British Columbia Committee Hansard (Blues) — 31 July 2020, p.m., Issue 19 (41st Parliament, 5th Session) (20200731am CommitteeA n19)

20200731am CommitteeA n19

British Columbia — Debates (Hansard)

Fifth Session, 41st Parliament REPORT OF PROCEEDINGS (HANSARD) COMMITTEE OF SUPPLY ,

SECTION A Virtual Meeting Friday, July 31, 2020 Morning Meeting Issue No. 19 Presiding Officers: RAJ CHOUHAN, DEPUTY SPEAKER SPENCER CHANDRA HERBERT, DEPUTY CHAIR, COMMITTEE OF THE WHOLE ISSN 2563-3511

PROVINCE OF BRITISH COLUMBIA (Entered Confederation July 20, 1871) LIEUTENANT-GOVERNOR Her Honour the Honourable Janet Austin, OBC Fifth Session, 41st Parliament SPEAKER OF THE LEGISLATIVE ASSEMBLY Honourable Darryl Plecas EXECUTIVE COUNCIL Premier and President of the Executive Council ............................................................................................................... Hon. John Horgan Deputy Premier and Minister of Finance............................................................................................................................Hon.

Carole James Minister of Advanced Education, Skills and Training..................................................................................................... Hon. Melanie Mark Minister of Agriculture.........................................................................................................................................................Hon. Lana Popham Attorney General.................................................................................................................................................................Hon.

David Eby, QC Minister of Children and Family Development ............................................................................................................ Hon. Katrine Conroy Minister of State for Child Care...................................................................................................................................... Hon. Katrina Chen Minister of Citizens’ Services...................................................................................................................................................Hon.

Anne Kang Minister of Education ............................................................................................................................................................ Hon. Rob Fleming Minister of Energy, Mines and Petroleum Resources ..................................................................................................... Hon. Bruce Ralston Minister of Environment and Climate Change Strategy............................................................................................. Hon.

George Heyman Minister of Forests, Lands, Natural Resource Operations and Rural Development ..............................................Hon. Doug Donaldson Minister of Health .....................................................................................................................................................................Hon. Adrian Dix Minister of Indigenous Relations and Reconciliation ......................................................................................................... Hon.

Scott Fraser Minister of Jobs, Economic Development and Competitiveness.............................................................................Hon. Michelle Mungall Minister of State for Trade...............................................................................................................................................Hon. George Chow Minister of Labour ...................................................................................................................................................................Hon.

Harry Bains Minister of Mental Health and Addictions............................................................................................................................ Hon. Judy Darcy Minister of Municipal Affairs and Housing.................................................................................................................. Hon. Selina Robinson Minister of Public Safety and Solicitor General ........................................................................................................... Hon.

Mike Farnworth Minister of Social Development and Poverty Reduction..............................................................................................Hon. Shane Simpson Minister of Tourism, Arts and Culture.....................................................................................................................................Hon. Lisa Beare Minister of Transportation and Infrastructure................................................................................................................ Hon.

Claire Trevena LEGISLATIVE ASSEMBLY Leader of the Official Opposition................................................................................................................................Andrew Wilkinson, QC Leader of the Third Party .................................................................................................................................................................Adam Olsen Deputy Speaker................................................................................................................................................................................

Raj Chouhan Assistant Deputy Speaker............................................................................................................................................................. Simon Gibson Deputy Chair, Committee of the Whole ................................................................................................................ Spencer Chandra Herbert Clerk of the Legislative Assembly ...........................................................................................................................................

Kate Ryan-Lloyd Law Clerk and Parliamentary Counsel.............................................................................................................................. Seunghee Suzie Seo Clerk Assistant, Parliamentary Services...........................................................................................................................

Artour Sogomonian Clerk Assistant, Committees and Interparliamentary Relations ..............................................................................................Susan Sourial Senior Research Analyst ................................................................................................................................................................. Jennifer Arril Senior Research Analyst ...................................................................................................................................................................

Karan Riarh Acting Sergeant-at-Arms..................................................................................................................................................................Greg Nelson

ALPHABETICAL LIST OF MEMBERS Ashton, Dan (BC Liberal) ......................................................................... Penticton Bains, Hon. Harry (NDP)................................................................ Surrey-Newton Barnett, Donna (BC Liberal) .....................................................Cariboo-Chilcotin Beare, Hon. Lisa (NDP)..............................................

Maple Ridge–Pitt Meadows Begg, Garry (NDP) .......................................................................Surrey-Guildford Bernier, Mike (BC Liberal) .........................................................Peace River South Bond, Shirley (BC Liberal)...........................................Prince George–Valemount Brar, Jagrup (NDP).......................................................................Surrey-Fleetwood Cadieux, Stephanie (BC Liberal)........................................................

Surrey South Chandra Herbert, Spencer (NDP) .......................................Vancouver–West End Chen, Hon. Katrina (NDP)...................................................... Burnaby-Lougheed Chouhan, Raj (NDP) .................................................................Burnaby-Edmonds Chow, Hon. George (NDP).................................................Vancouver-Fraserview Clovechok, Doug (BC Liberal) ..................................Columbia River–Revelstoke Coleman, Rich (BC Liberal) ................................................................ Langley East Conroy, Hon.

Katrine (NDP)...........................................................Kootenay West Darcy, Hon. Judy (NDP) ............................................................. New Westminster Davies, Dan (BC Liberal) ........................................................... Peace River North de Jong, Michael, QC (BC Liberal) ..............................................Abbotsford West Dean, Mitzi (NDP)................................................................ Esquimalt-Metchosin D’Eith, Bob (NDP) ................................................................Maple Ridge–Mission Dix, Hon.

Adrian (NDP)....................................................... Vancouver-Kingsway Donaldson, Hon. Doug (NDP)...................................................................... Stikine Eby, Hon. David, QC (NDP).............................................. Vancouver–Point Grey Elmore, Mable (NDP).........................................................Vancouver-Kensington Farnworth, Hon. Mike (NDP) ........................................................Port Coquitlam Fleming, Hon. Rob (NDP) ......................................................

Victoria–Swan Lake Foster, Eric (BC Liberal).............................................................Vernon-Monashee Fraser, Hon. Scott (NDP) ..................................................Mid Island–Pacific Rim Furstenau, Sonia (BC Green Party) .............................................Cowichan Valley Gibson, Simon (BC Liberal) ...................................................Abbotsford-Mission Glumac, Rick (NDP).........................................................Port Moody–Coquitlam Heyman, Hon. George (NDP) ................................................Vancouver-Fairview Horgan, Hon.

John (NDP) ................................................ Langford–Juan de Fuca Hunt, Marvin (BC Liberal) ........................................................ Surrey-Cloverdale Isaacs, Joan (BC Liberal) .......................................... Coquitlam–Burke Mountain James, Hon. Carole (NDP).................................................... Victoria–Beacon Hill Johal, Jas (BC Liberal).................................................Richmond-Queensborough Kahlon, Ravi (NDP)............................................................................... Delta North Kang, Hon.

Anne (NDP)......................................................... Burnaby–Deer Lake Kyllo, Greg (BC Liberal)..............................................................................Shuswap Larson, Linda (BC Liberal) .............................................. Boundary-Similkameen Lee, Michael (BC Liberal) ........................................................Vancouver-Langara Leonard, Ronna-Rae (NDP) ..................................................... Courtenay-Comox Letnick, Norm (BC Liberal).............................................

Kelowna–Lake Country Ma, Bowinn (NDP) .....................................................North Vancouver–Lonsdale Malcolmson, Sheila (NDP) ........................................................................Nanaimo Mark, Hon. Melanie (NDP) .......................................Vancouver–Mount Pleasant Martin, John (BC Liberal)....................................................................... Chilliwack Milobar, Peter (BC Liberal)..................................... Kamloops–North Thompson Morris, Mike (BC Liberal) ........................................... Prince George–Mackenzie Mungall, Hon.

Michelle (NDP)......................................................Nelson-Creston Oakes, Coralee (BC Liberal) ............................................................ Cariboo North Olsen, Adam (BC Green Party)............................ Saanich North and the Islands Paton, Ian (BC Liberal).......................................................................... Delta South Plecas, Hon. Darryl (Ind.) ........................................................... Abbotsford South Polak, Mary (BC Liberal) ............................................................................. Langley Popham, Hon.

Lana (NDP)............................................................... Saanich South Ralston, Hon. Bruce (NDP) ............................................................Surrey-Whalley Redies, Tracy (BC Liberal) .......................................................Surrey–White Rock Reid, Linda (BC Liberal) ................................................. Richmond South Centre Rice, Jennifer (NDP) ............................................................................. North Coast Robinson, Hon.

