Timber Supply — Issue No. 23 — Wednesday, July 11, 2012 (HTML)

Strategy Room 320, Morris J. Wosk Centre
580 West Hastings Street, Vancouver, B.C.

Present: John Rustad, MLA (Chair); Norm Macdonald, MLA (Deputy Chair); Harry Bains, MLA; Donna Barnett, MLA; Eric Foster, MLA; Bill Routley, MLA; Ben Stewart, MLA

1. The Chair called the Committee to order at 9:30 a.m. and made opening remarks.

2. The following witnesses appeared before the Committee and answered questions:

The following electronic version is for informational purposes only.
The printed version remains the official version.

REPORT OF PROCEEDINGS
(Hansard)

SPECIAL COMMITTEE ON
TIMBER SUPPLY


CONTENTS
Page
Presentations	685
J. Foy
D. Lehane
L. Gardner
K. Shields
K. Uhrich
J. Woods
S. Zika
R. Vossen
A. Gerow
K. Wu
M. Arcand
J. Wieting
B. Parfitt
D. Routledge
T. Elton
D. Orr
A. Kammenos
M. Anderson
D. Carter
J. Fisher
D. Perdue
R. Bealing
B. Matters
L. Matthaus
B. Fleet

J. Rustad (Chair): Good morning, everyone. Welcome to our Special Committee on Timber Supply hearings here in Vancouver. My name is John Rustad. I'm the MLA for Nechako Lakes, and I think we'll start this morning with introductions, starting with Bill.

N. Macdonald (Deputy Chair): Good morning. My name is Norm Macdonald. I'm the MLA for Columbia River–Revelstoke.

J. Rustad (Chair): Along with the ones that have introduced themselves, the MLA for Westside-Kelowna, Ben Stewart, is running a little late this morning. He will be joining us in a bit, though.

With our committee we have two special advisers that were appointed, the two former chief foresters, Jim Snetsinger and Larry Pedersen. As well, I just want to recognize and introduce our current chief forester, Dave Peterson, who's been so gracious as to travel throughout our committee's schedule.

Also with us is Susan Sourial, who is the Committee Clerk, and at the back we have Morgan Lay, who is also with the Clerk's office. For anybody who is presenting or who's listening to us and will be presenting further on today, please make sure you check in with Morgan when you come in so that we can have a list of who is here, in case we're having to move around the schedule.

Everything that the committee does is recorded by Hansard Services and is broadcast live on the Internet, and with us today with Hansard Services are Michael Baer and Jean Medland.

The Special Committee on Timber Supply was struck in May and has a fairly tight time frame. We've been tasked with the goal of looking at the mid-term fibre supply, in particular to deal with the impact of the mountain pine beetle epidemic. The pine beetle epidemic, of course, has created quite a challenge for our mid-term fibre supply.

The committee has been out on tour throughout the impacted area. We started several weeks ago in Smithers, travelling along the Highway 16 corridor out to Valemount, including Fort St. James and Mackenzie. Last week we were in the Cariboo, from 100 Mile House back up to Prince George, as well as doing a day in the field. This week we are doing three days of provincial meetings on Monday, Tuesday and Wednesday. On the Thursday we'll be wrapping up in Merritt and Kamloops.

People have until July 20 to present a written submission to the committee, and those submissions can be sent through our website, which is www.leg.bc.ca/timbercommittee. Once again, those submissions have to be in by July 20.

The work of the committee after the public consultation component is over will be…. We'll go into some deliberations around what recommendations, if any, we'll bring forward. That work has to be completed and submitted to the Legislature by August 15.

At this time I'd like to start off with our first presentation of the day. Presenters here in Vancouver have half an hour, and they can decide how they want to do that. I'd recommend, if you have an opportunity, to give us some time for some questions and answers.

J. Foy: Well, thank you. Thanks to the committee for giving me this opportunity.

My name is Joe Foy, and I'm national campaign director for the Wilderness Committee. We are a B.C.-based environmental organization with about 60,000 members and supporters from across Canada, with the greatest number here in British Columbia. We were founded in 1980 with our core value being the protection of wilderness and wildlife habitat.

When we heard the news that your committee was looking at various recommendations to deal with the result of the pine beetle outbreak and that one of those things you may be looking at is logging in forested areas that had previously been protected, we knew we had to make a presentation to your committee.

Now I, working with the Wilderness Committee, experienced the turbulent times of the past several decades. I've been with the committee since 1988. As a result of those times, forested areas were set aside, often as the result of protest, but also as the result of widespread public process to better protect everything from viewsheds to wildlife habitat, to provincial parklands to tribal heritage lands, to jobs and communities, and drinking watersheds. It wasn't easy. Oftentimes it was scary, as people faced possibly losing their jobs, as people out on the front lines felt the very heated times.
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In the 1980s the Wilderness Committee was involved, for instance, in that vigorous debate to protect the forests of Gwaii Haanas, Stein Valley, Meares Island. In the '90s it was Carmanah Valley, Walbran Valley, Clayoquot Sound, Pinecone Burke. In the 2000s it was the spotted-owl forests of the Lower Mainland, and these days our organization is still working with many others to protect additional forests in Clayoquot Sound, in the Cayoosh Range west of Lillooet and environments around Fish Lake in the Tsilhqot'in Nation territories. The work continues.

I think we all have to ask: when we talk about protected areas, what do we mean? Protected from what? What have we been protecting? Why have we been protecting these lands? Why have we advocated protection? Why has legislation been passed to protect lands?

Well, for the most part, over the last 30 years, it was to protect enough of the lands, the forests and the wildlife habitat against the effects of commercial logging. It was also, in some cases, other industrial activities like mining and hydro development, but mostly it was commercial logging. This would include the environmental impacts, both known and not known yet, of clearcut logging and other forms of logging, of roadbuilding and even of widespread fire suppression.

The work to set aside a network of protected forests was all good work. It was difficult work, but it was very worthwhile in a province where the very roofs over our heads are made of wood, where the employment of ourselves or our neighbours is based on wood, where spiritual values come from forests for many of our citizens, where the drinking water that makes our bodies comes from forests.

This was all good and important work, and it has resulted, for example, in raising the level of provincial park protection from 5.5 percent of the province, as it was in the 1980s, to over 14 percent now. But it is a work in progress of the citizens of this province. It is not finished yet. There is more to be done. And we know how it's to be done. It's to be done with our own special form of democracy here in this province.

For example, as compared to the 14 percent level of protection we currently have, or thereabouts, in our provincial park system, in the Canadian boreal forest, that great northern forest which spans so much of the country, a target of 50 percent preservation is seen as a conservative goal in the fight to sustain the economy and protect the plants and animals and other values that are in the forest — 50 percent.

It's clear that B.C. is going to need to set aside more old-growth forests, more parkland and more endangered-species habitat if we are going to fend off species diminishment and extinction and if we are going to protect our reputation as a province and nation. And as a place that has many industries that work with wood products, this reputation is very important.

B.C. is also, obviously, going to need to work harder together to squeeze more jobs out of a cubic metre of wood, because certainly, at least in the mid-term, we are going to have fewer cubic metres of wood to access.

Now, I brought with me today three of our pamphlets, which I've distributed: one on protecting old-growth forests, one on protecting endangered-species habitat and one on protecting more parkland. They explain more fully what I'm talking about here today.

You know, it seems curious to me, puzzling really, that here we are. We've suffered as a province a great hurt to the health of our forests — a massive pine beetle outbreak, some say made worse by decades of fire suppression — which has sparked an accelerated burst of clearcut logging carried out with greatly diminished government oversight. That's what has happened to us.

I would have thought, given the weight of that hurt, that we would have taken time to assess the damage, to plan how to repair it so that we are not unnecessarily haunted by this damage for generations to come and so that important wildlife populations, for instance, don't wink out, or we don't end up wrecking other important values in the province that our tourism industry or our water supply depends on.

It would seem to me that we would have therefore taken care to make sure there are enough government employees out in the forest assessing this damage, making sure it's not worse — foresters, biologists — to ensure the forests and streams and wildlife are being protected in these dangerous times.

It would seem to me that we would have ensured that no log leaves the province in an unmanufactured form so that jobs can be better maintained and timber supply better regulated to protect our future. It would have been wise, I would think, to have maintained the contract that says: "If you get access to timber, you must show us how you will produce jobs here in British Columbia."

But we have done the opposite of this here in the province of British Columbia. We have seen far too many raw logs leaving the province — a trend that has gone on for far too long. We have seen access granted to B.C. logging companies without the guarantees that B.C. used to get that wood manufacturing jobs will be created in our communities. We have seen forest service offices closed, budgets to look after the forests slashed and government forestry employees let go at precisely the time we need them the most to protect our future.

Now this committee is being asked to comment on some changes. Harvesting some of the areas currently constrained from timber harvest in order to support other resource values is one of those changes being proposed. This sounds a lot to us like allowing logging in old-growth management areas, wildlife habitat areas, viewscape forests and perhaps forests that supply drinking water to the citizens.
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The reason I say this is that our organization has begun to see these terrible practices showing up in parts of the province outside the central Interior. For example, several years ago, under pressure from the federal government, the B.C. government set aside a number of wildlife habitat areas for the conservation of the northern spotted owl, one of our most endangered species. This past winter, under pressure from a local logging company, the B.C. government has opened a number of these wildlife habitat areas to logging.

These are pitiful remnants of an endangered-species habitat that the citizens thought had been set aside. One of these areas is near Chilliwack Lake, and it so happens that people live nearby in cabins and summer homes. Those residents were horrified when the logging tape showed up. They had thought their local forest was protected for an endangered species, and they stood up for their forest.

But it was to no avail. The logging started this winter. The logging has proceeded, putting this species and the reputation of the forest industry and the province at greater risk. There are now thought to be less than a dozen spotted owls remaining in the wild in British Columbia. I've fought this issue now for several decades, and it is a very, very sad spiral to extirpation.

Recently in southwestern B.C., we've been informed that the B.C. government is looking at lowering requirements to protect viewshed forests in the region around Harrison Lake. This is very concerning to local residents and tourism operators.

I would remind the committee that when you get off at Vancouver International Airport, what do you see as you're coming down the escalators? Well, you see visions of British Columbia's beautiful views and forests and the like. We have a multi-billion-dollar industry based on this. Yet with lowered government oversight, increased raw log exports, damage to endangered-species habitat, here at Harrison Lake we see a lowering of the viewshed requirements.

Now, that's very concerning to me, because I know that over the years, forest uses have been stacked up. Forests that have been set aside for viewsheds have often been claimed to be species habitat — in other words, multiple-use forests. So when you take out a viewshed forest, you have to pay attention, because that may also be the place where foresters have claimed that that would be, for instance, deer winter habitat. That's very concerning in the area by Harrison Lake.

On southeast Vancouver Island this winter we also saw the logging of a piece of publicly owned coastal Douglas fir forest at Nanoose Bay, even though local citizens and elected leaders had worked hard to protect it. The coastal Douglas fir forest is one of the most endangered forest types in the province, yet logging went ahead anyway. It was shameful, but it also shook me to my very core. Who's in charge? Is anyone in charge? Does anyone care?

Surely, the provincial economy does not rely on the logging of the last remnants of the most endangered forest ecosystem in the province. Surely, it relies more on getting a handle on our out-of-control raw log exports, for instance, which represent a far greater volume of timber leaving the hands of our workers.

I see here there's a proposal for "increasing the harvest of marginally economic timber." I think we should be concerned about this, because if it's marginally economic, it looks like this would require greater subsidization. What I have seen when government lately has been required to subsidize the logging of timber, they've got to get it somewhere. And where do they get it out of? The Forest Service, the Ministry of Environment and the other agencies that we need to keep an eye on our forests. So when we talk about moving into the harvest of marginally economic timber, all I can see are more foresters and biologists getting laid off. And that would be wrong.

Another concern is found in a recent Forest Practices Board report that shows a large percentage of our old-growth management areas, which the citizens had thought had been set aside to protect remnant patches of old growth, actually have no protection in law at all — a large percentage — and may not even be mapped in a proper way, meaning that they can get logged without anyone knowing that they've been set off-limits.

Now, moving into the harvest of marginally economic timber would also increase the cumulative impacts on the landscape. I note that, because I saw in the Prosperity mine proposal for west of Williams Lake that one of the reasons the federal government turned it down was the concern over the impact to the south Chilcotin population of grizzly bears. It was felt by the federal panel that the cumulative impacts of logging had so impacted the landscape and the bears that the mine, in combination with the forestry, would have damaged hopes of recovery.

That's occurring all over British Columbia, in that heavy impact by forestry risks preventing other economic activities because the other economic activities would tip the ecosystem. We're going to see more of that, unless we get more of our government managers back on the land, making good decisions.

Now, I see here a proposal of "changing the flow of timber by adjusting administrative boundaries…." I've seen this happen before through all the decades. I'd be very concerned for the inland temperate rain forest if that happened in places like the Walker wilderness and the Goat River. What it is, is fiddling with the boundaries in order to facilitate more overlogging in adjoining areas. It just pushes the problem down the road, and we don't have much more road to push the problem down. "Accelerating timber availability" means logging before previously logged areas can support wildlife — which, I think, is another recipe for disaster.
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"Shifting to more area-based tenures" is another suggestion. I see that as granting more power to the timber companies. I would say we just have to look at southern Vancouver Island to the privately owned tree farm licences to see the effect of that. It's bad news for the workers. It's bad news for the water supply area. It has increased raw log exports. There are timber companies with too much power. It's like giving your kids all the candy that they can eat. It's not good for them.

In closing, I'd say that our forests need to be there for our timber companies. They need to be there for our workers. They need to be there for our drinking water, our wildlife, our tourism industry and our fishing industry.

I have five suggestions: (1) ban raw log exports; (2) ensure that access to timber is linked to the creation of B.C. wood manufacturing jobs; (3) enact stand-alone endangered-species legislation to ensure that B.C.'s wildlife and reputation are protected; (4) greatly expand and strengthen in law B.C.'s protected area system to ensure the protection of remaining old-growth forests, the health and recovery of the landscape and the protection of other values in industries such as drinking water supply, fishing and tourism; and finally, (5) increase the budget and workforce of the B.C. government's on-the-ground staff in forestry, environment and parks to ensure proper inventory and protection of our increasingly stressed natural environment.

H. Bains: Thank you, Joe. In your presentation you talk a lot about workers and jobs, and I appreciate that. But as you know, the numbers are clear. The post–pine beetle estimated AAC will go down by close to ten million cubic metres, which represents close to eight or ten mills, as it is. And you're proposing protecting 50 percent of British Columbia's land base.

How do you propose what needs to be done for those workers who will be losing their jobs as it is now because of the post–pine beetle, if you're adding more to the protected area? It means the AAC going down even much, much further. What are your thoughts on the communities that are actually forestry-dependent and that are there for generations, and the workers who make their good living in forestry these days?

The second question is on the log exports. As you know, last year close to five million cubic metres left our province. Can you just tell me what your organization actually has done — you know, concrete actions — to stop those log exports?

J. Foy: Well, let me start off by saying that there are three main levels of government in our country that sort of spring from the land: the federal government, the provincial government and First Nations governments. When we're moving towards 50 percent in the protection of the land base, those are the three levels of governments that will make the decisions.

An environmental organization, a union, a community group…. We're the citizens. We don't decide. But we do, all of us, stand on our rights to free speech. British Columbia has a history in these things. They are difficult things, just the same as the power between unions and companies is a difficult thing.

I would propose that we need to move forward the way we have moved forward, which is process. In such a process, I would argue…. Look, if you zip back a number of years, as a Newfoundland fisherman, before the collapse of the cod stock, your argument for jobs goes one way, which is more fishing. After the collapse of the cod stock, it goes another way.

I say here in the province…. In a changing world, reputation is very important — how the world views us. Certification is very important. I think it's to the interests of all the people — forest workers, forest company owners, citizens — that we continue the discussion about what forests to be set aside, because that job is not finished yet.

As for the issue of raw log exports — for 30 years we've been calling for the end of raw log exports. We are not the government. I have been out on the Fraser River holding banners and signs, and I have stood in protest with forest workers. The one thing I have never done is give up, because sometimes we're strong; sometimes we're weak. Many things are out of our control, but whether or not we give up is in our control. Our organization has never given up.

Raw log exports are idiotic. The longer we go with them, the more that will become apparent — the same way as hammering the cod stocks is now, apparently, idiotic.

B. Routley: It's interesting — your comment about raw log exports. In my previous life, I, too, held banners about raw log exports, and now I get to talk about it in the Legislature. Although we do know that it creates some employment, the issue is around the loss of value-added jobs.

The irony is not lost on me that I'm on a committee, you know, flying around B.C. trying to ensure that there's some kind of fibre supply for some of our regions, while at the same time our Minister of Forests is signing off on the export of raw logs as surplus to the needs of British Columbia. There is something wrong with that picture.

The issue that you raise about the war in the woods. I was certainly there. While you and I were on different sides, I do see that a lot of what ended up happening…. It's just setting aside…. We're actually far and away ahead of other places. I know the goal of the Brundtland com-
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mission — 12 percent was something that we supported. I know you want to go a lot further than that.

I guess my question comes down to…. The scientists say — and I've heard an eminent scientist suggest — that some of the greatest problems of our time are, of course, climate change, the burning of fossil fuels and poverty. Believe it or not, poverty is one of the largest environmental problems of our time, because in countries throughout the world, we're mowing down forest to put beans in the ground and have soya beans in Malaysia and other parts of the world. There's illegal logging going on.

I do fear…. I know that a sustainable forest is all of our goal. I think that would be your goal. It's certainly my goal to see sustainable forest harvesting in a plan that works for British Columbians and creates jobs and at the same time protects our environment.

I guess my question is: do you believe that…? I guess it's pretty clear that there's nothing that we can do to increase fibre supply in your mind. Do you have any ideas at all on how this committee might increase fibre supply, given the task of looking at fibre supply? Other than the issue of log exports, do you have any other ideas?

J. Foy: I think what we want to do is increase jobs, don't we? Those five points…. Crank down on the raw log exports, and reopen that discussion. If you're going to get access to timber, we want to hear what you're going to do with it — how we're going to get jobs out.

This is the interface between people and nature — right? I keep on bringing up the cod fishery, but we could bring up the salmon fishery. At some point nature has a colder heart than your banker. It just tells you: "Your account's empty. Deal with it."

I absolutely think the days of saying that to increase the economy is to increase the fibre supply are gone.

We can increase our economy. We all want that. I want that. My neighbours want that. Everyone wants that. But after what the central Interior has gone through, after we've now climbed to 1,900 species on the at-risk situation…. For other indicators of our environment a red light is flashing. The wild salmon industry is having a hell of a time.

I just think we need a new way of thinking. What I would say is that if we do it right, the forest industry will always be, and hopefully will always be, an important part of our economy — maybe even a more important part of our economy. But the days of shipping unmanufactured wood products out the door should be gone.

I think the question we should be trying to figure out after this disaster is: how do we hold on to the building blocks of our environment so that it'll continue to support us, and how can we get jobs and employment for the people in communities that are suffering? In some places that's not going to be increased timber supply because it's not going to be there without doing a whole heck of a lot of damage, I don't think.

J. Rustad (Chair): Joe, thank you very much for your presentation and for spending some time with us here this morning.

D. Lehane: Thanks, John. Good morning. I'd like to first thank you for the opportunity to present today. My name is Dave Lehane, and I'm the vice-president of woodlands for West Fraser.

I know that this committee has been charged with examining timber supply options. I just want to start with a brief overview of our business and use it as a model to put in context the importance of the recommendations that you might make as a committee.

As many of you know, West Fraser was founded in 1955 when the three Ketcham brothers purchased a small planing mill on Two Mile Flat in Quesnel. Our company is still based in Quesnel and has grown significantly since those early years. That growth has been founded on a clear understanding that we operate in a highly competitive global market and that reinvestment is the cornerstone of not only our growth but our ultimate survival.

Today we're a diversified forest products company that's based in British Columbia. Our British Columbia operations produce plywood, lumber, pulp, medium-density fibreboard and, most recently, electricity from biomass. Modern, competitive manufacturing facilities have provided long-term stability to our employees, our contractors and the eight communities where we operate today.

The short- and longer-term impacts of mountain pine beetle in British Columbia have been part of our business planning for over ten years. The reduction in harvest levels that is facing British Columbia today were predicted and well-communicated.

Understanding that harvest levels in the Interior mountain pine beetle zone would eventually be reduced, we made significant investments in B.C. to ensure our business viability post–mountain pine beetle.

With the purchase of Weldwood, we enhanced our diversity of products and enabled internal rationalization and efficiencies. We purchased timber tenures in the Kamloops timber supply area to reinforce our Southern Cariboo operations in Chasm, 100 Mile House and Williams Lake.

We've also made significant investments to modernize and enhance the efficiencies in both our sawmills and pulp mills. We recently responded to the B.C. Hydro
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phase 2 power call and are currently completing plans for biomass electrical generation, which will be installed in conjunction with our Fraser Lake and Chetwynd sawmills. This is a $90 million investment in bioenergy that will reinforce those sawmills and communities.

Our activities in the past ten years have not been all about growth and investment. Along the way we've had to make difficult decisions. They've involved mill closures and internal consolidation and rationalization. Our strategy since 1955 has been to invest in British Columbia, invest in our facilities to secure our future with modern, globally competitive facilities. These investments were made in an environment of stable forest policy that recognized free-market principles, competition and equal access to timber.

It's critical that the province maintain these principles, and it is the reason why we do not support the modification of administrative boundaries or the redistribution of timber tenures. Having said that, we do believe that the province has many viable and sustainable options to enhance the timber supply in the interior of British Columbia. Many of these are worth examining in further detail.

At this point I'd like to turn the presentation over to Larry Gardner, who can talk about some of those options in more detail.

L. Gardner: Hi. My name is Larry Gardner. I would also like to start off by thanking the committee for allowing us the opportunity to speak.

I'm chief forester for West Fraser's B.C. operations. I've worked for West Fraser for 32 years. Half of that time was in the field. I've also been through two beetle epidemics. In fact, almost my entire career has been influenced by mountain pine beetle.

My experience has been diverse and has included supervision of harvest operations as well as forest planning. I've seen firsthand the positive changes made to forest practices and land use planning over the years, and I'm acutely aware of the importance of our social licence to operate on the forest lands owned by the people of the province.

Now, I'm hoping to deliver some key messages today. They are: the need to maintain high environmental standards to secure our environmental reputation; that there are options to mitigate timber supply reductions in the mid-term — that they need to be examined; and, as Dave's already stated, that government needs to respect existing, replaceable harvesting rights and ensure equal access to an efficient, competitive and open log market.

In the longer term we think there are options, legislated options, that may be available to transition to area-based tenure. That would provide greater certainty, thereby enabling intensive silviculture investments that will increase the timber yields over time.

Successful adjustment to a post–mountain pine beetle world relies on a balance between three central factors: economic security, environmental stability and community stability. British Columbia has, through years of land use planning, found this balance.

Even though we endure an unprecedented impact to our forests from mountain pine beetle, we must endeavour to maintain the high environmental standards that we've created. The province's and our own environmental reputation must remain intact as it is the price we pay for entry into the global market.

West Fraser is a Canadian company that started out as a small planer business in 1955 in Quesnel. Our company philosophy of reinvesting profits to create efficient sawmills and globally competitive manufacturing facilities has served our employees, contractors and communities well. West Fraser's operations overlap the area impacted by mountain pine beetle, and the primary tree species we harvest today is lodgepole pine. The timber supply reductions that are forecast come as no surprise to us, or to any of our foresters, for that matter.

For years we have known there will be timber supply falldown following salvage efforts. To date, despite very rough economic times, industry has done a good job of salvaging dead pine and in creating new plantations. This will be an accrued benefit for future generations.

Salvage harvesting was and still is the most efficient method for rehabilitating mountain pine beetle stands. But the issue before us is not primarily about the short-term salvage of dead pine. It's more about what we should or can do to mitigate timber supply reductions through the mid-term after the mature pine has surpassed its economic shelf life.

When timber supply reductions occur, replaceable licence volumes will most likely be reduced and open market log purchases will become increasingly important. This outcome of the mountain pine beetle epidemic was anticipated and planned for and therefore does not in itself worry us, provided government respects the investments in existing replaceable harvesting rights and supports equal access to an open and competitive log market.

As already mentioned, West Fraser has remained competitive by reinvesting in our facilities. This is a strategy that we believe is important to our success.

Now I'd like to comment on mitigation. Several years ago, Minister Bell made a presentation he called Filling the Gap. In his presentation he spoke to three ways that timber supply falldown could be mitigated. Firstly, we can extend the shelf life of pine. Secondly, we can take actions to grow the timber faster. And thirdly, we can make more timber available for harvest.

The installation of new sawmill technology has helped us extend the economic shelf life of pine, but the biological shelf life is beyond our control. West Fraser has considered the other two options for mitigation, and we
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offer the following comments of what we believe are the best opportunities.

Firstly, an examination of land use plans for timber availability. To begin with, and I want to make this clear, this is not about reopening land use plans. West Fraser does not support the reopening of land use plans. These plans were created with a great deal of stakeholder input and should not be circumvented by a short public consultation process.

However, we do support a close look at each land use plan to examine and ensure that timber targets are being fully met, that non-timber values are not overallocated and that every opportunity to increase available mature timber is explored, provided conservation values are maintained.

West Fraser believes that within existing land use plans there are means to increase the available mature timber volume without compromising the non-timber values. These may include looking at the mobility of conservation values or achieving conservation values over time. Critical non-timber values such as caribou, critical fish, water quality — all of these values — must not be jeopardized.

West Fraser values its responsibility to the environment, and B.C. must maintain its environmental standards and earn a global reputation. Therefore, it is paramount to gain a social licence before applying any alternate means to achieve land use plan objectives. Foremost is the need for community support.

Harvesting of low merchantability stands. In some management units timber analysis has shown there is an opportunity to make more timber available simply by lowering the timber merchantability specifications. Since many of these stands are already being harvested and more will be harvested in the future as mature timber becomes scarcer, no specific actions are needed by government. In the Cariboo region we're already regularly harvesting stands below 100 cubic metres per hectare, and as timber becomes less and less available, I can see us harvesting similar stands north of Quesnel.

Economics will drive the level of the utilization that takes place. Therefore, anything government can do to lower the cost of harvesting low-volume stands will increase the timber supply. Government needs to carefully examine the long-term fibre supply to existing MDF, pulp, OSB and energy facilities before encouraging new entrance into low merchantability stands.

Inventory. The quality of inventory should be balanced with government's need for accuracy in decision-making. In order to assess the availability of timber and the value of stands to meet non-timber values, more detailed inventory might be needed in selected management units.

Infrastructure improvements. This is one way of lowering the cost to industry. There are road systems that could be built or upgraded to improve access for all resource sectors that would help to expand the economic timber supply. I use examples of roads that could be built west of Nazko or north from Smithers, Houston or Fraser Lake into the Fort St. James district.

As you've heard in Quesnel, and I'll repeat here, we're strongly in favour of area-based tenure. I'll repeat ourselves one more time here. This type of tenure, area-based tenure, improves our certainty of supply and thereby encourages investment. West Fraser holds more than one tree farm licence, but we've held a tree farm licence in Quesnel for many years.

We've increased the annual allowable cut by 15 percent since it was awarded in 1991 — on a shrinking timber-harvesting land base. Rotations are now forecast to be 20 to 40 years shorter. This has been accomplished through extensive use of genetically improved seed, shortened regeneration delays, higher-density planting and aggressive brush control. Timber supply can also be increased through the benefits of total-chance planning on area-based tenure.

However, given the shortage of mature timber, the full benefits of intensive forest management cannot be realized in the mid-term unless opportunities can be found within land use plans that free up mature timber. You have, I know, been brought up to speed on the ACE effects, so I won't go into that.

One of the questions I have is: if we do create area-based tenure, should portions of the area-based tenure be designated as commercial forests where the primary focus is timber production?

It should come as no surprise that West Fraser supports area-based tenure, as we have been promoting it for a very long time. It is a simple principle. If a licensee is a beneficiary of the forest management results, it will enable investment.

Area-based tenure may not be the best fit for all circumstances, particularly where there are multiple replaceable tenure holders. However, in other jurisdictions there are models that are working.

Area-based tenure may also not be suitable for an area where there is no merchantable timber available. West Fraser recommends that government create legislation that will permit the exchange of volume-based tenure for area-based tenure on a proposal basis. These proposals should be critically reviewed, based on the proponent's track record, community support, sustained employment record and demonstrated good forest management practices.

In closing, it's not possible for government to guarantee enough volume to ensure that there is no impact on manufacturing facilities or on our communities. We know there will be further industry rationalization. We do, however, expect government to treat all replaceable licensees equitably and to maintain equal access to a competitive open log market.

Government should not be choosing winners and los-
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ers. Rather, efforts should be put towards creating a business environment where the forest industry can be most efficient and internationally competitive. There are many mitigation options that are available, but each management unit will have its own solution.

J. Rustad (Chair): Thank you very much. Questions from members? First question to Norm.

N. Macdonald (Deputy Chair): Thank you very much for the presentation. Two questions. First, we take your point that environmental reputation is important and that, as a business, you've planned for this for ten years, and you've organized your business around the reality of….

Two questions. One is on inventory — a bit of a nuanced statement on inventory, saying that you need improvements in certain areas. In terms of the government, presently I think it's around $6 million spent on inventory. The professional foresters say $15 million is needed. At the height of FRBC, it was up to, I think, almost $30 million.

Now, I don't need a dollar figure, but how much more? Can you give, on a scale, how much more investment you think government needs to make in inventory to get to a place where you'd be comfortable as a business in terms of the information you have?

L. Gardner: I wouldn't put a number to that, Norm, but I do have to recognize that government has been redirecting efforts into getting better inventory. We may not have all the answers or be able to obtain all the answers tomorrow. It's going to take a number of years.

The only thing that concerns me is that we ensure that the level and quality of the inventory work we undertake can answer the detailed questions that we need to ask. How much dead pine is there out there in the stands versus live pine? Making sure of the accuracy of the species in the timber types — that we understand that. Knowing where all the little dribs and drabs of timber are on the land base.

All of these things are not just to benefit our ability to set the right cut and to harvest these stands but also to be able to have a proper inventory of those stand types for other non-timber values and to be able to know where they are distributed. So maybe that gives us some more flexibility in being able to access timber by doing that.

A number? I don't know. It's being stepped up now. I would like to see it continue to be stepped up and attained in a short period of time.

N. Macdonald (Deputy Chair): Okay, and one other quick question. Low-merchantability stands. Obviously that's an area that the committee is interested in.

Your comment was: "Anything government can do to lower costs." There are roads, I think, in the Quesnel area. There are the hydro improvements. Is there anything beyond that that West Fraser was thinking might be possible for government to do, given the constraints of trade agreements and things like that, and still be something that would be useful for getting that fibre?

L. Gardner: Yeah. To add to that, in areas where the stumpage is calculated at…. It's well into the negatives. It won't be positive stumpage in many of these far, distant, low-volume stands. They're running at 25 cents, and so anything you can do to lower your cost is a direct benefit. Do we need to have as intensive a cruising? You know, anything they can do at lower cost. The accuracy of that kind of work is not needed. There may be other field activities that could be lessened and relaxed as well. It could be some of the surveys.

One of the things we were putting forward that we thought would be beneficial would be…. We know we meet regen delay regularly. Why do we do regen delays? Why don't we just move that and do a check-in at free growing? That sort of thing.

D. Barnett: Thank you very much for your presentation and the presentation that we had in Quesnel. Of course, we had a great tour up there and had the opportunity to really see what the land base looks like and the great job everyone's doing.

Of course, I'm very close to West Fraser, as I know that two of my communities basically survive because of West Fraser. I believe you have good, strong community ties, and I know that the communities certainly are working with you to do their part to help West Fraser continue on.

The one concern that I have — as we all do — of course is the cut and what the future is going to hold for those mills in the Cariboo-Chilcotin. You might not want to answer this question, but without some increase in timber supply somewhere, do you believe that the future for the Cariboo-Chilcotin is strong in the existing forest industry?

D. Lehane: I think the answer to that, certainly, is yes, but I don't want to leave the impression that there's a home run or a magic bullet or silver bullet here. I think there's an opportunity for incremental change, incremental improvement and incremental availability.

As far as the South Cariboo goes, we made a significant investment after Weyerhaeuser closed their Kamloops mill to purchase tenures. Those logs are moving from Kamloops to the Cariboo today. That was an economic decision.

There will be further rationalization in the Interior and, I think, in the Cariboo. We need to understand what the timber supply is and then make investments to reinforce those facilities that are going to survive long term. That's
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been the philosophy of our business, and it's why we started to move wood from Kamloops into Chasm, 100 Mile and Williams Lake.

People may not see it clearly, but a cutting permit in Kamloops goes a long way to support the Williams Lake plywood plant. It's about economic reach, and that's what we're trying to do in the South Cariboo today. We have some challenging decisions to make in the future.

B. Routley: Regarding area-based tenures, what I'm familiar with were tree farm licences that have undergone dramatic change on the coast. We once had…. In some cases, a third of the land base was private lands that made up tree farm licences, and there used to be the social contract that committed the fibre to communities. It was broadly known as appurtenancy.

What's the quid pro quo for moving towards area-based tenures? I mean, obviously there are some benefits as long as you can show that…. For any government, you would be remiss in ensuring that any area-based tenure move was to the benefit of the majority of British Columbians. So how could we assure ourselves that any change was to the benefit of all British Columbians? For example, what should be the rules around ensuring that there actually is the investment in…?

You point out a 15 percent change in the allowable cut since it was awarded. How do we assure that there's investment in doing that, and what should happen if the timber that's allocated with the connection to the community and to mills…? If mills shut down, should companies lose timber?

L. Gardner: We look at area-based tenure as the type of tenure system that enables investment, whereas volume-based tenure is not enabling that. It could. It would be the government's responsibility to put that investment in there. But it doesn't enable investment by private enterprise.

So the way an area-based tenure is managed…. It varies between licensees, and it varies between woodlots and community forests as well.

I think what you're doing is just creating the right environment to allow that investment. What I'm just trying to demonstrate is that we found that right environment, so we have invested. It doesn't matter if it's a TFL or if it's a community forest. You still need to have that environment to encourage investment.

B. Routley: A follow-up. The right environment, I certainly agree with. But, again, I've experienced private landowners, and I'll use the example of Pacific Forest Products. There was a 100-man crew that worked in Pacific Forest Products, and I was there in 1990 when they announced that they were going to go from a 100-man crew down to 25. That was so that they could continue into the next century. A year later they laid off the remaining 25 and went with a small contractor. They basically had logged the entire land base and were waiting for the trees to grow back.

So there's an example of somebody who didn't…. I mean, they did do some intensive forestry towards the end, but they did not manage the land base well.

Of course, with tree farm licences, when you suddenly took out the private land we actually lost a lot of the benefits that were done by federal governments investing in FRDA 1 and FRDA 2, planting and spacing and thinning that went on, a lot of it primarily focused on their private lands, by the way, a portion of the tree farm licence that was subsequently taken out.

But I've also seen companies and woodlot owners that are very successful. So just how do you make sure that we don't…? We want to reward the good actors, but how do you deal with those who are not going to invest and are going to hurt communities? Well, in my view, there has to be some kind of quid pro quo.

D. Lehane: Bill, we certainly do not support the return of appurtenacy. We think that just disrupts the logical economic flow of logs. But on area-based tenures we're certainly not suggesting that it's good for everyone, everywhere. There needs to be a mix or balance of tenures, I think, across the province, whether they're big, small, area-based or volume-based.

What we're suggesting is that there is some enabling legislation. It's not a new idea. It existed in the past — where a licensee with replaceable tenure could offer to exchange his replaceable volume-based tenure for an area-based tenure on a proposal basis. It would be government's prerogative to evaluate that proposal on its individual merits.

The province has moved significantly towards creating small area-based tenures in woodlots, community forests. The challenge, I think, that we have there is that…. This committee has heard it extensively — about the innovation that small tenure holders, horse loggers and selective loggers have. I think the challenge we have is to make sure that the mix of big and small is appropriate on the landscape.

Where those small tenure holders can excel is in highly sensitive areas, visual areas — areas close to communities. I think government has a responsibility to ensure that those small tenures are placed on the landscape where the value of their small scale can be maximized and complementary to the larger-scale operator. We don't see that happen in all cases today.

B. Routley: While I can understand — and I may even agree; I'd have to think some more about it — about whether we should never, ever return to appurtenacy, I would argue that B.C. logs should create B.C. jobs. I don't know if you agree with that. But there's got to be
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something, if you're going to look at area-based tenures. Maybe it's as simple as that kind of a notion.

D. Lehane: You know, at the end of the day the province owns the trees and gets to make the decision on what values they want to create with them.

