HANSARD

Printed and Published by Nova Scotia Hansard Reporting Services

Mr. John MacDonell (Chairman)

Hon. Barry Barnet

Hon. Karen Casey

Mr. Patrick Dunn

Mr. Sterling Belliveau

Mr. Charles Parker

Mr. Wayne Gaudet

Mr. Leo Glavine

Mr. Harold Theriault

In Attendance:

Ms. Charlene Rice

Legislative Committee Clerk

Forest Products Association of Nova Scotia

Mr. Steve Talbot, Executive Director

Mr. Garth Spencer, President

Mr. John MacLellan, Past President

Mr. Jonathan Porter, Past President

Mr. Jeff Bishop, Communications Coordinator

HALIFAX, TUESDAY, JANUARY 22, 2008

STANDING COMMITTEE ON RESOURCES

9:00 A.M.

CHAIRMAN

Mr. John MacDonell

MR. CHAIRMAN: Order, please. Good morning, I want to welcome the Forest Products Association of Nova Scotia. Three seats, each with a microphone, so you gentlemen can draw straws to see who gets the short one. Generally what we do is introduce the committee and then the time is your own. We have a couple of hours, minus five minutes, and hopefully some time for questions. I want to say welcome and sorry for holding you up.

[The committee members introduced themselves.]

MR. CHAIRMAN: For our purposes, could you please introduce yourself when you start to speak.

MR. JOHN MACLELLAN: John MacLellan, just recently Past President of Forest Products Association of Nova Scotia.

MR. GARTH SPENCER: Garth Spencer, just recently President of Forest Products Association of Nova Scotia .

MR. JONATHAN PORTER: If John is recently Past President, that makes me Past Past President. We had our annual general meeting just last week as some of you know, so everything changed then. My name is Jon Porter.

MR. CHAIRMAN: Do you want to introduce the gentlemen in the back as well?

MR. MACLELLAN: Yes, we have Steve Talbot, Executive Director of Forest Products Association of Nova Scotia. Behind me is Jeff Bishop. Jeff has just come on the first of December as our new Communications Coordinator for Forest Products Association of Nova Scotia.

MR. CHAIRMAN: We have a member just getting his seat, so we'll allow him to introduce himself and then the floor is yours.

HON. BARRY BARNET: Sorry about that, I apologize for being late. My name is Barry Barnet, I'm the member for Hammonds Plains-Upper Sackville.

MR. MACLELLAN: I wrote this so Steven Talbot insists, even though I put his name on it, that I read it so I'll do the same. Gentlemen, the Standing Committee on Resources, Nova Scotia. Thank you for inviting the Executive Committee of the Forest Products Association of Nova Scotia to discuss the state of the forest industry of Nova Scotia. We want to speak to the following areas of concern:

1. The value of the forest industry: A recent APEC report indicates that the industry provides close to $1 billion in economic benefit to Nova Scotia while providing 11,000 direct and 5,000 indirect jobs to this province. The industry also generates $139 million in tax revenue contributing to the provincial health care, education and social benefit system.

2. Competitiveness. There is a need for the Government of Nova Scotia to work with the forest industry. This will allow us to become more competitive in the global marketplace. Areas to direct these efforts include; transportation, technology and regulation, labour force husbandry and in-work training, using community college and university resources already in Nova Scotia.

3. Sustainable wood supply. The forest industry needs to be assured of a sustainable supply of raw materials to remain viable and competitive in the future. It becomes increasingly more difficult to achieve this goal while productive forest lands continue to be removed from management.

4. FPANS anticipates working with the government task force on the forest transition program, starting this February. The Forest Products Association of Nova Scotia will be taking an active role in the upcoming forest strategy development, a strategy that will govern Nova Scotia's natural resources.

Here today, the Executive Committee of the Forest Products Association of Nova Scotia looks forward to government support in meeting the many challenges that affect one of Nova Scotia's most important renewable resources. Yours truly, Steve Talbot, Executive Director.

We kept it short. In years past we have made some much longer presentations but I guess nothing so focuses the mind, to quote Samuel Johnson, as to know you will be hung in a fortnight and the challenges we've been facing in the last 18 to 20 months will not go away this year, or possibly not the next. So we have distilled - we spend a lot of time as an executive and as an association working on ways to go forward.

Some of these initiatives, for example in transportation, have been ongoing. Our transportation committee has had five full years of active work in coordination with government, specifically with the Department of Transportation, and working with such national institutions as FERIC - which is the Forest Engineering Research Institute of Canada - in making proposals that would enhance the competitive cost of transportation for our industry and other industries in Nova Scotia.

To be quite honest with you on that matter - and I'll speak to it and I invite John to jump in where John is actively part of the paper industry in Nova Scotia. After five years we have an excellent committee representing all the major wood-using companies in Nova Scotia and our committee is certainly frustrated working with the Department of Transportation. We have had many meetings, we have had many proposals. We have developed, consulted and delivered presentations on state of the art technology for the transportation of goods over surfaced and unsurfaced roads. We are also now working under a new regime which is basically a reduction in the axle tolerance weight that was delayed for a year, but as of January of this year, it came into effect. We're still working under this reduction in tolerance and we are working with the Department of Transportation, over the next three years apparently, to try to come up with a strategy that would allow us to move products competitively. Not competing so much against Canada, but against our other markets, whether they are in the southern hemisphere or if they are in western Europe, who also produce the same forest products that we do. We have to be able to move our raw material, primarily wood, wood chips, sawdust and bark as efficiently as our competitors to be competitive. On that matter, I just refer that one to Jonathan Porter to speak to.

MR. JONATHAN PORTER: I'm not sure there's a lot really to add to what John said about transportation. I think everyone understands how critical transportation is today for basically the majority of products coming in now are by truck and we need a way to ensure that those means are competitive. We'll maybe take the opportunity - I know the committee had asked us to update them on the state of the industry, as John alluded to. You're probably interested in where we feel some of the markets for the products made in Nova Scotia are and where they're going because although there has been a huge amount in the news recently, certainly a lot of attention on lumber markets and the historical lows they were at even before the impact of exchange rates. I think with pretty well all the major products, exchange rates are an impact because in most cases they're sold in U.S. dollars, so the speed at which the exchange rate is changed and the magnitude of the change have had huge impacts.

[9:15 a.m.]

In particular for lumber, we've got the housing reduction fiasco, whatever you want to call it, in the U.S. which had dramatically reduced demand and on top of that, we've got issues like the beetle outbreak in western Canada and the salvage to harvest those trees while they're still usable is putting huge amounts of wood on the market. You add those things together and that at least explains some of the major impacts on the lumber market. It appears that a lot of the people who spend their time looking at that don't expect any improvement this year and hope for some improvement next year, but it may be late next year. Certainly, things change by the day almost as you see what happens in the U.S. economy.

Some mills are certainly looking for other markets outside the U.S. but, of course, when you do that everyone starts doing that and it's very easy to fill up other markets you find. It used to be that when the spruce lumber market had declined, the pine lumber market stayed good but we're seeing that's not true anymore; the pine lumber market has dropped just as dramatically as the spruce lumber. So just about everybody in the lumber business is affected, even the hardwood lumber mills are affected so there is not a lot of encouragement there, it just means everyone really has to focus on finding ways to be competitive.

Newsprint from where I work is another thing we focus on. Again, a lot of impacts for North America with, I think, the last numbers I saw from 2006 to 2007, there was a 10 per cent reduction in the amount of newsprint used in North America - just a phenomenal decline. That's driven by all kinds of things from advertisers not using newspapers as much anymore and often going on-line, to newspapers looking at their own efficiencies and getting smaller size or lighter weight, using less paper.

In many cases circulation is going down, because young people today don't tend to read the newspaper as much, there are big impacts on exchange rates, but also escalating the energy prices, which is a huge issue in Nova Scotia, because they go up faster here than most other jurisdictions, and competition from the Far East. The other day I heard someone talking about the last new newsprint mill built in North America, I forget the date but it was decades ago. Of course, all the new ones in the last few years have been built in China. So big changes there.

Some improvement is hoped for this year in newsprint mainly because there have been so many mills closing, that should better balance supply and demand. The other two major products for Nova Scotia, the coated paper and the pulp market, a little more encouraging, the markets there have improved. Again, a lot of that is because demand and supply are more in balance, and oftentimes it's because of the result of the hard decisions to shut mills and get things in balance all because there aren't new mills coming on stream in other parts of the world. Some slightly better news there, but certainly energy prices are still a big issue for some of those manufacturers. That's a quick snapshot of thoughts on markets.

MR. MACLELLAN: The euro, of course, has appreciated against the U.S. dollar, which has delayed or put a higher threshold of entry for other European lumber or European paper products entering the North American market. As Jon just alluded to, in the southern hemisphere there's a lot of expansion and construction going on, so that will be more a period of months as opposed to years before that's replaced, probably 12, 15 or 20 months at the most, before a lot of that market decline which in the last few months from Europe will be picked up by those very cost-competitive mills in Uruguay and Brazil.

On the training side, the Forestry Safety Society, which is part of the whole forest industry in Nova Scotia responsible for safety and training, three years ago had a study conducted that was released a year and half ago on our labour force. The forest industry in Nova Scotia has the same challenge as every other, whether it's government or any other industry, we have more people over 40 in the workplace than we have under 30. Within the next 10 to 15 years there is going to be a very marked and systemic decline in our available workforce for our mills, logging and truck-haul operations, specifically. The silviculture contractors, specifically tree planting and using the spacing saws for pre-commercial thinning, have been dealing with that issue for the last four or five years. It's quite a challenge.

One of the ways we believe that we have to look forward to improving that is to look at retaining workers and employees longer in the workplace. We need people to work in their early 60s in some jobs that maybe now or maybe 10 years ago we wouldn't have thought they would want to do or be capable of doing. There has to be a mix of improving the working conditions, whether it's ergonomics in cabs and machines such as mechanical harvesters or in a saw line, or improving their skills. In many cases, to improve skills without having the employee take a major loss in their annual income, we have to look at creative ways to leverage the resources that are in, for example, the community college system, specifically. There is a lot of training going on, there are a lot of human and material resources in our community college system, but they're still focused mostly at training younger students for entry into a career.

