?

A. Waters: I would guess that it would be somewhere in the order of $11 million or $12 million.

R. Kasper: Okay. So your administration costs are around 15 percent now. Would you say that? Is that a fair assumption?

D. Konkin: It's probably a close ballpark. . . . Again, we haven't traditionally budgeted revenue versus expenditures for every individual program, because we do operate a lot of programs that are not revenue producers. But I concur with your thought pattern. We should be looking at our revenue and setting a target around what our admin costs are.

[1105]

A. Waters: My understanding of the 5 percent takebacks is that they were originally designed to provide opportunities for smaller forest enterprises, both the small business forest enterprise program and woodlot licences. Now we have community forest agreements.

D. Konkin: There is an indirect linkage. At the time that the ministry agreed and took on the expansion, there was volume available. Part of that undoubtedly came from some 5 percent takebacks, and part of it was Forest Service reserve, licences surrendered -- whatever.

A. Waters: Essentially, the minister has to allocate some more annual allowable cut to the woodlot licence program in order for there to be further expansion of the program. The allowable annual cut on Crown land is essentially allocated.

R. Kasper: My last question is: what happened to the 47.5 full-time staff that Forest Renewal had funded in the year '98-99? Are they still with the program, or have they gone?

A. Waters: Some of them have left. They were declared redundant, or they were put into other positions. We estimate that there are still 30 full-time-equivalent staff that are operating in the program.

R. Kasper: That comes out of the $1.954 million -- right?

A. Waters: That's right. It eats up virtually all of it.

R. Kasper: So in short, though, your administration costs are going down.

A. Waters: Yes.

M. Coell: I hope you can refresh my memory. In 1994, when the announcement was made to double the program -- double the number of woodlots -- had there been a number of studies done? What was that decision based on?

A. Waters: The report identifies a number of studies that were done in the late eighties and early nineties indicating that the program had some positive benefits, and there

[ Page 1168 ]

M. Coell: What I'm getting at is: was there a study of the economic benefits to woodlots, as opposed to having the money available and the political desire to do that? Was it based on whether it makes economical sense to increase them?

D. Konkin: My sense would be no, that wasn't a big part of it. It was more the social benefits derived from small-scale forestry that drove it.

M. Coell: Have there been any studies that the ministry has done since '94 that compare the employment capability of woodlots to other means of forestry?

[1110]

M. Coell: With regard to environmental studies since '94, have there been any comparisons of either woodlot reforestation capabilities or damage to the environment and other means of forestry?

A. Waters: There are no formal studies on damage to the environment as such. Essentially, the compliance and enforcement branch produces an annual report looking at infractions and penalties -- administrative remedies that have been assessed against various forest companies. They do identify woodlots in there as well. There have been very, very few instances of any significant problems on woodlot licences.

Woodlot licences in urban interface areas, a lot of times -- particularly on Vancouver Island and other places, where there's a lot of current controversy. . . . Nobody wants to see areas of Crown forest close to a community harvested by a major forest company -- go in there and create a large clearcut. There's a fair number of instances where woodlot licences have been suggested at public meetings and various processes dealing with land use planning. The land use planning committees have recommended that they establish woodlot licences on those particular areas that are close to communities.

A lot of the Crown forest, with the sustainable harvest rate that is set, is essentially virtually untouched. So you have a 400- or 600-hectare area, and less than 1 percent of it actually sees any harvesting. A lot of it is still maintained intact. So it has proved to be a very good tenure for allowing forest activities on those types of areas where otherwise you're at kind of a stalemate to do any forest harvesting or management.

M. Coell: I'm pleased to hear those comments. I guess the one area that I'd like some assurance won't be affected by the staff cuts that Mr. Kasper was talking about is environmental monitoring on woodlots. It strikes me that with your reduction in staff. . . . I understand the need for increased staff if you're going to increase the program and then a cutback in staff if you're going to manage it. Does the level of your staff allow you to meet, I guess, the obligation that the recommendations of the auditor general's report give you? Or are you going to have to cut back in monitoring, because of the recommendations, in your attempt to comply with them?

