Special Report,
Provincial Auditor: Section 3.13, forest management
program
Ministry of Natural
Resources
Mr John Burke, deputy minister
Mr Bill Thornton, acting director, trade and investment
marketing,
Ministry of Northern Development and Mines; former director,
forest management branch, MNR
Mr Mike Willick, assistant deputy minister, forests division
STANDING COMMITTEE ON
PUBLIC ACCOUNTS
Chair /
Président
Mr John Gerretsen (Kingston and the Islands / Kingston et les
îles L)
Vice-Chair / Vice-Président
Mr John C. Cleary (Stormont-Dundas-Charlottenburgh L)
Mr John C. Cleary (Stormont-Dundas-Charlottenburgh L)
Mr John Gerretsen (Kingston and the Islands / Kingston et les
îles L)
Mr John Hastings (Etobicoke North / -Nord PC)
Ms Shelley Martel (Nickel Belt ND)
Mr Bart Maves (Niagara Falls PC)
Mrs Julia Munro (York North / -Nord PC)
Ms Marilyn Mushinski (Scarborough Centre / -Centre PC)
Mr Richard Patten (Ottawa Centre / -Centre L)
Substitutions / Membres remplaçants
Mr Raminder Gill (Bramalea-Gore-Malton-Springdale PC)
Mrs Tina R. Molinari (Thornhill PC)
Also taking part / Autres participants et
participantes
Mr Howard Hampton (Kenora-Rainy River ND)
Mr David Ramsay (Timiskaming-Cochrane L)
Mr Erik Peters, Provincial Auditor
Mr Gerard Fitzmaurice, director, economic development audit
portfolio,
Office of the Provincial Auditor
Clerk / Greffière
Ms Tonia Grannum
Staff / Personnel
Mr Ray McLellan, research officer,
Research and Information Services
The committee met at 1042 in committee room
1.
SPECIAL REPORT, PROVINCIAL AUDITOR
MINISTRY OF NATURAL RESOURCES
Consideration of section 3.13,
forest management program.
The Chair (Mr John
Gerretsen): Good morning, everyone. I'd like to call
this meeting to order to deal with section 3.13 of the 2000
special report of the Provincial Auditor, dealing with the forest
management program. Deputy, welcome once again.
Mr John
Burke: Thank you very much, Mr Chairman.
The Chair:
It's getting to be a daily occurrence.
Mr Burke: It
is.
The Chair:
We look forward to your presentation of 15 minutes or so, and
then we'll throw it open to questions to the members of the
various caucuses. Go ahead, sir.
Mr Burke:
Good morning to everyone. My name is John Burke. I'm still deputy
minister of natural resources.
Mr David Ramsay
(Timiskaming-Cochrane): After yesterday? Wow.
Mr Burke: I
know.
With me this morning are two
colleagues: Mike Willick, who sits at the far end, who is the
assistant deputy minister of our forest division; and Bill
Thornton, who was the director of our forest management branch up
until very recently. Bill is on my immediate left. Bill has gone
on for a short-term assignment to the Ministry of Northern
Development and Mines, but because he was so intimately involved
in much of this material, he has agreed to assist us in our
discussions today.
I appreciate the opportunity
to discuss with committee the Provincial Auditor's comments and
findings on the forest management program in this province. The
Ministry of Natural Resources welcomes the work of the auditor as
a valuable process to improve the effectiveness and efficiency of
our efforts in managing the province's forest resources.
Let me start off by saying
that in general, the Ministry of Natural Resources supports the
recommendations made by the auditor, and staff at MNR have acted
on all of these recommendations. To understand many of the issues
raised by the auditor, it's important to have a grasp of both the
general approach as well as the roles and responsibilities for
forest management and how they've changed within this province.
I'd like to sketch out the larger context for forest management
operations and outline our progress in meeting these
challenges.
Under forest management, the
harvest of crown timber is undertaken by private companies under
licences obtained from the Minister of Natural Resources. In
addition to giving companies the right to harvest crown timber,
licences impose numerous obligations and conditions with respect
to forest management and reporting. The major licence type in
Ontario is known as a sustainable forest licence, or SFL. At
present, there are about 68 SFLs in the province ranging in size
from about 300,000 hectares to as many as two million
hectares.
Ontario's forest management
program has undergone considerable change as a result of three
major influences since 1994. First, the Class Environmental
Assessment for Timber Management decision in 1994 was a landmark
document on how forest management would be undertaken in the
province in terms of harvest, access, renewal and maintenance.
Second, the enactment of the Crown Forest Sustainability Act in
1995 meant that SFL forest companies, rather than MNR, became
directly responsible for forest planning. The companies were also
required to carry out forest renewal on behalf of the crown.
Third, the implementation of MNR's re-engineering plan in 1996,
along with the other factors mentioned, has resulted in MNR's
role progressively evolving to one of overseeing the activities
of the companies.
The ministry has retained the
responsibility for plan approval and for overseeing the
independent forest audits of the sustainable forest licence
areas. It also is responsible for managing wildlife, protected
areas, recreation and non-timber values. MNR now conducts few
forest field activities other than those associated with
compliance monitoring and auditing. The forest industry has also
assumed responsibility for day-to-day compliance monitoring and
assessment.
In terms of forest
information, while the process has generally been positive, the
transfer of management costs and additional responsibilities to
the forest industry has not been without occasional problems. One
concern that has been raised is the question of who is
responsible for data collection and who owns the data collected
by the forest industry pertaining to crown forests.
In order to address this, MNR
has accelerated the production of a forest information manual
which we will be seeing
probably in the next three to four weeks. The manual describes
the roles and responsibilities of the ministry and the forest
industry in ensuring that information collected and reported
remains current in the future. It prescribes the mandatory
information and information products required by the ministry and
provides field staff with direct legal authority to enforce
adherence to those requirements. The forest industry participated
in the development of the manual. I'm pleased to say today that
the manual is in the final stages of the regulatory process.
The Provincial Auditor has
pointed out that the ministry is required to report annually on
the management of crown forests under the Environmental
Assessment Act so that any necessary corrective action can be
taken in a timely fashion. The ministry has renewed its efforts
to produce these reports on time. I'm pleased to advise that the
three annual reports on timber management identified in the
Provincial Auditor's report have now been completed. Subsequent
provincial annual audits will be scheduled for completion within
18 months following the fiscal year being reported on.
By the end of 2001, MNR will
also produce a five-year state-of-the-forest report. This report
will document MNR's progress toward sustainable forest management
and will meet legal and policy requirements for forest management
reporting. The ministry has also undertaken a review of the
delivery of the forest resources inventory, including a quality
assurance component, to identify and act upon cost-effective
improvements that will meet the needs of forest managers as well
as the public.
With respect to forest
operations, the auditor commented on the need to address
variations between planned and actual harvests in order to ensure
that forest management units are maintained sustainably. We are
placing greater emphasis on having the forest plan authors
provide more realistic estimates of planned harvest levels in
future forest management plans. Incidentally, the fact that
harvest levels have been lower than planned has helped allow for
the expansion of Ontario's systems of parks and protected areas
and the creation of jobs by using the surplus of underutilized
crown hardwood. It will also help address the projected decline
in the crown conifer wood supply, the natural result of an aging
forest.
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While these factors will
reduce the variance between planned and actual harvest in the
future, the ministry is taking additional steps to correct these
variances. This includes ongoing training to emphasize the Report
of Past Forest Operations as well as the use of independent
forest audits.
In his report, the Provincial
Auditor asked the ministry to ensure that all operating mills are
licensed and report in a timely fashion. By the end of this
month, the ministry will have a new procedure in place to address
the issuing of mill licences when companies merge or are
acquired.
On the topic of compliance
with legislation and ministry policy, this was an area in which
the Provincial Auditor made recommendations regarding compliance
with legislation, of course, and ministry policy. The 1996 forest
management business plan identified major changes in roles and
responsibility for delivery of compliance and enforcement. These
were required as a result of significant restructuring within
MNR. SFL holders became partners with MNR in ensuring compliance
in 1997. The transfer in responsibilities has taken place largely
over the past four years, and adjustments are still being made in
some of the SFL areas. It is important to note that it is this
period of time that the Provincial Auditor reviewed and commented
on.
With these changes in place,
industry, not MNR, takes the lead in compliance planning,
education and training of its employees, monitoring, inspection
and reporting on operations, and taking remedial action as a
condition of the issuance of a sustainable forest licence.
For its part, MNR is
responsible for its compliance planning program, setting
priorities for spot-checking and auditing industry activities,
applying remedy and enforcement action and undertaking analysis
and evaluation of trends and, of course, the independent forest
audits.
There is no evidence to
suggest that the forest industry is neglecting its compliance
requirements and responsibilities; however, there is clearly room
for improvement. The compliance program review undertaken by MNR
during 1999 has already identified the areas noted by the auditor
for improvement and action, and steps are being taken to make
these corrections.
The Provincial Auditor's
findings support the work of the ministry in developing the
compliance reporting system that is just beginning to produce
trends and records of forest operations. These records, combined
with the independent forest audits, will of course over time
support an effective, economical inspection process. MNR will
continue to review annual compliance plans, spot-check the
activities of forest companies to see if they match the
compliance plans, and regularly analyze the results of both
industry and MNR compliance inspections to identify areas of
concern.
The Provincial Auditor noted
that ministry inspectors found significantly more variations than
industry inspectors did. This of course is to be expected, as
companies are required to report on all of the areas they have
harvested, whereas MNR inspectors in the past tended to go to
likely and reported problem areas.
The auditor noted that some
of the MNR monitoring and inspection activities duplicate the
work of company inspectors. While it is true that some
duplication in compliance and inspections did take place, we felt
this was appropriate, particularly during the transition
period.
As a result of the Provincial
Auditor's report, MNR has undertaken a number of compliance and
enforcement activities, including drafting a new policy for field
operations that will minimize inconsistencies and promote
communication and early issue resolution; making changes in
recording, tracking, assessment and analysis of administrative
penalties; and developing a new compliance inspector training
program, including certification requirements.
On the topic of managing, and managing effectively
and efficiently, the Provincial Auditor made several references
to ensuring that ministry resources were managed in an economical
and efficient way, in particular with regard to the
administration of stumpage charges received and forest renewal
trusts. With a view to continued improvement, the ministry will
continue with its practice of undertaking wood measurement audits
on a 15- to 20-company-per-year basis and will systematically
address any recurring problems noted in these audits. It should
be noted that the margin of error in assessing crown charges has
been less than 2% in recent years. To ensure the province
receives the proper amount of revenue, MNR has committed to the
following: ensuring that the action items resulting from the
individual company wood measurement audits are acted upon and
corrected within 30 days of that audit; making improvements to
the timber resources evaluation computer system, as we call it,
TREES; and placing more responsibility on private landowners and
the receiving companies to prove that lumber harvested is from
private lands by revising procedures.
Improvements to the forest
renewal and forest futures trusts administration have been
initiated. The ministry will ensure that minimum balance
requirements for each sustainable forest licence area account are
being met by March 31 of each and every year. MNR has established
a process that tracks the monthly balance in each of the forest
renewal trust funds. When a forest management company's account
balance has slipped below the minimum, MNR will bring this to the
company's attention and request that corrective actions be taken
as soon as possible and right away.
MNR has set up a process to
have the forest future trust charges go directly to that trust,
rather than having them transferred following deposit into the
forest renewal trust. These changes were initiated on April 1,
2000, and charges to be paid to the futures trusts are now going
directly into each of those accounts.
In closing, I want to thank
you again, Mr Chairman, and the honourable members for the
opportunity to discuss actions taken by MNR to address the 2000
Provincial Auditor's report. The Ministry of Natural Resources
views these reports as an excellent way to improve our efforts in
ensuring that Ontario's forests are managed sustainably and will
be available for future generations to use and to enjoy.
I look forward to today's
discussions and would be pleased to answer any questions that
members may have.
The Chair:
Thank you very much, Mr Burke. We'll start our round of
questioning now with the official opposition.
Mr Ramsay:
Thank you, Deputy, for the report this morning. Some of the good
news you gave us today is that you're getting caught up in the
reports and you say there's going to be just an 18-month lag time
then on these reports. That is better news, because that was a
concern for sure.
One question I have is that
we're concerned about the lack of information, that the
registered foresters could not assess the harvest area
successfully renewed in 25% of the forest management units they
audited. Are we doing better there in really understanding what
we have?
Mr Burke: Mr
Chairman, as with yesterday, I have colleagues who have specific
information on these matters. With your indulgence, I would refer
the question to these folks.
Mr Bill
Thornton: The answer is yes, we are doing better, and we
think we will continue to improve. We've reinforced with the
forest industry, through a variety of meetings, the need for them
to provide this information in a timely fashion.
The other piece that was
missing, as noted by the auditor at the time, was a forest
information manual that really collected in one document the
requirements to provide this information. You can appreciate
there's a whole host of issues with standards for collecting data
and timelines upon which it's reported and so on. That manual, as
the deputy has pointed out, will be regulated to take effect
April 1. We think that will be yet another step in our continuous
improvement to record these important pieces of information.
Mr Ramsay:
I'm interested in this transition period since 1994 with the
Crown Forest Sustainability Act. Before that time, it was the
ministry that basically controlled the inventory, planned the
cuts etc. It's all changed now. I think it was felt by most of us
that the ministry really didn't have a good handle on forest
inventory, and part of the thrust of the changes we've made,
which I don't disagree with, is that obviously the companies that
have a vested interest in knowing what's out there could possibly
do a better job in knowing that. So they're doing the work,
they're doing the planning. I'm just wondering what the baseline
inventory is for this. When you get the forestry plans in from
the companies or the co-operatives that are doing this on behalf
of a number of companies, how do you verify that the wood is
there, since they're doing all the work now and maybe your
baseline inventory was 20 years out of date? How are we squaring
that?
1100
Mr Thornton:
To answer the question I'll give you a bit of background in terms
of how this information is collected in the first place. We need
to distinguish between two things with respect to forest
inventory. There has been in the past, as you have mentioned,
this 20-year cycle of actually conducting a brand new inventory,
but also every five years, in preparation for a forest management
plan, that inventory is updated. We distinguish between a
re-inventory and an inventory update here.