One of the focuses in a province like Nova Scotia - looking around the room, I don't want anyone to take offence at this - we are all predominantly in the 40-plus club, and those of you who are younger take it as a compliment, but the rest of us have to deal with reality - most of us are in that 40-plus club. We are the workforce for the next 15 years in this province, so we have to look at increasing our skills as some firms move to technologies that require the demand for labour. At the same time those technologies also demand the higher skills and a greater ability to problem-solve, for logical thinking, to interact with digital devices. How we get that training, how we work on that, we have started some discussions this past Fall with the community college system on looking at programs, some program development to train the people we need to retain in the system, and to also look at training people who are changing maybe from their second to their third career.

There are individuals who no longer have a job in a plastic-extruding factory, but they have skills that could go into a sawmill. What's harder is to have those skills translate into operating a truck in the forest conditions around a pulp loader, to navigate those roads and to get the training and get the skill to be a productive employee, or to make the leap into the seat of a feller-buncher machine, for example. Excavators, harvesters, the mechanical track harvesters, they look like excavating, earth-digging machinery, but they don't work the same way.

In the whole business of logging, paper-making and the sale of forest products, efficiency is paramount. You absolutely must produce - there are no two ways about it - you must meet your production targets, you must keep your costs in line. You have to deliver now to a customer that has more product choices and has more definition. I don't believe, Jonathan, you even really sell newsprint anymore as you sell newsprint to a specific customer to their specifications, is that right?

MR. JONATHAN PORTER: Tends to be very much. You don't make the product until you have an order for it and you make it according to their requirements.

MR. MACLELLAN: That's a big change from 20 years ago when newsprint was rolled in the warehouse and eventually somebody sold it, sometimes by the shipload, sometimes by the railcar load. So that's another challenge we're looking at, is our aging workforce, and we're already in discussions with the community college system. It's quite a change in focus from looking at training just the youth of the province into a career choice, looking at also streaming those who are in mid career, or in late career, into skills where they can be employed and maintain their lifestyle and have a good living and be able to live in rural Nova Scotia but also be a productive employee for their employer who has to compete in the world market - because there are no two ways about it, with the Internet and access to information, it is a world market.

MR. JONATHAN PORTER: Just a couple of points that I suspect will come up in the questions and may help stimulate some of them. John mentioned sustainable wood supply to our industry, that's a critical item for us. You can't make forest products without a sustainable wood supply and for that we have to look and work a much longer term than most other industries would consider. Certainly the new forest strategy development is key. It's important for the province, it's important for the forest industry and we will make sure that through those hearings the issues that are important to managing forests come out.

One of the big issues today is the issue of protecting certain areas and not actively managing them, and as John mentioned, certainly the less and less land you end up with that is being managed the more you have to look at the practices and the more intensely you have to manage a portion of that land to get the wood supply, which seems is slowly being understood, I think, in Nova Scotia. It's something that I remember 20 years ago, a visit from a group from Germany that basically said it's a no-brainer; if you need to protect something

here then you need to offset that by more intensely managing another area to get your wood from. It's just the way you do things, it's the way you balance the competing demands. It's possible to do, but you've got to look at the bigger picture than just putting something out for whatever reason.

MR. SPENCER: I guess I think the two Johns have covered most of the issues. I'd just like to say with regard to the industry we have, we're growing that industry in the time of decline to maintain the market share that you have, you definitely have to be cost competitive and you have to deliver high quality and good customer service. So the part that we have a lot of control over, as industry and as government, is cost-competitiveness. So right at this time, anything that affects the cost competitiveness position of the industry is a barrier to maintaining the market.

Now as far as trying to resource capital to have spent in our facilities or have new growth, the three main things that a business will look at will be: is the resource there; can we be cost-competitive; and do we have a sufficient labour force? Again, those three items have all been identified so any regulations or any barriers to being cost-competitive or being able to get the resource or not have sufficient labour are a detriment to the industry and it will be a detriment to its growth.

MR. CHAIRMAN: Can I open the floor with a question?

MR. CHARLES PARKER: You're the Chair.

MR. LEO GLAVINE: It's unusual but we'll allow it. (Laughter)

MR. CHAIRMAN: Well I didn't see anybody's hand up, I don't want to jump in first. Mr. Glavine, do you want to go?

MR. GLAVINE: You start it off.

MR. CHAIRMAN: Well, okay, I'll start off. We touched on a lot of things that I find quite interesting, in particular the transportation committee and the challenges of the transportation committee. I'm not sure that in my time to ask questions that I'm going to get into that in as much detail. I'm curious about why there's not more emphasis on rail and not on trucks, considering just the cost of transportation, fuel.

[9:30 a.m.]

Actually what I want to ask you is about the money offered to forest products by the province. I certainly think about the exchange, the difference in the dollars. I would think pine beetle would have a greater impact, actually, than the dollar. If you see the view from the TV of the damage by the pine beetle in the west - I mean, some of those pictures are as

far as the eye can see, it's red so somebody must be trying to cut a pile of timber and get that on the market before it is worthless. I would think that would have a devastating impact on markets.

Housing reductions, the mortgage fiasco in the United States, I think, probably you're right but we're entering a recession, by the sounds of things, and probably the impact of that had started some time ago, I would think - some months ago. So I'm curious as to the dollars from the province to the industry and how the industry sees that as helpful, where the industry intends to use those dollars and who in the industry is going to get them or get the advantage of them - is everybody? Everybody who's a member of Forest Products Association are going to see some advantage from those dollars? So that's where I'll start.

MR. MACLELLAN: The transition program, I'll specifically start with just one, of course it's a broad program. The first aspect I would speak to would be the fuel tax rebate for forest roads. Those monies that were received last month from the province, those immediately went back to look after - we had, Steve, do I quote, over $155,000 worth?

MR. STEVE TALBOT: Over $100,000.

MR. MACLELLAN: Over $100,000 worth of roads that were prior-approved over the previous and that deficit or that amount approved in excess of the tax rebate money that we could rebate has been growing for, I guess, nearly four years. So last month when that first instalment came in, Steve, as Executive Director - immediately cut those cheques, so it went back to the woodlot owners and producers, that's going to be the same for this year and for the next.

Now we're expecting because we were able to catch up - we, by no means believe that everyone who had work done on their woodlot, or as a logger for a landowner had built a road, had applied because of the backlog. We are anticipating to have quite a number of new applicants this year. It is literally going right back on the ground and that's going to be a big help because that was money spent in the last one to four years by woodlot owners.

MR. JONATHAN PORTER: It goes directly to the landowners who own the land and the woodlots.

MR. CHAIRMAN: That's not a new program - fuel tax rebate. You guys have been managing that for some time now.

MR. MACLELLAN: Ever since an old neighbour of yours, Mr. Jimmy Wilbur, through Forest Products led the . . .

MR. JONATHAN PORTER: For over 40 years.

MR. MACLELLAN: And we have a very efficient bureaucracy.

MR. CHAIRMAN: When you were mentioning - I'll come back to my original question - about getting people to work longer in the system and that there are more people over 40 than under 30, I was thinking you must be alluding to everybody working like Danny Thompson in the system. Are you? (Laughter)

MR. MACLELLAN: I don't think we can go that far though, for Canada's GDP that would be a tremendous asset if we all did, it's about allowing them to - as you get over 40 you have more aches and pains. I ski every Sunday - I know I should be in church, but that's when I can get out for the whole day. Don't tell my minister I said that, but anyway - I ski hard and fast by mid-morning, but by two o'clock in the afternoon I start taking it easy and I chase my 11-year-old down the hill. I stay up with her because I find on Monday and Tuesday morning, if I ski hard all day, at 48 I don't bounce out of bed the same way, or when I arrived in Halifax this morning I'm a little stiff getting out of the truck from the drive from Truro.

As our bodies change, whether we're physically fit or not, things happen to us, we get aged. Some of us get arthritis early, some don't, but it's about accommodating those people, but it doesn't affect our intellect or ability to think and problem-solve. Quite often we lose people out of the workforce because there are barriers: there are barriers in education, there are barriers in ergonomics, in the design of a job.

One of the little growth industries which is happening under the encouragement of the Workers' Compensation Board and the occupational therapists and physiotherapist professional associations is there are more occupational therapists starting to be employed in the province that actually work outside of a hospital and clinic, going into the workspace to work on ergonomics, to work on design. One case I know of in Truro, going into a large trucking company where they have a valuable employee who suffered a debilitating slip-fall and a back injury, after 11 months that gentleman is coming back to work.

His return to work was stalled for a week or so just because of the way the truck he was driving was designed. The occupational therapist went out to the site and worked with him and his employer, at his employer's request, because he is a valuable employee. They actually worked on designing and changing, in this case here, for example, the seat of his truck to a more expensive seat, but a seat that allows him to work effectively without aggravating his injury as he's recovering.

You have a case there where the employer doesn't want to lose a valuable employee, as probably some of you have heard from your constituents that valuable, considerate, safe truck drivers are in demand all through Canada and the United States. This gentleman didn't want to lose a good employee, the employee didn't want to lose any more income, because

getting paid a compensation rate is not your full income by any stretch of the words. So it was a win-win case there.

That's an innovation that wouldn't have happened 10 years ago, or even maybe five years ago, to have a professional like an occupational therapist go to the work site and look at modifying. Probably 15 years ago or 10 years ago the employer never would have thought of that, he would have said, he's on compensation, I have to hire somebody else. It's not easy to hire somebody else anymore, so that's when as far as working with people to stay longer and to adapt and when they can't do the job, to see if there's a way to encourage them and coach them and then provide the resources to get retrained.

You hear lots of stories about call centres and I'll give you one example from New Glasgow. A gentleman used to work at a foundry in New Glasgow and he found he couldn't do that heavy work anymore and it was cold some days, like today, cold and heavy work. After two years of working through his unemployment and working through the career counselling centre in New Glasgow, he actually took an interview with a call centre company that works out of New Glasgow, and he loves it. He has been there almost nine months and he likes it. He has a different perspective from the 20-year olds who are in his work group - I think they call themselves work pods. He's actually doing quite well and he's coming ahead on it. It's not something you would really think about, but for him it's a career - it's not cold, it's not dirty and it's challenging him, and he's stimulated and rewarded by it. So those are just two examples of adapting as we go forward.