Log exports are not a part of our business. They are not a part of our Interior operations. The logs that we harvest are either manufactured in our mills or traded with other suppliers.

It's a hugely complicated issue that we debate, that we try and stay out of, because it doesn't affect our business. We tend to talk about log exports at the same time as we're talking about mountain pine beetle impacts. I think the coastal operations are significantly separate from the mountain pine beetle zone. Really, what we're doing today in Fraser Lake or Quesnel isn't impacted by the log export debate.

J. Rustad (Chair): Thank you. We are just about out of time. One quick question from Ben — if we can keep it short.

B. Stewart: Okay. I understand that in your opening comments you made a comment about the forest policy that recognized free-market principles, competition, equal access to timber. But in the next…. When we talk about harvesting of low merchantability stands — and from what we saw in our tour about product that is not being utilized, left in the forest, that you'd call waste — I guess what I'm asking is…. You're utilizing it in a lot of different manners — OSB, MDF, energy facilities — but we're still seeing quite a bit of that out there. I guess you're suggesting we don't really have the ability to issue licences, maybe, to people that want to take that material that is waste and turn that into pellets or some other things.

You know, you're talking about kind of closing the door on licences, but on the other hand, keeping a free market. Maybe you could just kind of better explain how we utilize the waste and get that out of the forest so it is as well utilized creating jobs as possible.

D. Lehane: It's really a caution. Today in the mountain pine beetle zone there is more cut than is being utilized. Whether or not you're extracting wood from the forest is an economic decision today.

As timber supplies get more and more constrained, people will move into greater and greater utilization. It's what happens. But the caution that we have is that if you take that marginal timber today and you allocate it to a new entrant, it's predicted, I think very well, that very closely behind sawmill curtailments will come a fibre shortage for existing producers of pulp, pellets, medium-density fibreboard.

I think there is in excess of a million cubic metres today that’s whole log chipped to produce pulp. That will grow significantly. Our company saw that during the last market downturn, which we're just slowly clawing out of. As sawmills took downtime we very quickly increased our whole log chipping and our biomass extraction for pulp, energy and for MDF.

Many of our pulp mills in B.C. today are retooling so that they can produce energy and can produce bioproducts somewhere in the future. As biomass as a residual or by-product gets less available, those facilities will be reaching out further and picking up that biomass. At the end of the day, it is all about demand and economics.

L. Gardner: I'd just like to add one thing to what Dave has just said. The product, pulp, is still one of the highest-end values for that fibre, and so we see that the reach of our pulp mills will be going out to whole log chipping in the future, and I think the forecast was that two million cubic metres are going to be needed on an annual basis in the near future.

K. Shields: Good morning, everyone. On behalf of all the stakeholders and committed employees of Conifex, we appreciate this opportunity to share our views with the Special Committee on Timber Supply and to talk to government about enhanced hosting conditions that could be put in place to propel growth in the bioenergy and bioproduct areas, all in furtherance of the province's job creation objectives.

I'm Ken Shields, the chairman of Conifex, and with your permission, I will provide some opening remarks. My two partners here with me — Tony Madia, head of corporate development, and Kalin Uhrich, head of forestry — are available to respond to your questions.

Our intention today is to describe how we would like to work with government to position companies similar to Conifex for future success in light of the MPB epidemic here in B.C.

In August 2008 we purchased forestry and sawmilling assets at Fort St. James, B.C. In June 2010 we purchased additional forestry and sawmilling assets in Mackenzie, B.C., as well as an idle pulp and newsprint complex that we are repurposing. We recently purchased two companies that provide lumber marketing and transportation services. Since inception we have raised $150 million from shareholders to purchase and upgrade these businesses.

In 2008 we had one employee. Today we have 527, and of the 527, 480 high-paying jobs are based in Mackenzie and Fort St. James, the two most forest-dependent com-
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munities in our province. Our 2012 cash outlays in these two communities will exceed $150 million, of which the largest portion is represented by payments to local logging contractors, followed by wages, salaries and benefits, and that, in turn, is followed by payments for supplies and materials.

We plan to invest $80 million in Mackenzie, converting an idle pulp and newsprint complex to a power facility supplying green electricity to over 20,000 households. This game-changing development will allow us to restart our third sawmill, leading to a further increase in the expenditures funded through local communities.

Our objective is to build Canada's premier forest company. To achieve this ambitious objective, we intend to develop new revenue streams around our core lumber business. We view the new business opportunities as enhancements, not substitutes, to our core forestry business and sawmilling business. We intend to use the merchantable wood available to us for conventional forest products for decades, even if energy prices increase.

You may find our recommendation differs from the advice you will have received from traditional forest products companies. We launched our company and commenced operations after the MPB infestation was well established in B.C. Over five years ago we and other knowledgable industry observers recognized that there were too many sawmills in B.C. relative to any reasonable estimate of the available future supply of sawlogs.

We also recognized that there were exciting opportunities available to us, one, to capture incremental revenues from the 50 percent of the volume in each log that is used for products other than lumber, and two, to develop new and profitable uses for in-forest woody biomass that is not currently accessed here in B.C.

It is against this background that we formulated one recommendation we wish to share with you today. Our one recommendation outlines the path forward to expand the interior B.C. fibre basket. We are not appearing before you to mourn the inevitable decline in the supply of quality sawlogs. To us, the silver lining in this dark cloud of declining sawlog availability is the continually growing demand for low-quality fibre that is really only suitable for bioenergy and bioproducts.

Our recommendation is consistent with the strategic direction set out in recent publications, such as the reports published by the Working Round Table on Forestry. We agree that "wood waste and residue can…generate clean electricity" and that "export markets for biomass products are growing quickly, creating opportunities for B.C. technologies and products."

Here is our one recommendation. We request that the province design and implement a new form of long-term tenure that allows existing replaceable tenure holders secure access to low-quality fibre, subject to appropriate reforestation obligations, cut-control provisions and Crown charges.

We believe it is important that policy and legislation support the use of low-valued wood fibre for higher-valued bioenergy and bioproducts. In this way the bioenergy and bioproduct harvest can increase and offset much of the decline in the sawlog harvest, thereby maintaining employment.

Let me outline several reasons why this approach makes good business sense and represents good public policy in B.C.

Reason 1. Under the current regime, replaceable tenure holders are governed by cut-control legislation. We basically have a floor and a cap on the volume of sawlogs we harvest over a five-year cut-control period. This causes tenure holders to always focus on taking the best of what's left, which means too little emphasis is placed on harvesting and reforesting marginal stands. Simply put, if subject to a harvest quota, operators will always access the highest-quality fibre.

Reason 2. Under the current regime, new entrants to the forest sector are able to access bioenergy tenures in priority to existing tenure holders that wish to grow and develop their bioenergy segment. The Working Round Table on Forestry on the one hand comes out strongly in favour of industry transformation, yet it grants a preference and priority in bioenergy tenures to new entrants. Our recommendation levels the playing field between new and established holders. Both existing companies and new entrants are capable of supporting industry transformation.

Reason 3. Although it makes sense to attract new participants to the industry in B.C., it makes even more sense to encourage existing tenure holders to add a bioenergy and bioproduct component to their operations.

A report co-authored by FPInnovations and a managing director of CIBC World Markets concluded: "The research shows that bioenergy and bioproduct opportunities are stronger economically and socially when integrated within the traditional industry's operations rather than on a stand-alone basis."

Reason 4. The existing stumpage charges fluctuate in tandem with lumber prices, yet many of the new businesses the B.C. forest industry is capable of hosting have revenue streams that are completely unrelated to lumber prices and U.S. housing starts. The advantage of our recommendation is that the new tenures would be eligible for a system of Crown charges, which reflects the ability of the new businesses to pay Crown charges on low-valued fibre.

Reason 5. When reviewing the historic growth of the B.C. forest products industry, it is clear that security of fibre was of crucial importance to investors and lenders who were responsible for the initial buildout of our lumber sector followed by the buildout of the pulp sector in the 1960s and 1970s. Our recommendation provides the
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security of tenure required to attract the funding and investment necessary to build B.C.'s bioenergy and bioproducts presence.

Reason 6. Current reforestation regulations obligate a licensee to establish a suitable crop of trees and achieve a state of free growing. This free-growing process typically takes from ten to 20 years to accomplish and involves a significant investment by a licensee. These areas are generally productive fertile lands that readily accept and nurture the planted crop trees.

However, if a licensee were to log areas currently excluded from the timber-harvesting land base, such as problem forest types or marginal stands, then we recommend that the province accept a modified stocking standard that is appropriate to the quality of the site that is being harvested. In other words, we believe that the result of reforestation obligations on non-timber-harvesting land base lands should be commensurate with the growing potential associated with these areas and the expectations and definitions for achieving free growing should be tempered accordingly.

Reason 7. Once lower-valued, currently non-contributing stands are harvested and replanted, they will be converted into fully productive stands. This will permit an increase in the long-term sawlog AAC in the future. The rate of this stand conversion and the attributes of the stand being converted will be key factors in how much more and how soon the sawlog AAC can be increased in any given TSA.

Reason 8. As presently constituted, B.C.'s sawlog harvest needs to be overseen with reference to the terms of the softwood lumber agreement. This creates rules and restrictions on the harvest that are appropriate for the lumber sector but have no relevance for the bioenergy and bioproducts sector. This also creates uncertainty when the remaining term of the softwood lumber agreement is short, or when our two countries cannot agree on the terms of cross-border lumber trade.

It follows that lenders, too, and investors in the bioenergy and bioproducts areas would be reluctant to provide capital to the sector given this situation. The advantage of our recommendation is that it has the effect of partitioning the harvest into a sawlog component, which could continue to be impacted by softwood lumber agreement matters and a non-sawlog component, which need not be shaped by softwood lumber agreement matters.

Summing up, we believe there are powerful advantages to British Columbians if the province gives favourable consideration to our recommendation. Before turning to your questions, let me quickly review the three main factors underpinning our decision to invest in the Interior B.C. forest sector.

The first was the policy and regulatory framework in place in the province. We were impressed that sawlog tenure holders in the province were able to rely on predictable fibre costs that allowed operators to remain competitive on a global basis while continuing to adhere to the Canada-U.S. softwood lumber agreement.

The second was the quality of the forests in our operating areas. Although the mountain pine beetle infestation has killed trees in the Mackenzie TSA and Fort St. James district, our forecast of sawlog supply in these two regions remains robust, primarily due to the preponderance of spruce and balsam forests that have not been impacted.

The third was that we were proud of the province's record of sustainable forest management. In public forums and in meetings with foreign customers successive Ministers of Forests reminded the audience that B.C. has more timberland subject to third-party certification than any other country in the world.

Against this background, we urge the special committee to stay the course with B.C. forest policy relating to sawlogs and the environment. Please do not take any action that has the effect of raising doubt about the sustainability of our forest practices. Please do not take any action that has the effect of having the province determine which tenure holders end up as winners and losers in the inevitable rationalization of the industry which is underway.

Please give favourable consideration to initiatives which allow existing participants to continue to transform their business from one which was entirely dependent on sawlogs to one codependent on sawlogs, with important revenue streams generated from low-quality fibre being utilized in emerging product lines.

Thank you for this opportunity to present today, and we would welcome any questions you may have.

Maybe I'll just ask a first question. With your operations, when you're talking about a new form of tenure, are you talking about something that would be overlapping with existing tenure, or are you talking about a tenure that would incorporate the existing replaceable but also provide that non-sawlog component as part of the tenuring and pricing system?

K. Shields: That's a very good question, John. In terms of our internal discussion and debate regarding this, we could not come down as to whether these should be volume-based or area-based tenures, so if…. I'm anticipating one of your questions. We do not have an answer on that. We think that both could work and so, too, could a combination of both.

Candidly, we view this as being separate and distinct from the sawlog harvest opportunities that we have. We view it in adjacent areas and from stands that are not currently included in the areas that make up the AAC deter-
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minations for sawlogs in the province.

K. Uhrich: No, I think that's the sum of our discussions that we've had. Like Ken said, I think that it could work in an area-based concept or a volume-based concept. It would really depend on the situation and circumstances.

J. Rustad (Chair): What I was trying to drive at with the question is more around the logging residuals and the components that are currently not utilized. It's estimated that somewhere between 15 and 30 percent of the tree is not utilized. For the biofibre opportunity that you're looking at, there's a tremendous amount of fibre associated with existing replaceable sawlog licences. That's why I was wondering how you would get at that fibre in a new licence format on existing operating areas.

K. Shields: John, let me attempt to answer that without getting into the specifics of the forest industry legislation. As we're presently constituted — and I'll use Mackenzie, British Columbia, as an example — we have a conventional sawmilling operation. Our non-lumber portion of each sawlog is going to be directed to the pulp sector, and we are a very important supplier to the Mackenzie pulp mill complex.

We have and believe we have access to harvest residuals and other sawmill residuals that will allow us to fibre up our power plant. Now we want to grow the business further.

Some of the reports that we read indicate there is something like 55 million cubic metres of beetle-infested dying pine in the southern part of the timber supply area. From our operations, we're also aware that there are some stands that would be attractive to us as a source of fibre for bioenergy and bioproduct opportunities that are not included in the land base when we determine the sawlog harvest.

Going forward, we would like to add some additional business in Mackenzie, but from a provincial policy point of view, there's no net gain if we redirect fibre from, say, a pulp mill back into one of our converting facilities. What we want is an opportunity to go out and find incremental sources of fibre so that we can keep our traditional residual fibre sources fibred up but have the ability to add new business units to our operation there.

I think I might be better at describing our problem than the solution, but we're very much looking forward to what will no doubt be very thoughtful points that are brought out by your committee when your report is released.

B. Routley: Reason No. 6 under your new kind of tenure. You are looking at the state of free growing. You talk about the marginal stands having a modified stocking standard. What kind of things are you thinking about there? How modified are you…?

K. Uhrich: We don't have any specifics around that. I guess just in principle…. These stands are excluded from the timber harvesting land base for reasons. Quite often they're economic reasons. Sometimes they're productivity-related reasons.

In the case of productivity-related reasons on the land, what we were thinking about there was having some ability to…. If we were to harvest those sorts of lands, would there be opportunity to bring those lands back into production? Under the current rules and regulations around silviculture today there's a series of stocking standards that you have to meet. Without getting into a bunch of specifics, some of those stocking standards would be virtually impossible to achieve in those areas.

What we were contemplating there was working with government, working with forest practitioners to come up with modified stocking standards in those areas where the stocking standards that we would see on the rest of the land base…. It would not be appropriate to put those stocking standards on this problem area.

That's really what we were contemplating when we talked about this particular aspect.

The concept that has come up in our internal discussions is that if we had a broad cross-section of land area from these low-quality stands that we're talking about, we firmly believe that in the entire area, following the harvest we should be able to increase the overall AAC, but it might involve a pretty traditional restocking on the most productive of the sites.

It's quite possible that there would be some sites where it doesn't make any sense to conduct a traditional restocking program.

B. Routley: As a follow-up, it could be that some of the stands are currently not economic because of their distance to a milling facility or manufacturing facility. The site itself might not be a problem. You could replant it. But isn't it true that some of those sites are actually not viewed as merchantable because of their distance away? They wouldn't really require a change.

K. Uhrich: I think that was the point I was trying to make, that there are some stands that are economically…. There is an economic impediment to getting to those stands. There may not be a land productivity issue associated with those, so we're not necessarily asking for anything different on those types of stands.

On the same topic, when you look at going into these marginally economic stands and looking for this new timber, are you…? I tried to quickly glance through this again. Are you talking about partitioning those stands, or just putting them into the cut?

K. Uhrich: I think that probably the way this would work would have to be some form a partition. It would either be a specific area that's partitioned — i.e., if that area was identified as non-THLB, and it would be contributing to a new form of tenure, perhaps a new AAC, then it would be perhaps a partition in that respect…. I think that would be the way that it would probably work. It would probably have to be a partition.

We'd want to make sure that there was a clear segmentation between that type of tenure and our existing forest licence tenures that we currently have. I think to do anything different than that would create a bunch of other issues. I think we do need to see the segmentation there.

J. Rustad (Chair): I think that might be it, then, for questions. Thank you very much for your presentation and for spending some time with us this morning.

J. Woods: I'd like to thank you for the opportunity to be here this morning and to address the committee. I've met some of you before. John, we had a meeting in your office a couple of years ago, and others I've met as well.

To start with, I'd like to acknowledge the Coast Salish people, in whose traditional territory we're meeting today.

By way of introduction, my name is Jack Woods. I'm the program manager for the Forest Genetics Council of B.C., a group I'll describe in a minute. I have a bachelor's and master's degree in forestry and forest genetics. I'm a registered professional forester.

Early in my career I worked for 17 years as a scientist of the B.C. Forest Service. For the last 13 years I've had the privilege of managing the provincial cooperative set up as the Forest Genetics Council of B.C. I also lead a small company called Select Seed Ltd., which is owned by the Forest Genetics Council. The business of the company is to produce and sell tree seed.

I'd like to acknowledge Larry Gardner on my left here, the chief forester of West Fraser Timber, who spoke this morning, and also Kerry McGourlick, who is chief forester for Western Forest Products. Kerry is not able to be here today. He is private sector co-chair on the Forest Genetics Council. Larry is also a member of the council. Both Kerry and Larry contributed to this presentation.

The Forest Genetics Council of B.C. is a group of representatives from the private sector, including large and small licensees; from academia; the Canadian Forest Service; and also the Ministry of Forests, Lands and Natural Resource Operations, which I'm just going to call "the ministry" from now on, if you don't mind.

The council has been in existence in various forms since the early 1960s and has provided a way for stakeholders in tree improvement and forest genetics to collaborate for effective and efficient delivery of a key long-term program. The council also provides policy advice to the provincial chief forester and recommendations on provincial public funding directed at forest genetics and tree improvement activities.

It's important to note at the outset here that none of the activities of the council are directed at the development, production or use of genetically modified trees. In fact, there are no genetically modified trees being developed or planted operationally on Crown lands in B.C. At the present time it's against ministry standards to plant them. The reality is that genetically modified trees are not needed, and we're not putting any effort into developing that option. I raise this as there is often a misunderstanding on this matter.

What is it that we do? The Forest Genetics Council has three primary objectives: increasing forest value, enhancing forest resilience and conserving genetic diversity. I'll focus on the first two: value and resilience. While conservation of genetic diversity in forest trees is important, receives attention and investment, it's not the focus of this discussion.

Not all trees are genetically alike, just as not all people are genetically the same. Using age-old plant-breeding methods in combination with sophisticated, modern computational techniques, tree breeders are able to identify trees from native stands that grow faster, have greater pest resistance and offer better overall value, from a timber perspective.

These selected trees are put in seed orchards where we can grow them to produce seed that is inherently faster-growing or more pest-resistant than wild non-selected seed. This increases productivity on the land base. When this is done on a large scale, timber supply is positively impacted. The planting of faster-growing trees results in shorter rotations, higher timber inventories and more options to increase allowable cut or to maintain the cut on a smaller land base. This component of what we do is referred to as tree improvement.

To give you a sense of scale, there are breeding programs for 11 species, all native species in B.C., and there are over 100 seed orchards in B.C. In 2011, 63 percent of the 239 million seedlings sown in B.C. nurseries were sown from select seed sources. This percentage has increased from less than 40 percent a decade ago, and a target of the Forest Genetics Council is to increase the use of select seed to 75 percent by about 2014.

The seed produced in private and ministry-owned
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seed orchards is sold to licensees and B.C. Timber Sales, where it is used in their Crown land planting operations. In a broad sense, financial support for the science side and the tree-breeding side comes from the ministry, and revenue from seed sales supports the business of seed orchards and seed production.

The level of genetic gain and growth rates varies by species and seed zones. Trees are biological organisms, and they all differ. Some species — like Douglas fir in the southern Interior and spruce throughout most of the Interior — have large amounts of natural genetic diversity for growth rate. In other words, some trees grow a lot faster than other trees. These fast growers are found by tree breeders, and we use them to produce seed. When used for our planting programs, this select seed can increase gains in growth rate and in timber supply.

At the upper end, we can increase growth rates for some stands by over 30 percent. This means a 30 percent shorter rotation or more volume at the same rotation age, relative to using non-selected wild seed sources. Our target is to realize a genetic gain of 20 percent for Crown lands planted with seedlings grown from genetically selected seed by the year 2020. At the present time our average gain for select seed used is 16 percent across all species.

I'll speak in a moment about maintaining stand resilience, but I'd like to spend a couple minutes discussing what this faster growth means from a timber supply perspective. Having read through some of the large amount of material you've been exposed to, I know you've received in-depth briefings on the technical matters of inventories, age classes and all of the unavoidable factors that line up against maintaining timber supply in the short- to mid-term.

Tree improvement is, unfortunately, not a short-term silver bullet, but it is one of the tools that provides more options and adds value on the land base. For management units with few stands and older age classes and with serious issues impacting the economic availability of timber, planting faster-growing seedlings will not have an immediate impact.

Typically, though, in management units with a falldown in timber availability in the next few decades, the use of select seed will result in more long-term timber inventory and in new opportunities to increase harvest relative to what it would have been if select seed had not been used. In other words, in some units the cut will still drop, but it won't drop by as much as it would've.

To use an example from West Fraser Timber in the Interior — and I'd like to thank Larry for these numbers — they estimate the increased long-run sustained yield associated with using select seed to be about 11 percent. When combined with intensive management practices, such as shortened regeneration delays, crop rotations will be reduced by 20 to 40 years, depending on the site and the species. This has a significant impact on a timber supply profile.

For management units with a more even supply of age classes and no mid-term timber supply drop, or less of one, the ongoing use of select seed can have an immediate impact on timber supply and annual allowable cut. To use another example provided by Kerry McGourlick, for Western Forest Products on the coast, where age-class profiles have not been impacted by the beetle, the use of select seed has increased the long-run sustained yield for six of Western's area-based tree farm licences by an average of 8.9 percent, or close to half a million cubic metres per year.

These represent fundamental, on-the-ground increases in productivity that result in more timber, more value and more jobs. To briefly benchmark this, all major timber jurisdictions — including Sweden, Finland, New Zealand, most areas of the United States — and many large private forest landowners around the world aggressively pursue tree improvement.

Because of the Crown land base we collectively operate on, and because of our complex climate and geography, we are less aggressive in our pursuit of genetic gain, and we put relatively more effort into ensuring that trees are genetically adapted to the location in which they're planted. We also pay relatively more attention to maintaining genetic diversity in our indigenous tree species than most parts of the world do. This is appropriate risk management in a province with long timber rotations and many potential pest risks.

This leads me to the next key objective of the Forest Genetics Council, which is maintaining resilience in responding to climate change. The term "resilience" is overused and misused. I could be accused of adding to this today. However, the broad concept here is that for millennia, trees have been genetically selected by the climate of the area in which they live, and as a result, they're genetically adapted to these climates.

Thanks to sound long-term research led by the Ministry of Forests and also by UBC, we have good information on the patterns of genetic diversity for commercial tree species and how these patterns align with B.C.'s climatic zones. This information is used to develop seed zones that guide foresters who are leading the planting of trees in harvested areas and in areas impacted by wildfire.

Put simply, ministry seed transfer standards restrict seed movement geographically to ensure that planted trees are well adapted to the site on which they're planted. This is a key way that we help maintain the health and resilience of planted stands. In short, we're aligning the genetics of seedlots with the climates to which their ancestors adapted.

And now the climate envelopes are moving. They've already moved. Scientists tell us that warming since the 1960s has already shifted these climate envelopes. Evidence is becoming increasingly available as we watch
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the beetle devastate Interior forests. This includes non-timber species like whitebark pine at high elevations. We also see changes in rust attack frequencies, dieback of yellow cedar and other issues.

While it's difficult to definitively attribute climate warming as the cause of these problems, there is mounting evidence that the trees rooted to the ground in the forest lands of B.C. are having the climate space to which their ancestors adapted simply move away. The results are increased stress, more pests and other issues that are the result of being improperly adapted to the area in which they're growing. This problem is going to increase. That's the bad news.

The good news is that we have a tremendous opportunity to respond to climate change at a very low cost. The decades of long-term field trials established by the ministry, the expertise of people in the ministry, in academia and in forest companies, and the climate modelling work done at places like UBC and elsewhere provide opportunities for us to conservatively shift seed zones to ensure that planted stands are well adapted to changing climates.

We're not talking about the wholesale and risky use of seed in completely new geographic areas. What we're talking about is a steady adjustment of seed transfer zones over many years, using the best available information and science to ensure that the seed being used and the planted trees are from genetically appropriate seed sources. We're beginning to do this now, and we expect to continue to do it.

In many cases, climate warming is actually increasing productivity, but it only increases if we use the right seed source in plantations. To put it in timber supply terms and value terms, we have the opportunity to mitigate climate warming impacts and to even benefit from these impacts in some areas. The data tell us that in B.C. we can help mitigate this generally alarming situation if we have the right science, policy and seed production infrastructure in place.

What this means is that for only the cost of good science and for some adjustments to existing seed production facilities, we can leverage, at virtually no additional cost, B.C.'s massive operational planting programs, programs that routinely plant some 240 million trees every year. Licensees and B.C. Timber Sales already plant these trees, so there's no cost to doing this. We only need the right science to tell us how to move the seed.

From an economic perspective, using numbers developed from timber supply analyses and productivity across the province, we can positively impact timber supply by some five million to ten million cubic metres per year, with all of the economic value, jobs and tax revenues that come with it — all of this for only ensuring we have the good scientific information in place.

The opportunities would largely be realized in the mid- and longer-terms, but there are also nearer-term benefits like better survival and growth of planted areas and, for some management units, the ability to shift harvest closer to the present.

It's not a stretch to imagine that a future special committee on timber supply, similar to this one, will be discussing how to allocate additional timber. Sweden has increased timber in inventory and harvest volumes substantially and continues to do so. Their extensive cooperative forest genetics programs are a big part of the reason. I might just add that Sweden is also aggressively pursuing moving seed differently under climate change, which we call assisted migration.

My goal today is to make you aware of B.C.'s longstanding and very productive and cooperative program of forest genetics and tree improvement. Around the world programs of this type bring people together to cooperate.

In B.C., where the land base is largely Crown-owned, the Ministry of Forests has appropriately taken a lead role, and licensees have willingly participated and provided additional leadership. Two well-respected colleagues are working with you — Larry Pedersen and Jim Snetsinger. Both have been highly effective provincial chief foresters, and both have done a great deal to support cooperative forest genetics and tree improvement programs in B.C. I'd like to acknowledge and thank them.

Every program, however, has a pinch point. Ours is primarily linked to the succession of scientists and technicians in the ministry. Broad provincial cutbacks have limited hiring. The majority of the small group of scientists and technicians who lead the technical aspects of our cooperative program are quickly approaching retirement, and replacements are not being made.

A number of key people have already retired. We're facing a crisis in the supply of highly trained people to do this work. This is nobody's fault. The problem has resulted from other decisions made at a different level.

The result, however, is that we are going to lose the opportunities for long-term mitigation of climate change impacts and for long-term enhancement of timber supply. If we can't get a small handful of about six or seven people in place to learn and further develop this science before the current people retire, we lose the expertise they've developed over many years.

Just one thing to add to that. We can't in fact go out and hire these people, because they don't exist. They have to be trained in the job. Graduate students in genetics in universities are strongly moving in the direction of genomics, and very few of them have the right skills when they come out of school. We really need to hire people with the right talents and then train them for a number of years in the job.

I'd like to leave it at that and just have a quick summary of several key points. First, the use of genetically selected tree seed is adding to timber supply with both near- and long-term timber supply benefits. Second, the mitigation
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of climate change through the proper matching of seedlots with climatic areas is an effective and cheap way to enhance timber supply in the long term. Third, we have in place all the elements for this program to continue to make long-term and productive contributions to timber supply. What we lack is continuity with a handful of key people.

This program can work smoothly and is relatively inexpensive, but it needs stable support that can be leveraged through licensees and through operational planting programs.

I take your point that there is opportunity with the work that you do with genetics. I think you made a point of saying that there's danger with a degree of genetic uniformity. If you're not doing it properly, you can impact the resilience of the forest, but done properly it's a great tool.

I guess the other point that you've made is that we have to make sure, as legislators, that we're investing in the government's part of this work. We take that point.

We did have an opportunity to see…. When we were in Quesnel, we had a chance to tour one of the fairly recent facilities, I think. It's impressive. I didn't have a chance to go, but MLA Routley…. We were doing a tour, and he went to the Surrey seed facility, and it was impressive.

Anyway, thank you very much for coming, and we take your point. A small number of people, and there is an institutional knowledge that you're saying has to be passed along. We take that point.

B. Stewart: A very interesting presentation and a completely different context than what we've been hearing.

I guess, really, the main thrust is: how do we get sustainability in terms of what it is that you're trying to do? I think about the Freshwater Fisheries Society — of course, how that was kind of created out of where government ran something and spun off into something that was, essentially, self-sustaining.

I look at the tree fruit industry and the Okanagan Plant Improvement Corporation, which is at Summerland research centre, which is not really too much different — I mean, in terms of what it's looking for — and then some of the facilities that are at institutions across Europe in the industry I came from.

I guess what I'm wondering is if we tried a participatory model, where the beneficiaries…. They are really the people who are harvesting the trees on the land. Trying to get their direct involvement in funding, either through some sort of royalty or whatever it ends up being…. I don't know.

We were at one the other day in Quesnel. I know that that is industry-funded — but I guess, really, to the point where it's being driven by the needs and what industry drives, of course. Rather than the government trying to predict all of the things that you're talking about — the climatic changes and things that are going to be necessary to…. What's going to be the next best tree in the Cariboo?

L. Gardner: I would just say one thing to that. Ultimately, the trees in this province are owned by the people. The commitment by the province to support tree improvement is critical.

In many other jurisdictions that land is private, and it can become more self-sustaining and driven by those interests, rather than, I think, what we're looking at here, which is a cooperative program that involves industry and government, to all our gain. Really, the reason why industry is involved is because we're looking to the future as well.

J. Woods: I was just going to add that if you look at the money that flows, runs, our current system from the science and the tree breeding right through to the seed production, there's probably in the range of $11 million a year that is that whole package. About $7 million of that is paid by licensees to buy seed and use it on Crown land.

So licensees are already contributing a lot through seed purchase. The ministry contributes through the salaries and operating budgets of the scientists who do the work and through some money, which the Forest Genetics Council assists with setting a business plan around, which keeps the system operating and modified to be appropriate for the Crown lands of B.C.

In that sense it is a cooperative, both financially and otherwise. Having said that, yes, there are other models. Other countries, like Sweden, have a somewhat independent model for their forest tree–breeding work. Seed orchards typically are run by the private sector. I think it's not so much the model of what somebody else does; it's more what can work within the context of Crown land in B.C. and also in the history of some of the investments.

Companies like West Fraser and other companies have a lot of money in seed orchards that they've run for many years, as does the ministry. You can't change those things quickly. We can't place them at risk, because if they go at risk, then parts of the system start to collapse on you.

I think, really, what we should be looking at here is stability. We need to think in broad terms of the money and who pays, at what level. Just keep that context in mind — of keeping things running.

B. Routley: I was very impressed by what I saw there in
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Surrey. I certainly agree with your point that something ought to be done to deal with the brain trust that's leaving — that's critical to the province. It is an area that should be looked at, particularly in light of the value of the seeds.

Again, I think all MLAs should go and have a look at that facility and look at the value of the product that's coming out of there and, obviously, the cooperation that takes place between industry and the province in making that work.

I guess my question comes down to your comments about what's happening with climate change and how much science really is there. One of the criticisms, I know, of this committee has been that we're not really looking at timber supply in the context of climate change. And you've raised that issue — that it's something that you're already looking at.

I've heard that we're actually looking at planting trees that are currently growing further south, I guess it is, and moving them north. What kind of range are we talking about? Can you give me any indication? What's the science right now? Are you moving seedlings…? I heard 300 miles. Is that right, or is that way out?

J. Woods: Yeah, that's reasonable. It depends on the species and the genetic diversity patterns and climatic patterns. It gets very complex, but a move north of perhaps 1 degree latitude and a move upward in elevation of a couple of hundred metres is reasonable.

I think what's important here is that we're not talking about a one-time fix. What we're talking about is a process of science, long-term field trials, continual analysis and a continual adjusting of the system based on what we know. So it's not one big move. It's a whole bunch of small, incremental moves and changes in policy.

Over the next number of decades we're going to be slowly changing the allocation of seed and what seed gets used to accommodate climate change. We don't have all the answers now. We'll learn more things. That's why what's key here is to have in place the people who can actually do that work.

B. Routley: In the light of climate change, are there other things that the province should be doing?

J. Woods: We can always do more. You know, I guess my job and the job of the Forest Genetics Council is to try to put in place the pieces that will result in having the right genetics on the ground. It's our job to put in place the biology, if you will, so that we can grow that timber so that other people can figure out what to do with it. I think we can always do more, but some of the data, some of the information, comes from long-term trials, and they can only develop one year at a time.

I don't think we're asking…. There's no silver bullet here. If you threw $100 million at it, we probably couldn't use that money. There isn't that much we could do. You know, I think it's not an expensive program, and our argument is not to try to make it expensive. It's to create that stability around it so that going forward we can do what is right on the ground and ensure that our kids and our grandkids have a good timber supply to allocate.

E. Foster: Being the MLA from Vernon, I've had lots of opportunities to visit the Kal research station and the industry nursery that's up on the Commonage, and I've seen the developments there over the years. I actually date myself a little bit, but I did some contract work for Mike Carlson when he first went to work there in the early '80s. A great operation.

The development of the science over the years that certainly…. I even go back to when Gyula Kiss was there, so I go back a long ways. We've watched as it changed — and certainly working in the industry have seen the benefits. Other than what you just…. Where do we go next? I mean, how much more can we do to improve?

The improvements over the last 20 years have been, in both the genetics and the science of growing the trees…. In the early '80s we planted coastal Douglas fir in the Interior because we wanted big fir trees. That's not a long time ago, so there's been a lot…. You know, now we're within, like you say, a couple of hundred metres of the elevation that the seed came from. So where do we go next? How much more can we do?

J. Woods: Well, I think there are always opportunities. You know, if you look at agriculture, they've been using genetics to improve yields for decades — centuries, really. We have a lot of opportunities still in forest genetics.

I think, though, our challenge is around climate change. We have in place breeding and selection programs that have developed good orchards. We expect to continue improving those over time, but the challenge is climate change.

We're not sure what's coming. We see shifts. We see adaptations changing for these species. That's our big focus. We need to make sure that we're getting the seed out in the right place. If we're not doing that, then any other gains you get fall apart because the trees don’t do well.

At the end of the day, it's all about timber supply. We're just trying to make these trees grow to be mature, healthy stands as quickly as we can and just add to the timber supply. We're just pouring water into the bucket, if you will. The challenges of the day will change. Right now the big one is climate change, but we don't propose stopping our breeding programs and selection programs.

Our next presenters are supposed to be the Ancient
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Forest Alliance, but I don't believe they're here. So I'd like to ask Hampton Lumber Mills and the Burns Lake Band to come up and do a presentation for us.

S. Zika: Thank you, John. We appreciate the opportunity to speak with you again. We have a handout detail that you're getting right now. We're going to cover, primarily, the highlights. We're not going to be able to follow exactly, sentence for sentence. It would take too long. So we're going to hit the highlights since we have, obviously, talked to you before.

As you know, the crisis in Burns Lake has not gone away, and the urgency and concern continue to mount as the committee gets farther away from Burns Lake. I don't think I need to remind anyone of the importance of the Babine sawmill to Burns Lake and the First Nations.

We have put some summary information in the updated report we provided to show you the economic effect of the Babine operation. Many of our former employees are already feeling the effects of reduced income and declining medical insurance. If we don't begin construction of a new sawmill soon, I fear for the effects on the community and our business.

Just last night I heard from Luke Strimbold, the mayor of Burns Lake, that Endako has announced layoffs that, unfortunately, are affecting some of former employees who found jobs. I think the statistics are down to about only 40 percent of our former workers who have found jobs at this point, after those layoffs.

We have also brought with us — that we'll give you after the presentation, John — a binder signed by 1,700 people in the local community there supporting having the sawmill rebuilt. As we've talked before, Burns Lake isn't Vancouver or Prince George; it's a small community. Babine is by far the economic engine there.

I previously touched on the negative effects in the Lakes District if a sawmill is not rebuilt and competition disappears along Highway 16. You've heard it in other testimony at various stops of your public tour how damaging it would be to primarily leave the north to two large companies to control not only the lumber business but also the pulp and paper business. Biomass opportunities would go away without a sawmill to help with the economies of scale and transportation economics.

Biomass is exciting to talk about. We have an arrangement currently with Pinnacle up in Burns Lake, but that would be in jeopardy if our sawmill wasn't rebuilt.

