October 29, 2021
THE ROCKET RIDE OF SOARING LUMBER PRICES IS LEVELLING OFF, BUT THE ONGOING TALLY OF WINNERS AND LOSERS SHOWS THE NEW BRUNSWICK GOVERNMENT’S HANDLING OF FOREST RESOURCES IS A STORY OF MISSED OPPORTUNITIES AND MISPLACED PRIORITIES.
“How do you justify leaving so much money in the pockets of wealthy forestry companies while you are about to inflict higher taxes on average citizens already struggling with the rising cost of living?
It’s also a troubling story for taxpayers, especially property owners who are reeling from the latest assessment notices. Many ordinary New Brunswickers, rural and urban, are looking at hefty hikes in their property taxes next spring.
But while many of us are about to get slammed with higher taxes on the potential wealth locked in our homes and land, the real wealth pocketed by forestry companies during the surge in lumber prices has been left untapped by the provincial government.
It’s truly bewildering why this has happened. A recent news story by CBC states New Brunswick could have made more than $200 million in timber royalties during the recent spike in lumber prices had it copied rates used by the Alberta government.
Instead, New Brunswick made less than $70 million.
SWEET DEALS FOR INDUSTRY
Another CBC story provided more evidence of what we have always known -- that when it comes to concessions, industry gets the kind of sweet deals the rest of us can only dream about.
“Discounts are mostly still in place despite the dramatic turnaround in pulp markets.
In 2013, New Brunswick's six pulp and/or paper mills had their property tax assessments cut $130.7 million (52 percent) by the province. The discounts are mostly still in place despite the dramatic turnaround in pulp markets.
In fact, while lumber prices have come down, the price for northern bleached softwood kraft pulp has not. So why are very profitable enterprises still getting tax breaks?
In both of these news stories, comments from government officials, including Natural Resources Minister Mike Holland, were not offered. Having watched the machinations of government over the past few years, I can imagine departmental communications strategists are now busy devising explanations for these costly policy errors.
LEAVING MONEY FOR WEALTHY
It’s going to be tough. How do you justify leaving so much money in the pockets of wealthy forestry companies while you are about to inflict higher taxes on average citizens already struggling with the rising cost of living?
“Industry is not interested in wringing profit out of our forests for the good of all, it’s only for their benefit and their shareholders.
I’m sure the explanation will be something along the lines of, “Preserving secure, stable rates so that jobs in industry can be protected into the future.” In other words, to quote Greta Thunberg, “blah, blah, blah.”
It appears that successive governments in this province believe that bad resource deals and concessions made upfront to forestry companies will produce economic payoffs on the back end.
Certainly the 42,000 private woodlot owners in New Brunswick have not seen that, and neither have the province’s taxpayers. You would think that after so many years, governments would catch on to the fact that industry is not interested in wringing profit out of our forests for the good of all, it’s only for their benefit and their shareholders.
GOVERNMENT SETS RULES
As we know all too well, the low prices for Crown timber depress what private woodlot owners get for their wood. In other words, woodlot owners are competing with a government that unabashedly favours mill owners. And it’s the government that makes the rules and sets pricing trends.
“Woodlot owners are competing with a government that unabashedly favours mill owners. And it’s the government that makes the rules and sets pricing trends.
For example, you need two tonnes of wood to make a tonne of finished northern bleached softwood kraft used for products such as paper towels, diapers and toilet paper. The Crown price for softwood pulp is $5.75 per cubic metre or $7.05 a tonne.
The total stumpage value for enough wood to make a tonne of pulp is $14.10 and that tonne of finished pulp is worth $1,857.
At one time, the gate price for pulpwood was between 20 to 25 percent of the value of the product.
It’s currently just four percent.
As a woodlot owner, I would have expected to make more money this year.
But I didn’t put any wood on the market because of the stagnant prices.
LAUGHING ALL THE WAY TO THE BANK
Meanwhile, forestry companies laughed all the way to the bank. Over the course of a 13-month period ending in July 2021, New Brunswick sawmills and wood preservation operations recorded sales of $1.85 billion on treated and untreated lumber products, according to Statistics Canada.
It was $830 million more than the companies earned on similar production during the 13 months before that.
As I noted at the start of this blog, the record high prices are coming down, but they have not come down all the way and there is still time for the government to bump up royalty rates, turn down industrial concessions and realize benefits for the people of this province.
Rick Doucett President, New Brunswick Federation of Woodlot Owners