Resource Works looks at presentations made by forestry, mining, energy and ranching representatives to British Columbia MLAs.
Stained glass windows in the British Columbia Legislature.
It's an annual ritual in Victoria: civil society organizations representing a vast range of interests troop one by one before legislators to provide the latest information about the challenges and opportunities they are facing. This year was a little different due to Covid-19, but thanks to video conferencing the Select Standing Committee on Finance and Government Services was able to carry out the work.
We've pulled out the presentations touching on natural resource activities. Reading these is an education in the complexity of managing resource businesses while meeting social and environmental requirements.
Association for Mineral Exploration
Presenter: Kendra Johnston, president and CEO
I would like to recognize that I am sitting here on the traditional territory of the Squamish, Musqueam and Tsleil-Waututh Nations.
On behalf of AME's 300 corporate members and almost 5,000 individual members, we are pleased to have the opportunity to present our recommendations today. Like many industries, the mineral exploration sector has been affected by the COVID-19 pandemic, both through difficulty in raising venture capital and by delaying or reducing mineral exploration activities this summer, particularly in proximity to remote Indigenous communities.
However, the pandemic has also put a spotlight on the essential services that our members provide in supporting the continuous global supply of critical minerals and mining materials, which we need to support and power our low-carbon future.
In B.C., these metals can be sourced and developed ethically. Our companies have been leaders in environmental responsibility and economic reconciliation with Indigenous peoples by developing benefit agreements and employment opportunities right across the province. With further geoscience research and a competitive suite of fiscal incentives, the mineral exploration industry in B.C. will be better poised to attract investment and continue the good work that we are already doing.
Mineral deposits, of course, are rare and hidden. Finding one is described as finding a needle in a haystack. Government-funded geoscience programs, such as those conducted by the B.C. geological survey, an agency of the Ministry of Energy, Mines and Petroleum Resources, helps to point our mineral explorers in the direction of that proverbial haystack.
The B.C. geological survey conducts mapping of the province to outline potential areas for mineral and coal development, and thus future economic activity, primarily in those rural areas. Government geoscience programs are globally competitive, and jurisdictions ranging from Australia to Ireland have continued to increase their programming to match the demand for new geoscience and thus are leading to new discoveries and new deposits in those jurisdictions.
B.C. is currently underfunded and falling behind our competitors. Therefore, our first recommendation today is to ensure that the B.C. geological survey receives $6 million in funding in the next fiscal year. This will help to develop programs and leverage its activities with organizations such as Geoscience B.C. to help the province to remain globally competitive in our jurisdiction.
Our next two recommendations today build on the work of the B.C. Mining Jobs Task Force, which contain 24 actions, one of which was a study on the potential for a government-funded investment fund with the mandate to invest in homegrown mineral exploration companies that are exploring within our province. The resulting report confirmed that there was potential for this fund and recommended a structure similar to Quebec's SIDEX fund, which is now entering its 20th profitable year.
AME believes that this fund can provide multiple opportunities for B.C., including leveraging and increasing investment in the province, elevating the social and environmental performance of our funded companies and using the evidence to reclaim legacy sites and support capacity-building and training of Indigenous people for jobs in the mineral exploration and mining sectors.
Finally, AME recommends that government build on two tax-related action items that were outlined by the Mining Jobs Task Force and were endorsed by the committee but have not yet been implemented. We recommend that the government increase the existing B.C. mining exploration tax credit, or METC, for companies from 20 percent to 30 percent over the entire province. It should be noted that B.C. METC already is at 30 percent for the majority of the province — in fact, 85 percent of the province, which is also known as the pine beetle area.
Furthermore, we request that government increase the existing B.C. mining flow-through share tax credit for B.C. investors from 20 to 35. This would place B.C. as the most competitive jurisdiction in Canada, ahead of both Manitoba and Quebec.
As mentioned last year, the Mining Jobs Task Force recommended increasing the rates for B.C. METC and the mining flow-through tax credit for a three-year trial period. AME recommends making these increases permanent in Budget 2021 to support multi-year investments in mineral exploration and allow companies to plan for the long term.
Mineral exploration and mining is one of B.C.'s foundational industries and spans all regions of the province. AME's recommendations, if implemented, will help B.C. regain its competitive edge and will also provide opportunities for economic recovery throughout the province.
Thank you so much for your time this morning. We will be submitting a formal paper that expands on these recommendations, and I certainly look forward to questions after our next speaker this morning. Thank you.
Chair Bob D'Eith: Thank you very much, Kendra.
Deputy Chair Doug Clovechok: I just first of all want to say, Kendra and Patty, thank you so much for the work that you're doing for Teck Coal and, of course, AME. Such an incredibly important industry in our province and, certainly, in the Kootenays out here as well. I know my colleague Tom Shypitka is very much engaged with you all. We just really appreciate all the work that you're doing on behalf of our communities, because we couldn't do it without you.
