CROWN FOREST SUSTAINABILITY ACT, 1994 / LOI DE 1994 SUR LA DURABILITÉ DES FORÊTS DE LA COURONNE
CONTENTS
Tuesday 23 August 1994
Crown Forest Sustainability Act, 1994, Bill 171, Mr Hampton / Loi de 1994 sur la durabilité des forêts
de la Couronne, projet de loi 171, M. Hampton
IWA-Canada, Local 2693
Fred Miron, IWA eastern national vice-president
Wilf McIntyre, president, Local 2693
Avenor Inc
Murray Ferguson, chief forester
Firesteel Contractors Ltd
Dan Macsemchuk, vice-president
Marcri Logging Inc
Mario Letourneau, owner and president
Barry Angel, manager, forestry operations
Technologic Timber Ltd
Milan Mrakic, owner
Geoff Pattyson, forestry consultant
Iain Angus
STANDING COMMITTEE ON GENERAL GOVERNMENT
*Chair / Président: Brown, Michael A. (Algoma-Manitoulin L)
*Vice-Chair / Vice-Président: Daigeler, Hans (Nepean L)
Arnott, Ted (Wellington PC)
*Dadamo, George (Windsor-Sandwich ND)
Grandmaître, Bernard (Ottawa East/-Est L)
Johnson, David (Don Mills PC)
*Mammoliti, George (Yorkview ND)
Mills, Gordon (Durham East/-Est ND)
Morrow, Mark (Wentworth East/-Est ND)
Sorbara, Gregory S. (York Centre L)
Wessenger, Paul (Simcoe Centre ND)
White, Drummond (Durham Centre ND)
*In attendance / présents
Substitutions present / Membres remplaçants présents:
Bisson, Gilles (Cochrane South/-Sud ND) for Mr Wessenger
Carr, Gary (Oakville South/-Sud PC) for Mr Arnott
Hodgson, Chris (Victoria-Haliburton PC) for Mr David Johnson
MacKinnon, Ellen (Lambton ND) for Mr White
Miclash, Frank (Kenora L) for Mr Sorbara
Ramsay, David (Timiskaming L) for Mr Grandmaître
Wilson, Gary, (Kingston and The Islands/Kingston et Les Îles ND) for Mr Mills
Wood, Len (Cochrane North/-Nord ND) for Mr Morrow
Also taking part / Autres participants et participantes:
Wood, Len, parliamentary assistant to Minister of Natural Resources
Clerk / Greffier: Carrozza, Franco
Staff / Personnel: Yeager, Lewis, research officer, Legislative Research Service
The committee met at 1001 in the Valhalla Inn, Thunder Bay.
CROWN FOREST SUSTAINABILITY ACT, 1994 / LOI DE 1994 SUR LA DURABILITÉ DES FORÊTS DE LA COURONNE
Consideration of Bill 171, An Act to revise the Crown Timber Act to provide for the sustainability of Crown Forests in Ontario / Projet de loi 171, Loi révisant la Loi sur le bois de la Couronne en vue de prévoir la durabilité des forêts de la Couronne en Ontario.
The Vice-Chair (Mr Hans Daigeler): Please take your seats. The standing committee on general government is now in session and will continue its public hearings on Bill 171, An Act to revise the Crown Timber Act to provide for the sustainability of Crown Forests in Ontario.
IWA-CANADA, LOCAL 2693
The Vice-Chair: The first presenter this morning is the IWA-Canada, Local 2693. According to the list that I have here, it's Mr McIntyre and Mr Miron. Would you please have a seat and introduce yourselves. You will have half an hour, and if you'd please leave some time for questions and answers, it would be appreciated. Just give the copy to the clerk; he'll distribute it.
Mr Fred Miron: I appreciate the opportunity to appear before the committee. Half an hour sounds like a lot of time compared to sometimes at the CBC: "Tell us all you know about forestry and make it interesting. You have two minutes."
The Vice-Chair: Please mention your name and the name of your group. We want to help Hansard.
Mr Miron: Okay. I'm Fred Miron and I'm the eastern national vice-president for IWA-Canada, the industry that represents the majority of wood workers in different provinces. I grew up in a small forestry and mining community -- my father was a timber contractor -- so I've had the opportunity of observing forestry operations and forestry from a very young age. I've also worked in the industry, and for the last 29 years I have represented workers in the industry.
Beside me is Wilf McIntyre. Wilf is president of Local 2693, the Thunder Bay local. Wilf has worked in the industry all of his working life, and for the last 10 years has represented workers in the industry.
In introduction, IWA-Canada is a national union that represents workers in six provinces. The majority work in forestry and forestry-related industries, from the standing tree to the finished product.
As a major union in the forest industries, we recognize our social responsibility to practise and support sustainable forestry. We take considerable pride in the fact that our forest policy begins with the words:
"IWA-Canada commits itself to the establishment and maintenance of fully sustainable forestry. Forestry operations must leave to future generations of Canadians a rich endowment of fish and wildlife, soils capable of supporting varied ecosystems and forests managed so as to provide many more jobs and the wide range of the forest recreations that Canadians value if we are to achieve sustainable development."
We believe Bill 171 can accomplish this, and we commend and support the minister in this initiative. However, we have some concerns which we wish to bring to the attention of the committee.
This legislation calls for the involvement and participation of the public. In order to receive broad public involvement and participation, we believe it must be written in language that working people understand.
We recommend that the ministry consider making this act available in the form of a guide written in language the public can readily understand. I've seen copies of the manuals and the prescriptions, and they're about six inches high and 10 1/2 pounds. The act itself, of course, is written in legal language, and if we really want public participation, we have to understand what we're talking about, not only certain interests. Make it available so that they can see it. Now, for legal recourse, of course, you can go right to the act, but we highly recommend it.
On page 3, subsection 2(1), the definition of "forest operations" is not clear. It seems to imply that the act will only apply to the forest industry. We recommend that this definition be redrafted to include all those enterprises with direct economic interests in forest resources and crown lands. We're talking of mining, tourism and the other economic interests that are out there in the forest.
On page 4, 2(1), the definition of "forest processing facility" is all-encompassing. It obviously includes mobile chippers, and could be considered to include even short wood harvesters.
On page 15, 50, under part VI, there are specific requirements for a licence for each facility. On page 27, 67(1)21, under part VIII, it states that regulations can impose conditions as to location, mechanical efficiency and operating methods of a forest processing facility. While the general intent is understood, it appears that these could be restrictive and negative for both labour and industry when applied to mobile equipment in woods operations. We agree that mobile equipment should be licensed, but as a separate category. We recommend redrafting to separate mobile and stationary.
On page 5, subsection 7(3), plan to be certified by a professional forester, and page 6, 13(2), a forest operations prescription be certified by a professional forester: We recommend redrafting to provide for the plan and/or prescriptions to be prepared and certified by a registered professional forester. We want to ensure that it's prepared. He or she may have help, but it's done under their supervision and not just a rubber-stamped kind of a thing. We want to ensure that this isn't done; that they actually have the responsibility.
On page 6, 12, "The minister may establish local citizens' committees": We believe the creation of local citizens' committees in communities that depend on forests for their economic stability is a key piece of this legislation and will certainly help resolve land use conflicts. We recommend changing "may" to "shall." We believe it's essential that we take advantage of the local knowledge and experience and the concept of managing our forests from the bottom up instead of from the top down.
Part III, forest resource licences, page 9, subsection 26(2): This section is capable of various interpretations. In effect, it states that a minister could issue any number of one-year licences for 25 hectares each that would be in excess of the planned sustainable amount. We recommend that this section be deleted.
Page 11, subsection 35(2) and page 26, 67(1)13: These two sections deal with the resolution of disputes in accordance with procedures to be specified in the regulations.
We recommend that the ministry consider using the dispute resolution procedures used by the Ministry of Labour -- conciliation, mediation -- and, failing settlement between the parties, that the matter be referred to a third party for binding arbitration. If any of the licensed area is licensed to an employer who has a collective agreement with a union that represents persons who work in a licensed area, the union shall receive prior notification of the contemplated change and have the right to make representation. Our jobs would be involved in it.
General: Throughout the bill, reference is made to specifics that will appear in manuals and regulations. We realize that the policy framework for forest sustainability provides the guiding vision for them. However, we have little firm basis at this time for adequately evaluating the impacts of the bill as it relates to our collective agreements and therefore our jobs. All sections dealing with licences have only increased our uncertainty and apprehension regarding their status, particularly as it relates to tenure and reductions.
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Subsection 31(1) allows the minister to amend the licence in accordance with the regulations. Subsection 32(4) provides for what could be an automatic reduction of 5% for section 23 licence holders if the licence is transferred, assigned, changed or otherwise disposed of. Subsection 35(1) allows the granting of a forest resource licence on an area covered by an existing licence. Any of these situations could result in a shortage for the prime licensee.
Tenure in the form of an assured wood supply is a requirement for continued investment by the financial institutions and a clear responsibility and incentive to the industry to manage the resource on a sustainable and environmentally sound basis.
Our collective agreements and our members' livelihoods could be drastically affected by any change in licensing and tenure.
We recommend that all sections dealing with licences be redrafted to clarify the types of licences, their term -- we recommend for licences issued under section 23 the term to be the same as the present FMAs -- and responsibilities with respect to whether they are only timber harvesting licences -- subsection 22(1), supply agreements -- or whether they are licences that carry the responsibility for managing crown forests for sustainable forest resources according to clearly defined objectives.
In any event, all licences should specify the requirements and obligations specified under subsection 23(2). If a change is contemplated and the licensed area is licensed to an employer who has a collective agreement with a union that represents persons who work in the licensed area, the union shall receive prior notification and have the right to make representations.
Pricing: At the present time, crown timber charges, stumpage fees, vary depending on the type of licence issued. We recommend that the holders of any forest resource harvesting licence issued pursuant to subsections 22(1), 23(1) and 24(1) shall pay the same amount of forest resource charges regardless of the type of licence issued except for destination.
Conclusion: Once again, we reiterate that we support the principles and objectives of this legislation. We hope our suggestions and recommendations will assist you in making some improvements to the legislation that we feel is necessary without destroying the true intent of the bill.
That concludes our presentation.
The Vice-Chair: Thank you very much. We certainly appreciate the thought that has gone into the presentation of your brief. We will begin the rotation with the Liberal caucus; approximately five minutes each.
Mr Frank Miclash (Kenora): To go back to your page 3 where you've indicated, "The minister may establish local citizens' committees" -- and the word should be changed to "shall" establish local citizens' committees: You've sort of touched on a bit of what you saw a local citizens' committee as being. I'm just wondering if you could expand on that in terms of what you see as the membership and possibly the mandate of such committees.
Mr Miron: Well, the mandate would be strictly, as I see it, as an advisory role and under provincial guidelines. That is, the provincial interest would have to be recognized. Sometimes local committees have a way of looking at it only through local jobs, for instance; if a certain mill closes, things like that. You will find that when the jobs are affected they think differently. So the provincial interest -- when I say that, the interest of all the people in Ontario -- has to be reckoned with. In the local committees, they operate as advisory committees.
The local knowledge is there and experience; certainly a lifetime of it is available in these communities. I had an experience of it one time in a municipality where they were putting in a lift plant for sewerage, and the local miners had said to me, "That's impossible; that's all muskeg," and when I brought this up at council I was told that they had a company in, the expertise in, and they'd drilled holes and they had the soil and samples and the whole thing and it was fine etc. Lo and behold, what happened when they put it in? It sank three feet in the first week it was constructed. So the local knowledge was there, and I think we should be taking advantage of that.
The makeup of these committees, I would think, would be the environmental groups, tourist operators, everybody who has an interest in that area. But they would be, of course, local people who have an interest in it. I have no objection to independents, company officials, everybody who has an interest in it, including labour.
Mr Michael A. Brown (Algoma-Manitoulin): Thank you for your presentation. We always appreciate definite suggestions as to which sections need to be amended. I'm looking at your pricing paragraph. I'm interested in that and in understanding why you're making those suggestions.
Mr Miron: Well, natural resources belong to the public and I believe they should all be the same price. Under the system that we have right now, there's quite a variation. For instance, district cutting licences: DCLs today are about $5 a cubic metre. The FMAs and order-in-council licences, when destined for a sawmill for instance, right now are $11.37. That's about $6 a cunit difference. We think under the new act it should all even out and it should be the same, and the large companies shouldn't be able to take advantage of the independent operator, because they can read and they know what the prices are, and they take advantage of that cost. We have to remember that the independent operators, as I call them, the vast majority of them do not have the means and they don't process it themselves. They sell it to someone who has a processing facility, and the owner of the processing facility sets the price and takes advantage of any variation in the price. This is what I mean.
Presently there's something like 800,000 cunits produced under DCLs, and under that $6 difference we're talking about $5 million annually. I think our taxpayers shouldn't have to subsidize. We should receive a fair return for forest resources.
Mr Brown: Thank you. That also brings up the question, which you don't mention in your brief, and I know you've been very active with, and you and your organization should be commended for, your work with the industry on the code of practice that the industry put out a year or a year and a half ago. The issue of best end use has appeared before this committee on numerous occasions, and I wondered what your views are on that issue and how we might best address it.
Mr Miron: Well, the best end use or value added I think is essential also, but when we talk on value added, we mean adding something to the product that is already produced and not necessarily saying that "value added may mean." Some of them have that interpretation of value added, that if we put it through a sawmill, we can get per cubic metre $100, and if we put it through a pulp mill we can get $200. So that's value added, and that isn't what we're talking about when we're talking value added. We mean adding something to the product. It may be in the form of a paint; it may be in the form of other matters. You also had another -- you're talking about best end use --
Mr Brown: Yes.