We still have a lot of work to do in our industry of getting that message out, by no means are we there. We just have little hints now, with these two examples, of what can be accomplished, because it's all the professional and material resources that we have at hand now. It's about accessing them, it's about leveraging them to win and that's where the forestry transition program, as you can guess by the amount of dollars, in no way is it any attempt to compensate for the almost 18 cents on the dollar change in 2007 for the currency of the forest products. It would be much bigger - there would be more zeroes for sure.

MR. JONATHAN PORTER: Maybe just to quickly touch on the other elements of the strategy that you asked about. John talked on the . . .

MR. CHAIRMAN: Before you do that, Jon, because I'm going to run out of time and my committee will get at me, I want to know if you people have any concern around the possibility of the Americans starting a countervail, based on the dollars going to the industry. I know the minister has said that he doesn't see this as a problem, but are there any flags that go up for you?

MR. JONATHAN PORTER: There's always a concern, I think that's one of the very reasons that one of the elements of the transition program, referring to the investment in private land silviculture, there's still a lot of work being done on that, because that appears

to be the only element of that program that has attracted the attention of the U.S. coalition. That's a critical component of the program, but it's also critical for the industry that we remain outside the softwood lumber issues shipping into the U.S. We support the move; however, it's to find a way to implement that without triggering the softwood lumber issues.

MR. CHAIRMAN: So some other points . . .

MR. JONATHAN PORTER: Just the other ones, I think the elements you said where does it go, there was the rebate of the legal expenses through the Maritime Lumber Bureau to the sawmills for the work in the softwood lumber, so that obviously goes directly to any sawmill that was involved in exporting to the U.S. - that's big and small right across the province. There's the support for the Forest Safety Society, which ties in with some of the things John mentioned, and supporting the training which goes directly to benefit employees in the industry across the province. I think the last element, if I remember them all, was the land purchase program, which was that the province wants to go out and buy more land, so they've been making funds available if there are groups in the industry, particularly sawmills, that want to sell land. So that's fairly straightforward.

MR. CHAIRMAN: I'll give up my questioning role and go back to my chairing role. Mr. Glavine, I think you indicated you were willing to pick up the ball after I dropped it and then Mr. Parker, I think you're next, and Mr. Dunn after that.

MR. GLAVINE: Thank you very much, Mr. Chairman, and thank you for being here this morning - very timely in light of what's going on in the forestry sector. Government had an announcement of a $36 million injection over the next several years. One of the reactions was from Andrew Fedora, Executive Director of the Federation of Nova Scotia Woodland Owners. He said, "Is the Forestry Transition Program a sound investment of our tax dollars? If the program is properly administered and the industry is truly 'transitioning' into something more economically and ecologically responsible, then the answer is yes. If not, then the province just bought a $36 million cod boat."

I mean, are we going to see the forestry like I saw the transitioning of the hog industry, where eight years ago we had 175 producers; this time next year we may have 10 - 10 or 12 if we're lucky. How do you plan to use some of the dollars to set the course for the next number of years? While there may be a downturn now, in a renewable resource you need to make plans now for the next 30 or 40 or 50 years. So what about the transitioning dollars?

MR. MACLELLAN: Most of the money is in the land purchase program, so putting good Canadian dollars out there to buy good Canadian real estate, which as everybody agrees, real estate is one of the few things that they don't make any more of very often, unless you're in Iceland and the volcano goes off. So that has the potential to buy hard assets for the Province of Nova Scotia. So if you take most of that money out of there, the lesser

amount of money is in the other programs, and one specific example is the fuel tax rebate program for forest roads.

We have an industry that is ever-green, in the true sense of the word. Most of our forests regenerate - all of our forests regenerate naturally. Where you do intervention is where you want to increase the harvest and encourage more marketable products and a shorter rotation than you would naturally when it comes to the stand interventions, whether it's through plantations or pre-commercial thinning or spacing, that's all about getting more - encouraging more timber, more productive timber off any given forest acre than by waiting, and that's productivity. That's productivity, that's producing higher quality products and producing them in a shorter period of time. The industry is still doing that. When it comes to the silviculture program, which is still under review, I guess, right now, that aspect, that's about investing in the future to go forward.

[9:45 a.m.]

MR. GLAVINE: If I could just jump in, if we're going to put $20 million to buy land, which you won't be able to cut off, it's going to be part of the 12 per cent land that will be protected lands, like Liscomb and Chignecto Game Sanctuaries where you can go in and, of course, do your cutting. So $20 million, yes, good for the province, I absolutely believe in the 12 per cent designation, but not much investment for the future of forestry.

MR. JONATHAN PORTER: Well, you have to remember the way the program works. That money will go to individual companies and it may allow those individual companies to make decisions - it will allow them to make decisions - and if they're in need of investment in the technology in their sawmill to become more efficient and more competitive, that sort of injection in money, or a portion of that, can be very significant. I think it comes back to what we talked about earlier with removing land out of production for it to meet the protected area goals of the province, which has not only been discussed for many years but now put in legislation.

We need to find ways to manage the remaining lands, to grow the wood we need while still meeting all the other requirements for sustainability and environmental protection. Those things can be done with the right support, with the right investment in silviculture. You talked about 50 years; we're planning on looking far beyond the 50 years, because you have to when you look at the life of the forests. So the private silviculture program is critical to the future, that's a lot of the fibre, a lot of the management occurs on woodlots. So those funds in themselves are not the answer, but they will help companies, big and small, to find their way forward and become more competitive in this industry which with all the focus today on green industries, this is, was and will be the original green industry.

MR. MACLELLAN: There are companies that spent money last year on their plants, serious money; there are several firms in the province that spent serious capital investment

in the last 15 months on their facilities. That's part of what's making it all possible to be more efficient.

MR. GLAVINE: I'm pleased to hear you say that, John, in terms of the companies can look over here and put monies into new technologies and updating and so forth. I think we're maybe a couple of years away from seeing whether or not it was a good investment. Whether or not the $24 million last year will keep Bowater going. Whether this $20 million may keep another mill or two going for a couple more years.

If we're going to do real transitioning - I mean, even the fact that we still allow whole logs to go out of the province. Why aren't we really looking and solidly investing in more value, more value-added? I'm not sure those trucks that leave Digby and go over to Saint John are a real investment for our future and part of transitioning and making more value-added for our province. I just wonder if you could react to that, please.

MR. SPENCER: I think on the value-added, there certainly is a market there and something that needs to be looked at and grow, if possible. The other principles remain the same - you do need the wood supply, you do need to be competitive. It doesn't matter if it's value-added or if you're in something that's a commodity product.

One of the important things for the value-added business is to have places to sell their non-value products - i.e. pulpwood - whatever quality less than they're using to add value and generally added value products require a higher quality of wood. To get that wood, you have to harvest a considerable amount of other volume that you need a home for. So the business is basically a circle, everybody is in that circle and for it to be successful you can't have one side and not the other. So if we're going to grow value-added, we need to have the commodity businesses, the pulp businesses. We're a value-added company and basically raw material comes from that sector. For us, we use hardwood, so it could be firewood and the people who are cutting saw logs or pulpwood and so we have to have all those businesses to grow.

MR. JONATHAN PORTER: Just two quick points on that; if you think of value-added in hardwood, people would focus on things like maybe hardwood flooring. You look at - the value-added industries aren't immune to the global competition. Quebec is well known for its hardwood flooring market - it is being just decimated by the imports of hardwood flooring from Asia. So it's not a simple business to get in.

I think the other issue when you talk about logs leaving the province, I think there's the issue of interprovincial trade and whether you're allowed to restrict that and if you talk to a lot of the private woodlot owners in the province, they wouldn't support restrictions on that; they want a wider market than just the province. Obviously companies operating in this province want to source their material here but there are - it's not as simple as just stopping them going across on the ferry or driving through the border.

MR. GLAVINE: In terms of hardwoods, do companies have access to hardwood on Crown lands, currently? Can you get a quota, for example, to cut so much hardwood on Crown lands?

MR. SPENCER: I guess the short answer to that is yes. We're a hardwood user, we have access to some hardwood on Crown land. I believe the two licensee holders here have access on their licence to hardwood. I don't know if anybody else wants to add to the other licensees, they might know more about than I do.

MR. JONATHAN PORTER: We don't operate on Crown lands, we certainly don't.

MR. MACLELLAN: There are only a couple of licences - Stora Enso and Neenah Paper - and I believe a couple of hardwood mills. B.A. Fraser works with Stora Enso and also the Group Savoie sawmill in Westville have, I believe - I don't believe they have a Crown allocation, I believe they work with Stora Enso also. When it comes to companies having access to hardwood on Crown land, outside of Garth's employer, Louisiana Pacific, which is the primary and the two papers in northern and eastern Nova Scotia who have those - they're the only two companies with those long-term lease arrangements with the Province of Nova Scotia. Everyone else, it would be like a tender - a local tender from time to time - at the discretion of the regional office of Natural Resources.

When it comes to markets, there were investment bankers trundling through Nova Scotia, New Brunswick and Newfoundland this Fall. Two different groups of British investment banks looking to buy or invest in or to finance the building of, for example, pellet mills, for making more pellets. I know there are a couple of firms that have been looking for almost two years now at the possibility of building more pellet mills here in the Maritimes and some of you are aware in New Brunswick, there are several smaller plants going. The Shaw Group, who have had a pellet operation in John's area for years, are actually building one now in Belledune, New Brunswick. They, and the MacTara pellet mill, had quite a business shipping pellets to Europe as well as, in Shaw's case, selling domestically.