Selina (NDP) .........................................Coquitlam-Maillardville Ross, Ellis (BC Liberal)................................................................................... Skeena Routledge, Janet (NDP) ....................................................................Burnaby North Routley, Doug (NDP) ................................................. Nanaimo–North Cowichan Rustad, John (BC Liberal) ................................................................Nechako Lakes Shypitka, Tom (BC Liberal) ..............................................................

Kootenay East Simons, Nicholas (NDP) ......................................... Powell River–Sunshine Coast Simpson, Hon. Shane (NDP)..................................................Vancouver-Hastings Sims, Jinny (NDP) ........................................................................ Surrey-Panorama Singh, Rachna (NDP) .........................................................Surrey–Green Timbers Stewart, Ben (BC Liberal) ................................................................. Kelowna West Stilwell, Michelle (BC Liberal)...............................................

Parksville-Qualicum Stone, Todd (BC Liberal)..........................................Kamloops–South Thompson Sturdy, Jordan (BC Liberal)........................................ West Vancouver–Sea to Sky Sullivan, Sam (BC Liberal)................................................ Vancouver–False Creek Sultan, Ralph (BC Liberal) ...........................................West Vancouver–Capilano Tegart, Jackie (BC Liberal) ................................................................. Fraser-Nicola Thomson, Steve (BC Liberal)......................................................

Kelowna-Mission Thornthwaite, Jane (BC Liberal) ...............................North Vancouver–Seymour Throness, Laurie (BC Liberal) .......................................................Chilliwack-Kent Trevena, Hon. Claire (NDP) ................................................................North Island Wat, Teresa (BC Liberal) ................................................. Richmond North Centre Weaver, Dr.

Andrew (Ind.)................................................Oak Bay–Gordon Head Wilkinson, Andrew, QC (BC Liberal) ................................Vancouver-Quilchena Y ap, John (BC Liberal)............................................................Richmond-Steveston LIST OF MEMBERS BY RIDING Abbotsford-Mission............................................................................Simon Gibson Abbotsford South....................................................................... Hon. Darryl Plecas Abbotsford West......................................................................

Michael de Jong, QC Boundary-Similkameen...................................................................... Linda Larson Burnaby–Deer Lake....................................................................... Hon. Anne Kang Burnaby-Edmonds................................................................................Raj Chouhan Burnaby-Lougheed .................................................................... Hon. Katrina Chen Burnaby North .................................................................................

Janet Routledge Cariboo-Chilcotin .............................................................................Donna Barnett Cariboo North.................................................................................... Coralee Oakes Chilliwack ............................................................................................... John Martin Chilliwack-Kent ...............................................................................Laurie Throness Columbia River–Revelstoke .........................................................

Doug Clovechok Coquitlam–Burke Mountain.................................................................. Joan Isaacs Coquitlam-Maillardville ...................................................... Hon. Selina Robinson Courtenay-Comox................................................................... Ronna-Rae Leonard Cowichan Valley .............................................................................

Sonia Furstenau Delta North.............................................................................................Ravi Kahlon Delta South ..................................................................................................Ian Paton Esquimalt-Metchosin ..............................................................................Mitzi Dean Fraser-Nicola .........................................................................................

Jackie Tegart Kamloops–North Thompson .............................................................Peter Milobar Kamloops–South Thompson..................................................................Todd Stone Kelowna–Lake Country .....................................................................Norm Letnick Kelowna-Mission ..............................................................................

Steve Thomson Kelowna West ..........................................................................................Ben Stewart Kootenay East.......................................................................................Tom Shypitka Kootenay West........................................................................ Hon. Katrine Conroy Langford–Juan de Fuca .............................................................. Hon. John Horgan Langley .....................................................................................................

Mary Polak Langley East.........................................................................................Rich Coleman Maple Ridge–Mission.............................................................................. Bob D’Eith Maple Ridge–Pitt Meadows............................................................Hon. Lisa Beare Mid Island–Pacific Rim................................................................ Hon. Scott Fraser Nanaimo......................................................................................

Sheila Malcolmson Nanaimo–North Cowichan............................................................... Doug Routley Nechako Lakes........................................................................................ John Rustad Nelson-Creston ................................................................... Hon. Michelle Mungall New Westminster........................................................................... Hon. Judy Darcy North Coast ...........................................................................................

Jennifer Rice North Island.............................................................................. Hon. Claire Trevena North Vancouver–Lonsdale................................................................... Bowinn Ma North Vancouver–Seymour........................................................Jane Thornthwaite Oak Bay–Gordon Head............................................................Dr.

Andrew Weaver Parksville-Qualicum.......................................................................Michelle Stilwell Peace River North ................................................................................... Dan Davies Peace River South ................................................................................ Mike Bernier Penticton ................................................................................................. Dan Ashton Port Coquitlam...................................................................... Hon.

Mike Farnworth Port Moody–Coquitlam.......................................................................Rick Glumac Powell River–Sunshine Coast....................................................... Nicholas Simons Prince George–Mackenzie....................................................................Mike Morris Prince George–Valemount ..................................................................

Shirley Bond Richmond North Centre..........................................................................Teresa Wat Richmond-Queensborough.........................................................................Jas Johal Richmond South Centre ......................................................................... Linda Reid Richmond-Steveston ...................................................................................

John Y ap Saanich North and the Islands .............................................................Adam Olsen Saanich South .............................................................................Hon. Lana Popham Shuswap...................................................................................................... Greg Kyllo Skeena........................................................................................................... Ellis Ross Stikine....................................................................................Hon.

Doug Donaldson Surrey-Cloverdale ................................................................................ Marvin Hunt Surrey-Fleetwood.....................................................................................Jagrup Brar Surrey–Green Timbers........................................................................Rachna Singh Surrey-Guildford......................................................................................Garry Begg Surrey-Newton ..............................................................................Hon.

Harry Bains Surrey-Panorama ...................................................................................... Jinny Sims Surrey South ................................................................................ Stephanie Cadieux Surrey-Whalley ......................................................................... Hon. Bruce Ralston Surrey–White Rock .............................................................................. Tracy Redies Vancouver-Fairview.............................................................. Hon.

George Heyman Vancouver–False Creek........................................................................ Sam Sullivan Vancouver-Fraserview...............................................................Hon. George Chow Vancouver-Hastings ............................................................... Hon. Shane Simpson Vancouver-Kensington....................................................................... Mable Elmore Vancouver-Kingsway..................................................................... Hon.

Adrian Dix Vancouver-Langara................................................................................ Michael Lee Vancouver–Mount Pleasant..................................................... Hon. Melanie Mark Vancouver–Point Grey ............................................................Hon.

David Eby, QC Vancouver-Quilchena........................................................Andrew Wilkinson, QC Vancouver–West End .....................................................Spencer Chandra Herbert Vernon-Monashee ....................................................................................Eric Foster Victoria–Beacon Hill.................................................................. Hon. Carole James Victoria–Swan Lake.................................................................... Hon. Rob Fleming West Vancouver–Capilano...................................................................

Ralph Sultan West Vancouver–Sea to Sky................................................................Jordan Sturdy Party Standings: BC Liberal 42; NDP 41; Independent 2; BC Green Party 2

CONTENTS Friday, July 31, 2020 Morning Meeting Page Committee of Supply Proceedings in

Section A ......................................................................................................................................................... 341 Estimates: Ministry of Forests, Lands, Natural Resource Operations and Rural Development(continued) J. Rustad Hon. D. Donaldson

FRIDAY , JULY 31, 2020 The committee met at 9:33 a.m. [R. Leonard in the chair.] Committee of Supply Proceedings in

Section A ESTIMATES: MINISTRY OF FORESTS, LANDS, NATURAL RESOURCE OPERATIONS AND RURAL DEVELOPMENT (continued) On Vote 29: ministry operations, $489,126,000 (continued). The Chair:I want to recognize that I am participating today from the homeland of theLək̓ ʷəŋin̓ əŋ-speaking peoples, known as the Songhees and Esquimalt Nations. We extend our appreciation to them for the opportunity to undertake the work before us on this land. We are meeting today to continue consideration of the estimates of the Ministry of Forests, Lands, Natural Re- source Operations and Rural Development. J.

Rustad:I hope everybody is buckled in for 7½ hours of estimates today on the Forests, Lands and Natural Resource Operations. Today we’re going to focus, from my perspective, primarily on forestry issues, although there’ll be a few other things that need to be brought into the con- versation. Y esterday we had a pretty extensive conversation with regards to wildlife management. I just want to put one last question on wildlife management before we start off into forestry.

The minister can provide this information in writing, if he so chooses. [9:35 a.m.] The minister had stated yesterday that there were no LEH permits outside of the two areas, in particular, in areas that many First Nations have expressed interest in. I have one example, I think, particularly of the Thompson- Nicola region 3, where there are 18, which, of course, some of the First Nations that have written to the minister had an…. The request to the minister, if he could provide a breakdown of the LEH for moose cow-calf hunting oppor- tunities across the province by the various regions, that would be helpful.