Mr Miron: -- and best end use, we've always stipulated that the larger sawlogs can go into peelers or, for instance, go to a sawmill, and then returned to the pulp mill in the form of chips. There should be assignments made. There should be assignments and there should be tradeoffs. When we see trucks crossing paths, one going east and one going west, it's adding to the cost. It just doesn't make sense to us in that manner. We think we can make much better use of it. This is one of the concerns we have, one might say, with the chippers. If they convert completely to chippers, what happens to our sawlogs?
In the chipping operation, for instance, the log goes directly. There's a feller-buncher out there that fells the tree and then the skidder operator brings it directly either to the landing or to the chipper, and then it's processed. Under the harvesting operations, whether it be the skidders or other matters, it is delimbed by a delimber, which is one job. It is then bucked by a slasher operator into lengths, which is another job. It is then loaded by a machine on to a truck, which is another job. Those jobs, when a chipper is there, are all eliminated because it goes directly. The chipper now delimbs, debarks and blows it right on, which means loading it, and if we say that best end use means assigning sawlogs to a sawmill, you'd have some opposition. I know from industry there is some opposition that we would have to keep all this other equipment just for sawlogs. They wouldn't need it otherwise for their own purposes.
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So it does give us some concern, and there has to be some of the proper assignment of sawlogs. We believe that the company that holds the licence should be responsible for separating that and sending it to a sawmill.
Mr Chris Hodgson (Victoria-Haliburton): Thank you for your presentation. I believe you're the first union representatives that we've had appear before the committee, and we're very appreciative of that. We've had the concern that people haven't been given enough time to analyse the manuals and all the regulations in detail to know how they will impact fully. I'm sure you'll send in more comments if you come across them as you mention on page 6 of your report.
One of the disadvantages of going second is that sometimes your questions get taken, but I'd like to go back to your answer to Mr Brown about the pricing. I've got a couple of concerns; they're just questions, really. On the DCLs, you mentioned the difference. We've heard quite a bit about this one, or I have in my area. Why is it set at $5 now? Why is there a price differential?
Mr Miron: You'd have to ask somebody other than me.
Mr Hodgson: No, I can ask their answer later. I want to know your opinion. If you want to make it the same, you must have thought of -- you don't think that will have any impact, or --
Mr Miron: No, I don't. I think that our natural resources, under the new legislation, would certainly increase and have increased, and we've heard a lot about it. I do believe that various companies have been trying to take advantage of any decrease in cost in DCLs to carry a different rate. DCLs may be out, but whatever licence, if it carries a different rate, I'm sure they would be taking advantage of it.
It's a problem all over the place where the taxpayer has to subsidize. They talk about it being small businesses. Well, it isn't small businesses because in a lot of cases it's large businesses and in some instances there is more than one operator who has a number of DCL licences; he may have them under different names or under the same name, but a number of them simultaneously. When they are out harvesting, the vast majority of them, at least in northern Ontario, are all suppliers to the major pulp-and-paper companies or the major sawmills; they're all large suppliers. Certainly, the managers of those operations and the CEOs can read. They know that if it's less and if it's $6, they're going to take advantage of it.
Mr Hodgson: So they just cut the price $6 accordingly.
Mr Miron: Yes. Then they say to the union that your workers have to be competitive -- well, we can be competitive in terms of production and other things, but certainly, how do you become competitive when, first of all, most of them are not covered by WCB through themselves, 13%, 15%? Then they get a break on the stumpage fees paid.
We have a large pulp and paper company paying for their employees who are unionized, $11 for instance, and purchase wood $6 in stumpage less the WCB. They can work different hours and it's not competitive. We believe that any resource licence that's issued should carry the same price. There's no rationale for it being different, and we believe and we know that the independents can produce it cheaper regardless, and the companies are going to take advantage of it anyway. So all we are doing, if we do increase it, it carries all the same, because it still will be a cheaper product. After all, unions are there to represent workers and to have top wages and conditions.
Mr Hodgson: Will that help the wages, you think, of the workers?
Mr Miron: I don't think it would make any difference. The companies would have to add that on.
Mr Hodgson: Would it make the companies less competitive on the international market if they have to pay more for their wood?
Mr Miron: If that's the case, let's lower it all.
Mr Hodgson: Get a net level playing field, is what you're saying.
Just a second question, if I can, Mr Chair, just a little one: You mentioned the trend that we have right across the province that companies are avoiding the payroll burden that's inflicted upon in this province and they're contracting out the work and that the workers and their families aren't even covered under workers' compensation any more. What's the trend in your industry? What's the numbers in your union and have you seen that happen, that companies will contract out the work to avoid the payroll burden?
Mr Miron: Oh, very definitely. They call it purchased wood. Sure; they have a contractor system, they have their own harvesting employees and they purchase wood. Now, purchased wood, of course, is always a chance because they set the price. I can give you 10 DCLs and unless you have a sawmill to process it into a product, a sawmill or some other manufacturing facility to process it, you're at the mercy of the mill owner. He tells you what it is -- he or she -- and this is the price and if you can't get it -- we find where they cut prices and do certain things, that the independent operator out there, in order to maintain his business, has to look around for ways to cut costs and keep his head above water and a lot of times, it's at the expense of our environment and our forests, sad to say.
Mr Len Wood (Cochrane North): I'm not going to get into the other areas of independent contractors and DCLs because I think it's been covered. In your introduction you're saying that you don't have a problem with the interpretation of sustainability as far as forestry's concerned because it's spelled out in your labour agreements or as a policy, when you're talking about wildlife, soils capable of supporting varied ecosystems. So, I just wanted to make that point, that your organization, which is represented right across Canada, has been using these words and the interpretation is there.
In the last paragraph on the introduction page, you're saying that you'd like to see a short version of the act available. How do you feel that we should distribute this? Through the education system, starting out in the schools to make sure that people are aware of how the crown land is managed, the province or the government of the day is the landlord of the forestry industry or the forest out there? How do you think that should be distributed throughout the --
Mr Miron: First of all, it's the act that I'm talking about and it should be written in plain language. I understand when lawyers get at it, nothing is impossible until you give it to lawyers sometimes. I suppose you have to create work.
The legal document has to be there, but the document itself can be -- licences, the types of licences, what it means and that -- written in language that working people understand and yes, distributed to schools; yes, to the ordinary worker; yes, to the people -- my members, for instance; members of other unions that are involved in the mills and others can take it. Without looking at the legal document that says to refer to section 2 of 3 of 10, it just says "This is what it means."
Mr Wood: You're talking about a simple booklet, 10 pages or whatever.
Mr Miron: Yes, just a guide, that would say it in simple language so that my daughter, for instance, who is in university, is not involved in forestry, will understand what the act means. I think they'd be a real benefit to people, and they would get a lot more involved.
Mr Wood: On page 3 you've mentioned that you recommend changing the word "may" to the word "shall." I understand that in the environmental assessment ruling that come down, which the government is bound by, the word "shall" is there, so there's no doubt that an amendment will have to be made to make sure that the wording of that complies with the act.
I guess you were here yesterday and you heard comments that independent loggers or DCLers cannot afford the cost of hiring a forester out there, and it was covered on the front page of the Thunder Bay newspaper today, that they would be at a disadvantage. I just want to know if you want to comment on that, Mr Miron.
Mr Miron: Well, I was very discouraged by that by saying that we don't need a management plan, just leave us alone and we'll do what we're doing, regardless of what the conditions are going to be of that forest out there. For our own membership that I represent we have to have a management plan. It's certainly required out there. We must manage the forest for its many diverse values and there must be a plan in the prescription; in other words, that we don't continue doing some of the things that we have done in the past.
As I say, I grew up in that area, my father was a timber contractor, and I can remember load after load coming and harvesting. Some places that are there now that are so barren, a grasshopper would have to pack lunch to get across.
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I can remember the arguments even with my father that God put the trees there and he will replace them and it doesn't matter how many, that God was having a hard time keeping up. Actually, the old thoughts were -- when I talked about replanting, I just knew.
You know, I'm an environmentalist. I think most of our members are because our jobs depend on it. But when we would talk about planting the trees, then the smart remarks would come back, such as, "Yes, we will plant them and then spray them with whisky so they'll grow up half cut and ready for us." Thank God, we're well past those days now.
The Vice-Chair: Mr Bisson, a brief question.
Mr Gilles Bisson (Cochrane South): It's on third-party licences. I'm not sure if I understood you correctly. You were saying we should not allow third-party licences?
Mr Miron: No, I didn't say that. That's the existing licence upon an existing licence. No, I just have some concerns. It says "the minister may" order in subsection 35(2). It may have an effect on our jobs if some of that is third-party or another licensee coming on or something else that we're not utilizing at the present time, as we have hardwoods. It may be, but we want the right to make representation to bring it out into the daylight and examine it, is what we're saying.
We have concerns on it, how it would apply. It may create a shortage of timber. What happens is, if there's a surplus, even with clawbacks or anything, what are we going to do with them? If it's a surplus and we claw it back and then give it to an independent operator, as was asked yesterday, all it means is it's a replacement of jobs. It's not creating any jobs because the timber supply, let's say, to that mill is all there. It's there whether it's union, part union, all union -- not all; there are none all -- but the timber supply is in place. You claw back and then create, and say you're creating with the independents. All you've done is remove it from somewhere else. You've taken somebody else's job. There are only X number of cords.
If the clawback or the removal of timber from a licence is for another mill, that's another matter, but to just take it back -- as I say, we have concerns on third-party because of those kinds of things we'll call X, how they affect our jobs. There's insurance, for instance, what's known as insurance when there's a surplus. You have to have a bit of a surplus. They call that insurance in the industry and what we call it is insurance against fires, natural disasters that may be out there that may destroy a portion of the timber, and that mill then is out of business unless you have that kind of insurance.
Different licences -- and all that will be determined -- need less insurance. For instance, in a black spruce swamp the fire hazard is lower than it would be in a jack pine stand like E.B. Eddy or somewhere like that so they need less of the insurance. But those things all fall in and we have concerns. Sometimes you don't have to claw back very much. You don't have to take very much from the limits that will put some operator out of business, a sawmill, for instance, 10 jobs or 10 part -- everybody says, "Oh, they only took 10,000 cords and it's only 10 jobs," and that has no -- there are 100 people. It might just be enough and that sawmill now becomes economically unviable. It just can't run a second shift so it's out of business just by taking a little portion.
Mr Bisson: Could I ask a question --
The Vice-Chair: Sorry, Mr Bisson, we're quite over the limit already.
Thank you very much for your presentation. We certainly appreciate your appearance before the committee. I'm sure you will follow the proceedings with interest. We have another week of hearings in Toronto next week and then clause-by-clause in the middle of September, the week of September 12. I think your comments will be helpful for that.
AVENOR INC
The Vice-Chair: The next presenter is Avenor Inc. I understand Mr Murray Ferguson and Mr Dave West are here to speak on behalf of Avenor.
Mr Murray Ferguson: Certainly. My name is Murray Ferguson. I'm the chief forester for Avenor Inc in Dryden woodlands. With me is David West, who is our management planning forester, also located in Dryden. Although we are both based in Dryden, our presentation will reflect our operations throughout northwestern Ontario, Avenor having operations both in Dryden and Thunder Bay. Dave and I are both registered professional foresters with considerable experience in timber management planning.
I will be making the presentation. However, because of Dave's familiarity with timber management planning and because Dave has recently been involved in the preparation of the Forest Management Planning Manual, he is along with me today to assist in answering any questions that may arise.
First, by way of introduction, Avenor Inc is an international forest products company formerly known as Canadian Pacific Forest Products. In Ontario, Avenor operates mill complexes in both Thunder Bay and Dryden. Our company and its predecessors have been operating mills in these locations for over 70 years. My family, for instance, has been steadily employed at the mill in Dryden since 1919. Products manufactured by Avenor include both softwood and hardwood market pulp. Also produced are newsprint in our Thunder Bay mill, white paper and stud lumber in Dryden.
Avenor holds eight major timber licences, five of which are forest management agreements beginning with the English River forest which was the second forest management agreement signed in Ontario back in 1980. Additionally, we hold licence on three company management units.
As well, Avenor relies heavily on wood produced by contractors working on crown management units and also receives a substantial portion of our fibre requirements in the form of chips produced by area sawmills.
Avenor directly employs 1,300 people in Dryden and 1,800 people in Thunder Bay. A total of 3,100 people receive their paycheques from Avenor in northwestern Ontario. Many other jobs can be linked directly to Avenor through our contractors and our suppliers.
We have a proven track record of solid working relationships with northwestern Ontario communities, native bands, the tourist industry, other forest products companies in the area, members of the local public and government agencies, such as the MNR. We believe we are a progressive company and we support the concept of sustainable resources and we welcome any changes to the Crown Timber Act. However, we do have a number of concerns.
Our first concern relates to the concept of timber as opposed to forest management. We as a company support the principle of sustainable forests. However, it appears that Bill 171 is attempting to include all renewable resources within the framework of an act written very much for timber. Merely substituting "forest" for "timber" is not sufficient to address all resources. We believe a more suitable approach to resource sustainability would be to draft umbrella legislation which would set the framework for relationships between a revised Crown Timber Act and legislation dealing with other renewable resources.
Our second concern deals with the time frame. We feel the time frame under which the new act is to be implemented is much too hurried. In the period of a few short months, this legislation is being pushed through.
This act deals with some very complex issues and has the potential for significant impacts on the forest industry. These impacts cannot be fully understood based on the information we have received to date. Some of the potential impacts include increased responsibility for data collection, studies, reports; increased costs; and a loss of tenure and an increase of uncertainty of our wood supply.