That process of inventory
updates has seen a lot of improvements in recent times. It has
become far more automated, and all of that information is made
available to the planning teams every five years in the course of
preparing a forest management plan. MNR does see that as it comes
in during the planning process. We also, though, have an
oversight role and responsibility in ensuring that the manner in
which forest resource inventory information is collected is consistent, has some
quality assurance parameters and so on, and to a large extent
these are now being described in this manual that I refer to
that's to be regulated April 1.
Mr Ramsay:
I'd like to move into some of the measures of effectiveness of
what's going on in the forest. What steps has the ministry taken
to ensure forest managers comply with the reporting obligations
for renewal activities?
Mr Thornton:
Again, we've had extensive discussions with the forest industry
on the need for them to improve their reporting of that
information to us, and that takes a host of forms, one-on-one
meetings with individual companies, right up to the association
level. I know many chief executive officers were spoken to with
respect to this issue and we've seen considerable action since
then.
We have also taken great
steps in preparation for these five-year plans that I've spoken
of to embed this in the training that precedes that planning
process. This is training where we bring in the forest companies
to explain to them the new guidelines that are to be applied in
preparing a plan, and we're focusing on the need for more
comprehensive reports, past operation, which includes, in your
example here, information on forest renewal. There are a number
of steps. Obviously in addition to this, once the manual I've
referenced is regulated, we have an additional regulatory
mechanism at our disposal to ensure that information is
forthcoming.
Mr Ramsay:
Another question: are the forest licensees now required to
provide a quantitative analysis of the variations between the
planned and actual harvests? I know the deputy had touched on
that.
Mr Thornton:
Yes, they are. They were in the past, and they'll continue to be
required. It's not an easy thing to do. There are a lot of
reasons why a five-year plan of harvesting does or doesn't
materialize, and it can be any of a host of reasons-strikes,
fire, for example-that may alter your harvesting plans. Markets,
to a certain extent, as noted by the auditor, affect the demand
for forest products and therefore the amount of harvesting that
takes place. So this will never be perfect. There will always be
reasons why the projections for harvesting are not completely
accurate, but we require that kind of explanation to be
provided.
The reason we do this is we
want to make sure that those people who have been allocated crown
timber are in fact using it, because if there is additional
economic development opportunity to be realized and if it isn't
being used, or if there is an opportunity to expand our parks and
protected areas network, we have the option of doing that. That's
what's behind the request for this information, but as I say, it
will never be completely accurate because of those unforeseen
circumstances that affect our level of harvest.
Mr Ramsay:
The deputy mentioned and explained why there was a discrepancy
between the self-compliance activities of the companies versus
the MNR verification of what's going on in the forest in that the
ministry just does spot checks but the companies report back on
everything. I suppose that would be one explanation.
I'm sure the nagging question
out there with the general public is, is it right to give the
companies the power to enforce themselves, their own activities?
I think there's a real concern there that if MNR is not doing the
inventory and the planning work, at least, on behalf of the
people of Ontario, they should be there to make sure that what is
supposed to be happening in the forest is happening. I was
wondering if you're reviewing your compliance and enforcement
activities and making sure we're getting good coverage and maybe
increasing the spot checks. Are you looking at that activity and
how you can do a better job of it? Just give us assurance.
Mr Thornton:
The answer is yes, it is being reviewed. Just to go behind the
question a bit to give you a sense of what happens here, annually
a company is required to submit to a district manager a
compliance plan, and that describes the kind of compliance
activities they will undertake in the coming year. The district
manager has the discretion to approve or not approve that, to
require amendments based on particular issues that he may have in
his district. Then that plan is implemented by the company and
MNR puts in place a series of spot checks to ensure that it's
being carried out as anticipated. The company is also required to
report annually on the results of their compliance
activities.
MNR, as the auditor has
pointed out, increasingly focuses attention on the areas where we
think there will be the greatest problems with compliance. So
when we do our spot checks, they tend not to be random; they tend
to be very focused on areas that we believe will be the problem
areas. When you look at our numbers you will see that the
tendency is to find a greater incidence of non-compliance,
because we are obviously focusing on the high-risk areas.
The other thing that's
happened during the course of the last few years, during this
transition that the deputy minister has spoken to, is that we've
put in place a compliance information system to bring together
the results of those compliance inspections. There are literally
thousands-probably 5,000 to 6,000-of these individual inspections
undertaken each year. We want to look at some of the trends to
see if there are recurring problems.
To give you an example, we
had early signs that there were concerns with water crossings and
we saw a number of non-compliance issues related to water
crossings. Our response to that was to put in place a training
course, to bring companies in to talk about proper installation
of culverts and bridges, to embed that in the forest management
planning process so that people understood what our expectations
were around installing these water crossings. It's been a very
successful endeavour in that respect. There is a comprehensive
oversight role here that MNR plays in the entire spectrum of
compliance activities and so far it's been shown to be
effective.
Mr Ramsay: I
just have one last question for now and then I'll pass on the
questioning time. Are you confident that the ministry has the resources to do this
work right now?
Mr Thornton:
It's a difficult question inasmuch as our business has changed so
dramatically over the last period of five or six years. We're
doing things differently. We're in a transitional state, as the
deputy has pointed out, but I'm confident that our management
structures are adequate, that the proper oversight and
expectations the public have of the Ministry of Natural Resources
are being met.
1110
Mr Ramsay:
We have enough people in the field?
Mr Thornton:
I would always like to see more. I think any public servant would
tell you that. But the fact of the matter is, we re-engineered
our business. We have placed additional obligations on the forest
industry to report to us on their activities. I don't see a
change in that trend. I think the oversight we've provided is
adequate. We are able to assess problem areas and prepare
remedial actions in response to those. I guess I'm as optimistic
as anyone can be during this period of transition.
Mr Richard Patten
(Ottawa Centre): Just to follow a question up, the
report cited four districts specifically where there was unlawful
harvesting without a licence. Have you been able to pinpoint
those, and what have you done, and what's the consequence to
that?
Mr Thornton:
We haven't been able to pinpoint it. When we look at our
compliance information system, we don't see a particular
aggregation of non-compliance in a particular part of the
province. I should point out, though, that when the auditor
conducted his work, he sent particular questionnaires and asked
for particular information of districts that we weren't privy to.
It may be that in that sampling there were particular areas noted
in a district. I am aware of some problems we had in northeastern
Ontario with respect to the point raised by the auditor on repeat
offences-in other words, taking progressively more stringent
remedial action against repeat offenders.
One of the things that has
complicated this during the last few years is the fact there have
been a lot of mergers and acquisitions in the forest industry, so
a company that you may look at today and say, "Why aren't you
being more strident with them?" may in fact have been three
companies a few years ago. So if you're going to take a
progressively more stringent view on remedial action, you don't
have the same corporate structure that you had in the past.
That's something we've tried to factor into it.
The other thing is, in the
transformation of what had been crown activities to industry
activities, we've seen co-operatives formed by the industry to
undertake the management of these forest management units. Those
co-operatives are often bringing together a number of small
operators to manage the land base that the crown had managed in
the past. One of the things they said to us in this period of
transformation was, "Look, we're now all going to be under one
licence, whereas before we had operated as individual licences.
We don't want automatically to be assessed the same level of
remedial action because one person in this co-operative isn't
performing well. All the rest of us don't want to be dragged into
it." So we've tried to take that into account too during the
transition period.
That's kind of a long-winded
answer to your question, but there were some circumstances at
play here that helped explain why there were what appeared on the
surface to be problems with repeat offenders, if you will, that
weren't being dealt with in a more stringent fashion.
Mr Patten:
What do you do when you find the non-compliance? Do you take
legal action?
Mr Thornton:
We have a variety of remedial actions at our disposal. Legal
action is certainly one of them. It can be a fine; it can be a
court prosecution. Oftentimes, though, it takes the form of a
remedial order, where we say, "Go fix it." If it's wasteful
practices and you've left too much timber on a site following
harvesting, we order them to go back and pick it up, for
example.
Mr Patten:
The implication from the auditor's report is that-and I
understand that your role is now monitoring, but when you did the
special investigations, there was a significant difference
between the reporting of non-compliance and the self-regulating
system, which implies that the self-regulating system, in my
opinion, has a built-in self-interest of not reporting
non-compliance. So what are the implications for us in Ontario
and the role of the ministry in assuring that you feel confident
that in monitoring this you really are on top of the compliance
with what should take place?
Mr Thornton:
Yes. Again, we need to go behind the numbers and remind ourselves
that MNR's spot checks are not random; we are focusing on the
problem areas. So it only makes sense that we are finding a
higher incidence of non-compliance than the more random
inspection efforts that the industry shows. In fact, that's the
very recommendation of the auditor: take a risk-based approach to
your work. The numbers in themselves can be misleading in that
respect.
I think the important point
here, though, is that we do have a comprehensive system of
looking for problems in non-compliance. We are, as in the example
I gave earlier, taking action in the form of training, or
whatever the case may be, and we're not shying away from the need
to take court action. That's a frequent occurrence where we see
serious problems out there.
The Chair:
Ms Martel?
Ms Shelley Martel
(Nickel Belt): Deputy, Mr Thornton, Mr Willick, thank
you for coming today. I want to begin by asking you some
questions about your budget. The auditor indicated that in
1999-2000 the ministry spent $70.8 million on forest management.
Can you tell the committee what that involved?
Mr Thornton:
It's a pretty comprehensive figure. For example, the forest
program has a science component, an information component.
There's a field delivery component that includes the forest
management planning responsibilities, some of the compliance
responsibilities that I've spoken to here, as well as
enforcement. There are the functions that are provided at more of
the main office level on
the policy side and so on. I'm not sure if you want me to get
into particular percentage breakdowns.
Ms Martel:
Actually, does it involve MNR doing regeneration on its own crown
unit?
Mr Thornton:
No. There are very few crown units that remain now.
Ms Martel:
Is it 10?
Mr Thornton:
It's less than that now; it's probably more like-I'm searching
for a number here-a handful, three or four.
Ms Martel:
The auditor noted 10, but that's OK.
Mr Thornton:
Yes, and even since the auditor has done that, there have been
some of those units converted to sustainable forest licences. Is
that responsive to your question?
Ms Martel:
When you talk about $70.8 million, is that the overall budget for
the program?
Mr Thornton:
Yes, it is.
Ms Martel:
What would have been the budget for the program in, say,
1995?
Mr Thornton:
I couldn't give you a precise number there. If you'd like,
though, we could undertake to provide you with that
information.
Ms Martel:
Would you estimate it would have been higher or lower?
Mr Thornton:
Higher.
Ms Martel:
Actually, could you provide the committee with the budget for the
program from 1995 on?
Mr Thornton:
Yes.
Ms Martel:
Can I ask you as well what staff are attached to that
program?
Mr
Thornton: Today's staff for the forestry program is 662
full-time equivalents.
Ms Martel:
For the forestry program.
Mr
Thornton: Right.
Ms Martel:
What would that have been in 1995?
Mr
Thornton: Much more. Again, we will undertake to give
you that.
Ms Martel:
Please. If you could give us those figures, budget and staff over
the previous five years, that would be most useful.
I wanted to begin by asking
you about the annual report. Deputy, we had a conversation about
this yesterday, so let me start with you. You already told the
committee, and the auditor made it clear to us, that the last
report that had been tabled was 1996-97, yet the EA requires you
to table that annually. So we are quite far behind, and I heard
you say that you are getting those complete, and I suspect that
is partly as a consequence of the auditor making a note of it.
Then you told us yesterday that it will be 18 months from here on
in, from the time the next one is published after the work from
the fiscal year is complete. I question even 18 months, because I
note that the EA says, "The audit report shall be published by
the audit team no later than four months after the initiation of
the audit." I'm wondering why, if that's a requirement, it's
still going to take you so long to actually get this worthwhile
information published.
Mr
Thornton: That's a good question, but we're confusing
two reports here. There's an independent forest audit, and that's
the one you made reference to a four-month period to respond on,
versus a time frame for an annual report, which is one we've said
takes 18 months following the fiscal year-end to prepare.
1120
Ms Martel:
But the independent audits form part of the government's annual
report, do they not?
Mr
Thornton: Yes. The independent forest audits are a
snapshot on an individual management unit, of which there are
about 68 in the province. It covers a period of five years. It
looks at very specific things on that unit. That's undertaken by
consultants independent of government, and the expectation is
that they will provide that report within four months of the
completion of that audit. So, for example, that takes a period of
several months, where they visit the sites and the company and so
on. That's different from an annual report, which is an
amalgamation of all the reports for all of those 68 management
units and covers a more expansive piece of information than you
would get in an individual audit.
Ms Martel:
But if the audits by the management teams are provided four
months after the audit, all that information should be available
to MNR; it should not be a question that most of that information
is outstanding in order to compile an annual report.
Mr
Thornton: Yes, but again, the independent forest audits
that you're referring to are only undertaken once every five
years and there is more information in an annual report than is
in just an independent forest audit.
But to really get to the
nub of your question, which I think is, why does it take 18
months for us to prepare an annual report following the end of
the fiscal year? It's largely a logistical problem. For example,
we're coming to the end of a fiscal year now, in March. There are
activities taking place out there on the landscape, timbers being
harvested and so on, today. In order for us to collect this
information, or a company to collect it, they'll have to fly
aerial photography to take pictures to see where those areas have
been harvested. That information doesn't even come in to us until
November, so we have a six-month period where that information
isn't even available; it's simply being collected. Planes want to
fly when they can see cutovers, when there's not snow on the
ground. For some of these reports, the information is collected
in the summer months, when the field season allows for it, and so
on and so forth.
Then there's a 12-month
period where MNR reviews that information to ensure that it
really is accurate, that the area really was harvested. We may
expect to go to a company to look at that photography, for
example, to verify this information.
That is all pulled together
for those 68 management units and compiled into a report that
then has to go through the approval process, eventually being
tabled in the Legislature.
Ms Martel:
I wonder, Mr Thornton, can you assure the committee that the
reason there has been a delay in the audits being provided has nothing to do with
the fact that the crown was pressuring companies to change some
of the results?
I'll tell you why I ask the
question. In March of this year I received a package with a
typewritten note on the front that talked about crown pressure to
change these results. "The crown is not managing its area
sustainably and not complying with its own legislation. The 1999
audits have been under pressure from the crown, industry and
other parties to change the results, and the 1998 audits are not
presented to the Legislature, as some contain anti-government
comments."