The second piece, once again, if the minister could just provide this in writing. The minister talked at length yes- terday about science and making of the decisions for wild- life management based on good science, which I fully sup- port. If the minister could provide me with the science behind the decision to ban the grizzly bear hunt. Grizzlies, of course, are predators. They have an impact on caribou, as well as other ungulates like moose. As a matter of fact, it’s often said that when a cow is giving birth that it’s considered to be a dinner bell to a grizzly bear.

Obviously, as grizzly bear populations increase, there will be more predation to caribou and to other ungulates. So if the minister could provide that information in writing — I don’t need it at the moment — that would be helpful. I want to move on to talking about the working forest. We talked yesterday at length about the area that has been set aside for caribou management, the reduction in the available forests for forestry activities.

To start off with, I just want to ask: can the minister con- firm, out of the 700,000 hectares, how much annual allow- able cut will be reduced from the working forest up in the northeast region? Hon. D. Donaldson: Y es. From our modelling, the annual allowable cut impact from the areas in the partner- ship agreement that are temporarily now set aside for cari- bou protection will be 284,000 cubic metres per year.

Once the area becomes permanently protected for caribou hab- itat, then the chief forester will be making a partition in order to ensure that that 284,000 cubic metres is removed from the annual allowable cut for the area. J. Rustad:It’s an interesting number in terms of the Peace country. I’ve heard numbers fluctuating, particularly estimates from industry, but it is what it is, I suppose, in terms of the…. I won’t quite go into the arguments of whether it’s 540, 270 or 280. It’s still a reduction. [9:40 a.m.] This past fall there were….

I believe the number was in the thousands of people on Vancouver Island that came to the Legislature and delivered a petition the minister. In particular, they had been talking a lot about the working forest and the need for a designation of the working forest. Does the minister support the petition — and the efforts that have been going on by the people in the forest sector on Vancouver Island, as well many right across the province — that there should be a designated working forest dedicated to supporting our forest sector? Hon. D.

Donaldson:I distinctly recall the representa- tion that was made to the Legislature by those concerned about their future employment in forestry in the province. I met with some of the organizers. I would say, in answer to the member’s question, we have the timber-harvesting land base in B.C. That is the area in the province that the primary activity and the primary value considered is timber harvesting for support of workers and support of communities, from the eco- nomic benefits that derive from that.

I’ d also say, because he did start off by mentioning the Peace country and the impacts in that area of the part- nership agreement, that one way we defend the timber- harvesting land base is epitomized by what we were able 341

to accomplish in the partnership agreement. If we hadn’t been able to sign that agreement with the federal gov- ernment and with the Saulteau and West Moberly First Nations, then we could have been subject to a

section 80 Species at Risk Act order by the federal government. That would have unilaterally taken control out of our hands, without any socioeconomic considerations, and impacted immensely the timber-harvesting possibilities in the forest industry in the Peace country. So we took that one on. We were able to sign the partnership agreement and that enabled us to have a made-in-B.C. solution rather than made-in-Ottawa. J. Rustad:Let’s go back, then, a moment.

I think the minister just said that the timber-harvesting land base is what he supports, but of course, that timber-harvest- ing land base is subject to change based on policies and approaches and decisions made by the government of the day. Clearly, that timber-harvesting land base has eroded in the efforts on caribou up in the Peace country. It’s debat- able as to whether the feds’ threat would have been imple- mented or not. Obviously, when we were in government, the feds threatened as well.

We worked with the federal government on policies to recover caribou, and as we saw from recent reports, those efforts actually saw some increase in the caribou populations in Peace country. Across the province there are, I think the number was, 54 — I may be wrong about that — various areas of poten- tial caribou habitat.

Obviously, the minister has struck various groups, and I believe — the minister could con- firm this — is in discussions with First Nations throughout those other areas that have potential caribou habitat and caribou herds. [9:45 a.m.] The example of the Peace country seems to have set the tone as to the approach this government will take. Has the ministry done any analysis in terms of how much additional habitat may be required or will be protected or could potentially be protected to further try to secure the future of caribou? I guess it’s a very convoluted way of ask- ing a question.

How much more of the timber-harvesting land base is potentially to be put under protections to sup- port efforts to recover caribou? Hon. D. Donaldson:We have, definitely, under the sec- tion 11 agreement with the federal government, been engaging on herd management plans for the remainder of the herds in B.C. So the member is right on that. As far as an analysis of how much additional protected areas might be necessary for caribou habitat, we, through our scientists, are looking at the southern groups. There’s already large core habitat protected.

There’s nothing being contemplated on the scale that was witnessed in the part- nership agreement in the northeast. There might be some subtle changes, some boundary changes required. In some instances, that might mean changing boundaries based on best available science and removing areas that are under protection now and other circumstances. It might mean expanding those bound- aries slightly, depending on the science that we’ve been able to accumulate in the last number of years. So noth- ing on the scale that was in the partnership agreement — subtle changes.

It’s important to remember that in the areas that are protected right now, there are habitat restoration activities ongoing, because, as we canvassed yesterday, there are many areas, especially in the Tweedsmuir area, within the caribou habitat protection lands that are heavily impacted by circumstances like wildfires. So habitat restoration efforts are underway. Just to the comments the member made on the efforts in the northeast and the imminent threat by the federal government. Y eah.

It wasn’t until 2018 that the federal government actually issued an imminent threat order and that caribou were at the risk of extirpation in many of the herds. When we had been working towards, with the fed- eral government, since 2017…. Obviously, the efforts pre- viously weren’t good enough. [9:50 a.m.] We weren’t going to roll the dice with the federal gov- ernment. The potential risks were just much too great to the timber-harvesting land base and to the communities that were dependent on forestry. J.

Rustad:The minister talked about the timber-har- vesting land base and the potential impact in the southern range as being minimal. Industry has, of course, expressed some significant concerns that it may be more than that. I guess the question to the minister…. First of all, I guess, is the ministry engaged with the First Nations, and what role will the First Nations play, and their local know- ledge, in determining areas that may need to be set aside? Hon. D. Donaldson:Y es, we’re definitely attuned to the concerns of industry in these COVID times.

I’ve been making regular check-ins with the CEOs of not only all of the major forest companies in B.C. but also associations that they’re part of and the smaller licensees as well. As far as how the engagement process works under the

section 11 agreement….

Section 11 is a

section under the Species at Risk Act federally, and that allows for a process to unfold and to be transparent around herd planning. We’ve undertaken that work. The

section 11 agreement with the federal agreement was only signed in February, so we began the herd planning work, and then COVID-19 hit, especially in mid-March. With First Nations, that has had a significant impact in their resources and ability to engage. Within the

section 11 agreement, it’s clearly outlined that First Nations have an important role to play with the local knowledge that they have of the herds in their areas. 342 Committee of Supply,

Section A Friday, July 31, 2020

But it’s also important to know, in the

section 11 agree- ment, that industry has also got a very important role to play in how we arrive at herd plans for these caribou populations. So we regularly touch base with industry in regards to that. We’ll be re-engaging more vigorously in the herd plan- ning come the fall, dependent, of course, on how we’re doing with the COVID-19 pandemic. J. Rustad:Well, I’m happy to hear that all groups are being engaged, including industry. It’s a shame that industry wasn’t engaged until the deal was done already in the Peace country.

But that’s a debate for another issue, I suppose. [9:55 a.m.] Of course, there are other potential herd areas, potential habitat areas. There are some areas, for example, where there are no caribou at all that have potential habitat that have been defined as desired to protect for the future of potential caribou herds. Also, noting the Telkwa herd, the areas in there, there’s some discussion around potential protection measures in those areas as well.

I’m wondering if the minister can con- firm that areas that currently do not have caribou herds or areas such as the Telkwa area are also being considered for land protection measures? Hon. D. Donaldson:To the member: thank you for the question more specific to an area we both share, almost. We have a boundary quite close to the Telkwa herd. First I’ll talk about areas in the province that currently do not have caribou that previously had caribou, where the herds have recently become extirpated. It’s taken a long time for that to happen, but unfortunately, that has happened.

In those areas, they are covered by the

section 11 agree- ment. Under that agreement, there’s a joint science com- mittee, federally and provincially. We have scientists from both our province and the federal government sitting on that. They are conducting an analysis around how climate change will impact the habitat that has been set aside in those areas where the herds are extirpated. The question they’re addressing and considering is: is it possible to recover the habitat, in light of climate change, that supports caribou?

That’s work that’s ongoing, and obviously, the answers to those questions will be the basis of decision-making about whether to continue protection in those areas or whether, due to climate change, we’ll nev- er be able to recover the habitat that’s required for caribou populations in those areas. It’s important to note that in the meantime, because of the extirpation, access for winter-mobilized vehicles has temporarily been reinstated in those areas. That’s an action we’ve been taking in the meantime.