We also previously presented our summary plan, entitled Lakes District Timber for Lakes District Mills. There was a lot of discussion around how much timber could be harvested sustainably in the Lakes District. The current AAC in the Lakes District is set at two million cubic metres and is forecast to drop to 500,000 cubic metres beginning in 2021, versus the 1½ million AAC that existed prior to the beetle uplift.

As Richard Vossen will describe, we have done additional analysis and modelling that demonstrates that if we adjust current AAC down to one million cubic metres in 2014, we can operate at that level indefinitely.

During our previous presentation on June 19 in Burns Lake, we discussed some options to increase mid-term AAC in the Lakes TSA above the ministry's base case of 500,000 cubic metres. Since that meeting we've completed our own analysis of the TSA to determine if we could see improvements to the mid-term timber supply forecast by modelling a number of mitigation scenarios to help improve the base case predictions.

Given the limited time frame to complete the shadow analysis, the final report is not yet completed but will be completed by the 20th of July, and this will be submitted to the timber committee at that time.

For today's presentation I've added a graph, and I believe you have that in your package. It's our preliminary findings, which have been positive, that we can maintain an AAC in the Lakes TSA at a million cubic metres on a sustainable basis if we do some changes to how we project timber supply and some changes on the land base.

As a starting point for the analysis, we asked Tesera Systems, a timber inventory consultant who's well known in the industry, to immediately lower the current AAC from two million cubic metres to one million cubic metres to conserve as much green timber as possible for the mid-term.

Recent harvest data indicates that 27 to 40 percent of the stands harvested have green fibre and have been harvested annually while the dead pine is being liquidated. In the Lakes TSA, as the volume of dead pine drops, the percentage of green non-pine timber harvested will increase. Lowering the short-term AAC to one million cubic metres can conserve 300,000 cubic metres of green fibre annually in the Lakes TSA for mid-term timber supply.

Secondly, we modelled the harvest priorization of pure leading-pine stands, or stands that have the highest percentage of pine, to utilize as much of the dead pine remaining and conserve as much of the green fibre that we have on the land base. We also increased current utilization standards and changed the minimum harvest volume from 140 cubic metres per hectare to 100 cubic metres per hectare. This increased the timber-harvesting land base, or the number of hectares within the TSA available for harvest.

Improving the utilization standards will increase the use of dead pine in the short term and facilitate better use of the THLB in the mid-term. This change, in fact, did show us the biggest results for increased mid-term timber supply. While this will increase logging costs, im-
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proved lumber markets in the future will, hopefully, cover these added costs.

We also modelled some modest changes to land use constraints on the THLB. We didn't remove anything; we still want to maintain high environmental standards. We just did some relaxation. For instance, on visual-quality objectives we relaxed the visual-quality objective by one management class. This maintains the presence of VQOs in the Lakes TSA, ensuring blocks still employ good visual design at a reasonable size and scale. A modest change, as such, will allow for better use of the dead pine in beetle-devastated landscapes while still protecting scenic values, which are so important to us.

Thirdly, we modified the way we manage old-growth management areas, or OGMAs, in the Lakes. Like many other TSAs in the province, we strongly believe that OGMAs should be managed non-spatially rather than spatially. Rather than having spatially defined OGMAs, a static footprint on the land base, our analysis considered the management of old-growth values through non-spatial, seral-stage targets, as described in the Lakes North sustainable resource management plan.

In conjunction with this, we also considered the definition of old growth when managing seral-stage targets. For instance, rather than a definite age to define old, we considered old forests to be the stands that exhibit old-growth characteristics. A strategy, as such, maintains the healthy level of old forests throughout the TSA, allowing the recruitment of old forests over time within the static OGMAs. This is similar to the way old-growth values are managed in the Morice TSA.

We made no changes to restrictions in place to protect key environmental values related to water, important wildlife habitat or soils. Essentially, we only proposed mitigation strategies that would not jeopardize our high standard of environmental stewardship and provide the greatest return for timber supply mitigation.

Timber supply gains from fertilization-intensive forest investment were not directly modelled in our analysis. However, we believe the gains projected by the ministry are worth the investment and will prove some additional mid-term timber supply.

Lastly, we used updated growth-and-yield data tables to estimate and project growth on the land base. The mid-term timber supply can be increased from the base case of 500,000 to a million cubic metres. We are confident of that, and we will have that report here in the next ten days. This increase still provides for the management of non-timber values, which are so important to us, while allowing enough timber to rebuild a sawmill in Burns Lake and maintain a local sustainable forest industry in the Lakes TSA.

A. Gerow: Good morning. I'm Chief Albert Gerow of the Burns Lake Band and president and CEO of Burns Lake Native Development Corporation, which owns 11 percent of Babine Forest Products, for those folks that may not know.

The Burns Lake Native Development Corporation is made up of six First Nation bands — Lake Babine Nation, Wet'suwet'en First Nation, Burns Lake Band, Nee Tahi Buhn Band, Cheslatta Band and Skin Tyee Band.

I'd also like to acknowledge the Coast Salish territory, whose traditional lands we're on today.

If you were to issue a licence today in the Lakes TSA, there are two million cubic metres. Our focus, as the six First Nations, has not changed since the beginning of February. Presently 900,000 cubic metres have been allocated in a variety of licences, and 1.1 million cubic metres are unallocated. The chiefs are suggesting that the direct-award licence be awarded to the six First Nation chiefs for that volume. From that volume the sawlog quality would go, naturally, to the sawlog business, the biomass to the biomass industry.

We recognize that there is no magic pill to the falldown in the timber supply, but we also believe that Burns Lake should not further suffer as a result of the tragedy that happened January 20, in which we lost two of our First Nations workers and severely injured 19 others.

Shortly after the tragedy, Hon. Christy Clark paid a visit to Burns Lake, and when she attended Burns Lake, she committed to the residents of the Lakes District that Burns Lake would be a strong, vibrant forestry community once again. In meetings we've had with Hon. Pat Bell he stated that their government had lost three mills on their watch in the last ten years, and he would not let Babine Forest Products be another mill lost to tragedy.

The visual quality objectives in the old-growth management forest that we've talked about earlier — recognizing some adjustment to that would assist us to be able to rebuild Babine Forest Products and once again create a strong, vibrant community. I've taken a picture, which I've provided to each of you. This was taken along the highway when I left Burns Lake and clearly shows to folks who may not be able to travel to the Interior or Burns Lake what the forest is like within the surrounding area of Burns Lake.

Eighty percent of our forest is mountain pine, and 80 percent of that mountain pine beetle is dead forest, which is causing a huge fire risk. Just two years ago we had a 12,000-hectare fire just south of Burns Lake, Binta Lake, and we don't want Burns Lake to become another tragedy similar to Slave Lake in Alberta.

The chiefs of Burns Lake are very committed to the rebuild of the sawmill. We do not want to see the government develop policy that would potentially eliminate our ability to build a new sawmill in Burns Lake so that another community can add new industry to their areas at our expense. We've already paid hugely as a result of the mountain pine beetle.
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In the early days millions of cubic metres of fibre left Burns Lake with the promise that that volume would be reciprocated, to try and mitigate the impact of the mountain pine beetle. Suddenly that offer seems to be off the table. We're not hearing anything back with respect to that.

The six chiefs are very concerned about our community. They've been there for thousands of years. Other industries and people may move, but the First Nations people don't. They tend to stay within their area.

They're very concerned at the time that it has taken for a decision to be made so that we could remove the cloud of despair over Burns Lake. What they're very concerned about is: what has this committee learned as a result of these round-table meetings and community meetings that they didn't know already, that we have been living and eating and breathing since the beginning of February? The six First Nations that I mentioned earlier will not settle for anything less than a rebuild of Babine Forest Products.

S. Zika: Thank you, Chief. As we will confirm with the final report that will be submitted prior to July 20, the Lakes District can be operated at a million metres, sustainably, without any negative effects on the environmental values that make British Columbia such a special place.

However, that will not do Burns Lake any good if we continue to allow other competitors outside the Lakes District to steal our future by removing green timber now. I can tell you as a gut check that every time you see a logging truck with green timber going through town headed east or west, it's just a tragedy.

If local timber can be aligned with local mills, we have only two primary requests:

(1) Convert our 450,000 replaceable licence to an area-based licence, so we can fully utilize the landscape and make the stewardship investments that will benefit our company and the community.

(2) Issue new area-based licences to First Nations and/or the BLNDC for the other annual harvest volumes available in the Lakes District. First Nations are struggling mightily in our region and deserve the opportunity to pull themselves up with this economic opportunity. If the sawmill is not rebuilt, the First Nations will suffer terribly, as they remain loyal to their traditional territories with very few employment options.

As I consider the task in front of this committee and the limited time to complete the process and issue a report, I ask that you consider three primary recommendations as you draw your conclusions:

(1) You can't solve all the pine beetle issues with one process and report, so please put Burns Lake and possible solutions as the highest priority. We can be a good pilot or model to show how the process can work. Legislation will be required, similar to what has been done for other communities such as Mackenzie. The legislation should authorize the area licence conversion, along with new First Nations licences. Your report should also encourage the Minister of Forests to find other replacement licence volume for our big competitors, near their many other sawmills in the province.

(2) Your report should emphasize a district-by-district approach. What is applicable in one area does not work for other areas. Additional time for analyzing timber supply in each district should be taken, with input from professional local foresters, First Nations and community leaders. The management regime in each district will be different, based on the health of the forest and other societal values as well.

(3) As part of each landscape plan within a district, the following factors should be considered: the effects of harvesting lower-volume stands; the effect of reducing short-term harvest to save green timber for the mid-term; whether modest modification to set-asides to address fire and forest health issues makes sense in that area; the effects of aggressive fertilization programs to promote additional mid-term timber supply; whether area-based licences allow for better stewardship; the effects that harvest levels will have on the social fabric of rural communities; and lastly, how much alignment there is with local stakeholders, including First Nations, in adjusting harvest levels.

No one is asking you to compromise on any environmental values that we all depend upon. You've heard it from speaker after speaker. Nobody is saying: "Let's jeopardize the environment." However, sustainability only exists when you have a balance between economic, environmental and social values. Please don't allow the economic and social values to be forgotten in Burns Lake.

H. Bains: Thank you once again. Like I said in Burns Lake, these are very trying times, especially in your community.

I've been there in similar situations on many occasions where we sat across from families who lost their jobs as a result of mill closures, so my heart is with you. But I think the situation here is twofold. When we were travelling in that region I did not find very many operators with 100 percent AAC attached to their mills or to feed their capacity. It seems to me that the 450,000 that you have pretty well comes to about 50 percent of your need.

My question is: if other operators can operate with 40 percent, 20 percent or 30 percent of timber supply available to them, why can't you? The other part is: I'm looking at the mandate of this committee. How do you see…?
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I mean, the mandate doesn't even talk about Burns Lake. It talks about overall mitigation of the mountain pine beetle impact in the entire region.

I think the other part that goes with it is that everywhere we went they were saying: "But don't do anything at our cost." I think you're making the same point — that others are benefiting at your cost. But if you stop timber leaving Lakes TSA, what impact will it have to the other communities and other sawmills, which they actually rely on today?

S. Zika: Well, I'll try and address each of those, if I can remember. In terms of the last one, what we're asking for in the Lakes District, which is a very small district…. The only other major licence holder is West Fraser. Canfor and L&M have very small licences, so it's really West Fraser. There's a possibility that maybe the Fraser Lake sawmill would lose a shift.

One of the key differentials in the Lakes District is…. I mean, yes, we have 450,000 licensed today, but if truly the volume goes down in the future to 500,000, and you go in more of a traditional way that they've done in the past, they're going to haircut everybody, and that 450 is going to drop to 200 or less. You have to remember that the Lakes District is very small, so people, like in Fraser Lake or….

Prince George is a massive TSA — massive. They've got opportunities to go north to Fort St. James. They can go northwest. They're all still in the Prince George region. In the Lakes District we don't have that opportunity. The road systems aren't set up. We can't compete in that same area, and in theory, our licence isn't in that area. So they're going to have a natural advantage over us by doing that.

Again, we're not asking to get 100 percent. We're just asking you to give us a shot, because again, we have to make a new investment. I mean, insurance will cover some of it, but you're asking us as a private, family company to make another significant investment beyond insurance. You have to have some kind of security to know that there isn't just this cliff at the end, that all of a sudden you're going to be left with very, very little.

The Lakes District is this very small district, and so we don't have the same opportunities that some of these other folks do. Again, the people that came into the district took all the timber out of the Lakes, saved their green timber, and now they can go back to their own districts. They have timber. They have options.

R. Vossen: Good point, Steve. Yeah, exactly. The Lakes TSA is probably the smallest TSA in the Interior. It also is going to be impacted the greatest. When you look at the uplift that happened — the potential, the forecast of 500,000 cubic metres as a mid-term timber supply — that's a 66 percent reduction in timber supply. That's going to be the biggest hit in the province for a TSA — smallest TSA and also the TSA that had probably the highest liquidation of pine taken out of it to support the communities to the east and west.

When you look at the impact on the Interior of the mountain pine beetle, Burns Lake will be number one. Don't kid yourselves here, guys. As Steve pointed out, sure, we have 450,000 cubic metres as a licence today, but if the predictions are correct, that's not going to be the case in the future. It's pretty clear. The Lakes, Burns Lake, is going to be the number one community impacted by the mountain pine beetle. That's the reality of it.

H. Bains: Just a quick follow-up. We were told in Smithers and Houston and other places that there are some logs from the west of where you are — Terrace and that area — being logged and exported. Have you looked at the possibility of even getting into that area and adding to your inventory?

S. Zika: We have done some analysis of that in the last two or three years, to be honest. There is some timber up there. Some of it's marginal quality. But you've got to consider the economics.

If you were Houston Forest Products and you're getting your wood from 60 kilometres away, you can compete and be successful. If the Babine mill has to go five hours away to get their timber, you can't compete.

Everybody else is going to have timber locally, yet the Babine mill is going to have to travel up to Terrace. Not only is it a long way away, when the infrastructure's not there, as somebody previously mentioned about the roads and stuff, but it's very hilly and the quality of the hemlock is not as good. It's a possible option when the market is really good.

If you're going to do that, everybody needs to be treated the same. For the last couple of years we've talked about amalgamating TSAs, to make them a big TSA. Nobody wanted to do that because they already have theirs. I mean, that's why you're seeing people saying: "Don't rob Peter to pay Paul."

Well, that's Canfor and West Fraser. They have all the money. They have all the licences. Of course they don't want to share. They came into the Lakes District, took the timber out. From a business standpoint, why would they want to change anything?

E. Foster: I'm just going through my notes that I took when we were in Burns Lake. I had a couple of questions that I thought about after the day I was there too.

Just for clarification here, I'm going to ask a couple of questions. You're suggesting that we take tenure away from some of the other people that have it.
[ Page 707 ]

S. Zika: I'm suggesting moving it. I think so. For example, the biggest by far is West Fraser. It has 340,000 metres today in the Lakes District, and I'm saying — they have, I don't know, ten or 15 sawmills, whatever they have in the province — to move some of that volume. I'm not saying take it away. I mean, that's probably not realistic. But there's no reason they can't get some additional tenure up in the Fort St. James area.

Like I say, they have ten sawmills. I've got to believe that if you went to West Fraser and said, "Hey, we've got a difficult social situation. We're going to lose this community here. We need to be able to transfer some volume. We're not going to take it away from you, but we're going to move it. It may not be all in one block," that's a doable thing.

E. Foster: Following that, if at the end of the day, the answer is that West Fraser, Canfor or whoever's at the table…. If there's some tenure takeback there, it'll have to be paid for.

S. Zika: I don't know the rules. I know that whenever in the past the province has taken the section — whatever it was — they paid people for that tenure taken. But I'm not talking about taking away tenure. I'm just talking about transferring it to other areas.

The other thing is I'm pleased to hear you talk about going into some of what we consider marginally economic stands today, because they don't factor into the AAC off the timber-harvesting land base.

We've had several other presenters who have said the same thing. What do you project? I might have missed it as you were making your presentation, Richard. What do you project in sawlog volume out of those currently non-economic stands?

E. Foster: Well, in your presentation you talked about going into what we consider today non-economic stands. What do you think you're going to take out of those on an annual basis?

R. Vossen: I don't have the final numbers, but the analysis that we've done here, and it's still in the preliminary stage, shows that between low-volume stands, increased utilization and a few other things — increased growth and yield — we can pull 376,000 cubic metres more from the TSA. The analysis…. I haven't at this point got the breakout of exactly what the low-volume stands would produce.

Now, the ministry's data indicated that would be 250,000. What I'm seeing here so far in this document — or the consultant we've asked to do the analysis — is it's going to be consistent. It's a significant increase to timber supply on the land base for the TSA and would be for other TSAs as well.

A. Gerow: There's one policy change that can be looked at which would benefit the community for sure. It's that presently…. The regional district of Bulkley-Nechako did a study on the harvesting in the Lakes TSA. With the dead mountain pine beetle and the falldown in the sawlog quality, for five trees that are harvested, three of them are taken out and brought to the mill. Two are left in the bush to burn.

They did an estimate that there were 1.1 million cubic metres of biofibre left on the landings and burnt in the fall in one season. That's more than sufficient fibre supply that would supply three different industries that have approached the six First Nations with respect to biomass. So if there's a policy allowing access to that biomass, that's one that we would support for sure.

E. Foster: Well, those policy changes are being…. I'll turn to the chief forester. Yeah. They've already been instituted, so the opportunities to get that waste are there now, where it wasn't in the past. That's just very recent, so there will be opportunities, then, for anybody to put a proposal in and get that fibre out.

J. Rustad (Chair): We've got a bunch more questions, so I'll ask people to keep them as short as possible — as well as the answers short.

N. Macdonald (Deputy Chair): I just referred to the written submission where you say that from reading transcripts of the committee meetings to date, there seems to be some confusion or uncertainty among the public as to what this committee is looking at and what their charge is and what deliverable will be produced on August 15. I think that that's a terrible situation for the community to be in. I mean, there should be clarity. You should understand the processes. This degree of confusion, I think, has to be embarrassing.

Minister Coleman's promises, the Premier's and Minister Bell's commitments — they should mean something. I think, if you've looked at the transcript from Friday evening, where Mr. Clark…. You will have known Mr. Clark. That was Minister Bell's fixer who came in. He was with you for four months. Presumably, you'd be clear on what his mandate was, how this fit with his mandate. I presume that you don't.

The presentation we had on Friday was an embarrassment. My community in the '90s went through — not a tragedy like yours did. We had the late Doug Kerley come in, and we had professional work done. I don't feel that you've had the same benefit.

I guess the question I would have…. There is work that
[ Page 708 ]
needs to be done. It can't be done publicly with this group. Even though we've been sort of led to believe we need to deal with this, and we're trying to, our terms of reference don't actually include this. So there's tremendous confusion all the way around on how to deal with the issue.

I guess the question is: have you been left in limbo waiting for this to finish off, unsure as to what we're actually doing? Or are you in the midst of involvement with the ministry doing work elsewhere? Where does it sit from a community perspective, or is it as confusing to you as it seems to be to me in terms of what's going on here?

S. Zika: Well, I'll give you my take on it. I acknowledge that the government has done a very good job in certain areas. They've been there for the community. Some of the projects they've put in, some of the unemployment policies, the people, the social…. They've done a lot of things for the community of Burns Lake.

When Bob Clark was put up there, it wasn't just for timber supply. He was helping coordinate all those efforts. So the government has stepped up and done a lot of really good things for the community.

The timber supply is the most difficult piece by far. My take is that he started the process, did some of the analysis on the timber supply, and then at this time, because of how big an issue it is and because of some of the rival communities, again, stirring things up — "Don't take our timber; you're going to shut our mills down" — it became a bigger deal.

My take is that your committee is looking at options for mitigation that may have broader application. There are opportunities for things to look at, and that's why our recommendation for your committee is: set the side boards on what should be looked at in each district. Yes, the work isn't done in every single district. But I think we're a long way there in Burns Lake.

I think we have a lot of data, between the ministry and the stuff we're doing, that we're ready to come up as soon as your report is done. I'm assuming there is going to be some government meetings. What we're hoping is that there'll be specific legislation put together for Burns Lake to lead the charge, based on the analysis that a variety of people have done. That's my hope.

We're really short on time here — okay? We're not going to get to questions if we want to do a whole lot of back and forth, but if you would prefer to do it that way and then answer, that's fine. It's just that there are four more questions that people would like to ask, and we'll be out of time. So your choice.

J. Rustad (Chair): No, they've arrived, which is why we just shuffled around in terms of the time slot.

B. Stewart: Steve, I want to ask you, based on the facts that are in front of you today, what type of changes you're going to make to the mill to make this thing more competitive. Obviously, you're talking about low-volume stands. What is this going to do? What's going to be different about this mill so that it remains competitive?

S. Zika: Well, the mill was built in '75. West Fraser — it was interesting listening to them talk about how they like to invest in mills, and I think they do have that, and they have some very good mills. That wasn't true when we bought the mill. They'd let it go down and run down because they knew they were going to sell the mill. It was just a business decision. So we put a lot of money into it.

This new mill we would build would be state of the art in terms of scanning, detection for the logs, a lot of things that weren't in the old mill. So there's a lot of technology in that.

The other part of it is now that the concern is there with the pine beetle, there would be three or four — I've seen the plans — special dust systems to capture it, so there are not the issues. Basically, almost all the mills up north now…. I mean, they're doing the best they can. We're making a really good effort, and the industry is, to mitigate that.

But the new mill will have things like that that are just taken in with new equipment. It's technology in terms of scanning, in terms of cameras — things like that — a little bit of labour, like I mentioned before. Before we had four different people, each with a chopsaw. Now I have one person handling four chopsaws. So there will be a little bit of labour reduction within the sawmill itself, but you're still going to need people for maintenance and cleanup and all those kind of things.

It'll be, as I said — about two-thirds the size is what we're hoping the timber will support.

S. Zika: Yes. We also do export and domestic lumber. That's really what the lumber…. That's the best use of the wood.

J. Rustad (Chair): We are out of time, but we have three more questions to be asked. I'm going to ask committee members if they could ask a very brief question.
[ Page 709 ]

If you could perhaps just take a note of that and include it as part of your written submission. That way, there'll be an opportunity to be able to get that information to us before the 20th of July.

B. Routley: My question is about the numbers that have been presented. I heard Albert talk about over a million cubic metres in uncommitted timber. I'm not clear on where. There seems to be a major confusion about that.

I'm frustrated in that we weren't tasked to deal with Burns Lake. Our task is to deal with timber supply throughout the province, and there's really a disconnect between what Bob Clark said that he thought we should be doing and what we're actually tasked with doing.

So the numbers — we just don't have the information. We're not at all clear about what you're saying as compared to what the information that we're being told is what's available.

I would like to know about the fibre that's gone out of the community. When were those licences given, and is there an ability of the province to buy back some of those licences, or whatever? Is there an obligation created by the province to buy back, given the promises that they made to your community? Obviously, you've said some things that were commitments by the Premier, by previous cabinet ministers.

Obviously the government has thrown some money at the problem. But you know, anything can be fixed with money, and if they've committed to it, then you need to hold their feet to the fire.

D. Barnett: Thank you very much, and thank you for your presentation. Sincerely, our heart and soul goes out to Burns Lake. We've all, who live in rural British Columbia, been through tragedies, dealing with pine beetle and other issues. We know the impediments that are out there.

I have a question, and I'll wait for your answer to come to us. Prior to the fire, what were Hampton's long-term plans for Burns Lake and for the old mill?

J. Rustad (Chair): I've just got one quick question to add as well, and I just wanted to clarify some comments that were said earlier.

The mandate of this committee is to look at the mid-term fibre supply throughout the impacted area. I’m interpreting that as TSA by TSA. Obviously, the Lakes TSA is one of those questions. The mandate of our committee is not to look specifically at mills but the overall timber supply within the various districts, not necessarily on allocation or those types of things.

The question that I have, though, is around the 1.1 million that was referenced by Albert. By my calculation, pre–pine beetle was 450 to Hampton. I think it was 343 to West Fraser, 56 to Canfor, about 23 to L&M Lumber, and then about 350, I think it was, or thereabouts, with the small business program, which adds up to over 1.2 million in commitment.

If the cut comes down to one million on a sustainable basis, as suggested, by 2014 there would be no additional unallocated fibre over and above what is already there. As a matter of fact, there would actually have to be a drop by all of the existing operations to be able to get to that one million.

I guess the question I have is: as part of your calculations, are you looking at wanting to allocate all of the small business volume, which is designed to try to set prices within the various supply areas, away from the ministry and to the licensees?

S. Zika: Obviously, we have some volume reconciliations to do to help everybody.

J. Rustad (Chair): I understand that. Anyway, I appreciate very much the presentation and taking some time to be with us here today.

K. Wu: My apologies, by the way. I'm very impressed to see the timeliness of your moderation for these committee hearings. I always thought it would be backed up for awhile. I was just coming in from the ferry, so apologies for coming late, and also apologies for not having the written handout yet. I just got back yesterday from a week on the West Coast Trail. It's my first day not covered in mud in seven days. I'll be sending in a more comprehensive written submission subsequent to this.

In terms of the organization, Ancient Forest Alliance is a relatively new organization. It's just over two years old. We've got about 20,000 supporters right now, including several hundred in the region of interest, in Prince George and Quesnel in particular. We're primarily promoting a provincial old-growth policy, a new provincial old-growth strategy to expand protections for British Columbia's old-growth forests in the central and southern Interior and the southern coast.

As such, you can see this is an issue that we have concerns about, as our central mandate is the expansion of protected areas for old-growth forests in particular. We also work to promote a sustainable second-growth industry and to support value-added wood products industries.

In terms of our connection to the region, we do have a provincial campaign. As such, this is encompassed within the provincial campaign to protect old-growth forests across all the biogeoclimatic zones.

Previously, I've also spent quite a bit of time in the region. I worked as a tree planter throughout the area. I lived in Burns Lake, in Houston, in Fort St. James, Prince George for several summers. I used to campaign around
[ Page 710 ]
the Chilcotin River, to protect the forests in the Brittany Triangle and also for ancient forests near Prince George.

I'll just outline here several of our key concerns. One of our big concerns, our main perspective here, is that opening up the last forest reserves in the region, the last protected areas outside the provincial parks, is essentially rewarding unsustainable behaviour with more unsustainable behaviour. It's a temporary quick fix. It's not going to keep the industry afloat. It essentially delays the necessary implementation of measures to diversify the economy and to find ways to keep the industry afloat.

In terms of the specific concerns that we have, I'll outline them in different areas here. A big one is about biodiversity. I don't want to be too redundant here, so I'm skipping over some of the aspects. The written submission will have the full thing.

In terms of biodiversity, this is a massive part of the province. Just eyeballing the scale of the area under study, it's looking like it must be approaching — what? — 20 percent of the province, if you add up all those four TSAs. That's a big section of the province, and as such, it's going to have a large ecological impact — any move to remove the forest reserves.

Also of note is that this is actually a very diverse region ecologically. I think what a lot of people imagine when they think about the Cariboo-Chilcotin region or the Lakes area or the Prince George region is lodgepole pine, because the whole thing is framed around the pine beetle. But this region has eight of B.C.'s 14 biogeoclimatic zones and totally diverse landscapes — from inland rainforest, interior cedar-hemlock, where you have minimal pine beetle impacts in the east side, in the Quesnel River area, in the eastern stretches of the Fraser, in the Prince George TSA….

I mean, there's a large diversity of trees there that are non-lodgepole pine. — Douglas fir, western red cedar, western hemlock, subalpine fir, western larch. Inflating the AACs in recent years and the potential for logging in reserves makes…. The logging going on makes no differentiation in species. They can cut what's there — right? The problem, then, is that in the reserves not only would they be cutting pine beetle–affected wood but also, potentially, the large inland rainforest on the east side of those TSAs, as well as western hemlock, Douglas fir — all of these other things which have been largely unaffected by the pine beetle outbreak.

Talking about some of the reasons why we're concerned about old-growth forests, it's important to recognize, and have an ecological perspective here, that old-growth forests have the requisite structural characteristics for species that need old-growth forests. So this is not just some sort of general concept. "Okay. Well, you have to designate old-growth forest because it's necessary to please the environmentalists." There are very real ecological concerns for species that will diminish in populations. Some will disappear if you lose the old growth. The old-growth management areas are a fundamental part of that.

People tend to think of it as coastal in nature, in terms of old-growth-dependent species. But in the Interior you're going to have species that either need old-growth forests, as well, or that flourish best in old-growth forests: Pacific fishers, a large weasel that eats porcupines, pine martens, northern goshawks, various types of woodpeckers, cavity-nesting birds, some neotropical migrants, rare lichens and certainly the mountain caribou. You have a whole suite of species that need those old-growth management areas and, in fact, need an expansion of protection if they're not going to eventually disappear from the land base.

Now, in the B.C. interior, in the drier forest ecosystems at least, the issue around old growth is not perhaps as pronounced as in the coastal ecosystems or in the inland rainforest, but there is an absolute requirement to keep old growth for a lot of those species.

Perhaps an even bigger concern is the general overcutting and roadbuilding going on, which will have the largest impact on the greatest suite of species. Opening up those forest reserves — generally roadless areas, becoming increasingly fragmented with roads — will also be a death sentence for many populations of creatures. Basically, you get a lot of guys with guns living along these back-country roads, and you get a diminishment of populations — in particular, of the larger, more sensitive carnivores like wolverines, grizzlies, wolves, cougars and, also, of the ungulate populations. That's obviously what they're aiming at.

As well as the concerns about erosion. It's the roadbuilding networks, in large part, as well as the elimination of the old growth, but roadbuilding networks, in particular, have some of the largest ecological impacts.

In the region there are also mountain caribou and northern caribou. The last count I saw for mountain caribou was 1,700 individuals. Obviously, it's a species at risk. And you also have diminishing large carnivore populations when you get to the central area, where ranching is quite heavy. But certainly the roadbuilding and logging are a threat to grizzlies and to wolves.

In terms of other perspectives and concerns that we also have, obviously the loss of the riparian zones is a big concern with respect to salmon and trout. For tourism, the key thing is that as timber declines, the most important thing is to promote a diversification of the rural economy, not to continue our past dependency on an unsustainable, overcapacity industry.

If anything, the B.C. government should be doing everything it can to support the tourism industry as a key component in the diversification of the economies in the area. Keeping the forest reserves intact for scenery and for recreation and wildlife is an important thing. These wilderness lodges — as part of their marketing they ac-
[ Page 711 ]
tually have to be able to have authenticity of a wilderness experience for their clients.

The Ancient Forest Alliance is working with the tourism industry on Vancouver Island to promote protection of old-growth forests. We support the growth of a sustainable, nature-based tourism economy. We're working with the Port Renfrew Chamber of Commerce, for example. We recently protected the Avatar Grove.

The basic point here is that we need to shift the economy to use less resources, to have less resource extraction, and create greater economic value while using less. It's better for this overburdened planet.

In terms of other concerns, recreation for B.C. residents. Clearly, some of the most beautiful ecosystems are in the B.C. Interior. You have tremendous diversity, from inland rainforest to grasslands and Interior Douglas fir. People are going to need places to go without endless clearcuts and roads. It's very hard to find in that region now. Especially if you Google-Earth it, you can see, of all regions, the whole Chilcotin plateau is just about the most heavily affected by fragmentation.

As I mentioned earlier, opening forest reserves to keep an overcapacity industry going in the area essentially works to prolong continued delays in focusing on transitioning and diversifying the economy towards other things, like tourism, renewable energy, maybe non-timber forest products, high-tech educational institutions. The government could be doing things like putting stumpage fees and taxes from logging to not only help forestry workers — that's an important aspect of it — but also to help in diversifying the economy, to have a very strong, concerted effort and a fund to work to diversify the economy instead of continuing along the same path that everybody knows is going to collapse.

Another big concern we have is around a precedent. If opening up forest reserves in the B.C. Interior can be justified because of a shortfall in timber, across a good deal of this province, including a lot of the coast, you have a shortfall in timber as a result of a history of overcutting. Cutting too much too fast, essentially, and converting high-volume stands into second-growth tree plantations has created a falldown effect on the B.C. coast. What we don't want is for this to set a legal precedent for the opening of forest reserves, old-growth management areas everywhere.

This is a fundamentally important thing. It's a can of worms to set a precedent that way. To have that happen in such a big part of the province, based on the concept of a shortfall of timber, I believe, is a major part in reigniting a war in the woods. It's taking us down the wrong path. And in this province, with such a large conservation movement, it's not to the benefit of the industry.

It was also mentioned briefly about how the industry was interested in further area-based licences. I assume these are TFLs or something similar to that. Again, the Ancient Forest Alliance would be opposed to that proposal. We need to move away from path of dependence and corporate concentration. We believe the timber sales approach is more flexible and allows for the entry of new players into the industry. So we would oppose area-based tenures.

Essentially, our main perspective is that the industry has a long history of overcut. Even prior to the pine beetle outbreak, there is a long history of overcut, even in the Interior. Then it was inflated even more during the pine beetle expansion. The biggest, best stands have been high-graded and the smaller diameter trees are here now, so there has to be a concerted effort to transition the industry.

At this point in time, as a result of overcutting the resource, it would be the wrong thing to do to open up those forest reserves. It's like bringing up parts of your house for firewood after depleting all your other wood sources. It's the wrong type of thinking. In terms of recommendations, we would say to take opening the forest reserves off the table as a consideration for mitigating the mid-term timber supply issue.

We support expansion of forest protection. What I've read in places is there was at one time — I think it was about six or seven years ago — the idea that if there was going to be an expansion of logging in the Interior, a massive expansion, there would also be a conservation uplift, essentially an increase in stand level and landscape level protections in those interior areas to compensate for the expansion of logging. That hasn't happened, at least on the landscape level, as far as I know. I'm pretty sure about that.

The government should work to diversify the economy. I would also recommend that they take the area-based tenures off the table for consideration.

Lastly, all British Columbians have a stake in this and should be consulted. Even though there are stakeholder meetings here, the public hearings have only been held in communities in the Interior. I believe that public hearings would have been justified to be held in the Lower Mainland and also in the capital as well.

N. Macdonald (Deputy Chair): Well, thank you very much for the presentation and for the work that you do. I'll take a slightly different tack.

First, I think it would give you some comfort to know that in each of the communities we went to, many of the views that you've expressed have been expressed by a variety of groups and people who have been involved on the ground. So I hope that that gives you comfort.

I think it's an interesting perspective that you finished off with, that the hearings should be held everywhere. But I'll turn that around a little bit. You know, forestry currently loses money. I think you talked about using some
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of the money from stumpage. There are an awful lot of areas where there simply isn't money. B.C. Timber Sales may start to make money, but the last couple of years it hasn't — right?

So basically, you'd be talking about tax dollars, and you're talking about an awful lot of good work — I think all of us would agree — that needs to be done. Like we had a presentation from genetics, we've had replanting, infrastructure, MLA Barnett has been very involved with the beetle action committees that need to be funded, inventory work that we likely want to do — all cost you money.

I guess the question to you…. It has to be paid for. I've come to some of your meetings, and I've seen 300 and 400 people out, very involved. How do you make the case for investments in a different part of the province that need to be made so that governments can come with a mandate to invest back in the land? I think, regardless of where you might be on the political scale — if you're from a rural area, if you're from Vancouver Island — people love the land. We have to invest, but we have to get a political mandate to make those investments.

The question is: for your organization, what sort of things can you do to give us the political licence to make recommendations around genetics and infrastructure and things that may go a ways to solve some of these issues?

K. Wu: Well it was actually under the NDP government in the 1990s when there was a substantial amount of money taken from stumpage for forest renewal.

I think the concept is that, of course, forestry is cyclical — right? And there's going to be a lot more money made, and surplus, in times of peaks. Now, it has been hard times for like about five years, but the last peak, I think, was not that long ago, maybe in 2003-2004, around that time.

So there are times when forestry can make substantial amounts of money — the point being that a lot of that money needs to go not just to within forestry but also towards economic diversification in areas where you have a major falldown and where the economy has to diversify. In terms of how the social licence is created, obviously, that comes from citizens' education and awareness.

I believe that the economy is changing over time. The business community, in particular, I believe is the fundamental driver for conservation initiatives now. That's new in the mix. I'm sure you've come across this in your tours around the Interior, where you have tourism businesses coming forward now saying that they want the visual-quality objectives to stay, and the old-growth management areas. I believe it's a combination of citizens' movements combined with the business community that will shift the outcomes and create the political will.

N. Macdonald (Deputy Chair): The licensees, as well, actually, have been very consistent, too, on the message. There are a number of things that they're selling, but one of them is environmental integrity of management here in the province.

J. Rustad (Chair): Thank you very much, Ken, and I encourage you to send your presentation to us through our website.

MaryAnne, I apologize for our delay. You should have been in at just after 12, but we had one presenter late, so we had to juggle around a little bit.

M. Arcand: No, that's fine. Do you guys want to grab your lunch and eat while I do it? I'm fine with that, because these are long hauls.