Just a quick question for Patty. Great that you've engaged the Ktunaxa people. I'm wondering if the Shuswap are involved, because that is a traditional territory of theirs as well.
Private Forest Landowners Association
Presenter: Megan Hanacek, CEO
Our association represents private land owners, both those in class 1 and also class 7, primarily, throughout the province. That's over 20,000 unique individual forested land owners, and they're diverse, as much as the ecosystems throughout B.C.
They're anywhere from one hectare all the way up to hundreds of thousands of hectares. Many of them are multigenerational and have transferred through four generations of families. The unique thing about our private forest land owners is that they are managing for a variety of values in amongst their private investment but also a myriad of public values, as well, in a sea of Crown land in the province.
Within B.C., we represent about 0.8 percent of the total forested land within Canada. In B.C., that's about 2 percent of the total land base. It seems small, but it's significant in terms of being an economic powerhouse. Every year, we generate over $1 billion in economic activity when we're running at full tilt. That's over 4,500 full-time jobs and also about $150 million in tax revenue.
It's a very interesting position to manage private land within a sea of Crown land within B.C. We do applaud the government for the work done to date, for the stimulus, in regards to the COVID-19 pandemic. We do appreciate that forestry was listed as an essential service and also that…. We had requested that class 7 have the school tax rate reduced compared to other classes that have been granted that, and that was achieved. So we do thank you for that. That helped ease some of the economic hardships that our members were going through.
Just moving forward, I did want to highlight the balancing act of our private forest land members and what they do need to balance. We manage for long-term forest values. Often many of them are public values that intersect with private land. The private land owners do own the timber, but that being said, they do have to manage for public values.
Just over half of the private forest land within B.C. has voluntarily elected to go into class 7, the managed forest program, which is a different classification. It's somewhat akin to class 9 agricultural land. We manage for crops. Our crops are longer term. As such, the original bill that was passed…. The incentive for members coming in voluntarily to class 7 was to have a tax reduction, but that's something that hasn't necessarily been achieved in recent years because of the methodology on how that's calculated.
We have a bare land calculation, and we also have a cut timber calculation. Just to give you an example, last year we were told by B.C. Assessment that on the coast, the bare land calculations were going to go up 11.7 percent, and in the Interior, almost 20 percent. The cut timber was going to go up on the coast by 15.7 percent, and in the Interior, 5.7 percent.
We've been working with B.C. Assessment on the methodology for this classification. We highly encourage our members to go into class 7, but there have to be incentives for them to go into that program, or else they'll just keep it in another class, such as class 1, where there is no long-term incentive for long-term forestry management. Currently these values are around water, fishery, reforestation and soil.
We're working right now, currently, with your government on the managed forest review. That has gone out for consultation. There has been input through various stakeholders. We welcome the opportunity. I will tell you, as a professional forester and biologist, I see a lot of gaps, and I see where we can do a lot of improvements. So we welcome that opportunity, but we're very sensitive to the fact that we have an outstanding tax and assessment file concurrently happening with potential regulatory change, and we just want to bring those two along at the same time.
The other issue that's problematic for us right now for our members is that there's been a ripple effect on the coast in terms of fibre and having access to international markets for private land owners. I'm making that distinction with Crown versus private land. It's important for the business, all the way from the bigger players down to our smaller players. There are 23 First Nations, four community forests, hundreds of other private land owners that rely on the bigger players to have access to international markets.
I can send you further information in conjunction with our submission today that shows this pricing differential offshore. Madison's does a monthly report, and often we'll see the prices for various species anywhere from 30 to 50 percent higher in the export market. Our members aren't asking for full access to export completely offshore, but it's part of the equation. If you have more access to your export market, you can redirect more fibre to the domestic market.
That's one thing that's happening right now. Some of our bigger players are down on the coast. They've been down since the end of November. That has also dramatically impacted our smaller member operations. Twenty-five percent of the managed forest land, class 7, actually resides throughout the Gulf Islands. I get calls daily from our smaller members that no longer have access. They have been hit by COVID-19, with furniture businesses, and they also now no longer have access to try to sell their wood through an export market conduit.
In terms of our wants, we did put a submission in. But in light of the COVID-19 impacts, our want is very general. The first want is to consider how private lands can be part of the solution in terms of economic stimulus. Usually on the coast, the coastal harvest is anywhere from about 16 million to 20 million cubic metres. Right now, between private and Crown land, the projection is looking at seven million. That has a whole myriad of spinoff impacts.
Our private lands offer significant municipal taxes, local, stable, well-paid jobs that the unions support. We're looking for that fine balance between access to international markets while still providing fibre to the domestic fibre inputters.