As far as the Telkwa herd is concerned, there’s no addi- tional protection being considered at this time for that herd. Right now the protection of the caribou habitat for the Telkwa herd covers 90 percent of their core habitat. Also important to note that even though 90 percent of that core habitat is protected for caribou, 70 percent of it is dis- turbed. So it reinforces and re-emphasizes the restoration work that needs to occur. [10:00 a.m.] J. Rustad:The reason for asking the questions about that is…. The next topic I want to go on to, which is talking about old growth, is….

Obviously, over the years, our tim- ber-harvesting land base has been reduced, with decisions made for a variety of reasons — habitat protection being one of them, environmental protections, protection of old growth, etc. — that have continually reduced the area which contributes to our timber-harvesting land base. Right now, of course, there’s a significant effort by many groups to protect additional old growth on the coast in particular, but really, across the province, forests that are considered old growth. The minister has a committee, I believe, or has asked for a report.

My understanding is that initial report might already be done for the minister. Looking at the issue of old growth, can the minister confirm that there will be no additional loss of area contributing to the timber-harvesting land base through changes that he may be considering to old growth man- agement? Hon. D. Donaldson:I welcome a discussion around old growth. I’m looking forward to it in these estimates debates. Y es, what the member is referring to is our old growth strategic review panel that was appointed in the fall of last year or so.

Al Gorley and Garry Merkel — very well respected within the forestry industry and with those who have interests in the forests — were the panel members. They undertook four months of very in-depth consulta- tion and public engagement. I believe they visited 45 com- munities, had thousands of submissions to an online sur- vey, as well as more thorough submissions, canvassed aca- demics and reviewed over 400 papers, many of them peer- reviewed. They have worked and amalgamated all the information that they received into a report, and yes, we received it in government in early May.

We’ve been reviewing it and plan to release that report very soon. With that, we will be announcing an engagement process on the recommenda- tions that are in the report. We convened the panel and convened the review because it was apparent that there were differing views and very strong differing views on the management of old growth in B.C., and our policies, our decisions, around that hadn’t been reviewed in a very long time. We wanted to make sure that any future decisions were based on this kind of strategic review. Friday, July 31, 2020 Committee of Supply,

Section A 343

[10:05 a.m.] As the terms of reference stated, the first step is a gov- ernment-to-government engagement consultation with First Nations before any decisions are made on the recom- mendations in the report, which I said, once again, will be released in the near future. I’m not going to unilaterally make any declarations until we fulfil our obligations and our very clear obligations around reconciliation with First Nations. The first step in that will be a government-to-government engagement with First Nations before taking any action on the report. J. Rustad:Just for some background information….

The minister can commit to getting this to me in writing, or if he has the numbers available, he can do this right away. If the minister could provide information — I think this is likely readily available on the ministry websites already — on the area that is considered to be old-growth forests on Vancouver Island, the south coast and the central coast, in those areas; the percentage of our forested land that is old growth, or considered to be old growth, and the categories; and the percentage of those areas, or that old growth, that already has protection measures and will not see industrial activity.

If the minister could provide that information, that would be helpful. One of the things the minister had talked about, as well, is a potential of redefining what old growth is. I’m wonder- ing if the minister could perhaps shed a little bit more light into what he meant by potentially redefining the definition of what old growth is? Hon. D. Donaldson:We do have some numbers for the member. We can also supply them in writing, because per- haps he’s not able to write as fast as I speak.

Also, we know that they’ll be recorded inHansard, but we can provide them in writing as well. [10:10 a.m.] Old growth is generally defined as trees over 250 years old on the coast and over 140 years old in the Interior. Based on those

definitions, in the province, about 57 mil- lion hectares, or 60 percent of B.C. ’s 95 million hectares of land, is forested. That’s how much is forested. About 13.7 million hectares, or 23 percent, of forested lands are old forest, depending on those two

definitions. Of that, about 3.75 million hectares, or 27 percent, of old forested lands may be harvested. The member had some questions specifically about Vancouver Island and the coast. The west coast region — which includes Vancouver Island, the entire Great Bear Rainforest and Haida Gwaii — has about 7.55 million hec- tares of forested area, with 3.15 million hectares, or 42 per- cent, consisting of old growth. And 33 percent of the west coast region is protected or reserved.

So that’s 1.27 million hectares of old growth plus 1.22 million hectares of non- old-growth forest being recruited for future old growth. Vancouver Island is comprised of 73 percent Crown land and 27 percent private land. And 24 percent of the Crown forest is protected or reserved. That includes 17 percent of old forest and 7 percent of non–old forest. So 810,000 hectares, or 39 percent, of Vancouver Island’s Crown forest lands are old-growth forests, nearly half of which are protected or reserved. That would constitute 344,000 hectares. There’s a whole array of numbers.

As far as the member’s question about redefining what old growth is, I have not considered that. I am supportive of the generally defined as trees over 250 years old on the coast and 140 years old in the Interior. Of course that’s dependent on site specifics, but that’s the general defini- tion, and that’s the definition that I am supportive of. Perhaps the member was alluding to comments around defining what the actual timber-harvesting land base is, as far as old growth and how much is protected.

There have been various scenarios around that presented, but I have presented him with the scenario that we have as a ministry and as a government. J. Rustad:It was just a comment that I had picked up on that I thought was attributed to the minister with regards to that definition. But that’s fine. One last question on old growth that I think is an important question to get on the record. There has been a lot of interest, obviously, in the report that the ministry has done and the engagement that will be happening, obvi- ously, as the minister just talked about, with First Nations.

Then, of course, what comes after that in terms of the recommendations. There is a movement afoot by many individuals asking for a moratorium on any harvesting in old-growth areas until such a time as that report is released and decisions are made by the government. Is the minister considering a moratorium on any old-growth harvesting until such time…? Well, a short-term moratorium on old-growth harvesting? Maybe I’ll just leave it at that. [10:15 a.m.] Hon. D. Donaldson:Again, I believe that the member might have inadvertently described the report as a gov- ernment report.

It was a report conducted by an inde- pendent panel, two well-respected individuals in the forest sector, and there was no government influence over how they conducted their business or what their conclusions or recommendations were in the final report. I have never used, and we’ve never used as a govern- ment, the word “moratorium. ” I would have to reinforce what I said in an earlier answer that before any actions are taken, we will…. We have committed and we will undertake government-to- government discussions with First Nations, many of whom have interests in the forest sector.

Before any actions are taken, we’ve committed to a full engagement with those groups that have an interest in the forests, such as 344 Committee of Supply,

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industry, such as labour, such as communities and such as environmental organizations. J. Rustad:I think I’m going to move on to another topic at this point. In particular, I’m curious about…. The minister and the Premier have on numerous occa- sions talked about cross-laminated timber, mass timber construction in B.C. They’ve held out the examples of the rebuild of the Royal B.C. Museum and, I believe, the Royal Jubilee Hospital. Or is it St. Paul’s? I can’t remember. It might have been St.

Paul’s that the member had talked about in terms of the desire to utilize these mass timbers as part of those constructions. Can the minister confirm if there are any other projects that government is considering for the utilization of mass timbers or structural laminate, along the lines that the ministry has been promoting? [10:20 a.m.] Hon. D. Donaldson:To the member, yeah, a very excit- ing topic — the focus that we have placed on mass timber engineered wood products.

The background to that is to try to get more value out of the timber that’s been har- vested in the province on the timber-harvesting land base. “Value over volume” has been a phrase that we’ve been using a lot, and it’s true. As the member well knows from the area in which he lives, the annual allowable cut is decreasing because the mountain pine beetle infestation has now run its course, and the merchantable timber has largely been extracted.

We’re dropping back to pre-mountain-pine-beetle harvest levels, so in order to extract the highest value out of the publicly held resource, we need to focus and try to focus industry on producing higher-value products. One way we can do that — there are many ways — as the member pointed out, is to display and showcase the use of mass timber products in public infrastructure projects, espe- cially public buildings. He mentions the renewed rebuild of St. Paul’s Hospital and the Royal Museum of B.C. Y es, those are two projects that we have discussed publicly and that will be high- lighted.

There are other projects where we’re turning our attention. Part of that is that the parliamentary secretary for this ministry has been appointed to lead a new initiat- ive, advancing the engineered wood opportunity for B.C. mass timber products. He received a new mandate in his letter of appointment from the Premier just recently to do that. Also, to show how seriously we’re taking this, we have established a new assistant deputy minister role in the Ministry of Municipal Affairs and Housing, and that pos- ition has just recently been filled.

The new position, the ADM, will be assembling to lead a cross-government team. And that office, housed in that ministry, will partner with our ministry and with the Ministry of Jobs, Economic Development and Competitiveness, as well as the climate action secretariat. I know there are a number of areas where our govern- ment has undertaken a very strong capital project on pub- lic buildings. I know that it holds a lot of promise, espe- cially senior care facilities. That office will be advancing all of those publicly built infrastructure projects and have a close look at how we can incorporate mass timber into it.