J. Rustad (Chair): We may do that while you're doing your presentation, if you don't mind. Yes, I appreciate that. Thank you.

Thank you for having me. I'm probably going to come at this from a little bit of a different perspective than you might have expected, for one, and possibly than what you've heard from some of the other groups and associations. For the purposes of this submission, I am representing the Central Interior Logging Association and the Interior Logging Association — so the affected area around Kamloops, Merritt and that area as well.

Just to give you a bit of an overview — and I'm actually just going to go to the questions on your thing here, Norm — the CILA has been around for about 46 years. We represent, between our two associations, over 250 log harvesting and trucking companies right from the American border to the Yukon and from Alberta over to the northwest. We do about 80 percent of the provincial Crown timber volume — most of the timber sales, of course.

Many of our loggers are also ranchers, farmers, or have other business interests on the land, but they are really very much community-based, most of them family-based. A few of our larger contractors will do up to a million metres a year, but for the most part, they're working local, hiring local and buying local. They contribute a tremendous amount to the economies of their communities because their paycheques stay home. They're taxpayers, live in those communities. We support the schools, the rural infrastructure, the hospitals and all those in those communities.

For our membership, their economic contribution is the backbone of about 200 small communities in B.C. I know we're talking a large geographic area, but that's where we are. We employ probably 9,000 to 15,000 people
[ Page 713 ]
directly and indirectly. A common sort of assumption is that for every sawmill worker there are two or three in the bush, between the equipment operators, the truck drivers, the welders, the fuel guys and the service and suppliers as well. Actually, that's a larger number of employees than the sawmills have in those same regions — okay?

For our members, assuring a timber supply is critical, but it's not, maybe, as dire a circumstance as that of the sawmills. During the downturn and with the onset of the megaprojects, half of my loggers are logging not for lumber anymore. They're clearing minesites. They're clearing rights-of-way. They're doing all kinds of other things. They have diversified.

So what I'm going to bring to your attention is the fact that, as I said, we've got huge amounts of timber being logged to get it out of the way for something else, and that's not really getting into the supply chain. You look at Site C, for instance. There's 1.8 million metres there. The highway transmission line, Highway 37; the Summit Lake–Kitimat pipeline; and whatever happens with Enbridge — the roadbuilding that has to go with that.

My loggers are actually quite concerned, because when they go and say to Apache or to Surerus, which is doing the pipeline building, or to the different contractors at the new goldmine out in the Nazko there, south of Vanderhoof, "So what do you want us to do with the wood?" and they say: "Get rid of it." The mills don't take it. So we're grinding it. We're burning it. We're throwing it on the ground. We're throwing it away. And with all due respect to the previous presenters from Burns Lake, they're also shipping raw logs, pine beetle wood, in sea cans out of Burns Lake. What the heck's that about?

So our concern is the overall use of the fibre. Our forest industry has to change. It's not only about making lumber anymore. I attended the BioEnergy Conference in Prince George a few weeks ago. I know some of you were there. We listened to a panel with a range of opinions on how much fibre there is. Some say there's lots. Some say there's nothing. Some say there's enough, and some say: "It's mine, and you can't have it." We heard it. It begs the question, then: is it so much that there's not enough timber, or is it how we allocate it and what we're doing with it?

My guys…. Whether it's an IPP, whether it's a road, a right-of-way, a minesite, a wellsite, a power dam, whatever, it still needs to get logged. They're doing their core business activity and not necessarily for lumber. So I just encourage you to think of it a little bit in a broader view — that we're not only talking lumber production for mills when we're talking about the mid-term timber supply. We need to talk about better utilization of that fibre as well.

We also have some challenges because of, you know, all the talk about the downturn and the drop in the AAC and whatnot. That has to do with our ability to capitalize. It has to do with our ability to have capacity to actually do whatever work is left out there. So our guys are having challenges. The banks want to know: "How much volume are you going to have?" "Well, I don't know." "Well, you want to buy how many bunchers at $700,000 a piece?" "Oh, yeah, if I can find someone to run it."

That's our other biggest challenge: the human resources. Unfortunately, all of this discussion about the downturn and the pine beetle is impacting our ability to attract people to our industry. Mining looks a hell of a lot more attractive right now. So we're losing the people we do have to something that's a little more solid for 35 years, and we're also…. It's a barrier to recruiting people into the industry.

I know that last year the Forest Products Sector Council did a report. They called it Renewing Canada's Greenest Workforce. They said that even in the worst-case-scenario projections of the downfall in the cut, we were still going to need 9,000 or 10,000 people in the next ten years. I don't know where we're going to get them, especially if they keep hearing: "There's no wood. The mills are going to close. Blah, blah, blah."

How do we keep this industry viable? I know that one of your items in your terms of reference was talking about a healthy and viable forest industry. It's about more than just trees. It's about the people as well. To us that's a big one.

On the four points for the committee's purpose, we do have a couple of ideas. One of them I've heard said already. I've been following along a little bit. Our members also don't want to see widescale opening of the land use plans.

They are concerned about precedents. If there is going to be some relaxation of some of the values, let's make sure it's really tight as to how that's done and not just wholesale go, go, go. They live in those communities too. They don't want to look at it anymore than anybody else. Many of our members invested a lot of time in helping develop those land use plans, and they don't want to see us lose those values.

They're also very, very concerned about short-term gain at the sake of long-term pain. It's kind of backwards to what we usually know, but we are concerned that we are going to pull a lot more fibre forward, and then we're just going to face this again ten, 15 years from now. So we really are encouraging or, I guess, advocating for balance.

I know there are economics, and we know that there's the environmental side. They don't have to be one versus the other. We can find a way to work this together. Some of it has to do with how we access the fibre, how we utilize the fibre and who's getting at the fibre.

In the previous presentation we were talking and mentioned B.C. Timber Sales. We're not sure. Maybe that's something we need to revisit in light of this — where there are sales that are not getting bid. B.C. Timber Sales
[ Page 714 ]
is losing money. There is some fibre there. Maybe going back to a different way of doing it is something to consider.

We're not saying yes one way or the other, but we do see abuse of the timber sale system. We do see underutilization of the timber sale system, and we see the system losing money. So that's something we would recommend having a look at.

Our main one that I wanted to bring to your attention is about increasing the harvest of marginally economic timber. The CILA — actually, at Minister Bell's request — has been working with a small-scale logger out of Quesnel. Donna, you probably know him — some of you may. Dave Jorgenson. He has developed mini-logging machines where you only need one or two people. Your production would be about three loads a day.

What he can do with this machine — and he's actually working for provincial parks right now around Ten Mile Lake — is go through areas that were already logged, say ten or 15 years ago, and the stuff that got left behind…. It's big enough now. They can get it without damaging the understorey in the second growth. And because it's closer to town — because we can go back to those old sales — it won't have as high a cost for trucking, so it mitigates the extra cost in the harvesting.

So the harvesting cost per metre there is a fair bit more. But between the mitigation and the fact that your human resources are not as high a requirement and the fuel cost, what it's basically…. We'll have the prototype that's being built, because WorkSafe wanted a purpose-built machine. It's a small excavator that will have a press, a buncher head. It can actually do the processing and the loading and the delimbing. One guy could do all four of those with one small machine — a very minimal environmental footprint. It doesn't damage the other growth coming up, but you can probably get another 10 to 15 percent off of those blocks that we got ten, 15 years ago.

FPInnovations has already done a study on it, so we're putting all the stats together. But you know, West Fraser is very interested in trying this one in Quesnel, because they figure they've got half a million metres sitting there that they could get at. If that works there, then there are other places we could do that.

It's a very low-capital, very low-cost, small-scale operation. That's something that we are pleased to be able to contribute, because we think it's actually a positive story.

The argument amongst our members between appurtenancy and keeping the wood home and sending the wood away…. You know, we have loggers that do five rounds a day because they are nice and close to home, and then other guys who have to do a 700-kilometre one cycle. It frustrates us when they are passing each other on the highway loaded.

I understand dimensions. I understand some of that, but some of it makes no sense. For us, we're looking at it in an innovative way, but because of the human resources it's taking to do all the trucking, we're starting to look at dropping trailers and not deadheading back one way but picking up a load of something else to take somewhere else along the way. Dispatching — which we've never done with log trucks before.

Also in the human resources, looking at truck sharing — two or three women to a truck. They're not going to be able to work 80 hours a week like the logger men do, but three of them at 30 hours a week at 25 or 30 bucks an hour is a heck of a lot better than Wal-Mart. It's one of our ways of mitigating some of the human resource pieces, but then it's going to be looking at shorter hauls.

We're looking at technology. We're certainly, as most of you are aware, looking at the whole carbon and emissions and reducing fuel consumption piece from the association's side. But we're more worried about…. I guess I'm not even going to say worried. That's the challenge. My members are not worried, because they are so busy, because we are so short of people. There are all these other opportunities, but those are going to be short-lived. We still have to look out long range.

I know that a senior official at Canfor told me that only 50 percent of their loggers just log for Canfor anymore — a real shift from where it used to be. It used to be all company. You worked for that guy, "Yeah, you're evergreen," and that was it.

Our quota system is changing. Some of our licensees are so concerned about keeping their contractors that they're doing ten-year evergreens. You would have never seen those before, where they're guaranteed that amount for ten years.

There's all kinds of stuff that needs to be done, but when I talk to our members…. Of course, we've got this whole geographic spectrum. The guys from Burns Lake, within 48 hours of Hampton blowing up, were booked. They were gone. They were busy. We couldn't find a spare contractor or a trucker. We thought that might help mitigate the situation. They were gone in the blink of an eye because we're so short.

So our challenge is a little bit different. Ours is really looking out long-term and not so much today or next week.

We also had a discussion, because some of our guys are into other aspects of the industry, around looking at alternate species. We've got a lot of aspen, hardwood, in the Lakes district particularly — up around Chetwynd and that. We don't touch that. We don't even inventory that, and yet there are other things we can do.

If we're talking forest industry and innovating, we need to look at some of those alternatives as well. I know on the Island they've always: "Well, what about the balsam? What about hemlock and hem-bal, and trying to find…. But we have the same issues in the Interior. We've got other things that we never use and that we could start looking at as well.
[ Page 715 ]

Our biggest encouragement is to consider the fibre resource as a whole, not just lumber. I mean, our wood right now — our fibre is BTUs. I mean, what's the end product? It might be a BTU. It might be a megawatt. It might be gigajoules. It might be some kind of lignol or some liquid fuel. It might be biodiesel. It might be lipstick, with this nanocellulose stuff. You know? And it's board feet. So let's look at the whole picture and not just how many board feet are we going to produce — okay?

So on the questions, the values and principles that should guide the evaluation — sustainability. We are really not into short-term gain at the risk of long-term pain. It needs to balance out. It has to be sustainable over decades, not just the next five or ten years.

What cautions and advice do we have? Well, we do need to be careful about the visual and other values, but we're also very concerned about public perception. I think that's why the licensees are staying on the environmental side too. We don't want to lose the FSC. We don't want Home Depot saying "Don't buy lumber from B.C." There are all these balances that have to be taken into consideration.

As a community…. Myself, I grew up in the Chilcotin. It's devastating to go out there. Between the fires…. I don't know if you guys went out Alexis Creek way. It's like a moonscape between what got logged, what got beetle-eaten and what got burned. It's hard to watch that when you live there. It's hard to look at that and see how…. Especially there where you've got a biogeoclimatic zone that's very slow-growing. It's going to be 30 or 40 years before it looks like anything again.

If you go down by Louis Creek…. I went through there last week. All those black stalks. When was that fire — '05? It's hard to look at that. It's hard to watch that.

As a community, we do want to have a say. We appreciate this opportunity from the business side, but I think…. I mean, you're not going to be able to please everybody. You know that.

I wouldn't want to be in your chairs, to be honest. No matter what political stripe you are, what brush you wear, somebody's going to be mad at what comes out of this. We have to think about the benefit to all British Columbians, especially our small rural communities, and remind ourselves that we'll finish digging rocks out of the ground or pumping oil out of the ground one day, but we can regrow our trees. We can manage our forests sustainably, and our communities can survive if we get together and learn to share.

We teach our kids to play with each other in the sandbox. We have to do the same thing in this industry. When you have majors sitting there going, "It's mine, and you can't have it, and I'll burn that sucker rather than let you have that slash pile," we have a problem.

From the ground level, my members — nothing frustrates them more than to have to set a match to something or leave it sitting there when some of them themselves have a pellet plant, and they can't get at that wood. That's ridiculous. That's the things that in our view need to change.

B. Stewart: Thanks, MaryAnne. A totally different perspective than we've heard from presenters, which is great.

You started off your comments about massive projects where trees aren't being used. Now, I know Highway 37 electrification — that's proceeded, and the right of way has been cleared. I can't honestly answer that question. But Site C…. The other one that you mentioned was Apache. In terms of the line and stuff like that, those rights-of-way and that are not being cleared yet, are they?

M. Arcand: In August we start for the Apache one. A new gold mine cleared I don't know how many thousand hectares, and nobody wanted the wood. It was 120 kilometres south of Vanderhoof. I mean, that's crazy.

M. Arcand: I know that one of my loggers did the last Surerus piece, and he said he never made so much money in his life, because they said: "Just take it." There was no stumpage, no stickers, no nothing. He just sold it on the open market. I know I've talked to several loggers who have been able to do that.

So the government is missing out on revenue. There's opportunity there. There's a lot more volume than we think about, but it doesn't get calculated in the forest's piece. They're still trees. It's still fibre.

B. Routley: Thank you. It's always good to see you because you always have some new, innovative thing happening.

B. Routley: You're an encouragement, like a little sliver of rainbow that comes into the room. It's nice.

I'm really excited, actually, to hear you talk about the new system, looking at smaller equipment. Some of that kind of equipment I've seen in Scandinavia, but I think we do have to kind of innovate our own equipment.

B. Routley: So that's great. Also, the suggestions that you've made in looking at some of these major projects and the wood supply…. It is shocking to see that.

I know in the estimates process we asked those questions about: was there revenue to the Crown, basically, from those sales? And apparently it's totally different and doesn't…. So it does seem to be a windfall for some, which…. I guess as long as they're spending it back in the community, that could be a good thing. The downside is that manufacturing operations looking for wood supply….

I'm wondering if you have any idea of the kind of…. If you put it all together and if you worked together like you're talking about — in collaboration — what kind of volume could actually be sustained? If you came up with a new kind of licence…. Or would it be possible to come up with a new kind of licence attributed to some of these major projects around? I know they're short term, but taken together they could actually….

M. Arcand: My understanding — and Dave had to leave — is that that's where the ministry is trying to go as far as the Ministry of Lands and Natural Resources Operations. It's to try and address some of those things where we have this crossover. It's somewhat similar along the lines of the natural resource road act — right? We're all using the infrastructure. We should be using it together, sharing the cost under the same set of regulations with the same rules.

To me…. Part of it is personal, and part of it is my opinion, but I'm guided by a hundred guys that have been doing this for a long time, saying: "A tree is a tree whether the end product is a 2-by-4, a piece of plywood, a laminated panel, BTUs out of a pellet plant, gigawatts of power or megawatts, gigajoules of gas. What different does it make?" For our activity it's cutting that tree and moving it — right?

I think one of the interesting pieces of that…. First of all, I've no idea how much wood that would be because it doesn't get inventoried the same way. We don't have the same licensing. So that's something that I think your committee could be recommending, to say: "We need to look at that." Because it's basically untapped and untouched, but it does hit the market somewhere when there are volumes of it. Where is it going? Who's getting it? How are they selling it?

I mean, far be it from me to fink on my members and say which ones are making money off of this. But under the circumstances, those guys have also recapitalized, reinvested that money in the community, gotten bigger, and so several of my large members have their logging side, their roadbuilding side, their mining side. They're all under different regulations. They all have different safety requirements and that kind of thing — which is another thing that's kind of crazy, but that's not your mandate.

The other thing…. They wanted me to talk about the tax regime and regulations. Again, not your mandate, except when it comes to that kind of a regulation, where there might be a licence that — if it's a non-forestry project but there is forest timber being harvested to clean it up. There's got to be a way to do that.

J. Rustad (Chair): Thanks, and I do know that many of the other mining projects that wood has gone in, such as Mount Milligan and Huckleberry and other types of projects…. It has been utilized — that wood.

D. Barnett: Thank you, MaryAnne, for coming. We did have a presentation by the Interior Lumber Manufacturers Association. I think it was yesterday or the day before. I can't remember.

M. Arcand: Those are different guys than the Interior Logging Association. They're still licensees, Donna. We're harvesting contractors.

Anyway, they had a few questions that should be related your organization, because you basically still move lumber and sell lumber and cut trees, etc.

D. Barnett: One of the issues that I have a concern about is…. It's great for us to hear: "There's all this stuff on the side of the road. What can we do with it?" Until there's a market to sell this, you and I both know nothing will happen, because everything turns around to value and to industry. If they can't make a dollar out of it, you're not going to have the industry.

We all would like to see this happen — to move this material here. Just on the record, I think I would like to have that. I don't want to give the impression that we're burning this because we don't have anything else to do with it.

M. Arcand: If I could, part of the problem is that there is a market for a lot of it, and the regulations or the different way it's measured get in the way of that.

For instance, a slash pile would be handy for a guy trying to do pellets, but if the mill still wants it, it's cubic metres. You can't afford that price. So it's about what it is, rather than: can you make a buck off it? No, you can't make a buck off it as 2-by-4s, but maybe you can make a buck off it as hog fuel or for torrefied or as something — right?

But we're still in these protectionist little boxes with some of this stuff, where you can't get at it because the pricing system on that wood off that block is the wrong pricing system for that end product. That's what I was trying to get at.
[ Page 717 ]

D. Barnett: Oh, okay. In essence, I've got a question for you, then. I know that to move some of this, because of our geographic nature out there, it would have to be subsidized by somebody.

M. Arcand: Not necessarily. If they're getting ground in the bush, you can get a lot more trees in it than if you're trying to bundle logs and pieces of junk.

D. Barnett: Where I live and my geographic nature…. I know that people have looked at it, and it doesn't work when it comes down….

D. Barnett: Anyway, thank you for coming. There are lots of issues out there. One of the issues that you've been dealing with is the education component. We have to stop telling everybody that forestry is not a good thing. We have to stop telling people that forestry is dying.

Our trades and our education. We are not having people come to take forestry. This is something that you're doing a good job of. We have to keep moving that throughout the province. So I thank you for that.

N. Macdonald (Deputy Chair): Thanks, again. As Bill said, every time we hear you speak, there's a whole bunch that's new and interesting.

Your expertise, B.C. Timber Sales — I'm interested in that. You talked about areas of improvement. That might be a big question to throw at you and ask you to answer that in two minutes. But who would you…? Any quick things that you would say? Or any suggestions as to what to read, where to go to look at some of the ideas?

M. Arcand: I know that there are some changes coming there, Norm. Two of our members sit on the Timber Sales Advisory Council. They are as frustrated as all get-out, because it doesn't seem to move. I know that there's talk at that level. These are industry guys making advice.

I guess some of our concerns…. When a company from China can come to our area — Burns Lake, Vanderhoof — where we are experiencing this shortage, and buy beetle timber sales and pack it in cans and ship it to China…. I thought we weren't going to allow that. So that's a real concern.

How can we be doing that if we're short of wood right here? Why would we send whole logs over there? Unfortunately, a lot of my knowledge is hearsay from various people's opinions.

Whether the old system of small business would work anymore either, I don't know. We're closely aligned with the community forest guys and the woodlot guys, of course. Many of my contractors own woodlots, so we're kind of enmeshed a little bit. But they are sitting as licensees — right?

I just think we need to look at that system better. My people complain that they're forced to bid on a timber sale because the mill wants that wood, As Harry pointed out, they don't all have guaranteed volume. That goes to the amount that they actually put through the mill. They use the timber sale system to access that.

The original idea of setting market pricing through the timber sale system is being kind of skewed, and that causes concern because then it sets a false market price.

As we go forward, as timber…. As there is less of it, it still costs the same, and prices are increasing, actually, to harvest it, and we may have to haul it farther. The margins get thinner and thinner. Then we have to make sure that that system is viable too. Right now it doesn't look like it is.

J. Rustad (Chair): Just a last question. There was a licence that was issued, or an opportunity that was created about 2003 to export pine logs from the area. It's my understanding that that licence either expired last Christmas or will be expiring at the end of this year. I'm not sure which it is in terms of that.

As of a few months ago I was informed by the Ministry of Forests that there had been no application under that licence to export pine beetle trees outside of B.C. from the Interior. To hear you say that there have been pine beetle trees that have been stuffed in cans and shipped out surprises me because I am not aware of any of that. I am aware of a company from China that has bought some licences with an intent to do that, but from what I understand they couldn't make the economics work, so I haven't actually heard that anything has gone offshore.

M. Arcand: My information came from a logger that did the logging for those guys.

J. Rustad (Chair): If you could get me some licence information around that as well so that I could track that down, that would be much appreciated.
[ Page 718 ]

M. Arcand: My information came from the logger that did the logging on that sale for them as a contractor.

J. Rustad (Chair): Like I say, that would be great if you could get that for me. Thank you.

J. Wieting: My name is Jens Wieting. I am the forest campaigner with Sierra Club British Columbia. Sierra Club British Columbia is a non-profit environmental organization, and our mission is to protect B.C.'s species and ecosystems, particularly in the light of global warming. We have around 18,000 supporters, six local groups, and our youth education program reaches out to more than 8,000 B.C. school children each year.

We are working with government, First Nations and other stakeholders and parties to make sure that conservation viewpoints are heard and to provide input on policy.

I'm mainly working on the implementation of ecosystem-based management in the Great Bear rainforest and on conservation issues in Clayoquot Sound. I'm also working on forest and climate issues. We put out a number of reports on the state of B.C.'s forests, particularly coastal forests and emissions from our forest lands. I will talk a little bit more about that.

My background is…. Before I moved to B.C. and joined Sierra Club to work on the Great Bear rainforest file, I worked on protection of tropical rainforests. I worked in Nicaragua for the German development corporation to protect tropical rainforests in Nicaragua. I also worked as a tropical rainforest campaigner for a German environmental organization called Robin Wood. Occasionally I will make some observations from a global perspective on the questions we are looking at today here in this room.

Before I speak to some more specific concerns in the light of economy, ecology and climate change, I would like to make some big-picture considerations. It's probably not the first time that you are hearing this concern, but allowing logging in the relatively small forest area set aside to protect old-growth, habitat, riparian, visual and recreational values is arguably inconsistent with the principle of sustainability.

If you look, for example, at the most widely quoted definition of "sustainability" coming from the Brundtland Commission of the United Nations in 1987, sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

You've probably heard it a number of times over the last several weeks, but I think this particular case is somewhat even more extreme, because we are looking at a region that is hit by a long period of time of overharvesting plus climate change–induced mountain pine beetle plus, I think, a faulty response following the increase of the annual allowable cut, which is now leaving us with a very challenging situation — between a rock and a hard place.

I think that if you look at the question that you are faced with, it's very clear — and Ken pointed that out earlier — that this mirrors the same patterns of overfishing, overhunting, overshooting, of depletion of resources that have led to extirpation or extinction of species, to economic collapse and even, in some cases, to the breakdown of civilizations.

I think the big difference today, for me, is that when you compare that to historic examples of collapse — Easter Island or the Maya — we never had so much information like today. We have overwhelming scientific evidence that the way we are depleting resources is undermining ecological integrity and environmental services that we need to survive.

Secondly, it's happening both on a regional scale, and it's happening globally. I don't know if you saw it, but just before the Rio+20 summit in June, a group of scientists published a nature article pointing out that because of the increase of greenhouse gas emissions, because of the alteration and disruption of ecosystems globally, we are approaching an irreversible stage shift globally.

If you think about thinking globally, acting locally…. Only if people around the world, in different parts of the world, regionally take leadership to restore and maintain ecosystems, will we be able to actually restore and maintain the life support systems that we need to support our civilization.

Clearly, if you think…. I understand that there's a very difficult economic situation in the Interior. I have to admit that I have few opportunities to travel there and see it for myself.

I think it's important from a global perspective. If we would allow logging in reserves in the Interior, we would have to ask ourselves, "What do we expect from countries like Brazil, Indonesia, the Democratic Republic of the Congo, who have the largest tracts of tropical rainforest that we need to maintain the planet?" What are we expecting from these countries, their governments, in how to deal with protection or forest management issues if we would make this decision here? Apologies for digressing a little bit on the global scale.

I'm going to talk a little bit more about the economy, because it's not only about ecologic integrity. It's about the economy as well. As I've mentioned earlier, the combination of having the mountain pine beetle and the provincial response of increasing the annual allowable
[ Page 719 ]
cut has left us with an even more challenging situation.

We have not only seen the cutting of dead stands; we have seen a lot of cutting of stands with a mix of dead and living trees. That is particularly unfortunate, because in many cases there would have been an opportunity to set aside some of the affected areas, giving nature its time, letting the healthy species and trees survive and allowing some future volume and some more opportunity to protect forests in these areas.

I think it's still important to do this now, to adjust the AAC as quickly as possible and undertake much more careful planning on a finer scale, distinguishing between stands that are overwhelmingly affected with dead pine trees and mixed stands, where it's urgent to protect some of these to maintain environmental services and also to create, in some cases, the opportunity for the next generation to harvest some of the other species that are not affected by the mountain pine beetle.

So it's not a surprise that we are faced with this situation. I think that if logging in reserves would be considered, would be allowed, it would support denial. It would encourage postponing inconvenient business decisions that should be made today. Some of these would be postponed until tomorrow, only to face an even more brutal reality then — right?

We heard about…. I'm going to echo that the value of the land use planning that has been undertaken…. It would send a very short-sighted message to business and other stakeholders that no place is off limits. I'm very concerned, as a precedent — not only for the Interior but for other parts of the coast.

We are working in the Great Bear rainforest to develop a world-class solution, allowing both ecological integrity and logging in the right places. To see another part of the province next door that some similar reserves are being given up to allow logging a few years later would be a very huge concern for us.

You probably also heard about the impact on other economic activity — tourism, agriculture. The excellent series in the Vancouver Sun, by Larry Pynn, points out how other economic activities are massively undermined and impacted by increased rates of logging in combination with the mountain pine beetle — agriculture, ecotourism and so on.

I'm very concerned about businesses that require small quantities of timber — that those will be left out for a long time. In order to keep some big mills running for a few years, you are giving away the opportunity to at least have some smaller businesses that provide more jobs per cubic metre — to have a small, reliable timber supply in the region.

I was really excited to hear the person speaking before me about small opportunities. I think that the whole idea of "small is beautiful" should really guide a lot of the planning and business ideas in the region, because that's what we are faced with in this region and in many other parts of the world as well. Faced with resource depletion, we have to think harder and be more creative about how to reduce waste, making more use of the resource.

I also would like to echo the fact that the quality of life of these communities will be further impacted if even these tiny reserves would be given up. There would be less natural beauty for people who live in the region and people who are visiting the region.

I also found it very interesting to take a look the other day at the economic state of B.C.'s forest sector in 2011, seeing that timber harvest in B.C. rose 42 percent from the 2009 slump to now close to 70 million cubic metres — and almost 50 million from Interior Crown lands. At the same time the employment decreased. Employment in the sector is down to 53,000 — 2.3 percent lower than in 2010. That's just a worrying trend. What that means is that harvest is increasing. There are fewer jobs.

If you compare the situation…. In the past, we were maybe overharvesting and undermining the environment, but at least there was an economic benefit — right? I'm wondering, if I hear about BCTS not making money: how long are we going to do this?

To what extreme are you going to give away resources if there are fewer and fewer jobs, not recognizing that, essentially, every day we are seeing more information about the value of the environmental service — of the carbon storage and many other environmental services? Also, opportunities — how to receive some revenue through carbon credits or other means, actually acknowledging that we need some of these environmental services now more than ever, particularly in the light of climate change.

On the ecological side, it's very clear that with climate change, we're seeing more and more extreme weather events, as we speak, around the world — more forest fires, more drought, more flooding. There is overwhelming scientific evidence for that — that we will see more and more of that.

If we don't maintain these forest reserves and actually enhance and demand our forests' protection, we put people's lives at risk, because there will be more flooding and fewer forests to provide essential environmental services like soil retention and flood control.

Species and wildlife. We already have over 40 percent of B.C.'s species as conservation concerns. According to the IPCC, based on the current trends — for example, average warming around two degrees by 2100 — we will see 20 to 30 percent of all species disappear. If it goes up 3½ degrees, it will be around 40 to 70 percent. The International Energy Agency warned in November 2011 that, based on the current emission trends, we will see six degrees of warming by the end of the century.

In order to survive — it's not about economic activity so much but actually survival — we have to, as soon as possible, reduce emissions from a number of activities
[ Page 720 ]
and make much harder efforts to protect what remains of our ecosystems.

The areas set aside in the Interior are some of the only places with a better chance, a higher likelihood of maintaining ecosystems and species into the next century. You will see species disappear. It's essentially about the extinction rate. Will we manage our lands in a better way so that we can reduce the extinction rate? Or will we speed it up by allowing more logging in the small areas set aside to protect some of these values?

I also would like to bring to your attention — because it's an issue that overshadows pretty much everything, from my perspective — the just-released provincial Greenhouse Gas Inventory Report that came out about two weeks ago. It's really surprising that we are not sitting here discussing that, because for thousands of years, and over the entire 20th century, B.C.'s forests were a carbon sink, and they were sequestering carbon from the atmosphere.

You probably heard a lot about how they became a carbon source over the last few years, but the growth of the emissions is exploding. The growth of the emissions from forest lands, which are not included in the official emissions, is 363 percent over the last ten years. Official emissions in B.C. are 62 million tonnes. That's mostly from fossil fuels, a little bit from deforestation, but remaining forest lands are not included because of the Kyoto negotiation outcome.

This was, through the '90s, a positive number. There was more carbon sequestered by these forests than released into the atmosphere. It was about 30 million tonnes a few years ago. Then it moved to 50 million and 60 million. Two weeks ago in the new report, on pages 56 to 58 buried in some tables as "memo items," it's now 82 million tonnes of carbon emissions from B.C.'s forests — essentially 44 million from harvesting, 66 million from wildfires, eight million from slash burning, with only 36 million tonnes of sequestration reducing all these emission numbers.

What that means, of course, is that we have fewer opportunities to reduce emissions from the mountain pine beetle, from wildfires. But wherever it's related to forest management and to logging, we can do a lot about it. There are 44 million tonnes of emissions from poor forest management, from destructive logging practices, from waste.

That's where we have control. If we have a certain amount of money available to reduce emissions in this province, we should look at that and shift some of the money around so that we have more resources available to reduce these emissions — whether it's reforestation or ecological restoration — and reduce the waste.

I don't think it should focus so much on how to use some of the waste. That's part of the solution, but it's also about avoiding it. Why would we kill so many trees and leave so much behind if our true interest or our actual priority is to find some of the best trees and leave some healthy trees behind, instead of clearcutting everything?

These numbers, in terms of emissions, should not only be a huge concern because of their contribution to global warming; they are also an indicator of the state of our forests. We have to work a lot harder to reduce these emissions.

In short, all the available information indicates that we need a paradigm shift or a U-turn — whatever you want to call it. We have to make better use of our forests. We have to increase conservation to protect species in the light of climate change. We need new regulation — there's no doubt about it — and incentives to improve forest management, to reduce waste and to stop destructive logging practices.

I think it's really worth pointing out — if you look at Vancouver Island, for example, the Wildwood example — that Merv Wilkinson took lumber out of his parcel, but he increased the stock. It's not a given thing that logging means emissions. There are ways to log selectively, carefully planned so that you can both have lumber, timber and volume and increase the carbon storage of the forest management unit.

B. Routley: On the information that you gave on carbon, have you got a copy of the scientific study that you derived that from? Obviously, one of the things that we want to be aware of as a committee is what the latest science is on carbon.

Also, I understand that our forest products actually store carbon, as compared to, say, cement or coal or some the other products in the world that are being widely utilized in developing countries. We're actually selling forest products to China, for example, or pellets, which could actually help deal with the climate change situation.

So I wondered about your comments on that, whether you agree that we should be aggressive in trying to do things to help deal with climate change with wood products in the world. Or do you disagree with that notion and believe that cement or steel or other products, which the scientists also seem to suggest is a greater contributor to carbon?

Obviously, one of the largest world problems is the burning of fossil fuels. Wood is, I believe, one of the solutions. I just wondered if you'd comment on that.

J. Wieting: Sure, absolutely. On question 1, the emissions I quoted are from the just-released provincial Inventory Report 2010, an overview on emissions for the year 2010. It's available on the website of the climate action secretariat.
[ Page 721 ]

On the question of wood, first, approximately 15 to 20 percent of the emissions from harvesting are actually not being released into the atmosphere but stored in wood products, so that should be considered. It's still a huge number. If you, again, compare the official emissions of B.C., approximately 60 million tonnes — and there are about 44 million tonnes from logging — it should be considered that about 15 percent of the 44 million is stored in wood products.

Now, is a wood product better than, for example, concrete or other materials? That depends entirely on the logging and where it comes from. One example: if Merv Wilkinson were to log a second-growth tree selectively in his stand where he increases the stock and the carbon storage at the same time, it's absolutely great. But if it were to come from a clearcut old-growth stand that hadn't been disturbed for a thousand years, you would have massively, several-times-multiplied emissions compared to logging selectively in the second-growth stands.

You have to consider that in an old-growth forest, just to choose an extreme example, you have a system that was relatively protected and undisturbed for a 1,000 years — closed canopies, stuff that you're walking through…. If you've visited a place like Carmanah Walbran or Clayoquot Sound, you have up to 1,000 tonnes of carbon storage per hectare, and the peer-reviewed science in these places after a clearcut is that you lose in these places approximately 50 percent of your carbon storage after a clearcut. Only a small portion of that gets resequestered in this situation over several decades.

So even when the younger trees start to grow again, it continues, which is an interesting point, also, in the Interior if you look at the mountain pine beetle areas. Werner Kurz's modelling suggested that all the dead mountain pine beetle stands will massively increase Canada's emissions, which is partly true, but it appears, based on some on-the-ground measurements, that No. 1, the dead trees store the carbon longer than it appears. They're not just falling apart overnight — right? They are still around for years. It takes decades until they decompose and release carbon into the atmosphere.

Plus, No. 2, the young trees in many stands grow very fast. There's not a clearcut where you lose all trees, living and dead, old and young. If you let the whole system sit, you will see that your younger trees that are still healthy grow relatively fast, and they start to sequester carbon quickly. So it's not as bad…. It's very bad, but it's not as bad as the modelling suggests.

These are all examples to show that we need finer-scale planning. We have to take a much closer look at each ecosystem, each stand, and give up on these large-scale, radical planning sites where you make decisions over tens of thousands or hundreds of thousands of hectares: "Clearcut that, salvage that and open that reserve." It has to be on a much finer scale if we want to make some gains here. There's enormous potential to reduce emissions, to protect species and to generate more jobs to create the volume for the next generation.

I remember seeing a study that showed, "Here's what a healthy forest would be able to sequester. Here's an old forest when it was past growing and starting to slowly deteriorate. Here's what it was," and then a forest fire or a mountain pine beetle: "Here's what it was." And the worst emitter was when it was harvested, the study said. However, what the study did not include was, of course, what that wood is used for, what it displaces in terms of all the potential that other products would have been used for, which then would have changed those dynamics dramatically.

The question I have for you…. I have to be a little vague around this. Obviously, carbon is an issue that you're concerned about. If we could find a way, through different forest management, to potentially sequester 50 million or 100 million tonnes of carbon over a period of time, is that a step or a direction that you think we should be considering going in?

J. Wieting: Absolutely. If you want to sequester carbon, that's a great idea. I think it's really important to look at the timeline. If you have a choice of different options to reduce emissions in the forest sector, you have to consider that growing trees takes time. Young trees are not absorbing a lot of carbon in the first 20 to 40 years, and the next 20 to 40 years will be absolutely critical to reduce emissions. In 20 to 40 years we might be over the point of no return in terms of runaway global warming and things like that.

If you have an option of some revenue — for example, the park fund — to increase conservation and set aside a forest area that is also important for species and so on, that gives you immediate emission reduction. If you have a choice to plant some trees here or protect this piece of land here and not log it, not logging means not having the emissions right now, right here. If you grow these trees, it takes 20 to 40 years until you see the difference, so we have to think about that.

That's also the reason why bioenergy is not carbon-neutral. You have to grow these trees again first before you sequester the emissions that you just caused burning the trees, burning the wood for bioenergy. That's often completely forgotten. Unfortunately, it's not carbon-neutral to burn wood right now and say: "Everything is off. My trees will grow." They will grow, but it will take time.