There is a great deal of uncertainty as to what our roles and responsibility will be and what rights of security we, as an industry, have on our licensed areas. Much of the detail associated with the new act will be laid out in the four manuals that are referred to in the act: the Forest Management Planning Manual, the Forest Information Manual, the Forest Operations and Silviculture Manual and the Scaling Manual. These manuals are being hastily drafted with limited opportunity for review by the industry or by anybody else. Considering the significance of these manuals, we suggest that the process be slowed down to provide adequate time for their preparation and review.
A second concern with the manuals in preparation is that they can be altered under the authority of the minister at any time. We believe there must be a mechanism provided for public input prior to any alteration or amendment of these manuals.
I might add that we have conducted timber management under the guidance of one manual for several years and have found it to be a very bureaucratic and time-consuming process. We believe that forest management with four manuals will become even more bureaucratic and unwieldy.
We are concerned that under the new act forest management will become process-driven rather than results-driven. It appears that increased responsibility will be placed on the industry to gather information, undertake studies and supply reports. It remains unclear as to the detail or type of information that may be required. It is conceivable that the forest industry may be obliged to gather information not directly related to timber and for which our expertise may be limited. Depending on the detail required by the manuals, the information requests and the will of the minister, our flexibility to achieve forest management objectives could become severely limited as we shuffle paper and do process work that does not yield positive results in the forest.
There also remains the question of costs associated with information gathering and study. How much is this going to cost us? While the act specifies that the minister may require industry to gather information and provide it to the minister, it is unclear whether government is prepared to share these costs or if industry is obliged to cover all expenses.
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We are very concerned with the punitive nature within Bill 171. The substantial increases in penalties and the emphasis placed on this section of the act implies that major problems presently exist in forest management. In reality, the forest industry has been in almost total compliance with all aspects of legislation and cutting approvals. Our track record is well over 99% compliance. The minor transgressions that have occurred have been accidental and have not resulted in significant negative environmental effects. The high quality of our performance has been confirmed by independent FMA reviews. I believe our company's had seven of these over the past few years, all with positive results.
The good health of Ontario's forests has been verified by the Ontario Independent Forest Audit Committee in its report of October 1992. I'm sure you're all aware this is a report that the minister has referred to extensively.
Additionally, the Class Environmental Assessment by the Ministry of Natural Resources for Timber Management on Crown Land in Ontario, in its report of April 1994, is very supportive of timber management practices in Ontario. This EA report is the result of the most intensive review of timber management ever undertaken anywhere, not just in Canada. It provides some legally binding recommendations and should not be taken lightly.
Ontario's forests are in good condition and are being well cared for. Despite this, the new act lends support to the myth and misinformation perpetuated by many groups that the sustainability of our forests is in danger. I would include in that group that is perpetuating these myths some of the green groups, the media, and I'd have to link politicians and bureaucrats into that as well.
We are concerned with the degree of tenure associated with our timber licences. Security of area and wood supply is extremely important to the forest industry. Without such security, it's very difficult to attract and maintain the financing necessary to keep our mills modern and competitive.
Our FMAs have been working well. They are evergreen in nature and there are limits as to how much area can be removed without replacements. Under the new act, there is little security of wood supply.
We would prefer to have the present FMA system retained as a legal and binding arrangement with the government of Ontario to manage these forest lands in a manner acceptable to both parties. To date, the FMAs have proven to be eminently successful, and to change them is to send out a negative signal on the merits of doing business in Ontario.
It appears that the minister will have almost unlimited freedom to remove areas from our licences and to issue overlapping licences to other parties for wood supplies from the same land area. This is already happening, as the minister had made commitments to other companies for access to hardwood volumes in areas licensed to Avenor. This is happening despite expansion plans by Avenor which are relying on those same volumes.
We are concerned that under the new act the minister will have enhanced powers to limit business arrangements relating to our licences. To date, we have been free to enter into third-party agreements that allow other forest companies access to timber on our licences, and this has worked very well, providing positive benefits to both our company and to others.
The new legislation will allow the minister to arbitrarily offer fibre under a "competitive process" that will permit other companies access to wood from these licences. In effect, licences may be stacked on licences and industry may have little say into what arrangements are made. Conceivably, wood from our licences could be made available to our competitors. Furthermore, the original licensee is to be held accountable for all crown charges, even though they have no say in the disposition of the wood.
Security of tenure is essential to a healthy forest industry in Ontario. We request that security of wood supplies for our mills be more clearly spelled out. Additionally, we request that the issue of area charges be clarified. What exactly are we paying for and how is this money to be used?
We support in principle the concept of trust funds to ensure the regeneration of our forest. This is a very progressive step over past practices of directing all revenues to the provincial treasury. We do wish to emphasize the need for flexibility as to how the funds within the trust are disbursed. Our regeneration costs have been among the lowest in Ontario, and we wish to ensure that we retain the flexibility of matching the most appropriate regeneration method to each particular site.
We have major concerns with the definition of a "forest resource processing facility." Under the new act, the forest resource processing facility includes any facility, whether fixed or mobile, where trees or other forest resources are processed. This could include bush equipment, such as mobile delimbers, slashers or chippers. The need for licences associated with resource processing facilities and the possible restrictions on their location could severely limit our operating flexibility and significantly increase our costs. We suspect that this section of the act is aimed directly at mobile chippers. This is reinforced by including chips under the definition of lumber.
We ask, is it the intent of the minister to use this provision of the act to either limit the use of mobile chippers or to direct fibre to sawmilling companies? We view this approach as direct government intervention into what is currently a free market. Such intervention would effectively reduce and limit any influence by pulp companies over chip quality or price. We must reinforce the need for high-quality, affordable chips by our pulp mills. We cannot survive on poor-quality residual fibre of the sawmill business.
There will always be pulpwood stands in Ontario, and that is a reality of our forests. We must retain the option to manage them efficiently. Managing all forests for sawmill production could only lead to high-grading operations.
We emphasize that at the present time there are positive working relationships between sawmill and pulp companies. Many trades are happening. We have solved problems of chip and log quality and supply as they have arisen. There's no need for government to become involved in these business relationships.
Finally, we are concerned that this new act greatly increases the power of the minister. In many cases, the minister has complete authority and is accountable to no one. There is no option to appeal decisions made by the minister other than to the minister himself. We believe there is a need for public input into these decisions and a definite need for an appeal mechanism relating to these decisions. This lack of consultation is in direct contravention to the recommendations of the EA report, which provide for increased opportunity for public consultation.
In summary, we must say that Bill 171 is regressive legislation. It is punitive and regulatory and will do nothing to stimulate the excellence we in the forest industry must achieve if we are to survive and prosper in an international marketplace. I remind you that good forest management is good for industry. Bill 171, in its present form, will not foster good forest management.
We suggest that Bill 171 be set aside until all affected parties have time to review and comment on this important legislation. Legislation as important and far-reaching as this cannot be hurried.
We'll entertain questions at this time.
The Vice-Chair: Thank you very much, Mr Ferguson. Before I pass it on to the Conservative caucus for questions, I'd like to welcome the member for Port Arthur and Minister without Portfolio, the Honourable Shelley Wark-Martyn, who has just joined us.
We'll continue then with the questions.
Mr Gary Carr (Oakville South): Thank you very much for the presentation. I think you're like a lot of people who have come in. Everybody is in favour of the intent. As you know, all parties supported it in second reading and we've had industry, environmental groups and unions come in all saying that they support the intent.
As we're getting into the nitty-gritty, though, and getting down and people are reading it, there have been some major concerns. Spruce Falls, when we were up in Kapuskasing, said if we don't make the changes, they advised us not to pass it. A chap was in yesterday, and I read the headlines in one of the papers, saying that the plans for forests could kill area jobs. I'd like you to be as straightforward with us as you possibly can. If there are no changes and this bill passes as is, do you see job losses happening at your company?
Mr Ferguson: That's a very difficult question to answer. I guess probably our major concern with the act is that there is so much uncertainty associated with it that we really don't know what the effects of this legislation will be. The powers of the minister are almost unlimited, depending on his will, the decisions he makes, and we're seeing evidence of that now with announcements of hardwood projects in northwestern Ontario that are directly cutting into our wood basket. We don't know what those effects are. We don't know the details of the manuals yet. They are still in preparation. Even the drafts that have been provided are being redrafted as we speak.
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We don't know what is going to be required, what the additional onus is going to be on our costs associated with preparing national plans and the cost of operating and in fact what security of wood supply we have. Certainly, without security of wood supply and a clear path of what is required by the industry, we cannot attract investment that allows us to remain competitive. So yes, I would think that there is definitely a possibility that this could lead to job losses.
Mr Carr: A very short question: As you know, we have to vote on this bill as is. If there are no changes and if you were Gary Carr and got to vote on this bill in the Ontario Legislature, would you vote for it or against it?
Mr Ferguson: I would have to vote against it.
Mr Carr: Thank you. I think Chris had a couple of questions too.
Mr Hodgson: Just a little, wee one. Thank you, Mr Chair, for your leniency.
The Vice-Chair: A short question and a short answer.
Mr Hodgson: We've heard quite a few recommendations from people that there should be some mention of "best end use" put into the legislation. You must have some opinions on this thing. I'll keep the question short. Can you just give me your comments on the idea of including "best end use," for the record, for the committee?
Mr Ferguson: Yes. I don't think we're in disagreement that best end use is a good direction to go. It depends on what your concept of best end use is. One of the concerns that we have with the legislation, certainly we have the feeling that there are some direction limitations as to our ability to use mobile chippers in the woods.
One of the reasons we got into mobile chipping and have invested substantially in it, not only our company but many of the contractors, is best end use of the forest itself. Putting chippers in the bush allows us to sort logs. Logs are sorted on chipping operations and provided to area sawmills. But over and above that the remainder of the tree, the pulpwood portion of the tree and the pulpwood trees, which are not capable of making logs, do end up, in our opinion, in the best end use in that we probably gain 15% more fibre out of the tree by using in-bush chippers and also have the ability to supply our mills with fresh, high-quality chips, certainly a much higher quality chip than what we get from sawmills. So, although the sawmills may think chippers are not the best end use, from our point of view they certainly are, and can satisfy not only the requirements of the sawmill business but also the pulp business.
Mr Bisson: By way of comment more than a question, your comment in regard to the bill being brought forward a little bit too quickly is I think a little bit off the mark. As you know and as everybody in the industry knows --
Mr Brown: That's your opinion.
Mr Bisson: As you know and as your industry knows quite clearly, there has been an environmental assessment that has been under way for some four or five years and much of what we find within Bill 171 is as a result of a lot of work that's been done over four or five years. As well, your industry has been plugged into the process fairly directly. But anyway, I understand why you're saying that and I would say that you probably understand the bill far more than you make out to today.
The question of security of wood is an issue that's come up a couple of times by a number of different presenters, mostly people who are current FMA holders. You would know that under the present Crown Timber Act there is nothing whatsoever that gives you tenure to wood. Where you get that is in the signed FMA that you undertake with the crown and that's where the evergreen clause is found, where you get -- I'm not going to explain it. You understand it far more than I do. But the evergreen clause in regard to tenure of the wood is not in the Crown Timber Act that has been in place for some 40 years. It's within the FMA that you've signed with the ministry.
Under Bill 171, the same will hold true in a section 23 licence. I'm surprised if you don't know that. It really quite stupefies me, because tenure of wood is obviously something that is very important for somebody who has a substantial investment in a wood processing facility. Obviously, that's something the ministry wants to make sure that they recognize in their section 23 licences.
The other thing is in regard to the remedies and enforcements. You were talking about the bill having a punitive approach to enforcement rather than a remedial approach. I think if you look at the bill, you'll see what it does is that the first step in the process is to say if there is an infraction in regard to how the work is carried out, the first thing the ministry does is ask you to go back and do it again and do it right. That's the way that basically most forest companies operate.
I live in Timmins. I worked with Abitibi, I worked with Malette, I worked with E.B. Eddy, and I don't know any of those operators to be irresponsible in how they treat the forest. They take the responsibility very seriously and, quite frankly, know how to do their job. I'm sure that you do as well. The intent of the bill is to recognize that and to say that we need to have a process.
First of all, what we need to do if there is a problem -- sometimes it's inadvertent, sometimes a direction might not be carried out as clearly as maybe you would want it to in regard to the people doing the work -- is that there has to be a remedial process in the intent. That's what the legislation does as the first step.
As a second step, if the person refuses to do the work, the minister may order that person to do the work. He doesn't jump to a fine. The ministry would order the person to go back and do the work, and if the person didn't do it, then the minister can say through the court system, "I'm making you do this work, and if you don't, then you jump to a fine."
I just think the way that everything was lumped in together by saying it was punitive doesn't reflect what's in the bill, because I think what the ministry understands clearly and this government understands is that there has been a lot of good work that's been done in the forestry industry over the past 20 years.
The FMA systems are a model that we're building on, something that's clearly a good direction by which we can set the standards by which we operate, and that's what this legislation does.
In regard to --
The Vice-Chair: Do you want to leave some time for Mr Ferguson to comment?
Mr Bisson: Mr Wood?
The Vice-Chair: No, there won't be time for Mr Wood. Mr Ferguson, did you want to comment?
Mr Ferguson: I certainly would, if I have the opportunity.
The Vice-Chair: Go ahead.
Mr Hodgson: You can take the Liberal time.
The Vice-Chair: No, we're still on NDP time.
Mr Ferguson: I guess a number of points have been brought up here fairly quickly. Firstly, on the subject of the EA, yes, there are some things in the EA that speak very clearly to some of the things that are attempting to be reflected in Bill 171. I would point out, however, that the EA was approximately four and a half years in a period of hearings and almost, I guess, a little over six years in the preparation of the final report. The EA talked to the subject of timber management, not forest management. The EA was very clear in that and there was a distinct difference.