Nicholas Simons: My question is to clarify. I've never heard that the cost of fibre was the issue. I always heard it was the supply. I represent a riding with two pulp mills. So can you clarify on that? The second one is about non-traditional sources of pulp or fibre. I know that there's a lot of innovation taking place in the sector. I'm wondering if other sources, like hemp fibre, have been looked at as possible alternatives. Is that actually part of any discussion? Whoever can answer those, I'd appreciate your insight.
Bonny Skene, Domtar: I'll take a crack at the first question. It's Bonny from Domtar.
You know, as supply tightens, it drives your cost up, because you have to go farther and farther afield for your fibre.
I think what we're saying is that there is enough underutilized fibre within an economic radius of the Kamloops mill and, presumably, other mills that providing access to that underutilized fibre will help with the cost issue. It's closer to the mill. It's accessible. It's not used by other sectors or other members of the sector in terms of the solid wood business, but it's fibre that can certainly be used in a pulp mill.
I think, from a framework, there's a philosophy in British Columbia, and rightly so, that is built around this idea of dimensional lumber, with the residuals, as Bob said, flowing to the pulp mills. We just need some mechanisms to get at the fibre that isn't used by the sawmills.s
Hanacek: Nicholas, I could take a stab at your hemp fibre supply. The one thing about British Columbia that's very unique in the world is that we're lucky we have very specific biogeoclimatic zone mapping, and we plant native species here, so that's another consideration. To do hemp on a large scale would actually displace native flora, which wildlife and other species rely on. So if you were trying to do it on a big scale, you would have that consideration, as well as displacing native tree species.
D'Eith: Thank you.
Any other questions from members?
Ronna-Rae Leonard, MLA: Thanks for your presentations. The question that I have is around the COVID-19 impacts to your industry. I know that there's this declaration that they are part of the essential services sectors. The question that I have is: what is the impact? Are you having to reduce operations to create the physical distancing? Where are your pinch points? And is there impact in terms of recovery?
Skene: Just speaking from a pulp mill perspective, our material, our product, goes into consumer products like bath tissue, paper products, some specialty papers and wrappings for medical use, those types of things. So demand for our product has been high. We're very appreciative of having been deemed essential service, because that continues to allow us to operate, to meet the demand that is being driven or increased by the COVID-19 pandemic.
At the mill, the way we operate has changed very significantly. We've implemented social distancing, increased hygiene and handwashing. The way work is done has had to change. We've changed shift schedules so that employees are minimizing their opportunities for interaction. For example, a group of employees will be at home on an off shift while another group of employees is in the mill, and then they alternate.
As the province comes back gradually, we're bringing folks back to normal shifts. We've almost completed that process. But I can tell you that the way things work inside the mill is very different than it was three months ago, and we expect that to continue to be the case, obviously, for very good health and safety reasons.
Full credit to Unifor Local 10B. They've really stepped up and helped us make sure that we're walking the talk in terms of what's being required on the floor in the manufacturing facility.
For your question about impact on other businesses, perhaps Bob can address it. I think that a lot depends on customer demand, so I'll let him speak to other markets outside of pulp.
Canadian Association of Petroleum Producers
Presenter: Geoff Morrison, Manager British Columbia Operations
Good morning, Chair and committee members. Thanks for having me. I'm joining from the traditional territories of the Songhees and Esquimalt First Nations. I'm speaking on behalf of the upstream oil and gas industry. I've provided a presentation, as you've already indicated, including some graphs, and I'll refer to some of them as I'm speaking.
In my remarks, I hope to show why we are a cornerstone of the B.C. economy now and in the future, why it is important that we work in partnership with government to attract investment to create well-paying, quality jobs and lower global emissions, and why competitiveness is more important than ever. B.C. is a modern, innovative and diverse economy. However, B.C.'s strength remains in its natural resources. Seventy-five percent of B.C.'s exports are natural resources by value, and oil and gas is a top-three exporter.
The natural gas industry employs directly 12,000 people in B.C. In 2019, we were the third-largest investor in B.C., investing $3.3 billion and producing exports valued at $4 billion. These numbers do not yet include the emerging LNG industry. That is to say that our industry is a cornerstone today of B.C.'s economy.
Making quick reference to slide 3, you will see an illustrative graph that shows that for every hour worked by natural resource workers, Canada generates $304 of real income, and it shows that mining and oil and gas generate almost twice as much real income per hour as any other industry. These are good-paying and community-building jobs, typically outside of the Lower Mainland and often creating opportunities for Indigenous communities and advancing reconciliation.
Quickly moving to slide 4, we can see the jobs impact of the worst economic shock since the 1930s. In a few months, 14 years of job creation has been erased, with an estimated 400,000 jobs lost in B.C. and three million jobs nationally since March. We will need to work together to lift our economy and our society out of this hole. We will need all of our acumen and resources to do this.