D. Konkin: As you know, it's kind of a moving target. Our budgets change from year to year. I expect, given our budget instructions for next year, that we're going to be hard-pressed to inspect our low-risk activities. Of course, as we've talked about, woodlots generally fall into the low-risk category, so there will be some effect on our ability to inspect them. To counter that, what we're trying to do is make sure people understand that clear things like replacement of the tenure, the ability to transfer the tenure and the ability to get top-up are really strongly linked to performance and thereby provide the incentive for them to monitor and perform adequately. We're looking at initiatives like that.

R. Coleman: I want to go back just for a minute to the staffing issue. The 47.5 staff that FRBC funded -- was that for two years, three years, four years? How many years was that?

[1115]

R. Coleman: For three years?

A. Waters: For three years. The first year there was a major problem filling those positions. They basically did a cross-Canada recruitment to try and get foresters. You remember 1994; the code was just coming in. Every major forest company hired additional foresters. You couldn't find a forester for hire virtually anywhere. A lot of the people in the Ministry of Forests that were young, aggressive-type people -- the companies hired them. The ministry had a hard time filling new positions created for woodlot licence foresters. So the first year, the allocation wasn't used as well as it should have been because of that, but in the next two years it was. Then there was a reduction in '98-99 from 47.5 full-time-equivalent staff. Sorry; we lost six staff in the last year -- down to 42.5 in '98-99.

R. Coleman: Okay. Prior to this FRBC funding being available for the expansion of this program, how many people were working in this program?

A. Waters: A handful.

R. Coleman: By a handful you mean four, five, six?

A. Waters: There were six people that were kind of identified as key people. The program was largely managed off the corner of somebody's desk in a district office.

[ Page 1169 ]

D. Konkin: As I indicated earlier, I don't think there was what I'd consider a good solid business analysis of the economics side of it. There was certainly a plan around the expansion and budgeting around that.

R. Coleman: Would this be a normal occurrence within your ministry to make a substantial investment without knowing that benefit at the outcome?

D. Konkin: It certainly would not be the case now.

R. Coleman: So could you explain to me why it happened then?

D. Konkin: No, I actually can't explain it to you, because I wasn't around then. To be fair, I don't have the information in front of me around the kind of analysis they've done. I can certainly find it and bring it to the committee's attention.

R. Coleman: We'll just sort of play with my quick math for a minute. We have, after the staffing and the other costs and expansions, somewhere between $18 million and $24 million that has been put into this program by FRBC. We now have 875,000 cubic metres annually coming out of this program and $10.5 million in stumpage. Before we spent the $24 million, how many cubic metres were coming out of the program? How many millions of dollars in stumpage were we receiving four years ago?

D. Konkin: I believe there's a chart on page 57 that gives you some indication of the stumpage revenue back to '94-95.

R. Coleman: Maybe you could just humour me and answer the question with your understanding of the dollars.

D. Konkin: I'm sorry. Could you repeat the question again?

R. Coleman: We've spent about $24 million expanding the woodlot program. We're now cutting 875,000 cubic metres of timber, and we're getting $10.5 million in stumpage. That's what we anticipate getting. Now, what were we getting before we spent the $24 million? What were the woodlots, in cubic metres, producing? And what was the stumpage they were producing?

D. Konkin: I don't have the figures in front of me in terms of the actual volumes being cut, so it's difficult for me to give you a comparison. I know there would be variations from year to year. For example, we recently introduced an additive for small operations -- the small operations wood-cost additive -- that reduced the amount of stumpage paid by woodlots and other small operators. The cut I don't have, so I can't. . . .

A. Waters: The cut was essentially half of what it is right now.

R. Coleman: Okay, so let's just back off on that for a second. Obviously the stumpage calculations from '94 to '99 also changed relative to FRBC. . . .

A. Waters: Well, '94 was a peak year for lumber prices, and stumpage was relatively high compared to what it is. So it's very difficult to compare year to year. Plus, woodlot licences have the ability to take their cut out over a five-year period. They can take it all out in one year when the market is high, or they can harvest very little in a year when it's low.

[1120]

D. Konkin: What I'd say is that you would not make any significant investment decision without a thorough analysis. We can't just look at the economic side; we have to look at the social value. Certainly communities appear to put a value on woodlots, well beyond the strict economic benefits that are obtained by the province.