We, in a very short time, are trying to force something that is much more encompassing than timber management into something much broader. I would add to that that even the time frames in the EA are being moved ahead very quickly. One of the terms and conditions of the EA report specified that a draft of a revised Timber Management Planning Manual would be produced within six months and then fairly lengthy opportunities for review and comment would follow that. In effect, a Forest Management Planning Manual has been rushed through in less than three months, I guess, and then opportunities for input are quite limited. There is some merit to what you're saying; there are also some flaws in that.
The security of our licences becomes -- I recognize what you're saying, that some of the things that are not provided for in the Crown Timber Act are quite true. However, we have become very concerned over the past several months with some of the signals we are receiving from the minister, particularly as it comes to withdrawals of land for such things as old-growth forests, for revised park systems and, most recently, the removal of areas from our licence areas and diverting to new businesses when we have definite plans for utilizing volumes from our licence areas. That is of real concern to us and definitely sends us a very negative signal.
The punitive nature: Recognizing what you're saying there as well, it does not say that right off the bat you're going to get levied with a $1-million-plus fine. However, just the tone of the legislation itself implies that. It doesn't say you're going to be asked to repair damages or to take corrective action. It says that here is the range of fines and it implies to us very strongly that there is a view that there is much wrong with forest management in Ontario, and that is certainly not the case.
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Mr Miclash: First of all, Murray, thank you for coming down to Thunder Bay. It's always good to hear from the good people of Dryden. I must say that your comments regarding the bill being rushed through, and the planning manuals, and the lack of time for review are not the first comments in regard to this that we've heard. We've heard from a good number of presenters who feel much the same as you do.
In your presentation, you talked a little bit about the costs of this legislation. Mr Carr referred to jobs earlier on. I am just wondering about the actual dollars you're looking at, in terms of what you've seen so far in this legislation and in terms of what it would cost your company in terms of the dollars. Yesterday we heard from the independent contractors saying that the bottom line is that it's going to kill the little contractor. I am wondering if you'd like to comment in terms of your company and what you see it doing to them.
Mr Ferguson: Certainly the little contractors -- we refer to them as holders of small licence areas -- the act implies that they will have a much more active role in management planning and some of the costs that are associated with that than they currently do. Now that is primarily done by MNR, but some of that may be passed on.
We, as holders of large licences, are already heavily involved in timber management planning. Preparation of a management plan for us at the current time probably runs us $300,000 to $500,000. That's for a timber management plan. We have all these additional things that we may deal with. It's really unclear. That's the real glitch in the whole thing right now: It is totally unclear as to what the requirements will be under the new manuals and the ability of the minister to request information and ask for surveys and ask for studies. We can see ourselves getting into quite a process of going out and studying and reporting and shuffling paper, which we have not previously had to do, and we have no way of knowing what that additional cost is, because we don't know what the requirements will be. The uncertainty is the key.
Mr Miclash: I'm sorry?
Mr Ferguson: The uncertainty is the big issue there for us.
Mr Miclash: If you were following yesterday, you would note that we have indicated that we would like a cost-benefit analysis of the bill from the ministry. I think that's extremely important. I made it clear to the parliamentary assistant yesterday that it's something we are going to have to have before we can go on to clause-by-clause. It goes back to your initial point of trying to rush this legislation through without knowing what the cost-benefits are going to be.
You touched a little bit on the hampering of expansion plans, and I know it's something that Avenor is quite concerned about at the present time. I just wonder if you could maybe expand on that with a few specifics for us.
Mr Ferguson: I guess the specifics are that there have been three projects identified in northwestern Ontario which will use so-called surplus hardwood volumes: the one in Thunder Bay and the one in Kenora with Tolko and, recently announced, the Fort Frances one with Boise.
I'm not totally familiar with the details of the Thunder Bay operation, although I understand it does have some effects on Avenor as well. Certainly in Dryden both the Tolko proposal and the Boise proposal will utilize wood supplies that are currently being used by Avenor. There are some commitments made as well for additional volumes coming directly off our licence areas that would go to these new processing facilities.
We have at the moment plans for expansion in hardwood pulping. Certainly it will impinge on those expansion proposals and, conceivably, could limit our current operations. I don't think there's been enough detail into wood supply analysis done just yet to exactly confirm what the major effects of those will be, but certainly they're looking right into the same wood basket we are, with very negative effects on Avenor.
The Vice-Chair: Thank you very much, Mr Ferguson and Mr West, for appearing before the committee. You probably could go on at some length still, but as you will appreciate, there are other presenters now as well who also would like to share their thoughts with us.
Mr Ferguson: That will be fine for now. I have copies of my presentation here.
The Vice-Chair: Oh, you do. If you could leave this with the clerk, it's much appreciated. Again, thank you for appearing before the committee.
FIRESTEEL CONTRACTORS LTD
The Vice-Chair: The next presenter, Shunish Forest Products, has cancelled. However, Mr Dan Macsemchuk who, on our schedule, was scheduled for 9 o'clock this morning, is here. He, however, had the information that it was going to be this afternoon and he has thankfully agreed to make his presentation now, so that we can fill this half-hour, the time that we have available right now. Mr Macsemchuk, speaking on behalf of Firesteel Contractors Ltd, you will have half an hour, and if you'd like to leave some time for questions and answers, we'd appreciate that.
Mr Dan Macsemchuk: Thank you, Mr Chairman. I apologize for the mixup in the time schedule this morning.
I represent a small company based in a small village west of here. We're a privately owned, family-owned business. We employ approximately 30 people. We're a unionized company. We contract 100% for Avenor on their management area.
On reading the parts of the Crown Forest Sustainability Act that I could understand, I can understand the change, the need for progressive change. I think it's good for us. We've worked in the same area basically all my career, and the same area was operated by my father in the past. Right now we're operating three miles from where my father had a camp in the late 1950s. So I understand a little bit about a sustained forest and the manner in which we should be operating in it.
We have a couple of problems. Probably the biggest one with the act is the interpretation of a "resource processing facility." In the past, we always associated that with being a mill -- a pulp mill or a sawmill -- and it appears in the act now that we're going to move that into including field chippers, and it possibly could extend to other machines, slashers, feller-bunchers, and this sort of cuts right into the heart of the kind of operations we run. If we would have to get a licence, a resource processing facility licence for every piece of machinery, it would become rather prohibitive for us.
We've recently changed our operation to mainly chipping. Probably 35% of the softwood that we cut is made into sawlogs and the rest at the present time is all wood chips in the field.
With having to get a licence, we have to be able to prove a sufficient forest resource for our area. We must put up a business plan. The ministry may impose conditions of location, mechanical efficiency. Without being able to supply all these, we end up with no security for our wood supply for the machinery we have.
Without a licence, we really don't have the security of being able to operate a business, and licences issued on a one-year basis require us to keep this as an ongoing process. It gets a little difficult to get financial backing from financial institutions if they're only working on a one-year basis. Everybody wants to see a long-term business plan. So these licences can affect us in that manner.
If the ministry's real goal to licence these as mills is to manage the supply of wood chips in the province, then field chipping operations such as we run to conduct business on a sustained basis could be severely restricted. At a time now when machinery and business infrastructure costs into thousands, millions of dollars to operate, the scenario of not being granted a licence makes it extremely difficult to continue to find financial backing and to guarantee job security for our employees. That's important to us. We live in a small community, like I said, and job security is important just for the number of people we know, and we personally have contact with other than with work.
Once we've applied for this licence, there is no flexibility left to us to react to market demands or even weather conditions. If we've committed to a certain volume of wood, a certain type, product type, we basically have to stick to that as far as our licence is concerned. You could end up with a product that, because of market conditions, is undesirable and you can't sell it.
The concern I have if our licence specifies a certain amount of volume and we don't utilize it in a year is that it could become like a government budget: If you didn't use it, you're not going to get it again.
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The licences are non-transferable, so if we spend our lifetime to build up our business, there's a possibility we cannot sell our business because the licence is not automatically transferred to whom we sell it to. I cannot even leave it to my children because still there is no guarantee that they will be able to get a licence. This, once again, comes back to job security, not only for ourselves, but for our employees.
One of the results of this licensing will give us an increased bureaucracy. Someone's going to have to analyse the business plans and the forest resource supply projections, inspect mechanical efficiency and operating methods, inspect chippers and fill out inspection reports. Somebody else is going to have read these and approve them.
What, in effect, happens is that we're going to end up with trading bureaucratic jobs, which are tax-consuming jobs, instead of the jobs that are the tax-paying jobs. Some of the conditions that the act looks at as far as mechanical efficiency or operating methods of woodlands machinery -- it's kind of a moot point. Any businessman will strive to make his operation as efficient as possible and as cost-effective as possible, because anything else is really non-profitable.
At the present time, once we switched to field chipping, we find we are getting a better yield per hectare, we're putting a better quality product to the mill than they were used to getting. I think we're putting a far better quality into the mill than what the mill was producing itself -- we hear that from mill people -- a definite advantage all around.
The solution we have to our problem is to remove mobile whole-tree chippers from schedule 2 and ensure that other processing machinery, such as slashers and delimbers and processing heads, don't become a part of the legislation as mills. That's about all I had to say at this time. I'd welcome any questions.
The Vice-Chair: Thank you very much for your comments. The first caucus to be able to ask questions would be the government caucus.
Mr Wood: Thank you for coming forward with your presentation. One of your main concerns seems to be the interpretation of what processing equipment is for licensing. I know that the wording in there is to combine that type of equipment now. I'm sure that we're not talking about each individual piece of equipment that might be involved in your operation.
I just want to congratulate you. You made the comment that you're on what was formerly your father's operation and you're still operating three miles from the original camp. It's quite obvious that you've been involved in sustainability of the forests or you would be miles and miles and miles away from that particular area.
Your amendments that you think we should put in there that would help you individually, if you could put them down in writing and maybe submit them to us, to the clerk -- he can distribute them to us -- and what type of wording you would like to see in there that we can do to help your operation.
I know we have two different groups of people: One group I'm sure we're going to hear more from next week, the Ontario Lumber Manufacturers' Association, is saying that they've been lobbying the government for the last 14 or 15 years to change the timber act. We have another group of people who are coming forward saying that the legislation is moving too fast.
We're trying to strike a balance in here somewhere along the line, seeing that the timber act is not doing the job it should be. The new act, maybe with amendments, hearing from the public out there over the last week, this week and next week, we might be able to define the legislation that is needed. I just thank you for coming forward.
Mr Macsemchuk: I think progressive change is welcomed by anybody, in the business or not in the business. It's something we should all look forward to.
Mr David Ramsay (Timiskaming): Thank you very much for your presentation.
I was wondering, through the parliamentary assistant, because this seems to come up every day in our hearings about the mobile equipment, the licensing of that equipment, could we get somebody from the ministry to give us some more detail about this? It seems to be a concern that it is every piece of equipment. Is the parliamentary assistant dead certain that we're not talking about all pieces of equipment being licensed. Could we ask somebody in the ministry?
Mr Wood: We can get you more information on that, but what pieces of equipment are involved? Your pickup truck, Ski-Doo, four-wheeler, a chipper, a timberjack? Sure, if you want more for clarification on that, we can do it, but we're looking at a sawmill, a chipping operation, a pulp mill, a paper mill.
Mr Ramsay: So you're talking about licensing the bush operation globally, but each piece of equipment within that bush operation?
Mr Wood: What I'm saying is there are a lot of pieces of equipment that are in that operation.
Mr Ramsay: Then, again, what I'm saying is, and I think that's what's being asked and the concern being brought forward, that the operation in the bush will be licensed as a whole, not each piece of equipment. Is that what you're saying?
Mr Wood: This is the question that I asked him to give us a feedback on how he'd like to see it, and if there are amendments that are required, Mr Ramsay, I'm sure that we can address them as we go through clause-by-clause and get the interpretation that we want in there as we finalize the legislation. We're looking for amendments right now from your people, from the presenters, from the Conservative Party to clarify it.
Mr Ramsay: No, I agree with you. We can make amendments in the future. I just want to know what is the intent of the legislation today, and its regulations. That's all I'm trying to get. What's it today? Then we know one way or the other and then we can make some amendments, as you say we should. That's all. I'm just not sure what it is today.
The Vice-Chair: You may want to raise that question again next week when we have ministry officials up here.
Mr Ramsay: It's just frustrating, Mr Chair, we can't answer the delegates who come before us when they've got concerns. Here I am as a legislator and I can't even tell the person coming forward what's in the bill.
The Vice-Chair: The parliamentary assistant tried to give an answer and I guess that's as far as he can go at the present time.
Mr Macsemchuk: What concerns us is that we've been a logging operation and, essentially, if I read the act now, it makes us a mill. There is still an end use after us. All we are is a processing facility in between to separate the sawlogs, separate the veneer blocks, chip the remainder and ship it in, but we've become a mill instead of a logging operation.
Mr Ramsay: Yes, you are considered as a processor today.
Mr Macsemchuk: That's right.
Mr Ramsay: That's what we want to know. If you are being considered as a processor, doing a process in the bush, because you are changing the nature of the fibre before it gets to the plant, then does that mean that all the equipment in your operation will have to be licensed, and what does that entail? We're going to try to get that for you, as frustrating as it is, hopefully in the next couple of weeks.
Mr Macsemchuk: Essentially, it makes everybody who runs a logging operation a processor as well.
Mr Ramsay: Yes, we agree with that at the moment. We'll try to get that clarified, and if it is so, we'll try to get it changed.
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Mr Hodgson: The crux of the issue is mobile equipment being licensed, a mobile chipper. There have been groups telling us that this is a positive step for this committee. As recently as this morning we had the union, the IWA-Canada. On page 2 of their report, "We agree that mobile equipment should be licensed but as a separate category." They linked it to jobs we've got, as mentioned by the parliamentary assistant. You're a unionized company?