J. Rustad:We have seen one announcement by Kales- nikoff, with regards to building one of those facilities out. We’ve got, I believe, Structurlam that has one in British Columbia. With Structurlam, when they looked at doing an expansion opportunity, of course, they went south of the border and built a facility south of the border. What does the minister see as the potential for more facilities providing this kind of a product in British Col- umbia? Obviously, I mean, I’m not asking you to speculate about corporate decisions as to where and what they want to do.

But, you know, for example, even with the potential of expanded utilization of mass timber in British Colum- bia, it’s probably estimated that Kalesnikoff ’s plant could more than meet just what is going to happen in British Columbia by itself. [10:25 a.m.] Doing more and getting more value out of timber is a good thing, but the question becomes: what is the poten- tial of that? Obviously, there are a lot of challenges in our forest sector right across the province, and it’s going to take more than just one initiative to be able to drive the kind of value that’s going to be needed to create those sector jobs.

I’m just wondering about the minister’s thoughts around what the potential is for more of those plants, other types of plants and what initiatives the minister might have in mind to try to encourage those kinds of investments com- ing here in British Columbia. Hon. D. Donaldson:The member mentioned a couple of companies. I didn’t want to leave StructureCraft off the list, which is another company producing mass timber products right now in B.C.

Obviously, the market, domestically in B.C., is a limited market, even though we are intent on a $20 billion spend on public infrastructure projects in the next three years. There is a limit to that market when it comes to mass tim- ber. What we are doing and intend to do is showcase the great use of mass timber in public infrastructure projects and make sure that the world knows and other jurisdic- tions know that we can produce these products and use them economically within public infrastructure buildings.

The other things we can do, though, and what we are doing, are to facilitate — that’s in the member’s words — and to amend regulations to encourage the use of mass timber. A great example of that is we led Canada in the building code amendments to allow tall buildings to be constructed out of mass timber products. That required a Friday, July 31, 2020 Committee of Supply,

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lot of research and increasing the comfort level of builders and developers around the safety aspect of building with mass timber. [10:30 a.m.] In previous examples…. Brock Commons, for instance, required specific permits just for that site. But by changing and being a leader in building regulations now, that specif- ic requirement is no longer in place. As a result, we’ve seen a number of private developers creating mass timber–sup- ported buildings. On the North Shore and in Langford, there are a couple of examples of apartment buildings going up.

That is how we can support the private sector in creating the market. We also have undertaken research initiatives with FPIn- novations on the use of mass timber. That’s another way we can support the development of the sector. Also, through Advanced Education, Skills and Training, the workforce that’s needed, because creating a large, tall timber struc- ture, mass timber structure, requires a different skill set than a typical carpentry and engineering in traditional buildings. We have a number of ways to facilitate it. The member is right.

The market for the use of the material in public buildings in B.C. is limited. We want to capture more of it. But it is limited. So we turn our atten- tion towards how we can support the use of this lumber, this material, in the private sector. I just want to finish off by saying that CleanBC, our plan and our actions to reduce greenhouse gas emissions, is another way that we are encouraging the use of mass timber products. It’s storage of carbon over the long term, and, of course, the forests we grow to support that product sequester carbon as well.

So not just the storage of carbon in wood products but the replacement of higher green- house-gas-emitting materials and by-wood is something that really resonates, especially with the younger demo- graphics in B.C. and across the world. Across the world, we’re seeing an increase in markets, and we want a share of that as well. J. Rustad:I’m happy to see the government is continu- ing the previous government’s wood-first initiative with many of these things. Obviously, that’s an important piece of what has been going on in the province. I want to move to softwood lumber just for a few moments. We lost a case.

The challenge that we have goes on — the legal challenges, the legal fight, still going on that Canada has with the United States. There have been some attempts by other jurisdictions in Canada to try to form some coalitions, try to build support. Could the minister detail the efforts that the British Col- umbia government is taking to help build coalitions, to help to build support for ending this softwood lumber dis- pute and for moving forward B.C. ’s position? [10:35 a.m.] Hon. D. Donaldson:This is a topic that’s very front and centre within the ministry I represent.

The member might know that my current deputy minister was a lead on this file when he was outside of government, before we recruited him into the ministry, so has a long history and a very deep understanding of the topic. We disagreed with the NAFTA injury panel final report — strongly disagreed. That report and that finding that the member referenced is only one piece in the ongoing soft- wood lumber dispute, and we are continuing to aggress- ively pursue litigation on all of the fronts that are available with our legal team in Washington.

And that’s in collab- oration, in cooperation with the industry here in B.C. and with the federal government. As far as efforts to support our position, and when it comes to the federal government, within this year alone, I’ve had conversations with Deputy Prime Minister Chrys- tia Freeland, who, under her new role, still carries the soft- wood lumber file; with the Minister of Natural Resources, Seamus O’Regan, who is my direct counterpart in the fed- eral government; and with Minister Mary Ng, the Trade Minister federally.

I’ve expressed the strong need for continued federal assistance to support our workers, not just for our efforts in Washington, with the United States on the softwood lumber disagreement, but also the need to support work- ers and communities through the difficult time that we’re facing with the softwood lumber tariffs. J. Rustad:I’m going to move on from softwood.

Soft- wood, actually, deserves a much longer discussion, but given that there is so much litigation work going on, I’m not sure we could get into too many more details without it being just very superficial answers, and I don’t know if that would be a useful expenditure of our time here in estimates. From that perspective…. Not to diminish the import- ance of the softwood lumber file and the impact that it’s having, certainly on our forest sector and our compet- itiveness of our forest sector, but there are a couple of other topics I want to try to touch on here this morning, for sure. I want to talk about….

The ministry has been undertaking a review of the private managed forest land. My understanding is that review is, I believe, complete. It is in to the ministry. Could the minister provide me with some details as to when that report could be expected, what they have heard from that review, and when the sector may be able to anticipate any kind of recommendations or action by this government? [10:40 a.m.] Hon. D. Donaldson:First off, thanks to the member around his comments on the softwood lumber file.

I think he used the word “superficial. ” I know that he wasn’t depicting my answers as superficial, but that we would have to only skim the surface because of potential implic- 346 Committee of Supply,

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ations on the legal case and that the U.S. Department of Commerce and interests in the United States follow our proceedings here quite closely. I appreciate that he’s not pursuing that topic, because of that, in any great depth. Private managed forest lands. Y es. We launched a review of the private managed forest land program as a result of concerns that had been forwarded to our ministry from the public as well from members of the private forest man- aged land community.

It hadn’t been looked at in a long time, this topic, so we have completed phase 1, which was a wide public consultation process on this topic of private managed forest lands. We have summarized and brought together all of the submissions in a what-we-heard docu- ment that was posted publicly on the ministry website, the government website. The next phase will be the development of an issues

summary and recommendations. That work is underway within the ministry. Once that’s completed, we’ll be taking that out for a targeted engagement with the members of the private managed forest land association and a targeted engagement with identified public groups that are inter- ested in this topic. The final report is expected in Novem- ber of 2020, so November of this year. J. Rustad:One of the things in that report that kind of stood out to me was the number of respondents who dis- agreed that the regulatory framework was effective in sup- porting achieving the management objectives.

That raises significant questions, obviously, for the sector, as well as for the public, about what options may be considered. [10:45 a.m.] Now, obviously, there’s a process going on and a final report that will be coming out — as the minister, I think, has just said — in November. I’m curious, though, what options government could consider with regards to addressing that concern or if the minister has anything more specific that he’ d like to add in terms of how that issue may be able to be managed. Hon. D. Donaldson:Y es, the member is correct.

Reflec- ted in theWhat We Hearddocument was that people from a number of different perspectives didn’t necessarily agree that the current regulatory framework, which we inher- ited, was the best framework for the management of private forest lands. It’s an issue that is of interest, of course, and is also com- plex. This is private land, and there are elements of pro- vincial legislation that apply to that private land — things like forest practices or impacts to water quality that those practices might cause. We’ve heard from a number of com- munities, especially at the Union of B.C.

Municipalities convention last year and the year before, about concerns about their watersheds. Generally, I won’t presuppose the development of the issues

summary and recommendations, because they haven’t been completed yet. But I think it’s clear from what the member has seen in theWhat We Heard document that ways to encourage more participation and member- ship by those who have private managed forest lands in the Private Managed Forest Land Council is important, because that’s a self-regulating body for those who have private managed forest land to set forest practice standards and enforce compliance and those types of issues that the public are interested in. The more we can encourage people to join that council and be members of the association, the better.

I think that’s part of the thrust of what theWhat We Heard document outlined. J. Rustad:There’s so much detail to go into through this ministry. There are a lot of topics that we need to get covered off, so I’m going to actually move on from that report to another report that I think was pretty critical for a lot of logging contractors, which is the contractor sus- tainability report and issues associated with that. I know the minister took some steps and was engaged, obviously, with the TLA on this report. There are many recommendations in the report.