R. Coleman: That actually leads me to my next question, so thank you. Frankly, I'm not sure you get benefit for the dollar, and I don't know that. . . . Obviously, going in, you didn't know if you were getting benefit for the dollar, because you didn't have the plan for that benefit. But earlier you made the statement that there was a substantial social benefit from small-scale forestry. When you were making the decision and when you were moving forward with woodlot licences to expand to 350 more licences, what study did you do to determine what that social benefit was? That's jobs, economic outcomes, what it did for communities. What was done to help you make that part of this decision, since you say that maybe it's not a financial decision but a social decision? What did you look into to determine that this was a good social-benefit decision?

D. Konkin: I'm not personally familiar with what work the ministry did. Certainly it was responding, as indicated in one of the tables in the report, to numerous studies -- the Bakewell study, the Gillespie study and others -- that clearly identified that there was a demand and social benefits from that. That was, in part, what the expansion was based on -- those studies. But I'm sorry, I don't have anything in front of me to tell you what analysis we did.

R. Coleman: Just to summarize it, there really wasn't a business plan. We relied on some studies that weren't

[ Page 1170 ]

D. Konkin: I will say that we personally are not familiar with what study was done. I wouldn't definitely say that there wasn't a study done. I'd have to go back and provide whatever information we've got to the committee.

R. Coleman: Okay. I'd like that information.

R. Thorpe (Chair): If you could provide that information through to the Clerk's office, then the Clerk will make sure that the information is supplied to committee members.

Hon. H. Giesbrecht: I was just going to ask you. . . . There's a considerable body of opinion that has for some time advocated woodlots in favour of large tenures. In fact, there's probably a particular segment of the population in the province who would argue that we shouldn't have any large tenures and that the whole province should be woodlots. That's based on all kinds of stuff that's been written. There have been books written on the subject and everything else.

You mentioned that it was in response to some initiatives that involve social policy and so on. Perhaps you could tell me, first of all, whether in your experience you've discussed the issue with some of these people out there -- I certainly have -- in terms of the need for increased woodlots, because they give a better return. People want to separate the logging operations from the processing operations. People are talking about a log brokerage yard where you get the best value for the logs that are cut -- this sort of thing. So there's a large body of opinion out there that has advanced, for many years, the idea of woodlots. It's not something new.

I am going to ask you, as well: isn't the number of woodlots sort of dependent on what available harvest land there is? Isn't it also partly geographic? You can't have a woodlot stuck in the middle of nowhere. It has to have road access. Otherwise, nobody is going to bid on it. So there are some factors like that. But clearly, if you're talking to any of the people out there that want to see more sensitive and sustainable logging practices, they're going to advocate woodlots or small operations as opposed to the larger ones we have in the province, who are dominating the province's forest industry today.

[1125]

R. Thorpe (Chair): Just on that point, then, let me ask a couple of questions. As I understand it -- and please, either the ministry or the auditor general's department, clarify this for me -- the thrust for this audit in fact came from some fairly persistent, vocal, small woodlot owners in the Prince George area. Is that correct?

A. Waters: Some private woodlot owners, yes -- people that were unsuccessful and felt they didn't have a chance of getting a woodlot licence and were unhappy with the way things operated in terms of the evaluation of applications.

R. Thorpe (Chair): Were their concerns valid? Obviously they were, or we wouldn't have done the audit. Is that a fair conclusion?

D. Kelso: A lot of those concerns came from people that were looking at licences or that got licences in the early nineties, before the expansion program. Our work was basically done on lots that had been in the program for the last three to four years during the expansion program. I think there are examples in here. Yes, there were concerns but not in the last number of years since they've gone to this expansion. A lot of those concerns were about older woodlots.

R. Thorpe (Chair): I'm sure, time permitting, we'll get to those. A number of people in the Prince George area have supplied me with questions that they would like me, if we have the time, to ask people. We'll get around to that.

Mr. Weisgerber asked a question earlier, and we were referred to page 19, exhibit 3. I'm assuming that this is a provincial summary. Is that a correct assumption on my part?

A. Waters: That's correct.

R. Thorpe (Chair): Do we have a six-region breakdown of those figures that would conclude and equal the total figures? Do you have that information available at the ministry?

A. Waters: I could probably dig that out.

R. Thorpe (Chair): Well, I think it might be useful. Again, going back to one of the reasons that this whole audit sort of got a little kick-start, if you will. . . . I certainly would be interested in seeing the breakdown of these figures on a provincial basis back to the six regions, if that's possible.