J. Rustad (Chair): Thank you very much for your presentation and for providing us the information.
[ Page 722 ]

B. Parfitt: I just want to start off by saying first a heartfelt thank-you to the committee for the opportunity to be here today and to the advisers who have been travelling with you for giving their time. This is a very important issue that you are here to address, and I think it's critical that you carefully consider all of the presentations that you've had to date and will have in the coming days.

First off, I want to say that I will be submitting a more detailed written document to you, outlining some of the concerns that I'm going to be raising — and amplifying on them.

My first concern about the possible courses of action being contemplated by this committee rests with the potential social and economic fallout, particularly for rural communities, that could result if some of the proposed courses of action that the committee is contemplating are followed through on.

By far, in my estimation, the action item of greatest consequence being considered by you today is the proposed lifting of constraints on logging in order to free up additional supplies of timber for the forest industry in the near- to mid-term. This is where I will focus my remarks.

Information before you shows very clearly that no matter what is done, there are looming and very large reductions in logging that must occur, due to the extent of the mountain pine beetle outbreak but also to the elevated rates of logging that have occurred in response to the current outbreak and, very importantly, to the previous outbreak, a significant one, that occurred in the Chilcotin Plateau in the 1980s.

What I don't think the committee has enough information before it about — and I think is very important to stress — is that the sawmilling industry that built up and, in fact, expanded in response to these beetle attacks now has an accumulated milling horsepower that far, far exceeds what the forests can reasonably be expected to provide and sustain. That excess milling horsepower is only going to become more problematic as time goes on and more forest is logged and more forest becomes commercially unattractive as the lodgepole pine trees attacked and killed by the beetles further deteriorate.

Presentations made to this committee by senior public servants show very clearly that the Prince George area sawmills can consume roughly 16 million cubic metres of wood per year and that the mid-term projection would see the available supply dwindle to 6.4 million cubic metres, or 40 percent of current mill needs.

Around Burns Lake the picture is far worse. Local mills can consume 1.9 million cubic metres, yet in the near term, according to projections by the provincial government, the forests will only be able to provide for about 26 percent of current mill needs. In and around Quesnel and Williams Lake the picture is only marginally better, with local forests likely to be able to meet only one-third of existing sawmilling capacity in future years. These numbers obviously point to very, very tough decisions that must be made to bring milling capacity in line with what the forests can reasonably be expected to provide in future years — years in which climate change will pose even greater challenges to forest professionals than is already the case.

If the provincial government chooses to lift what I believe are entirely reasonable constraints on logging activities in what amounts to a relatively small portion of publicly owned forests, it will, in effect, be trying to expand supply to meet mill demands. That, in my opinion, is a very dangerously backwards response to a very complex problem, and it will have very grave social and economic consequences down the road.

Temporarily throwing more timber into the logging base for a period of time simply serves to mask the underlying problem. You can't log and you can't mill what isn't there. The more we take now, the deeper the pain down the road. This explains why successive provincial administrations, from the Social Credit regimes of the '80s to the NDP regimes that followed to the Liberal regimes of today, have all preferred, essentially, to kick the problem down the road rather than coming to grips with the fact that a falldown in logging rates looms.

This, in somewhat different words, is precisely what the committee heard on Monday in a presentation from Canfor's Don Kayne, who noted: "It's a fact that the mountain pine beetle infestation will have a significant impact on the mid-term timber supply in the central Interior…. While it might be possible to increase the fibre supply, it is also a fact that mills will close. We have to acknowledge that there is simply not enough timber to run all the mills in the Interior."

Now, Mr. Kayne also raised in his remarks another overriding concern in the industry. It's a concern widely shared among professional foresters, woodworkers themselves, provincial civil servants, environmental organizations and others. That's about the need for ongoing forest inventories in order to ensure that we have the best information upon which to make sound decisions about how public forests are managed on the public's behalf.

This is the second issue I would like to comment on. It strikes me that one of the central challenges before you is to determine how much confidence can be placed in the projections on mid-term timber supplies that are now before you. If there are outstanding questions about the robustness of those numbers and the assumptions that lie behind them, then it makes it very difficult, if not impossible, to make informed choices about relaxing constraints on present-day logging rates.

I believe that it was concerns within the ranks of the public service over the true state of health of our forests that lay behind the leaking of the mid-term timber supply
[ Page 723 ]
report that is now before this committee and the related cabinet briefing document that was leaked a day later.

Regardless of the motivating factor behind those leaks, there are several reasons to believe that the present health of our forests may not be as robust as we would like. The question is: is that reality reflected in the mid-term timber supply projections now before you?

We now know, due to the release of a recent Forest Practices Board report, that the total area of B.C.'s provincial forests that may need to be restocked with healthy young trees could exceed current reforestation efforts by more than a million hectares, and most of that is in the Interior, in the beetle zone. We know further, as a result of the ongoing work of forest scientists, both within government and within academia, that many allegedly healthy or free-growing tree plantations are no longer.

Many sites that have been examined that were allegedly free-growing and had reached the proper standard are today below even minimum stocking requirements. We know further, from ongoing work of forest scientists, that many of the areas of forests that have been salvage-logged in response to the pine beetle were actually very poor candidates for logging in the first place, because when they were clearcut, huge numbers of healthy younger trees in the understorey of the dead trees were also logged. That, in effect, took away valuable mid-term timber supply.

The cumulative effect of all of this is that the mid-term timber supply may be even less rosy than the already gloomy projections before you. The only way to ascertain whether this is true will probably be through significant increases in forest inventory work.

Further complicating matters are the huge challenges posed by climate change, which you just heard about, a subject that some members of this committee have also heard, it should be noted, in the Public Accounts Committee, where Doug Konkin, Deputy Minister of Forests, Lands and Natural Resource Operations, recently spoke. It was in speaking to the issue of concerns raised by B.C.'s Auditor General that Mr. Konkin made the following remark:

"When you look into the future, we believe there will be more and more significant, unexpected disruptions. You look at the economy today and the diversity of the markets — what's happening in the marketplaces. You look at climate change. You look at mountain pine beetle, as an example of that. We think the primary focus has to be about building resilience into our forests and our forest management regime."

"I would absolutely argue that trying to specify a long-term timber supply target and have people believe that you can with certainty deliver a 20- or 50-year long-term timber supply target is highly dangerous."

If, in the words of one of our province's most respected public servants, it is dangerous to project into the future, one has to ask how much dangerous again it is to make projections based on an incomplete understanding of what the true health of our forests may be.

Lastly, regarding climate change, the committee needs to carefully consider what forest scientists are saying to the government right now about our uncertain future under a change in climate. I would urge you to consider this and to look at the recent publications by the B.C. Future Forest Ecosystems Scientific Council, where they make the following point:

"Cumulative environmental stress results in increasing uncertainty and deterioration in the services that humans have come to receive from ecosystems, including the provision of a reliable supply of clean water from streams, a steady flow of timber from healthy forests and nutritious forage for livestock and wildlife from healthy rangelands.

"While a generally warmer and wetter climate is likely to increase rates of tree growth, forage and wildlife production, and supplies of fresh water for some species in some geographic areas, the broad scientific consensus is that the cumulative environmental stresses associated with the rapid rate of ecological and social change will outweigh these local benefits, causing a high risk of an overall decline in the provision of ecosystem services at the provincial level."

This is a statement written by provincial scientists, submitted to government just one month ago.

The emerging scientific consensus is that we must plan now for how we have healthier, more resilient forests in future years. It is hard to see how you get there by increasing the logging land base even further at this time.

My third and last point before concluding is that the committee and government would be well advised to heed the warnings being expressed by forest companies and others that lifting the constraints at this time could have significant consequences, both domestically and internationally.

British Columbians went through a protracted and very divisive set of land use negotiations that in effect led to the creation of many of those patches of forests that are now reserved from logging. The industry, government, labour organizations, First Nations and environmental groups, among others, used the creation of that network of reserves in the drive to have numerous forest and logging company operations certified as sustainably managed.

The question the committee and the provincial government ought to be asking right now is whether it is worth placing at risk British Columbia's hard-fought victories to obtain certification by going in and rewriting the rules now.

I myself have travelled in one of those reserve areas adjacent to the Itcha Ilgachuz mountains in the Chilcotin Plateau near a park that was created to, among other things, protect summer habitat for woodland caribou. The adjacent reserve, which may or may not be up for consideration to log if constraints are lifted, was set aside with the express purpose of protecting the winter habitat for woodland caribou.

Again, does this committee and does the government want to reopen legislated land use plans to, for example,
[ Page 724 ]
open up such reserves to logging? What would news about logging such habitat do to the forest industry's hard-won certification efforts, markets for our forest products and forest industry jobs in many Interior communities?

Now, over the past five years I have had the opportunity to ponder some of the issues you, as committee members, now wrestle with. This was done through the lens of trying to identify forest management options that would address both the longer-term interests of those people working in the forest industry and those people and organizations focused more on issues of forest conservation.

I can tell you it was not easy, but what I found in two recent research reports was an encouraging degree of consensus.

When people representing woodworkers and people committed to trying to find solutions to complex issues involving trade-offs that benefited both the environment and resource industry jobs got together, they found answers.

In 2007, in response to the rapid run-up in Interior logging rates, the first of those reports was published. It brought together the B.C. Federation of Labour; the B.C. Government and Service Employees Union; the Communications, Energy and Paperworkers Union of Canada; the Pulp, Paper and Woodworkers of Canada; and the United Steelworkers. They came together to sign a document outlining a recommended course of action alongside ForestEthics, the Sierra Club of Canada's B.C. chapter, the Sierra Legal Defence Fund and the Canadian Centre for Policy Alternatives.

What all the unions representing forest industry workers in British Columbia and some of the province's leading environmental groups agreed to was this: to increase forest conservation by banning clearcut salvage logging in mixed forests in the Interior; to immediately reduce logging rates on the basis of an end to salvage logging in such forests; to halt all logging of pure pine forests where sufficient numbers of living trees grew beneath the beetle-attacked dead trees; to stop the egregious wasting and burning of usable logs; and, finally, to immediately identify those beetle-attacked forests that would not be logged by the forest industry and that it made sense to reforest and to rehabilitate, with the provincial government assuming the costs and responsibilities of doing so.

At their core, most of those recommendations were informed by field studies and findings of provincial Forest Service staff. They were also squarely focused on ensuring healthy forests in future years, including forests that could provide a healthy supply of trees to log in the mid-term, if only they were left alone for the time being.

Late in 2010 many of those same labour organizations and environmental groups came together again, calling for a broad range of forest management reforms built around the capacity of our forests and, very importantly, our forest products to store carbon and to help us in our efforts to combat climate change. Many of the findings in that report were later embraced by forest industry representatives, including John Allan of the Council of Forest Industries.

What I learned during that work is that we face daunting challenges but that there are solutions. However, real solutions require us to resist the temptation of embracing quick fixes that don't address underlying problems. Lifting logging constraints in response to today's very clear timber supply crisis is one such quick fix, and it will ultimately harm our environment and our economy alike.

This concludes my prepared remarks, and I'm happy to answer any questions. Again, I really want to thank the committee for embarking on this work and for giving me time today.

D. Barnett: Thank you very much for the presentation. Some of the comments that you have made are very interesting to me. I happen to live in the heart of the pine beetle and happen to have been involved with the pine beetle since it was first discovered.

When you talk about the excess milling power that is there now, the uplift that was given to the industry here awhile ago, we as communities were well aware of the uplift. We were also very well aware of the mid-term timber supply projections. We were also very aware of what was going to happen when the mid-term timber supply went this way.

The communities have been working very hard throughout the whole pine beetle area to come to grips with it. I listen to people talk about the environment, talk about this. One of the main things that I guess I didn't hear in your speech was communities and people. Those are the very dear things to a lot of us that we have to look after. Through some of the presentations we've had, it seems that people have forgotten that the most important component is, yes, the environment, but it's also the communities and the people that are out there.

I don't know what your organization has in your projections. You seem to know a lot about the area, where preservation should be kept and where we shouldn't do this and that. I'd like to ask you what you feel the long-term outlook is for those communities and those people.

B. Parfitt: Well, what you raise is a highly important issue. In much of the work that I've done, I've tried to emphasize that in light of the very clear challenges that communities that are heavily dependent on the forest industry face, we have to get, I think, very serious about developing policies that are going to encourage maximum utilization of the logs that are harvested to ensure that we
[ Page 725 ]
get the highest value. And when I say the highest value, I mean the highest social as well as economic value from a limited pool of wood.

Realistically, given the numbers before you, given the fact that timber supplies are going to dwindle, the only significant opportunity, I believe, for communities to see some stabilization in forest industry employment has to be through diversification. It has to be through secondary manufacturing of products, taking primary products and breaking them down further to make secondary products. We need to do a much better job on the value-added side to offset the job losses that we should with some certainty be able to predict in the primary milling sector, as it was noted to you by Canfor's reps on Monday.

I really believe strongly that we need to be looking at increasing the return from the volume of wood that we are presently working with. If one looks at examples in other Canadian provinces — Quebec and Ontario, notably — they are generating a lot more jobs from a lot less wood. So that's where we need to go.

I for one find it troubling that, for example, here on the coast of British Columbia we have Douglas fir trees being logged today that are being milled in Oregon, and product from Oregon is ending up in a secondary manufacturing plant in Manitoba to make Douglas fir–framed windows. That doesn't make sense to me.

It's one example among many of lost opportunities here in British Columbia that we need to get our heads wrapped around, because I think that is where the hope for communities lies.

N. Macdonald (Deputy Chair): It's good to see you, Ben. Thanks for the work that you do, and thanks for the presentation.

Just a question. You had done work in the past, and you mentioned it, on waste. We were in the Quesnel area, and a number of the community presentations and a number of the industry talked about the utilization issue. I know it's complicated, and I know the economics have to work, but do you have any updates? I think they were talking about between 15 and 30 percent in some stands. The fibre was left and wasn't fully utilized. Like I say, it's a complicated issue, but have you done more work on waste? Do you have any other suggestions on how that would be dealt with?

B. Parfitt: I haven't done any focused work on the wood-waste issue for the last few years. But I am involved in a co-research project with the University of Northern British Columbia and the University of B.C. where we're going to be looking at, among other things, accumulated wood-waste in the Interior of the province, with an aim to understanding both how much is out there and what some of the prospects for working with that wood might be.

Very clearly, there are examples of significant volumes of wood being left behind in the Interior. The question is: can that wood economically be brought in and utilized? That is a big question. I think probably the single-largest constraint on utilizing that wood to date is the economics of it. If means can be found to bring it in and utilize it, very clearly that would help to offset some of the job losses in the primary milling sector that we know are coming.

N. Macdonald (Deputy Chair): Okay. Well, just one of the examples we had was where the economics would work in a certain sense for somebody to go and get the wood. There's been work to allow overlapping tenures, but the way that it was applied to the cut meant that it was sort of taken off the table. There were not a lot of examples but some examples like that where it seemed that if work was done administratively you might find a solution. In the work that you did, did you find there was much of that or is it generally just straight economics that's the impediment?

B. Routley: I think you already mentioned that you could support looking at some of the low-merchantability stands. I assume you understand that the stands that we are being encouraged to look at…. One of the groups that was here this morning, earlier today, talked about a new type of licence, partitioning and licensing a new area that is actually growing the AAC outside of the current AAC. Because it has been low merchantability and it may have been outside of the area that is suitable for harvesting because of distance or some other reason, it was seen as not merchantable. But there is a possibility of using some of that fibre.

The other question I had was on log exports. We heard when we were in Smithers that it's five hours to the coast and five hours to Burns Lake, and yet some of the wood from the Kispiox is being exported. We heard this morning from one of the presenters that there was a Chinese investor who came over and invested in some of our pine beetle and actually put it in cans and shipped it to China. So obviously, with those kinds of things going on, that's not utilizing the fibre here in B.C.

I wondered if you would comment on that — on what kind of policy levers we could look at to improve the value-added and number of jobs per cubic metre out of doing more with less as well as growing the timber supply.

B. Parfitt: Well, on the issue of exports, it's my understanding that in the last year, if you look at the total number of approved log exports, we were at over seven million cubic metres. Of that, approximately 40 percent originated from Crown lands, not from private holdings, which I think would make the last year the highest year ever in terms of overall log exports in the province.
[ Page 726 ]

My recommendation to the committee would be that if you're going to be considering log supply and log exports, you be looking very carefully at the logs that originate from Crown lands, because that's obviously where the greatest opportunity lies, I think, to formulate policy and turn that particular trend around.

J. Rustad (Chair): Good. Thank you very much, Ben, for your presentation and for providing us with information here today.

D. Routledge: A number of your committee members are not necessarily familiar with the council, so I'll briefly familiarize them with it. I know a number of you already are. COFI represents the B.C. interior forest industry, predominantly. Our members range from the large, integrated, global-scale public companies to small, independent and family-owned niche players. With over 60 facilities, COFI members produce lumber, panels, pulp and paper and engineered and remanufactured wood products.

Two of COFI's several mandates include working with government, communities, organizations and individuals to ensure that public policies in B.C. support the forest sector and, as a result, support people and communities who are dependent on the sector for business income or family-supporting jobs. The other one that's relevant is working domestically and internationally through the Canada wood partnership to improve market access for forest products — both domestically and abroad, as I said.

It's in the context of both of these particular mandates that we welcome the opportunity to present to the committee today. This Special Committee on Timber Supply is conducting its hearings at a critical time for the British Columbia forest sector — for the industry, for the workers and for the communities. The industry has been one of the cornerstones of development in B.C. and its long-term economic growth and stability.

In recent history, over 125 communities within the province's borders were virtually fully dependent upon the forest. Indeed, major urban areas such as the Lower Mainland benefited more than most people could imagine. Forestry was the single largest driver of B.C.'s economy and its biggest industrial employer. The provincial government reaped tax revenues on an annual basis that paid for the entire K-to-12 education system.

More recently, British Columbia has been the fortunate beneficiary of an economic diversification that has seen oil and gas, mining, tourism and high-technology development sectors grow to provide the province with a level of economic security and a broad range of opportunities that are the envy of most other jurisdictions.

However, change is always inevitable, and B.C.'s forest industry has successfully faced many paradigm shifts in its history. Historic forces of change have evolved our sector from one composed of small bush mills serving more localized needs to today, arguably, being the most productive, technically sophisticated forest sector on a global basis.

More recent drivers of change have also profoundly impacted the sector. Environmental reputation. Once the focus of global environmental campaigns, B.C.'s forest industry is now considered a leader in not only environmental performance and excellent forest practices but in technologies and processes that minimize waste.

The collapse of the U.S. housing market and the ensuing global debt crisis led to an aggressive campaign by industry and governments to expand the new markets in Asia.

The climate change issue has revealed and highlighted the array of benefits of using carbon sequestering wood products. This has led to the development of new processes and technologies and new business opportunities using biowaste from harvesting and milling operations. Of course, the mountain pine beetle infestation impact on entire pine stands, which has resulted in milling technologies that permit better use of mountain pine beetle logs….

That brings us to today, where in addition to continuing to produce traditional forest products, doing things like generating bioenergy, producing non-toxic bioproducts, textiles and new and innovative building products are all part of a new future for B.C.'s forest industry.

Architects, engineers and designers are rapidly developing building systems that will see a greater use of wood in commercial buildings and ten-plus floor office towers and residential towers.

B.C.'s Wood First program is encouraging a greater use of wood in construction in B.C. so the province can be a showcase to the world on the best applications of wood — one of the world's most valuable renewable building materials.

It's in the context of these emerging new opportunities that are shaping the future of B.C.'s forest sector that we need to examine the significant impacts the mountain pine beetle has had and will continue to have on Interior forests in light of those.

Careful management of the fibre supply available to today's modern, efficient facilities; to the emerging new facilities tailored to new products and new markets; and to renewing the impacted forest for future generations — all of these are essential to ensuring a viable, globally competitive industry that will continue to contribute to the economic health and stability of B.C. and the thousands of families and hundreds of communities throughout the province.

To assist the committee in developing recommendations around the epidemic-related, short- and mid-term
[ Page 727 ]
timber supply for B.C., we recommend the following seven principles we've taken into consideration when assessing post–mountain pine beetle timber supply mitigation options.

First, the forest industry's and province's reputation for environmental excellence must be top of mind when considering measures to mitigate. It must be clear that the options being considered are intended to be applied to only the 24 percent of B.C. referred to as the working forest. The options are not about either reducing environmental standards or about impacting the 15 or so percent of B.C. that's in parks and protected areas. We need to be clear about that.

Second principle. Mitigation measures must be carefully assessed to ensure that they provide a net positive impact to the economic stability of communities and families. For example, if and when the AAC adjustments become necessary, consideration should be given to a slow and step-like decline in AAC to a constant floor level from which recovery might take longer, rather than a deep dip followed by an earlier recovery. Such an evolutionary, rather than revolutionary, approach allows both industry and communities the time to innovate and adjust in ways that may avoid employment and community dislocation that, given time to innovate, may be unnecessary.

An example of a manufacturing process innovation that dramatically improved the economic shelf life of
[ Page 728 ]
mountain pine beetle–affected timber and in doing so reduced the need for an earlier and larger AAC reduction was industry's investment in the new scanning and curved sawing technology.

Third principle. The significant investments made by companies as a result of holding replaceable tenures must be respected.

Existing replaceable tenures have made significant capital investments, and those have led to stable employment and economic benefits in dependent communities — salvaging and reforesting mountain pine beetle–damaged stands and delivering on mitigation measures. Existing replaceable tenure holders represent a foundation that should be strengthened and built upon.

Fourth, mitigation measures that involve possible movement of available timber volume from one tenure holder to another are controversial. Currently there is not a consensus view among COFI member companies on this issue, and it remains under active discussion at our board. The committee will become aware of differing views from individual COFI member company presentations.

To give the committee a bit of a sense of the issue, at one end is the view that mitigation measures should not result in the movement of available timber volumes from one replaceable tenure holder to another or to new non-replaceable tenure holders. The other view is that in that in order to preserve the economic and social viability of critically affected communities, mitigation measures that include the need to move short- or mid-term volume from one replaceable tenure holder to another will require some creative government solutions in order to keep all parties whole. It will give you a bit of a sense of the diversity of use at the moment.

The fifth principle. Land use plans were established through extensive community involvement and consultation, but many of these plans in the mountain pine beetle–impacted areas are 15-plus years old. A continuous improvement phase should be commenced for these plans, as this continuous improvement work offers the opportunity to identify short- and mid-term timber supply mitigation volumes.

This principle is not about redoing land use planning. It's about restoring value to B.C.'s investment in land use planning by implementing the maintenance component of the land use planning process.

Some of our recommended steps to approach this would be: update the background inventories and the science and management practice information on which the current land use plans are based; second, update for any large-scale events since the plans were initially completed — for example, the mountain pine beetle event; third, use this new inventory information and the new practices information and new analysis tools available since the last land use plans were done to optimize the accommodation of various forest values across the landscape over what was envisioned in the existing approved, but now dated, land use plans.

It's the optimization step that represents the potential opportunity to mitigate some short- and mid-term timber supply shortages while minimizing, or perhaps even eliminating, negative impacts on the non-timber values.

The sixth principle. Existing operational mitigation measures by industry in the province have already maximized the available timber supply to the greatest degree possible under the existing approved land use plan constraints. It's our view that the social licence sought by the Special Committee on Timber Supply's work to do more will be strengthened if it's clear that the new measures the committee may recommend build upon those significant steps already taken.

By way of illustration, the existing steps I speak about that have already been taken include maximizing the harvest of impacted pine stands, with the result that undamaged pine stands and other species stands are largely left in the bank for future mid-term timber supply.

The second thing we've been doing jointly is…. Prompt reforestation of harvested mountain pine beetle blocks is helping to minimize the regeneration delay, so it's helping to fill in the mid-term timber supply deficit sooner than otherwise would occur.

The third thing that's been going on. Milling technology investment has increased the economic shelf life of damaged pine stands — for example, the earlier one I used about scanning to detect the cracks or checks that are tied to the curve-sawing technology, which, in turn, maximizes the lumber recovery factors out of mountain pine beetle–attacked timber or logs that we previously, before the epidemic, would have left in the bush as unmanufacturable. Secondly, improved moisture sorting and custom kiln-drying schedules maximize the grade 2 and better, the better-quality boards that we can get out of those mountain pine beetle–attacked timber or logs.

Fourth, market concerns that forest products from damaged pine stands result in either poor quality or have phytosanitary — i.e., insects or disease transmitted elsewhere — issues have been and continue to be dispelled.

Those are the four kinds of things that have already been going on and have helped to contribute to maximizing the mitigating opportunities within the existing land use plan constraints, and we should build on those successes and build on that reputation.

Seventh, and certainly not least, mitigation measures will not be a one-size-fits-all solution. The suite of suitable mitigation measures will differ from timber supply area to timber supply area due to issues like timber species mixes, age class distributions and degree of beetle attack.

For example, if you look at the Lakes TSA or the Quesnel status quo TSA analysis relative to the Prince George and the 100 Mile projections, you can see there is considerably more flexibility in the latter two TSAs. So the solutions will be different in each of those TSAs. So look for not one-size-fits-all components.

We've not addressed specific mitigation measures in this COFI presentation due to the time restrictions, but we do intend to do so in our written submission.

In summary, emerging out of the mountain pine beetle era will be a new forest sector that will continue to provide immense benefits to British Columbians. The challenge is to manage available fibre supply in a manner that supports viable, competitive businesses that provide high-paying and sustainable employment and competitively priced products that are in demand on a global basis.

Implementing short-term measures to ensure the long-term viability of that business model into the future is what's necessary. Taking those measures carefully while maintaining environmental standards will result in a globally significant forest sector that will provide for British Columbians for generations to come.

B. Routley: One of the things that we've heard from a number of presenters is the overcapacity in the region and the fact that mills will have to close no matter what we do, and that if we do look at mitigation measures, it could make matters worse in the future.

I just want to be clear. You did talk about our reputation being critical, and we've heard over and over again from major corporations and from environmental groups that opening up land use plans would be, really, a misstep — if this committee was to recommend opening up land use plans. Is that generally your sense, and are you suggesting that we look at updating the land use plans? Again, I'm not clear from your presentation on that.

We did hear that updating land use plans…. There were a variety of other interests that pointed out that the beetle kill may have impacted some of the lands that are currently set aside, for example, for old growth and a whole range of other values or however you want to put it, if you view it as a constraint. There are some people who look at it as values, and some people who look at it as constraints.

I just wanted to be clear on what you're recommending in terms of land use planning.

D. Routledge: Okay. I use the words "maintenance" or "continuous improvement" purposefully. It is not opening up land use plans, and the opportunity — again, I'll use the term — optimization is the focus that we'd like to take.

When the land use plans were done, the best available information at the time was used to do them, but one of the steps that was never quite concluded in most cases was taking a look at that balance of values across the landscape that was arrived at, at the conclusion of each of those land use plans.

It would have been in our best interest, as part of the maintenance phase of those plans — monitoring is the term that some people use; monitoring land use plans — that we would have looked at…. So with the best knowledge that we had, we thought this suite, balance of values across this management unit is what we'd like to try and achieve. But has anybody ever done the math to say: does the capacity of the land, of the forest there, actually produce X number of cubic metres and Y amount of user days and Z amount of environmental value on the landscape, whether it be water quality or whatever is being sought?

In some cases the tools didn't exist to do those kinds of analyses. Today some of those tools still don't exist, but there are better tools available.

So part of that maintenance or updating or optimization step is to take the improved information and the improved tools and say: by all this better information, relook at what the sought after balance was. Is there now good information to help us understand…?

In fact, we could actually grow more timber on this land base than we originally thought; or the constraints to realize the other values we want off the land base are
[ Page 729 ]
more rigid than necessary; or we have set aside a critically important wildlife habitat in this area over here, where we've reduced the footprint that's allowed for logging, but we didn't in turn free up some harvesting areas elsewhere that are no longer needed because we've accommodated a greater degree of need for the habitat in this area of the TSA over here. That's what I mean by optimizing, and that's the opportunity that I see available to us without opening up land use plans.

B. Stewart: Thanks very much, Doug. You mentioned a couple of things about replaceable tenures to maintain them. I know you have 60 different mills that you mentioned that are underneath that. I'm assuming some of them have area-based tenure.

My question is: is there a position from COFI in terms of area-based management versus the current volume-based? If there isn't…. What you were just answering a second ago speaks directly to that, as actually managing to the highest and best capability of the land, and maybe…. Why isn't that seen to be the answer by some of your members?

D. Routledge: We do have members that have area-based tenures, tree farm licences, as well as volume-based tenures. The membership is strongly in support of an area-based management approach, but we wouldn't put it all in one basket. For example, we wouldn't necessarily say that a tree farm licence or an area-based tenure is the only tool that might be available to us.

I'll raise one other possible tool; there are several. But one other possible tool — to give you a sense of what we mean by area-based approaches to management and that it should definitely be in the toolbox — is the concept that had been discussed a few years ago about commercial forest reserves.

These would be spatially explicit portions of the land base that would potentially be managed under one of the volume-based tenures. But it is a spatially explicit piece of the land base that has as its highest and best use timber growing with low environmental problems on it and potentially low First Nations conflict issues on it. So it's an area where we could, in fact, focus on investing and growing timber.

You would put it under a volume-based licence, potentially. It doesn't have to be an area-based licence. So it's managed, and the person who might invest the money and the time and the effort to do that focus, growing the fibre, would actually accrue the benefit.

So that's a form of area-based management that doesn't necessarily involve an area-based tenure, just to give you a sense of: "Yes, we think improvements can be made in the quality of management and the fibre availability off the land base from area-based management." But it doesn't necessarily have to be just an area-based tenure.

D. Barnett: Thank you very much, Doug. Numbers one to six were about land use plans, stating that they needed to be updated. My question is: what process would you see that we would go through to update these plans, as they were made with the public? Would you see regional and subregional resource boards being put back in place, or how would you see the process?

D. Routledge: Much like the land use plans in the province ended up being slightly different from place to place, due to time and due to local regional preferences, I don't, again, see one size fitting all. I think there needs to be some common components across the province. We need some consistency — what lenses are brought to bear, what information is brought to bear, and those kinds of things. But I would see that we could have a Cariboo Lake–wide kind of land use plan continue to be that way, if the communities in that area are finding it working and see that as a valuable way to go.

I can see TSA-specific and LRMP-like processes are still viable. There may be a fourth or fifth or sixth alternative that we haven't yet employed that we could learn from other jurisdictions.

I don't see a one-size-fits-all, but I do see the need for some consistency in information and analysis and the things that are looked at and some of the decisions that are made, because at the end of the day, provincially we would like to see a good suite of values, including economic, generated from that land base.

D. Barnett: Would you see the Ministry of Forests, Lands and Natural Resource Operations being the lead on this?

D. Routledge: Ministries change from time to time, as you're well aware. I would answer that by saying that the recent move at the permitting level, at the authorizations level, to a one land base, one land manager approach — and we're still ringing out the benefits of that — is the right direction. I would suggest to you the answer may be in that we need to implement a one land base, one land manager approach at the land use planning level, and that those two things would dovetail together.

N. Macdonald (Deputy Chair): Just to flesh out the idea. You have heard other speakers being very, very cautious about — whether it's described as updating or anything — what that might open up. Presumably, there would be parameters in terms of what you would set this group to do. It seems to me that it could easily stretch.

One of the suggestions that was made to the group…. If First Nations decided to participate, that would introduce a whole new set, potentially, of interests that perhaps hadn't been considered in the first negotiations around the land use planning.
[ Page 730 ]

Are you thinking of very strict parameters around what is looked at, or what are you thinking?

D. Routledge: The features, to me, that would be important to bring to the process are that it is a continuous improvement and updating, not a reopening.

If we had been able to engage in the monitoring and maintenance phase right from day one, I think that the improvements that we would have been able to make, such as incorporation to a greater degree of First Nations interests, if they hadn't been involved in the plan; such as changing social values; such as the emerging mountain pine beetle…. We could be a little further down the road by that being a normal, ongoing function.

These need to be living, breathing documents that take into account all of these kinds of changes. We've let them be static and dusty.

How we kick-start that process today is going to be more difficult. I'm not an expert in this area of facilitating and making things happen, so I think we would need to draw on some of that expertise. But I would suggest that it needs to be, once again, a community-centric process and not something driven, say, from the provincial level — supported from the provincial level but really done at the regional, subregional levels.

N. Macdonald (Deputy Chair): Originally, when we were going through this, I think many of us assumed that that's what would happen — that there'd be this constant monitoring and there'd be this evolutionary adjustment. So yeah, I think it makes a lot of sense that you would enter into that carefully.

J. Rustad (Chair): Thanks, Doug. I've got a couple of questions and things for you to think about. In particular, one of the issues that we saw on our field tour and that has been well discussed over time is the issue of the amount of fibre that's left behind in the woods and not utilized.

There have been many ideas as to how we should try to utilize that, whether it's through different permits or whether it's through a stumpage that reflects the whole log and maybe some credits that flow through if that value is captured and used. I'm just wondering whether COFI has a position or a thought as to how we can create the opportunity for that fibre to be utilized.

D. Routledge: I think we look to where it actually is moving for the solutions. The emphasis that we like to take in our public policy work with government and communities and so on is finding a way to develop public policy that allows, or uses, dollars and cents, the almighty buck, to drive out behaviour, as opposed to the policy stick. Our experience is that that results in a more sustainable and lasting solution.

The first place I would turn is to: where is the fibre moving today, and why is it moving? What are the barriers to it moving in those areas where it is moving?

As was mentioned by the previous presenter, economics is a major stumbling block right now — the major stumbling block. Obviously, it's economic in some locations, so let's start there and look in those places. That's one part of a partial answer.

The second part is that there's been a considerable amount of work done — not only between COFI and the tenures branch of the Ministry of Forests, Lands and Natural Resource Operations — around trying to put into place public policy that would lead to, perhaps, regulatory changes or policy changes that would, I think, remove a few policy barriers to the fibre moving. I think we need to dust that work off.

Some of the statutory stuff, the enabling legislation, is in place. It just needs the regulatory step to be done. I think there are some solutions there.

The fundamental building block that is there is that there's an opportunity for existing tenure holders to say: "I have a home for this fibre" or "I don't have a home for this fibre." If they don't have a home for the fibre, then the district manager is given an opportunity to make that fibre available.

It's a market test approach. So as the economics work, that fibre is picked up and utilized. That's the early indicator that actually, things have turned around and we should be helping things to happen in certain areas.

That stuff, that policy frame, is roughly built. I think we need to finish the work around that.

The third piece. The way I would answer is that the industry itself has made quite a bit of a transformational shift in their thinking about what fibre is like out there in the forest. We've traditionally had and done inventories around it being a sawlog-based economy, producing sawlogs and panels or lumber and panels from these logs. Increasingly, the industry looks now at the forest as a fibre basket.

We've heard some presenters talk about: "There isn't enough fibre out there. The mill capacities were over the current allowable harvest levels."

That's true if all you look at is the sawlog component. If we look at the full fibre component and we make, as an industry, the transition that we're beginning and in the middle of, in some cases, to retool some of those sawmills into other kinds of product producers, then I think that also offers the opportunity to create the market for that fibre that in turn then generates the economic conditions necessary to have it moved. Right now in many places there's no destination for it.

J. Rustad (Chair): The second question I've got is just around one of the components when we look around the various TSAs that have been impacted by the pine beetle, at some low-volume or marginal types of stands, prob-
[ Page 731 ]
lem forest–type stands. As we saw in Williams Lake, they have found ways to utilize that and have tooled their facilities and made that economical around lower volume. In Prince George, for example, we're still at a very high cutoff in terms of what's economical.

The question is: as we drop down our AAC to post–pine beetle and if we look at considering some way of bringing that in, other than just letting it occur naturally over the time of process, how would you look at that fibre? Should that be something that is allocated to existing licences? Should that be new opportunities that are created? Have you put any thought around those types of questions?

D. Routledge: As an overall Interior-wide association, I don't think we have any one answer. Again, this is not a one-size-fits-all. I think the answers to that are at the TSA level or at the management unit level. I think that's where you need to engage the individual companies, the individual communities in those areas.

Part of the answer will be in pending business plans that some businesses may have as to whether or not that should be represented as a brand-new opportunity, an incremental opportunity or whether it should actually be used to bolster up, as I said earlier, respecting the rights of existing replaceable tenure holders as the foundation upon which to build out the strengths.

Short answer: I think we need to look at each of the management units differently.

Our next presenters are the Mackenzie Fibre Management Corp. Along with them is the McLeod Lake Indian Band and Paper Excellence Canada.

T. Elton: My name is Tanner Elton. I'm going to act a bit as the master of ceremonies here.

First of all, we would like to thank the committee for the opportunity to make this presentation. We appreciate the tremendous scope of the task that's been set for the committee and the many challenges that you're going to have in this large, important and often fractious industry. We are looking forward to the recommendations overall and the impact that this is going to have in this industrial area.