The Europeans are here looking for energy. Whether it is either bio oil or whether it's - there is even a firm out of the Valley getting together. They have a grant from Sustainable Development Canada of over $3 million - the biovision - looking at the low-grade hardwood resource as a source of industrial chemicals and ethanol. That technology is here and in fact there is a lot of work going on of that $3 million here at TUNS and at the Research and Productivity Council, as well as the federal forest lab in Fredericton, working with that group out of Port Williams to see if they can build a plant here or in New Brunswick near a hardwood operation, so they can use the hardwood chips to extract chemicals and ethanol from it. It's a viable concept, if it's built it will be the first one of its type in this part of Canada.

One of the best potential sources, according to Sustainable Development Canada, in work out of Scandinavia is wood. Wood is a much more cost effective and ethically better producer of ethanol than corn, because corn takes it from people's tables. As you probably heard, last year there was a little bit of trouble in Mexico over the rising cost of corn because of the huge expansion of corn methanol production in the United States. So there are lots of opportunities. We are beaten up, but we're not broken.

MR. GLAVINE: I was hoping to keep my questions away from John because I heard him speak on Wednesday, but I got two questions in. (Laughter)

MR. CHAIRMAN: Mr. Parker.

MR. PARKER: Mr. Chairman, good morning, gentlemen. Many of your faces seem familiar to me, having met most of you last week a couple of times during the annual conference you had. It seemed to be a good conference, and I was certainly glad to be there.

I guess some of my questions have been asked, but I'll pick up maybe where we left off. The transition program - I guess it has been supported and it has been criticized in the province. The question has been asked, what is it we are transitioning to? What does a better future look like in the forest industry? I guess that's the hope why government would support it and we're hopeful that there is not going to be retaliation from the Americans if it's seen that we're putting money directly in to subsidize the industry. So far, that hasn't risen its head too far, but it is always a possibility that it might be seen as direct support for the industry from government.

I'm coming around to what the better future is for the industry and it comes back to wood supply - I guess that's where I'm really heading with this. Are we sustainable? Do we have enough wood in the province to support a viable better industry in the future? Are there enough trees out there planted now or are we looking at a silvicultural program that is going to produce enough fibre and a product for a viable future in the industry? I would just like to know around the annual allowable cut and sustainability, is there enough wood fibre out there to support a good industry into the future?

MR. JONATHAN PORTER: I think the short answer from our point of view is yes. As with a lot of answers, there are a lot of things that go into that answer and a lot of things that have to happen for that to be true. Certainly, although all companies do their own projections and modelling and analysis, the Department of Natural Resources is certainly the lead in the province for looking at the province as a whole. We spend a lot of time talking with them and looking at their projections.

The forests in Nova Scotia are capable of continuing to support the type of harvests that have been happening. It does require continued investment in silviculture, both on small private woodlots which is certainly where the transition program plays a role, it does on

industrial holdings, and it does on Crown land. All different types of ownerships require continued forest management, particularly as we try to meet this 12 per cent target of protected lands which will move more lands out of forest management. The science of growing the trees to meet that demand is certainly there and to me that's one of the exciting parts of the new strategy development - to make sure that people understand that if we want we can have the different end results we want in terms of an active, viable, sustainable industry and some protected lands, as well as we make the right choices. That does mean investment and it does mean a mixture that includes intensive forest management where the primary objective is growing wood on some of the lands. Yes, it can be done and I think the industry is committed to doing that because if we don't have the wood, we don't have an industry.

MR. PARKER: Very true. What about on the silviculture side? Years ago, it was under the group ventures and federal funding that supported that and then it was transferred under the bioregistry program and more emphasis on the buyer and the producer. Now, of course, I think government has pretty well taken over the whole program of financially supporting it. How do you see that rolling out in the future? Do you think there is a role for the government to continue there or should it come back onto the private producer, or what is the future for silviculture in the province?

[10:00 a.m.]

MR. JONATHAN PORTER: As you know, the legislation in place today puts the obligation on the buyer - that's very clear. In the past, the government has provided some support and with the way the transition program was announced, that level of support was to be increased at least for the first two years of the agreement and then some sort of indexing. We'll have to see, through these discussions, the concerns with the response in the U.S. if that's exactly how it is delivered. To me, I see a future that involves all of the players. When you're investing money in woodlots, it involves the government, it involves the buyers of wood and it involves the woodlot owners themselves. I think if you want to see value in something, you need to have an investment in it and that goes for everybody. There have been a lot of woodlot owners in this province who have been investing a lot of their time in their woodlots for many years and with the programs, a lot of them have been putting in money as well as the industry and the government.

MR. PARKER: Well, certainly, you're not going to have a good wood supply if you don't have a good silviculture program now, so it makes sense that it be supported. One relatively new aspect that is getting a bit of attention in the silviculture field is around this category seven, especially with hardwood production. There has not been a big uptake on that, partly because it hasn't been very lucrative to woodlot owners to do the treatments that are necessary. It seems to be that there are some additional dollars now coming toward that program. Do you see some future there to maybe work with our hardwood lands in particular, or mixed woodlots to better support so that there's a future there in that field?

MR. JONATHAN PORTER: Yes, I think the association certainly supports directly into ASF - this category seven project. I think one of the things Garth mentioned, particularly when you talk of hardwood and the potential for some of the partial harvesting techniques for the better quality hardwoods, a key issue is still you have to have markets for the low-grade product. When you're harvesting even the quality hardwoods in Nova Scotia, you make a lot of the lower-grade products that are not suitable for saw logs. So it's not just support for category seven - there also needs to be markets for those products to make it viable, but yes, it is one of the things we need to do.

MR. PARKER: I have a more general question here. The forest industry in this province is struggling, I think it has been called the perfect storm by some commentator that a lot of influences are coming to make it a difficult time. Certainly, there are a number of Nova Scotians employed in the industry and it's a very important part of our economy. On the other hand, there are people in the province who think the forestry practices are not what they should be in Nova Scotia, that we're in a rush to cut down the last tree as quickly as possible, so there are two sides, there is the positive aspect and there are people who see it as not so positive. I guess the sync between the two sides is not always together. There are some people who say, everything is going wonderful and there are others saying everything is totally wrong with the forest industry. Is your association working to try to find that balance to bring people together to show that you are environmentally sustainable and that you're wishing to work with the general public overall?

MR. JONATHAN PORTER: You used a key word, I think - balance - and we use that a lot in the association because you are forever balancing different views, different requirements, different ways of doing things. As we mentioned earlier, we're committed through the forest strategy development process the province is about to embark on, which is going to bring I'm sure all these issues out into discussion. We're committed to working with that and through that to find resolution to these issues.

The industry has been through difficult times before and I had an opportunity to talk with one of the original employees of the Mersey mill, who started work there in 1929. He talked about how all his friends told him he was absolutely crazy to go and work in a mill because it wouldn't last more than five years and he spent his entire life and his entire career and supported his entire family from doing that. There have been difficult times - that was the start of the Depression which, I'm sure, was a very scary time for a lot of people. It is difficult and there are difficult questions and we will find solutions. Part of it is balancing these views on how we should manage our forests.

MR. SPENCER: The industry is cyclical in nature, it always has been. If you look at the energy that is here and that has been here - particularly the sawmill business - those are family run, family owned in rural communities. Despite them having negative cash flow, they have continued to run their business until things turn around for their communities and I think you'll find they will do that again.

MR. CHAIRMAN: Thank you, Mr. Parker. Mr. Dunn.

MR. PATRICK DUNN: Thank you for your presentation. There are certainly many factors putting pressure on the forestry industry today - it is increasingly difficult to remain viable and competitive in the global marketplace. You made mention some comments, John, in your opening dialogue about the Canadian dollar and the declining U.S. housing market and the many vastly evolving shifts in the global marketplace and so on. I had several questions, most of them have been touched on, so I don't want to repeat, but there's one that may not have been answered. It is my understanding that there's going to be a technical advisor placed in the province. I'm just curious, what role would this technical advisor play in the forest industry and when will this occur?

MR. MACLELLAN: Are you referring to the FERIC-Forintek position?

MR. DUNN: Yes.

MR. MACLELLAN: That's FERIC and its parallel organization Forintek. Forintek was set up almost 30 years ago as an industry supported with government participation, but as a not-for-profit society to look at sawmill and wood product manufacturing technology and innovation, to do research and design in that area. FERIC was set up to do it with wood extraction and wood transportation of logging and wood trucking. Those associations have changed their structures quite a bit to become basically stand-alone agencies where they actually sell services now. Before you would pay a very substantial fee as a firm or as an individual company to be a member. There is still that, but they also source out what used to be federal and provincial funding in a large way. They also made up for that loss of income in the last decade - they sell services too, so they act as an active industry or as in industrial design consulting firms as well. They bring best practices, new innovative technologies and by having the representative here in the province, it allows larger firms who are also members, but primarily the smaller, medium-size firms in the province who are not necessarily members of Forintek or FERIC to access that innovation to technology and that's going to be very helpful. It'll be like any other program - the more innovative and creative entrepreneurs and business owners who are looking for opportunities, looking for advantages, will knock on that person's door and access them.

It can't be overstated for a smaller firm, it might cost them $5,000 or $7,000 a year to be a member of either one of those two organizations. By accessing that assistance through this position in the province, they're going to be able to access it with, I guess, taxes they are already paying. So they'll be able to leverage the information and hopefully the wins much more easier so that's a very good fit. That's an innovative program, that was something that wasn't really there in past years.

MR. JONATHAN PORTER: A good example, John mentioned earlier the concerns in transportation and looking at new technologies and truck configurations. In that area,

FERIC has considerable expertise not only across Canada but in North America and in Europe of what technologies are in place so you can use that to a group like that and the same in the sawmills, how to make a sawmill more efficient, very, very important although obviously you need capital to invest in the technologies.

MR. MACLELLAN: Just to make comment in reference to Charlie's question to Jonathan, Jonathan's employer - Isaak Walton Killam - when he started up the mill his timing was really bad, it was in the early 1930s. He started up the mill after spending all that money and the market for newsprint in the eastern United States took a bad slump in the Spring of 1930 and it wasn't until 1932-1933 that the thing started to improve, of course in the post-1929 crash.

