Viewpoint - Economic opportunities require wood

For years, OFIA and our members have been told by government leaders that the forest sector needs to explain – needs to educate – needs to get the word out there like Governor Schwarzenegger and Premier Campbell are doing right now, that "using products derived from sustainably managed forests is one of the best things each of us can do to reduce our carbon footprint."

Last year, we outlined the pivotal role for Ontario’s forest sector in the transition to the province’s new, local, green economy. By utilizing our sector’s expertise and existing infrastructure, by promoting our world class forest management standards and strong environmental track record, it was recognized that Ontario’s forest sector was well poised not only to take advantage of emerging markets such as bio-energy, but was well positioned to capitalize on expanding/recovering markets for primary and secondary forest products – many of these right in our own backyard!

We explained that with the right public policy and continued government support in key areas, Ontario would attract new investment, create employment and generate prosperity for all Ontarians – a sentiment that holds equally true today.

We met with numerous key Ministers and Ministries and explained the made-in-Ontario challenges and opportunities and shared, what FPAC’s 2009 report, Future Bio-pathways Project, recently confirmed that, "the most promising future involves sawmills and engineered wood product plants mixed with biorefineries which produce a range bio products" and highlights the benefits of an integrated approach that builds on a strong primary sector pointing out that "The traditional forest products tend to generate far higher employment multipliers….".

We left these meetings feeling like there was a greater understanding of how, with the right provincial policy, we could continue contributing to Ontario’s prosperity.

But a year later we feel confused due to mixed signals.

On one hand, 2010 saw 2009 opportunities realized. Ontario citizens – architects, engineers and builders went local. As evidenced by their actions, they recognize that by using local Ontario forest products, they are not only making an environmentally responsible choice, they are supporting local jobs - local communities.

In August, Craig Marshall of Toronto’s Marshall Homes unveiled an Oshawa subdivision home built using only Ontario wood stating "I think it’s time builders and consumers in Ontario take a conscious effort to support this industry by building homes using most, if not all, of their wood from Ontario suppliers. It not only makes good economic sense, it makes great ecological sense as well."

The GTA homebuilders purchase about $800 million of lumber annually and of that it is estimated that 70% comes from outside of Ontario. This represents an annual opportunity of over $500 million dollars for Ontario’s lumber sector.

Attending the event, Minister Gravelle commented, "Housing and forestry are two key economic drivers in Ontario….. We recognize there are real opportunities and we’re going to move on them."

This initiative received further support in the Legislature from GTA MPP Wayne Arthurs when he called upon government "to aggressively promote the use of Ontario wood products in residential and commercial construction throughout Ontario."

And this is where it gets confusing: because while we have all this good local stuff happening, while we have some in government making supportive statements, government action on the other hand, is reducing Ontario’s industrial wood supply and threatening economic recovery. In order to sustainably maximize this sector’s potential and navigate through this recovery, we are asking government to act quickly on the following six recommendations.

First, permanently protect Ontario’s Industrial Wood Supply.

We were pleased when Minister Gravelle stated that "Ontario’s Crown forests can sustainably produce about 26 million cubic metres of wood annually".

Yet, we continue to see an erosion of Ontario’s land base due to government action. For example, MNR recently announced its intent to reduce the area available to forestry in Algonquin Park. To date the MNR has not been able to provide one credible social or ecological rationale for this initiative, despite the undeniable fact that this initiative will have negative repercussions on the forest sector and local economies. In fact, the Algonquin Forest Authority (AFA), in a report to government "expressed reservations about the Proposal, as they are unable to say with certainty that this Proposal will not negatively impact the forest industry and local communities."

Also, Ontario’s Endangered Species Act (ESA) continues to threaten Ontario’s industrial wood supply.

To put this in perspective, this past fall, after only one public workshop in Toronto and no economic analysis, the Wood Turtle Habitat Regulation which represents a 2000% increase over previous standards received Cabinet level approval, and was filed.

Economic analysis conducted by one of our members indicated that this new regulation will threaten 40 percent of the total available fibre on their management unit.

Business runs on certainty - how can the province stimulate investment and generate employment when the wood supply in Ontario is constantly threatened - continually shrinking?

OFIA requests that government permanently protect a minimum of 26 million cubic metres annually for utilization by existing mills and new entrants, even if it is not being used because markets are recovering.

Further, OFIA requests that government conduct an economic impact assessment on all decisions that could reduce the provincial wood supply.

The following 5 recommendations are covered in far more detail in OFIA’s written submission.

Second, OFIA requests that the Government maintain all existing competitiveness measures and initiatives that have been put in place since 2005.

Third, the OFIA requests that the government maintain the Crown dues rate for poplar and birch at a rate no greater than $1.07/m3 for the next three years.

Fourth, OFIA recommends that the Ministry of Environment develop a risk based approvals system that quickly gives approvals to low risk projects and puts more effort into approving complicated high risk projects. Also, we recommend that all new MOE policy, standards and regulations receive economic impact assessments before the government makes its decisions.

Our fifth recommendation has to do with Industrial Electricity Rates. OFIA members are alarmed by the trend of rapidly increasing delivered electricity prices. We are asking for your support to reverse this trend and bring delivered industrial electricity prices to a competitive level.

Lastly, OFIA recommends the creation of a Green Energy Credit. In Ontario, the forest sector is the largest producer and consumer of green energy. By working with Ontario’s forest sector, the government will be stimulating the province’s green agenda with a made for Ontario green energy program.

In conclusion, Ontario currently consumes more wood products than it produces. As the population in southern Ontario continues to grow, the domestic demand for wood products will only increase, raising a fundamental question for government and industry – do we want to produce these products in Ontario, supply good paying jobs and provide support for our rural and northern communities and through integration, maximize bio-pathway opportunities or do we want to forego these benefits and import wood products from other jurisdictions?

We can no longer witness the slow erosion of our natural resource sectors due to the agendas of special interest groups in Toronto which all have as their focus, the removal of land base from industrial use.

We have incredible responsible economic opportunities in front of us, and in order to maximize them, we need the government to permanently protect our industrial wood supply, start conducting economic impact assessments, and take quick action on OFIA’s recommendations.

We need strong public policy that supports Ontario’s world class forestry sector and protects the economies of our communities and our province. A healthy forest sector means a healthy Ontario.