Recommendation 2 talks about the development of a long-term vision, and colleagues on both sides have talked about performance measure and lack of getting numbers, etc., that can tie things together here. Is the woodlot association actively with the ministry in the development of the vision and the plan?

A. Waters: Absolutely.

R. Thorpe (Chair): That plan is going to be completed by the end of the fiscal year we're in now. Is that correct?

A. Waters: The commitment we made in the ministry's response was to have it done by the fall of 2000.

[ Page 1171 ]

A. Waters: That's correct.

R. Thorpe (Chair): The other thing, just to go through a couple of themes that ran through my mind as I read this stuff and listened to the answers here. . . . We've got 19 recommendations here. We hear about limited resources today. I get a sense that you're concerned about resource allocation going forward. Have you taken these 19 recommendations and ranked them in order of priority for implementation? If you do have a resource allocation concern, would it not be prudent to rank these 19 in order of priority and, if you think that would be a good idea, to then also set dates beside them as to when they're going to be finished? I don't necessarily want to attack you folks, but my concern is that it seems that we would talk about these things forever. I'm just trying to get a sense of priority and urgency within the ministry. Could you make some comments on that?

[1130]

R. Thorpe (Chair): But surely, Doug, the priorities should be the priorities, should they not? Should the funding really matter, or should it not matter? Should the priorities not be the priorities, and then whatever resources you have available, you will then allocate those, I would think, to your number one priority? I get a little concerned when you say: "We can't do this because we don't know that." I think you could establish your priorities, and then when you do know your funding, you could allocate it against your top 19 or 13 or 12 or six. There might be some, though, where you're going to say: "Well, are there any in this 19 that we're not going to do, no matter if we have the resources or not?"

A. Waters: The only one that we disagreed with was recommendation No. 5. We've indicated that we have a couple of the recommendations completed by the end of the fiscal year -- that's March 31, 2000 -- and we said we'd complete the long-term vision by the fall of 2000. There are a few recommendations where we said that resources permitting, we would do something. Other than that, we tried to make concrete commitments to actually accomplish something -- get it done by a certain date.

D. Konkin: I would also comment that doing a strategic plan, for instance, would seem like a logical first priority -- get your strategy in order. However, we did not want to falsely commit to a date that we felt was undoable, because there were too many significant questions around what we could actually deliver and where we wanted to go. We don't want to jump into a strategic plan without the proper analysis of the economic and social benefits, without understanding the larger framework within which we're dealing with them. We have tried to reflect a date that enables us to incorporate forest policy review with those kinds of things in it. So yes, I think there are two lists. There's our priority list of what, practically, we would like to do, and that's been modified based on what resources we have available.

R. Thorpe (Chair): Therefore would you please provide the committee with the ranking of the 19 recommendations? I guess No. 5 would be last. What would be your ranking of priority just as individual items? Can you undertake to do that for this committee?

D. Konkin: Right now, at this. . . ?

R. Thorpe (Chair): No, report back to the committee. No, not right now.

D. Konkin: Just so I understand, would that be independent of everything going on around us? Or do you want our final list considering everything going on around us and resources and. . . ?

R. Thorpe (Chair): I think I would like you to use your best resources to put forward your No. 1 through No. 19 priorities, as best you can.

D. Konkin: We will do that.

[1135]

D. Konkin: Just so I understand, when you say "the process," do you mean the audit or. . . ?

R. Thorpe (Chair): No, just the whole issue of the woodlots. You know, it's important to communities. Your words were "social values" and "communities." How have you involved the various communities in the process over the last three or four years or going forward? And how do you define those communities?

A. Waters: Part of the cost associated with a woodlot licence is that you do a lot of referrals before you establish a woodlot licence. You may have a number of candidate areas. You either hold public meetings or send out referral letters to anybody who has some sort of resource rights -- water licences, trapping, guiding, first nations. You do a lot of consultation with the community and with people that have rights over a particular area, through public meetings and other forums, to screen particular areas for woodlot licences. That's part of the cost associated with establishing

[ Page 1172 ]

D. Konkin: The other thing is that I think we've indicated that we'd like to believe we have a good relationship with the woodlot association. There's a provincial association and local associations. I think that's probably our primary forum or conduit to local communities: through the associations and by working with them.