Mr Macsemchuk: Yes, our employees are IWA members.
Mr Ramsay: What union do they belong to?
Mr Macsemchuk: Local 2693, the same one that made the presentation today.
Mr Ramsay: The same one? They're asking for this to be licensed and you're asking for it not to be?
Mr Macsemchuk: Probably, the way I look at it, yes.
Mr Hodgson: Okay.
Mr Macsemchuk: My point still is that I am not a mill. We're not a mill. We're not an end. We don't make the end product from the fibre. We just convert it in form on the way.
I think Mr Miron's concerns lead to a specific type of chipper, that is, the whole tree. In other words, it takes the tree as it's cut from the stump and it chips the whole thing. So we purchased -- it's a little more expensive, but it allows us a lot of leeway and being able to sort products out before we run them through. It's a little different setup. We did not sacrifice any jobs in our operation when we bought our setup.
Mr Hodgson: Well, am I missing something here or is this just an advance in technology that's changing from the traditional way?
Mr Macsemchuk: Basically, it's old technology. It's just something new here.
Mr Hodgson: New to here. Is this like sort of going from a Swede saw to a chain saw? Is that an analogy?
Mr Macsemchuk: Yes. We're going that fast on it, too.
Mr Hodgson: Okay. Thank you.
The Vice-Chair: That will conclude your presentation. We certainly appreciate your appearance, especially at this time, since we had a bit of confusion there about the scheduling. But it all worked out, so thank you very much.
MARCRI LOGGING INC
The Vice-Chair: The next presenter I think is here as well, Mario Letourneau from Marcri Logging. Also, I should say again that if anybody wishes to make use of the French language, we do have simultaneous translation.
Mr Mario Letourneau: My name is Mario Letourneau. I represent a company called Marcri Logging. I'm the owner and also the president. With me is Barry Angel, professional forester.
We're a contractor for Avenor. We supply both chips to the paper mill and we supply roundwood or logs to the sawmills. We're based out of Ignace. We employ 140 people in the area. We think that the sustainable act could affect our business and certainly could affect our workforce.
Ignace is heavily dependent on the logging operation for its survival. It was recently, a few years ago -- they've lost many jobs due to mine closures, so needless to say they're heavily dependent on logging. We're the main employment of the town and we think the sustainable act is good; however, we do have some concerns which I'll ask Barry Angel to voice for us.
Mr Barry Angel: Bill 171 in its present form -- you've got a handout in front of you there -- is going to be very difficult for Mr Letourneau and Marcri Logging to live with.
With regard to paragraphs 18 to 21 of subsection 67(1) of the act, we've listed a number of reasons here, many of which you've already heard before and many of which you'll probably hear again. Their importance can't be overemphasized, and I'll go through them quickly.
Lack of security for wood supply: The act does not clearly guarantee long-term wood supply for the major licence holders, and we as contractors fall under the umbrella of major licence holders; therefore, showing instability and uncertainty.
Uncertainty in financial support: The fact that the licence can be revoked or not reissued after one year creates a serious concern to the lending institutes; therefore, could prevent us from replacing worn out equipment and limit our ability to expand.
Negative impact on bush unions: There will be no security of employment for unionized bush workers. There is a possibility that the licence to operate the chipper is cancelled or not renewed.
Fibre utilization: Field chippers increase fibre yield up to 15% to 20% per hectare versus the roundwood operation which left tops and any tree lengths below four inches behind. In the event that this bill is passed as is, the only option for us to continue operating would be to go back to the roundwood system with no sales for pulpwood, as paper mills have gone to greater expense to convert their operation from roundwood to chips. I might also add there that it's much safer transporting chips to the mill than it is the roundwood because it's in an enclosed truck.
Lack of flexibility: We have no way of predicting one year in advance what species the mill will want because markets change rapidly. Therefore, we must have the flexibility to react to their demand.
Competitiveness: Is the real goal of licensing field chippers to control the chips supply in the province? If so, sawmill chips could be forced on to pulp mills regardless of price or quality, making it very difficult to compete and could enable sawmills to increase their chipping production by simply bringing in more tree length for chipping purposes only.
Lack of freedom: The fact that chippers will be operating under mill licences and the fact that the licence may not be renewed is of major concern for us. It limits our option to even transfer our business to sons and daughters -- and we heard that from the previous speaker -- and even to sell our equipment to a successor or even to sell on the open market. The resale value of chippers could virtually be non-existent.
Forest management plans: We feel that there will be too much paperwork involved for small businesses -- the fact that we have to draft a business plan and show sustainability of the forest in order to be considered for renewal of a licence. We have no objection with showing sustainable forest, but we feel it should remain as it is presently, being the responsibility of the licence holders.
We propose -- and again, you heard some of these proposals most recently -- changes to the bill by removing whole-tree chipping from schedule 2; remove the words "whether fixed or mobile" from the definition of a "forest resource processing facility"; change the mobile to semimobile or semitransportable in the above definition; to also classify chips under raw product, not finished product. This would eliminate the need for a licence to operate portable chippers.
I would just like to reiterate that the length of time to review this particular new piece of legislation is quite short. I'm sure, given more opportunity to study it, as well as the manuals that go with it, we could've made maybe a little longer presentation and possibly delved into some of the other points that I had to make.
Mr Miclash: Thank you for travelling down to Thunder Bay to present to us. What I'd like to ask is for you to expand a little bit more on what you see as cost to you as a small operator. As you say, you've had very little time to go through the legislation, but what have you seen so far that you see as increasing the cost to you doing your operation in northwestern Ontario?
Mr Angel: Well, we would have to present a business plan and there'd be more paperwork involved in putting it all together. It's certainly going to be a much higher cost. We would have to license the chippers. If the government so regulates under the new legislation, it could shut one of our chippers down for a period of time throughout the year, which would create some hardships for paying for that particular equipment through the lending institutions, and the lending institutions would also be reluctant to supply dollars for improvements or expansion. Not really putting a concrete dollar figure on it, but definitely there would be an increase.
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Mr Miclash: In terms of actual jobs with your company, do you see it affecting any jobs, a downturn of jobs, or do you see this as increasing employment and increasing your costs?
Mr Angel: Under the existing legislation, Bill 171, jobs could be decreased. Again, if chippers are shut down for periods of time, we would probably create an unstable workforce in the community and some of them may even leave the community, which would have some spinoff effects on small business and other institutions in the community.
Mr Ramsay: I'm very concerned about your first paragraph on page 2, under fibre utilization, and I'd certainly like you to give me some more information about this. In the middle of the paragraph, you say, "In the event the bill is passed...the only option for us to continue operating would be to go back to a roundwood system with no sales for pulpwood as paper mills have gone to great expense to convert their operation from roundwood to chips." Why do you think this act is going to stop field chipping operations?
Mr Angel: It may be a little awkward in the way you're reading it right there, but again, if the operations are going to be shut down for periods of time throughout the year to offset an oversupply of sawmill chips that the ministry may decide it wants to use rather than our portable chippers in the bush, the incentive to keep in business would be to go back to the roundwood operation again. Again, I don't think we want to make a step backwards. We want to be progressive in the way we do business and carry on, and that's where we've come to with the portable chippers in the bush.
Mr Ramsay: On the other hand, for sustainability, it's going to be very important for us to make sure that we use all fibre that's already harvested first before we go out in the bush to harvest more fibre. This is a problem with the sawmills, the few that are left in this province, from time to time the surplus of chips, and we don't want mountains of chips piling up in one yard somewhere that's within a transportable distance of a mill that could use that while we go out into the bush and create more chips. There's got to be a balance. But your concern is that they may really stop field chipping operations because of this.
Mr Angel: Yes, that's a possibility, if the government so decides that sawmills are taking precedence over mobile chippers that are on the pulp licensee's area. That could happen, yes.
Mr Hodgson: Thank you very much for coming here today. I realize that you, like other presenters, haven't had a lot of time to go through the manuals and study it; and put forward any other comments you have, if you want to send them on through the clerk.
I'd just like to follow up -- it's all related, basically, from the one through your whole report, but on section 6 you talk about competitiveness. Can you just go into more detail on what you're getting at? This is sort of related to what you were just explaining to Mr Ramsay. What's behind this? This is a pretty strong statement, "If so, sawmill chips could be forced on to pulp mills regardless of the price." Why do you say that?
Mr Letourneau: I guess that's a pretty strong statement. I guess what we're trying to say is, sawmills could essentially force the paper mill to buy their chips, regardless of what price or what quality they are. We have a tendency of having a better quality with our portable chippers in the bush. Sawmills have medium-quality chips, I guess. I don't think the paper mills could operate 100% solely on sawmill chips, because they're not of top quality, and in today's markets the demand is top quality at a low dollar. So, that's the way things are going.
Our other concern is that sawmills, being licensed under sawmills, could bring in more tree length for chipping purposes only and you wouldn't have to explain it. They could bring in truckloads and truckloads and truckloads of tree lengths, and just simply putting it through a chipper and selling it to the paper mill and putting us out of business. So basically that's what that paragraph is intended to mean.
Mr Hodgson: I just have one more little question. It's not really related to the act, but when you mention the quality of chips, just for my information, why does it produce a better quality? Is it cleaner or is it a different species?
Mr Letourneau: What it is, in the sawmills, they basically only chip slabs and ends and pieces like that. In the bush, we chip the whole tree. So if you're going to chip a tree that's six inches and seven inches in diameter, you're going to get a better-quality, uniform chip than if you were chipping a piece of wood like this, basically.
Mr Hodgson: So you take the whole tree and run it through.
Mr Letourneau: The whole tree, yes. I guess maybe the perception may be that we chip quality logs, but we're not. We extract our logs from our trees that are a certain size -- eight inches and over -- take all the logs out and we chip the rest. We do not chip log material.
Mr Hodgson: I'd like to go out and see the operation some time. I think that would be helpful for the committee.
The Vice-Chair: We can always come back up here.
Mr Hodgson: The parliamentary assistant's arranged that.
Mr Bisson: I'd just like to follow up on this whole chipping aspect. I think it's most interesting. Up to what diameter are you chipping? That concerns me. You're chipping actual sawlogs?
Mr Letourneau: No, I just explained that. We do not chip sawlogs. We have two operations. We have a roundwood operation, which supplies sawlogs to the sawmills. What we do, we have another operation, which is chips. So what Barry does is, he goes out there and he tries to determine which stands are going to be chips and which stands are going to be sawlogs. So we go in and do that.
Also what we're doing, we're extracting out of all stands -- Barry can't say, "This is all going to be chips," because the wood is not going to be all four, five, six inches; there may be some bigger trees. So in the bigger trees we have a way of extracting the logs before they go into the chipper.
Mr Bisson: So your concern is -- let me just see if I follow you -- that under part VI of the act, "Forest Resource Processing Facilities," if I understand what you're saying, you feel that your licence will be then under the licence of a mill. Is that what your concern is?
Mr Letourneau: That's the perception, yes.
Mr Bisson: Okay, it's not my understanding. It's something maybe that we can clarify, because that's not my understanding.
Mr Letourneau: The way we understand the act is that we would have to show, number one, a need for the chips; a sustainable forest, which we have no problem doing. The only problem we have is that we're a smaller contractor for a major company. I think it's up to them to show sustainability. They have for the past -- for ever, I guess -- made the five-year plan, the 10-year plan, the 20-year plan, and we just do the annual schedules. That's what we do.
Mr Angel: Whole-tree chippers are included in schedule 2 in the act in its present form. If it wasn't in there, then there wouldn't be this problem.
Mr Bisson: In the definition, you mean?
Mr Angel: Yes, that's right.
Mr Bisson: You make the same point as a number of other presenters have done in the industry, and that is the question of tenure. Just by way of clarification, as I mentioned before, under the timber management act presently there is no tenure through the act. It's through the actual signed agreement that you have with the crown through the FMA. The same would hold true under section 23 of the act or 24. The evergreen clause that you talk about is contemplated within the agreement that you signed. So the tenure thing is the same under the old act as it is under the new, just by way of clarification.
Mr Wood: Thank you very much for your presentation and coming forward. You've covered four items concerning chipping and permanent chippers versus portable chippers. I guess the same thing would apply to sawmills, portable sawmills, permanent sawmills. The technology has changed from when the timber act was brought in in 1952 to the technology we have today, where operations can be mobile. In my mind, I'm saying if a sawmill is licensed and it's sitting on piers, if it's portable or if it's a portable chipper versus a permanent chipper, why would the licensing not be the same?
The other area that you covered in some of the comments to the Liberal Party was that you're saying cost, but there is a certain amount of cost now involved in the primary licensee. You're operating off their licence. They have a responsibility and they've had a responsibility for a large number of years that when they go out to harvest trees, they have a prescription or a plan of what it's going to look like 80 or 90 years down the road for the security of their operations. In my mind, I'm just curious as to why you would think the primary licensee would pass that cost on to you as a contractor, because they're already doing it now.
Mr Angel: I don't quite understand how they're passing it on to the contractor.
Mr Wood: You're saying your costs might increase.
Mr Angel: Why not leave business the way it is, like it has run for the last few years? What's wrong with portable chippers producing their material and shipping to the major licensee? We can work under the umbrella of Avenor and still maintain a viable business. The new legislation is trying to restrict how we operate. That's what it's trying to do.
Mr Wood: I'm well aware of the technological changes that have taken place and the fact that it used to be -- Great Lakes shut down their operation and they don't have the chip supply from their yard that they used to have before, when they had the chipping saws, and 50-50: 50% would go into lumber and the other 50% would supply their big wheel. I'm well aware of those changes that took place in 1987 and 1988 and I'm just saying in my mind, why would there be an additional cost from doing business? Because they've been doing this type of business for years and years and years in both Dryden and Great Lakes here -- now they're called Avenor. But I'm curious in my mind as to where the extra cost would come in.