Slide 5 shows how the $3.3 billion of oil and gas investment compares to other B.C. industries. To put it into perspective, every two to three years, this industry invests the equivalent of a Site C dam project — of private capital — into the province. However, today's crisis, combined with an OPEC-Russia price war, has had a devastating impact on capital availability, equity markets and cash flow to this cornerstone industry. In Canada, nearly $9 billion in oil and gas spending cuts have been announced since March. In B.C., the best estimate for capital investment this year is $2.1 billion. That is a 36 percent drop compared to 2019.
B.C. produces some of the lowest greenhouse gas–intensive commodities in the world. This includes our natural gas. World demand for energy will recover, and that demand will surely be supplied, but it's not clear that B.C. will be in a position to grow its supply of lower greenhouse gas–intensive energy if we do not attract investment needed to develop our resources.
Drilling is a leading indicator, and the drilling information in slide 6 is moving us from trying to understand what is happening to understanding what is going to be happening. Looking at March numbers, industry activity is down by almost half, year over year — 18 wells this March compared to 34 wells last year — and the trend is worsening. This April it has the lowest well spud rate ever recorded in Canada, and there are fears that we are not yet at the bottom. To spell this out plainly, capital investment translates to wells drilled; wells drilled translates to jobs and government revenues.
Early numbers show B.C. oil and gas export volumes and values are trending down since the start of COVID. This is not encouraging news for a government in need of revenues or for companies in need of cash flow to reinvest. However, I'd like to argue that a strong oil and gas sector can help lower the demand on government programs, and these high-paying, quality jobs will help pay for the government services we all rely on through income taxes.
In addition to employee income taxes, government has received hundreds of millions of dollars annually from oil and gas royalties and land sales. Last fiscal year this was estimated to be over half a billion dollars. British Columbia is facing unprecedented headwinds, and I would argue that B.C. needs a strong oil and gas sector to have a full economic recovery. That is why we're asking this committee to recommend to the government that it work with industry to develop a clear strategy to attract oil and natural gas investment.
I'd like to point out that carbon tax is one of our biggest costs. This is why this strategy must address EITE competitiveness. We 're asking B.C. to look at GHG offset policies and to adopt a stringent policy lens to prevent carbon leakage, as any jurisdiction serious about addressing climate change must also take carbon leakage seriously.
That was the end of my remarks. I look forward to your questions.
Mining Association of British Columbia
Presenter: Michael Goehring, president and CEO
Thank you, Mr. Chair, and good morning, everybody.
I'm pleased to present to the Select Standing Committee on Finance and Government Services on behalf of the Mining Association of British Columbia. Just briefly, MABC represents the steel-making coal, metal and industrial mineral producers, as well as smelting operations and advanced development companies in our province. Our mandate is to encourage a safe, responsible development and operational environment in B.C.
Our mines are the largest producers of copper and steel-making coal in Canada. We are the second-largest producer of silver and the only producer of molybdenum. We're also a significant producer of aluminum, gold, lead and zinc, and we produce 20 percent of the world's supply of germanium, which is a critical element in thermal scan thermometers. Together, these commodities account for 24 percent of our province's exports, second only to forest products.
As the economists at the Business Council mentioned the other day, we're one of our province's value-added industries that drive the economy and help pay the bills. Mining is definitely critical to our standard of living and our future prosperity, particularly as we restart our battered economy, present day.
To that end, our sector generated $12.3 billion in economic activity in 2018. Our mines injected almost $3 billion into more than 3,700 small- and medium-sized businesses across B.C. That's in 215 B.C. communities. We supported more than 33,000 high-paying jobs for British Columbians, and strikingly, more than 1,200 of those businesses call Metro Vancouver home, earning nearly $1 billion for the region. Clearly, mining benefits every person in every city and town in B.C.
It's important to remind you that B.C.'s mines and smelters also contributed nearly $1 billion in direct payments to government in 2018, helping pay for the public services that all of us rely on. But our industry's importance goes beyond our economy.
Take the following three points, please. B.C. currently has some of the lowest GHG-intensive mines and smelting operations in the world. Our products are essential and sought after for the production of electric vehicles, renewable energy infrastructure and consumer technologies like smartphones. Two, our members employ high-technology and innovation to conserve more, waste less and reduce their environmental footprint. We're continuously improving our environmental performance while operating to some of the world's toughest regulatory standards here in B.C. And, third, mining is a leader in advancing economic reconciliation with B.C.'s Indigenous peoples.
I just want to acknowledge the province's response to the COVID-19 pandemic and the measures taken, to date, to deal with the ensuing health and economic crisis. The response has provided critical supports to businesses that have kept British Columbians working safely and assisted those most in need. The deferrals of the employer health tax and the hydroelectric payments, for example, have helped maintain liquidity within the natural resource sector and enabled several of our mines to continue operating and to keep people working.