R. Thorpe (Chair): One of the concerns -- and a couple of members have raised it -- as I read excerpts from whatever the paper is in Prince George, is about favouritism. I think what I've heard you say in your responses is that you do not believe there has been favouritism. Is that a correct summary on my part?

D. Konkin: Yes, I believe that is. Maybe I'll add that I think part of it is a philosophical difference around how you measure skills and abilities. Certainly -- and I've talked to many of these individuals in Prince George. . . .

R. Thorpe (Chair): I know you have.

D. Konkin: Okay. They believe that the program was originally focused on assisting farms and ranchers and that we have moved away from that . We have started to take skills or credentials, such as registered professional forester, and use that to move away from more the basic person who's got in touch with the land. I think that is a valid question: how much weight do you provide to credentials versus experience, and those kinds of things? When we say that we have to evaluate our application evaluation process, I think that's part of it. I think that we'll have to work with the association and look at what weighting we put on these things and how much we assign to various credentials versus experience. That will be a time-consuming, interesting process.

R. Thorpe (Chair): Don, would the auditor general's department like to make a comment on that?

D. Kelso: No, I think what Doug was saying is correct. We went through them, and we looked at the process. They have their criteria, and they're being well addressed right now. We didn't go back and look at the way the process worked in the mid-eighties, because we thought that there were not a lot of woodlots being issued back then, and it wouldn't do justice to the program to go back and say: "Okay, this was what was." We could have written probably a dozen pages of minor horror stories -- or horror stories. But that was what was. We looked at the period when the new programs were being issued -- the licences were being issued -- and how it is being worked today. I think they have a reasonably good process in there, but there are areas in there. . . .

[1140]

Some of them, as you say. . . . Okay, depending on what they put the weighting on. . . . Registered foresters would probably come forward, having more expertise. But other ones were given weight -- loggers and individuals who had been in the woods for a long time. I think there was a reasonable balance in the last ones.

R. Thorpe (Chair): To follow up on your reasonable balance statement, Doug and Al, does the ministry have a way of evaluation that is very black and white -- this is the way it is; this is the way is has to be? Of course, that would come from Victoria. Or do we have an approach that looks at some of the historical practices, realizing that we're going through ongoing transitions? Is there some discretion for local knowledge, for lack of a better word, on who can be awarded these, based on their experiences, etc.? As we know, if we try to pigeonhole everything, that's when we get ourselves into problems. Do people have some flexibility and discretion to make a more informed decision?

A. Waters: There are certain eligibility criteria in the legislation, and of course, that's the law, and you have to follow that. The rest of the evaluation and award policy is a policy. There is limited discretion for the district manager with just cause to consider the information he has at hand and make a decision as to who will be awarded the licence, based on consideration of the policies. There's a limited amount of discretion in the decision of who is the best applicant. But you have to have a process that's legally defensible and as objective as possible. So if you happen to be the best applicant but you didn't put the information on the application form and you didn't have a lot of letters of reference. . . . Everybody might know you in the community as the best potential candidate, but you didn't provide that information on the application form. It's difficult for the district manager to award you the licence and defend that amongst other applicants during the 30-day review period, when your application is not full of detail.

R. Thorpe (Chair): So in fact, if a district manager does know that I'm the best-qualified person, but for whatever reasons I don't have the wherewithal to complete all of the paperwork, etc., do you have a way in which the ministry provides assistance in situations like that? Or is everybody just out there to fend for themselves?

D. Konkin: What I would say is that there are ways if people are proactive. Certainly a complaint I've always heard is that someone goes out, hires a consultant and comes in with a beautiful report. Does it really indicate that they know what they're doing? There is that danger. Certainly if someone wants to be proactive, they can be exam-

[ Page 1173 ]

A. Waters: Ministry staff are generally quite willing to talk to applicants and give them a full insight. There's nothing more disappointing than looking at somebody who is a really good applicant, and they didn't understand something to do with the policy. And as a result of that, their application is somehow flawed.

[1145]

A. Waters: Legally, we're required to advertise applications for new woodlot licences in a local newspaper a number of times and in the B.C. Gazette. People that are really interested in getting an application are generally checking with the district office to see what's coming up and when it might be coming up, on a routine basis.