The one document that
struck me had to do with the Timiskaming independent forest audit
report. It was prepared by KBM Forestry Consultants, out of
Thunder Bay. The document I have is dated February 24, 2000. It
said the following:
"The audit team found that
forest management activities did not fully conform to existing
program direction and legislation.... It also found that an
assessment of sustainability of the Timiskaming forest could not
be made due to the lack of relevant and credible
information."
There's a note to the
reader that reads as follows:
"The above summary
statement was made on November 4, 1999. The draft final audit
report was then sent to Dr John Naysmith, chair of the forestry
futures committee....
"On November 30, 1999, the
chair of the committee, in the light of the draft audit report's
conclusion, asked if the audit team would examine four revised
forest manager's reports. The reports would be supplied by MNR's
Kirkland Lake district staff on January 31, 2000.
"While pointing out that
this was an extraordinary request"-that's the comment from the
people doing the audit-"it was agreed to examine the revised
forest manager's reports and reconsider the audit team's
conclusion about the sustainability of the Timiskaming forest
should verifiably new or improved information be provided....
"MNR submitted the revised
forest manager's reports to KBM on January 31, 2000 and the audit
team has compared..." these.
"The audit team has
confirmed that, despite the revisions made to the forest
manager's reports, the earlier conclusion that an assessment of
sustainability could not be made will stand."
That was submitted by Herb
Bax, a registered professional forester, lead auditor for the
audit team, 2000.
There are a couple of
things that really concern me. The audit team themselves, who are
independent of government, point out that it was an extraordinary
request for MNR to come and ask to be able to do a revision on
its document so that the audit conclusions could be changed. I
found that very disturbing, because it made me also wonder what
pressure might have been brought to bear on other audit teams.
Could you respond to this?
Mr
Thornton: It is unusual, I certainly agree with you,
that an audit team is asked to look at additional information
following the audit, and that's the nature of the request
here.
As you've noted, the report
stated that they were unable to make a determination as to
sustainability because of the lack of information, the same
information problems noted by the auditor. The effort that was
undertaken was one of asking the district to compile information
that hadn't been formerly, originally available to the auditor,
in order to allow them to reconsider their recommendations. At
the end of the day, as you point out, they did not change. They
said that the additional information they had received still did
not allow them to make that assessment.
If I may, just as a
background to that particular unit, this is an example of a unit
in transformation. It was formerly a number of crown units
brought together to be managed by a co-operative where the
licensees formed a new company, the Timiskaming Forest Alliance,
as you've referred to. During that transformation, there were
tremendous difficulties in the handoff of information being
gathered by the crown versus the information to be gathered by
the forest industry, the new management entity there, if you
will.
My understanding is that
since that time we have gone back and said to the district and to
the company, "We want to see improvements. We want to see this
information gathered," and there is an action plan in response to
those audit recommendations to do that.
Ms Martel:
Mr Thornton, I appreciate your comments.
A couple of things strike
me. Number one, the Timiskaming unit wouldn't be that different.
Over the period of especially 1996-97, you had a number of crown
units, for example, that became SFLs that may have been in
transition, so I don't think this is an extraordinary and
exceptional case.
Secondly, it's clear that
the audit team was being asked to change their conclusions
because the ministry didn't like their conclusions. My concern
is, in how many other cases did that happen, where pressure was
brought to bear by MNR staff to change conclusions of independent
audits that MNR didn't like?
Mr
Thornton: Again, I would disagree with your statement
that MNR asked for the audit finding to be changed. It was a
request by the forestry futures trust committee, which is the
party that administers these contracts with the independent
forest auditors.
More importantly, the
request that came from the forestry futures trust committee was
one of considering additional information to be provided by MNR
and the forest company. We did not dictate or suggest to them
what the nature of their findings should be. The forestry futures
trust committee simply requested that additional information be
considered.
Ms Martel:
Can you tell us, Mr Thornton, how many other scenarios like this
occurred with the draft reports that have yet to be tabled, or in
fact even 1996-97?
Mr
Thornton: That's the only one that I'm aware of where
the forestry futures trust committee asked for additional information to be
considered post the original audit. There are many other
examples, as you have pointed out, of crown units being converted
to SFLs and experiencing this difficulty in the transformation,
but that's the only instance where additional information was
requested of the company and MNR.
1130
Mr Howard Hampton
(Kenora-Rainy River): I want to ask some questions about
compliance. The auditor states that "over a three-month period in
1999, the ministry performed over 650 inspections in areas where
the responsibility had been transferred to forest management
companies." Which areas? Can you name them? In which areas were
these 650 compliance inspections carried on by MNR in 1999?
Mr
Thornton: Are you asking geographically, in which parts
of the province?
Mr
Hampton: Yes.
Mr
Thornton: Throughout the province. The compliance
activities took place on-
Mr
Hampton: These were the 650 inspections carried out by
MNR. I thought I heard you say that you focused your inspections
on areas where you knew there were troubles.
Mr
Thornton: Right.
Mr
Hampton: So where are they?
Mr
Thornton: Where are the problem areas?
Mr
Hampton: You must know which units they're in.
Mr
Thornton: It's not a case where we divert compliance
activities from one unit to another. Every unit has a compliance
plan, so it would be a question of how we shift our compliance
efforts within different parts of a forest management unit.
Mr
Hampton: But did I not hear you say earlier in answer to
a question from one of the other members that when you did this
special compliance work in 1999, you focused on particular areas?
You knew where the problems were.
Mr
Thornton: Yes.
Mr
Hampton: I'm asking you, where are those problem
areas?
Mr
Thornton: I'll give you an example. We noted, because of
some of the trend analysis, the problems in water crossings. So
we focused a lot of our compliance activities on making sure that
they were properly installed, which led to the remedial action
that I spoke of.
Mr
Hampton: OK, so you're talking about particular areas of
enforcement, not particular geographic areas of the province? I
want to be clear on that.
Mr
Thornton: That's right.
Mr
Hampton: The auditor says, "Our analysis of violations
over the 1997-98 and 1998-99 fiscal years revealed that half of
the offences for unlawful harvesting and harvesting without a
licence occurred in four districts." Where are the four
districts?
Mr
Thornton: Again, we haven't been able to decipher that,
and it may be that the auditor had information on that that we
didn't. When we've looked at the distribution of violations
across the province, they've been relatively evenly distributed.
We didn't see a particular hot spot, if you will. It may be-
Mr
Hampton: We'll get that from the auditor there.
Mr
Thornton: Certainly.
Mr
Hampton: So in a three-month period in 1999, the
ministry performed over 650 inspections, and I want to be clear
about this. When you refer to areas, you're talking about subject
areas, not geographic areas of the province.
Mr
Thornton: When we refer to-
Mr
Hampton: A subject area being a water crossing or a
trespass, those kinds of things.
Mr
Thornton: That's right: at a specific, obviously,
geographic-
Mr
Hampton: When in 1999 was this done? What was the
three-month period?
Mr
Thornton: Sorry. What three-month period are you
referring to now?
Mr
Hampton: This is the auditor's report: "The ministry's
role is to monitor the inspection process of licensed forest
management companies.... However, over a three-month period in
1999, the ministry performed over 650 inspections in areas where
the responsibility had been transferred to forest management
companies. In many of these areas, forest management companies
had implemented their own compliance plans and inspections," and
then they point out that there's a great divergence between
non-compliance as reported by companies and non-compliance as
reported under these 650 MNR inspections.
It says here this took
place in a three-month period. When in 1999 did this happen?
Mr
Thornton: I think that's a question for the auditor. The
auditor obviously has sampled a three-month period to come up
with those-
Mr
Hampton: No, this was done by MNR. It says MNR here.
Mr
Thornton: We have ongoing activities throughout the
year. It may be that when the auditor compiled his information,
he focused on a particular three-month segment to make these
conclusions.
Mr
Hampton: All right. The auditor's report says, "The
ministry spent $5.2 million during the 1998-99 fiscal year to
employ over 40 staff to perform monitoring and inspection
functions." Was that related to these 650 inspections?
Mr
Thornton: That's part of it. It doesn't mean that our
compliance activities are focused only on inspections.
Mr
Hampton: So you're saying there was nothing unusual
about these 650 inspections? That was all routine, no special
staff. It wasn't done in response to the auditor; it wasn't done
in response to anything else. It was just routine MNR work.
Mr
Thornton: That's right.
Mr
Hampton: So is that routine MNR work repeated in
1999-2000 and in 2000-01?
Mr
Thornton: Yes, we have continued with our same
complement of staff, our same level of effort in compliance
monitoring throughout that period.
Mr Hampton: This is the 40
staff?
Mr
Thornton: Yes, and again it's hard to say for an
individual person that they do only compliance, because they may
be involved in many different activities-forest management
planning, compliance, a host of activities. But for the sake of
these here, yes, that is roughly the number of staff that
are-
Mr
Hampton: I'm left to ask the general question then: in
view of what the auditor refers to-650 inspections over a
three-month period in 1999 showed that there were incredible
discrepancies between what companies were reporting as violations
and what the ministry then reported as violations-was anything
done to follow that up? What was done to follow that up, anything
unique or different?
Mr
Thornton: Again, I'll go back to my earlier statement on
that. First of all, comparing those numbers is not a fair
comparison, because MNR focuses on problem areas. As I stated
earlier, our compliance activities are largely focused on the
problem areas, so naturally we report a higher incidence of
non-compliance than a random sample would. But to get to the nub
of your question, which is what follow-up activities take place
when we discover non-compliance, it takes a range of forms. Often
it's a compliance remedial order to fix the problem. It can take
the form of court action as well.
Mr
Hampton: The auditor's report refers to our analysis of
violations over 1997-98 and 1998-99. Do you have a record of how
many violations there were in 1997-98 and a record of violations
in 1998-99?
Mr
Thornton: I don't have it at my fingertips, but we
could-
Mr
Hampton: Could you produce that?
Mr
Thornton: Yes, we could.
Mr
Hampton: Do you have a record of violations for
1999-2000?
Mr
Thornton: Yes.
Mr
Hampton: You can produce that?
Mr
Thornton: We will undertake to do that.
Mr
Hampton: Do you know what the trend line is for
violations?
Mr
Thornton: The trend line is improving in terms of there
are fewer violations being found out there.
Mr
Hampton: By companies or by MNR?
Mr
Thornton: I would think probably by both, but I'd have
to return to the figures to give you a correct answer there.
Mr
Hampton: Can you break it down between violations
recorded by companies and violations recorded by MNR?
Mr
Thornton: Yes, we'll undertake to do that.
Mr
Hampton: Did you not find it disturbing, when your own
people went out there and started looking at areas that had
already been inspected by companies, that the first finding was
fewer areas in compliance? I believe they said 70% were in
compliance; you were down at close to only 50% in compliance.
Then in the non-compliance, they said only about 5% were in
non-compliance and you found over 20% in non-compliance. Didn't
you find that rather disturbing?
Mr
Thornton: Again, no, inasmuch as when you're on the site
it's obvious that there's been a situation, in most cases, of
compliance or non-compliance. So let me give you some real-life
examples here. If a company has harvested beyond a boundary,
it's-
Mr
Hampton: Trespass.
Mr
Thornton: It's obvious it's a trespass; there's no
question about that. However, there are instances, and let's take
wasteful practices, for example, where if there is too much
debris left on a site, where is the line? This goes back to our
earlier point on the need for some standards to be set there and
to be clearly understood by the companies undertaking these
compliance inspections to know how much debris is acceptable on
the site. So there is a judgment call on some of those. No doubt
there probably has been a difference of opinion between the MNR
person and the company person on those occasions. The danger
here, though, is when we look at summary statistics and we try to
compare the results of a non-random sample with a more random
sample and draw conclusions from that.
Mr
Hampton: It's clear to me from the auditor's report that
the auditors were upset about this. He says, "Alternatives need
to be considered, such as more directly overseeing company
inspectors where necessary or performing ministry inspections on
a cost-recovery basis." Have either of those suggestions by the
auditor been followed up on by MNR?
Mr
Thornton: Not with respect to the cost recovery. What we
have done, though, is put in place a training program so that in
these very instances that I spoke of, where there is a need for a
judgment call to be made, MNR and the company people are together
to look at those sites and to determine what is and isn't in
compliance. So that's an example of how we've tried to work with
the industry to rectify those situations.
Mr
Hampton: So there's been a training program.
Mr
Thornton: Yes, there has been.
Mr
Hampton: Because the auditor says, "The situation at the
time of our audit indicated a need for a continued ministry
presence." That's the auditor's statement.
1140
Mr
Thornton: And there has been a continued ministry
presence in compliance monitoring.
The Chair:
We'll have to leave it at that, Mr Hampton.
Mr
Hampton: I was just getting to the fun part.
The Chair:
I know. You'll have to wait for that until this afternoon.
Mr
Hampton: I wanted to introduce my video now.
The Chair:
We look forward to seeing your video later on. Government
members?
Mr John Hastings
(Etobicoke North): The first question I'd like to focus
on, Mr Burke, is that in your remarks you talked about the
data-gathering in your new decision-making model for forestry
management with these two thrusts. I would like to know, has the
ministry, sort of the overall supervisor-monitor of this
function, been able to figure out with the industry and the
subcontractors that
they're involved with how this data is to be utilized, shared and
owned? There's probably a privacy issue involved in who owns what
species of wood, where, how many different types of seedlings are
being grown in different areas, the types of personnel, I
suppose, that are now utilized, who the folks are who are doing
this for the private operators. How do you deal with this issue?
Have you resolved it?
Mr
Thornton: That's a good question and it's one that we've
wrestled with for some period of time. It goes essentially to the
point of proprietary information. This is a matter that was
expressly spoken to in the forest information manual that's about
to be regulated, as I mentioned earlier. In fact, there are
relatively few circumstances where information about our natural
resources should be proprietary. We believe, because these
companies are operating on crown land, their activities should be
a matter of public record. So where they harvest, how much they
harvest, the kinds of seedlings they use, the extent of the road
network, their future plans for the upcoming five years, these
are all matters of public record. This is the information that we
believe should be made available to the public.
