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Federal Funding for the Industry has Promise

By Jim Stirling

Recent news reports indicate that the federal government is considering investing in Canada's forest sector. Natural Resources Minister Ralph Goodale is seeking cabinet approval to spend $328 million on expanding international markets and wood product research over a fiveyear period. Goodale is scheduled to speak further on the proposal during this spring's federal budget deliberations. The initial response to the federal government doing anything for the forest industry is positive, if accompanied by mild surprise. But experience teaches caution. To begin with, Goodale is just one of many federal ministers with a wish list for Finance Minister Paul Martin's attention.

He may get $328 million, he may get part of it or he may get none of it. There is also an unfortunate but wellearned cynicism that arises when governments propose giving money to the forest sector. An occasional bone thrown to the yapping hounds, you might say. But although shy on details, Goodale's proposal contains the hint of promise. Most of the money-$295 million-is earmarked for developing markets for forest products and protecting the ones the industry already has. The strategy apparently involves trade missions overseas to promote Canadian forest products. The federal government has considerable expertise in organizing trade missions. Its knowledge of the needs of the forest industry may be less than expansive, however.

It's to be hoped that Goodale and his staff have and will continue to tap industry people to help plan the missions as well as participate in them. It is forest industry executives and marketing experts who possess the keenest understanding of which countries would most likely benefit from a trade mission approach and what specific Canadianmade forest products the focus should be upon. And indeed what the forest industry can supply. Goodale's plan to spread activities across five years is commendable as short term market dabbling can do more harm than good. Five years is probably a minimum time frame to lay the foundations as a credible longterm supplier.

The forest sector has made the mistake in the past of using peripheral markets as dumping grounds for products when traditional ones are restricted or offer little potential for growth. Goodale's vision includes trying to counteract the largely misleading reputation the Canadian forest industry has overseas for dubious forest management practices. Some environmental groups have become wealthy peddling outright lies and halftruths about Canadian forest management and sustainability. Harvesting timber in BC's rain forests has taken a particular shellacking, resulting in boycotts of the wood products of targeted companies and damaging the provincial reputation for everything from salmon to tourism. Simply saying it ain't so-even when it ain't-just doesn't cut it, unfortunately. So Goodale's idea of arranging exchange trips for critics and doubters to come see for themselves is a theory with merit.

The remaining $33 million of Goodale's proposed package is to be directed toward researching new forest products. Again, the money will be dispensed over five years and will go to existing forestry institutions primarily in Quebec and BC. Research into new wood products, sensitive to changes in demand, should be a motherhood type issue. Everyone can see that benefits will result from wellconceived research that has direct, practical application.

But Canada has traditionally spent much less on research and development than many of its competitors in the world's forest markets. Sweden, Finland and the United States come to mind. Perhaps if Ottawa gets involved in funding forest product research through Goodale's proposals it will spur provincial governments into investing more in the industry's future. But, regrettably, that doesn't appear likely to happen in BC. When provincial forests minister Dave Zirnhelt was asked to respond to Goodale's proposals, he made the right noises: "This idea that we enhance forestry in BC and Quebec through investment in forest institutions is critical. We need research and development." The minister is quite right-we do need research and development-although he does appear to be suffering from a memory loss. It was as recently as the summer of 1998 that Zirnhelt took the axe to budgets within his ministry directly involved with research and development. He reduced the chief forester's department budget by 30 per cent.

Forest research programs were a cornerstone of the department's work. Zirnhelt authorized slashing his ministry's disease and insect control budget by 60 per cent. That department researched ways of protecting the province's forests and without trees there is no industry. Further, Zirnhelt remained mute when Forest Renewal BC quietly cut $10 million that was supposed to be used on research projects. Zirnhelt instead chastised the forest industry for not funding more research itself. It must also have slipped the minister's mind that every cent FRBC has is drawn directly from the forest industry (FRBC is a millstone around the neck of the industry in BC and a significant factor in the province's forest industry being the highest cost producer in Canada. And that, in turn, has contributed to the erosion of the industry's competitive edge). Zirnhelt's commitment to research and development in the forest sector is a game of semantics.

Research is a wonderful thing, but his government has no intention of funding it. That is all the more reason to be hopeful about the Goodale proposal as the federal budget discussions accelerate in the coming weeks and more details of the minister's plans are made public. And as they are, they will indicate how strongly the industry should lobby to ensure the Goodale package receives full budgetary approval.

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This page last modified on Monday, November 03, 2003