There have been ups and downs in the business cycle and timing is everything. It's about endurance, it's about focus on your cost, and it's about commitment to be here. Unlike, for example, technology firms which can land in Nova Scotia for a while and then leave because technology - whether it's this famous Canadian device here which I use too often - it could be gone. This firm is at the top of its game now in communication devices but by being overtaken by some incredible, evolving, amazing technology which emerges in 20 months time, in five years this could be on your shelf or in the recycling bin, gone.

The trees are here forever, a lot of these firms like Bowater Mersey have generations of employers and work and stability and even though we're under more pressure right now, working through this business cycle, we'll be there in the future. So we have a lot of pedigree and the farming is a good analogy; farming follows its cycles, too. Hog farming, for example, to be in the hog business you had to feed your hogs and maintain them and innoculate them and keep them healthy even when you're losing money.

In our case, with our forests, in many ways it's much easier to maintain the active, growing forest because it's part of the environment and in many ways it's sustaining itself. So we don't have that same kind of pressure.

MR. DUNN: Thank you, Mr. Chairman.

MR. CHAIRMAN: Mr. Theriault.

MR. HAROLD THERIAULT: Thank you, Mr. Chairman, and thank you for your presentation - it's interesting. I have been sitting here thinking about competition around the world. About a year or a year and a half ago down in Digby, Shaw Wood shut down a furniture plant there so the red flags went up for sure - about 200 people working there. So I got on the phone and I talked to the head manager at Shaw and said, how can I help out as a person, a working representative of the area? What if I got you some free wood off Crown land here in Nova Scotia? The air went dead and he came back and said, Mr. Theriault, if you

give me all the wood in Nova Scotia, we cannot and will not compete with what is happening.

He went on to say that Russia was given the biggest forest in the world, was giving their people free wood, setting up free mills and subsidizing $9 a day wages. China is giving the Chinese wood and paying labour $3 a day. So, Mr. Theriault, if you give me all the wood and all the transportation and everything else it takes to run the forestry and the wood and furniture business in this province, we can't compete with that. The air went dead again because I didn't know what to say. It is just mind-boggling. So how do we compete with something like that in this world?

The only thing that keeps coming back to me to compete is - and you mentioned it, John - the energy resource of wood. Last year, my son put a stove in his home; a wood pellet stove automatic heater. It cost him $725 to heat that 1,100 square foot home last winter with wood pellets coming out of Quebec, that he bought at Home Hardware; $725 won't quite fill your oil barrel once. My mother burned three and a half barrels of oil last winter - 85 years old. She said, Junior, I think I'll go back to burning hardwood again. I said, Mom, maybe the pellet stove would be the best; you buy it like a bag of dog food and dump it in your hopper and go to bed. She was even going to get some hardwood and split it up - this is an 85-year old woman.

I believe that we can heat every home in this province out of the forests, with just the deadwood that is lying around, with just the wood that can't be used for value-added. For the alders in western Nova Scotia alone, which grow four feet per year, which if you put them in a wood stove and light them, they'll melt the stove if you're not careful.

[10:15 a.m.]

Why aren't we - I mean people are paying out $4,000 a year to big oil, half of it going to where? Overseas, Asia, Venezuela, wherever they're getting their oil from, that's where all these big bucks are going. The people who can afford to buy it, $3,000 or $4,000 or $5,000 a winter now to heat a home, and we could be heating a home for $500 or $600 or $800 bucks with alders growing in western Nova Scotia.

Why aren't we doing that? Why isn't forestry jumping onto this? I mean we're talking about keeping millions and millions of dollars right in our own backyard with what is growing around here, for energy. You're saying, John, that they're just touching on it, they're just thinking about it.

MR. MACLELLAN: Because capital is available for good, well thought-out projects, but one of the . . .

MR. THERIAULT: I can get the alders cut for nothing.

MR. MACLELLAN: We'll need to get the lenders, we'll need to make the lender comfortable, which probably after the last week and maybe yesterday it is probably hard to get the lender truly comfortable. But there are good lenders, there is money out there for good projects.

Part of the challenge is the fact that the sources of energy and the means of delivering them are different than what we're doing now. The product is new so you have to introduce the product. The means of distributing it and folding it are new. It's not new in Scandanavia, it's not new in Western Europe but it's new in Nova Scotia and new in eastern Canada so it takes a while to make a transition. It took almost 70 years to go from the first real oil strikes in pumping oil in western Pennsylvania to a boom in Texas. It took almost 70 years to go from that first taking bitumen on the surface, bubbling up through - just like the TV show - it was bubbling up in a couple of places in western Pennsylvania. It took 70 years to go from that to distributing oil by horse-drawn wagons. So it takes time to make the evolution.

What the province can do, as a government, is encourage markets for those products to get base markets going. Several different firms with different technologies, whether it is pellets or whether it is a bio-oil or whether it is whole tree chips, have approached the power utilities in the province with proposals. There is one very large power plant making steam for the Bowater mill and selling electricity on the grid going at Liverpool now, but that's the only one of large scale. The Neenah mill in Pictou creates all its own electricity and I believe annually it's actually a net seller of electricity because it buys waste and it uses its own organic wastes from the pulping process to create its electricity.

By the way, it gives the Neenah mill a huge competitive advantage, especially up until a year ago when kraft prices started up again for the first time in almost four years. The previous four years, the fact that they could control their energy costs, because they were making their own electricity, kept that mill open when many other kraft mills were closed. The one in Miramichi, which was owned by UPM, is closed and partially dismantled now in the last three years while the Neenah mill is still looking for chips right now; in fact, it's one of the drivers in the local market. It's actually helping some of the sawmills be more competitive because of their need for chips, for example.

So the technology is there, there are dozens of entrepreneurs working in this province on all kinds of alternative energy projects, but it takes awhile. You need to have access to market and that's where the province can help and the utility can help, and it's a slow process because there is a risk factor. The lender says is anybody else doing this in Nova Scotia? No. Is anybody else doing this in Canada? No. Where are they doing it? In Finland. Oh, good. It's not like the bank commercial where they're travelling around Ireland looking at a crumpet plant - that's the most recent one - it's much harder. Our bankers don't tend to get on airplanes and fly to Finland to go look at central steam plants for the Town of Digby, which could be all on one central steam plant that was actually having wood waste from a local area

go in. Two or three local people take turns all week being employees of the utility making sure the steam plant works.

If you had been lucky enough to go to Scandinavia, Finland or Sweden in the wintertime and you go into a village of 1,800 or 2,000 people and you see the steam plant, the last one I was at had a 100-horsepower John Deere tractor with a large bucket on the front and the local guy in the village, who was a part-time teacher, first thing in the morning he went down to the steam plant to make sure the hoppers were filled, checked everything over, and he had a pager on so if there was an alarm they could call him and tell him there was a system problem and he could go look after it. He ran the tractor, cleaned up the snow in the yard, then he loaded the hopper and went on to his day job and he or his alternate that night would come by, check the system again, run the tractor, load up the hopper with these whole tree chips coming from a small operator that had contracted to supply for that year or that two-year contract, and there was central steam in the plant.

They told us on that trip it's a lot of money up front for the community to spend, but after eight to 10 years it's cheaper, but they have a long-term view of it. They also had to because the only place they could buy carbon-based fuels from efficiently was Russia and Russia was a difficult neighbour, to say the least, with its past or even its present regime. So they had to learn to make use and they had the forest resource at hand.

Finland hasn't been independent 100 years yet and it didn't have any resources except people, water and trees. Despite that, Finland has become a world powerhouse, two of the largest paper and lumber companies in the world are based in and owned by Finns, and it's a good example of what's possible. Their population, by the way, is only five million people; we have a million people here. We're quite capable of having a competitive forest industry here that's well within our purview.

When it comes to energy there are all kinds of products and opportunities and we have to support them initially, either through federal and provincial programs, and in many cases by simply providing a market for the product to get it off and going. Once you have a market for it that will fund your project, that will create cash flow, then you can go look for the smaller local markets. Some products like the bio-oil, the same trucks that carry heating oil can carry the same quality oil, only produced from a wood-based product, a waste-based, carbon-based product, and deliver it to the home the same way and there's very little change or difference.

When it comes to burning pellets, in Scandinavia they have whole schools and homes that have something like a furnace room, they have a pellet room. Those of you who were at our forest products meeting last week would have seen one supplier had an example, had a large, full-scale model of how it looks in your home system for your home pellet furnace, for your hot water and your heat. It's out there, it's pretty well existing, but it's new and it's getting people to think about it.

Quite frankly, the Europeans want to buy our green energy products. They'll buy more from us, they'll buy more from New Brunswick, and that's why the Shaw plant is being built at the pier in Belledune. Europe is quite prepared to buy it, so it's going to be made in Nova Scotia, but probably most of it's going to go to Europe who want it more.

MR. THERIAULT: What if the government gives . . .

MR. CHAIRMAN: Mr. Theriault, I'm going to make this your last.

MR. THERIAULT: The last, okay. What if the government gives incentives for people to change over, especially in the rural areas? We'll never see natural gas in the rural areas. We're seeing it here in the city, it's going to be much cheaper than oil, that's for sure, but out in the rural areas we'll never see it. What about if the government could give incentives for the rural areas to change over to these pellet stoves or efficient wood-burning stoves? Would that be a boost to it? Would that help the forestry in getting this industry going? Both, wouldn't it, win-win?

MR. MACLELLAN: It's better to encourage the market than maybe - it's hard to pay to establish a market, especially at the smaller level basically. It's something you would have to look at very carefully because incentives can seem like they're easy to apply, especially on a small basis where there are multiple applicants. It turns out to be very expensive to manage and to put in place and it doesn't always produce a result. A more strategic result - I'll give you one good example . . .

MR. THERIAULT: What if oil goes to $200 a barrel? Someone will have an incentive.

MR. MACLELLAN: Before it hits $200 a barrel some economies will crack and hopefully it won't happen just yet. I just want to give one example.