There are a few instances,
however, where a company may undertake particular investments in,
for example, intensive forest management. If they have, of their
own accord, spent money on research determining how to grow trees
faster, to bring it to simple terms, it may be that they have
proprietary information at their disposal in doing that, and
that's the kind of information we would protect. We believe that
is proprietary to a company. We would not ask for that and
therefore it would not become public information. However, the
forest information manual will give us the authority to see that
information if we choose to see it. We will not own it, and we
will therefore not make it public, but we have an interest in
knowing how fast that forest is growing so that we can administer
the forest under the principles of sustainability.
Mr
Hastings: There's a concern here obviously when you
change the management model or the monitoring model for figuring
out whether the players are complying with what they have agreed
upon through these trusts. There obviously must be some sort of
protocols for the companies that are involved as to what they're
supposed to do. I presume, then, that you have on-site
people-inspectors, foresters-who go out and look to see, as
you've alluded to in some of these areas that you were concerned
about. Does the ministry have a technology plan in place so that
the data you're collecting in terms of the species of wood being
generated, the climate, all that stuff, are readily available to
the people-you folks primarily, but everybody involved-to deal
with the auditor's concerns about providing up-to-date, quality
information?
Mr
Thornton: Yes. I guess the answer takes two forms. We
have a science strategy that describes the kind of research and
application of technology that take place on the forest. We also
have, or will have shortly, a forest information manual that
describes information we require from companies to be provided to
the crown on-
Mr
Hastings: Is that the one called TREES?
Mr
Thornton: No, this is the forest information manual
that's to be regulated in April. That gathers together
information from a variety of sources, including how much wood
has been harvested and so on.
Mr
Hastings: When you make this major type of
transition-and I don't see much reference to it in the audit of
the types of wood that are being harvested-and you're looking for
long-term sustainability in the types of trees that we need for
the demands of furniture and everything in a modern society, what
kind of training plans do you have in place? There are only two
universities that I'm aware of that have forest faculties, and
that's Lakehead and U of T. Is there enough expertise and will
there be sufficient graduates becoming available to manage this
new approach to forest sustainability over the next 20 to 30
years? We're already experiencing shortages, or are about to,
enduring shortages in almost every area as we go through these
generations. Are there enough graduates coming out of these two
forestry schools to your satisfaction, to the companies'
satisfaction, to everybody who is a player here?
Mr
Thornton: In my opinion, no, there aren't enough
graduates from those two universities that you've mentioned to
meet the demand in Ontario. However, there are universities in
other provinces that we rely on and in fact recruit from now to
meet the need for professional foresters.
Mr
Hastings: Alberta being one, and BC, I guess.
Mr
Thornton: Yes, and New Brunswick. There are a number
throughout the country, but the supply of undergraduate foresters
right now is dwindling. Lakehead University is the only
university, for example, that provides undergraduate foresters.
The University of Toronto has only graduate foresters now. So we
have directed our recruiting efforts, and so has the forest
industry, beyond the boundaries of Ontario to attract those
professionals.
Mr
Hastings: In the harvesting of wood from crown-owned
properties, it's primarily the large companies that have the
contracts with the forest trusts for the harvest of these woods.
Then, my understanding is, they can in turn subcontract out to
smaller woods operators for specific types of wood that are
required in local markets or in US markets. Do I have a good
understanding of that function?
Mr
Thornton: The structure is as follows: there is a
sustainable forest licence, which is usually a licence held by
one of those large companies, but not always. We have some
co-operative ventures now as well. In the case of a large company
like an Abitibi-Consolidated or a Tembec or a Domtar, most of
their wood today is harvested by contractors to that company. So
it's more of a primary licensee-contractor relationship in
Ontario than it is a multitude of small licensees, but even that
is in transformation. The basic model in most cases is a
sustainable forest licensee who in turn contracts out timber
harvesting, in this instance, to a number of small operators to
supply the wood that's required by the mills.
Mr Hastings: Are the requirements
or the conditions in the contract between the large players,
Tembec as an example, with the forestry trust-whatever the terms
and conditions are generally in the principles by which they're
supposed to operate in the management of wood species, are those
terms and conditions transferred, and would they be generally
reflected in the operating agreements between the large
companies, like Tembec, when they contract out to the smaller
wood operators, the two- or three-person operators, who would go
out and cut right at this time of the year?
1150
Mr
Thornton: Yes, they are. Those responsibilities are in
large measure transferred to the independent contractors. For
example, Tembec would say to its operators, "Here's our
expectation in terms of how you're going to harvest timber. You
have to follow the guidelines that we have to follow to protect
values and construct roads where they should be constructed," and
so on. However, the crown's relationship is not one directly with
those contractors. Our relationship is with the licensee, so it's
with Tembec. If one of Tembec's operators, for example, did
something they shouldn't do outside of a boundary, it's Tembec we
go after, not the individual operator. Tembec, obviously, has a
relationship with that individual operator, that contractor,
where I'm sure the penalty we assess Tembec would in turn be
passed on to that contractor in some fashion.
Mr
Hastings: If I'm a small woods operator and I see some
choice types of veneer that I'd like, how do we know that's being
managed well? If I take those, because veneer is a very big
demand right now in certain markets, what would Tembec do to me
as a small woods operator up in Kap if I had signed the-
Mr
Thornton: That's between Tembec and the contractor.
Mr
Hastings: Have you seen what has happened?
Mr
Thornton: Yes. This is a very serious concern for
companies, where they want to have operators, obviously, who
perform well, because when they don't, it's reflected on Tembec.
In some instances, if a company is not complying with a
compliance plan and has poor harvesting practices, for example,
they can be let go by Tembec.
Mr
Hastings: Has that actually happened?
Mr
Thornton: Yes, it has.
Mr
Hastings: A number of times, then?
Mr
Thornton: Yes. There are a number of occasions where
contractors have been let go by the larger companies for that
reason.
Mr
Hastings: I'm now a sort of rogue operator. How am I
going to be reined in? Is there a record kept?
Mr
Thornton: There may be by Tembec-
Mr
Hastings: Do I just go out and cut what I want, go down
the road at night?
Mr
Thornton: Tembec may keep a record of it. We don't. Our
regulatory relationship is with Tembec and not with the
individual operator.
Mrs Julia Munro
(York North): Thank you very much for coming here today.
A great deal has been discussed this morning about the issues of
compliance. I want to come back to that issue in a couple of
ways. The first question I want to ask you is sort of a
big-picture question. To what degree has technology impacted on
the whole area of compliance? It would seem to me that as you
were discussing some of the technology that you alluded to
earlier, that would also have an impact on your ability in the
area of compliance.
Mr
Thornton: It's had a dramatic impact, particularly
information technology. We now have at our disposal information
systems that can gather together the results of compliance
inspections, for example, from throughout the province to give us
some trend analyses and do that very quickly and in a summary
fashion that's of great benefit to a forest manager. Information
technology has also provided great advances in a field known as
geographic information systems. This is the ability to produce
maps in digital form and to simulate a variety of activities on
the landscape to try to assess their impact before the activities
take place.
I could go on on the
science side. We're discovering how to regenerate the forest more
rapidly, better, more in tune with some cycles that would
naturally take place. Whether it be on the science side or on
information technologies, absolutely, there's been tremendous
application of both of those areas in the forest management
field.
Mrs Munro:
I take it from that answer then that it's fair to say that
obviously the goals of compliance, if we could use that term, are
increasing as the information technology becomes available.
Mr
Thornton: Yes, I think public expectation is also
increasing around compliance. We're in a better position now to
report to the public on that than we were a decade ago.
Mrs Munro:
That takes us back to the comments made by the Provincial Auditor
in his recommendations on forest compliance and the issue of
enforcement. I just wondered whether, given what you have told
us, his recommendations came as a surprise.
Mr
Thornton: No, those recommendations didn't come as a
surprise. The reason they didn't is because we have these systems
in place. In large measure the auditor noted that there were
already feedback mechanisms available to MNR that gave them some
assessment, whether it's compliance or renewal activity or
whatever the case may be. The auditor relied on some of our own
internal auditing mechanisms to draw his conclusions.
Mrs Munro:
There's an issue that was raised earlier that I would just like
to come back to, and that is, going back to the auditor's report,
he refers to a gap between forest harvest and forest renewal. I
guess, as on Ontarian, one has this sense of the special nature
of crown lands, so I think this kind of comment sends a little
bit of a concern among people. I just wondered if you could come
back to that issue in terms of explaining how that gap appeared
for the auditor.
Mr
Thornton: This is the gap between the harvest and-
Mrs Munro: And the renewal.
Mr
Thornton: -and the renewal. Again, the devil's in the
details here. It's often difficult to make that direct comparison
because, following harvesting of a site, the plans to regenerate
it may be plans that cover a decade. So, for example, after a
site's been harvested, there's a prescription obviously that
says, "At a certain point in time, we expect this site to look
like this." Often, that's 10 years later, when we expect to see
so many trees of a certain height and a certain species on the
site. There is that 10-year lag, in this example, between when an
area is harvested and when it's actually assessed for renewal,
because it just takes a forest that long to become re-established
on the site.
In the course of that 10
years, many things can happen, many natural events. Fires can
burn the area that you just planted. Drought is probably one of
our biggest problems, where young seedlings can't survive a
period of drought in their early establishment. Insects and
disease are other examples.
So when we give some
measures of how well the forest is being regenerated, we take
those factors into consideration in those areas that do fail-and
there are failures. There will continue to be failures, for those
natural reasons. They go back through the cycle. Another
prescription is prepared, treatments to that site reoccur, and we
measure it again at some point in the future.
The result that the auditor
has noted is that the gap between harvest and renewal levels has
been closing. That's a good-news story for us, and that's also
reflective of the continuous improvement that we have and the
forest industry has in understanding how to regenerate those
sites best.
Mrs Munro:
Would you also build in some kind of risk management in terms of,
over a period of years you'd have some idea of the probability of
certain things, like the insects or the drought or something like
that? Would that also be included?
Mr
Thornton: Yes, that's a very good point. Where that's
built into the system is in determining the available supply of
timber for harvest. We make downward adjustments, assuming losses
to fire and insects and diseases, so that we don't allocate a
greater supply of timber than can be sustained.
Mrs Munro:
Are we out of time?
The Chair:
We've got about three more minutes left.
Mrs Munro:
I just need to ask a question, and again it was raised a little
earlier, about the question of the changes in market demand and
how our forest management plan is able to be developed,
recognizing the impossible in terms of not knowing clearly what
those market demands might be, going back to the risk-management
notion of how you develop those, recognizing the vagaries of
market demand.
Mr
Thornton: It's difficult. For all those reasons that you
mentioned, no company can perfectly predict what the market will
hold in store for them in the future. I think what's important
from the government's perspective here, and from our perspective
as stewards of a natural resource, is that demand is only one
part of the equation. Our focus is on the supply side. What we
want to prevent is having an industrial capacity that outstrips
the supply, regardless of what the demand is. If the demand in
the marketplace were 10 times what it is today, we're under no
obligation to meet that. Our forests can grow so much under
certain conditions and that's what the limit to industrial
expansion will be. While it's an important consideration and it
does account for some fluctuations in harvest levels in response
to the market, it's not something to become obsessed with from
the perspective of forest sustainability. Our job as stewards of
that resource is to ensure that we don't cross a line where we're
harvesting more timber in the province than can be sustained in
the long term.
Mrs Munro:
I think that's really an important message, because clearly we're
all aware of the fact that there are those fluctuations and we
need to be assured that regardless of those fluctuations that's
the overriding concern.
Mr
Thornton: Right.
The Chair:
That's about the time for that. Mr Peters wanted to make a
comment, and then I suggest that we recess until 1:30 and start
again with another round.
Mr Erik
Peters: The comment strictly pertains to information
gathering or information providing by the ministry. Certainly the
questions that were raised which pertain directly to our report,
we'd be very happy to work together with you to provide you with
where we got the information, but the flow of information should
be really from the ministry to the committee. We'd be happy to
work together with you.
Incidentally, and this is
maybe the opportunity to put it out, this was one of the audits
where it was really a pleasure for my staff to work together with
you and we appreciate the co-operation that was provided to us by
the ministry when we conducted the audit.
Mr
Thornton: Thank you.
The Chair:
With that, we'll recess until 1:30, when we'll continue on.
The committee recessed
from 1203 to 1333.
The Chair:
I'd like to call the meeting to order. We'll start with another
round of questioning, starting with the official opposition.
Mr Patten:
I was listening to the news. A friend of mine predicted, "In hard
times the Americans will always claim that the free trade
arrangement is of course not balanced and that there should be
some adjustments." I was interested in noting the cry from the
northwestern states against BC and the subsidies they're talking
about. By the way, when they use the term "subsidy," can they say
that about Ontario's situation? What is the American's argument
on that? This is not related to the auditor; I'm just curious.
But it might be educational for some of us.
Mr
Thornton: I'll give you a quick response and Mr Willick
will probably want to add to this. The case of the softwood
lumber agreement is one that has gone on for years and years, so
there's a rich history behind this. In essence, though, the Americans have argued that
the nature of our valuing crown timber, being so different from
theirs because of our preponderance of crown timber versus their
preponderance of private timber, is fundamentally different and
the market forces in Canada are therefore different in
determining a price for that timber. As a result, they will
allege, because we don't have identical free market conditions,
as they see it in the US, where there's this preponderance of
private wood, that there is in essence a subsidy of Canadian
crown timber. That's sort of the nub of their argument.
Mr Patten:
That's why they call for the federal government to impose some
kind of an internal tariff on crown land products.
Mr
Thornton: For the record, Ontario obviously disagrees
with that assertion. We do not feel that there is a subsidy.
Mr Patten:
I would think so.
Out of curiosity, can we go
back to something that was mentioned that we addressed this
morning: in planning and harvesting, the ministry's response to
the expansion of Ontario parks and some protected areas under the
Ontario Living Legacy. Are any of those parks protected totally
from being harvested? What's the arrangement?
Mr
Thornton: All of them are protected from harvests.
Mr Patten:
So they're all protected.
Mr
Thornton: Yes.
Mr Patten:
In a sense, that reduced your inventory, and in that sense it
means a little bit of a lighter load, which is enormous. I guess
just the crown lands are bigger, probably, than in many of our
provinces in Canada, the smaller ones anyway.