Does the minister plan to implement any further recommenda- tions to help contractors be more sustainable? [10:50 a.m.] Obviously, through the strikes, through B.C. ’s longest forestry strike on the Island, through the downtime of various companies, particularly Mosaic, but really through the continued curtailments and other issues throughout the province that have happened over the last number of years, contractors are really squeezed and have big con- cerns. What steps is the minister looking at to further con- tractor sustainability and the recommendations from the report? Hon. D.

Donaldson:I live in a community of logging contractors. I know the member does as well. In numerous meetings I’ve had with not just the Truck Loggers Association but the Interior Logging Association and the North West Loggers Association, they make a good point — that if it isn’t for the people doing the work with the iron in the forests, there are no logs coming into the mills, and those jobs and the communities depend on that. So the health of that sector is extremely important, and the health of the contracting sector to the overall industry. We had the contractor sustainability review.

We launched it in 2017, and in 2019, recommendations were endorsed — January of 2019. Those January 2019 recom- mendations have been agreed to by the parties to improve transparency between parties on the rate models; to improve work predictability, so around scheduling, espe- cially, and looking out ahead around the work that con- tractors can depend on; to establish a timely and effective arbitration process; to have mandatory data collection by the contractors, as well as industry; and to develop a best Friday, July 31, 2020 Committee of Supply,

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practices guide. Those are all elements of the contractor sustainability review that have been agreed upon between the parties. The plan, in answer to the member’s question, is to move forward with amendments to the act, through reg- ulation, in 2020. Before the end of the year, we’ll have the regulations in place, and that’s very good news. The con- tractor community is looking forward to that. [10:55 a.m.] Just to finally do, I guess, an example of our commit- ment to and understanding of how important the con- tractor community is, the member will recall that we established….

He mentioned a long labour dispute on the coast. In response to requests by the Truck Logging Associ- ation and others, we established the contractor stabiliza- tion trust, the Coast Logging Equipment Support Trust. That was for contractors who were potentially going to lose assets to the bank because of the ongoing labour dispute, and it set up a trust in order for them to not lose those assets and be in a position to work again and respond quickly when the markets and the labour dispute turned around, which it has, I’m happy to say. J.

Rustad:I mean, that, obviously, was a very challen- ging time for the sector on the coast. It is a shame that gov- ernment didn’t step in earlier to help resolve that issue. The pain, quite frankly, that has been undertaken within some of the communities, particularly on the north Island, was unprecedented, in many ways, from the results of a strike. Obviously, permanent closures and other types of things would have similar types of effects. But I know the com- munity is still reeling, and it will take a long time for the folks up there to be able to recover.

Sustainability, in terms of the contractors, is critical. Often, they feel left out and they feel squeezed between various other parties, various other interests, that are asso- ciated with this. So it’s important to raise the topic and to see that there is still some progress being made. I know there’s more that they would like, which I’m sure they will adequately bring forward to government, as they do to opposition, in terms of their requests and components that they want to do. But it leads into the next topic, which is really the overall cost structure in British Columbia.

Contractors pay one piece of that, in terms of their com- ponent of harvesting and the competitiveness, and the fact that they need rates that are sustainable and can support their ability to be able to earn a living and pay off their equipment. But British Columbia, obviously, has a cost structure problem, in terms of its overall structure.

Maybe I could start just by asking the minister: how does British Columbia compare to other jurisdictions in North America and in the world, in terms of our competit- iveness in our cost structure for, I guess you could say, the net wood costs associated with our forest sector? [11:00 a.m.] Hon. D. Donaldson:I’m happy to discuss this topic. To be succinct, in the Interior sector of the province, we’re about in the middle of the pack, compared to other jurisdictions, as far as pricing and competitiveness goes. On the coast, it’s one of the more expensive jurisdictions compared to our competitors.

That’s why we’ve under- taken the cost-driver initiative with industry over the last six months, and also the Pulp and Paper Task Force, to look at where we can mutually agree on costs that can be addressed while still deriving the revenue that should be derived from a publicly held asset in the province: the forests of B.C. I imagine the member might be wanting to discuss stumpage. We’ve actually had quite a discussion, I believe, in the last year, in question period and elsewhere, on stumpage.

He knows that we will not politically intervene in the stumpage system, because of the implications that that would have on the softwood lumber disagreement, and we believe in the integrity of the market pricing sys- tem that was established under his government. It’s just interesting to note, to finish off this part of the answer, how the market pricing system has reflected that the cost of logs and stumpage have decreased year to year — on July 1 on the coast by 18 percent and, year to year, by approximately 35 percent through the Interior. There’s that, reflecting the previous three months’ activities.

That helps when it comes to the economic viability of many of the forest activities in the province. J. Rustad:I’m not quite sure. I suppose the minister and I are looking at different information. Out of the 29 juris- dictions that produce forestry products, British Columbia basically ranks last overall when it comes to cost structure. The question I’ve got for the minister is…. Since the minister has been in power, now for around 3½ years, what we have seen is, in the Interior, an increase of 33 per- cent in the cost and, on the coast, an increase of 69 per- cent in the cost.

This is from the Forest Economic Advisors report. Could the minister explain what factors have happened within this government that have led to those increases in cost structure in British Columbia? [11:05 a.m.] Hon. D. Donaldson:Again, just to allude to the previ- ous answer and the contention by the member that we’re closer to or at the bottom of the competitiveness spectrum, we don’t agree with that assertion. With the numbers we have, it puts us in the Interior, as I said, around the middle of the pack with our competitors in jurisdictions around the world.

On the coast, yes, we’re one of the higher-cost jurisdictions. In relation to the question at hand, some of the factors that have resulted in increased log costs and costs of oper- ating are factors that the member alluded to in his previ- 348 Committee of Supply,

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ous questions. For instance, on the coast, the labour dis- agreement between Western Forest Products and the United Steelworkers, combined with the shutting down by Mosaic of their forestry operations, really resulted in a decrease in volume available to the mills. It’s basic eco- nomics: when there’s scarcity on one hand and demand on the other, prices go up. Those two events led to the increase in log costs, because more facilities were bidding on less available volume. As far as the Interior goes, the member refers to the number of years we’ve been in government.

He will no doubt recall that when we inherited the forestry file from the previous government, it was in the midst of the worst wildfire season in the history of the province — 2017, outdone by the 2018 wildfire season. Millions of hectares together in those two years were consumed by wildfire. That resulted in the volume being harvested decreasing. That was compounded by the fact that the pine beetle salvage wood was no longer available to mills and licensees that were looking for that wood. As a result, they’ve had to go farther to acquire harvesting for their facilities and go farther up mountainsides.

That increases costs as well. All those factors together have created higher competition for logs and, therefore, the bidding up of log prices by those who are looking for wood for their mills. [11:10 a.m.] As I said before, we’re aware of this situation. We’re aware of the scarcity. We’re working with industry on other ways that we can assist in reducing costs while, at the same time, ensuring that the public gets the fair return for a pub- licly held natural resource, the forests of B.C. J. Rustad:Well, what I found very curious in the answer from the minister was what he didn’t say.

That was the myriad government policies, legislation and approaches that this government has taken to driving up costs. He pointed at everything else that went on and did not address one of the core issues, which is the added layers of cost and the challenge of operating in the jurisdiction of British Columbia. When you look at the similar demand in cost structures, at some of the things right across all other jurisdictions…. It wasn’t isolated to British Columbia, what the minister talked about.

There is one big difference in British Col- umbia compared to those other jurisdictions, and that is policy challenges. Now, I know industry has engaged the minister and the ministry directly. For example, on the coast, they were looking for a $30 reduction in the cost structure, excluding stumpage. They were looking for that because costs have continued to be added on to the point where the sector is not competitive. In the interior, they’re looking for a sim- ilar type of reduction, not at the same level but a compar- able reduction, and engaging with the ministry on these cost reductions.

Can the minister provide some information on what components he is considering, in that work with industry, to reduce B.C. ’s cost structure and to make us more com- petitive, excluding stumpage? We’ll get to stumpage in a little bit. [11:15 a.m.] Hon. D. Donaldson:I want to make sure it’s clear, and clearly stated, that we have done nothing policy-wise to add to the cost of delivered wood. In fact, we’re taking this topic on with industry. We’ve been engaged with them since January on a cost-driver process to look at where we can mutually agree to reduce costs.

The three main topics that we’ve been able to arrive at, in consensus with industry, are around concerns and ideas and actions around utiliz- ation, around cruising and scaling design and around cutting permit administration. I want to make sure the member knows there are no quick fixes or easy fixes. We are taking this on, hand in hand, with industry around how we can help reduce log costs. That’s through the systems that are currently in place. We’ve taken measures since January.