R. Thorpe (Chair): In your opinion, then, is advertising generally. . . ? Do you get feedback from the association or members of the association that it's fairly adequate? Or is it inadequate, in your opinion?

A. Waters: Nobody has commented to me personally that it's inadequate. It seems to be serving the purpose.

D. Konkin: Actually, on woodlots, I've never heard complaints, mainly because, as Al mentioned, people are so interested in them that they know in advance of the advertisement what's potentially coming up.

R. Thorpe (Chair): What residency requirements are there in winning a woodlot application?

A. Waters: You have to be a Canadian citizen or a permanent resident of Canada; that's a requirement of the act. You have to be at least 19 years of age. In the evaluation process, the closer your permanent residence is to the Crown area of the woodlot licence -- in other words, the easier it would be for you to travel and carry out work on the licence and manage that land intensively. . . . You receive a higher rating for your application. So if somebody is living very close to the Crown portion of the woodlot licence area, then they stand a better chance to receive more points on their evaluation.

R. Thorpe (Chair): Is that residency requirement a significant part of the weighting in the total scheme?

A. Waters: Some people would say it probably needs to be more. It depends on how. . . .

R. Thorpe (Chair): What's your view?

A. Waters: I think it's probably adequate.

D. Konkin: One thing that I would comment on, Mr. Chairman, is that the proximity is an interesting thing, and it relates to transfers. If you award a licence because someone lives close to it, and then they move another 100 miles away, what do you then? When we look at proximity, we're going to have to look at it in light of transfers and applications.

R. Thorpe (Chair): Thank you.

Does anyone else have any questions? I'll just run through mine, then, I guess. Again, I'm sorry I don't have knowledge in this area. But what do we mean when we say "supplementing income" with respect to woodlots?

A. Waters: I guess the ministry does not want to give the idea to people that are applying for woodlots that if they get this woodlot, this could possibly be their sole means of income. Therefore they indicate that the woodlot licence is designed not to be your sole means of making a living, but it's to supplement your income, so that there's no way that somebody would come back to the ministry and say: "This woodlot really isn't profitable enough for me to make a living from. It was advertised under the assumption that I'd be able to do that, and I'm not able to do that. I want more." Or: "I want some form of compensation." My understanding of why it's written up is it's something that's supposed to supplement income.

D. Konkin: I would add that I believe it is a continuation of the farm woodlot days, when they were clearly designed to go to farmers to supplement income.

R. Thorpe (Chair): Is that why you have specific wording around it? Is that why? Have we had cases where people have come back at us?

D. Konkin: I don't recall anyone coming back and saying they have a right to make a living from the woodlot.

R. Thorpe (Chair): Okay. I'm just wondering.

Again, going back to resource allocation, basically I think what I've heard you say -- so correct me if I'm wrong -- is that the renewal is. . . . You want to move to much more of a results-based methodology, etc. With your resource-allocation question and flag that you've raised here this morning and in the reports, how do you feel with respect to having the resources for enforcement and monitoring of the woodlots?

[1150]

R. Thorpe (Chair): I've talked a little bit about community involvement. I think there's an expectation in

[ Page 1174 ]

As I mentioned earlier, I have been provided some questions from some people in the Prince George area. Since I seem to be asking all of the questions right now, I thought that if it would be all right with the Forestry staff, I would just acknowledge that Mr. Nunley -- I'm sure you're familiar with that name -- Mr. Doug Kronebusch and Mr. David Voss. . . . What I would undertake to do, instead of reading all of these questions into the record, is perhaps send you a note with their specific questions attached, and I will circulate a note to committee members. If you could address those back to the committee, I think that would serve that purpose.

I guess my last comments are into the area of performance measurement and accountability and all of that. I think that once we get your ranking of the priority of your 19 recommendations, we could ask you folks if. . . . Do you think it would be appropriate for you, after you've done that, to perhaps revisit the committee sometime next spring, just to tell us how you're doing on some of those areas? Do you think that would be beneficial?