Under the licensing
arrangement, the auditor noted that there were 13 resource
processing-I guess these are sawmills or whatever, operating
without a current licence. Have you responded to those? By the
way, did they give you the data you were looking for this
morning? The auditor had said there were four particular
districts and you had said that was news to you.
Mr
Thornton: There are two questions there, one with
respect to mill licences and one with respect to the four
districts.
Mr Patten:
That's right.
Mr
Thornton: With respect to the mill licences, those
deficiencies have been corrected, so the 13 mills that weren't
licensed at the time of the audit are now.
With respect to the four
districts mentioned in the auditor's findings, no, we don't know
where those are yet but we will be in consultation with the
auditor to find out more about that. It was during a period of
sampling that these four districts were identified and we just
didn't have that level of detail.
Mr Patten:
Under the recommendations on management practices and optimizing
economic opportunities, it says here, "The ministry will take
steps to ensure all operating mills are licensed and information
reports are received." Does that mean a change in your procedures
with them or is it just the difficulty of being thin on staff?
How does that work?
Mr
Thornton: The reason the 13 mills weren't licensed, as
we mentioned, has to do with the fact that there were mergers and
acquisitions taking place. Given that we issue these mill
licences annually-which is changing now. We want to go to a
longer period of time, five years. When a mill is purchased by
another company, we have to establish what the recognized
operating level of wood consumption will be for that mill, and it
may change with new ownership. That's just one example of a delay
that can be brought about through a change in ownership. But the
important point here is that there are no outstanding mills to be
licensed as we speak today.
Mr Patten:
Let me ask a technology question first, somewhat expanding on the
questions of my friend across the way. What computerized systems
do you have that enable you to gather the information, store
information and communicate with your clients? What do you
use?
Mr
Thornton: That's a far-reaching question. As the
ministry goes, the Ministry of Natural Resources is probably one
of the most highly automated in the public service. I would
hazard to say that virtually every employee either has a computer
on their desk or has access to it. We make extensive use of
information systems to share information from one part of this
province to another.
1340
In addition to that, as
I've mentioned earlier, we've placed a lot of emphasis on
geographic information systems. These are systems that have
information about the landscape that allows us to simulate into
the future current management activities. It allows us to, for
example, compensate for some of the losses we may experience in
different fire scenarios. It allows us to consider the impact of
disease and insects on the forest. It allows us to adjust our
harvest levels for different degrees of utilization and so on.
We've made extensive use of that, and so has the forest industry
at the same time, for the very same reason: to improve their
forest management planning.
I could go on into the
science side of things in terms of the information and technology
being brought to bear there, but I think the basic message is
that this is a ministry that has really focused on that
particular opportunity. In fact, we have a whole division that is
dedicated to science and information in this ministry and I think
it has really set us apart from some other jurisdictions in
Canada in that respect.
Mr Patten:
Do you utilize satellite imaging?
Mr
Thornton: Yes, we do.
Mr Patten:
How sophisticated is that?
Mr
Thornton: Very sophisticated; it's very expensive too.
You have to purchase that from the federal government, from
satellites. The problem with most satellite imagery right now is
that relative to its cost the benefit isn't there for us in that
you tend to get very coarse information and not at the detailed
level of inventory that we require. That's why we use low-level
aerial photography to
give us better pictures of the trees that are growing out there
and to develop maps from there.
Mr Patten:
I just have a couple of questions. John, I don't know if you have
any?
Mr John C. Cleary
(Stormont-Dundas-Charlottenburgh): Yes, I do.
Mr Patten:
On the enforcement side, how is your staffing there? Obviously
your staffing has dropped because your role has changed somewhat,
but there's still an enforcement responsibility. How have your
resources been affected, or have they been affected, in terms of
enforcement?
Mr
Thornton: On the enforcement itself, and I'm taking that
term literally-we equate "enforcement" to our conservation
officers-there has been no reduction in the number of
conservation officers since 1995. So throughout that change, that
transition that our deputy spoke to, we have held constant the
number of conservation officers responsible for enforcement.
There were reductions, and those were in the compliance functions
that we've talked about and those reductions were concurrent with
transferring that responsibility for compliance to the forest
industry.
Mr Patten:
The auditor in his review made a couple of comments, one about
the issue of consistency between district offices in their
reading of penalties, warnings, severity of penalties, this sort
of thing. The response they got from some at the ministry was,
"We give them a chance to take corrective action," but then in
following up on that they gave an example in the report-I'm sure
you're familiar with it-where in one particular area, in two
districts they cited over 100 instances of wasteful practices.
The implication would be that the ministry was a little light on
the transgressions. What's your response to that?
Mr
Thornton: First of all, we agree that there is room for
improvement here and we have followed up on those instances. One
of the benefits we have with this new information system is to be
able to look at those trends beyond simply one small management
unit and see if we're finding reoccurring problems on a larger
scale. In each of those instances of non-compliance there is a
follow-up to make sure that remedial action occurs. The problem
is that some of these instances of minor non-compliance can be as
little as, for example, "We found some garbage on the site. Go
pick it up. There's garbage left on the site." You don't know if
that's from the timber operator or that's from the moose hunter
who was there last fall. That's an example where you'd say to
them, "Go fix it. We're not going to give you a penalty, we're
not going to take any more action as long as you go and pick up
that garbage." That's a minor example.
There are more serious
examples, one of which I've spoken to, and that is when a water
crossing is improperly installed that results in siltation that
can damage fish habitat. That's a very serious matter and that's
a matter which we focus our attention on.
Mr Patten:
Have you revoked any licences or not renewed any significant
licences in the last couple of years?
Mr
Thornton: I know that we have never revoked a long-term
licence, a sustainable forest licence. We did have one example
where a company was not performing to our expectations, and
rather than renew that licence for a 20-year period-and this is
how these licences actually work; they're 20-year licences and
they are renewed to 20 years based on successful performance.
There was one example where a company didn't perform up to our
expectations and we let that tick down to 15 years, and less than
that, until their performance improved. That is seen as a threat
to them because it effectively reduces their tenure and in turn
can make it more difficult for them to raise capital for their
operations.
That's probably the best
example that comes to mind. There may have been examples where a
very small operator stole wood or something like that where we
cancelled the licence, but in terms of the large companies,
that's the only example that comes to my mind.
Mr Patten:
When a financial penalty is imposed, how does that work? How does
the ministry proceed with that?
Mr
Thornton: It can take two forms. One is an
administrative penalty and the other is an actual offence where
you go to court. In the case of an administrative penalty, we
review the situation, determine if there in fact has been a
violation, and we say, "Here's a penalty; please pay it." If they
agree with it, it's paid. If they don't, they have the
opportunity to take that to a court.
The more serious infraction
actually goes directly to court, where we're in front of a judge
or a justice of the peace and he administers justice under the
Crown Forest Sustainability Act.
Mr Patten:
How frequent is that and what would be the largest penalty that
has recently been served?
Mr
Thornton: I don't have that information at my
fingertips. In my personal experience I've been involved with
some that were tens of thousands of dollars.
Fifty-thousand-dollar penalties, for example, are not
uncommon.
Mr Cleary:
We hear a lot about forest fires. Is that the responsibility of
the licensee or the MNR at the present time?
Mr Mike
Willick: The Ministry of Natural Resources is
responsible for forest firefighting.
Mr Cleary:
So that hasn't changed.
Mr
Willick: That hasn't changed. We do have partnerships
with the forest industry to take initial action on fires on their
limits, to be prepared and to support our activities. It's a
partnership, but we provide, by and large, the initial response
in the firefighting capacity in the province on crown land.
Mr Cleary:
So those are still employees of MNR that fight the fires?
Mr
Willick: We have a core group of employees within the
fire program in the ministry who handle initial
attack-firefighters, pilots, support staff-and we hire contract
people to help us in the far north. Aboriginal people are formed
into crews and they help us. In the more industrial part of the
province, industrial forest, we have contract crews that have to meet our
standards. That's the big thing. They meet the fitness standards,
the training standards, and they're rostered and available for
short-term hire.
Mr Cleary:
So the policy's pretty much the way it was before, then.
Mr
Willick: Yes.
The Chair:
Any other questions?
Ms Martel:
I'd actually like the auditor to give us some clarification with
respect to compliance, because there was some confusion over the
reference that you made, Erik, on page 231 to a three-month
period in 1999 where the ministry performed over 650 inspections
in areas where responsibility had been transferred to the forest
management company. Can you explain what that reference is?
Mr Peters:
In what way?
Ms Martel:
When we questioned the ministry about that, they didn't
understand what the reference to the three months was. As I read
that I assumed it was a specific, special effort that was made by
the ministry to review compliance on land where industry was
regulating. Are we wrong in assuming that?
1350
Mr Gerard
Fitzmaurice: No. The period is April to June 1999. The
ministry has a report that they produce quarterly. That was the
most recent one at the time of the audit when we first went out
there. This report gives inspections by area. It shows how many
inspections were done by the ministry and the results of those
inspections, and how many were done by the industry and the
results of their inspections. What we have done is take out the
ones where the ministry itself or the crown units have done all
the inspections and the ones where the industry did all the
inspections-just the ones where there's duplication.
It is true that in some
areas inspections are more focused on problem areas. But in other
regions we spoke to the people in the field who do the
inspections and I think they are of the opinion that they're
doing pretty much the same job they did before. So I think it's a
variation throughout the province. We can't really extrapolate
out of that report which ones are targeted and which ones aren't
unless we actually went and reviewed all 600 of them.
We think it's a problem. It
may not be of the magnitude that would first appear in that
graph, but we think it is a problem. There is duplication. I
think what we have tried to emphasize is that the ministry should
be more focused in what they do and oversee the work that is done
by these company inspectors. In some cases, they are redoing
inspections.
Ms Martel:
The 650 refers to a three-month period, and the 650 inspections
exclusively by ministry staff were to review what had been done
by industry staff, am I correct? Is that what that reflects?
Mr
Fitzmaurice: No, it wouldn't. It would be a mix. Some
would be targeted inspections by the ministry; some would be
unfocused, regular inspections.
Mr
Thornton: If I may help.
Mr
Fitzmaurice: OK, go ahead, Bill.
Mr
Thornton: I think we've left a mistaken impression that
there was a special investigation comprised of 650 inspections
focused on a particular geographic part of the province. That's
not the case. What happened was, during that year, there were
about 2,000 inspections. The period of time chosen by the auditor
to make the findings was a three-month period where 650
inspections throughout the province were looked at.
Ms Martel:
So the reference, for example, to $5.2 million to employ over 40
staff was not special? You regularly have $5.2 million for 40
staff who carry out those inspections?
Mr
Thornton: Yes.
Ms Martel:
That was 2,000 inspections in total by industry and the
ministry?
Mr
Thornton: No.
Ms Martel:
Two thousand by MNR?
Mr
Thornton: Right.
Ms Martel:
Is that more or less than you would have done this year or in the
year before the audit was done? Is that about an average?
Mr
Thornton: I'll give you a sort of summary, if I can.
Ms Martel:
Sure.
Mr
Thornton: Forgive me if my numbers aren't precise; I
don't have them at my fingertips. In the year 2000, we'll
probably do something close to 6,000 inspections in total:
roughly 4,000 of those by the forest industry and roughly 2,000
by MNR. If you were to go back to an earlier period of time, say
1995-96, when only MNR was doing inspections, that figure would
have been closer to 4,000 inspections. So over the period of time
from 1995 to today, we've gone from about 4,000 inspections to
6,000, and over that period of time, obviously industry has come
on stream and now accounts for two-thirds of the 6,000
inspections being done annually.
Ms Martel:
I guess my concern would be the quality of the inspections being
done by industry. I hear you telling us that more inspections are
being done overall. But even in that snapshot the auditor pointed
to a serious problem where MNR inspectors themselves would have
had orders for, or identified, far more violations than industry.
So I'm not clear how much further ahead we are if the quality of
the work being done inside the private sector is not identifying
the violations that are there.
Mr
Thornton: Yes, and this is the difficulty we have in
interpreting summary data. As I mentioned earlier, MNR's efforts
tend to be more focused on the problem sites, although not
completely, so we have a higher incidence of non-compliance,
whereas the work a forest company does tends to be more random,
looking at the scope of their operations. As a result they're
getting fewer instances of non-compliance, as a percentage.
Ms Martel:
But wouldn't it be the reverse? Bear with me for a second. You've
got a forestry company that's now responsible for a single unit,
right?
Mr Thornton: Right.
Ms Martel:
I assume their inspectors would be much more knowledgeable about
their unit than an MNR inspector, who could be doing inspections
in a number of units. So I would expect exactly the opposite. I
would expect the company to be able to identify, much more, a
violation on their own property-I use that term loosely; I know
it's not theirs-because that's the only unit they're responsible
for.
Mr
Thornton: Let me go back to the nature of the compliance
plan and how we follow up on that. When a company submits to MNR
their compliance plan for the upcoming year, we require it to
cover the scope of their operations. We don't say to them, "Just
go out and deal with the areas you think are a problem." We want
them to look at the scope of their operations. Frequently, in the
course of carrying out those inspections, they'll report to us,
"We've found an instance of non-compliance." Immediately one of
our people will go out and visit that site. So right off the bat,
our people are going to an instance of non-compliance. Ours are
not as random as the industry's efforts in terms of inspecting a
site.
Let's say there is an
example of non-compliance-I'll use my garbage example. It may be
that we go back to that site a couple of times to make sure the
garbage is picked up. Now we've had three instances where an
inspection of non-compliance is submitted to the system. We've
gone back and checked it three times, whereas the company visited
that once and said, "There's an example of non-compliance." All
I'm trying to do is point out with some caution here the fact
that these numbers can be misleading if you don't take into
account the random and non-random nature of the inspections.
Ms Martel:
Except you've already told the committee-and correct me if I'm
wrong-that by and large MNR is going to problem spots. So I
wouldn't assume that MNR is going back three times to do
inspections for garbage. You're going back to problem areas, as I
think you've already told the committee.
Mr
Thornton: That's right. I used a poor example. I should
have said a water crossing that takes three months to repair or
whatever the case may be.
Ms Martel:
I'm suggesting you're going to areas where there are serious
problems. I'm supposed to understand that, is that correct?
Mr
Thornton: Yes.
