COLUMN

Chipping away at B.C.’s giants

Diane Francis February 15 1988
COLUMN

Chipping away at B.C.’s giants

Diane Francis February 15 1988

Chipping away at B.C.’s giants

COLUMN

Diane Francis

When Peter Lougheed became Alberta’s premier in 1971 the province had a wealth of oil resources. But a few foreign-owned multinational companies smugly sat on all the best drilling sites—leased to them by the government, which owns mineral rights to 80 per cent of Alberta’s land. That domination sidelined Canadians from the action, and the control that those companies exercised over refineries resulted in artificially low oil prices paid to independents for their oil. But Lougheed busted up the oil trusts by taking tough, unilateral action. Now, a similar concentration of power plagues British Columbia’s forest industry. And the 1986 softwood lumber battle with the Americans, who were upset at our low tree taxes, underscores the need to bust up Canada’s tree trust.

The Americans claimed that the way our stumpage fees (prices paid for logging a tree owned by the province) were assessed meant that taxpayers were subsidizing the major forestry companies. The Americans were 100-per-cent right. Only a few firms control 92 per cent of B.C. timber-cutting rights, through long-term leases. Just four have the lion’s share: New Zealand conglomerate Fletcher Challenge (which owns Crown Forest Industries and just gobbled up British Columbia Forest Products); MacMillan Bloedel, part of the Peter and Edward Bronfman empire; CIP Inc., owned by the Canadian Pacific conglomerate; and Canfor Corp., controlled by the wealthy Bentley family of Vancouver. Small guys scramble for the other eight per cent of cutting rights, some of which are auctioned off each year.

But small operators cut down one per cent of B.C. timber in the 1985-1986 fiscal year—and paid fully 11 per cent of the stumpage fees. Big companies with long-term leases paid stumpage fees of only $2.18 per cubic metre on average, while independents who bid competitively each year paid $5.35 per cubic metre. And besides being unfair, stumpage fees are woefully inadequate. In 1985-1986 the province spent $443 million on forest administration and collected $210.3 million in stumpage fees. Those and other figures were compellingly cited as subsidies by American trade officials in 1986.

The U.S. timber industry pressed for a 27-per-cent countervailing duty on lumber imports from Canada, and the American government officially proposed a more modest 15 per cent. Inter-

national Trade Minister Pat Carney averted that in December, 1986, by announcing a 15-per-cent export tax on Canadian lumber, one of the largest selfimposed fiscal penalties in world trade history. Opposition parties screamed that it was a shameless sellout to U.S. wishes, and MacMillan Bloedel chairman Adam Zimmerman uncharacteristically lashed out at the Tories. But B.C. Premier Bill Vander Zalm admitted that the United States had a point. Now, the Americans have agreed to let higher stumpage fees replace the export tax beginning this year, and the B.C. government is increasing stumpage fees with the goal of tripling forestry revenues to around $600 million a year.

But clearing up stumpage fees will not solve the industry’s problems. “Countervailing duties drew attention to the issue,” said Dan Hanuse, president of the Truck Loggers Association, whose 700 members fell and haul trees for the big

Big logging firms, cushioned bg historical land rights, have shut out independent loggers and neglected B.C. forests

forestry companies. A full-blooded Nimpkish Indian and successful businessman, Hanuse says that the root of the problem is long-term cutting rights granted decades ago that are now in the hands of a few companies. This has allowed them to shut out others and not contribute enough toward replanting.

One result has been environmental problems: in British Columbia, a land area in the Interior equivalent to twothirds of the Netherlands has not been reforested. “The way we have parcelled out our forest resources is a national scandal,” said Bill Manson, another independent logger. “It has been: cut the best, leave the rest and move on.”

Such issues were heatedly discussed at January’s annual meeting of the Truck Loggers Association in Vancouver. Conference displays ranged from brochures about forestry courses to tents, chain saws and giant helicopters. Such equipment puts these independent loggers millions of dollars in hock to do the job, but few are free from exploitation.

Many are caught in the clutches of corporate giants that employ bully-boy tactics. “You might be asked by a big

company to set up a work camp in some remote location,” explained Hanuse. “So you ship up $50,000 worth of gasoline, $28,000 worth of groceries and a couple of crews, say 20 guys. Then after two weeks they tell you to move the camp, without compensation, or they just cancel.” One independent told Maclean’s that he was forced to drop his prices by 21 per cent overnight by a large company for which he had worked 25 years. Like most, he would only talk anonymously because of fear of reprisals.

Clearly, Vander Zalm must set up an arbitration board to settle such disputes. He should also adopt reforms similar to Lougheed’s. In Alberta, big companies drilled selectively, looking only for big oilfields, ignoring the fact that small Canadian independents were willing to search for smaller reserves. Alberta required the larger companies to drill or lose their leases, forcing them to let small companies drill in return for a piece of the profits. Most importantly, Lougheed made Alberta the monopoly buyer of oil. Big refiners then had to pay a fair price for oil from everyone, including competitors, thus sparking even more activity.

Similarly, the government of British Columbia should become the only buyer of logs in the province. That would hike the artificially low prices paid to independent loggers, which would in turn encourage independent logging and make more logs available to small mills. And the province should open up rights. On Vancouver Island, for instance, there are huge reserves of second-growth timber up to 60 years old that should be thinned to ensure better crops. “The majors are not thinning because their mills are not equipped or numerous enough to handle smaller logs,” said Manson. “But independent mills and loggers would love to get in there. They are shut out.” Alberta all over again.

British Columbia partially recognized the problem in the mid-1970s and asked forestry giants to subcontract half of their logging operations to independents. This was ignored until 1979, when a tougher law was passed. What is needed now is recognition that competition means more jobs, more efficiency and more opportunities. Busting up the tree trusts is a logical extension of Vander Zalm’s policy of busting up big unions and big Crown corporations. Concentration of power not only sidelines smaller, more enterprising entrepreneurs, but it angers our biggest trading partner. It may also cost us our future forests.