Tragically, COVID-19 has taken loved ones before their time while entire sectors of our economy have been shuttered with nearly 400,000 jobs lost in March and April. B.C.'s economy has been devastated, and I think the younger generation has taken the biggest hit. As you policy-makers begin to formulate the next provincial budget and try to make sense of the uncertainty, we urge you to think boldly. Nothing short of bold action will help get our province on the road to economic recovery in what will be, I think, a somewhat harsher and less forgiving global economy.
Together, as British Columbians, we have a lot at stake. However, with our province's mineral wealth, skilled workforce, education, infrastructure, assets, there's a significant potential for mining to help our economy grow and recover and create new opportunities and social benefits throughout, while helping the world transition to a low-carbon future. To help to realize this potential, however, we urge policy-makers to focus on improving the fiscal and regulatory conditions in our province to enable our industry to compete and succeed in global markets. If the global recession becomes protracted and commodity prices fall further, this will be paramount.
Prior to COVID-19, our mines were already challenged by softening commodity prices, a complex and slow regulatory process and an increasing cost burden. The economic crisis brought on by COVID-19 has shone a bright light on the challenges facing B.C. companies across all industrial sectors that are competing to sell their products in global markets.
While the duration and extent of the global recession remains uncertain and commodity markets are expected to remain soft, a focus on competitiveness for B.C.'s resource sectors is essential — not only as a jurisdiction in which to invest capital but as a producer of competitive and responsibly produced minerals and metals and other natural resources.
With an eye on the time, I'll approach my main point and recommendations. Looking to the long term, the fundamentals are strong. Demand for our minerals and metals will increase as we move to an increasingly lower carbon economy. As an open trading economy, we can position ourselves to take advantage of the inevitable economic upswing. But to do so, we must improve our ability to compete and succeed in world markets to keep our minds open and to support and encourage mine expansions and new mines.
I mentioned B.C.'s mines are among the lowest GHG emissions–intensive in the world. Increasing the global market share of copper, gold, steelmaking coal and aluminum from B.C. will lower GHG emissions globally. Yet right now B.C. mines pay the highest carbon tax in the world, which places our products at a distinct cost disadvantage in the global marketplace.
Our primary competitors — Australia, China, Chile, Peru, Russia and the U.S. — do not price carbon, not yet. And other Canadian jurisdictions whose mines compete with ours — Alberta, Ontario and Quebec — protect their trade-exposed industries like mining. In stark contrast, B.C. continues to offer no protection for mining or our province's other trade-exposed industries.
Yet with the increasing opportunity available for B.C.'s responsibly produced minerals and metals, I ask the committee to please consider why B.C. has chosen not to offer our mines and other trade-exposed sectors in B.C. the same protection. We are among the cleanest in the world. But we're not competitive.
On behalf of our membership, I offer three recommendations for the committee to consider to support our industry and the benefits it provides to British Columbians.
First, level the playing field with our competitors in other provinces and capture the low-carbon opportunity by making the CleanBC industrial incentive program available to mines and B.C.'s other trade-exposed industries to reimburse every dollar of carbon tax paid below $30 per tonne, effectively aligning B.C. with the federal government's output-based pricing system.
Second, address the competitiveness challenge posed by the provincial sales tax by removing this input tax from all production machinery and equipment used in mining operations. I would say that policy would apply broadly across all industrial sectors in British Columbia.
Third and finally, implement new measures to reduce upward pressure on electricity rates to ensure we regain our low cost and clean electricity advantage. This includes incenting new mines and the expansion of existing mines through lower interconnection costs and enabling the deferral of a portion of B.C. Hydro payments during the capital payback period for mine expansions, extensions and new mines.
We will be providing our recommendations in our submission to the committee. Just to close, as we reopen our province, with the right policy measures in place, mining offers British Columbians a significant opportunity to help our economy grow and recover, creating new job opportunities and social benefits throughout, while helping the world to transition to a low-carbon future.
I thank committee members for your time.
British Columbia LNG Alliance*
Presenter: Bryan Cox, CEO
Mr. Chair, hello to you and the committee. I'm happy to be with you today from the Semiahmoo, Katzie and Kwantlen First Nations, where I'm speaking from today. It's a pleasure to be with you to talk a little bit about the LNG opportunity that we have here in British Columbia and in Canada.
As we know, we are in an unprecedented time right now, just as evidenced by this committee meeting today and by the fact that we're all meeting virtually. I don't think we ever contemplated what's occurring right now, from a pandemic point of view and, really importantly, from an economic point of view — where we find ourselves as a province and as a country. We really need to look forward towards economic recovery.
When you look at what an opportunity like the LNG industry provides for British Columbia and for Canada, it's very important that this committee and the government look very closely at what we can collectively do to continue to build this industry. If you look right now at the LNG Canada project, Coastal GasLink project…. Prior to the COVID pandemic beginning, we were seeing over 7,500 people working for the LNG Canada project and 2,500 people on Coastal GasLink, with over a billion dollars in contracts let locally, many of those opportunities with Indigenous communities.