Mr Angel: If the new legislation forces us to shut down these chippers for periods of time throughout the year, then it's additional cost.
Mr Wood: Why would the legislation shut down your chippers?
Mr Angel: Because the ministry may decide that there's an oversupply of chips from a sawmill somewhere and that this particular chipper is not required to be run in that area.
Mr Wood: So you're saying to eliminate the waste out there, you fear that could happen.
Mr Angel: It could happen, yes. It's not spelled out in the new bill that clearly.
Mr Wood: I don't think the taxpayers in this province and the government, any government, would want to see a lot of waste taking place. They would have to take some kind of action; there's no doubt about that. But what it would be and who it would involve, I don't know.
The Vice-Chair: Thank you very much, gentlemen. We certainly appreciate your appearance before the committee. Your thoughts will be carefully considered as we continue the hearings and also clause-by-clause in the middle of September.
This concludes the hearings for the morning. For this afternoon, we'll be back at 1:30.
The committee recessed from 1144 to 1327.
TECHNOLOGIC TIMBER LTD
The Vice-Chair: The first presenter this afternoon is Technologic Timber Ltd, and we have Mr Milan Mrakic and Geoff Pattyson with us.
Mr Milan Mrakic: Good afternoon. My name is Milan Mrakic and I'm presently the owner of Technologic Timber. I'm also part owner of Treemill Manufacturing Ltd, which is producing here in Thunder Bay.
Since the early 1950s I have been a logging contractor working throughout the forests of northwestern Ontario. For over 40 years I have derived my livelihood from the crown timber of Ontario and hope to continue for a while longer. The forests have sustained me, my family and my business for 40 years, and I'm confident that they all will continue to be sustained into the future.
As a logging contractor I have observed numerous changes in harvesting technology. In these 40 years I can remember using horses to move timber from within the stand to skid roads; the change from Swede saw to power saw; the use of a high-lead yarding system that was more common to BC but tried in northwestern Ontario; the construction of small bulldozers to construct all-weather access roads; and brought the first Johnson skidder-forwarder into woods in northwestern Ontario. That was back in 1957. That was used to forward eight-foot pulpwood. The introduction of a skidder replaced horses in 1959, a method of moving tree-length timber to roadside to introduce the mechanical equipment to cut, limb and buck timber in the woods.
I have been an active participant in the evolution of harvesting technology in the forests of northwestern Ontario. In 1989, after touring logging operations throughout North America, I introduced the first mobile full-tree chipper to the woods of northwestern Ontario. This harvest technology continued to be utilized by my company, Technologic Timber, on the harvest operation west of Armstrong, approximately 250 kilometres northwest of Thunder Bay.
As well, I am a partner in Treemill Manufacturing, which builds from components a mobile full-tree chipper right here in Thunder Bay. This company is fully owned and operated by a Canadian manufacturer, a mobile full-tree chipper competing in the world market with American and Scandinavian firms.
The mobile full-tree chipper produces at roadside and the wood fibre from that is most attractive to pulp mills. The mobile full-tree chipper is simply the next step in the evolution of harvesting technology. Sawmills utilize a harvesting system to produce roundwood, a fibre form that is attractive to their process. Pulp mills now utilize harvesting systems that produce fibre form that suits their process of wood chip.
My primary concern with Bill 171 is the definition of "forest resource processing facility." It states that it is "a sawmill, pulp mill or any other facility, whether fixed or mobile, where trees or other forest resources prescribed by the regulations are initially processed."
Using this definition, every mechanical piece of equipment utilized in the harvest of timber would require a forest resource processing facility licence. Power saw, feller-buncher, delimbers, slashers, single and double grip harvesting and mobile full-tree chippers will require a forest resource processing facility licence. However, schedule 2, which classifies forest resource processing facilities, indicates type G or H only, while full-tree chippers are -- the wording is incorrect.
The intent of definition and inclusion in schedule 2 appears to indicate that a mobile full-tree chipper will require a forest resource processing facility licence. I would request that the definition of "forest resource processing facility" be revised by eliminating the word "mobile," and that full-tree chipper classification be removed from schedule 2.
A piece of equipment working in the woods that is mobile and part of an overall harvesting system should not require a licence. If one was to pick blueberries, which are classified as a forest resource under Bill 171, with a mechanical picker rather than a manual, one would require a forest resource processing facility licence. There is no need to have additional regulation imposed on open harvesting activity in the forest when Bill 171 with its manual and supporting documentation of class E and A for timber management is more than adequate and ensures proper, consistent, sound management of the forest resource relative to any activity on crown lands.
As a small businessman I presently employ 35 people, and as an entrepreneur it must be pointed out that unnecessary regulations only impede business success. The inclusion of the forest resource processing facility definition in the present form of Bill 171, and the listing in schedule 2 of full-tree chipping will have a significant impact upon my logging operation and my manufacturing firm.
It has been stated by a Ministry of Natural Resources official that the intent of the definition of "forest resource processing facility" was to permit the Ministry of Natural Resources to control the flow of chips in the province. It was further stated that wood chips produced as a byproduct of a sawmill would be permitted to be sold to a pulp mill ahead of chips produced during the timber harvesting operation by mobile full-tree chippers.
Sawmills are fixed processing plants producing lumber as a primary product and wood chips as a byproduct. A full-tree chipper is a mobile chipper, a mobile piece of equipment working as a part of a harvesting operation producing wood chips as the primary product. Why should sawmill wood chips byproduct be given preferential treatment for sale over wood chips produced by mobile tree chippers?
Marketplace will determine the most attractive wood chip through cost-effectiveness and quality. There is no need to interfere in the marketplace in a manner that imposes hardship on one businessman and provides preferential treatment to another.
Wood chips provided by mobile full-tree chippers are of superior quality and much more beneficial to the pulping process than the wood chips byproducts of a sawmill. Mobile full-tree chipper wood chips are more consistent in the size, particularly in thickness, which is a benefit to the pulp mill. The digester process does bring in natural brightness to the definition paper produced, meaning less bleach is required in the pulping process.
As well, a harvesting operation utilizing mobile full-tree chippers increases the level of utilization of wood fibre yield from the forest land base compared to the roundwood harvesting system. Greater utilization will mean increased stumpage fee revenue.
In summary, mobile full-tree chippers should not be required to be licensed as a forest resource processing facility. Harvesting activity is more than adequately regulated by the terms and conditions of the forest resource licences. Government regulations should encourage all forms of business rather than give preferential treatment to one sector. There is no need for regulations that interfere in the marketplace. The committee should ensure that free enterprise remains the key component of the forest economy.
Mr Hodgson: Thank you for coming in today. I was wondering, Mr Chair, if we could get an answer from the parliamentary assistant or the ministry on why they've included mobile chippers. There have been very elaborate --
The Vice-Chair: Just a second while I ask the parliamentary assistant --
Mr Hodgson: I'll cede my time to the parliamentary assistant. They've been quite detailed in the description of why not to have it.
The Vice-Chair: Do you want to give an answer to that?
Mr Wood: Yes, I can give you a brief answer. We know the technological changes that have taken place over the number of years, that chipper sawmill operations were being -- Great Lakes was operating them, Spruce Falls was operating them, a number of places were operating them. Then the technology went to portable chippers and sawmills were shut down all over the place.
But you also have a lot of sawmills that are still running. They're dependent on getting their chips to the market, which means pulp mills, paper mills. If you have portable chippers out there that are chipping whole trees or chipping only for the purpose of chips, you can end up with sawmills with 200, 300, 400 people employed that will have to take a layoff because sawmills were not able to sell their chips to a pulp mill or paper mill or whatever. So you end up with one operation shutting down at the expense of another.
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There's got to be a balance somewhere along the line to be able to achieve that you get the maximum employment with the resources that are out there without one operation affecting another one.
I think it's the technological change that has come forward, that we have portable sawmills now. You can move a whole sawmill basically in a 24-hour period from a land mass to another land mass. You have portable chippers that you can do the same thing with, and large numbers of them, but you didn't have them when the timber act came in in 1952 or in 1926.
There are technological changes that have come, and all we're doing is updating the legislation of 1926, which was updated in 1952. Now we're updating it to the technology that's out there and the equipment that's out there.
We can give you a further answer next week in Toronto.
Mr Hodgson: Thanks. That's my only question. If you gentlemen have a comment, that's my time.
Mr Geoff Pattyson: I'd just like to make one comment relative to sawmills shutting down. We're familiar with northwestern Ontario. Full-tree mobile chippers were introduced here in 1989 and came into full operation in 1990. I'm not aware of any sawmill in northwestern Ontario that has been shut down due to an oversupply of chips produced from full-tree mobile chippers. I'm speaking from my perspective in northwestern Ontario. It may be in other regions it possibly has happened, but since the introduction of the mobile full-tree chipper, there haven't been excess chips on the market.
The Vice-Chair: It's your turn now anyway.
Mr Wood: Just a further comment on that: Northeastern and northwestern Ontario, the flow of chips back and forth to pulp mills, paper mills -- I'm talking about the Hearst area, the Kapuskasing area, the Cochrane area -- there have been operations that have been curtailed as a result of mountains of chips that were out there and sawmills have been told: "Look, you cannot stockpile chips any longer. It's a fire hazard. It's a danger, and you're going to have to shut down your operation or go to a one-shift operation and find a market for the chips."
Myself and Bud Wildman were on the phone, numerous long-distance calls all over the place, trying to get some people who would say, "Oh, yes, we'll take a few truckloads of chips," and try to keep the sawmills running so that we didn't have massive shutdowns and massive layoffs. I'm talking about 1990 and 1991 this was happening.
Mr Pattyson: However, the villain in this particular case is not mobile full-tree chippers.
Mr Wood: I guess I have a little bit of time. I just want to go a little bit further. You're saying you're operating on a primary licence?
Mr Pattyson: It's a third-party licence of Avenor, the Caribou east management unit.
Mr Wood: I just want to go back a little bit. You were saying you started up in 1989 and 1990, so it was about a year and a half after Great Lakes shut down its sawmill operation?
Mr Pattyson: The operation on that particular area conducted by Technologic Timber commenced in 1987. It was in 1989 that the full-tree chipping operation was the method of harvest in that particular locale.
Mr Wood: Okay. I'm just trying to get in my mind the change that was taking place, because it was relative to free trade and the 15% tariff in 1987. There were a lot of pulp and paper companies that said: "We're getting out of the business. We're shutting operations down." As a result we ended up with a chipping operation to supply their pulp mills.
Mr Pattyson: From 1987 through until 1989, Technologic Timber primarily produced sawlogs for sale to sawmills. That area had been declared surplus. There was no need for roundwood from that particular area. In fact Mr Mrakic in 1989, as he pointed out, brought the first full-tree mobile chipper into the forests of Ontario, and it was, as you are aware, an advance in technology.
He created basically his own market for chips at that point in time, and it was based on the success of his operation that Avenor more or less embarked upon its overall conversion from a roundwood operation to the present situation where they're relying more heavily on wood chips from the forests.
Mr Wood: In your presentation you were talking about the quality of chips of sawmills versus the quality of chips from chipping operations in the bush. I worked for 30 years in the paper mill, 20 of those years as a millwright and eight years as a tester, testing the chips when they were coming into the mills, testing the product that was going out as far as brightness, as far as quality, strength, all of these qualities were concerned.
Unless something has changed in the last four or five years since I got elected as a member of Parliament, chips coming from sawmills produce good quality strength kraft and they also produce good quality strength newsprint, and they do it in northeastern Ontario.
Mr Pattyson: There are three components. Basically the chips produced from the full-tree chipper utilize what is called a disc chipper. They have three components.
First of all, they can provide a consistent thickness, and if you have consistent thickness in the digester process, it makes for a much more even cooking, as the chemists tell us. The majority of sawmills utilize chip-and-saw pieces of equipment. They are rotary saws that take off a shaving at one end and bring it up to thickness, so they are not a constant thickness from one end to the other, whereas disc chippers are.
The other component of quality would deal with the juvenile wood versus the older wood. The older wood is in the centre of the tree. Chips from sawmills are the juvenile wood. They are the outside of the slabs, which is the faster-growing. They are a larger cellular configuration and they don't provide the right mixture in the cellular configuration aspect of it.
The third component deals with the brightness aspect of it. Traditionally a roundwood system will stockpile wood in the bush, it'll stockpile wood in the mill yard, and there's a time frame lapse anywhere from a month to six months before that particular wood gets into the pulping process.
The full-tree chipper is a hot logging operation generally from the day it's cut until the day it enters the digester. It could be anywhere from one day to seven days. It's fresher. When it's fresher, it maintains its whiteness and the product that's produced is much brighter, meaning that there is less bleach required to bring it up to that higher quality of paper.
Those are the three main areas where quality is significant.
Mr Wood: There are a number of operations that are finding ways of getting around that as well. I know the sawmills at Hearst have cranes that are about 75 feet in the air, and they can pile their wood to the point where they can keep the frost in the ground 12 months of the year so that at the bottom of the piles they have the fresh wood. It's very similar to a chipping operation because the wood is basically frozen all year round. There's technology, and I guess the equipment is very expensive to buy.
I'm just pointing out that when you go out and visit, as I have and Howard Hampton has done, you see the different operations that there are. Northeastern Ontario and northwestern Ontario have a different way of operating, from what I can understand right now, as a result of a number of changes I guess.
Talking to some of the people in the labour movement, one of their problems started back in 1974 when there was a strike and the strike never did get resolved, and it ended up with a lot of independent operators and a whole change of the woodlands operation, independent, more DCLs and independent loggers out there. Those are basically my comments if you want to comment further on that.
