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$400M Heist Angers BC Industry

The NDP government's "transfer" of $400 million in Forest Renewal BC funds to relieve its fiscal problems infuriated forestry people throughout the province. But there is more involved than a simple revenue grab.

By John Clarke
Copyright 1996. Contact publisher for permission to use.

The Glen Clark NDP government in British Columbia has been accused of betraying itself, the forest industry, its workers and their communities after its recent syphoning of $400 million in unallocated funds from its trail-breaking forest renewal program. Betrayal is not too strong a word for the manoeuvre. But more is involved here than a simple revenue grab. The whole FRBC program is in deep trouble for other reasons.

The grab undermines one of the basic principles upon which the program was founded. The industry pays a super stumpage fee to fund Forest Renewal BC (FRBC), which was formed two years ago in the face of the downward trend in the annual allowable cut (AAC) in BC. The AAC is expected to drop another 20 per cent over the next 20 years.

FRBC has a mandate of supervising the rehabilitation of the province's shrinking timber resource. The money is supposed to be used for thinning and planting, stream bed repair, logging road cleanup and so on, to replace jobs lost as allowable harvests are reduced. The concept was generally applauded because of those goals. Many took comfort in the government's assurance that the fund would be off limits to any other use and would therefore be free of political interference. The scheme was trumpeted internationally as the way a modern forest industry should be run.

All of this occurred before the Clark people discovered that the arithmetic in their provincial budget was wildly skewed. Just weeks after touting its budget-balancing expertise while on the way to re-election, the government faced an embarassing cash flow crisis. In late August, it was forced to announce a $750 million spending cutback to compensate for lower-than-budgeted revenues - especially from the forest industry, a prime money cow that couldn't be milked to anywhere near the level the government had projected. With some pretty evident mathematical justification, the government was shortly accused of deliberately over-estimating revenues as part of its balanced-budget spin to gain re-election.

In the face of all this, hints of changing attitudes toward the previously sacrosanct - and rapidly growing - FRBC fund began to multiply in Victoria. Unspent by the FRBC, the targeted $400 million was suddenly called "surplus". Cabinet ministers began arguing that it didn't make sense to have that big FRBC bank account sitting there not being used for the purpose intended.

The height of double-speak came from Finance Minister Andrew Petter, a former forests minister, when he said: "In the case of Forest Renewal, we are trying to make sure the program is meeting its objectives in the most effective way possible and at the same time look at how the program is being operated in the larger context of government to meet the concerns of taxpayers regarding the overall costs of government."

Technically, and for public consumption, the FRBC board - comprising industry, union and community representatives - "offered" the $400 million to the government. At this writing, there was a question of whether the law will have to be changed before the money can actually change hands. That isn't likely to be a problem.

Even short the $400 million, however, FRBC won't exactly be hungry for cash. As Petter noted, the FRBC will likely have close to $1 billion in the bank by next year when the money is to be transferred. For the FRBC, perceived as floundering badly in getting its programs up and running, it is an embarassment of riches.

The government has embarked on a complete review of the FRBC concept, which in retrospect appears to have been ill-defined from the outset. While FRBC was initially conceived as operating with independent powers, an enabling change to the Forests Act was never undertaken. That would likely cede more jurisdiction to the FRBC board than the Ministry of Forests, which by law has jurisdiction over forest land, would ever willingly give. Ministry officials want to first approve projects funded by FRBC; the resulting turf war has produced predictable bureaucratic delays and increased frustration levels on both sides.

Exasperated critics in the industry, meanwhile, say they are already up to their eyes trying to understand and process the paperwork involved under the recently implemented and highly complex Forest Practices Code - another much-touted jewel in the NDP crown.

Jack Munro, the former IWA-Canada union president and now president of the Forest Alliance of BC, takes direct aim at the Forests Ministry for delays in implementing FRBC programs. He says Ministry involvement is making the system too cumbersome and "the process is taking the whole thing down." "There are some bureaucrats in the Ministry who think they own the forests," he says. "The people in the field should have quick approval to get down to what the fund should be doing."

Council of Forest Industries (COFI) president Mike Apsey notes pointedly that the government isn't just reviewing FRBC activities but other agencies and ministries as well "to ensure they're doing what was intended." Another stumbling block has been a shortage of suitable projects to fund relative to the millions at hand to spend on them. One reason is that forest companies who were expected to participate in the process by submitting project proposals haven't done so. They say they won't do anything until they get some assurances from Victoria that they will be able to harvest the trees they will be helping to grow. The government doesn't want to give those assurances because that would mean freezing existing forest tenures. It wants to keep open the option of altering tenures in the future if circumstances dictate. That probably means government wants to allocate more wood to small, value-added operators who have been pressing for a bigger share of the forest relative to that secured by the bigger tree farm licensees.

Many in the industry will concede that some of FRBC's startup troubles can also be attributed to industry foot-dragging in the hope that the NDP would be defeated in last May's election by a Liberal government under Gordon Campbell, who is believed to be less committed to forest renewal, at least utilizing this model. Forest renewal may be a motherhood issue, but as envisioned by the NDP it is seen in some quarters as more of a social program than a forestry program, with job creation for political ends the paramount goal and not necessarily what must be done in the woods.

How well this would sit with Victoria can be imagined. In targeting the FRBC "surplus" to solve its fiscal problems, the government has also sent the industry a pointed message or two, the implications of which are hard to miss. In terms of forest renewal funds, this would surely be: Use it, or lose it. Whether the FRBC funding process will speed up now, or what the extent of program funding will be until the government review is completed remains to be seen.

COFI's Apsey sees some light in the tunnel, noting that a number of larger companies are becoming more "actively involved"' in FRBC programs. At the same time, he observes that "there are others who are not."

Everybody supports forest renewal, of course. But many of the problems FRBC has encountered weren't anticipated and must be addressed. The prevailing view now is that it could take years to sort everything out. n

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