A. Waters: Certainly.

D. Konkin: It's always a pleasure.

R. Thorpe (Chair): I almost detected a wee bit of sincerity. You're going to have to practise that, Doug.

I think that one of the things we really have to focus in on here, as you're projecting a continuing shortage of resources or an issue of setting priorities, is that we're going to have to establish performance measurements so that we can all check ourselves. I think it's good for everyone. In that regard, in your recommendation 17 you've put forward some performance measurements. I'm just wondering -- I'd like to get some comments from the auditor general's office -- whether they in fact think these are meaningful performance measurements. Or do they think we require some more work in this area in establishing meaningful performance measurements?

G. Morfitt: Well, I'll take that under advisement, Mr. Chair. But just looking at them cursorily, they seem to be focused on inputs rather than outputs. So I think we might have some suggestions for the ministry people, if we can give some time to it.

R. Thorpe (Chair): I'm sure the ministry would appreciate the input, George. Maybe if we could ask the auditor general. . . . Since you folks have worked on this audit and have suggested that performance measurements are lacking in fact as a strategic plan, if you could come back to the committee with some of that information, I think it would be appreciated.

G. Morfitt: We'll undertake to do that.

R. Thorpe (Chair): Thank you.

Does anyone else have any other questions or comments? Arn, do you have any comments today?

A. van Iersel: No, Chair, thank you.

R. Thorpe (Chair): Okay. Any other members? Kelly, have we got any other business here today?

Doug and Al, thank you very much for taking the time to come; we appreciate it, yes. Please, George, pass along our regrets to Mr. Jones; thank him for his work. We look forward to hearing back from both parties as soon as possible on that.

S. Orcherton: I take it we're going to adjourn in a minute. Is that right?

R. Thorpe (Chair): We're heading there, yeah.

[1155]

R. Thorpe (Chair): Excuse me -- the one that was handed out to all members?

S. Orcherton: Yes, that's it.

R. Thorpe (Chair): Yeah, go ahead.

S. Orcherton: The reason I waited was because I didn't have an opportunity to review the letter when I sat down at the desk this morning; I've had an opportunity to review it. Firstly I'd like to thank the auditor general for providing some of the history in terms of this question. I hope that in the near future I'll be encouraged that the Chair and the Deputy Chair have met to discuss this issue.

Having said the thanks for the historical documentation -- I think we all can learn from history, and by learning from history, we can always work to plan a better future -- I am still of the view, and remain to be convinced otherwise, that it is not appropriate for the auditor general to provide lines of inquiry for this committee. I await the deliberations of the committee Chair and the Deputy Chair in that regard. Hopefully, the entire committee can have an opportunity at some point to discuss this matter further.

R. Thorpe (Chair): Well, thank you for your comments.

S. Orcherton: Oh, one other point, if I may. Were lines of inquiry provided for today's meeting?

R. Thorpe (Chair): I did not receive any, no.

S. Orcherton: So there were none?

[ Page 1175 ]

K. Dunsdon: We have them, but we didn't distribute them.

G. Morfitt: Okay, there you go.

R. Thorpe (Chair): I think I don't want to make an assumption here. But I would assume that they were held pending our meeting -- which is tomorrow, Steve, and not today -- with the Deputy Chair and the committee members.

S. Orcherton: Yeah, I look forward to the outcome of that meeting and, hopefully, some broader dialogue with the committee members as a whole.

R. Thorpe (Chair): Thank you.

Any other comments or questions? Seeing none, could we. . . ?

S. Orcherton: . . .adjourn now?

R. Kasper: No, I just have a question.

R. Thorpe (Chair): Yes, sir?

R. Kasper: Is it anticipated that we'd be getting some lines of inquiry re our next two meetings? Have they been prepared? Is all that on hold?

R. Thorpe (Chair): I can't answer that question, because I haven't received them.

G. Morfitt: It is not our intention to provide any lines of inquiry for the Y2K report. We think that the report is quite explanatory and that Mr. Culbertson will be dealing with all aspects of the report in great detail tomorrow afternoon, so we didn't think any lines of inquiry were needed for that.

In respect to the fast ferry report, as an audit office we would find it difficult to deal with certain aspects of that report in suggesting lines of inquiry with regard to it. We do, however, think it might be useful to provide some suggestions from a forward-looking perspective in dealing with the main issues and the main recommendations within the report. But we're at the pleasure of the committee in that regard.

R. Kasper: Thank you.

R. Thorpe (Chair): Does anybody have any comments on that? Thank you very much.

The committee adjourned at 11:58 a.m.

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