We are seeing this benefit translate out not only in the local communities but across the province and, importantly, across the country. This is truly an opportunity with a $40 billion project that we've only just begun to see the benefits for. You've also seen that project do everything responsibly during this time to ensure that it's maintaining the essential levels of services that it could. Now it's in a position, as we move through this next phase of the pandemic, to begin to provide more economic opportunity to the province.
We've really seen that through one project, and we have the opportunity to see that through more projects. We have projects like the Woodfibre LNG project, like the Cedar LNG project, like the Fortis Tilbury expansion, as well as other opportunities like the Kitimat LNG project that we have here in British Columbia.
I think it's really important to put it in context that not only are these billions and billions of dollars of economic activity an opportunity for British Columbia and Canada, but we are producing the lowest-emission LNG in the world through these projects. The LNG Canada project, when constructed, will be the lowest-emitting LNG facility in the world. Kitimat LNG, Woodfibre and the Tilbury facility will be even lower than the LNG Canada project. So we're demonstrating in British Columbia and in Canada this leadership when it comes to economic development and also climate leadership when it comes to what we can show the world through this industry.
The power of this industry is through our clean, green hydroelectricity grid. When you think about what our opportunity is through natural resource investment in British Columbia…. You've heard it in the prior presentation — what the natural resource industry provides in economic activity to the province, over and above other industries. We do it to the highest standards, with a clean, green electricity grid.
As we move forward as a province through this time, it's incumbent on us to really look at how we develop our economy and our natural resource economy, which we should all be incredibly proud of, and do that in partnership. In order to do that, especially when it comes to LNG, which are, as we know, massive capital projects that require private sector investment, we have a real opportunity now to look at how we invest collectively to unlock those private sector dollars.
I think I would venture to say there are not many other opportunities in the country of Canada right now with higher abilities for private sector capital deployment than the LNG opportunity through British Columbia. This truly is British Columbia's opportunity to provide much-needed economic help to our country right now, by getting this opportunity correct, by ensuring that we build the LNG Canada project, as we're doing now, but really importantly, empower the growth of this industry.
In order to do that, we need to ensure that we have a regulatory system that can accept this capital investment. Every other jurisdiction in the world right now will be looking to get as much capital investment as they can, because they're going through the same economic troubles as we are. We have to be ready, as a jurisdiction, to accept this capital investment. When you put it together from a regulatory point of view and from an infrastructure point of view, we need to make the investments now that are going to unlock those multiplier effects of private sector dollars that will benefit locally, provincially, nationally and our Indigenous communities.
We would really recommend to the committee that government put a focus and a lens on natural resource development that involves all of the partners that we have — Indigenous communities, local communities, all levels of government and industry — in order to ensure that we turn the corner on this COVID pandemic and get back to prosperity for our province and for our country.
*It was announced June 15, 2020 that the BCLNGA has become the Canadian LNG Alliance.
British Columbia Cattlemen's Association
Presenter: Kevin Boon, General Manager
I'm expecting someone to have a steak in front of them before we're done here.
I'd first of all really like to thank you for the opportunity of being able to present to the standing committee on the needs of agriculture and the cattle industry. I fully support and deeply support all of the comments that have been introduced by Glen and by Reg in their submissions and would like to add more of an Interior perspective to our comments, I think, in what it is, fully supporting what has been said.
The BCCA, B.C. Cattlemen's Association, has been the official voice of cattle ranchers throughout British Columbia since 1929. We represent approximately 1,100 ranchers across the province. These are family-run ranches that are among many of the British Columbian small businesses that are the backbone of the rural economy.
British Columbia has demonstrated leadership and a commonsense approach to managing the coronavirus outbreak. While we are facing uncertain times, we have learned the importance of our health, our food supply, our sense of community and our impact on the environment.
As the province emerges from the global pandemic, farmers and ranchers are an essential part of B.C.'s economic recovery. B.C. Cattlemen's Association has given careful thought to our request in these uncertain times to ensure that we are investing in the future and not just reacting to COVID-19 but fully aware of what we have learned from this crisis.
As British Columbia builds a road map to recovery, the B.C. Cattlemen's Association has discovered how we can be part of this recovery. The road to recovery needs to make smart investments into areas that will reap benefits now and into the future. We'd like to highlight a couple of areas where we feel that it is very important — that is, enhancing Crown resources and B.C. beef processing and marketing opportunity.
Water storage has been identified as one of the most important factors for climate change and adaptation. While we know that agriculture is a major benefactor of water storage and is often the reason for constructing them, this is supported by a recent cost-benefit analysis titled Study of the Costs and Benefits Associated with Dams and Reservoirs on B.C. Cattle Ranches. The analysis identified that there are many others that benefit, including recreation, wildlife habitat, fish migration, wildfire suppression and flood mitigation.