Our focus today is fairly narrow. We want to talk about the work of the committee as it will impact the Mackenzie TSA and, within that, the Mackenzie pulp mill and related issues.

In 2008 the former owner of the Mackenzie pulp mill went into bankruptcy, and the mill was sold by the receiver. It languished for a time with an owner that didn't know what to do with it and in 2009 was taken over, in the fall, by a group that was more regionally focused to see if it could be brought back.

In order to bring it back, there were three critical success factors that had to be met.

The first was that the pulp mill in its current condition, which was under emergency takeover by the Ministry of Environment, had to maintain the capacity of being a pulp mill. That basically meant it needed to be protected against the Mackenzie winter, and a heroic group of local folk banded together and made that happen. We called them the Mackenzie 12, and it grew from there.

The second critical success factor is that it needed an owner that knew the business, that had the expertise and the capital to bring it back and that was probably the end user. We successfully found that owner in Paper Excellence, which is now a large pulp and paper company in Canada and North America, and with important assets in Europe.

The third factor is that we needed to secure fibre for the pulp mill, because the former fibre supply agreement had been sold in the bankruptcy proceeding and cancelled, so we basically had a factory without raw materials.

Before you today, you've got the components of those three critical success factors, and our objective is threefold. We want the committee to understand the important role that the McLeod Lake Indian Band played, working with the broader community and the ministries to secure a long-term interest in the fibre in Mackenzie.

We want the committee to understand the importance of the Mackenzie Pulp Mill to the forest sector and to that community as its largest employer — and, in terms of multipliers, the most significant node of a now very solid forestry sector — and as a consumer of the residual fibres and the secondary fibres that become important to the proper utilization of our forests.

Thirdly, we'd like you to understand the role of Mackenzie Fibre, which is the company that we created to manage the forest licence obtained by the McLeod Lake Indian Band and is now managing that cut and the fibring of the mill in a unique way.

Our presenters — and I'll introduce them now in the order they'll appear — are Chief Derek Orr, who is the Chief of the McLeod Lake Indian Band; Andreas Kammenos, who is the director of fibre for Paper Excellence Canada; Darren Carter, the fibre manager for the Mackenzie Pulp Mill; and then finally and not last, Mac Anderson, who's on a return engagement. You spoke briefly to Mac when the committee was in Mackenzie. Good to his word, he said that we would be appearing here, and he's come down for that.

I would suggest that we go through the full presentation and that we then answer questions for you. We're going to try to keep this to 15 minutes to give us lots of time. With that, I'll turn to Chief Orr.

D. Orr: Hi, everybody. Thanks for allowing us to be here and voice our opinion. There are just a few points
[ Page 732 ]
that I'll be talking about.

The basis is the current situation in the Mackenzie TSA. As you may or may not be well aware, McLeod Lake is situated in there. We want to voice our opinion on just how we want to move forward and the benefits that we've been able to achieve through our agreements with the province and such.

As Tanner said about the mill that was reopened, in 2007 the pulp mill was shuttered in Mackenzie and it went into bankruptcy and third-party management. We managed to play a part in that, to help it get reopened by legislation that allows forests to be allocated for First Nations. What happened was that we were able to do that and secure the forest licence in order to make the pulp mill viable, because nobody wanted to buy a pulp mill with no fibre.

We were able to do that, and we managed to find a buyer, Paper Excellence, that came in and started to open the mill. Please remember that this was a very significant time. In 2008 the pine beetle epidemic was at one of its most heightened stages. Then the world economics crashed, so we had to shut down. We cut our business operations by 40 percent; our annual budget, $3.1 million; and shut down from a five-day workweek to a four-day workweek. So there was a huge impact.

Out of that deal we were to get a 20-year forest licence, renewable for 20 years. This was for the long-term benefits of McLeod Lake Indian Band — and not just the band but the region. It's always been our belief that if we help our neighbours, we will be helped out too. The fact of the matter is that when the pulp mill started up, there were many jobs available — both in the mill and the outside, indirect jobs. For instance, McLeod Lake Indian Band has a contract to deliver fibre to the pulp mill as well as take charge of the front end of the mill. So it's very beneficial. Included in that, we have a royalty agreement with Paper Excellence for fibre going into that mill.

This has been a real success story for the fact that in such a challenging time we were able to come together with the community and other businesses as well as government to work for a win-win situation. We were very happy with the product we had. We'd like to say thanks, once again, but we just want to make sure that you understand how good it has been for the region, the mainstay, the grounding that it's done for McLeod Lake Indian Band. As I said, it has provided us with revenues and the opportunity for our employees to work, as well as our members. It's located right in our backyard, and we want to see the success of Mackenzie as well as our region. So we're very happy with that.

Mackenzie Fibre directs over a hundred people, and with our logging show, we're probably up to 120 people. It's a significant opportunity within the area. We're dealing with all the suppliers within the area and are believed to be a fairly big force and always wanted to be involved in the economics, so we're very happy for that.

I'm just here to voice our opinion on how important this agreement is. We actually gave up some treaty rights with this agreement, our economic development agreement that we have signed with the province. There are parts in here where, when we were negotiating the treaty, there were lands, certain parcels, which had been impacted by pine beetles. One of the reasons for this agreement and why we wanted to move forward was that we were unable to transfer the lands right away. There was an impact that affected McLeod Lake Indian Band.

One of the ways to get around this was to sign this agreement. We'll pass it out to you later. I don't know if you guys have been able to view it, but it has all the information in it.

I just want to say that we're happy to be here. We thought we had a long-term agreement, but it's my understanding in that report that was provided to you that it's only supposed to be a two-year. We have great concern with that. This opportunity with this group and Mackenzie Pulp Mill has a significant impact on and positive role in our community, and we are here to protect that for our members and our community.

T. Elton: The arrangements around the economic development agreement, the issuing of the licences and serial and how that affects Mackenzie Fibre, is a complex one. We have some materials we'll leave with you that explain it.

A. Kammenos: Thank you, Tanner, thank you, Chief Orr, and thank you, committee members, for your time.

I'm in charge of the fibre procurement for Paper Excellence. I just want to give you a brief background about who Paper Excellence is.

In just a few years Paper Excellence has grown from one single mill to basically a multinational company with several mills across the world. We produce 2½ million tonnes of pulp and paper. Five of our mills are located in Canada. We have mills that stretch from Howe Sound, British Columbia, all the way across to Pictou, Nova Scotia. Obviously, today we're here mainly to discuss Mackenzie Pulp Mill, which is one of our acquisitions over the last couple of years.

Just in terms of British Columbia, Paper Excellence has over 850 direct employees that work for the company. These are high-paying jobs that require high skill levels that are very beneficial for the community. Paper Excellence has endeavoured to enter the Canadian pulp markets to provide products across the world.

A couple of items in B.C. Paper Excellence produces about 900,000 of the 2½ million tonnes that I mentioned in British Columbia. We expect to generate revenues of
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about $700 million with those sales in British Columbia. Our production plans have us consuming about four million metres of wood to produce those products, and that's not including the energy and other by-products that we use in other areas of our process.

Just to focus a little bit, I think Tanner has covered a lot of the stuff about Mackenzie Pulp. But one of the main things that we would like to express to the committee is that during the idle period Mackenzie Pulp was basically stripped of many of its long-term fibre agreements. So the mill doesn't really have a lot of the long-term fibre agreements a normal pulp or paper mill would have. What's critical for us to share with you is that Mackenzie Fibre is really our only long-term source of fibre.

In addition, it was the basis of our investment into the Mackenzie Pulp Mill. As Tanner had mentioned, the Mackenzie Pulp Mill wasn't ready to run when we first purchased it. It was idled for a considerable period of time, which is not typical for any pulp mill. We've had to spend about $75 million to have that pulp facility up to the point where it's running today. The basis for our investment was the fact that we would have this agreement with McLeod Lake Indian Band and Mackenzie Fibre to provide fibre for the mill.

That's why we're here today: because any changes to the Mackenzie TSA that would impact our agreement would have a considerable impact on our decisions in the future and what we've done in the past.

Going forward, we have plans to actually increase our potential production at Mackenzie by anywhere from 30 to 50 percent. Again, we've spent $75 million to date in improvements to the mill. As Chief Orr has mentioned, it has been the basis for providing some boost in the local regions, and we'd like to see that continue. But for that to continue, there are a few key items that have to be protected, at least for us.

One, again, is to emphasize that we would not have purchased Mackenzie Pulp without the Mackenzie Fibre agreement with the McLeod Lake Indian Band and the renewable agreement that was referred to by Chief Orr. It was the basis for the dollars that we spent into the mill, and again I would share the same concerns with Chief Orr. If there is some other understanding in terms of what agreement was put in place, what was signed a few years back….

We would like to see the committee ensure that Mackenzie Fibre and the McLeod Lake Indian Band are involved in any future changes to the Mackenzie TSA. We feel that this is the best way to ensure that the interests of the local region, which include the harvesters, the community and the pulp mill in general, will be sufficiently addressed.

T. Elton: Again, last but not least, Mac Anderson. Mac manages the Mackenzie Fibre, which is a unique harvesting company. It's got a very large licence. The licences are renewable, in the sense that you perpetuate them, but they're replaced with new licences. It's a nuance that we'll get into later.

The cut is 800,000 cubic metres of cut control, which basically is a sawlog licence. The fact that it's not connected to a mill makes it quite unique.

M. Anderson: Thank you for giving me a second opportunity to come. I said I'd bring my colleagues, and we came down in force.

I'd like to comment on the value of Mackenzie Fibre. Like Tanner said, we have a substantial cut, but without any ongoing obligation to a specific sawmill. It's a sawlog licence, or a specific log spec. As a result, we approach harvesting differently, compared to other people.

First, we're always mindful of the connection to the pulp mill and the value of having sawlogs to leverage for chips, shavings, sawdust and other requirements for the pulp mill. We also don't sell trees, not like BCTS. We sell logs, and we sell fibre.

Our contractors harvest a block, and we take all of the fibre. Sometimes the log leaves the roadside and goes directly to a sawmill. More often than not, the log ends up at our reload facility. At the reload facility we sell the logs to sawmills — certain larger logs for specific mills; smaller logs for other mills; poles to pole companies; peelers for plywood plants; and, of course, pulp logs for our own chipping facility that go directly to Mackenzie Pulp.

As a result, we feel we have one of the most efficient and cost-effective harvests in the region. We're also certified with PEFC standards, and we're very proud of the fact that since we've been going, every year we plant the following spring and summer, and we're current with all of our NSR lands.

We also go out in the market and acquire pulp logs for the pulp mill from a variety of sources. We also go out and bid on timber sales when it makes sense to do so. Our 20-year obligation to fibre the pulp mill goes well beyond simply supplying fibre from our own licence.

In addition, we're now moving to develop a second reload facility that has rail access. We'll be also moving into processing as much of the secondary fibre as possible, making both wood chips and smaller sawdust, which we call a mini-chip.

With the road and the rail access to this new site, which will be right next to the pulp mill, we hope that we're going to better serve the mill and a range of customers throughout the province.

I just want to finish. You know, we have a very good model. The model works because of its arrangement with the McLeod Lake Indian Band. We have to respect what that agreement is, how it's all come about and their dedi-
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cation to the region.

I guess that's about all I've got to say. Any questions — I guess the group's ready for it.

E. Foster: Thank you very much, gentlemen, for your presentation. I've got a few questions on how your logging operation works. First question, though, to the Paper Excellence people.

Your operation at Pictou, Nova Scotia — I take it, it's the old Scott Paper mill — is it?

E. Foster: No, no. Port Hawkesbury — I worked for them for ten years. So the only one in Pictou is the old Scott Paper mill. Okay. Just curious. Thank you.

A few questions on your fibre. What percentage of the fibre that you use in the pulp mill is residuals from the sawmills and what percentage would be round log?

D. Carter: Right now we're running at about in between 22 to 24 percent whole log chips. Everything else is residual.

E. Foster: The other question I have on your…. When you talk about the reload, is this like a sort yard? Is that essentially what it is?

A. Kammenos: Just one other comment, Eric, just because we're a little unique in that we do use sawdust, as well, in the pulping process. In addition to chips which come from the pulp logs and the residual sawmills, we actually also use sawdust in our process.

M. Anderson: If I can just add to that a little bit as well. In the discussion of Paper Excellence, they're planning on some significant production increases. Those increases are not going to most likely come from residual fibre because residual fibre is locked up with other companies and that kind of stuff. It's going to be coming mostly in roundwood form, so it should increase quite substantially. It could get in excess of half a million metres plus.

E. Foster: So then I would assume that the round log that you would be using would be the traditional, what we would call a pulp log, old category 5, 6 wood — that type of thing?

M. Anderson: Yes, that's what we're currently using. We're also working on some local stuff with the local Ministry of Forests and Lands to try and get into some of what I call the opportunity wood — the stuff that's currently not being used as well. So we're working, trying to go down that alley to gain….

E. Foster: Logging residuals you're referring to there, or just low-volume stands?

M. Anderson: No, lower-volume stands, smaller piece sizes that aren't currently being used.

A. Kammenos: I guess, Eric, we're targeting…. Rather than actually a chip, we're looking at maybe a replacement for sawdust. So that's why we're able to even go a little bit lower in the grade of the log.

T. Elton: I think that's worth emphasizing for the committee. Because of the configuration of the mill, with a large short-fibre digester, and because of the quality of the chips, they can actually produce a good product with a significant component of shorter fibre in it. As a result, the mill is looking at ways of utilizing fibre in the region that would be left on the ground just about anywhere else.

J. Rustad (Chair): I just want to follow up on that because I need to understand.

Logging residuals. They're not necessarily the whole log or the pulp log but the butts or the tops or the other stuff that is thrown into the junk pile that is often burnt. Is that fibre the fibre that you're considering for your pulping operations?

First, Bill and I were up in Mackenzie, and I know that you sort of live that whole experience, so it's heartening, especially since we're all so focused on Burns Lake. So it's heartening to see a success story.

You have a bit of a unique setup in terms of tying the fibre to the mill. It's not quite appurtenance, but it is sort of a connection — right? So maybe describe how permanent that is. I heard two years. I don't know how permanent that is.

Then, also, is it applicable in other areas? Of course, we're looking at Burns Lake, and we're looking at fibre.
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Maybe just describe your experience with it.

T. Elton: Let me try this. We've actually got a handout that I've misplaced someplace that kind of outlines it. The pulp mills need long-term security on fibre. There are no more replaceable licences out there. They're all taken, and there aren't going to be any new ones.

What happened was this. The province of British Columbia entered into a long-term economic development agreement with the McLeod Lake Indian Band, renewable for 20 years. This was an agreement which was with the band for the region. It's very interesting reading, because that's what it says. It was using the unique relationship of the McLeod Lake Indian Band to the resource and the fact that they could access licences to the benefit of the entire region.

Under that agreement, the Ministry of Forests could allocate licences as applied for by the McLeod Lake Indian Band, but the McLeod Lake Indian Band would designate who receives the licence. The licences are for five years for 800,000 cubic metres to cut control, which is a sawlog licence. When it's used up, it's replaced with another licence. Now, it isn't a replaceable licence; you just get another one.

This was to ensure, basically, through McLeod Lake and the management of that licence by Mackenzie Fibre, that the pulp mill, which is very significant to the long-term success of the region, had the same right to the fibre as the two other tenure holders in the area, being Conifex now and Canfor. It's not a pulp log licence; it's a sawlog licence. The sawlogs are leveraged to get fibre. The pulp is collected.

The obligation to fibre from Mackenzie Fibre to the pulp mill goes well beyond just the cut. In a pinch, it should be able to completely fibre the mill, if you ended up in the situation where pulp was high and there was no market for logs. It's a bit complex, but we think it works.

Now, the points that Mac made are that what we've learned is that we've got an agnostic licence. It isn't tied to a specific sawmill or a specific cut. No one's going in to do a cut-for-length program and trying to figure out how to not bring out the pulp logs.

You need kind of a special company that's well resourced, because in the case of Mackenzie Fibre, it's set up over a million cubic metres in the standing timber licences — ribboned it off and paid the amounts — with no customers.

What's happened is that it's a very efficient cut, because they take everything. So the big logs go to Dunkley, and the middle ones go to West Fraser and Conifex. The pulp logs come in, and we chip them. We have plans to use that secondary fibre as soon as we get the wood processing facility up. We've established a reload where people could come and see the wood and buy it. There's going to be another one with access to rail.

We think this is an interesting model. There are some aspects to it, but that's the fundamental. We want to make sure that that arrangement, the long-term economic development agreement — the fact that these licences will come in serial as long as this pulp mill is operating; and we expect it to operate forever — is in place. It needs to be taken into account in the management of that licence.

We also think that we've already started to do what the committee wants. We're already shipping significant logs to the mills to the south because we're harvesting. They're surplus to what's required locally. We're using those logs to leverage sawdust back to the pulp mill and, in some cases, to Howe Sound. It's an interesting model. We don't know if it can exported. We'll let the committee decide that.

N. Macdonald (Deputy Chair): I won't pretend to understand it completely, but you are struck by the elegance of it. Like I say, we were in Mackenzie, as I think many members were. To see something put together like this and actually serve a number of needs…. It's certainly a very hopeful presentation from that perspective. I know you've come with your issues, but for us as a committee, it's just very hopeful, again, to hear the work that you've done and that it's successful.

D. Orr: Well, it goes to solve the problem of the fibre that's being left in the bush. We'll be hauling whole logs, all the way down to probably a two-inch butt — being able to utilize all of those.

As we go forward, we, the McLeod Lake Indian Band, understand the lack of fibre that's going to be out there. We believe that we want to be first and foremost to make sure we utilize everything that we cut, and we would hope that all of the other companies live up to that standard as well.

D. Barnett: Thank you very much for your presentation — and congratulations. You have a great mayor there who is certainly out there doing a lot of work on behalf of yourself and the community. I have had the pleasure of working with her.

I'm still a bit confused about this licence. You say that it was supposed to be for 20 years, and it's for two?

T. Elton: It's described as being a two-year licence in the materials. One of the reasons we are here is to ensure that that's corrected in the information going forward.

D. Barnett: So have you been working with the ministry on this issue?
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T. Elton: They signed the licences, and the economic agreement was negotiated with them. We're not overly concerned. We understand that these things get developed. We didn't help them very much. There's nothing in the agreement, as well, on the expansion of the pulp mill. Well, the pulp mill doesn't tell people, maybe, as often as they should that they are going to double the capacity over five years.

We think it's a real good story there. We think that the doubling of the capacity of the mill means a bigger market for the smaller fibre. We think Mackenzie Fibre is a really good way of allocating the wood. It will work with Timber Sales, but it's different because we cut it down and then market it, as opposed to marketing it out on the stump.

We think that the greater involvement of the McLeod Lake Indian Band in all of the harvesting, including this big cut, is going to be beneficial to this region. It's a model that we're going to protect and that we think has good resonance in other areas.

A. Kammenos: There were a few issues in the summary that we weren't quite clear on. I guess, as part of our written submission, we'll highlight a few of the items that we think are a little bit erroneous, in our view — and make sure we highlight them. We kind of share the same confusion that you had.

J. Rustad (Chair): Great. Well, thank you very much for your presentation today.

Sorry, if I can, we're just going to take a five-minute recess here before we start with Dunkley.

J. Rustad (Chair): Good afternoon, again. We will continue with our committee meeting here in Vancouver. Our next presenter is Dunkley Lumber.

J. Fisher: Thank you very much to the members of the committee for hearing from us again. I know that we did speak to you, as a company, in Fort St. James. I wasn't there at that time.

What we'd like to do today…. We have provided you with written material. Our talk isn't intended to completely cover everything in the written material but rather just to highlight some of the salient points that we think are important.

Specifically, we want to talk a little bit about what our concerns might be coming out of this process and what we would urge you to guard against. We'd like to talk to you about the difference between managing volume-based licences and area-based licences from the perspective of a licensee.

Before we do that, I'll introduce myself and a little bit about the company. My name is Jason Fisher. I am the vice-president of Dunkley Lumber, and my job primarily is to worry about timber supply. With me is Doug Perdue. He is our chief forester, and his job is to make me worry less about timber supply.

That's the end of my jokes. I had some jokes about being the last presentation of the day, but I've been moved up. Now if anything in my presentation is funny, it's completely inadvertent.

J. Fisher: A little bit about Dunkley. We are a family-owned company. We have one sawmill that's located between Prince George and Quesnel, right on the border of the two TSAs. There has been an operational mill on that site since 1951. We've put a lot of capital and energy and love back into the mill since then.

Currently, at full production we consume over 1.8 million cubic metres of logs annually. We manufacture more than 550 million board feet of SPF dimension lumber, and we directly employ 275 people at our mill complex. Our employees come from Prince George, Quesnel and all areas in between.

In addition, there are over 450 people, we estimate, relying on Dunkley Lumber for their employment because of our logging operations, our forestry operations — the growing of the timber and the harvesting of the timber. In addition to that, we supply pulp mills, pellet plants and other companies with the raw materials that they need to operate. So we are supporting additional jobs as well.

Currently we manage two replaceable licences, which Doug is going to talk about in a lot more detail than I will. We have tree farm licence 53, which is located near our mill. It has an annual allowable cut of 219,000 cubic metres per year. We have a volume-based licence in the Fort St. James area, which has an annual allowable cut of approximately 201,000 cubic metres a year.

So if you're good at math, which I am not, that means we have about 420,000 cubic metres under replaceable licence — or roughly 20 percent of our fibre needs. As a result, we get most of our fibre out on the open market.

We purchase logs from B.C. Timber Sales, from farmers, woodlot owners, community forests, research forests, First Nations, private and publicly traded forest products companies. We have some excellent suppliers of ours in the room with us, in the McLeod Lake Indian Band and Mackenzie Fibre, who we've been dealing with for a number of years.
[ Page 737 ]

In fact, over the last two years — we looked back — we have purchased timber from over 59 different vendors in the Prince George TSA and elsewhere. As you can imagine, maintaining a healthy group of people who have access to logs is near and dear to our hearts and absolutely essential to the continued success of our business.

We think that our position as an independent sawmill with so little replaceable tenure relative to our needs gives us a unique perspective on timber supply issues and probably a special set of concerns going into this review process and into the mid-term.

Before I let Doug tell you a little bit more about what it's like managing area-based tenure versus volume-based tenure, I just wanted to hit on a couple of highlights that we would like you to take away from our presentation today.

As I just said, we acquire approximately 80 percent of our annual timber supply on the open market. These suppliers may be next door to us, or they may be in the next TSA. So for us, timber supply is regional in nature. It's not local. It's not down at the community level. It has to be at the regional level.

For that reason, we are urging the committee in the strongest terms possible to resist any temptation to return to appurtenancy or anything like it. That may have a short-term appeal. It may have political appeal. But we feel that, not only for us but for other operations, in the long run it's going to stifle innovation and competition. It's going to interfere with the marketplace, and it will ultimately place other operators and communities at greater risk in the long run.

We think that we've come through these unprecedented economic times as a stronger industry. We've been battered, but we haven't been broken. And those of us remaining have come up with business plans and strategies, and we have reinvested and innovated in a way that has allowed us to survive and thrive through these times. But what can't happen is to arbitrarily make those strategies that have allowed us to be successful and to compete, no longer applicable because of a policy decision.

Along those same lines, we have heard and read in the transcripts of these hearings some people talk about BCTS as being an afterthought or being a potential supply of timber for other users. Again, we would strongly urge you to resist that temptation as well. From our perspective, BCTS plays a vital role, both in supplying consumers of timber like us but also in setting an effective, predictable and accepted pricing system.

So it's the unintended consequences of messing with that at this point that could lead to more trouble down the road than it actually solves. And in fact, we think that maintaining or enhancing BCTS will be one important step that the government can take to ensure that market forces will be the dominant determinant of how forest companies succeed through the mid-term and beyond.

You heard earlier from COFI that there is more than one view on how different TSAs or different licensees should be treated. We are very strongly in the camp that we shouldn't be robbing Peter to pay Paul — that we can't favour one area or licensee over other areas or licensees. Again, that's picking winners or losers. I know that's a cliché that you've heard before, but it's something that concerns us.

The final issue that I'd like to raise before turning it over to Doug. You heard a little bit, from COFI and from others, about how we're going to approach the falldown in the mid-term. The revolution — I can't quite remember the term that Doug used. We have a slightly different view or different strategy that we would like to put forward.

When B.C.'s Forestry Revitalization Act was passed, it was decided at that time that a pro rata impact of the takeback would be felt more keenly by small licensees or by licensees with minimal quota relative to those that have more quota relative to production. The decision was then taken that each licensee would get to protect essentially 200,000 metres of their cut — or up to 200,000 metres of their cut, depending on the size of their licence — and that the takeback would be visited on whatever volume they had in addition to that 200,000 metres.

We would suggest that an approach like that should be something to be considered going into the mid-term to ensure that we have as wide a range of operators as possible, so that these licences provide a backstop to a number of mills and remain viable sources of timber, going into the mid-term and beyond.

And with that, I'll turn it over to Doug to talk a little bit about our experiences as a manager of both area-based and volume-based licences.

D. Perdue: We've heard lots of questions at the hearings and through Hansard about area-based management — what it means to people and whether they'd like to go there. We manage both an area-based tenure, a TFL, and a volume-based, replaceable forest licence, so we'd like to give you our perspective on that.

Our TFL was granted in 1989. It's located right behind the sawmill. When it was granted, the AAC was 187,000 cubic metres. Through the work we did, which I'll get into a little bit here, we managed to raise the AAC up to 239,500 metres just before the beetle became severe in impact. We addressed the mountain pine beetle on the TFL, and currently our cut is 219,000 metres. That's an increase of about 17 percent over what it was originally.

We achieved that increase in cut while we still managed for non-timber resources. The roads we maintain on the TFL are well used by other users. We have recreation sites that are popular. We've addressed other non-timber values, such as wildlife, water quality, etc., and planned for that as well.
[ Page 738 ]

Our commitment to this stewardship is demonstrated by our SFI certification. We do rigorous internal audits to maintain that certification. We get audited to the SFI standard by external auditors and the Forest Practices Board as well.

Our volume-based licence operates in the Fort St. James district. We acquired this licence in 2009. The operating areas for a volume-based licence are determined in Prince George through a gentleman's agreement, basically, between the replaceable licensees. Through negotiation, each licensee selects the areas in which they'll operate. For the most part, this approach keeps us from stepping on each other's toes when we're laying out our harvest areas.

Despite the gentleman's agreement, these negotiated agreements don't have a long-term life span. At varying intervals we had to re-examine each TSA and at times reassign operating areas to account for changes so that we maintain equal access to timber rights and also to reflect the addition of new licences. With the mountain pine beetle, there have been a number of non-replaceable licences that also overlap these operating areas.

Recently we've had to allow a couple other licensees into our traditional forest licence area to allow them to meet the partitioned determination from the last chief forester's timber supply determination. We may also be displaced by proposed First Nations woodland licence agreements. So the forest licence areas don't have the security that we do on the TFL.

Given both forms of tenure, we would like to expand area-based tenure over a replaceable volume-based tenure. Having said that, however, there are considerations in that — one being location. We're fortunate that our TFL is located right behind the mill. It may not be as beneficial if it's too far away to be economic. The quality of timber, the quantity of timber and the forest health are all important factors.

The risks and benefits of the area-based tenures are there. Some of the woodlots, which are an area-based tenure, that were comprised almost entirely of pine, have been turned back in, because there isn't a lot of benefit left for the original licensee once the pine has all died.

But having said that, again, we do see benefit in area-based tenure. And we do manage TFLs differently. We invest more time, effort and capital in the area-based tenure than we do in the volume-based tenure.

There are several reasons why we do this. The first one is that the TFL is a great place to grow trees. We've got a high proportion of productive forest land. So when we implement strategies to improve growth, we get positive results. The TFL also has enough mature forest volume to increase long-term growth rates, and that makes timber available immediately through the ACE effect.

We recognize that these mature forests are valuable, and we work hard to maintain the mature forests through forest health programs. Our salvage logging is our priority always, and when stands are damaged, we try and get in and deal with those over a healthy forest.

In short, for enhanced forest management on an area-based tenure, you need high site productivity and an adequate, mature forest base to implement the programs and get a short-term benefit.

I think one of the driving factors in that is that our access to the timber is relatively secure. With an area-based tenure, we're only dealing with two licensees on the land base. It's ourself and BCTS. Like we say, with the forest-based TSA approach, there are numerous licensees, there can be new ones added, and we don't have that security that we need.

As Doug Routledge spoke of, there may be other ways of creating that security in a volume-based world. Zonation, we think, is something that's been underutilized to date, from a timber-growing perspective. We've done a good job for protecting parks, protected areas, caribou management habitat, etc. — to delineate areas for those values. What we need to do is establish and implement strategies for intensive timber management zones.

Prince George LRMP is an example. Where the LRMP identified enhanced resource management zones, the management strategies within there don't differ very much from the general resource management zones. Although the zone exists in name, the strategies haven't been developed that obtain the objective that it was designed for.

Another reason the TFL is important to us and we invest in it is we have limited access to replaceable volume. That's a great motivation to increase timber supply. We require, as Jason said, far more fibre than we have to harvest, so we're very motivated to conserve and increase those harvesting rights. Silviculture decisions that make sense on the TFL because they might lead to higher sustainable harvest or faster green-up may not make sense in a volume-based licence, where the benefits accrue to the TSA and not the licensee individually.

I think one of the main reasons that we've been successful as TFL managers is the commitment of our owners, the company and the people who work for Dunkley. As one small example, our planting costs on the TFL can run up to $160,000 a year more than it would be just to meet the regional stocking guidelines. We plant more trees. We plant large stock types. We invest those dollars, because we can see a return in the sustainable cut level when these efforts are recognized through a timber supply analysis process.

Some of the things that we do on the TFL. I'll run through those just to give you a feel for how we've managed our TFL. I think a lot of these could be more broadly applied in the TSA as well. There are both land-based components and growing components.

Land-based. In short, an accurate, current inventory is critical to good management. When we got the TFL in '89,
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we undertook an inventory specific to the TFL. We did that in the first five-year management plan. We did additional growth and yield work to look at growth rates on the TFL. We undertook visual resource inventories and recreation inventories to manage for those resources. We completed a terrestrial ecosystem mapping inventory so we could address biodiversity management.

In the last few years we've been working with the Ministry of Forests, Lands and Natural Resource Operations to complete a new post-beetle inventory on the TFL. This work should be completed in 2013. That gives us a great basis to move forward with our decision-making.

Another key factor is the entire productive land base has to be managed to meet the objectives. Dunkley invests in projects in conjunction with our current silviculture program. Things like increased planting densities and the road rehabilitation program, which I'll get to in a minute, are current incremental programs.

Government-funded incremental forestry is also important. We use programs such as Forest Renewal B.C. and the forest investment account to invest in on-the-ground projects. Initially, it was treating backlog NSR and brushing impeded stands. As we got those taken of, we moved on to addressing things like fertilizing stands to increase growth rates.

We also use projects to address things like stream and road crossings to improve water quality and fish habitat.

Our road rehabilitation program is designed to return temporary roads to productive forest land. What we do is on the in-block roads that we don't need for long-term access is we'll take an excavator, and we'll unbuild the road to the point that you can't tell it was there. Then we'll reforest that section of land. What this program has done is reduced our road deduction from productive forest land from 5.5 percent down to 1 percent in the cutblocks. Now, we still maintain a good operational road system throughout the TFL, and that gives us access to manage for all the activities that we do.

Small-scale salvage is another important program. We see damaged stands with suboptimal stocking as a loss of potential growth. We run a program to keep the TFL land base fully occupied growing trees. That means we would harvest damaged stands as a priority. As an example, in 2003 when the beetle was really getting rolling, we harvested 1,917 separate patches averaging 0.4 hectares each in an attempt to control the beetle. We were waiting for that magical cold weather event. Unfortunately, it didn't show up for us.

Growth-based components. As we mentioned, we plant high-density plantations. We try to plant mixed species wherever it's ecologically appropriate. That's a risk management decision. We do plant pine where it's ecologically appropriate as part of that mix, and that gives us faster green-up that helps address hydrology and wildlife issues.

We use class A seed, the seed orchard seed, wherever we can. Currently all our spruce is class A seed, and that gives us an increase in the range of 15 to 24 percent over natural seed growth rates.

Our regen delay is also important. When the TFL was granted, it was about seven years between when harvesting started and the block got planted. Today it's around 14 months. We target one year.

So in combination with good inventory information, land-based decisions and a good silviculture growing program, we've managed a successful TFL, and we think that can be expanded to other areas as well.

J. Fisher: I'm not sure quite exactly when we started, and I want to make sure we have lots of time for questions. I just wanted to wrap up by saying that we really do appreciate the effort you've put in, going around to communities. I can't imagine how hard it's been over the last few weeks for you to do that.

What we appreciate most of all is that it's clear from the comments that you make and the questions you're asking that you're here to learn and to listen. This bipartisan approach is what's going to make the recommendations that come out of this panel credible and able to be acted on.

We encourage you to maintain that sort of spirit of cooperation and problem-solving and learning as you continue to come up with your recommendations. Thank you for giving us the time to present.

B. Routley: Thank you, Jason. A few sheep now and then help out with the cooperation — the spirit, anyway.

The question that I had. You talked about how zonation has not been used in ways that it could. I'd like to know a little bit more about what you meant by that. Also, the intensive management zones. Are you talking about commercial thinning? What kinds of intensive management zones are you talking about? Is that the volume-based regions that you're referring to?

D. Perdue: In the Prince George land and resource management plan, we came up with, I think, five different objective designations for landscape units. There was special protected areas. Their use was pretty well defined. There was habitat areas, such as caribou habitat. There was general resource management areas, and there was enhanced forest management areas.

The lack of differentiation that I see is that the strategies employed in both the general and the enhanced resource management aren't different, basically. I think there's an opportunity there for mitigation if we can look at those enhanced forest management areas, which tend-
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ed to be the low-conflict areas, for other values. We could maybe update the strategies to improve timber growth in those enhanced zones. They could be done as a volume-based approach or an area-based approach.

B. Routley: Do you want to go on record on the land use plans? Are you interested in opening those up to have a look at some of these?

D. Perdue: Well, I spent eight years developing the land use plan in Prince George, so I don't think opening it up is a good idea in my lifetime. They were meant to be monitored and improved over time, however, and I think that is a good idea, to maintain them and update them as we can.

J. Fisher: And I think they were meant to be fully implemented, and that's where there's the opportunity still.

I'm just wondering about how you manage for piece size on the TFL, whether you're looking at shorter rotations through the process that you're doing, I guess, on that management side. Or are you trying to go through a full 80-to-100-year rotation and grow a different size tree?

D. Perdue: Our approach was to try to maximize the volume growth on the TFL, so we didn't set specific piece-size objectives or tree-size objectives. The thinking we have is that if in the future, with these second-growth stands, we want to produce a wide or larger board, we can glue it together, if need be. Our approach has always been to maximize the fibre growth rather than to target a specific piece size.

J. Rustad (Chair): What sort of density do you plant, and are you looking at thinning or other types of activities throughout that?

D. Perdue: We plant targeting 1,800 stems per hectare. We do believe that will give us a commercial thinning opportunity down the road. We'll have that option.

B. Stewart: I just have a couple of questions. One is: how big is the TFL that you have? How many hectares?

B. Stewart: It's 88,000. Okay. And the next one is: since you like the idea of area-based tenure, how do we get there? Since you have a volume-based cut in another area, how would you see, as somebody that has that, converting that?

D. Perdue: Location is important. We're fortunate. Our TFL is right behind the mill. If it was a long distance away, it might be less appealing to us. The quality, quantity and health of the timber is important. You have to have something to work with there.

The risks have to be considered. There are risks both to the Crown and to the licensee — forest health risk to the licensee. The mountain pine beetle, if you had a pure pine area-based tenure, would be pretty tough to deal with. There's risk to the licensee. We've heard discussions about how the expected benefits haven't always been derived from area-based tenure. Those things have to be assessed.

J. Fisher: I think one of the fundamental questions is: how much and how many licences would we think there were? I mean, West Fraser put the proposal forward this morning that it should be proposal-based. West Fraser would suggest: "This is the area that we could appropriately manage, and this is why we're a good manager for that." If you do that, that's fine. But it's a self-selecting process. It's not necessarily going to be competitive, and it's not necessarily going to give you a choice of manager.

If there is going to be that opportunity for everyone to sort of look at converting, then that may make sense. But if it's going to be a competitive system, then it is going to be a case of establishing the boundaries. Is it within an area that's already been zoned for intensive management? What are the underlying conflicting values that are at play there? Are there unsettled First Nation land claims that can be dealt with, or do you need to look at partnerships? How are you going to address those issues? I think those are fundamental.

Then you have to establish a matrix to say, "What are we looking for in a manager? Who do we want for a manager?" and then look for applications that way. It depends on which way you want to go. I think that there are two systems, and that's going to depend, again, on the scarcity of this opportunity.