We took measures, for instance, to streamline the scaling process around pulp logs and sawlogs so that there is an easier ability to do a one-pass system, especially on the coast, and to remove and harvest pulp and sawlogs at the same time off the land base, which is more cost-effective in providing furnish to pulp mills. We’ve adjusted the fibre recovery zones that we put in place based on economic data that we’ve received from companies.

We’ve delayed and deferred the variable fee-in- lieu regulation that we have put in place, in understanding the situation that’s being faced by companies, the uncer- tainty, especially with COVID and not being able to col- lect data off the BCTS sale. [Audio interrupted] had a vari- able fee-in-lieu in place. These are actions we’re taking to address the topic that the member has raised. I want to point out the reality of the situation. The spot lumber price today was $635 per 1,000 board feet. This is what really enables companies to decide whether they’re economically viable.

Because of actions that we’ve been taking and because of global markets, this week West Fraser reported an oper- ating profit, at its most recent quarter, that was more than six times higher than the previous three months. West Fraser Timber, on the second quarter, reported earnings of $83 million, more than six times the $13 million that they reported a quarter earlier. West Timber and other companies are turning a profit.

Their share prices have rebounded from the decline that they saw immediately due to COVID, in mid-March, back to the levels that were apparent and were in place at the beginning of the year. [11:20 a.m.] To address the concerns that the member raised about Friday, July 31, 2020 Committee of Supply,

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log costs and attempts to reduce that…. I mentioned three areas that we’re in agreement with industry to focus on. The CIBC capital markets report from this week estimates — it’s not spot price — for the next year, SPF prices of $415 per 1,000 board feet. So at that level, it is anticipated that most licensees should be able to turn a profit. Of course, what we are also concerned about is ensuring that the forests of B.C. are managed first and foremost for communities and workers and return a revenue to the province that holds this natural resource on behalf of the people of B.C. J.

Rustad:I now understand the frustration of forest companies across the province. With the minister’s answer, it’s hard to know just where to go on this topic. Maybe I should just ask a simple question. When you look at mill curtailments, not closures because of reduced fibre supply…. When you look at cur- tailments, when you look at the downtime that has been taken by mills in British Columbia compared to every oth- er jurisdiction in North America, why is it that the com- panies are having such a difficult time staying open here when they aren’t everywhere else?

We’re looking at a situation where, whenever there is a blip in prices, B.C. goes down first now. It’s not because we’re in the middle of the pack in prices. It’s not because of variables on trade and other things. It’s because we are not as competitive as other jurisdictions. Perhaps the minister could explain why so many mills took curtailments in British Columbia compared to all other jurisdictions. I’ll just add to that, because the minis- ter added the financial reports for West Fraser.

When you look at the financial reports of both West Fraser and Can- for, in particular, it’s well worth noting where the revenue, where the profits are coming from, because the majority of those profits are from their operations outside of British Columbia, not from operations within British Columbia. Perhaps the minister could explain why British Col- umbia’s forest sector has taken so much curtailment and downtime compared to other jurisdictions that we com- pete with, particularly in North America. [11:25 a.m.] Hon. D.

Donaldson:We have to ensure that it’s on the record that what we’re facing today in the forest sector, especially in the Interior, is a legacy of the previous gov- ernment ignoring what they well knew was on the horizon. There was a 2013 report by industry experts predict- ing that up to 13 mills could be shutting down because of the pine beetle coming to an end. The member himself admitted in 2014 that up to eight mills could be shutting down. In 2015, the then government that he was a mem- ber of commissioned a study and received a report that communities would be facing mill shutdowns across the Interior.

The response was that absolutely nothing was done to prepare the communities for this issue and to prepare that industry was going to be facing these kinds of circum- stances of less fibre and log shortages. The legacy that we’re faced with today is what I focus on, and I focus on work- ers and communities. I focus on the fact that workers and communities are suffering because the previous govern- ment didn’t address what they knew was going to happen. We are behind the eight ball.

Can you imagine how far ahead we would’ve been if the previous government had begun, at least, addressing what they knew was going to happen back in 2015? We’re intent on the focussing on communities and workers. That entails supporting industry where we can as well. But under the cost-driver initiative that we’ve been engaged with, with industry, industry was bringing to the table reduction of stumpage rates and subsidies. The member may disagree, but we believe in market economics. Maybe he doesn’t. I’m not sure.

Maybe he agrees with industry — that they should be subsidized and they should be recipients of unwarranted advantage when it comes to stumpage rates. We believe in market econom- ics. We believe that that’s the best way to recoup the best revenue possible from the forests and the best benefits for workers and communities. [11:30 a.m.] We have worked on stumpage where it makes sense within our stumpage system and it makes sense for our stumpage system to be more reactive to market trends and to log cost trends. We’ve incorporated that data, and that data influences the stumpage rate on a quarterly basis now.

I just don’t agree with the narrative that the member seems to be spinning — that we should be ignoring market forces and subsidizing and propping up industry when it isn’t profitable. As far as the industry confidence in how we are ap- proaching forestry resources in B.C., I think no better statement can be made than the fact that Interfor recently made the decision to invest $9 million in a new kiln-dry- ing facility in their Adams Lake facility. That will mean more jobs and confidence in our management of the forest resource for the public benefit. J. Rustad: I have some words.

Unfortunately, they’re unparliamentary. So I’ll keep them to myself. I’ d just remind the minister, through you, hon. Chair, that this is estimates, not question period. Having said that, the minister talks about what-ifs. “Boy, if only something could have been done. ” Y eah. Y ou know what? If the government of the 1990s had dealt with the pine beetle problem, we wouldn’t be in this pickle to begin with. Perhaps let’s not go back that far. But we will go back and look at some of the other issues that the minister has raised.

Our government, when we were in power, did a tre- mendous amount to prepare communities for the chal- lenges through the beetle action coalition work that was 350 Committee of Supply,

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done; through the work that was done with NDIT, the Northern Development Initiative Trust, the additional money that was put in there; and through the efforts on mining and diversification within communities. We did a tremendous amount. In addition, we had a strategy to go out to the communities after the last election to engage with those communities on the transition that was com- ing. Of course, when the government came in, they did nothing. They said: “Well, just blame the previous govern- ment. We won’t worry about it. ” To the minister: you’re sitting in the chair that has to make decisions.

I asked you some very straightforward questions around competitiveness, around asking why mills in our jurisdiction took downtime. Not closures. And I didn’t talk about stumpage. Why our mills took down- time when other jurisdictions didn’t. There’s only one reason for that. For the private sector, when you have business operations, when you look at your costs and you’re facing challenges, the first thing you do is you bring down your highest cost producers. Y ou bring those down because you are reducing the amount of losses that you have.

The second thing you do is you look at where you need to invest, what jurisdictions you want to invest in to actu- ally get a return. And you don’t invest in the highest cost jurisdictions. Y ou invest in the places where you’re going to get the best return, which, unfortunately, is not British Columbia. The minister talks about a no better example than $9 million spent on a new dry kiln. That is maintenance work to update and to keep operations going. That is not a sig- nificant investment in the future in production.

There are significant mill replacements that are needed to modern- ize, standardize the mills for the fibre supply that they’ve got coming in that companies are not doing. They’re not making the investments. Why? Because of the uncertainty, because of the cost structure in this province. The state of the forest sector in this province right now has never been worse. It has never been worse in B.C. ’s his- tory. The only time that would even compare was in the early 1980s, when we saw the significant break of interest rates and the significant downturn that happened.

Y ou know, we’re going into lots of political rhetoric here. I do want to get back to the actual questions in estimates. But fundamental to what we have been talking about….

Whether it is our working forests, softwood lumber, the reports that have been done or contractor sustainability and many topics that we’re going to get into later in these estimates discussions, a fundamental piece of this is to have a jurisdiction where companies can operate, where they can support communities and families and workers and be able to make investments that are needed to carry forward with that sustainable, supportable forest sector. [11:35 a.m.] Right now British Columbia has none of the underpin- nings for the forest sector. There is no confidence in the ability for supply. There is no clarity.

The cost structure is one of the highest in North America. The costs have con- tinued to pile on. I asked the minister what things had been added on. The minister said that they hadn’t done anything. Just report- ing the components alone — the changes to a professional alliance, the additional taxes, like the increase in carbon tax and employer health tax and corporate taxes…. All of these things add on to the cost structure, and those are all decisions that this government has made that help to make our forest sector uncompetitive.

We ventured into the world of a little bit of finger- pointing, and I suspect that is partly because we’re approaching the noon hour and there are people who are a little hungry, with regards to their responses. But I’ll ask once again. The minister mentioned…. Sorry, I won’t ask again because I don’t think I’ll get a different answer if I ask again about why the mills curtailed more here than any other jurisdiction. I will ask this.