Ms Martel:
It's not adding up for me in terms of your saying MNR might be
doing some of these inspections and we shouldn't assume that just
because the industry is not picking these up, they're less or
more serious. You're already going into areas where serious
problems have been identified. Why wouldn't we continue to have
an ongoing concern that while you're picking up the serious
incidents and trying to deal with those, the industry is not
picking those up, or maybe they're just letting them go in some
cases, they're not being as stringent as your folks are?
Mr
Thornton: Again, when we have a report of
non-compliance, regardless of its significance-
Ms Martel:
Your own staff or industry?
Mr
Thornton: -we visit that. In the case of garbage, you're
right, we would record that non-compliance, and hopefully it's
fixed within a day or so and it's over with. But if we go to a
site where it is more serious, a water crossing has washed out
and we say "Fix it," and fixing it is going to take a period of
days or even weeks, then every time we go back to that site,
we're recording an instance of non-compliance. If you visit five
times during the course of that repair taking place, you have
five instances of non-compliance, compared to the one instance
reported by the company when they first brought it to our
attention. Those are some of the dangers in comparing these
numbers, and that's my only point.
However, I do concede the
point you made that there are cases where a company inspector and
an MNR inspector may visit a site and look at it, and it calls
for a judgment as to whether or not that is in compliance. There
may be a difference of opinion there.
I wish it were as simple as
black and white: you either harvested on one side of this
boundary line or you didn't. For example, if you visit a site and
there are standing trees left on the site, that could be wasteful
practices. However, our guidelines for wildlife habitat require
certain numbers of cavity trees to be left for nesting purposes
for certain birds. However, the Ministry of Labour says, "If they
are in a very poor condition, such as could be a safety hazard,
they need to come down." At the same time, the operator is
saying, "I don't want to waste my time harvesting a tree that I
may not have a market for because I've got a market for the
softwood but not the hardwood," for example.
So now you're looking at a
site and you're considering all those dynamics at once, and
inspectors decide whether or not this is a case of wasteful
practice. That's where the training comes into effect. That's
where we've tried to bring the parties together on the site to
have some consensus as to whether that's an example of an
infraction or not.
1400
Ms Martel:
Is MNR going to increase its own inspections of industry
inspections in response to the auditor's comments?
Mr
Thornton: I'll defer to my colleagues here. I don't
think there are any plans to increase the staff complement in
compliance for the coming year, but I'm not privy to that
information.
Mr
Willick: That's true. We don't have plans to increase
the staff complement to do that. The secret is to make sure we're
focusing on the right areas, collecting the right data, and
training the people so we have a common understanding with the
forestry industry of what needs to be collected and reported
on.
Mr
Hampton: This may sound like going over an old horse
again, but I just want to be clear on something. In the auditor's
report, the auditor identifies four MNR districts where most of
the compliance problems are coming from. I want to be clear that
we're going to find out what those four districts are, we're
going to get that information.
Mr Thornton: Yes, we are.
Mr
Hampton: And you're going to make that information
available to the auditor? How is this going to work?
Mr Peters:
We are going to tell them what we have and the ministry will let
you know what the four are.
Mr
Hampton: OK. I'm sorry if I'm picking on this, but I
want to make this clear. The auditor says, and this is what I
understood, "The ministry's role is to monitor the inspection
process"-not to do the inspection process but to monitor. Then
the auditor's report says, "However, over a three-month period in
1999, the ministry performed" all these inspections. What I want
to know is, is this monitoring or is this inspecting? Is it
within what was anticipated when compliance was turned over to
the private sector or is this different than what was
anticipated? Because from the auditor's report, the auditor says,
"MNR's job now is to monitor." But then there is the
"however"-however, MNR went out there and started doing its own
inspections of areas that had already been inspected by the
private sector and found a lot more violations. So are you
monitoring now or are you inspecting, and is this different than
what was originally anticipated?
Mr
Thornton: This isn't different than what was
anticipated. We knew that the effort in inspecting forest
operations will go mostly to the forest industry, with a role for
MNR to do the spot checking. If the very coarse numbers that I've
given you are any indication for last year, two thirds of the
inspections are in fact being done by the forest industry and one
third by the ministry. We think that is the kind of level of
oversight that is necessary to say with confidence that we have a
handle on the inspection activity of the forest industry.
The auditor has pointed
out, I believe, if I interpret this correctly, that even that may
be more than is necessary. Our deputy has responded by saying,
"If there needs to be some overkill, if there needs to be some
redundancy of effort, this is an area where I'm happy to see it
because of the contentious nature of this activity."
Mr
Hampton: The auditor recommended that you essentially do
a compliance and enforcement review, and I believe the deputy
referred to a compliance review by MNR in 1999. Are there any
documents about the outcomes of that review?
Mr
Thornton: Yes, there is a document.
Mr
Hampton: Do we have that?
Mr
Thornton: I don't know if you have it. It's an internal
document that we're acting on and we're still in the process of
making sure its recommendations are followed.
Mr
Hampton: Does the auditor have that document?
Ms Martel:
Can I just be clear that that is in response to the auditor's
comments? Because I thought the auditor completed his review
after 1999.
Mr
Thornton: You're right.
Ms Martel:
All right, so-
Mr
Thornton: We were already, of our own accord,
undertaking a review in 1999 of the compliance function before
the auditor appeared on the scene. That has resulted in a report
and we're acting on that report. In addition to that, we
committed, in response to the auditor's findings, to undertake a
further review. That review has not yet been initiated because we
want to get the results and the actions in place from our
original 1999 review before we start another one.
Ms Martel:
Can I ask what the difference is between the two?
Mr
Thornton: The other one hasn't even started yet. The
review that we have committed to the auditor to undertake hasn't
been initiated yet.
Ms Martel:
But what's the difference in terms of the one you've already
completed? What are you looking for that's different? What are
you going after that's different?
Mr
Thornton: Probably there won't be a huge difference. It
will be in degrees of implementation. For example, the one that
we undertook in 1999 was really to assess the early years of this
new arrangement where the forest industry was taking greater
responsibility in complying.
Since that period of time,
we have new players on the scene. We've got the ability now to do
some trend analysis in terms of compliance problems and I think
you'll see in the upcoming review we'll learn from some of those
mistakes, some of those pieces of information, that feedback, and
hopefully be able to continuously improve here.
Mr
Hampton: So that part of the auditor's recommendations,
even though your response was you will initiate a review, you
have not done that. So the compliance and enforcement activities
review hasn't happened, as required by the auditor's report.
Mr
Thornton: That's right. It has not been initiated
yet.
Mr
Hampton: There are some other points he made. He said,
"Identify areas at high risk of non-compliance where ministry
inspection staff should focus their efforts." Has that
happened?
Mr
Thornton: Yes, that is happening on an ongoing basis and
I think it's partly reflected in the explanation I've given as to
why it's difficult in comparing those instances of
non-compliance. We have always and we will continue to focus our
efforts on areas where we think the greatest problem exists and
therefore the higher probability of non-compliance.
Mr
Hampton: So I'll ask the question I asked this morning:
Is that done strictly on a subject basis, or is it also done on a
geographic basis, or is it done on a company basis? You indicated
earlier that one company was told, "We're not going to extend
your licence because you're simply not living up to the
requirements." So is it done on a subject basis, an area
basis-that is, a district basis-or is it done on a company
basis?
Mr
Thornton: It could be any combination of those,
depending on the circumstances. I know that sounds like a vague
answer, but I've given you one example where it's a subject
basis, water crossings, for example. I'm also very familiar with situations
where within a management unit, because there are different
contractors undertaking those activities within the management
unit, you're more likely to look at contractor XYZ as opposed to
contractor ABC.
If we felt there was a
particular problem beyond that with a company or in some cases
even fraudulent activities, then we could also mount an
undercover investigation to look at that, and that has happened
in the past.
Mr
Hampton: Even though it sounds in this report as if the
three months were a special three months, I now accept that this
is not special, this happened in 1999. So what you're saying is,
this work was ongoing in the year 2000. You would have gone out
there in 1999-2000 and you would have continued to do these
inspections. The results in 1999 showed that there was a
significant disparity, industry saying, "We're in compliance,"
MNR staff saying, "Oh, no, you're not." What were the results for
the year 2000?
Mr
Thornton: I don't have those at my fingertip, but I
think in an earlier undertaking we said that we would provide you
with that.
Mr
Hampton: And for the year?
Mr
Thornton: The year 1999-2000.
Mr
Hampton: Yes, OK.
The other issue is,
obviously some of the enforcement also depends upon compliance.
So what have you done on the enforcement end, given that you've
found some problems with respect to compliance? For example, in
those places where MNR staff have found companies not in
compliance and the industry has said, "We're in compliance," what
happened in those cases?
1410
Mr
Thornton: In all cases where we find instances of
non-compliance, there's a follow-up action. As the auditor has
pointed out, it can be anything from a warning to an
administrative penalty or a court-imposed decision on an offence.
No instance of non-compliance is left unattended to. I can't give
you any more information than that until we get into the
specifics of a particular instance of non-compliance.
Mr
Hampton: Do you know, for example, how many charges
would have been laid, say, under the Public Lands Act, or how
many charges would have been laid under the Crown Forest
Sustainability Act? Do you keep that information in terms of
compliance?
Mr
Thornton: It would be kept. Again, I don't have it at my
fingertips.
Mr
Hampton: So you'd have it for 1999?
Mr
Thornton: Yes, we should have charges under-
Mr
Hampton: You'd have it for 2000?
Mr
Thornton: For 2000-01? Probably not, because we're still
in the midst of 2000-01.
Mr
Hampton: I believe this refers to 1998-99. So there'd be
1999-2000, and then we're just coming to the end of 2000-01. So
you should have it for last year.
Mr
Thornton: We can undertake to provide that. I can't
guarantee you that that summary has taken place, but it seems
reasonable that that information should be available.
Mr
Hampton: Could we get it for 1998-99 and 1999-2000 and,
when it becomes available, 2000-01?
Mr
Thornton: Yes.
Mr
Hampton: Just one other question that I found troubling,
and that has to do with the forest renewal trust fund and the
auditor's point that there were several companies that were not
maintaining their minimum balance, and in fact a company that was
totally, I would think, in breach of the act. How can that
happen? How can a company not be putting into the trust fund the
required amount of money on a periodic basis?
Mr
Thornton: OK, this is going to take me a while to
explain. The way the trust fund works, as you know better than
almost anyone-
Mr
Hampton: There have been some changes to it. I'm not
sure I like any of those changes.
Mr
Thornton: Then for the benefit of the committee, as
crown timber is harvested, there is a set fee, which is deposited
into a trust fund. That money is held in the trust to be used
only for regenerating the area that has been harvested. As part
of the design of the trust fund, the government insisted that
there be a minimum balance in place at one point, March 31 of
each year. The reason it insisted on that is that it wanted to
make sure that there was always at least one year's worth of
money available to regenerate the site that had been
harvested.
Why one year and why the
need for this? It was an insurance policy, if you will, because
during the course of a year, for example, if any unforeseen event
were to arise, there would still always be money set aside to
regenerate this area. So that's the reason for the minimum
balance. That was roughly approximated at one year's worth of
renewal cost by a management unit.
Mr Hampton's point is
correct: some companies on March 31 of a given year have not met
that prescribed minimum balance. The reason for that is varied,
for example, the Domtar strike at Nairn. Timber wasn't harvested.
Because timber wasn't harvested, monies weren't paid into the
trust and they didn't meet their minimum balance requirements.
Nevertheless, the renewal work took place.
In all of these instances
where a minimum balance hasn't been met, we require the company
to report to us as to why and to give us a plan as to how it's to
be corrected. In that instance, Domtar said, "As soon as the
strike is over and we've resumed harvesting timber, don't worry,
we're going to be putting the money in."
The more common example is
where management units are being merged. What happens is that a
company will say, "Look, I'm in a surplus situation on this unit;
I'm close to the edge on this other one. My future plans are to
merge these together, and there's no question that I'll be well
over my minimum balance when that happens, but I'm in a
transition here where I will miss that." That was very frequently
a situation that we ran into.
The important point here to
leave with the committee is this: right now the minimum balance
as aggregated across
those participants in this trust fund arrangement is to be $90
million. If you look at our balance today, we have $155 million
in there, so there really is no fear that this trust is being
depleted or is in danger of not living up to its original
expectations. But there are these management-unit-specific cases
where minimum balances have not been met.
Mr
Hampton: There was one company that was a more serious
situation. It wasn't a question of minimum balance; they were, as
I understand it, in a deficit. How did that happen?
Mr
Thornton: Poor timing in terms of the processing of an
invoice. As I mentioned, the minimum balance is to be met on
March 31 of each year. This is a company that had sent in an
invoice to draw monies out in April that was processed by the
trustee faster than expected, and as a result they had a deficit
on March 31, which then became a surplus after the fact. So it
was a timing instance. We investigated that particular example to
determine this, and it has been rectified to our
satisfaction.
Mr
Hampton: I want to go back to compliance and
enforcement. I just want to be clear on this. Since the auditor
asked for it, in effect a review of compliance and enforcement,
and the ministry committed to it-and this is 1998-99; we're now
in 2001-when is this going to happen, this review of compliance
and enforcement activities, the one the auditor asked for a year
ago?
Mr
Thornton: I'm presuming it's going to happen within the
next year, but not being with the ministry now, I'll defer that
to Mike.
Mr
Willick: I want to make sure it's clear that this is
just good management practice that we're talking about. We had
some ideas on how to fix the system back in 1999. We're putting
them in place now. We need to look at how that is working. Then,
in answer to the auditor's report, we look at it once again and
fix it again. This is an ongoing thing. I would commit to within
a year. Within a year we will do the review that's in
question.
Ms Martel:
Can I just be clear, Mr Willick. You don't see any specific
changes as a result of what the auditor said? It sounds like it's
just more of the same. I'm not trying to undermine your process,
because it's a very important one, but I would have thought, as a
result of the auditor identifying what he did, that there would
be some more significant changes, I guess is the way to describe
it, with respect to the report, what you're looking for and what
you plan to do.
Mr
Willick: I'm hoping, as we implement the review that was
ongoing and completed just when the auditor was doing his report,
that we would have woven within our actions the good thinking
that the auditor has brought forward to us.