D. Barnett: Just back to the land use plan. We all know that…. We've heard from many people here that say it should be updated. Of course, now that we've heard this, my question to you is: how should we get there? Through a public process or…?

D. Perdue: I think you have to involve the sectors that were involved the first time around, and if there are new
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sectors, they will want to be included and should be included as well.

D. Barnett: And should the Ministry of Forests, Lands and Natural Resources take the lead on this?

D. Perdue: If they're currently the stewards of the land use plan, that would make sense to me, yeah.

J. Fisher: Ultimately, this is a public resource, and you are the people elected by the public as their representatives to make these decisions. That's why it's so important to hear from as many people as possible. But you have to wear it at the end of the day.

B. Routley: I noted that you got your tree farm licence in 1989. I wondered what conditions were in play at the time. Was it tied to a mill, or did it have any kind of appurtenancy at that time or any kind of conditions?

D. Perdue: Our TFL was a conversion of a replaceable volume-based forest licence to an area-based tenure. I'm not aware of any appurtenancy requirements with the licence at the time.

J. Rustad (Chair): One last question I want to throw out there. This may be far too complex for a short answer.

Woodlot licences typically are designed by the forestry. They look at opportunities. Sometimes it's because individuals have approached them and asked them about a specific area. It's designed with a mix. Do you think there might be an opportunity to look at that type of approach — to design opportunities and then have licensees go after it in terms of a bid and swap of renewable or whatever other process might be involved?

J. Fisher: I think so. I think, again, the key is going to be in the decision-making matrix that determines who is going to be the successful bidder at the end of the day and what the government decides it's looking for as far as a good steward of the resource.

J. Rustad (Chair): That's short. That's good enough. That's kind of what I expected — the answer.

D. Perdue: We've got a range of area-based tenures. We've got the community forest agreements, which I think are very popular and in demand. We've got the woodlots, of course. We've got research forests, which serve a specific purpose. First Nation woodland licences are a new concept that is getting underway. So I think there is a range, and I think they have a place.

J. Rustad (Chair): Thank you very much for taking the time and for your presentation today.

R. Bealing: Good afternoon, everybody. It's a pleasure to see you all again. We've met in various places around the province over the years, and some of you have been fortunate enough to be dragged out onto our land to see what we're doing up close. I'd like to extend that invitation to all of you over time.

I'm not sitting here as an expert on the areas that have been struck by the mountain pine beetle. We do have some members with land in that area, and there's a lot of private land in that area.

Not that much of it is in the managed forest program. That's largely because the tax situation doesn't favour putting land that's suitable for running cattle into the managed forest program. I think that's something that the woodlot federation raised with you earlier in this process. They've talked to you about that.

I'd like to give a fairly narrow perspective, the private land owners' perspective, on what we do to grow more trees. Really, we're in the same boat. We've got a lot in common.

Our business model is very simple indeed. We are tree growers, just as the public of British Columbia are tree growers and forest owners.

I thought: "How can I make a positive contribution to this process?" I thought we'd just look at some of the things we do and have transitioned to as a sector, as forest owners across British Columbia, to improve our businesses.

(2) Focusing on the forest. I think it's important that we remember that's the true economic engine for the forest industry. It has to start in the forest.

(4) Allowing the market to work its magic. If you like, you can put in brackets next to that "By getting out of the way."

I was really encouraged to hear from the folks from Dunkley how they're stewarding their public land in the TFL. They stole some of my messages, in fact. But it's good, sound forestry to do a lot of those things, and I will be touching on it later in this presentation.

The third slide. Just to kind of put things into perspective, private land is the tiny little light-coloured sliver in that pie. But we think we have something good going on in private land. We have a story that's worth listening to because we generate approximately 10 percent of the province's timber harvest off of approximately 2 percent of the province's land. There are a number of reasons for
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that, and I will get into them shortly.

Just briefly, slide 4. B.C.'s private-managed forests are leaders in forest land management. We are certified. We are regulated to protect water supply, water quality, fish habitat, reforestation, critical wildlife habitat, and so conservation.

Yes, we have a different regulatory model than applies on Crown land. There are lots of good reasons for that, but we believe that we're finding balance between regulation, certification and federal, provincial and local government regulations, and the expectations of our neighbours and communities.

We're also legally required to reforest, not that that is an issue, because if you think about it, it would be like legally requiring farmers to plant crops or feed their cows. It's something that we do because it makes good sense business-wise. And we're subject to penalties, audits and public reporting.

Just briefly, as a group, the association I represent represents individuals, families, pensioners and investors in the form of companies that they own. Again, I can't emphasize enough: I could sit here and talk for hours, but there's nothing that has the same effect as actually getting out into the woods, showing you what we're doing, showing you how we're managing these issues.

In terms of issues, per cubic metre we're probably redlining because of where we are. We are operating in people's backyards. Those of you that came out a couple of years ago…. The property line stops here, and there's the lawn and the goldfish pond and the kid's playset and the golf course. And this is where we're working. So we understand a little bit about working with the public.

Going on to slide 6 — learning from our competitors. I'm not sure who you've spoken to or what you're looking into as part of this process, but I always think it's good to take a really broad view of things. I was educated in the U.K. and Finland. I worked there, and I brought a lot of ideas with me.

Inventory — private land. I'm a forest owner myself. I have a couple of hundred acres. Inventory is what it's all about. Typically, on private land we do about 10 percent of our land base per year. The idea of not doing it is really hard to stomach. It would be like a store owner not knowing what they've got to sell. So in order to engage customers, to make plans, to engage contractors, we absolutely have to know what we've got — growing stock, merchantable timber, that kind of thing.

Integrated pest management. I don't want to just focus on bugs and diseases. You could really apply this to things like blowdown, fire as well. We are superaggressive when it comes to monitoring our land base after storm events, identifying opportunities for salvage, and then absolutely jumping on those opportunities as fast as possible.

We've learned that having some flexibility — and a lot of these bullets are really kind of overlapping — being able to respond to a blowdown event by shutting down the settings that we're on, moving the equipment to wherever the blowdown is or wherever the fire kill is — is absolutely essential to capture that value. You know from this process how quickly wood deteriorates. So it's a question of monitoring the crop and then aggressively salvaging it if something bad happens.

I'll give you a good example around that. There have been a lot of marginal hemlock stands that we couldn't really go anywhere near up until a few years ago when there was an increase in the pulp market. The pulp price came up just a few bucks, and boom, we're able to go in and do something about it. Now those really poor-quality hemlock stands have been harvested. People have been able to go to work. They've generated some revenue. The sites have been replanted with a new crop and more valuable species. There's a good example.

Administration. We have to have a flexible, reasonably priced administration model. I'm very proud to say that the private land regulatory model is funded by landowner dues. It's currently run by the Private Managed Forest Land Council, which reports to the ministry. The owners actually fund the operation of that council. So it's a regulatory model that exists at the cost of nothing to the public, but there is public oversight.

Operational certainty. We got into it a bit just now with the TFL discussion. I think you can see that some magical things start to happen when there's some certainty, when people have some confidence that they're going to be able to go back to that same piece of land, that they are actually going to be able to harvest that tree or re-enter those stands for thinning or whatever. It just means that there's a much greater incentive to invest, to take more care.

It might only be slightly incremental things like slightly bigger transplants, or getting improved stock or making small investments. But over time these make a big impact on the kinds of crops we have in the future. Infrastructure and investment, roads, bridges, equipment, training staff, retaining staff when times are hard, keeping contractors going when markets are poor — these are all things that are really crucial for us in order to keep our operations going.

Utilization. We share the same concerns that the Crown does. We struggle with certain timber types and harvesting residues. It's a problem for us. We'd love to see some of the markets that are available to our overseas competitors, certainly around bioenergy, that kind of thing. One of the things that we really can do…. We might not be able to find a home for tops and broken logs and that kind of thing, but what we can do is find the best possible home for our full profile.

I'm going to talk a little bit later about sorting — how important it is for us, when we harvest a stand, to have done all the marketing ahead of time, understand what we're getting ourselves into, know what the market wants, and then sort the harvest to that market. In terms of rev-
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enue and getting the full value for that stand, it's absolutely important, essential for our survival, to sort those logs, get the right log to the right customer and bring the overall value of the stand up.

When we do that, it makes more stands operable and it means there's more money to go around in the operation generally. So if we're doing small-scale salvage, responding to bug kill or whatever, we need every penny we can get to make those otherwise uneconomic exercises viable.

In financial performance, it's always interesting to compare what wood is worth in British Columbia, what land is worth in British Columbia, how much these practices generate in terms of revenue and what it costs.

Just briefly, No. 7. Again, I think it's really important to focus on the forest. I know one of the things that kicked this process into action was: "Gee, let's see if we can find some wood for Burns Lake."

Let's face it. I'm quite confident that you have a very wide view of this, but I can't emphasize enough how important it is to recognize that the forest is really where it all starts. And as long as we look after the forest and we keep it managed to its best potential, we're going to have more options. If we try and put the cart in front of the horse, that's when we're going to get into trouble.

Personally, I am of the view that there has been traditionally far too much focus on the mills in British Columbia and that we need better balance in terms of looking at the bigger picture. I'm encouraged to see more diversification of tenure. There are a lot more tenure interests in the game now than there were in the past, and fewer of them have mills. We've got community forests; we've got First Nations forestry agreements, more woodlot licences — those kind of things.

There are more players out there, but still the policy basket really hasn't kept up. If you look at stumpage policy, the way that volume is allocated and, in particular, export controls — which Mr. Routley asked me to bring up today — those are three things that have a big impact on the value of fibre and the viability of those operations. I'm sure you've heard that through this process.

Pursuing best value at every level. I'm a small-scale forest owner. I've spent most of my life working with small-scale forest owners. I suppose I could have chosen something else to do with my life, but I quite enjoy it. I enjoy a challenge. I think it's a pretty wholesome way to make a living. It's not necessarily a very lucrative way to make a living, regrettably.

One thing that has been drummed into me from day one…. I was talking to a friend of mine who lives in Sparwood — talking to him this morning. He and a couple of his colleagues are doing exactly what I was doing in the U.K. about 20 years ago.

We were trying to help small owners, small operations, small woodlot licensees, this kind of thing, understand what they have in terms of their products that they're growing and what the market wants — try and put the two together and help them understand how to integrate from the marketing right down to the falling, the bucking, the sorting, and ensuring that those higher-value logs go to the customers that are prepared to pay more for them.

When you do that, it drags the whole operation up by its bootstraps, puts more money into the job, and there's more money to go around generally. It's such an important thing.

On the private land side of things, as a private land manager managing my own family's land, working with people that manage land for others, they all have to look the owners in the eye and say: "Yeah, we're getting you the best value for your wood. We're doing the best we can to manage this land, not to degrade the asset, to keep the asset valuable for the future."

Going back to the market and letting the market work its magic, I can't really emphasize enough how — in order to get the greatest range of benefits from the forest and keep the forest viable, keep the stewardship ongoing and sustainable — we have to figure out how to get the average log value up.

The reaction to the beetle kill was: "Okay, let's salvage as much as we can." I think that made perfect sense, because there was such a big wall of dead wood coming at the industry. But over the long term, we really need to get our heads around how we get the optimum value from that stand, from those trees.

Just to give you an example, in a typical private land operation on Vancouver Island you might see 42 different log sorts coming out. In the Interior I'm more used to seeing four, and it's red wood, white wood, short logs and long logs. That's typically how it tends to go.

There are good reasons for that. The business is structured differently, but the reason I'm telling you that is that this is how we've evolved on the coast. We have higher costs. We are determined to try and get a better value out of that log, so this is the path we've gone down, in order to get the right log to the right customer.

Value. We need to get the most efficient value-adding customer access to that fibre, because they will pay the most for it. When they do that, everyone else — from the planners to the biologists to the engineers to the truckers to the tree planters — gets some more action.

Innovation. Again, by increasing that log value, it means we can be a bit more creative. We can go after the small-scale salvage. We can capture those areas that are marginal. We can upgrade stands that aren't doing very well.

Incentives. Essentially, you send positive price signals out to the market, and the fibre flows. You think of all those burn piles that you've seen in the Interior and you see on the Island. It only takes a few bucks to tip that wood from a liability into an asset. Those are the kinds
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of price signals that…. It's happened in the past. We saw it in the mid-90s when the pulp price spiked. Everybody was going back into the burn piles and pulling everything out again.

The main message here is: we need to get those log prices up. The reason we are so hung up as an organization on getting access to international markets is that that's what we're looking for. It's not about sending the wood overseas. It's about getting a fair price for that wood to keep the operation going. There are also some softwood lumber agreement implications here. The U.S. continuously attacks Canada for allegedly having low stumpage. They question the scaling and grading rules, and they're critical of the export controls.

Moving on, No. 10. We heard a lot of this from our friends from Dunkley: certainty, certainty, certainty. The location…. Trees take a long time to grow. If you're going to put improved stock — this A seed, plus seed — you want some certainty that you're actually going to be able to go back to that area. You also need some certainty that there's going to be the ability to go and harvest those trees, that your local government hasn't brought in a tree-cutting bylaw, or some rules come in that you can't actually go after that fibre in the future.

The other thing, especially for private land, is property tax. Because the cumulative effect of property tax is the biggest carrying cost we've got, it's really important that that tax be as low as possible. It has to be comparable with other jurisdictions in order to make tree-growing viable.

We aggressively reforest on private land. Typically, we aim for about 12 months. The average on the Island is around six months. We look at ground without trees on it, and it just isn't paying the rent. There are all kinds of really good reasons for getting those trees in the ground fast. Brush management is one of them. If you get the trees in before the brush establishes, that cuts down on your brushing costs.

We get 20 percent gains for using improved growing stock, using seed that's selected from better trees. And just like our friends from Dunkley said: embrace diversity. That means to use the right trees for the right microsite. We've had so many pleasant surprises over the years where we thought we should be killing all the red alder, and then a couple of years ago red alder was worth more than Douglas fir. Those of us that had it everywhere were able to buy groceries that month. We just don't know what the future is going to bring.

Also, you have to effectively manage the stand density — crop-tree stocking and brush, competing hardwood species, maple coppice and competing vegetation, that kind of thing. The best way to do that is to reforest aggressively, but you have to be able to have the flexibility to use herbicides at times as well.

Use of fertilizer. Again, we heard that from our friends from Dunkley. Use of fertilizer can help to establish trees. It also helps late in the rotation to improve log quality and to increase volume. It can be a very lucrative thing to invest in — late rotation — and has a very positive effect on the value and the volume of the crop.

Aggressively integrate pest management into your operation. Keep an eye on things. Progressively monitor. Be able to salvage. Be able to react to opportunities, particularly with blowdown and fire and the bugs. You have to ask, if we'd been a little bit quicker in the salvage game back in the day, if we might not be having this meeting today. You have to ask yourself that.

Then, as I mentioned, relentlessly pursue value at every level, understand the market, and be prepared to sort that wood out and get the best log to the best customer.

The last slide I've got, you should all be familiar with. The point I'm trying to make is that it's terrific when we have a competitive mill nearby to sell our wood to, but sometimes that's a luxury that we really can’t afford to wait for, and sometimes having to truck that log to the next town or a more competitive jurisdiction is quite okay. Rather than wait for a mill to magically appear…. There are a lot of jobs, there's a lot of value, there are a lot of really good things going on in the growing and harvesting of trees, and sometimes waiting for a mill to appear is a luxury we can't afford.

J. Rustad (Chair): Thank you very much, Rod. I have one question for you, and that's just on the taxation classification, the managed forest land that's set up within the tax code. I know there have been some presenters to us in the past that have talked about the agriculture model versus this, versus rural land. I'm just wondering if you have any comments about that tax category.

R. Bealing: Absolutely. It's quite a can of worms — because, of course, it involves local government. But we certainly welcome the opportunity to get into the discussion with you on that.

We look at property taxes for forestry in other jurisdictions, and B.C. is not in a very competitive position, even with Germany, New Zealand, Washington State. If we're trying to send the signal out there that we want farmers to grow trees on marginal agricultural land, we have to take a closer look at the property tax question. And it is super complex, because it has a direct impact on local government. Yeah, we see room for improvement there.

J. Rustad (Chair): Yeah. The reason I asked, of course, is because there are literally thousands and thousands of hectares of private land scattered throughout the pine beetle area that could potentially become productive forest at some point.

Our next presenter is the United Steelworkers. Welcome, Bob. Over to you.
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B. Matters: I want to start off by, again, thanking you for the opportunity to be here today. I'm Bob Matters, and I'm chairperson of the United Steelworkers Wood Council.

I think everybody understands, but for those that don't, the IWA merged with the Steelworkers in 2004. I know there are lots of sometimes wide-eyed looks about why the Steelworkers are talking about forestry issues, so I represent the former IWA. We represent about 15,000 members in British Columbia, most of those in the region we're talking about, in the Interior.

I want to start off by saying that I think you guys have an enormous task before you. And frankly, I don't believe that your mandate is broad enough to deal with this crisis, Make no mistake about it: we're talking about a crisis here when we're talking about the livelihoods of the thousands of workers in British Columbia and the viability of numerous communities in northern B.C.

I want to start off my presentation with this first conclusion, if I can. The first conclusion is that the provincial government has no choice but to work with the Burns Lake Native Development Corp., the Burns Lake community and Hampton to ensure the construction of a new sawmill in Burns Lake, hopefully commencing before the first snowfall.

To get to that conclusion, I'm going to talk a little bit about our presentation. I won't read it completely, but I'm going to touch on a couple of key areas. Where is this timber we're all looking for going to come from?

Sawmills used to be able to rely on a legislated supply of timber through appurtenance provisions of forest licences, and this source of stability was eliminated in the 2004 changes to the Forest Act. In our view this change to the legislation has done much to encourage and, in fact, enable mill closures, doing immense harm to employment communities to build the export earnings, etc.

I'm going to stop there to say that I am going to be, obviously, critical of existing forest policies. A couple of other things that we touch on will be critical of existing forest policies. But in saying that, we were always upfront with offering what we thought were constructive solutions to problems. In order to have any credibility, you also have to acknowledge when things happen quickly, or when the right things happen or potentially happen.

That said, I don't think anyone has been more outspoken in their criticisms of this government's forest policies than the Steelworkers. That said, the initiative that was undertaken to deal with Burns Lake on its own was the correct initiative. Unfortunately, that got derailed, and I'm afraid the importance of Burns Lake might get sidetracked in this overall timber supply issue. The fact of the matter is that I congratulate the government for the initiative to try to find solutions to the immediate crisis, which was Burns Lake.

That said, we used to have in this province an office called the job protection commissioner. If I may be so bold, the government got rid of the job protection commissioner, but I think the government tried to sort of re-enact what I'm going to refer to as the job protection commissioner–lite with the exercise that we initially underwent in Burns Lake to try to see if we can do something to find fibre.

Frankly, that process backfired. Documents got leaked, and all that wonderful stuff that happens in the political real world we live in. Again, I'm really concerned that that key issue is going to get dwarfed in the big picture of the timber supply.

Steps must be taken to ensure that more of our publicly owned resources are used to create jobs in British Columbia and, in particular, in communities that depend on that resource. Somewhere between the current laissez faire approach to timber allocation and log supply and the strong form of appurtenance regulations that applied historically there has to be a solution that ensures corporations' flexibility — needed, obviously, to make money while ensuring sawmills and communities a steady supply of timber to produce a wide range of timber products.

Again, this is a perfect example of a perfect opportunity to work with the Burns Lake Native Development Corp. to do something that's very similar to what I heard previously with respect to the McLeod Lake Band. That kind of arrangement — finding fibre and allocating it in some form to the Native Development Corp. for them to do a deal with Hampton — seems to be a win-win for everybody in this situation.

A review of the rules governing the links between the timber harvesting and manufacturing should take place at a couple of levels. One would be the development of appropriate policy to ensure the future of workers, their families and communities throughout the beetle-impacted region, in addition to new provisions in their forest licences that would ensure community control over at least a portion of that local timber supply.

The task could be facilitated through the creation or restoration of an office similar to what I talked to, a job protection commissioner. The agency should be granted necessary powers to ensure that existing timber-processing facilities can access timber on a priority basis to ensure the continued operations and that licensees process or ensure the processing of timber within a stipulated distance.

I pause there. I first met MLA Norm Macdonald back in the '90s, when I earned my grey hair, and that was through the job protection commissioner and his action in Golden, British Columbia. I'll remind the committee, and I'm sure they're all aware of it, that at that point in time a mill went bankrupt, and there was an effort to save that mill.

At that point in time the opposition government said: "No, we should let it go down." The environmental move-
[ Page 746 ]
ment was on side with the opposition at the time and said: "That mill should go down."

The JPC looked at it and said: "You know, I'm neither fish nor fowl on this thing, but the fact of the matter is that there is an economic model that, with some tweaks to the existing rules and processes, can survive." As a result of his actions, that mill today in 2012 is still operating. That mill never missed a beat. That community of Golden survived because of the work of that JPC.

I'm going to skip some of this stuff, and I'm going to talk about a view expressed by many. I heard it this afternoon in one of the earlier presentations, about how the solution is to do nothing. Frankly, Steelworkers do not accept the position — the, crudely said, "too bad, so sad" approach that many are taking.

Simply saying that government should have done something earlier and/or corporations should have done something earlier with respect to the beetle mitigation…. There may be some validity to that, but the fact of the matter is that simply saying, "No, do nothing," means, in the case of Burns Lake, that there will be no sawmill in Burns Lake. That community, instead of paying taxes, instead of dealing with a payroll of some $50 million, will be on EI and/or welfare. That is not acceptable to the Steelworkers, and it shouldn't be acceptable to anybody in this room.

With respect to other stuff that's been talked about, I've heard many comments. I've read some of the presentations on line that were made here. A lot of people use terminology that isn't quite correct. I've been guilty of that in my time as a bit of a politician myself. So I understand why they do that. But the fact of the matter is that I have not heard of any credible, possible solutions that include logging parks or logging protected areas. To be very clear, we don't have any issues, and we're not talking about, for the sake of finding extra timber supply, going and logging parks and protected areas.

Outside of protected areas in the forest that might otherwise be available for timber harvesting, there are various provincial statutes and regulations currently in place that place constraints on forest management, effectively reducing the volume that can be harvested from a given land base. These constraints are, of course, quite aside from the roughly 14 percent of the provincial land base that is outright protected under the Park Act or protected areas act and other statutes.

Again, I don't think anybody is seriously suggesting we deal with finding timber supply for the sake of finding timber supply in protected areas. We are not there.

Areas that we are describing are those not currently designated parks or protected areas. They represent areas that are within the productive forest but which have been subtracted from the actual timber-harvesting land base as a result of various restrictions or constraints to timber harvesting.

This goes back to a little bit about what one of the previous speakers was talking about — and I'm going to get into that in a minute also — with respect to special resource development zones, integrated zones and enhanced resource development. Those are areas where, I think, this committee can look to try to find possible solutions or partial solutions to the problem.

With respect to the constraints on the harvesting, there's no question that many are necessary to ensure the maintenance of fully functioning ecosystems and the integration of water systems, soil protection, diversity — all that wonderful stuff that we do. These are, in part, covered by the objectives established under the forest and range act or measures aimed at protecting biodiversity.

Some of these constraints, however, actually contribute little other than aesthetic value. Even when overlaid or combined on the land, it is important to recognize clearly the cumulative effect of these constraints is to significantly reduce the timber-harvesting land base.

As indicated by the numbers…. I think it was Allan Lidstone who presented some numbers to this committee. Again, when people use language about how logging in an area is going to destroy the forest and/or regions of the province, we have to understand that we are not talking about — I'm repeating — the protected areas.

As far as the timber supply area, I'm not sure the public understands that the timber-harvesting land base is actually only, in some cases, a small portion of the entire TSA — Lakes being 65 percent, Mackenzie only 32 percent, PG 60 percent and so on. I'm not going to bore you with the details. I'm sure you guys all have been through all of that.

The point that I'm trying to make is that the constraints that are limiting the harvest, frankly, far exceed the constraints that were initially envisioned in the Cariboo land use plan. I'll get to that in a minute. When we review land use designations in their various land use plans with an eye to implementing the various intensive, dedicated and enhanced forestry silviculture designations, we've got to remember this.

In the CORE processes…. I was intimately involved in the East Kootenay and West Kootenay CORE process. We had members of our union that were intimately involved in the Vancouver CORE process and the Cariboo.

It's important for the committee to remember that of all those land use plans, only one reached consensus, and that was the Cariboo land use plan. One of the reasons the Cariboo land use plan was able to develop through consensus is because they did it a little bit different than everybody else. They did it, and they took the approach that: "We want to establish timber tar-
[ Page 747 ]
gets."

Instead of what we did in the East Kootenay, the West Kootenay and on Vancouver Island — instead of going to each landscape unit and saying, "We're going to do this here, and we're going to that there" — in the Cariboo the wise people decided: "We want to establish timber targets, and we're going to have constraints on these various designations that net-down the available fibre, but we're going to make sure we have timber targets." Thus, the mills had security of fibre.

I'm telling you, from my unprofessional forester background, that the constraints that are on the land use plan today far exceed the constraints that were established in the Cariboo land use plan. It's important for you guys, I'm sure, to remember, but it's important for the rest of the people of the province to understand that.

Those designations of intensive, dedicated, enhanced forestry — if we revisit those into the theme that was created through the Cariboo plan, I suspect that we can find some additional fibre there, as well as relaxing some of the other constraints that we talked about or that you guys have talked about in the various processes.

Also, as far as the critical issue about securing fibre, we talk in our submission about John Doyle's report, about the lack of reforestation that's gone on in the province — again, critical of the government, frankly, for letting that take place. The good news is — and hopefully there is a potential for good news here — that there is an awful lot more potential for us to grow a whole lot more trees by doing some proper things, including some of the things that previous people have spoken about here.

Again, this all has to be in the context — and I heard this when I came in a little bit earlier — of the uplift. We all knew in British Columbia that because we had the uplift in the AAC, we were going to have a subsequent required reduction in the AAC. But not everybody in British Columbia understands that we were never even coming close to reaching the cut of the uplift.

My recollection is that in one year, or a couple years, we were actually at less than 50 percent of the pre-uplift cut. The point there being that if you have an AAC here and we raised it up to deal with the beetle, knowing we were going to have the dropdown here, we never did come close to reaching that peak. And because we never reached that peak, we don't have to go down as low today.

You couple that with the other untold story in British Columbia — that we've had about seven million cubic metres of capacity taken out through sawmill closures in the last ten years. I'm not talking about all of British Columbia but just in the beetle triangle. The volume that was taken out comes close to actually what was thought we were going to have net out in the first place.

So when you add up what didn't happen — the fact that we didn't get to the cut — and you add up what we didn't plan on happening, which was having all of those mills close sooner because of what has happened since 2006, particularly in the U.S. housing market…. As a result of that, there is not the need to net down like we thought there was in the first place.

You couple that with doing some creative things on the ground within the existing timber supply areas — not talking about protected areas — and the Steelworkers are convinced that if we went to the chief forester and said, "Here are our timber targets" — again, particularly for Burns Lake, that is the priority; we deal with Burns Lake — "find a way to get there," we are confident that that is doable.

That's going to be a bit of a longer process, a more complicated process when you deal with the whole beetle triangle, but we think that there are certainly ways of doing that.

Without going into, again, all the report, I want to just conclude. I know, or I hope, that there are going to be some questions.

The Steelworkers believe that our main objective should first be to ensure timber supply for communities that have urgent and pressing needs, and that is Burns Lake. Secondly, we need to look to long-term stability and the health of our forests and forest ecosystems.

Third, we should ensure that there is a plan to help people and communities through the crisis. Some will need to be restored, some maintained and some provided specific measures to get through this crisis, but again, that's our job.

When I say "our job," our job through government is to make sure that the citizens are protected, not just from what happens through natural issues like the beetle. Sometimes they have to be protected from government policies that helped create part of this problem.

Again, thank you very much for the opportunity to be here. I welcome any questions.

B. Routley: Thanks, Bob. I couldn't agree with you more that there are some major things that can be done. I am concerned that, particularly with Burns Lake, our committee has been set up, in my view, almost like a straw dog to be knocked down because we do not have the mandate. If you read our mandate, it was not to deal with Burns Lake exclusively. We were set up to deal with timber management in British Columbia.

While there are some things that we'll be able to do…. Government does have responsibility, based on what I've heard presented to this committee and the promises that were made by government representatives to the citizens of Burns Lake.

In particular, I think you should have a look, if you get a chance, at what Bob Clark told us last Friday, in terms of his role. We still have yet to see his contract and exactly what the terms of reference were, but it's clear that we heard today the Chief say that there were promises made by the Premier. There were promises made by cabinet ministers. And government, only government, has the ability to act, to do some of the things that I think they were promised.

I hope that one takeaway you'll have is that it's not
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the committee's role to duck from that. It's just that we haven't been given it. I was very clear in asking the question: is your mandate different than our mandate? And yes, it is.

We've got a mandate to deal with timber supply for the entire province. When you look at the overwhelming documentation that's been given to this committee, there is a clear suggestion that we not open up land use plans, but that we can go back and we should be updating them more. At least, my takeaway is that there should be some updating.

I guess what I'm trying to…. When I look at what you've suggested, some of the areas that you're recommending, they're focused on Burns Lake. I just wanted you to be clear on that. But I do hear you loud and clear. I do feel that some of the things that we can look at are…. Obviously, reforestation you've raised.

Are you aware of some of the opportunities that might exist to stands that are not necessarily merchantable under the forest land base today? Were you told anything about those in discussions with the government? Did they talk about inoperable or stands that were outside of the existing land base?

I think, first, if I may, a role of the…. There's no other perfect example of a community that needs some assistance, and the government recognized that through their use of Bob Clark in whatever role they did. Whether it was the right role or not — I would have preferred to see a formal job protection commissioner — the point is that everybody understands there's a dire need to do something. So I appreciate that effort.

The land use plan, you talked about it. Like many people in this room, I've got grey hairs because of the land use plan. Certainly, there is no short-term solution. Everybody has to clearly understand: the land use plan — no short-term solution.

If you're going to consult with the people of the province who were involved the first time, that's one thing. But I somewhat get aside from some of my counterparts when I like to take the position — and I mean this — that we elect government to govern. It's fine for government to consult. But sometimes, especially if they think they're going to get consensus on an issue like land use plans in British Columbia, it ain't gonna happen. Sometimes, yes, you can consult, but government has to do what government has to do.

We all know…. This is one of the other big misnomers that the public doesn't quite get. We keep talking about fibre that's unmerchantable. It's too expensive. It's not good enough. That's all cost-driven — plain and simple.

Unfortunately, since 2006 we've had historic lows in a number of prices. We had a couple of spikes, but none of them lasted more than a couple of months. If we get anywhere to whatever the new normal is going to be…. If you ask any of the experts, they tell you we're in for a great future in the forest industry, at least those that survive. So those stands that are marginable or at the margins or even under the margins today, if we get lumber, which they all claim is more than realistic, north of $400, then a lot of those stands are going to be economically viable to log — absolutely.

N. Macdonald (Deputy Chair): Thanks for the presentation, Bob. I guess I'll just come to process. There is confusion about the process and where we fit into it. What precludes the government from working on this right now as a separate…? And I'm talking about Burns Lake. What precludes them from working on it and having, like, a parallel process? I don't understand why the one process with Mr. Cook stopped. Clearly, what we're doing doesn't quite take us to a place where we can solve the problem.

Clearly, there's capacity, because we've had the experience. Mr. Matters, you were here listening to some of the work that was done at Mackenzie, and that seems to have worked for the community. I don't suggest that it could necessarily be duplicated, but it's intriguing in terms of what they've done and the possible parallels. Do you see any reason why the government can't be working on this with the resources that they have while we do work at perhaps a higher level? What are your thoughts?

B. Matters: The short answer is no. I don't understand why it had to be "set aside" or somehow, for lack of a better term, buried in this report. Clearly, the government thought it was important enough to deal with stand-alone. But whether it was….

Forgive me, but I'm not exactly on the inside of the offices. I don't know what the secrets are. I'm not sure why they postponed or set aside that process. Obviously, the assumption was, you know, the famous leaked document, and things went downhill after that. But whether it was more than that, I don't know. To answer your question, there is no reason the government could not have continued that process and done some wonderful stuff.

Again, I point out ironically that we have this wonderful session with you folks, but it was this government that got rid of most of these public processes through their changes in 2003 and '04.

There used to be reviews of all transactions. There used to be reviews of any kind of licence transfers. There used to be reviews a lot, but we got rid of all that stuff. So why we even have to do it now…. On the one hand, I want to say: "Why do we have to do it?" I understand that in this day and age we want to consult with the public. Particularly — and don't take this the wrong way — with an election looming, we want to consult with the public, but there's no legislative reason why we have to do this.
[ Page 749 ]

It's frustrating. Again, on the big picture it's frustrating because there's some uncertainty, but I hope…. I'm sure I'm speaking to the converted with respect to whether or not we agree on the solution, but we can all agree that the issues facing Burns Lake are critical and imminent.

J. Rustad (Chair): Thanks, Bob. I've got a question, but I'm going to need to make a couple of comments just before I make the question.

There's been a question that's been raised around why there isn't a process carrying on. The adjacent communities were very concerned about their mills, the adjacent companies are very concerned about their mills. They are facing the same question that Burns Lake is, only it's going to be a few years down the road. So it became: "How do you solve one problem without trying to look at the broader picture?" Hence, the decision was to try to look at the broader picture through this process. And then it would be inappropriate for a process to go on in one particular area that wouldn't be applicable to the other areas, so hence the short time frame and why this is going through the process.

The second thing I'd like to just clarify is our terms of reference. The terms of reference as struck by the committee was "to examine, inquire into and make recommendations with respect to mid-term timber supply for British Columbia resulting from the pine beetle epidemic loss of timber supply in the central Interior," specifically, "recommendations that could increase timber supply, including direction on the potential scope of changes to land use objectives, rate of cut and the conversion of volume-based to area-based tenures," as well as a few other things.

Clearly, the mandate for the committee is to look at the mid-term fibre supply throughout the impacted area. The Lakes District is one of those areas that needs to be addressed, so hence that is part of what we are trying to do as our committee.

The question, though, that I want to ask you, which arises out of our terms of reference, which is around the area-based component…. I know that might be a little bit out of your expertise, but as you probably heard from some of the witnesses this afternoon who talked about some of the gains they had through different management on the land base — being able to have a 15- to 20-percent increase in the amount of volume that they're able to access through their TFLs.

If we can find ways through a different management structure to be able to increase the potential fibre supply for that mid-term range, which is a period out in the future and beyond, is that something that the Steelworkers would be interested in us exploring?

B. Matters: Certainly, any measures that would help increase timber supply short-term — why wouldn't we look at them? I know from part of the discussion here and some of the submissions that I read earlier that there is a bit of divergence, particularly from the industry in that view. But I would point out — and this isn't a suggestion — that those same industries that are looking to protect their back doors all jumped on board with a government initiative to take back 20 percent of their fibre to supposedly address part of the softwood lumber issue. So on one hand, they were very happy to give up some of the fibre.

Again, that's not a suggestion. But my point is that obviously they're protective. If you're going to ask them what they want to do, they're going to be protective. Are there things that can be done? Absolutely, and the track record shows it.

J. Rustad (Chair): Bob, thank you very much for taking some time and for presenting to us this afternoon.

L. Matthaus: Okay. I guess I will get going. I will start with a thank-you for the invitation to present to the committee. My name is Lisa Matthaus. I'm the provincial lead for Organizing for Change. Organizing for Change is a project of Tides Canada, and it's also an initiative of 12 of B.C.'s foremost environmental organizations. But I'm not really here as Organizing for Change, as several of our member organizations have and are presenting to the committee on their own behalf.

Instead, I see myself here as a forest activist who has spent many years working on forest policy issues, first in my own forest-dependent community on the Sunshine Coast back in the mid-'90s — 15, 16 years ago — and then with the Sierra Club of British Columbia. I am trained as a resource economist and have always approached my work on forest policy issues as a relationship between people, or communities, and the forest they rely on in a wide variety of ways.

Our challenge is not in managing the forest — it manages itself quite well without us, thank you very much — but in managing ourselves and our expectations of the forest and our other natural resources.

I've worked with environmental colleagues, government, First Nations, labour and industry on a variety of forest policy issues over many years, including timber tenure transfers, the softwood lumber dispute, the Forest Stewardship Council developing the standards for B.C. for the Forest Stewardship Council and the Great Bear rainforest, to name a few.

That said, I have not been focused much at all on forest policy issues for at least the past five years, so this exercise has been welcome for me in that it has been an opportunity to open up that chapter again, at least a bit, but with some distance from the details that I used to love to get caught up in. And I daresay, you've probably been hearing a lot of details, in the last few days in particular.
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I believe I'm one of the last presenters on the long three days here in Vancouver. Always good to get that last spot.