Neighbours of yours down in Meteghan, working with the Comeau sawmill, they have a small power plant and are looking at a central system there along with the mayor. What Comeau Lumber and the local community there with the mayor and councillors are trying to put together and work between wind, steam and waste energy from the sawmill there, that's a good concept, that's a really good model to look at, that's a really attractive possibility. It will not work in all communities, but in that community there, because they have the sawmill, they have wind for sure, that's a really good model. You have different energy sources, but it's all energy and that's the kind of model where the central system will probably be more effective than an individual system. A central system that a community of some density could share in would probably be the most efficient.

MR. CHAIRMAN: Thank you, Mr. Theriault. Minister Barnet.

MR. BARNET: Just quickly before I ask my questions, and when I ask my questions you can answer them yes or no or expand upon them if you like, but just to give you some space as to where I come from. It might seem a little unusual that a suburban Member of the Legislative Assembly is deeply concerned about the industry, but ironically enough the constituency that I represent, the biggest number of jobs actually inside my constituency come from the forest industry. We have three mills that all produce a variety of products, mostly for domestic sales but some of it export. It has been and continues to be a mainstay of the small internal economy within my constituency and has been for decades and generations, in fact. Ironically enough we, in Sackville, claim the fame of Charles Fenerty, who was, we believe, the inventor of paper from pulp and he actually developed a process that led to what we've all written on today.

I was intrigued by your analogy about your BlackBerry, your Research in Motion device, and it brings me to the whole issue of research. The device that you used as an example was developed because people invested in research. It would seem to me that the long-term solution to the forest industry's problems is investing in research. That isn't just government's area, it is businesses' area and there needs to be a partnership from all involved to move towards a research-based solution that looks at new products, that looks at efficiencies in manufacturing, that looks at production and the land itself, and how we can grow those trees that we need to cut to make jobs to grow the economy. A quick question, how many people in Nova Scotia currently work in the industry, do we know that?

MR. MACLELLAN: Approximately 11,000 directly, that's the last published statistic.

MR. BARNET: And has that gone up, down or is it - where is that over the past decade or two, do we know where that sits?

MR. JONATHAN PORTER: No, that would have come down.

MR. MACLELLAN: It's probably around 8,000 now.

MR. BARNET: It's around 8,000 now?

MR. MACLELLAN: Because of my job as Manager of Forest Safety, I have just recently come into possession of statistics which aren't public yet, so that's probably as far as I can comment.

MR. BARNET: A very quick and direct question, does the association support the goal of protecting 12 per cent of our land mass?

MR. JONATHAN PORTER: We believe it is achievable and will support it. If the offsetting issues that we've talked about, the importance of managing the remaining land to

produce the fibre can be accomplished, so maybe it's a qualified yes. You can't look at it just on its own if the support isn't there. That's what needs to come through this forest strategy, that we need to have the support to continue to be able to grow the wood on the remaining land. So if that is resolved, I think it's fair to say that we support that goal, but you can't look at one without the other.

MR. BARNET: Government wrestled for some time with the transition program, trying to develop a program that didn't create other issues with our neighbour to the south. We came up with a program that we believe industry was asking for that met some short-term needs of industry and provided an opportunity for reinvestment into the industry.

I guess my question is - it's direct again - does your association support the transition programs offered by the Province of Nova Scotia?

MR. MACLELLAN: Yes, we do, absolutely.

MR. JONATHAN PORTER: A simple answer.

MR. BARNET: A quick question is, are you aware of what other jurisdictions have offered similar transition programs? Do we know how the program is offered by Nova Scotia compared to other jurisdictions?

[10:30 a.m.]

MR. MACLELLAN: Yes, we are aware of some of them, to some degree. Nova Scotia is very unique in that 70 per cent of the forest resource is owned privately; 50 per cent of the forest resource is owned by people like my mother and I. We're part of the 32,000 or 34,000 individual landowners, some of you in the room and some of your family members are, so we are very unique. Only the Province of P.E.I. has a higher percentage of private ownership of real property when it comes to the forest resource lands. So we're very different and very unique and our programs in Nova Scotia are very different than even from New Brunswick, where almost 50 per cent of the forest is owned by the Crown, and in long-term lease or protection.

MR. BARNET: I'm not sure who mentioned it, but somebody talked about the issue of supply and demand and how demand was down. A figure was given - I forget what it was, a certain amount or percentage - but for me to better understand the issues, it would be important that we know the percentages of both the supply and demand.

It was also mentioned that there are a number of - we've seen a shrinking on the supply side and it would be interesting to know how those numbers match, how the demand matches with the supply, because that would be the golden equation, I guess, that we all need

to know. If we have an equalizing of supply and demand, I would think it should stabilize the industry.

MR. JONATHAN PORTER: I think it was me who made the original comment. It's an ever-changing target, too, but what I remember last year - and this was in newsprint - in North America the demand was down about 10 per cent. I believe the supply, the production, was down about 5 per cent, which means the balance was shipped offshore because globally there has been a small increase in the use of newsprint. It's just that it's plummeting in North America and the growth is all or primarily in South America, Asia, which is also where some of the new mills are coming on.

So I think the supply is trying to catch up with the drop in demand, if that's the way to put it, and certainly the demand in lumber has dropped very dramatically with all the issues we've talked about in the U.S. and supply hasn't caught up with that drop in demand. I think with some of the other products, it is getting better balanced because at some point I think as you were saying, when the two match, then you have the opportunity for more competitive pricing.

MR. BARNET: The issue of currency, and it's also a bit of a double-edged sword, it obviously costs you money as you sell into an area where their currency is declining, compared to ours or actually ours is rising compared to theirs, but it also given you an opportunity to invest in equipment and your built plant where jurisdictions outside of Canada - particularly in the United States - build that kind of stuff. Has there been that side, that edge of the sword where the industry has looked at the opportunity to invest in its built equipment, particularly if it's manufactured in an area like the United States where our dollar now is worth par.

MR. JONATHAN PORTER: One of the interesting things, and John touched on it, is that certainly in pulp and paper, very little of that equipment any more is manufactured in the United States. It used to be, it is primarily now in Scandinavia. So you don't get the advantage of the lower U.S. dollar because compared to the European currency, there isn't that big difference. So the product is priced in U.S. dollars whether you're selling it in the U.S. or in South America or in Asia, so you're getting that disadvantage on just about everything you sell and there's not as much opportunities on the things you need to buy to reinvest. Regardless of that, you've got to be making money to reinvest.

So a lot of people are constantly talking about what needs to be done to improve, but you've got to have the turn to be able to put money in when you're in the conditions it is in right now.

MR. BARNET: I understand that, I guess. That speaks to one of the pillars of the program that we offered and that pillar was the opportunity for people to divest of some of

their land so that they could then take the value of that land and reinvest in their plant and their infrastructure so they could be more competitive.

I think, at least in my belief, probably the most substantial pillar of that program was the ability for money to transition back into the industry so the industry can invest in itself and continue on, to get to the day where the issues of currency and supply and demand may not be as great a concern as they are today.

My final question, and it brings me right back to the very beginning of what I said, it's about investment in research. It would seem to me that the best long-term way out of this - which is a global issue - is investment in research so that we can become more efficient, smarter, better use of our land and become, if not leaders on our continent or in the globe, leaders in our continent in how we work within this industry. I guess my question is, do you believe that investment in research is one of the key ways out of this current situation that we're in? If so, I guess what has or what is the industry doing itself to overcome the recent challenges? Often people look at government as being the solution to all their problems. There has to be a true partnership and there has to be the ability to work together.

We've placed on the table our programs. I guess what I'd like to know is what the industry itself is doing to overcome these challenges, and do you see research as one of the opportunities that may help get past this?

MR. MACLELLAN: Mr. Minister, I'm glad you asked that question, I'm quite happy. I want to use one example right off the top, transportation. Our Transportation Committee has for five years been bringing innovative technologies which are from other parts of the world and also developed in Canada, to the table with the Department of Transportation for Nova Scotia to look at means to work more efficiently even with the loss of axle tolerance, which is part of the national standardization of transportation . . .

MR. BARNET: Not just in Nova Scotia.

MR. MACLELLAN: Not just in Nova Scotia. We've been bringing innovative technologies to the table. Some of these technologies are widely used in western Canada. I want to pick on one of those technologies just to bring it on the table and that's central tire inflation. That's where you have a - it can be either manually with simple toggle switches which, by the way, were used on the amphibious vehicles in the Second World War, the amphibious vehicle called a duck which was strictly manual.

MR. BARNET: The Hummer has them too.

MR. MACLELLAN: The Hummer has them too, that's right. But that central tire inflation - they're using it in western Canada in two provinces, specifically Alberta and Saskatchewan. Primarily in the oil and gas business, but also in off-road trucking for some

of the large paper concerns there, especially in Alberta, using it very efficiently. Central tire inflation can improve traction and at the same time reduce road impact and the studies are legion, there are over a decade of studies with the FERIC organization in Canada. They are bringing this technology to the table for five years as a possibility and I can tell you today, in 2008, it's not in place in Nova Scotia. It's still not accepted by the transportation authority in Nova Scotia as a viable on-road and off-road, on surfaced and unsurfaced road as a viable technology to maintain our payloads, to keep our costs of transportation in line and possibly even more competitive than some of our competitors in eastern Canada, it's still not accepted. It is not new and it is not - I'm going to use the phrase - rocket science and a lot of time has been spent.

I'm glad you brought up the question because that gave me an opportunity to bring this forward because that is one of our concerns. We have the ongoing discussions and working with the mechanisms of government, the bureaucracy, to be reactive, to respond in time. Five years ago we started the process, it is now because we're under a lot of other pressures between currency and market, but we started, as an industry association and as individual companies, fully five years ago with that initiative.

When it comes to research, research is excellent. Canadians are very good researchers, we do a good job of it. We give a lot of federal programs, some provincial programs a lot of encouragement. We have excellent world-class institutions and labs. What we do really well in Canada is, we develop technology and then we let somebody else put it into production because there is a gap between taking a concept and proving in the laboratory that it is a viable concept - there is a huge leap from that. Tens of millions of dollars for any given project to take it from the laboratory as a proven concept to a plant and that's where lenders tend not to want to be because it can fail. Making it work in the lab at five tons per day and making it work at a 500 ton per day scalable plant - just to give you an idea of the concept - it could be anywhere from $2 million in the small lab setup to $28 million to $50 million to make it to build the first one and there will be problems because it is the first one. As you increase this scale of a process you inevitably run into problems that didn't manifest themselves.

