Big Companies and Big Government Need to Reinvest In Our region

By Peter Ewart

When we think about what to do about the pine beetle epidemic that is hitting our region, the question inevitably comes up:  Where is the money going to come from to help our region recover and renew itself in the wake of the damage caused by the pine beetle?  Will it come from the big governments in Victoria and Ottawa?  Will it come from the big forestry companies?  Are they, in their offices and boardrooms far away, going to take pity on their poor country cousins and seriously help out? 

But to present the issue this way is to do so upside down.  The fact of the matter is that we, as a region, for many decades have been producing far more wealth than we would ever need to cope with the pine beetle issue.  Indeed, we have “two taps” that stream much of that wealth out of the North every year to the tune of hundreds of millions of dollars, and, over the last forty years, in the many billions of dollars.

The first “tap” is the corporate revenue and profits that the big forest companies get from the region and invest in operations elsewhere, as well as distribute to shareholders in Vancouver, Toronto, New York and abroad. 

The second “tap” is the huge amount of revenue that the governments in Victoria and Ottawa obtain through stumpage, royalties and taxes.

As a result of these two “taps”, both the big companies and the big governments have done very well by our region and our communities over the last 40 years, accumulating untold billions of revenue. 

For this arrangement to be workable, however, the big companies have to continually reinvest in their operations, timber holdings and infrastructure in the region.  And the big governments have to continually reinvest in community infrastructure, such as health, education, social services, transportation, environment, etc., as well as retraining, economic development, and so on.  Without this reinvestment, the industry and the communities of the region will go into decline.

In the wake of the pine beetle, that is the fundamental question on many people’s minds:  Will the big companies and the big governments step up to the plate to ensure that the region can renew and revitalize itself? 

There are some reasons to be concerned.  For example, Canfor, the largest forest company in this region, has remained non-committal as to whether the hundreds of millions it will be getting back through the Softwood Lumber deal will be reinvested in this region or somewhere else. 

Recently, as part of its “global building products strategy”, Canfor has been investing in mills in Southern United States that will be milling logs from offshore sources such as Europe and Russia.  In addition, it is hiving off its three local pulp mills into an “income trust”, a move many believe is the first step towards selling these mills off and getting out of the pulp & paper industry altogether. 

That being said, some reinvestment is planned.  For example, Ainsworth Lumber Co. intends to invest $400 million in operations in this region to increase its oriented strandboard production.  And Canfor is investing $45 million for a wood pellet plant in Houston, BC.  But the levels of reinvestment are clearly not enough.

Without substantial reinvestment, lumber and pulp & paper manufacturing operations in this region will face strong challenges from other countries, and, as the pine beetle infestation cuts into the amount of fibre available, quite possibly shrink or wither away.  One of the reasons why the North of BC is known as a world leader in forestry manufacturing is because in previous decades, large amounts of money were reinvested in manufacturing operations, resulting in a highly productive industry.  Today, for the industry to move ahead, a similar reinvestment is necessary, not only into existing operations but also into secondary manufacturing which this region badly needs to create more breadth and diversification in the economy.

The full extent of government funding and reinvestment that will be forthcoming is also uncertain, although the commitments from the federal government are considerably larger and more definite than the provincial government.  Prior to the last election, the federal government pledged $1 billion over ten years to deal with the pine beetle problem.  In the most recent budget $400 million was allocated over two years.  But questions still remain.  Is this funding enough?  And will it go to communities or to the big forestry companies, allowing the forest companies to beg off what they should be reinvesting?

Provincially, a definite commitment to substantial, long term funding has not been forthcoming.  The Northern Trust Initiative has received $50 million from the provincial government earmarked for beetle funding and there has also been a pledge of $90 million over three years for rehabilitation of Northern roads.  In addition, the Cariboo-Chilcotin Beetle Action Committee has been given $1.7 million and the Omineca Beetle Action Committee, $800,000.  Other “beetle” money that is being distributed by the provincial government originates from federal funds, and cannot claim to be truly provincial in origin.  Clearly, these amounts are nowhere near what is necessary to renew the vast forests and the many communities in this region that face severe challenges.

All of this demonstrates that the people of the North must be vigilant to ensure the big forest companies and the big governments are held accountable and do not walk away from their commitments.  Reinvestment by both is not an option for our region.  It is a necessity.

Peter Ewart is a writer, community activist and instructor in Prince George, BC.  He can be reached at peter.ewart@shaw.ca

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