I believe you've had lots of presentations here and elsewhere with all the numbers and technical policy aspects of the proposal to log forest reserves and that those aspects have been laid bare and dissected and, I understand, have largely demonstrated why the proposal is a very, very bad idea. I think you've had a few of those cautionary types of presentations. While that might not be surprising coming from the environmental organizations that have presented that have said the proposals are ill-advised, I understand many people — from professional foresters to academics, to forest companies themselves — have enumerated many reasons why that's a very bad idea.

I'm going to quote from the Canfor presentation, which is going around right now. I have to admit it. Part of it here actually brought a small tear to my eye.

"We will not support actions that impact parks, riparian areas or areas that provide critical habitat for species at risk or other important environmental values such as biodiversity and old growth. We will not support actions that put us at odds with obligations of our registered professional foresters to uphold the public trust by managing forests sustainably. And we will not support actions that jeopardize our third-party forest certification and risk access to domestic and international markets.

"It would not be an overstatement to suggest that the recommendations of this committee can impact the viability of British Columbia's forest sector as a sustainable industry."

As an aside, just because I cannot help myself, I have to say that if the proposed changes to these land use plans could be seen to jeopardize even an SFI certification — sustainable forestry initiative, which is the lowest bar for a certification standard out there — it is yet more testimony to how bad an idea it is, that they wouldn't even be able to achieve that bar. Sorry. I just had to get that in.

At this point I don't think anything I could add to the reams of information you will receive that are speaking to the specifics of the proposal, what impacts they would have and why it's all a very bad idea…. I think that's all fairly comprehensively and competently covered.

Instead, I'm going to use my time to talk about the alternatives — what should really be the subject of public consultations, special committees, royal commissions and the like. I'm going to start with a couple of recent lightbulb moments. Again, I've not worked in forest policy in a few years. Just recently both this…. And I've had another occasion to think about it again. It's been interesting.

One of them was this process. With the invitation to present, I started looking at stuff that I've been doing. I pulled out this series of pamphlets that I wrote for the Sierra Club. I hate when things aren't dated, and I didn't date these. Ten or 11 years ago, I think it was.

It's a series of five pamphlets that go through.... Overcutting Forests is Undercutting Communities is on how we're changing the nature of our forest and what those implications are for the future. Jobs and Forest Communities. What's happening to jobs, happening to forest communities? What has happened elsewhere? What might we expect here?

Adding Value to Our Wood Adds Value to Our Communities is a whole pamphlet just on value-added. Accounting for the Forests looks at all the other values that forests provide and how they have been accounted for elsewhere and how we could account for them here in real terms.

The last one, From Dependence to Diversity, looks at what we consider to be forest-dependent communities and tries to address the struggles they face in making a shift.

I wrote that ten or 11 years ago. I was surprised, as I went through them, that with a few updates to stats in some of the pie charts, they are largely and sadly still relevant. We've made distressingly little progress towards a more sustainable and diverse forest industry predicated on the true ecological limitations of a dynamic resource.

Exceptions are either regionally circumscribed, such as efforts to implement ecosystem-based management in the Great Bear rain forest, or too little and unstrategically deployed to have made the impact they could have had, like the 20 percent tenure takeback as part of B.C.'s response to the softwood lumber dispute.

Second one. I had the opportunity to participate in a forest policy discussion among folks from labour, environmental groups, academics and even someone from industry that I used to go head to head with on forest policy discussions a few years ago. While the conversation was, of necessity, somewhat high-level — we only had a day — it was telling to me that the environmentalists in the room were not the first to raise issues of the need to protect forest health first and foremost, of the need for tenure reform and the need to make jobs-per-cubic-metre the overarching driver of forest policy in this province.

These used to be things that would come out of my mouth first, or my colleagues' mouths, and people would either laugh or they'd scream and shout. Or they would just resent us when the market also demanded the same things. Now I have it coming back from other people — that this is what we need to see.

While we all acknowledged that we might not agree up front on all the details, to say the least, it appeared that there was enough acceptance of the need to grapple with and resolve those issues to make that a conversation
[ Page 751 ]
worth starting finally.

Has that time finally come? The Auditor General would suggest that it has. A quote from that recent report:

"In light of the devastation resulting from mountain pine beetle, the ministry has a window of opportunity to shape our future forests and mitigate the impact with a timely reforestation plan and cost-effective silviculture. To do this, the government needs to establish a provincial plan that states its long-term timber objectives and focuses its resources in order to foster economic stability and quality of life for British Columbians now and in the future."

It's a bit too focused on timber objectives for my liking, but the need to foster economic stability and quality of life for British Columbians now and in the future requires a much broader conception of our relationship with forests than just timber. But as he says, we have that window of opportunity, and I see this process and this discussion as, hopefully, the start of that.

In the invitation the committee asked presenters to consider a number of questions, some of which I found helpful to shape my thinking, although in a slightly different order. First, you asked us to consider what values and principles should guide evaluation and decision-making. I present the following as values and principles, though they are not limited to the mountain pine beetle–affected area.

What we are seeing in the mountain pine beetle region is an acute instance of the social, economic and environmental damage that accompanies falldown in the timber supply. But most of B.C. has or is or will also face it. They outline, at a high level, a fundamentally different approach to managing B.C.'s forests.

I almost feel strange in having to say this again so many years on, but the first one has always got to be to take a precautionary approach, which is not what is being presented in the proposals in front of us. I have to admit, it feels quaint or even naive to say this, given how far our society and our world is from internalizing this maxim.

It's still a fundamental step we need to take. But given what British Columbia is facing in the mountain pine beetle region, perhaps this is an opportunity for us to collectively internalize what this precautionary approach means and the consequences of ignoring it. It's an exercise in humility. It's a recognition that we don't manage the forests, as I said earlier; we manage ourselves and our expectations. The problem is not the forests. It's not even the beetle. It's us.

Go back to my decade-old pamphlets here. When I went through them — no mention of climate change in these. No mention of mountain pine beetle. Those issues were starting to bubble up. They weren't really part of the public discourse at that point. They were still so far from that that in writing for a public audience it just didn't factor in to what I was putting in there.

I raise it not to say that's a shortcoming in these pamphlets. It's not. It's more as an example of how we have no idea and no real way of managing so many factors in the natural world. Managing ourselves with humility in the face of those forces is really the only responsible, rational approach.

What does that mean, then? It means not structuring our economies and communities in such a way that they need to be logging the maximum the forest can produce in order to meet their expectations. It means not going back to the forest for more unsustainable levels of logging when we hit a wall, when we hit our economic problems, and expecting we can just strip that back out of the forest yet again.

It's a huge disservice to our communities and to the workers to have them build lives and set expectations for the future on what is in some ways a razor's edge of certainty for timber supply, market demand and technological advances. It's always been how we should but never did operate. But it's even more relevant now as we face this first, and only the first, real manifestation of climate change on our resource base. And we can only look forward to more impacts that we really can't predict or plan for.

The second one: good old "put forest health first." We're experiencing limits in a way that we've never had to before. The precautionary approach tells us to stay well back from the cliff's edge, because we really don't know exactly where it is. What we are experiencing now is what happens when we step off that edge. What it looks like; what it feels like. We need to move back from that edge. We didn't this time, and we are now falling off, and we face crisis.

Many presentations, I'm sure, have given chapter and verse on the kinds of planning and inventories we need, that we used to have and lost, that we never had and should. I hope the committee will be taking those to heart as it considers what should happen, not just in the mountain pine beetle area but throughout B.C.

I will state here only the fundamental notion of ecosystem-based management. We need to determine, first, what needs to be retained to maintain forest form, structure and function, and only then figure out how much can be logged and what we do with that.

I very much support the proposal put forward by MLA Bob Simpson that the chief forester's role should focus on maintaining ecosystem health. That should be the primary directive to the chief forester. Timber decisions are separate from and explicitly subsidiary to that directive. We need one person who is thinking about how our forests are going to be maintained and carried in a healthy manner into the future, leaving lots of buffer space for the incredible uncertainty that we face as we go into a climate-changing era.

Again, to restate, this is the first manifestation we've seen of it. It will not be the last, and we have no idea what the future ones will be.
[ Page 752 ]

Of course that means, then, probably less timber supply. It's not about more timber. It's about less.

We need to — the third principle — take a broader view of timber-dependent communities. So many B.C. communities have been told for so long that they are timber-dependent by definition that it's not surprising that it's very hard to get them to change their view of themselves. They've been told for so long that their current and future well-being depends directly and exclusively on the profitability of their local forest company, that it's not surprising when there is huge resistance to seeing value in a separation, or at least a willingness to articulate that value. It's hugely challenging.

The mountain pine beetle strategy included attempts to help communities in the uplift areas develop diversification strategies to help ease them through this and out of this temporary boom. But in the midst of a boom, it's hard to plan for the bust.

Even though we've all seen this pattern play out many times before, or maybe because we have, there's an ingrained expectation among many in the communities and elsewhere, I'm sure, that just like the last bust, decisions will be made to bail out the forest sector at the last moment, to take just a bit more or a lot more from the forest and that the boom will ensue or continue.

Regardless of what I or others may think of the mountain pine beetle strategy overall, one good part about it was that the uplift was explicitly temporary. It was intended to end, and we pray this time that government has the political will to stick with that plan.

Trying to pillage the visual-quality areas or any other restraint areas will have so little benefit for the costs that they will impose, both ecological and economic, that it's simply not worth it. Resources would be much better spent and better focused in developing the diversification strategies and investing in alternatives — again, not easy.

But there are many other areas that have gone through these types of issues. Many B.C. communities have faced it and come through the other end. They look different. They act different. They might even have different people — some the same, some different. It's not as if it's a new issue, but it doesn't make it easy. It's still hard. We can still look to other places to give us hints as to how to go about it.

As part of those strategies we need to fully recognize the wide array of roles that forests play in that broader conception of communities and how best to capitalize on them.

The fourth principle, and the last of these, is to make value-added the primary focus of our forest sector, not a nice-to-have. Value-added has been talked about in B.C. for many, many years, but it's a nut we've never been able to crack. Stats are regularly rolled out to show how badly we underperform Quebec, Ontario, Washington State, New Zealand, Sweden, Germany and probably more.

It's partly not surprising. With access to so much wood, it has been easy to make a buck from high-volume, low-value processing, and there has been a huge resistance from industry to be pushed in a different and more complex direction.

We now crow about massive raw log exports to China, as if that's progress, when that would have been seen as a shameful admission of failure only ten years ago. The only way we will fundamentally break the jobs-versus-environment conundrum of B.C. forestry is to shape all our forest policies around a commitment to value-added, to creating jobs, value and wealth by adding skill and ingenuity, not just by logging a few more cubic metres.

The greater our ability is to add value in processing, the less dependent we are on maintaining a high and ultimately unsustainable level of logging. The more we allow our industry to diversify across a wide range of products and sectors, not just raw logs and 2-by-4s, the less susceptible our communities will be to booms and busts and the more adaptable they will be to changes in forest composition due to climate impacts.

These are going to be the primary characteristics of any kind of resilient community in the future. It's not: how much timber do you have? How much timber do you have access to? How big are your mills? It's going to be: how diverse are you? How adaptable are you? That's what we should be aiming for. And this is how we implement that precautionary approach in our economy. How we start to step back from the cliff's edge is by giving those communities the resilience they need. It's the adaptability and the diversity; it's not the timber supply.

The policy prescriptions are ones many of us have been advancing for many years. Tenure reform: to bring the forest back into the service of the public interest with a diverse array of tenures, diverse operators and with strong ecological oversight from the chief forester.

More log markets. You won't probably find anyone in the province more a fan of log markets than me and some of my environmental colleagues. With the free enterprisers among you there — log markets. We need more.

We need most of our timber supply moving through log markets to help set a price for timber and to make it available to set a proper price for timber that's not as subject to dispute from the Americans — put it that way — but also to make more of it available for anybody with a good idea of what to do with the wood, to extract the highest value from it rather than subtracting value, which we do with a lot of our wood right now when we put it through spaghetti forest sawmills.

An oldie-but-goodie recommendation from the 1991 Forest Resources Commission: at least 50 percent of B.C.'s wood supply should be directed through log markets. They were right then, and they're right now. Other policy recommendations have been, of course, reducing or banning raw log exports and establishing industry
[ Page 753 ]
sector clusters to help with the innovation that can come from working with each other.

This is not to say that there's no role for large companies or primary breakdown in B.C.'s forest sector. Of course there is. They're an essential part of any value-added strategy. But it is to say that we need to see them as a part of our forest sector that is a service to help meet broader value-added objectives. They aren't the end in themselves. They are a component leading to and supporting the value-added sector, which has really got to be the primary focus, the real prize.

The committee also asked how these decisions should be made and by whom. There are a number of ways that this can be structured, and many environmental groups will of course be eager to help develop a plan to engage the public on the real future of B.C.'s forests and the communities that rely upon their diverse services. That also answers the committee's question on how our communities might be involved in these considerations going forward.

However, a few key principles should be paramount in any decision-making process.

Honourably addressing First Nations title and rights issues must be central to a re-envisioning of B.C.'s forest sector.

Holding the public multi-generational interest as a primary interest over the corporate interests in our forests. The forest companies can play a valuable role, but it's only valuable if it's in service of public interest objectives that have been agreed upon broadly.

Also, thirdly, ensuring all information about public forests, regardless of who collects it or holds it, is made publicly available. It is a privilege granted by the public to operate on public forests, and any company doing so should be expected to be fully transparent about the nature of, condition of and plans for that forest.

In terms of cautions and advice, it's time British Columbia made the decision to start decoupling forest jobs and profits from environmental destruction. We can make all the regulations we want to set aside reserves, protect species, make plans, etc., but as long as jobs and profits are perceived to be directly in conflict with the needs of ecosystem health, the pressure to determine those well-intentioned policies will continue to be there. Now is the time to start that process.

N. Macdonald (Deputy Chair): Well, a number of people have talked about the need to engage the public, that they're public lands. That has come from licensees, you know, as well as environmental groups, community groups. It has been a very consistent theme, and often related to land use planning.

There are a couple of things. First, within government — and you can see this — we've had decision-making, which used to sit within communities, very deliberately taken away. The example was IPPs, which on the Sunshine Coast you would have had…. I mean, legislatively, we were removed from the process. With resort municipalities, it was the same thing. I know the interactions we used to have around forestry are simply not there. That's one part of it. Very consciously, communities have been removed.

The other part of it, which I don't think we've talked about very much but we've heard about, is we used to have capacity within our communities. I think we used to have a forestry office of 40 people, and now it's two or three. In McBride we heard of an office of 40, and basically it's gone. In Invermere it's the same thing, the capacity.

You know, we've talked a lot about going back into these…. If we're going to make any changes, we would engage in a discussion. I mean, is your sense that the capacity we used to have is simply not there the way it used to be?

There was the capacity, but also there used to be a lot more transparency in…. Well, there was a requirement for a lot more planning in the forests, which actually had to be approved by the Ministry of Forests. Those plans were made public, and there were opportunities for the public to engage on them. Of course, then you'd need capacity within the Ministry of Forests to engage with the public and receive and accommodate that input.

All of that is gone. There are no plans, and therefore, there's no opportunity to comment on them, or there are very few plans. The plans that are there are so vague and so high-level that there's nothing, really, to comment on.

That whole public oversight, that public engagement in our own public forests, is simply non-existent now. In my view, that is a huge loss to British Columbians, because more and more, people start to just believe that they belong to the forest companies, and the forest companies get to decide what happens out there. They don't see the link between themselves and their forests. These are our forests. They still are, and people will fight tooth and nail to keep them that way. At least they will now. But the more that that distance between….

Those of us who remember the days when you used to be able to comment on the forests, more and more activists like myself are…. With the younger folks coming up, they don't. They've never seen that. They've never had that opportunity.

They don't know that you used to be able to ask where a cutblock was going to be. You never know now where a road is going — you know, what kind of stream crossings would be there. What were they planning for that stream
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crossing? What do you mean, you're only going…? You know. You can't do that now, and I think that's a huge loss because British Columbians themselves lose that connection with their forests.

I think that's part of the process that we need to go back to — if we ask British Columbians: what is the relationship going to be between us and our forests? Part of that needs to be: how do you, British Columbians, want to engage on that? I remember that used to be a lot of work to watch all those plans that were happening: who's commenting on this…? We never had the capacity to fully do everything we needed to, but at least you had that opportunity.

N. Macdonald (Deputy Chair): Now, you've cited Canfor, and I think you'd also cited your own experience. The other thing that we're hearing from licensees — right? — is very, very clear about that community engagement. They are saying that that needs to happen. So I think we're in a place where everybody is saying the same thing — that if we're looking at changes, any process you went through would have to go through a community process.

There's capacity within industry, and there's a willingness with licensees and that to do it, but it still has to be government. I guess my experience, and probably yours, is that a lot of that has been taken apart. Some are retired and still live in our communities, but like I say, a lot of the people that did that work that allowed us to do something and then have it connect to government so that it came into something real just seems to be all gone now.

L. Matthaus: It does. I mean, we have land use plans that have been completed for most of the province now. Those land use plans always were meant to be revisited.

L. Matthaus: Yeah, living — in that way. I mean, it's a hugely complex and expensive process. I understand. There might be ways to streamline it in some way.

The caution I would put there…. As you say, industry has an interest and then maybe the capacity to do it. It can never be industry running those processes for the process to have some degree of credibility that this isn't just paying lip service. "Oh, we had everybody over for a chat. They told us what they thought, but we're going to go out and do what we we're going to do anyway."

N. Macdonald (Deputy Chair): And to be clear, that's not what they're saying at all. They're saying it's the government's responsibility. But what's notable is that there the licensees are saying that.

L. Matthaus: Yeah, with, again, that quote from Canfor. It's a recognition of the value of social licence in this province and in the marketplace.

Again, we might not want to open up all the land use plans. I don't think anybody has that appetite. But in terms of taking them to the next level, that was supposed to be that next process. That was the strategic resource management plan. It was supposed to be the next level down. I'm not sure how far we got on that process.

So there are those even within the existing structure, the existing framework — some opportunities to start people re-engaging in those levels. But they have to be done with some credibility. They have to be done with transparency, particularly around the information that's available and who's controlling that information. And you need to have…. There needs to be a belief among the participants that they will be taken seriously. Again, it's not just: "Come out and tell us what you think, and we're going to do what we're going to do anyway."

J. Rustad (Chair): We have lots of time. We've got takedown and all that sort of stuff. No rush.

B. Fleet: Well, listen, thanks very much for spending some time with me. I sort of thought about what I would say before I came here and decided that almost anything I could say probably had been said already more than once, but I'll give it a try anyway. Hopefully, you'll hear something new and different from me.

By way of introduction, I'm Bob Fleet. I'm the VP of forestry and environment at Tolko Industries. Our head office is in Vernon. We have 15 mills in 11 communities in British Columbia, and we have a head office in Vernon as well. It's a privately owned family business. We also have mills in Alberta, in Saskatchewan and in Manitoba.

We make a diversity of products, which gives us an interesting perspective. We make pulp. We make paper. We make both dimension and stud lumber. We make veneer and plywood. We make oriented strand board. We have three or four sites where we make and sell renewable energy — electricity. We make engineered wood products.

Personally as well, in addition to the Tolko experience that I have in Manitoba, Saskatchewan, Alberta and British Columbia, prior to joining Tolko I had a lot of experience in Ontario, South Carolina and Georgia. Just in case you people think this is a long process, one of my life experiences when I worked in Ontario was seven years in an environmental assessment hearing. People that did not know each other at the beginning of the hearing were
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married and had children who were in kindergarten at the end of the hearing. Long, long time.

Tolko is a family business. It's a third-generation family business, and it thinks very multi-generationally. So something like the mountain pine beetle epidemic has weighed pretty heavily on the minds of the owners and on the minds of the families in terms of the way they look at things, their commitment to community, their commitment to employees and family.

One of the things I thought I would point out is that Tolko, in terms of its devotion to environmental management, to managing ecological values and such, is a signatory to something called the Canadian boreal forest agreement.

That's a pretty unique approach in Canada, important to what I call our international sustainability brand, whereby Tolko, Canfor, West Fraser, Tembec, Abitibi and Resolute — a number of the large national or international Canadian forest products companies — and our friends at Greenpeace, Canopy, ForestEthics Solutions, Canadian Parks and Wilderness Society, and David Suzuki Foundation have decided to take a different approach to managing some of the challenges in the forest, what has often been referred to as the war in the woods.

We're working collaboratively to figure out ways to manage going forward, where we frankly put up with some policy vacuums jurisdictionally in different areas.

Just so you know in terms of Tolko's commitment, we're a signatory to that. It's important to our international image. We sell products around the world — places like Egypt, China, Korea, Japan, United States, Canada. I think that sets us apart, perhaps, from a number of other companies that you might have heard from across British Columbia. There are two or three. It's really an eastern edge, northern edge of British Columbia agreement at this point in time.

I guess I will start, then, with asking this question, which may seem obvious to many. Why is there a mid-term timber supply legislative committee? I think the answer to that is — if I understand what you guys have been doing for the last few weeks — because, as you have seen as you've toured around British Columbia, there are lots of dead trees.

In places that I think you've been, you've seen forests where 100 percent of the trees are dead. I think you've also had the opportunity to view areas where not 100 percent of the trees are dead, or as few as 50 percent of the trees are dead in terms of the degree of infestation and attack by the beetles.

That poses some interesting challenges that are going to be threaded into the remainder of my presentation. So for the commercial forest in British Columbia, what's been our strategy in terms of dealing with this mountain pine beetle epidemic? Well, in my view, anyway, it's been pretty straightforward. It was to accelerate the harvest of the dead and dying trees and save the live trees and the other species for after. So uplifting harvest of lodgepole pine, stay away from the spruce and the fir. Leave it green on the stump. We'll go back to it later.

Why we're here today is because after is almost here. We're getting to the point where the allowable cuts are, and the uplift is going to disappear. I think what's important to recognize is that arrival of mid-term timber supply, or after, is going to be at different times and different places around the province. Counterintuitively, I think after is going to be sooner in areas that weren't as hard hit by the pine beetle and later in terms of where we were hit really hard.

For example, we have operations in the Okanagan, and we have operations in Williams Lake. Mid-term timber supply and allowable cut decline is hitting us sooner in the Okanagan because we're running out of dead trees faster because there weren't as many of them. Up in Williams Lake we're not running out of dead trees quite as quickly because there are still lots dead trees and so far they're still usable. I think that's a little bit counterintuitive to what a lot of people might think. Nonetheless, irrespective of whether it's sooner or later, after is coming.

One of the suggestions that you guys have heard over and over again in a report that found its way onto a website was to increase the supply of dead trees by relaxing the constraints. And those constraints, if my understanding of them is correct, were there to conserve and protect non-commercial timber values such as habitat, viewscape, shorelines and fish habitat and that kind of thing.

You can argue that dead trees aren't protecting to the same degree as live trees and therefore to go ahead and cut them. But harvest and roads will further aggravate already compromised protection. So we're a little nervous about that suggestion. We think we're going to invite upon ourselves criticism of British Columbia's internationally recognized sustainability brand, which is of critical importance to Tolko.

I think that where constraints were serving a physical purpose such as erosion or water temperature control or something like that — more so than, for example, viewscape — this committee should recommend accelerated reforestation. So if a reserve was left for water temperature, I think you people should recommend accelerated reforestation. The tough question is: who is going to do it, and who is going to pay for it? Given where we're at in the never-ending recession, I would volunteer that it can't be the forest industry.

I think that some constraint trees could be harvested with some form of stakeholder consensus, but I think we have to tread very carefully if we think that that's going to be a big solution to the mid-term timber supply challenge in front of us. The reality is the suitability and availability of fibre is shrinking, and the reality is, unfortunately, that some mills are going to close.

So besides relaxing environmental and ecological con-
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straints, my view is that there are some man-made rules that we can change that may not or would not offend the environment. I'll give you a couple of examples.

There are places in British Columbia where harvesting on slopes is off limits, not because of the risk of erosion or ecological damage but because of operator safety. We're worried about machines rolling over and killing people. I think there could be some technological fixes to allow us to access or make the pie bigger by, for example, having unmanned skidders.

The mining industry has all kinds of unmanned equipment. They work underground in hazardous places, and I don't think it would take a whole bunch of innovation or thought to enable the forest industry to do something like that without offending our environmental viewscape and ecological protection constraints. Make the pie bigger by doing that by way of one example.

Another way would be…. These trees that are dead are much lighter than wet, fresh trees. Allowing not heavier but larger payloads on vehicles in a safe manner will enable forest companies to go slightly farther into the forest, again, without necessarily offending the existing constraints as an effort to make the pie bigger. It will make distant trees more economic.

One of the problems with the manmade rules is that they tend to be applied universally or, in our case, provincially. I'll come back to this, but my view is that that's an obstacle to us intelligently addressing the mid-term timber supply and, in many cases, is not appropriate. One of the issues aggravating the pending allowable cut or harvest reduction challenge in front of us is that as we go forward in time, lumber mills are recovering fewer sawlogs per acre harvested.

The trees are deteriorating. Probably when we started, we would go into a stand, and we would get 65 percent sawlogs out of the stand. We're probably down to 45 percent or 40 percent. There are sawlogs there, and we're getting to the point where they're not affordable to go and get anymore. It's the same cost for roads, and it's the same cost for planning and development, but you're getting less wood, so it's making the wood that much more expensive. Even though there are sawlogs that exist and are available in the allowable cut, we can't get at them.

Coming back to the point, the man-made rules have different results if all the wood is dead or if only half the wood is dead. Let me give you a little bit better explanation of what I mean by that. Up in Williams Lake if we cut a stand right now under the man-made rules and take half of it to a sawmill and half to a pulp mill, we get to go and cut more dead trees, because we get charged for the trees that go to a sawmill.

Because they're all dead and we've taken half to a pulp mill and half to a sawmill, we get to go back and get some more logs. We haven't used up our allowable cut, so we get to go back and cut some more dead trees. As we move south in the province, where only half the trees are dead, we'll go into the stands and cut, and we'll take good trees to a sawmill and less-quality trees to a pulp mill. Then we get to go and cut more trees there as well, but we get to go cut some more green trees. We're actually aggravating what we're trying to do.

My point is that there are places in British Columbia where we want to be able to go and get at all the dead trees, and they're still there. If we can find a way to do that that doesn't necessarily have to be a British Columbia–wide solution, then there are pockets of British Columbia where we can keep mills open through the mid-term timber supply legislative committee and recommendations that you make that aren't going to offend our international brand and reputation. These are man-made rules.

I think what I'm saying is that the committee should consider regional or local solutions that consider forest health and long-term impact in addition to mid-term timber supply.

I want to switch, then, to a different theme, which is timber pricing, and touch on that for a minute. This is a concern that I think is coming at us in a really big way. Our pricing and stumpage system I believe is designed in a manner that will be really problematic to British Columbia as we move forward with a declining annual allowable cut and thereafter.

The reason why I say that is because we have the British Columbia Timber Sales program, BCTS program, where we auction fibre. If you have a declining allowable cut, so both in our cutting permit licence areas and in the amount of fibre that's going to be auctioned by BCTS, you're going to have progressively higher bids that are eventually going to get to the point where industry has to rationalize. Mills will close. There will be too many mills chasing too few logs, and it will force prices up.

The problem is that that's very independent. That's a log supply-demand situation versus "the price is going up because the value of lumber is going up" situation. There will be no relationship in the near future between the price of logs that a mill has to pay to keep a mill running and the price of lumber or their ability to see their lumber into a market.

I think that because of the nature of what's called the estimated winning bid regression equation, high B.C. log stumpage will end up residing in the equation for years after mills have closed due to lack of wood.

In other words, you'll have an administrative rule in British Columbia that's going to keep the price of logs high even though the industry is rationalized and right-sized, because the supply of fibre is gone. If the price of lumber goes down, we'll end up closing more mills than needed because of the sensitivity of the timber pricing equation that we're using right now, which never contemplated a catastrophe or the tail end of this catastrophe. I think we'll end up closing more mills, not less mills, and
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I think that has to be tackled by this committee.

The analogy that I would use to explain what I think is going to happen to us — and I wish we were smarter, but I don't think we are — is that this is going to be a dogfight. One dog is going to die during the fight. The other dog is going to be mortally wounded and die a slow, painful death. That's going to be because the price of stumpage is going to stay high in British Columbia even though some mills have closed because they couldn't compete anymore or there wasn't a supply of fibre.

So I'm recommending that this committee determine if there is any alternative. It is complicated by the softwood lumber agreement, but I think this committee would serve the province very well if they looked at any alternative to the existing market pricing system that could serve B.C. better during the inevitable mid-term timber supply….

Linked earlier also to this concept of provincial or universal application of rules, I think we have to find an administratively effective way to access the non-sawlog material in these stands that are becoming progressively more decrepit, thereby increasing our ability and access to sawlogs. Again, it's a man-made rule. We're trying to manage allowable cut. It's an administrative thing.

There are professional foresters that are going to weigh in and have some opinions on it, but the reality is that most of the trees are dead. We can make more mills stay open longer or forever by finding a way to get them access to the sawlogs and finding a way to get all those who would use the lesser part of the stand for either pulp or bioenergy, pellets, OSB or something else. Right now my view as a relative newcomer to British Columbia is that a lot of this is an administrative problem versus an ecological problem, a biological problem or a forest health problem.

Finally, I just wanted to make a comment, because I've been apprised by some of my staff that your committee has heard about the concept that tenure might somehow help us address the mid-term timber supply. "We're largely volume-based in British Columbia, and maybe area-based tenure would be better." I would say to you that I don't share that view.

If you'll permit me one more analogy, I think that volume-based tenure is approximately equivalent to renting, and perhaps area-based tenure might be equivalent to leasing, but neither of those is the same as owning. If you're just renting or just leasing, you really are not going to reinvest in renovating the kitchen or adding to the property that you don't own.

From the perspective of what I view the job of the committee to be, I see that as more of a distraction at this point in time from hunkering down and tackling some of these man-made rules that are changeable, that won't disrepute our brand, that won't limit our access to the international markets we need and that will enable us to keep open three or four of the ten mills that might be on the chopping block.

B. Routley: Ah, yeah, interesting presentation. It was certainly different. I've heard…. A previous speaker, I think, was talking about increasing the size of the log market. Is part of the problem with the log market that it's actually too small? Is that what you're saying? With the impacts that would be unintended consequences, as you see it, of the current log market, is part of that because it's too small? That is one of my questions.

The other one was these…. Well, you had several suggestions, one of them being slopes that are off-limits. Are you talking about helicopter logging? What other kinds of logging practices could take place on some of the slopes that you're referring to?

B. Fleet: Well, if it was economic. I mean, helicopters are horrendously not economic, but there are…. I know that they mine deep underground in Sudbury, Ontario, and they operate the equipment from a high-rise in downtown Toronto.

I have to think that the technology could somehow be adapted to the forest industry — that we could stand nearby and operate, through remote control, equipment that would not put an operator in harm's way from a rollover. You'd be able to get a lower centre of gravity, as an example, and you may have access to greater volumes of fibre that are just currently not accessible because of concerns about operator safety — just by way of one example.

B. Fleet: I really wasn't sure what the predecessor was talking about. Clearly, having a commercial market for the lower quality and increasing the amount of lower-quality fibre that we find in these lodgepole pine stands would increase the size of the pie by making more stands commercial. So if we're down to 50 percent or 40 percent sawlogs, we're at a point now where we're going: "Even though there are sawlogs there, we can't afford to go do it."

If we had an outlet for that other part of the stand that didn't get charged against our sawlog allowable cut, which is the administrative part of it right now, then that would help. But you've got to be really careful. If the bioeconomy was all that some people will tell you it is — I mean, we're in the business of making money from forest products — we would be in it in a bigger way ourselves.

The reality right now is that with international pricing for things like natural gas at an all-time low, trying to compete with forest biomass products is a real, real tough sell at this point in time. Natural gas is at an all-
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time low. Forest-based energy production is not competitive without subsidy at this point in time. So it's a bit of a challenge.

J. Rustad (Chair): Bob, thank you very much for your presentation and for taking some time with our committee today.

That brings to a conclusion the presentations to our committee today. I just want to remind people that may be listening that you have until July 20 to be able to give us written submissions. The website, once again, is www.leg.bc.ca/timbercommittee.

I want to take this time to thank all of the presenters for the information they provided us today. I'd also like to give a special thank-you to Susanna Laaksonen-Craig with the Ministry of Forests, Lands and Natural Resource Operations, who has travelled throughout our tour with us and has helped coordinate any of the efforts from the ministry for the questions and information that we've required. It's been a great asset. She won't be with us tomorrow, but I just wanted to be able to say thank you to her today.

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12) Dunkley Lumber Ltd.	Jason Fisher
	Doug Perdue
13) Private Forest Landowners Association	Rod Bealing
14) United Steelworkers Wood Council	Bob Matters
15) Lisa Matthaus
16) Tolko Industries Ltd.	Bob Fleet

Chair:	* John Rustad (Nechako Lakes BC Liberal)
Deputy Chair:	* Norm Macdonald (Columbia River–Revelstoke NDP)
Members:	* Harry Bains (Surrey-Newton NDP)
	* Donna Barnett (Cariboo-Chilcotin BC Liberal)
	* Eric Foster (Vernon-Monashee BC Liberal)
	* Bill Routley (Cowichan Valley NDP)
	* Ben Stewart (Westside-Kelowna BC Liberal)
	* denotes member present
Clerk:	Susan Sourial
Committee Staff:	Morgan Lay (Committee Researcher)
	Larry Pedersen (Technical Advisor)
	Jim Snetsinger (Technical Advisor)
Attending Government Staff:	Susanna Laaksonen-Craig (Ministry of Forests, Lands and Natural Resource Operations)
	Dave Peterson (Chief Forester, Ministry of Forests, Lands and Natural Resource Operations)

Witnesses:	Mac Anderson (Mackenzie Fibre Management Corp.)
	MaryAnne Arcand (Executive Director, Central Interior Logging Association; Interior Logging Association)
	Rod Bealing (Executive Director, Private Forest Landowners Association)
	Darren Carter (Mackenzie Pulp Mill Corp.)
	Tanner Elton (Mackenzie Fibre Management Corp.; Paper Excellence Canada Holdings Corp.)
	Jason Fisher (Dunkley Lumber Ltd.)
	Joe Foy (Wilderness Committee)
	Bob Fleet (Tolko Industries Ltd.)
	Larry Gardner (West Fraser Mills Ltd.)
	Chief Albert Gerow (Burns Lake Band)
	Andreas Kammenos (Paper Excellence Canada Holdings Corp.)
	Dave Lehane (West Fraser Timber Co. Ltd.)
	Tony Madia (Conifex Timber Inc.)
	Bob Matters (Chairperson, United Steelworkers Wood Council)
	Lisa Matthaus
	Chief Derek Orr (McLeod Lake Indian Band)
	Ben Parfitt (Canadian Centre for Policy Alternatives)
	Doug Perdue (Dunkley Lumber Ltd.)
	Doug Routledge (Council of Forest Industries)
	Ken Shields (Chair, CEO and President, Conifex Timber Inc.)
	Kalin Uhrich (Conifex Timber Inc.)
	Richard Vossen (Hampton Lumber Mills, Canada, Ltd.)
	Jens Wieting (Sierra Club of British Columbia Foundation)
	Jack Woods (Forest Genetics Council of British Columbia)
	Ken Wu (Ancient Forest Alliance Society)
	Steve Zika (CEO, Hampton Affiliates; Hampton Lumber Mills, Canada, Ltd.)

1) Wilderness Committee	Joe Foy
2) West Fraser Mills Ltd.	Larry Gardner
	Dave Lehane
3) Conifex Timber Inc.	Ken Shields
	Kalin Uhrich
	Tony Madia
4) Forest Genetics Council of BC	Jack Woods
5) Hampton Lumber Mills	Steve Zika
	Richard Vossen
Burns Lake Band	Chief Albert Gerow
6) Ancient Forest Alliance	Ken Wu
7) Central Interior Logging Association;	MaryAnne Arcand
Interior Logging Association
8) Sierra Club BC	Jens Wieting
9) Canadian Centre for Policy Alternatives	Ben Parfitt
10) Council of Forest Industries	Doug Routledge
11) Mackenzie Fibre Management Corp.	Tanner Elton
McLeod Lake Indian Band	Chief Derek Orr
Paper Excellence Canada Holdings Corp.	Andreas Kammenos
Mackenzie Fibre Management Corp.	Mac Anderson
Mackenzie Pulp Mill	Darren Carter

REPORT OF PROCEEDINGS (Hansard)

SPECIAL COMMITTEE ON TIMBER SUPPLY

REPORT OF PROCEEDINGS
(Hansard)

SPECIAL COMMITTEE ON
TIMBER SUPPLY