Mr Ramsay: You bring up what is a tough problem that we're really going to have to deal with. I'm from the northeast, and I probably see it a lot more than you have in the northwest here, this imbalance of how we extract the wood fibre when we've got a surplus of one form of chips that comes as a byproduct from lumber operations and the mills directly harvesting roundwood for chipping purposes.
As I crossed the highway to go to lunch today and as I came back, there was a Grant's Transport truck from New Liskeard hauling chips from the Elk Lake Planing Mill 60 miles west of New Liskeard all the way to the local mill here. I guess what's changed is our sense of how we use the bush. In the old days there was a lot of waste. As you know, now with modern equipment there's less waste, but we also want to use all the tree so we chip up what's left. So we have this surplus, and I guess the thing is what do we do with it.
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I don't think it's all that bad. In the situation usually what happens it's fairly well in balance, but if there's a strike at E.B. Eddy in Espanola, for instance, then the mills north of there in my area and further north into Mr Bisson's and Mr Wood's ridings can't send their chips that way. Or, if there's a strike up their way, again the chips are blocked and then it starts to shut down.
We just want to find that balance, and I guess you're caught in the middle a little bit as you're a jobber for Avenor here. But I think we can get a balance. I mean, whether we should be trucking chips all the way from Liskeard to here, I don't know if that makes sense, but I guess that's happened because the pressure is on from MNR and I suppose the Ministry of Environment to get rid of those piles and to get them used.
It's something we're going to have to work on together, and as the parliamentary assistant says, we're going to have to try to find a balance, I guess, so that everybody has their share of the bush and we use the fibre in the highest value way we can. I don't think there should be any real dramatic changes to this, but I think we're going to try to even out the work throughout northern Ontario so everybody can share the resource and use the resource on a sustainable basis. I understand your apprehension, though, because I guess some changes are probably going to come as a result of this. I wouldn't mind hearing more about this from you, for sure.
Mr Pattyson: On the particular instance that you just talked about, of the chip truck coming in from Elk Lake, I believe that in itself is finding its own niche in the marketplace. If the chips were of poor quality or if they were too expensive, I'm quite positive you wouldn't have seen that particular truck at lunchtime. Once again, I think it just comes down to the fact that the marketplace will determine the best destination for wood fibre.
Mr Ramsay: But if you've got a pulp operation that through its collective agreements, whatever, or through its contracting can harvest wood at a very good price, that's very competitive to the byproduct of the sawmills, do we allow the sawmill to keep piling up these chips when there's no market for them? I don't know how we do it, because I believe the marketplace should be working and I'd rather not see the government interfere in that.
But I just wonder, we do get into circumstances, as the parliamentary assistant has said, where you get a surplus of chips at a mill that means the mill has to stop, because there's enough cash tied up in those chips that they can't go on. They're not getting the full cash flow from their product. I haven't seen any problems lately, but there were problems back a few years ago and it sometimes happens if there are shutdowns we get problems. Maybe the problem today isn't as big as it once was. Maybe the marketplace is starting to adjust.
The Vice-Chair: Mr Brown has a question too.
Mr Brown: Conceptually I'm having a lot of difficulty understanding this. The limits you're on are Avenor's --
Mr Pattyson: That's correct.
Mr Brown: -- and if you weren't using the mechanical chipper, you would be taking that wood to the mill and they would be chipping it.
Mr Pattyson: Initially that would have been the situation. However, their future they've decided as being entirely with bringing fibre in chip form.
Mr Brown: I understand that.
Mr Pattyson: If we wish to continue to sell our product in the fibre form of chips, then basically we're locked into the situation we're in right now.
Mr Brown: I understand your position. All I'm saying is really what you've got is just an extension of the plant, so to speak, an extension of Avenor's processing plant, because now they're only taking chips, the chips are being processed elsewhere to go. You're just a middleman. I think I'm on your side. I'm starting to wonder why it's necessary to license you. The fibre would be going there anyway. That's why it's there. You're not chipping trees over, say, eight inches in diameter, or are you?
Mr Pattyson: Incorrect. We are, given the marketplace as it presently exists in Thunder Bay, putting all timber through a chipper at the present time.
Mr Bisson: All timber?
Mr Pattyson: At the present time, given market conditions in Thunder Bay, we are putting all fibre through the full-tree chipper.
Mr Brown: How large a tree can --
The Vice-Chair: I think Mr Mrakic wanted to respond as well. Did you want to respond?
Mr Mrakic: Yes, I'd like to say something. I am chipping in Quebec now. I have a chipper in Quebec, working for a company there. My chipper has landed right inside the lumber mill. What they're doing there, they're hauling in double trucks of wood from the bush. They give one load to us, which is from eight inches and down. And there is another truckload that goes right in and goes to the mill, and they're bringing all the trucks from the mill out to our chipper.
I said, "Why do you do that?" because we don't want to chip their tops; it's very hard. "Well," he said, "Your chips are much better, uniform. The companies like it better." We must be doing something right.
Mr Brown: So how big a tree can the chipper handle?
Mr Pattyson: Twenty-three inches.
Mr Brown: Up to 23 inches.
Mr Pattyson: Yes, that's maximum. And basically, you indicated that Technologic Timber is operating 250 kilometres as the crow flies; it's probably closer to 300 kilometres as the truck drives. Given the market conditions in Thunder Bay for equivalent volumes of fibre, a chip will bring 20% more revenue for 10% less cost, or 10% more cost when compared to a saw log.
Mr Brown: Do I have any more time?
Mr Pattyson: And that's a situation that's peculiar to northwestern Ontario.
Mr Brown: Essentially, though, the fibre is moving the way it would move otherwise. Is that what I'm hearing? They need the chips --
Mr Pattyson: That's correct.
Mr Brown: Those chips would be going into their limits.
Mr Pattyson: That's correct.
The Vice-Chair: Thank you very much for appearing before the committee. Obviously this seems to be a rather interesting operation, something new.
The next presenter is Mr Mike Quince, but I'm told he's not here yet. Is Mr Mike Quince here?
The presenter who was scheduled for 2:30 has cancelled, and so has the presenter for 3 o'clock. However, we did have Iain Angus scheduled for 2:30, who was to appear on Thursday and asked whether he could appear today. I just saw him and I'm not quite sure whether he might be ready to make his presentation.
Clerk of the Committee (Mr Franco Carrozza): We will need a few minutes to bring the screen down, and the projector.
The Vice-Chair: He will make his presentation now but he needs a few minutes to set up a projector. So we'll adjourn for 10 minutes. We'll be back in 10 minutes.
The committee recessed from 1359 to 1414.
IAIN ANGUS
The Vice-Chair: The committee is in session again and we're continuing our hearings. I'm pleased to say that --
Interjections.
The Vice-Chair: Could we have some order, please. I'm pleased to say that Mr Iain Angus, well-known representative of the north, has agreed to come before us today rather than the originally scheduled appearance on Thursday. I'm also glad that you were able to move your presentation up, since we do have a vacancy. You know what the process is: 30 minutes, with the usual questions and answers. So go right ahead. I guess we up front will probably move a little bit to the side, since I see that you want to use some of the modern equipment here.
Mr Iain Angus: Mr Chairman, members of the committee, I appreciate the opportunity to address you today. What I want to do is not talk about the sustainability of forests, but to talk about the sustainability of transportation, because without transportation, regardless of what legislation this committee may send back to the Legislature, we may not be able to get those trees out of the forests or the processed fibre to market.
I've spent a fair bit of time over the last six months looking at the whole issue of transportation, particularly by rail, across the north. I've been working on a specific rail line abandonment on behalf of the Buchanan group of companies and Avenor Inc, which used to be Canadian Pacific Forest Products, dealing with the abandonment of the Graham sub. As a result of that and some work that I did for the government of Ontario on the merger, I developed a new sense of understanding of the relationship between where the rail lines are, where the forests are, where the mills are and where the markets are that I think this committee would find certainly interesting and I think valuable as you weigh the various suggestions and pressures from mills and communities but, at the same time, tie it into the ability to move that fibre from where it starts to where it has to be sold.
I've got a map of the north. I'm wondering if somebody could grab the front set of lights and dim them a bit. The numbers on the screen represent the location of mills across the region: pulp mills, paper mills, sawmills. The blue lines that you see are the CN lines across the north, including the Graham sub, and what's called the Hillsport sub, which is the connection between Longlac and Nipigon on to Thunder Bay, and then the CN line, which will eventually be their only main line through Fort Frances on to Winnipeg, with the interconnection down to Duluth.
CP, on the other hand, is the red line, starting in Winnipeg, double track to Thunder Bay, then across the top of Lake Superior and on through to Sudbury. You also have Algoma Central, which will soon become, if it's not already, Wisconsin Central's operation as a short-line development.
You also have the interconnection between the CN and CP lines at Manitouwadge. However, the CN connection has been approved for abandonment by the National Transportation Agency and the CP line will probably follow suit once the Geco mine closes, which is destined to happen in a couple of years.
What I want to do is to try to indicate to you the kind of relationship there is between the various lines and the wood fibre. I want to use as an example the Buchanan group of companies' mill at Hudson, shown as number 5 on the map. Now, that mill, in some part, gets its roundwood from the area between Armstrong and Hudson, as well as within the basket within that area. Their finished products go out by rail from Hudson to Winnipeg, and then down into the United States market.
Now, they also produce chips as a byproduct. As we've recently come to realize, the relationship between the pulp and paper operations and the sawmill operations has never been closer because of the need to use as much of the fibre as possible. In fact, in some of the mills there is no waste any more. Whether it's the lumber they produce or the chips that are the byproduct or the sawdust, shaving and even bark, they all are used somewhere, usually not at the location where they're processed.
The chips, for example, from Hudson have gone and will go to the following locations: to the Dryden Avenor mill, to Avenor in Thunder Bay, to Terrace Bay -- although you'll be interested to know that to get those chips to Terrace Bay, CN takes them to Winnipeg, down to Fort Frances and back through Thunder Bay and across the top of Lake Superior. There are also chips that have gone to Red Rock -- I think I'm getting this right; it's hard to read upside down -- to Boise in Fort Frances, and then the Abitibi Mission mill in Thunder Bay.
So you can see that from one sawmill in a fairly isolated part of northern Ontario, you've got a lot of interconnections, both in terms of the other operating pulp and paper mills, but between the rail lines.
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Now, I mentioned that some of the chips go from Hudson to Terrace Bay by rail. They're also trucked from Hudson to the Avenor mill in Thunder Bay. I want to explain the reason why the two approaches.
Under the hours-of-work regulations for the province of Ontario, the maximum legal drive time in a day is about 12 hours. The Hudson mill is on good road, from Hudson to Sioux Lookout down to Thunder Bay, and you can do it legally, there and back, one shift. On the other hand, if you're going to Terrace Bay, even if you were coming direct as opposed to the roundabout way, you'd be into two drivers, and that adds that much more cost to the cost of the chip.
On the other hand, in that same area, and this ties into the Graham sub question, if one was hauling -- where are we here?
Interjection: Turn it over.
Mr Angus: Turn it over. Okay. Turn it over. Turn it upside-down? All right. Maybe that's why I'm a consultant now rather than an MP.
You'll notice this line here. That's roughly the limit of the hours-of-work regulations if you're working out of Thunder Bay and hauling roundwood from the area north of that line, because at that point you're off a main highway, you're off a secondary road, and in a lot of cases you're off the primary logging road, so you're down to something like 10 kilometres an hour in terms of speed. So that's as far as you can go in terms of trucking unless you want to get into a second shift and a 24-hour operation. As Avenor found when they did an experiment up in this area, the weather works against you. It may work okay on paper, but once you get into bad weather and things get delayed, you end up having to shut down for two or three days in order to get the cycle back in place. So everything above that point needs to come by rail -- or, I should say, a combination of truck to rail. You've got that mix as well. That's one example.
Let me take a look at the Sapawe mill down here near Atikokan. Its chips go to Fort Frances and to Avenor in Thunder Bay.
Now, Buchanan's got two operations in Thunder Bay, Northern Wood and Great West. A lot of their chips just go across town to Avenor's mill or to Abitibi's mill in Thunder Bay, but they also go to Domtar, they also go to James River Marathon, those two.
Farther along you've got Dubreuilville, which is number 14. Its chips go to James River on the north shore. Over even farther, and I guess it's off the map, is Gogama Forest Products and Haavaldshrude which supply chips to Thorold, a fairly significant quantity.
In addition, you've got mills at Longlac that primarily ship out their finished products, or will once the Longlac mill gets up and running, assuming it does. They will go out by rail. Most of the finished products from the northern sawmills can only go out economically by rail. If you get into small quantities by truck on a continuous basis for long hauls, you just can't do it. It's just not economically viable.
So you've got a relationship between the northern line and the southern line, so if you lose one, you affect the viability of the remaining mills on the remaining line.
The other aspect that I wanted to draw to your attention is the real interrelationship between the forests and the mills, the sawmills and the pulp and paper mills, more than we've ever seen before. It's almost like the Buchanan operation has taken over what on the federal scene we would see the western grain transportation agency do, which is to control the movement of grain from the farm gate to the elevator in Thunder Bay, to make sure there is sufficient volume at each of the elevators that's been assigned from the appropriate source so there's some balance. Buchanan has been providing that kind of function among the whole region, a function that normally would have been done by government, but they filled a niche.
I guess the key thing I want to point out is that when you look at the legislation that's before you tested against the sustainability of transportation, don't look at it in isolation of just the forests, but if you want to have a viable forest industry you've got to have the ability to move those products in an effective, efficient way that is appropriate for the producer. Because keep in mind that the bottom line is that the only person who sets the price is the market. The lumber manufacturer doesn't set the price, the guy who cuts the tree doesn't set the price, the pulp and paper mill doesn't set the price. It's the market that does. The only thing that you control is the input costs, and so that has an overall impact on the viability.