When you look at capital investment in forestry mills and forest producing facilities across the province, there has been a dismal lack of investment in this province compared to other jurisdictions. Companies are taking their money and investing pretty much anywhere other than here. Could the minister perhaps provide some insight as to what’s needed in this province for a forest jurisdiction to be able to attract the kind of investment, the capital invest- ments, needed?

Whether it be secondary manufacturing, value-added manufacturing or investing in primary man- ufacturing, what is it that this province needs to do to be able to attract those dollars and to make us a jurisdiction that companies want to invest in and want to invest in their employees and in their communities? Hon. D. Donaldson:I welcome this debate, because it really is a debate about different perspectives. It’s a debate about…. I’m sorry the member doesn’t appreciate me bringing up the reasons why we are where we are and the actions that we’ve taken since becoming government, but it’s part of the context.

The fact is that log supply has declined, especially in the Interior, due to the beetle-kill wood not being available any longer. Basic economics: when log supply decreases and there’s a demand, the costs go up for those logs. [11:40 a.m.] I do have confidence. The member doesn’t seem to express confidence in the forest sector. I have confidence in the forest sector. I know that when the alignment of capacity and supply balances, then the fact that we have the expertise and the skills in the forest harvesting, in being able to create products that are in demand around the world, will put us in good stead.

That is why we are see- ing the investment that we have seen. I think the member is painting a rather bleaker pic- Friday, July 31, 2020 Committee of Supply,

Section A 351

ture than…. The reality is different. We’ve had $150 mil- lion in lumber manufacturing and remanufacturing facility investment by the Langley-based San Group in Port Alberni. We’ve had Coastland Wood Industries in Nanaimo invest $7 million to $8 million to build a barge dock facility in the Harmac pulp site that allows them to be more efficient in their logistics around the products they create. In 2018, we saw Skeena Bioenergy invest $20 million in a pellet plant beside their Skeena Sawmills facility in Terrace, and that plant is now up and running.

We’ve seen, as the member alluded to earlier, Kalesnikoff Lum- ber announce and undertake a $35 million investment in mass timber. These are smart business people. These are people who understand return on investment, and they’re putting their money where their mouth is as far as backing up and sup- porting our forest management initiatives. It’s not as if there is no investment in B.C. These are significant invest- ments.

To downplay a $9 million investment by Interfor in the Adams Lake mill that will mean a lot to the workers there around their future jobs, as well as increasing the number of jobs, is just not fair to the workers in Adams Lake and surrounding communities. So we are working. The member asked what we’re working on to ensure that this kind of investment continues and that the forest sector remains viable and important. Well, I’ve mentioned in the past, we’re encouraging value over volume in the Interi- or by the different tools we have as a government. We’re working on the supply side.

That means the log supply side, taking measures to improve fibre supply. An example of how that’s turned out is the reopening of the Conifex mill in Mackenzie, where we were able to ensure that they had enough of a fibre supply to reopen 160 direct jobs in Mackenzie. I know the people of Mackenzie are extremely encouraged by that reopening. We’re working on the cost side, as I already said, in con- junction with industry on utilization, on cruising and scal- ing design and on cutting permit administration. So these are what we’re focusing on. The member brought up in a general sense our government’s approach.

I would say, in a general sense, our government’s approach is invest- ing in rural communities, investing in workers and people, investing in infrastructure and the services that people in rural areas had seen decreasing under the previous gov- ernment. We’re building schools. We’re building hospitals, a hos- pital in the member’s own constituency in Fort St. James. We’re building housing like it’s never been built before, because we know that rural communities are the backbone of a rural economy that supports the rest of the province. J.

Rustad:Well, we will agree to disagree with many of those statements that the minister has just said. [11:45 a.m.] I do want to touch on stumpage. I mentioned earlier that some of the cost structure issues are stumpage. I do know that a year ago, or more than a year ago, the minister said they couldn’t adjust the stumpage because of the worry of softwood lumber and the challenges there. Here we are a year later.

While the industry suffered through challenges and issues associated with the lumber price spike of 2018 that carried over into 2019 for the stumpage issues, the minister, lo and behold, has changed the stumpage system. It took a year. It took more than a year, unfortunately, which, of course, was a big factor for the crisis in the forest sector in 2019.

Now we’re in a situation where, if my understanding is correct, instead of the stumpage being calculated once annually, with a 12-year period with a six-month delay with three minor quarterly updates, we’re now into a quarterly calculation, which is still based on the previ- ous year’s stumpage with only a three-month delay. It’s an improvement, but obviously, we’re now in a situation where we’re seeing lumber prices spiking again. They’re spiking up. As the minister has said, I think it’s over 600 now.

The minister previously stated that the aver- age lumber price is expected to drop back down into the low-400 range. Clearly, we’re going to be, once again, in a situation where stumpage is going to be…. The price spike from this year that’s going on is going to have a negative impact on stumpage for potentially 15 months out, as lumber prices come back down. That, quite frankly, will once again cre- ate more challenges and has the potential to lead to more curtailments.

Now, I’m obviously pleased that people are working, that everybody is making hay with the spike-up that we currently have in lumber prices, but I still have significant concerns about where stumpage will go as that works through the system. The question to the minister is: why did the minister not look at monthly calculations of stumpage similar to what is happening in Alberta so that we don’t end up having our sector potentially at risk through more volatility in the lumber pricing? [11:50 a.m.] Hon. D.

Donaldson:I’m pleased to be talking stumpage as we lead up to our lunch break today and enjoyed the last 2½ hours of discussion and forwarding of different ideas with my official opposition critic. I just want to make it clear that the member’s statement was incorrect. What he’s referring to is…. I said that we would not intervene politically in our stumpage system because of the negative consequences that would have in our ongoing legal dispute on the softwood lumber front. In fact, that was supported by industry, by people, by experts in forest economics.

If we were seen to be intervening politically in the stumpage system, the U.S. would imme- diately slap on additional tariffs that would impact our ability to export economically to that jurisdiction. 352 Committee of Supply,

Section A Friday, July 31, 2020

That’s the statement I made at the time, but I can agree with the member that we wanted to address lag times to make our stumpage system more responsive. The mem- ber well knows that, for instance, right now the stumpage is low compared to the prices that lumber is getting on the open market. Conversely, there are times when the stumpage is high compared to the prices that lumber gets on the market. We had — and I believe this is what he is referring to — looked at lag times on the coast, and we were undertaking work for a year on that.

What we’ve been able to institute on the coast is more of a stumpage model that’s lumber- based versus log-based, so it’s more responsive to lumber prices than the previous model. That was work that was undertaken for over a year in the ministry. [11:55 a.m.] On the Interior, we’ve been able to reduce the lag time between when lumber prices go up and down. It’s true, as the member has stated, that they’ve been very — not stat- ic, I guess I would say, in the last couple of years. We’ve reduced that lag time by using a rolling model to consider previous years’ log prices as the data is being collected by B.C.

Timber Sales versus solely relying on a one-year cal- culation date. So those are things that have led to increas- ingly smoothing out stumpage prices. In fact, that is what industry is looking for. Industry has not requested going to a monthly stumpage model. The feedback that we’ve received from industry is that would be much too erratic for proper plan- ning in their economic cycles and even in their economic quarters.

So by taking the measures we’ve taken, it has smoothed out the more erratic shifts that industry was concerned about and is responding to what industry is looking at as being the best model for them on a quarterly basis. As far as Alberta is concerned…. The member brought that up as an example where monthly calculations occur. Again, the industry in B.C. is not advocating for monthly calculations. But I want to point out that we have just a magnitude of order of ecological diversity in our tree species compared to Alberta.

We have high value, for instance, Douglas fir and western red cedar that Alberta doesn’t have. So we have a much more complex baseline to create our stumpage system from. The Alberta stumpage system works for Alberta because of the lack of diversity they have. If you’re looking for com- parison points between the Alberta stumpage system and B.C. ’s, you could look to the Peace area where that part of B.C. is more ecologically similar, as far as tree species are concerned, to Alberta. Our stumpage rates in the Peace region are very, very similar to what the stumpage rates in Alberta are.

To leave it off on a positive note, I can agree with the member’s comments around having a closer look at lag time. We’ve done that in a non-political way, and industry is satisfied that we’re going with our quarterly rather than a monthly synopsis, which would cause further difficulties for industry and their economic predictions. The Chair:Noting the hour, Minister, I’ d like to ask you to move the motion. Hon. D. Donaldson:Hon. Chair, I move that the com- mittee rise and report progress on the estimates of the Ministry of Forests, Lands, Natural Resource Operations and Rural Development. Motion approved.

The Chair:Thank you, Members. This committee now stands adjourned. The committee adjourned at 11:58 a.m. Friday, July 31, 2020 Committee of Supply,

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Collection	British Columbia — Debates (Hansard)
Citation	20200731am CommitteeA n19
Type	hansard
Volume / chapter	20200731am CommitteeA n19
Language	en
Format	pdf
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