Lenders tend to be very shy of it because they all went through the tech boom eight, 10 years ago, they're very shy of loaning to new concepts. That is where government can help out because we are doing a very good job and we are producing world class technology, but we are still not taking the technology into production. Our Scandinavian competitors do a very good job at research and development and they do a very good job of taking it from R&D into production. They will often do that with several companies and the federal government working together on the first few plants, which they own together, so they all have access to the technology and access to the risk, the risk-win at the same time.

MR. BARNET: Can you just give us . . .

MR. CHAIRMAN: Mr. Minister . . .

MR. BARNET: Just one more question.

MR. CHAIRMAN: Mr. Minister, I'm not going to let you . . .

MR. BARNET: Can you just give us an example of where research has developed innovation and it hasn't occurred as a result of . . .

MR. CHAIRMAN: Minister.

MR. BARNET: . . . failure to invest?

MR. MACLELLAN: Rob North, CBC, we were talking on Thursday at the Forest Products meeting. He told me about a technology that was developed by the agricultural lab in the Annapolis Valley to judge the quality of sugars in grapes for wine making and apparently it is a very effective technology. It was sold by the federal government last year to an Italian firm who are manufacturing it and it is becoming quite a success in the California wine-making area.

MR. BARNET: I meant in the forest industry.

MR. MACLELLAN: That was just a one hit at a time, it just drove me off there. The other is MacMillan Blodel Corporation - it was an excellent Canadian firm in many ways except they were challenged on actual manufacturing and delivery of products. Parallam and Glulam lumber, Oriented Strand Board were some of the innovative products their Mac-Blo labs worked on in the 1940s right through until the early 1980s. They did a great job on designing and developing these world class products, but they weren't competitive on implementing them and other people have and now they're part of the George Weyerhaeuser Corporation, so that's just one example.

When it comes to sawmilling technology, we are very successful, we're very well developed in Quebec and British Columbia and to a very small extent Ontario. But in Quebec and B.C. we have very well developed, world class sawmill manufacturing innovation technology firms. In Ontario and Quebec, we have firms that build forest harvesting equipment, but they're not supported the same way as their Scandinavian competitors are. They need the support of their provincial, but specifically in this case, the federal government - they need support as innovative Canadian technologies, building machines and devices which go into the forest resource.

According to the last report eight months ago on the Forest Products Association of Canada's latest report, Canada is still the world's largest exporter of forest products. There is innovation in sawmilling and innovation in logging and forest harvesting which really

speaks to one of our fundamental industries of which we are world class. The fact that we have the second largest territory of forest resource in the world outside of Russia means that that is one of our native industries. Here in Nova Scotia, with our 10 million acres of productive forest land, we only have about 1 million acres of other lands, so for us to be in the forest industry, to have a forest industry, whether it's the small one or two man specialized sawmill operation or whether it's a large paper concern like in Liverpool, we have the ability to have both and part of it is because of our ownership pattern. Because of our ownership pattern, we have the opportunity for the small entrepreneur to perform as well as the large corporate company.

MR. CHAIRMAN: Thank you. Thank you, Minister - I appreciate your help in chairing the committee.

MR. BARNET: You need all the help you can get. (Laughter)

MR. CHAIRMAN: Mr. Belliveau, I owe you an apology because you were the one who was supposed to come after Mr. Theriault and I inadvertently let the minister go ahead. I'm regretting that. (Laughter) So between you and Mr. Gaudet, who was last on the list, I will try to split the time as much as possible.

[10:45 a.m.]

MR. STERLING BELLIVEAU: I'll try to be brief. I had a nice story, but I'll continue on with my question. I thank you for your presentation and I picked up on one of the comments that I believe Jon Porter suggested about protection of the lands and I think Jon knows where I'm going with this lead-in. I also noted that the previous speaker talked about partnership and working together. I want to just bring you up to date, as we are all aware with the ATV regulations - in the last year, the government amended those particular regulations in identifying that there has to be a need for people to identify existing trails in order to use these ATVs on some of this land. A lot of this land is owned by private woodlot owners and a lot of the land, especially in Queens, is owned by Bowater.

My question is, it is my understanding that Bowater posted a lot of their lands last year, if not all of it, basically saying that ATV users will not have access to it. My first question is, is this a province-wide position by your association and the second part of that question is, is there room for discussion to sit down and discuss with these groups? I also picked up on one of you suggesting that most of the people - and I'm suggesting the ATV groups - are in this 40-plus or the baby boomers and that most of them if not all are very responsible users. I just think that this particular policy needs to be addressed, sat down and discussed, so if you could answer the A and B part of that question.

MR. JONATHAN PORTER: Your A question where the decision of one company is province-wide - I think, no. Each landowner, small, large or medium has and will continue

to make their own decisions on their own lands. The association leaves members and non-members to make their own decisions on that.

There is always room for discussion really in terms of discussion of ATV use, that falls on the groups interested in ATV use and the landowner on whose land they want to use it. That's where that fits in my mind and certainly the company I work for has had lots of discussions with groups over the past year. I don't know if there's something Steve or John want to say.

MR. MACLELLAN: As an association, we declined to take part in a debate because in our association we are representative of industry, individuals, landowners and industry large and small and so we declined as an association to take part in that debate. I, myself, with my parent's property which I'm co-owner with in Pictou County, never encouraged or allowed ATVs on the property. That was my father's request and my father is gone and that's my request, too. A lot of landowners who do not have ATVs have seen a lot of damage over the years and I just noticed the Halifax Herald on the weekend ran an article over some extensive use of ATV trails run amok on property - that's very much a personal use.

We enjoy walking through our woodlot. I was actually allowed to harvest a little bit after 36 years, two years ago, just a little bit and under very strict control. My wife and daughters were the quality assurance, third party verification of the activity on the family woodlot and they're very strict, too. They didn't cut dad any slack at all which was good, but that's the kind of use and enjoyment we have on our property. I guess we like the fact that it was over 30 years since the harvesting machine was on our property and you walk through our property you can hear the stream run, you can hear the birds and the bees and we like it that way. That's our personal choice.

I have friends who have ATVs and Ski-Doos and for them it's a family activity, it's what they do together, but it's very much a personal choice. That is one of the limitations sometimes with so much of the woodland being owned privately is that every individual can exert some influence - we still have some rights of use and enjoyment as landowners in Nova Scotia, as private landowners. I think it is really an individual program and for some people to say they don't want ATVs even running on the forest roads through their property, I think it's quite legitimate because there is a concern over liability for sure, but also about the impact. As with any situation, one user who abuses a privilege creates a huge amount of trouble for anyone. It doesn't matter what the activity is, from a ballpark to an ATV trail and I think that is the challenge, isn't it?

MR. BELLIVEAU: I respect your decision, Mr. Chairman, I'll allow the other member a question.

MR. CHAIRMAN: Thank you, very much. I hope the minister is paying attention. Mr. Gaudet.

MR. WAYNE GAUDET: Thank you for your presentation this morning. In your opening comments, I heard that the wood industry is worth about $1 billion for Nova Scotia; there's about 7,000 direct jobs, 5,000 indirect jobs, but I didn't hear what kind of impact this downturn in the industry is having in Nova Scotia. I would start by asking, do we have a sense of what kind of beating our industry is taking here in Nova Scotia with this downturn, with layoffs or sawmills shutting down?

MR. SPENCER: I don't know that we have an exact number, but Jon alluded today about the jobs, there were 11,000 and now we're down to probably in the range of 8,000, so that gives you some idea of the impact. Production-wise, there certainly has been a reduction. Even though we have had some mill closures, compared to other jurisdictions, relatively few, but definitely a reduction in production. If I gave you a number I would be guessing, but even mills that are still running, most of them that were running two shifts might be less than that now, so there definitely has been a reduction. To give you an exact number, it wouldn't be proper I don't think, on my behalf, anyway. Does anybody have anything to add to that?

MR. MACLELLAN: We'll have numbers probably by the Spring. We'll wait until they officially come out. Like I spoke a moment ago, the unofficial numbers are quite dramatic and I believe the Compensation Board and the Department of Environment and Labour will be looking at those compiled numbers probably in the next couple of months. January is a bit early to get the final numbers for 2007, but it will be quite an impact. If I were to guess, it is probably a 24 per cent loss in payroll in the last 15 months over the previous 10 years.

MR. JONATHAN PORTER: I think the thing that you notice and you hear a lot throughout the province is a lot of discussions about the impact, and I think people are becoming more and more aware how interconnected the industry is. Not only the people directly involved, from woodlot owners selling wood to sawmills buying wood and selling chips to pulp and paper mills buying chips, it's all the other businesses that go along with that. As you know, this is a rural industry, it affects every part of the province and it goes far beyond those direct jobs in terms of the gas stations, the corner stores, the supply stations, and when people look at other jurisdictions where there have been even more reductions than in Nova Scotia, they see that impact. I think that really brings it home of how important it is to find solutions and to not just get through this current situation, but find a way to thrive as an industry, because it has that level of importance for the province.

MR. GAUDET: Thank you. I want to focus on the market. I think in the opening comments I heard that there was some focus on looking at markets outside the U.S. I'm just curious, in terms of the industry here in Nova Scotia, what percentage is right here in Nova Scotia? What percentage of the market is in the U.S.? What percentage of the industry is outside the U.S.? So I'll start with that one first. Do we have a sense of . . .

MR. MACLELLAN: We retained APEC - the Atlantic Provinces Economic Council was the association twice in the last eight years to do an analysis of the industry and part of that was exports - exports and markets. In the U.S., when it comes to lumber, we're phenomenally big. Paper products are more worldwide, aren't they, Jonathan?

MR. JONATHAN PORTER12115: Yes, it's an interesting question and I guess you need some time to think through the numbers and research. For a small sawmill, the market for lumber in Nova Scotia can be critical; I mean that may be their key market. For the larger mills, the market here is so small that you've got to go into the U.S. or into Europe.