Ms Martel:
In terms of the review, let me ask you if you're doing this or
would consider this in response to what the auditor identified.
Clearly we've seen today that there are cases where the ministry
identified violations and cases where the industry did, and
there's quite a discrepancy. Is the ministry able to track those
cases where that difference exists to determine the seriousness
of the violation, then? You may assume that there are some
violations that are minor and so we missed it, but are you in a
position to track those cases where the discrepancy existed to
determine if the violations are indeed quite serious and whether
it was just wilful negligence on the part of the company or
training or that they were missed?
Mr
Thornton: Yes, we can track them. We have categories, if
you will, as to the significance of the infraction, and obviously
the more serious the infraction, the more emphasis we would put
on tracking that. We need to track it not only in terms of the
type of infraction but also, as pointed out by the auditor,
whether or not we have a repeat offender on our hands there as
well.
I should back up for a
moment and give a broad comment on this whole matter of
compliance, because I know the environment under which the forest
industry is now operating has changed compared to a decade ago.
Where they tried in the past to get away with matters of
non-compliance, there's really no benefit to them today, for two
reasons. First of all, if it's taking the best wood and leaving
the rest, we're at a finite point now where there simply is very
little wood available beyond that which is committed. So they're
really stealing from themselves if they leave wood on a site that
they could otherwise use.
1420
Now, for example, we have
companies spending a lot of effort in taking the tops of trees
that 10 years ago would have been left on a site without any
question. In fact, the day will probably come where we're
concerned that too much fibre is being removed from a site. The
whole issue of wasteful practices is one that's already
diminishing in terms of its significance to the industry and, in
some respects, to us.
The other thing that's
happening is that these companies are in an international
environment where they're under the microscope by not only their
shareholders but some very sophisticated environmental groups.
Now you see companies aligning themselves with these
environmental groups to say that, "We want to adopt your
certification system, to be reviewed by the Forest Stewardship
Council, for example, to get certified under that environmental
certification system, to prove to our shareholders, to prove to
our customers nationally and internationally that we are good
stewards of the resource." So there's been that change in the
whole overall environment in which these companies play where in
fact they're very proud to say, "We have our own compliance
system now. Here are the kinds of things that we report on.
Here's the remedial actions that we take of our own accord, quite
apart from that which is imposed upon us by the government."
I think that's a good
signal. That has really helped our case in recent years.
Companies have really focused on the stewardship role that they
have, as it's seen by their shareholders and their customers.
Ms Martel:
I appreciate that. Water crossings, for example, which MNR would
consider a serious contravention for fish and wildlife, might be very
important to MNR and not so important to some of these companies,
because it has little to do with selling their product in that
respect, right?
Mr
Thornton: Although, in difference to that, where
environmental groups have, of their own accord, taken
investigations-some groups have done this in Ontario, where
they've investigated the activities of companies. The area they
have focused on most heavily is, in fact, water crossings.
It is on their radar
screen. That's my message. It is on the radar screen of more than
just MNR and the company. The environmental community is focused
on this as well.
Ms Martel:
Can I go back to the trusts? We checked with the Clerk's office
this morning to see when your trust documents were tabled,
because if I understand the act correctly, those documents are to
be tabled annually as well.
Mr
Thornton: These are the-
Ms Martel:
The forest renewal trust fund and the forestry futures trust fund
are supposed to be tabled in the same way as the forest
management documents. The last one that was tabled was the year
ending 1997 for both documents. Can you tell the committee why
you're so far behind again in tabling these public documents?
I would expect they're
important indicators, especially the renewal, of the level of
investments in regeneration that a lot of members of the public
would be interested in. So why is the ministry out of compliance
so significantly?
Mr
Thornton: To be honest, I thought that there were more
current versions of that that had been tabled. I'll undertake to
find out where those are.
Ms Martel:
For the forestry futures, the last report was June 1998, which
covered the year ending March 31, 1997. That is the same for the
forest renewal trust fund document.
Mr
Thornton: OK, 1997-98 is the most current version,
then.
Ms Martel:
No, ending March 31, 1997. They were tabled in June 1998 with the
Clerk's office.
Mr
Thornton: Oh, sorry, OK.
The Chair:
Can we go on to the government members now.
Mr
Hastings: Mr Thornton, I'd like to continue along the
lines of the compliance situation. Do you folks have a common,
formatted compliance reporting system that the ministry and the
industry use that would record the types of incidents-major,
minor, dates-whatever type of data you would have on those? I
assume it's a computerized, formatted situation.
Mr
Thornton: Yes, we do.
Mr
Hastings: Would it be possible to provide the committee
with a copy of that type of report?
Mr
Thornton: Yes. We can provide you with a copy of a
standard inspection report.
Mr
Hastings: OK. I presume that a report where there are
serious problems, either of an environmental nature or a wastage
of wood-are those considered major, serious incidents?
Mr
Thornton: It depends on the magnitude. I'll give you an
example. A very common example we run into is that when wood is
harvested on a site, it's usually brought to roadside where, in
turn, it gets trucked to the mill. When wood is brought to
roadside, there is often wood placed underneath the pile that
gets pushed down into the snow or the mud or whatever the case
may be and it's not visible until the spring. Even though the
wood is trucked away in the wintertime, in this example, a return
inspection in the spring may discover that underneath the snow
there are in fact pieces of merchantable crown timber that should
be removed from the site. In that instance, we would look at that
as a minor instance of non-compliance. We would order the company
to go pick that wood up and away it would go.
A more serious example, and
this has happened, would be where you have an operator working at
night-some of these operations are 24 hours a day. They're
working in the dark, obviously; they crossed the boundary line
where they were not to have crossed and they are now harvesting
outside of their allocated block. In some instances it may even
be a problem because there may be a specific value there that
you're trying to protect, an osprey nest or you name it. In that
instance-a more serious matter, obviously-we would take more
serious action in terms of administrative penalty and require
them to immediately correct any damage to the value that may have
been incurred there.
Mr
Hastings: When you talk about financial penalties or
administrative penalties such as changing the lease date, which
is usually 20 years-
Mr
Thornton: Yes, the licence.
Mr
Hastings: -back to, say, 17 or however that happens with
that particular company, can the ministry provide this committee
with the amount of money on an annual basis of financial
penalties for the problems that have occurred in the last five
years? I guess it would show financial penalties, major
incidents, minor, however you define those, which are already
predetermined in terms of the definition.
Mr
Thornton: Yes, we'll undertake to provide that
information.
Mr
Hastings: To go back to the auditor's report with regard
to the fiscal reporting of these trusts, do you folks have on
record, even up to 1997, a breakout of the expenditures of these
trusts according to training and development, silviculture
research or whatever the categories would be, or is it not broken
out that way?
Mr
Thornton: It's not broken out that way. The monies in
the forest renewal trust are only available to be spent on
activities that regenerate a harvested area. Training is not part
of that, research is not part of that. Does that answer your
question?
Mr
Hastings: Where does research come into either trust in
terms of trying to improve the soil, trying to improve the
seedlings? My impression is that back in the old regime, 20 or 30
years ago, MNR used to have a lot to do with it in terms of being the supplier,
the developer of a lot of the seedlings. Is that a correct
impression or am I off base a bit?
Mr
Thornton: No, your impression is correct. We used to
operate tree nurseries, for example. With respect to your
question as to how that science is now paid for, it comes out of
MNR's operating dollars, which are distinct from the monies that
are held in the trust funds.
Mr
Hastings: So we're still involved in research funding
but not in the actual carrying out of the research. It's done by
the universities, by the companies or a consortia of
companies.
Mr
Thornton: Yes. To give you some perspective here, of the
$60 million or $70 million that's spent annually in the forest
program, roughly 20% of that is spent on the science and related
activities that you're describing. We continue to place a lot of
emphasis on the science.
Mr
Hastings: That's under the forest renewal trust?
Mr
Thornton: No, these are-
Mr
Hastings: That's separate from either trust?
1430
Mr
Thornton: That's right. Just to reiterate, the trust
funds have very distinct purposes particularly focused on
regenerating areas that are harvested and some other specific
uses. That's distinct from MNR's operating dollars, which are
used to pay for science and information and other things.
Mr
Hastings: You've been in this business quite a while, in
terms of your profession. Do you have a forestry designation?
Mr
Thornton: Yes.
Mr
Hastings: Having read Doug Fisher over the years, as a
layman, that's been one of his areas of concern. I can recall
from reading some of his columns that he used to be concerned
about the lack of generation by either government ministries or
by companies in terms of the different types of wood that would
be required, since Canada still employs about 100,000 people,
indirectly or directly. I don't know how good that number is.
Mr
Thornton: That's more like Ontario's figure.
Mr
Hastings: OK. So he was saying-this would be I guess in
the early or mid-1990s-that Canada was starting to fall behind
considerably in terms of output, productivity, training,
regeneration and all that. Do you think, based on his and other
similar impressions, that we've made some pretty significant
changes from the status quo that he described, say, back in the
late 1980s or early 1990s in terms of some of these issues, and
that the whole forestry industry, pulp and paper, is a little
better in terms of being competitive, aside from the free trade
issues?
Mr
Thornton: I'll give you my perspective from Ontario and
then I'll give you a bit of a national perspective.
My perspective from Ontario
is, with respect to our ability to regenerate the areas you've
mentioned, that probably the single most significant improvement
that has been made in that respect was when Ontario established
trust funds to provide dedicated money to regenerate the forest.
That was a tremendous accomplishment. At the time there were
reasons to be very concerned with the government's ability to
continue to pay directly for the areas that were being harvested,
to pay for that renewal. With the advent of public trust funds,
it set in motion a means by which monies were set aside
immediately upon harvesting the trees to regenerate that site.
That was a tremendous improvement, one now that other
jurisdictions in Canada have tried to adopt.
If you look also at where
Ontario is in terms of its forest management planning process,
which is the result of a very comprehensive environmental
assessment that took place six years ago now, we are, by far,
ahead of many other jurisdictions in terms of our involvement of
the public in being able to look at what's being planned for the
forest, to comment on forest management plans, and the
requirements of the industry to make this information available
to the public. On the integrated nature of our forest management
planning, we're really in a leadership position here in Ontario.
Again, other jurisdictions are coming to us to get advice on new
legislation to mimic the Crown Forest Sustainability Act, for
example.
If I elevate my comments
now to the national level and try to compare where Canada is on
the international scene, that perspective is often clouded by one
province, and that's British Columbia. British Columbia, for
example, is by far the largest province in terms of exporting
forest products nationally and internationally. The international
marketplace tends to focus on BC, with the successes and problems
it has had, and typifies Canada from a BC perspective. When we
are in national and international venues, typically the
impression that people have of Canada is a BC-based impression
when it comes to forestry, and provinces like Ontario are not as
visible. That has been a problem.
The BC forest industry is
going through some turmoil now for a variety of reasons, and
sometimes that image being projected by the one province isn't as
positive as we would like it to be if it were Ontario being
projected.
Mr
Hastings: I take it, now that you've moved to northern
development, that you'll be involved in the renegotiations,
indirectly at least, on the pulp and paper wood products issue
under the FTA, or you'll give advice to the federal group in
terms of how the Americans are again challenging us on stumpage
fees as a so-called subsidy?
Mr
Thornton: I'll have some input there. Most of that input
comes from the Ministry of Natural Resources because of the
emphasis on MNR's stumpage system, the system of valuing crown
timber. But the lead ministry within the Ontario government is
actually the Ministry of Economic Development and Trade and the
lead jurisdiction on international trade is the federal
government, not the provincial.
Mr
Hastings: Foreign Affairs. Why are we so timid in terms
of dealing with the Americans on this issue? Don't they have
stumpage fees from their state forests? Don't they have the equivalent of
the subsidy, whatever you want to call it, in the way that
companies in Washington or Oregon or Maine operate? Different
name, same-
Mr
Thornton: No.
Mr
Hastings: Or is it all privately operated?
Mr
Thornton: First of all, the vast majority of the timber
comes from private lands in the US. Where it does come from state
or federal lands, often what's employed is a bidding system for
that timber. So blocks of timber will be put up for sale and
companies can bid a price for it and the successful bidder gets
the wood. It's a very different system than we have in Ontario,
where we allocate timber to licensees and make sure they have all
those management/planning responsibilities associated with that
timber licence. It's a fundamentally different system, and that
has given rise to this problem in comparing the two
countries.
Mr
Hastings: You may think this is totally out of the
purview of the auditor's report in terms of the issues we've
dealt with. If you don't have a customer to sell your wood
products to, then it becomes somewhat academic as to how you're
going to find new markets, how you're going to have these trusts
operate, whether we have sufficient fiscal accountability between
the players in the actual operating accounts of either trust,
that sort of thing, and all the refinements the auditor has
recommended that you're trying to comply with. Is that not a fair
observation or assessment to make? Where would we sell our wood?
To ourselves? We're a very small market.
Mr
Thornton: Your point is well taken. We have a heavy
focus on our export market. Probably 80% to 90% of Ontario's
forest products is exported and that's why the expiry of this
softwood lumber agreement is one of critical importance to
Ontario, particularly northern Ontario.
Mr
Hastings: How would it affect northern Ontario in terms
of the types of products that are sold into the American market
if we end up losing the definition? It has to go to a free trade
panel, I guess, as to how things get sold into that market in
terms of the subsidy issue.
Mr
Thornton: We need to remind ourselves that this
agreement with the US deals only with softwood lumber. So it
doesn't deal with pulp and paper, it doesn't deal with plywood
and a host of other products.
Mr
Hastings: Veneer?
Mr
Thornton: It doesn't deal with veneer, no. Only softwood
lumber. So in those communities where there is a softwood lumber
sawmill, it would have a very significant impact if it had the
effect of restricting the level of exports to the US, or the
price, the countervailing duty that could result here. That
would, in turn, increase the cost of shipping that wood to the
US.
The Chair:
Could I just ask a question as a clarification to that? I know we
have a licensing system in Ontario, but do companies not bid for
licences in various areas, or how is that determined?
1440
Mr
Thornton: No, there isn't a bidding system in terms of a
price. In some instances where we have surplus volumes of crown
timber such that it could sustain a new mill, for example, we do
have a competitive process where companies will give to us a
proposal to build a mill that uses that wood supply, and we
choose from among those.
