Reducing the carbon tax and stumpage fees might help out struggling forestry companies in the province, say opposition politicians.
The request, made by Nechako Lakes MLA John Rustad and provincial Liberal leader Andrew Wilkinson was detailed in a letter to premier John Horgan on June 13.
Weak lumber markets and high fibre costs have presented huge challenges to sawmills, and several have shut down this month. Canfor announced temporary closures in Houston, Vanderhoof, Fort St. John and other locations. The Vavenby mill was closed down permanently.
The issue for the time being, as Rustad explained to Lakes District News, is trying to reduce the costs on companies and also on the contractors in forestry.
“If you can reduce their costs that also reduces the price of the wood coming into the mill. That’s the point of the carbon tax. Everything in forestry has to utilize gasoline or diesel,” he said.
Looking ahead over the next few months, Rustad believes it’s important to find ways to keep people working in case there are more mill closures.
“What we did during the downturn of 2007-2009 is we put a pot of money aside to support public projects. For example, it might be work on an arena or other types of things. So tradespeople can come in and do that work. And give them some work instead of having them go on EI.
“The next piece is, every community has issues with fire preparedness. Why not create an immediate fund where forestry workers can be doing that work, cleaning up, doing all the fire preparedness work, prevention around the communities because if they’re not working they’re not going to be working in the woods. Let’s put them to work and do something as a way to help them through this stage.”
The MLA foresees it could be a difficult season for forestry workers.
“Stumpage is going to go up again on July 1st. I’m anticipating that means a lot of mills aren’t going to be harvesting this summer, or very little harvesting this summer, which is going to make it very tough on contractors,” he said.
“If you were to take that stumpage rate and bring it down to something that could be significant enough to reduce the costs. For example, if stumpage was $80, if you could take it down to $50 maybe that’s enough to be able to get some mills working. And work with the mills and the contractors to see how that could be done.”
But cutting the stumpage fees could be difficult to achieve, said Steve Zika, chief executive officer of Hampton Affiliates, which owns the Babine Forest Products mill in Burns Lake.
“To make much of a difference, stumpage prices would have to drop substantially which is not consistent with our market based stumpage system methodology in B.C. and the shortage of logs related to the pine beetle epidemic.”
The government, for its part, doesn’t think Rustad’s idea will work.
“As the opposition well knows, any interference in B.C.’s market-based timber pricing system would lead to an increase in softwood lumber duties levied by the U.S. Messing with the stumpage system is not a solution,” said Forests, Lands, Natural Resource Operations and Rural Development Minister Doug Donaldson.
However, Rustad argues that the stumpage fee should be reduced in tandem with the lower lumber prices.
“The stumpage system is an old system that has a flaw in it. There’s a delay in the way it reacts. The lumber prices have crashed so far and so fast the system won’t start coming down for many months now. However, everybody recognizes the lumber prices are lower – stumpage should be lower. All you’re doing is adjusting early as opposed to waiting for it to play out.”