We can see the effects the past wildfires have on snow melt, freshet flows and flooding. This year, with a record snowpack, we would have been able to capture and manage some of that water. There are 1,500 dams within the province; about 62 percent are maintained by agriculture. They're essential to help B.C. adapt to an ever-changing climate and respond to severe weather events. Managing water will be a critical asset in B.C.'s future.
The cost borne by agriculture due to regulatory burden and maintenance is making it extremely uneconomical for agriculture to continue to invest in this infrastructure. It is our recommendation that the province invest in protecting, maintaining and building water storage infrastructure for the future.
We also want to bring your attention to Crown ALR lands. With over 50 percent of the ALR being on Crown land, government has a stake in the food production chain. This carries the responsibility to consider food production in the management of Crown land, especially the Crown ALR lands.
With the lack of an ALR objective in the FRPA regulations, there is a need for the Crown to invest in a forage development plan. Currently there is no requirement for professionals and planners to consider ALR rules. Landscape-level planning needs to consider all major tenure holders.
Finally, we want to bring to your attention the need to invest in processing and marketing. One of the hitch points we definitely saw was the centralization, as Reg pointed out, of the processing in Alberta. B.C. lacks post-processing, especially for beef. We've been working on a plan for a cooperative of producer-owned and gate-to-plate for the past several years and would like to ask that we continue to invest in this as we move forward to try and solve our problems.
I would like to thank you for this opportunity to present to you and look forward to working with you in the near future to try and overcome some of these hurdles created. Thank you.
BC Agriculture Council
Presenter: Reg Ens, Executive Director
Good morning, and thank you for inviting comments to support your ongoing work to serve the citizens of British Columbia.
B.C. Agriculture Council, BCAC, is a council of associations proudly representing nearly 30 commodity associations, who in turn generate 96 percent of farm-gate sales in B.C. We are the only provincewide organization representing farmers and ranchers of B.C. to the government.
I really don't need to say it, but we are in unprecedented times. Let me provide some observations on the status of the agriculture and food system. The Canadian food system isn't broken. There hasn't been an overall increase in the number of people going hungry. However, we have seen that it is fragile. People are looking at food security in ways that we haven't seen since the Great Depression or World War II. Many of the disruptions appear to be rooted in panic buying.
The pandemic has shown what the industry knew: that our supply chains are highly centralized and complex. They are very efficient, but have very little redundancy or flexibility. We're cautiously emerging from lockdown, and supply chains are adapting to meet the new normal. Many sectors like grapes, berries and cattle are still worried about what is yet to come. Farmers are challenged trying to predict what demand will be in six months.
Prior to the pandemic, discussions on food systems focused on sustainability, affordability and choice. Now it's about resilience. Resilience is typically defined as the ability to withstand adversity and bounce back. Dealing with fires, floods, hail and pests is all part of normal adversity that farmers can't control but have learned to prepare for. However, like most Canadians, preparing for a global disruption of supply chains due to the pandemic was not front of mind.
The question is: how does government support B.C. farmers and ranchers to be a key part of a resilient food system? We want to thank the provincial government for their leadership and prompt actions that are currently helping B.C. farmers during the pandemic. We understand that there are many parts of the B.C. economy that are in dire need of assistance right now.
Government and farmers have common objectives of wanting to ensure that consumers have safe and secure access to food. We also believe that farming and the food supply system can be an effective way to help restart B.C.'s economy. I want to provide three specific ways that government and farmers can achieve our common objectives:
- Ensure that risk management programs help farmers. The federal and provincial governments have created a suite of programs collectively referred to as business risk management, or BRM, to help farmers manage risk. Over the past number of years, farmers have let governments know that programs are no longer effectively helping manage risk. BRM programs were designed to help manage unpredictable but known risks. They were not designed to deal with global disruption of the supply chain. The province must continue to pressure the federal government to adjust programs to help manage today's risks.
- Invest in infrastructure that helps farms adapt and innovate. One of the recommendations from the B.C. food security task force report released this past January is to adopt and implement the U.N. sustainability development goals in future agriculture policies. Partnering with farmers and ranchers to improve water and nutrient management systems would accelerate environmental sustainability, create jobs throughout the province and strengthen our food supply system.
- Support farms adjusting to changing labour markets. One of the most immediate impacts of the pandemic was the disruption of seasonal labour supply. The system used to connect employers and seasonal workers is highly complex, involving multiple governments. It was unable to adapt to all of the changes required in response to the pandemic. Government must continue to support collaborative efforts to build resilience into the seasonal worker system.
We don't know what the next crisis will be, but it is apparent that we need to be better prepared for it. Improved coordination and sharing of information across government and the agriculture industry is crucial to ensure workers and communities are kept safe.