Mr Chairman, that's probably where I should stop, and it would probably be a bit more productive for me to respond to questions. I'll take it from you whether you want me to leave the slide up.
Mr Bisson: Thank you very much, Mr Angus. I take it what you're saying is that you have some fears in regard to the sustainability of those operations vis-à-vis the abandonment. Is that what you're driving at here?
Mr Angus: Yes. For example, the McKenzie Forest Products mill in Hudson, the Buchanan group of companies and Avenor have filed an appeal with the federal cabinet to ask for a variance in the abandonment of the Graham subdivision beyond the September 1 abandonment date because of the fear that if the northern line is abandoned by CN at some point in the next six months to two years, as they continue the rationalization, then that mill would be left without any rail access at all, whereas if the Graham sub was kept in place, at the very least there would be an opportunity to move their finished goods from the Hudson mill to market.
Mr Bisson: The Graham sub is the one from Thunder Bay up to Hudson?
Mr Angus: That's correct.
Mr Bisson: So what you're saying is that the cost of shipping the chips would increase to the point that it would really affect the viability of the mill itself.
Mr Angus: Yes. But also in the context of the northern line, the cost of shipping the finished product, the lumber that mill produces, would be beyond what the market is prepared to pay, and therefore that mill would not be viable. The same thing applies to Weldwood in Longlac, when they indicated to me that without that rail connection between Longlac and Thunder Bay, they don't believe they could survive to place their product in the US market having to truck it, or a combination of truck to rail in Thunder Bay or Nipigon, where you've got the additional handling costs.
Mr Bisson: I take it you're not asking to address that in this legislation, though.
Mr Angus: I don't think you can. I think that as you review the elements of the legislation, you keep in mind the relationship with transportation, but also as politicians that you keep in mind the importance of the rail system -- and not just in the north, and I mentioned the connection to Thorold; there's an interrelationship to southern Ontario as well -- in other aspects of your work.
1430
Mr Bisson: Pardon me, but being from northeastern Ontario, I guess I'm not reading the northwestern media, but are people concerned about this? Is that a public discussion? I know the discussion through what I hear through northeastern Ontario about the abandonment, but it's not quantified in any way like you have today.
Mr Angus: Two weeks ago, at the end of July, I hosted a conference here in Thunder Bay where representatives from about 22 to 25 different communities, a number of forest companies, economic development offices and unions came together to deal with the subject of what at that time we thought was a merger -- that's certainly the rationalization -- and they've created a cross-regional committee that will be looking at the whole question of the rail issues to, quite frankly, put forward a request for a national transportation policy related to the region but with a moratorium of any abandonments until such time as that's in place.
So the quick answer is: There is a lot of concern certainly at this end. I think when you look at the map, most of the lines in question are west of Sudbury, at least in the public view, although the reality is that we could end up with one line connecting northern Ontario and southern Ontario. So two out of the three that currently connect the north to the south would be gone. That's entirely possible.
Mr Bisson: Has it been quantified in any kind of way, if the northern line was abandoned, not only railway jobs but what jobs would be at stake in the forestry industry? Can you quantify that in any way?
Mr Angus: I don't have it with me, but certainly we've quantified, for the purposes of the Graham sub, the job loss in Hudson. If that mill were to close, we're talking, direct and indirect, about 1,200 jobs. If Northern Wood Preservers, which is the one that's linked to the Graham sub, and Avenor's A-kraft mill were to close, we're talking in the magnitude of 2,000 jobs.
The government of Ontario, through Northern Development and Mines, is in the final process of having a consultant complete an assessment of the economic impact of both lines. I'm told that is going to be out within the next few days or the next week or two; it's that close to completion. That will give us an idea of the numbers both jobwise and also in terms of revenues for governments -- provincial, federal, municipal -- revenues and expenditures related to the lines.
The Vice-Chair: I must say it's a bit tough for me here to hold back as Chairman, because I also happen to be Transportation critic for my party, but I'm strictly non-partisan today.
Mr Angus: You can always ask the committee for disposition.
Mr Miclash: Iain, thanks for the information you brought forward here. You mentioned your cross-regional committee, and that's something that I've taken a little interest in. I was just wondering if you could maybe expand on that in terms of its makeup and where it's going from today. What is its next step?
Mr Angus: In terms of its makeup, we've done a fairly good job of making sure that we've got people from the west, the centre and the east. I had two individuals, Ed Hoshizaki, from the Sioux Lookout economic development office, and Bob Krause, the reeve of Schreiber, act as the unofficial nominating committee, and they went through the group. We had about 70 to 80 people who were there. We got people from Sudbury, Capreol, Hanmer, Hornepayne, Schreiber, Thunder Bay. The mayor of Dryden will represent NOMA. The president of the Northwestern Ontario Associated Chambers of Commerce either will be on it or we'll have somebody from the chambers. We've got the rail unions well involved: BLE, UTU, CAW and -- I'm missing somebody. I can't think of the other one offhand, but it's a good cross-section, non-partisan. They will be holding their first meeting in Thunder Bay this coming Monday.
Now, coming out of the conference, they established the group itself, their priorities. Their first priority was the need for a national transportation policy that reflected the needs of this region, and that's their first goal. The second goal is research: They've got to understand what works, what doesn't work. I'd say their bottom line is to make rail more viable in the north. They're not a group that wants to keep it for the sake of keeping it, because it's nice to have, but they recognize the need for a viable railway operation. The third thing they wanted was a moratorium until such time as this work has been put in place. They were really fearful that, with all good intentions, they just wouldn't have anything to work on.
Mr Brown: This is, of course, an issue in the northeast too, where I'm from. All you have to do is talk to our friend Frank Mazucca in Capreol and you'll know that it's an issue.
Iain, have you done any work on what kind of costs it would be to the forest industry? You've told us that it would take two drivers. In worst-possible-case scenario, what would this do to the competitiveness of these mills? Obviously, the transportation is going to increase -- maybe not obviously, but the transportation may increase, and that would impact on their viability. What kind of cost increases do you see?
Mr Angus: I honestly can't answer that. I only have anecdotal information beyond the work that I did for Avenor and Buchanan to take a look at the relationship between the Graham subdivision and their operations. But just from that, Avenor indicated that one third of their fibre will have to come from the area that's served by the Graham sub. Buchanan, on the other hand, indicated that one half of the fibre that it needs for its Thunder Bay operations will have to come from that area. That's why they indicated -- they weren't my words -- that Northern Wood was in jeopardy and that the A-kraft mill at Avenor was in jeopardy if they could not get the wood out of that area at a price that fit into their overall financial package.
But secondly, my understanding of the report that's being done by the Hackston Firm out of Ottawa for MNDM is that they have discussed with the forest companies those kinds of specifics. It's a very technical document, focusing on the financial side, and I gather that it will answer that question in a very straightforward way.
Mr Brown: If I understand it right, the decision has been taken to abandon this line, and it's now under appeal?
Mr Angus: That's correct.
Mr Brown: That's correct?
Mr Angus: Yes.
Mr Brown: Are there any discussions going on in terms of a new railroad to take the place of the existing one, a short line, so to speak, maybe an Algoma Central sort of approach or whatever?
Mr Angus: There is one firm in Thunder Bay which has already written to CN indicating that it wants to begin the process of negotiating the acquisition of the line. There's a second company, again locally, which is considering whether or not it wants to spend some money looking at the option. Certainly, I have had indications from two of the rail unions that they would be quite willing to sit down with whoever was going to purchase that line and hammer out a collective agreement that made sense for that particular operation. In fact, our appeal to cabinet in part hinged on buying time to find a short-line operator.
Mr Brown: You just mentioned the forest companies in this, but there would obviously be some mining interests here?
Mr Angus: No.
Mr Brown: Not obviously?
Mr Angus: One of the reasons the line is being shut down is because the Mattabi mine has gone out of business because it's exhausted its ore body. In checking with the regional geologists in both Thunder Bay and Sioux Lookout, they indicated that the likelihood of any kind of base metal development in the next 20 years was pretty slim, so we decided right off the bat not even to pursue that any further and just recognize that we're in the wood game and that's the only one that's there that relates to the line.
1440
Mr Brown: I know my constituents would be most happy to get most of the forest products moving by rail rather than driving down Highway 17. I wish you luck.
Mr Carr: Thanks very much for your presentation. I was glad to see that you're working hard and getting some things done. I was, as you know, looking at the situation. Having been involved in politics, you'll see how things interrelate. You've got one industry that was suffering, the railways, so they took some options that then spin on down and affect everybody else.
Looking at this, do you think there is a plan that is going to be able to come about with all the players involved that is going to make it so that, first of all, the railways are viable, because they need to remain to do it? Are you convinced that there is some type of plan out there that can be done that can make sure that all the players remain a part, because as we see here, it's so vital to all the communities up here? Are you optimistic that there's going to be some type of agreement that we can come up with?
Mr Angus: Let me respond this way: There is no plan today. The only plan that I've seen is just the desire of the railway companies to reduce their operating costs, to relate to the reality of their bottom line. I could get into a good debate with them about whether they're including the right things and whether they're really losing as much money in eastern Canada as they say they are.
I think, though, that we really do need a national transportation strategy that puts all the players together and says, "Okay, we've got rail, we've got road, we've got marine. What's the best use for each of these modes as it relates to cost-effectiveness for the users? What's the best in terms of the environment, in terms of energy?" and work out a federal-provincial package that will emphasize the right things at the right place. Truck has a legitimate role to play. In the bush operations alone, that's the only game in town. For long haul, I think rail makes more sense. And then marine: We're still a thriving port here, but we could be doing a lot more than we're doing today because of some of the shifts at the federal level and international level.
So I guess the only message I can leave you with is the need for a national strategy. Ontario can't do it by itself; it's just one player. The federal government really can't do it by itself, because it doesn't have total jurisdiction. The feds gave up trucking a number of years ago to the provincial level and in effect lost control of that aspect of it, plus the highways are controlled by the provinces. So until you've got an integrated system, you're going to have these kinds of pressures and problems.
Mr Carr: One last question as it relates to the Ontario government. As you know, there are probably a lot of ministries that are involved in this process. I would assume it would be the Ministry of Transportation that has taken the lead role, but which ministries are you working through? Where do you see the Ontario government? Who's going to take the lead in helping you work this out?
Mr Angus: There are actually a number of players. On the Graham sub, relative to the intervention before the MTA, the Ministry of Transportation was very, very supportive. They participated in the hearings jointly with Avenor, Buchanan, the town of Sioux Lookout, the city of Thunder Bay and others. Subsequently, once we appealed, MTO filed its own appeal with the federal cabinet. That has been of great assistance.
At the same time, the Ministry of Northern Development and Mines has entered into the economic analysis, much like MTO entered into the community consultations which I did on their behalf throughout the north this winter, and then again through Frances Lankin's ministry -- and I've lost track of what the labels of some of the ministries are these days -- there's a task team based in that organization that is working to facilitate the creation of short lines. So it's a multilayered activity but it's coordinated.
Mr Carr: One last question too. Your contacts in Ottawa, are you hearing any feedback on what the decision will be from the cabinet? What is a date that they're looking at for getting a decision? Do you know?
Mr Angus: Let me answer that last part first. They have to render a decision by midnight on August 31, because on September 1 CN starts ripping up the tracks. That's their deadline. Cabinet meets on the 30th. I met with the Deputy Minister of Transport a week and a half ago, and my sense is that we may in fact get a favourable response. We're not going to get a three-year extension, but we might get some time in order to put a short line together.
Mr Carr: Okay, good luck.
The Vice-Chair: Do you have a question, Mr Hodgson?
Mr Hodgson: You mentioned the connection between rail, road and marine. It's been suggested that the north needs four-lane highways. Would that alleviate some of the rail, as you see it? What's the connection there, in your opinion?
Mr Angus: The desire for four-laning of the Trans-Canada in particular sections has more to do with the perceived safety of the travelling public than any economic spinoffs. The highways are not cluttered, they're not congested like they are in southern Ontario, except from 3:30 to 5:30 on summertime weekdays. That's about the only time you see any congestion. It's a question of safety; it's a question of security.
There are a number of parts in the north where Highways 11 and 17 are together. As Mr Miclash will recall, when Kenora was shut down and the Trans-Canada was shut down a number of years ago because of a PCB spill, there was no alternate Canadian route, because it was a single corridor. We've got sections on either side of Thunder Bay where that's the case, and those are the areas that are being twinned. That makes sense to ensure that we can always move Canadian goods within Canada and not have to rely on transportation through the United States, where we're subject to non-tariff action.
In terms of the relationship with rail, I don't think the limited four-laning that's happening at this end will have any impact at all, because again you're in the short-haul areas. You're always going to truck from Nipigon to Thunder Bay if it's a wood product from a plant to a plant. You'll rail from Nipigon to the final market, because it's a long haul. It just makes sense. But in the Highway 69 area, that, I suspect, will have some impact, make highway transport a bit more attractive than rail, continuing the progression that's occurred over the last 10 or 15 years.
Mr Hodgson: Thank you. I appreciate that.
The Vice-Chair: Thank you, Mr Angus, for giving us a different perspective. It all has to do with sustainability, I guess. We certainly appreciate your appearance at this time and the perspectives that you've brought to this bill and to our discussions.
Mr Brown: He was our first consultant, I think, and certainly our first one with audiovisuals.
The Vice-Chair: The first consultant with audiovisuals. Thank you very much. Now, let me ask again, is Mr Mike Quince here? Since I hear no one respond to this name and the two other presenters have cancelled, this meeting now stands adjourned until tomorrow, 8:30, I'd like to remind the members of the committee, in Fort Frances. The minister will be making a brief presentation.
The committee stands adjourned.
The committee adjourned at 1448.