The Chair:
But the actual licence fees aren't determined as a result of that
bidding process?
Mr
Thornton: No. That's correct.
Mrs Munro:
I just have a question, since we've spent so much time on the
issue of compliance. I wondered whether there's a grey area in
terms of when issues of compliance become issues of
enforcement.
Mr
Thornton: Every compliance activity, if it identifies an
instance of non-compliance, would lead to enforcement in some
fashion. As I say, the spectrum of enforcement can range from as
little as a warning letter to as severe as a major fine or even a
cancellation of a licence. So the act gives us a broad array of
tools to use on the enforcement side, but only, obviously, in
instances of non-compliance.
Mrs Munro:
Will the manual that you mentioned refer to those kinds of issues
as well?
Mr
Thornton: It will. It will outline information
requirements that the company is to provide to us. If we have an
example where some of the information being requested here is not
forthcoming from a company for whatever reason, now we have a
regulatory authority to say, "If you don't provide us with the
information, we can take some dramatic action here in terms of a
fine or what have you."
Mrs Munro:
That's really where my question was going. It seems to me that's
really an important piece, to be able to go from the one stage to
the other in a way that is understood and, might I say, clear-cut
for the parties, both the government and the licensees.
Mr
Thornton: It's a good point. The whole purpose of a
compliance program is one of putting in place preventive
measures. We're not in the business simply to bring in revenue
here where we find instances of non-compliance. The purpose of
any compliance program, whether it's in forestry or in any other
field, is to make sure that you continuously improve your
activities so you have fewer and fewer instances of
non-compliance. However, when you do have instances of
non-compliance, you need to go the next step of enforcement, and
that's what we do.
Mr
Hampton: I've been dying to ask this question all
afternoon. The auditor starts out his report by saying that MNR
does not have sufficient information to adequately meet its
obligations to report annually on the management of Ontario's
crown forests.
The key to all this, as I
understand it, is that the forest management plan is really the
sustainability plan. Let's call it what it is. It sets out what
has to be done to sustain a supply of timber; it sets out what
has to be done to sustain fish and wildlife habitat; it sets out
what has to be done to sustain tourism opportunities, what has to
be done to sustain forest renewal, the next forest. Basically,
it sets out what has
to be done to sustain the ecological integrity. It says this is
what must be done.
When the auditor says, "All
of the work that must be done after that to ensure that the plan
is being met," I take it as saying it's not being done, or it's
not being done timely enough, such that reports that are supposed
to be done annually are three or four years late, such that when
audits are done in terms of forest renewal, one quarter of the
audits couldn't really determine if the next forest was going to
be sustained. I don't see any information here about ecological
integrity, sustaining the ecological integrity, which probably
gives me the most worry, because I don't think you're there yet.
I'll make that assertion.
In view of all this
information that is necessary to tell you that you're living up
to your own sustainability plan but the information isn't there,
doesn't that give you real heartburn? I mean, how can you really
tell if the sustainability plan is being met if all of this
information that is integral to that isn't available? You can't
produce it for the auditor, you can't produce it for the
Legislature. In some cases, when it has been produced, it's full
of holes. Doesn't that give you some heartburn? In 1994 the act
was passed, which said, "This is how it's going to happen now:
you're going to put forward a sustainability plan that's going to
deal with all these issues, and then by the reporting mechanism
you're going to show that you're meeting the sustainability
plan."
We're now in 2001, year
seven. If I may, I think you're falling further behind in terms
of the kinds of information that must be produced to tell you if
you're doing a good job or not.
Mr
Thornton: There's no question about it that we haven't
done as good a job as we should in terms of the reporting. That's
clearly the case the auditor has made, and we haven't for a
moment objected to that. We think that is the case. We think we
do have to provide more timely annual reports, and we've provided
you here with evidence that that information is now coming
forward in a timely fashion.
We can't rest on our
laurels, I agree. I think we need to improve that. We also need
to focus on what's in store for the future in terms of our
reporting on the very points that you raised, the broader matters
of ecological sustainability. I would draw your attention to the
fact that there is a five-year state-of-the-forest report that is
under preparation now-it's scheduled to be completed in December
of this year-that will draw on some of those broad indicators of
sustainability, the indicators that the Canadian Council of
Forest Ministers, for example, has endorsed and has brought forth
for many years in the framework to be reported by the
provinces.
I believe that report will
be a watershed report. That is one that will give us, with all
its warts and wrinkles because of the difficulty in reporting on
some of those indicators, by far the best measure of the
sustainability issues that you raised, because it is much
broader, it is more comprehensive and looks at the suite of
indicators-fish and wildlife, the forestry-
Interjection: Bird habitat.
Mr
Thornton: -bird habitat, all of those things, to the
degree possible will be reported.
If I may, I'll say this:
we've had the chance to deal with other jurisdictions on this
very issue, because all the provinces are trying to report this
matter, because we want to be seen in the international
marketplace as managing the forests well. Ontario will probably
be in the lead there. We have been assisting not only the federal
government but some of our provincial colleagues in preparing
that report. I also know that it will not live up to everyone's
expectations of perfect information on that resource, but it will
be the first time there is a comprehensive picture of the state
of our forests in Ontario. That's something, as you point out,
that is long overdue, and we look forward to discussing that with
you in December.
Ms Martel:
I want to follow up on that, because I want to reinforce what we
don't have before us which was required by the act. For example,
the report on the state of the forest is supposed to be every
five years. The act was passed in December 1994. We should have
had that December 1999. We will have that report two years later
than the date that was required in the act. We have our forest
management reports, which are supposed to be tabled annually by
law, and the most recent ones that were tabled were for 1996-97.
We've got the trust fund reports, two different sets, one for
forest renewal, one for forestry futures, that are also by law
supposed to be tabled annually as a requirement of the act, and
the most recent ones were tabled year ending March 1997.
The information manual,
which was a key element of the act, still hasn't been passed by
regulation six and a half years after the act was passed. It was
a key component, and a number of other things flow from it, for
example, inventory. With respect to inventory, the act also said
that all of those units had to be updated, and the auditor, to
his credit, pointed out that MNR had made a significant effort in
that since the act was passed, but there are still 11 units where
that is not done. What bothered me the most was to read that in
two of the units where that information was recently done MNR
staff themselves were questioning the validity of the inventory
that was just recently done. What does that say about some of the
others, or the 11 that still aren't done?
1450
My concern is that we are
far past, I believe, the deadlines with which MNR should have
complied, and I think that has a lot to do with-it's probably
entirely due to-the huge, significant cuts that the ministry has
sustained, particularly in 1996. I just don't think you folks
have had the staff to do the job. What worries me is, what are
the long-term effects for our forests, which belong to all of us,
because of that? You are way behind where you should have been.
You might say that's a better position than the other provinces;
great, but I'm talking about Ontario, and we are way, way behind
where we should have been to produce some of these really
important documents to show us where we need to be.
I look at your staff cuts already and I wonder
if it's going to get any better, because I'm not convinced that
you can still deliver on some of this stuff any more, given the
cuts to your ministry. I don't blame you for that, but I think
that's the reality.
You can respond if you want
as to why it is that six years later we still don't have some of
these things in place.
Mr
Thornton: I'll just give you a quick comment. First of
all, you're exactly right: we are late, and we would be foolhardy
to suggest otherwise. This information should have been provided
in a more timely fashion, and it has not been. My message to you
here today is that we are very focused on correcting that.
Have the reductions
contributed to that? To some degree, of course. It's
unquestionable that they would have. But what you have to look at
as well is that during that period of transition, the work that
we had been doing is now expected to be done in many instances by
the forest companies. I don't care if you're a public sector
agency or a private sector company: when you go through a period
of transition like that, things get bumpy, and that's what the
auditor has picked up on. We're focused on making it better.
We're focused on doing the best we can with the resources we
have. I can't guarantee you that the future won't have some bumps
in it as well, but we're doing the best with what we have, and I
still maintain that at the end of all this we will continue to be
a provincial leader. Ontario will continue to be looked upon in
Canada as one of the leading jurisdictions here both in our
legislative framework and in our actual results of managing the
forests.
Ms Martel:
Can I ask you, Mr Thornton, do you think you have the staff to
deliver on the requirements of the act and the requirements,
terms and conditions of the timber class EA?
Mr
Thornton: I think we do, with the full co-operation of
the forest industry.
Ms Martel:
So you've got to have their full co-operation, you need their
money and you need to know that they are working in the best
interests of the public too. If we look at some of those
compliance numbers, that gives us some cause for concern over
here.
Mr
Thornton: It is a partnership that we're in. We require
information from them to give you the kind of information you're
asking for. It's not a case any longer of us going to our file
and we get this. Most of these companies are very co-operative.
Now we have an additional regulatory instrument at our disposal,
that forest information manual, to make sure that if we don't get
it, we can force companies to provide it. But it is an
environment now where we have to work with industry to meet our
expectations, whether it be under the Crown Forest Sustainability
Act or the timber class EA.
Mr
Hampton: I want to ask a question about the future. I
think we all know that there is a wood supply gap coming. The
wood supply gap coming across northern Ontario is going to hit, I
think, everywhere within the next 20 years. I think it's going to
hit some mills in the next five years.
As far as I can tell, you
haven't figured out how to grow wood in Lake Superior yet.
There's no wood in, for example, Minnesota; there's no wood in
Quebec-Quebec keeps trying to get our wood; there's no wood in
Manitoba. The only way you can go is north, into First Nations
territory. So there's another whole element of sustainability
here, and that is, what kind of relationships is the Ministry of
Natural Resources building with First Nations north of 51? I
suspect that's going to be your new job at northern development
and mines, and you'd better get at it pretty quickly, in my view,
because if MNR doesn't get busy on this very quickly and if MNR
doesn't do it the right way, I suspect most of what is presented
here is going to be full of holes within five years. So I'd like
to ask that question: where are you at?
Mr
Willick: There are some things I want to address before
we talk about the area north of the area of the undertaking. We
know that there is a dip in the allowable cut coming; that has
been forecasted for some time. Part of the management process is
to forecast that out. Some parts of the province will be worse
than other parts of the province; we know that too. But we're
already working on some things to correct that. We have done some
things to encourage the companies to use the tops that previously
had been left in the bush. That helps for the pulping
process.
Mr
Hampton: I'm going to send you a videotape that's going
to refute some of that, but you and I can talk about that
later.
Mr
Willick: We're coming to an understanding with the
forest industry about stands that previously had been bypassed
because they have not, till now, been suitable. We're talking at
great length about intensive forest management that only includes
activities that are allowed under the environmental authority
that we have now, not new activities but more intensive
management, monitoring and planning growth and yield and so on.
All those things are going to grow the fibre supply, the wood
basket, bigger. We're also making every effort to get the right
tree to the right mill, which helps us.
The other place where we're
going to realize some fibre, possibly, is in the area north of
the area of the undertaking. You know that we've had some early
discussions with some of the communities up in the area where we
currently do not have authority to practise forestry. The First
Nations have come to us, expressing interest. This is not an
industry-driven process. While there's a dialogue between some of
the industry members and the First Nations, we view it as the
First Nations driving the thing, because we recognize that we
need a different relationship than we've had in the past in the
area where we currently practise forestry. Those discussions are
ongoing; they take time. But the first thing we have to do is
some kind of a land-use plan for that area that involves
community-based discussions so that we can avoid having the
conflicts over land use that we had south of that line. We're a
ways from harvesting trees and running them through a mill in the
north.
Mr Hampton: Do you care to
comment on how long this process is going to take and the
direction this process is going to take?
Mr
Willick: How long it will take will depend on the
continued interest of the First Nations communities. This is not
something the government can dictate. We can't say that it's
going to take five years and we'll be done. I don't know how long
it will take, but a land-use planning process will take some
years, and then you go to discussions about forest management
planning after that.
The Chair:
OK. Does anyone else have any questions?
Mr
Hastings: Yes, I have a question for Mr Thornton. Mr
Thornton, it has been mentioned that you're behind in the
information gap when you go from an old model, which was
primarily public sector dominant, to one which is more
self-management in terms of having a lot of different players
trying to get their hands on the driving wheel. Maybe there's
only one vehicle. There's a bit of shouldering and elbowing going
on among the players in terms of their interest, because
everything doesn't meld perfectly into a nice, harmonized
arrangement. That's why you end up having an information gap, to
some extent.
In a self-managed model or
whatever arrangement, wouldn't it be better for quality
decision-making that you have benchmarks, indicators, performance
measurements, credentials-you're talking about the environmental
groups that are getting involved in the industry, the OFIA being
much more externally focused on relations with the public in its
broadest sense-isn't it better to have that kind of a world of
indicators than one where we didn't? Not that we didn't have any,
but we had less sophisticated information 10 or 20 years ago in
the management of the forest industry than we do today. Isn't
that what Doug Fisher was talking about, to some extent, in terms
of when you transition through the old regime, you're going to
end up having some pretty difficult issues to get through?
Mr
Thornton: I guess it goes, really, to the question of
whether or not some of the efforts we have in assessing the
performance of companies are sufficient. I go back to my earlier
point. Now there are internationally recognized agencies that are
in the business of certifying whether or not forests are
sustainably managed. One of them is the Canadian Standards
Association; another is the International Standards Organization,
ISO. You've probably heard of that. The third one, the one
supported largely by the environmental community, is the Forest
Stewardship Council. Regardless of which of those three
certification systems you ascribe to, they are all being seen in
the marketplace as a credible, independent assessment of the
performance of a company.
As proud as we are of the
Crown Forest Sustainability Act and the independent forest audits
and the various other regulatory mechanisms we have in Ontario,
they are rarely recognized beyond our borders by clients in
Europe or the United States, for example.
Companies are aspiring to
that. They are very focused on being audited under those
international certification systems that I described. Ontario
companies have done very well in that respect. They've done well
because we feel they're building on a regulatory environment in
Ontario that helps them well down the path of being certified on
the international scene. You referenced benchmarks and standards
and so on, and you'll see that those certification systems in
fact do rely on management systems to report consistently on the
performance of a company. That's a move in the right direction,
and it's a move that's being dictated by the marketplace and not
by government.
The Chair:
Anyone else? Thank you very much for attending here today, Deputy
and gentlemen.
We stand adjourned until 10
o'clock on Monday morning.