Let me conclude by saying that B.C. farmers and ranchers understand that there are many high priorities and demands that require investment within the province. But as the food security task force stated, it is critical for all of us — government, academia and industry — to work together to achieve our common goals.
BC Pulp and Paper Coalition
Presenter: Robert Lindstrom, Coalition Manager
I'm with the B.C. Pulp and Paper Coalition. I sent you a pack. Hopefully, you have that in front of you. I'll just quickly go through the slides.
If you look at page 2, where the map of B.C. is with a bunch of triangles on it, that just really indicates where our mills are. We're actually part of the whole forest sector here. We're an integral part of the supply chain. Our primary input is wood chips, which come primarily from sawmills and from pulp logs from logging activities.
If you think about the way sawmills work, they really make rectangles and squares from cylinders. We receive all the rest of the log as wood waste — in our case, wood chips. We also use the bark and sawdust and shavings for fuel for our boilers. With all that, you can see that pulp and paper is a big user of fibre in the province. We use over 40 percent of the timber harvest in B.C. You can see where our mills are on the map. We primarily are in rural communities.
Flip the page to page No. 3, the importance of the pulp and paper sector. I won't go through the bullets, but you can see from the information that pulp and paper is a key driver in B.C. We have about 11,000 direct jobs. These, again, are primarily in rural communities. For instance, we are B.C. Hydro's largest industrial customer, and we're the largest bioenergy — i.e., green electricity — producing region in North America. We're also a major shipper and user of the many services throughout B.C.
Flip the page to the next one, which is just an overview of the pulp and paper market. From a market perspective, I think it's fair to say the lumber markets are relatively weak at this point due to the housing market. But pulp markets remain steady, as our markets are tissue, towel, packaging and some medical grades. We're a little bit out of sync with the sawmill sector. I think they've seen a little bit of a rebound in the last couple of weeks. Essentially, we kind of view that the housing market's going to be sluggish for the next period of time, so a lot of our feedstock is not going to be coming as planned, so we have to look for additional supply.
Also, you should be aware that the fibre supply…. We have had a fibre shortage for our mills for some time. These are all the causes — things like the reductions in annual cut based on the pine beetle, wildfires and sawmill closures. So our mills have had a constrained fibre supply for some period of time. Now, coupled with COVID, we're seeing a further drop in wood chips from the sawmills to our mills — again, due to this economic hit and probably a drop in the housing market.
We're all hoping for a fast recovery, but realistically, we're expecting a sluggish housing market for the next year or two. This has forced significant curtailments in our sector. You've seen recent announcements from Canfor, West Fraser, Mercer and Paper Excellence paper mills. Our concern is that if this carries on for any length of time, this will lead to mill closures.
Flip to the next page, which is what we can do about this.
There are really two key successes for the pulp and paper business: cost improvements and reinvestment in our mills. From a fibre supply perspective, at this point, with our traditional sources of supply down or lower, we're going to need to replace that volume with other types of fibre, and we think a non-traditional source is our best way to target that extra fibre. In fact, our target is the damaged, problem or decadent forest stands that normally contain a higher degree of pulp logs, but they also have a higher cost to log. This can also apply to things like logging waste left on a logging site, which we can access for pulp material as well.
To target these stands obviously takes some extra effort and takes some extra costs, but there are numerous benefits, as you can see, that are listed there. It's an important lifeline for us to keep our essential business running. We can put the loggers, who are currently not working at full capacity, back to work, regenerate these poor stands up to high-value stands and improve forest health.
All these things are benefits if we can get a program to help us target these stands and give us the necessary feedstock for our mills. This is not a new idea, but this program would be highly focused and would generate these targeted results. I've given an indication there of the kind of funding dollars that might be required.
The last slide I've got just talks to the reinvestment possibilities here. There are numerous opportunities to reinvest, and a lot of these are carbon solutions and improve the sustainability of operations at the same time. Some of these opportunities, I would say, are on the near-term horizon, and some are still under active development. We should also realize that we're in a global development race for a lot of these products. If we don't invest in them, if we're not in the race, we're going to be left behind by the progress of other countries and other companies.
I've included in the appendix — and I won't go through that today — four key themes of the Pulp and Paper BioAlliance, which we're working on in partnership with both UBC and FPInnovations. We believe this work can be the foundation to create an advanced bioproduct strategy and cluster for British Columbia. It's our view that B.C. is a forest leader, and we also need to lead in these new and developing areas of clean technologies for our mills.
Therefore, we're suggesting a holistic approach to this opportunity to develop these bioproducts, to adapt this new technology and to work with the B.C. government to do that. We're also suggesting that we need some help with funding for early innovation right through de-risking the most promising technologies for the future in a more program-like way. Funding will obviously have to come from multiple sources, but we would like B.C. to step up and be one of those.
That's my presentation. One: focus on fibre to keep our mills operating. The other: focus on diversification and reinvestment for a bright future for our sector.