Paper and pulp products, it really is global and particularly with the decline in the U.S., everyone is now - some of the Nova Scotia mills were built, especially on the water, to access global markets, but now a mill in Tennessee is accessing the global markets because the U.S. is shrinking so much. When some move there are a lot of other people moving in the same direction, because everyone is watching where the markets are declining and where they're growing. So certainly the more you focus globally, the bigger the market but the more competitors who are in there, we're seeing huge increases in competitors in some of those global markets.

For local sawmills, I'm sure part of the reason they are still running today is they can focus on some of the specialty products in the local market and not go into the U.S.

MR. GAUDET: Is your association helping to find markets outside the U.S.? Or is that strictly left to the individual company?

MR. MACLELLAN: That's strictly left to the individual company. Steve Talbot, our Executive Director, receives calls frequently. I wouldn't say daily but certainly weekly, monthly, from - for example, one out of Mexico I noticed came across a couple of weeks ago. That's the kind of thing that comes in.

I've spoken to a couple of smaller sawmills last year about how do you get to - as you know, we have direct container freight from Halifax now once a week to India, which was just started there about a year ago. That creates an opportunity and I had discussion about it. But they said, how do I go to India - with my small mill in Meteghan, for example - how do I go to India and look at markets when I have to run my business at home and India, it would be my first time going to India. That's what I wondered about, is there a way, and that's where we're looking forward to working with the Cabinet task force on forestry over the next five months, which is another means of finding a way to - how do we use our development officers, how do we use the professionals and the staff we have in the province now to open these markets to it?

We're blessed with an excellent port facility here in Halifax, a huge amount of opportunity and we can certainly go into the Caribbean coast and Mexico and deliver goods

from Nova Scotia, as well as India or, as we have in the past or still do in some cases, into Europe. How do we get down to those markets when we have a lot of - for example, a lot of our lumber mills have five to 45 employees where they are generally family-owned or a couple of partners. How do we creatively come together, as an industry group, work with government to access the leverage to open the doors, so we don't just go to India and have a one-week trip?

A friend of mine is an engineer for an engineering firm, he got sent to India the first time for a one-week trip and, of course, he found it quite a culture shock in a whole bunch of ways. It wasn't until his third trip that he got a sense of what he was doing and what he was coming into. How do we avoid that shock? How do we go to Mexico and India and access a market, because there are going to be different conditions on payment, different products required than we're making now. Somehow we have to leverage the help we have with the government departments that we have here and our own interests, and come together and put a mechanism together. Maybe we can come up with some of that possibility over the next five months to allow the mill in Pictou and the mill in Scotsburn and the mill in Meteghan to access that market through some vehicle, some conduit that makes it possible.

By the way, our mid-year meeting for the Board of Directors of the Forest Products Association of Nova Scotia was in Halifax this last September. There's always a tour which goes with that meeting, it's one of the draws for going to the meeting, I guess. The tour was on the port facilities, because two years ago the single largest volume of traffic through the Halifax port was forest products. That's something we only became aware of about three or four years ago when the Port Authority asked to come to our annual meeting and have a booth. We apologize for that, but we weren't that aware. Forest products is the single largest product two years ago exported from the Port of Halifax. I won't fault anybody else if they didn't believe that on a question. It was interesting, so it creates some possibilities.

MR. GAUDET: Thank you very much. Mr. Chairman, back to you.

MR. CHAIRMAN: Thank you, Mr. Gaudet. I guess we're not going to start a second round, so I just wonder if you have any closing comments that you'd like to make. The committee is probably going to need five minutes or so to deal with some business. So is there anything that you'd like to leave us with, in summation, before you go?

[11:00 a.m.]

MR. SPENCER: From the Forest Products Association, we'd like to thank you for inviting us here today and having the opportunity to speak to you and give you our point of view on the industry, where we're at, where we're going and if at any time in the future you wish to have us come back to clarify anything or speak to you again, I think we'd be more than willing to do that. So with that, I just say thank you.

MR. CHAIRMAN: Well, thank you very much, we appreciate you coming and we tried to have you here earlier. So we certainly have a better understanding, I think, of some of the conditions that you're facing and the industry is facing. We do wish you well in the upcoming months and for sure, perhaps at some point in the future we'd like to have you here to pick your brain again to see how things are levelling out. So on behalf of the committee, thank you very much.

For the committee members, future witnesses, topics for meetings, I see we have lists from all three caucuses - at least I hope. So I guess for the Committees Office, as far as planning for the future, is there something in the lists that members see as something pressing for the immediate future? There are some leftover topics from the committee, from the caucuses that we never did get before the committee. So I'm just looking for some input from anybody. Mr. Dunn.

MR. DUNN: Just a comment. I notice on the first page here there's the Nova Scotia Federation of Agriculture that shows up a couple of times, I guess out of our caucus and under the Liberal caucus, and I look at the egg producers not being here since 1997. One of personal interest for me would be the anglers and hunters. Again, that's just a personal interest.

MR. CHAIRMAN: Okay, any other . . .

MR. GLAVINE: I was going to say the Federation of Agriculture, I think, almost annually getting a sense of the whole industry, is always a good group to have in. I know if we take a look at what's newsworthy recently, there have been a lot of mine and mine-related issues and I'm wondering about having the Mining Association of Nova Scotia come in and present to us.

MR. CHAIRMAN: I have to say I like that idea. I want to say we just had the Federation of Agriculture in December . . .

MR. GLAVINE: Oh yes, I'm sorry.

MR. CHAIRMAN: Our last presenter - Willie Versteeg is the new President and so he actually made a presentation to us. So not that I'm opposed to that, I'm not, but I'm just thinking maybe later would be better than sooner.

MR. GLAVINE: I got caught up, Mr. Chairman, with the Food Miles Project and forgot about the larger picture.

MR. CHAIRMAN: Well, I'm thinking around just in light of the forestry sector, the Auditor General and the Department of Natural Resources, the Auditor General's Report

from July 2006, the chapter on forest inventory, that would seem to be timely, if this presentation was timely. Any other members? Mr. Parker.

MR. PARKER: Well, I'll put a plug in for - I guess out of the Mining Association or the Department of Natural Resources - the mining registrar, which we have at the top of our list there on Page 2. Perhaps especially in light of the discussion around uranium, pro or con, but I think it would be a timely topic maybe to have both the department and the Mining Association. I don't know if we can have them jointly.

MR. CHAIRMAN: Well, I think that's more difficult.

MR. PARKER: One or the other, either the department or the Mining Association might be timely.

MR. GAUDET: Probably the mining industry.

MR. CHAIRMAN: The mining industry, okay. Mr. Dunn and Mr. Barnet.

MR. BARNET: I have no problem with that, that's a good idea.

MR. CHAIRMAN: So will we say for our next - we have a February one, so I guess we're looking at March. So the committee is fine with that? Do you want to propose an April presentation tentatively?

MR. GAUDET: Mr. Chairman, I was going to suggest if the mining is not available, why don't we invite the anglers and hunters? Or just switch them around, whoever is available to come in first.

MR. DUNN: If they are available, it would be very timely for them the following month, because . . .

MR. CHAIRMAN: In April, yes. Okay, the committee is fine with that? Sure, okay, we'll go with those two.

For the next meeting it is Seafreez, Canso. Mr. Minister.

MR. BARNET: A question. This was on a list of previously agreed meetings?

MR. CHAIRMAN: As far as I know. It has to be agreed by the committee.

MR. BARNET: See, I don't remember and I guess . . .

MR. CHAIRMAN: I think sometimes you're not here.

MR. THERIAULT: I put this request in last June.

MR. PARKER: They were scheduled to be here in November.

MR. THERIAULT: Yes, it didn't work out.

MR. BARNET: So it was part of the short list that we made when we first formed as a committee? I guess that's the question. When we first formed as a committee we each submitted our list and then we made a short list of those easy ones. This is one of those ones, is it?

MR. CHAIRMAN: Well, I'm thinking it's not. I'm thinking it may have been something that came from the Subcommittee on Fisheries - fisheries items. The Speaker basically indicated to us that our subcommittee didn't really exist under this format, but he told us that we could meet twice a month if we wanted and we could bring other presenters. So we haven't really picked somebody for twice a month yet, but this was one that came out of the Fisheries Subcommittee that basically deals with fisheries issues, that's where that came from.

MR. BARNET: I guess I don't want to be a stickler for the rules or even be seen as obstructive, but it would seem to me that the practice has been for the establishment of the agenda, it's the committee that establishes the agenda. I think for the future that's the way that it should continue to occur. That way all members have input into who appears and there is a democratic process of how things get on the agenda. If it were any other way, people would simply start sending in things and the committee agenda would get out of control.

MR. CHAIRMAN: Well, I agree with you 100 per cent and actually it did come before the committee and, unfortunately, you're not always here when the committee makes decisions. So if you want to have input, I have to say show up.

MR. BARNET: With all due respect, I've missed maybe one or two meetings. I don't know if this was on one of those agenda meetings. I can tell you that when I'm not here, I have somebody here representing me or on my behalf. The point that I was most concerned about is the time and date. Our committee generally meets the second Tuesday of the month, this is actually a Thursday and we normally meet from 9:00 a.m. to 11:00 a.m. I'd like to know, is there a particular reason for this?

MR. CHAIRMAN: Yes, there is. Because the Speaker said we could meet twice a month if we wanted, but because of all the other committees, trying to get on the Tuesday became very difficult, so we got a day when the committee rooms were actually open and we could actually fit this in. That is why it landed there.

MR. BARNET: Again, this is an agenda item that is now on our agenda, it wasn't voted by the committee to be on the agenda for a time and date . . .

MR. CHAIRMAN: It was.

MR. BARNET: No, that's not what you said earlier. When we established our agenda, we each put forth a list of items, this wasn't one of them that we agreed on . . .

MR. CHAIRMAN: Sure and we've allowed other items like Boris Worm, the professor who dealt with the fisheries issues. He wasn't on any of our agendas either, but because of that report that his committee came out with, we moved him very quickly before this committee - it was not on anybody's agenda. So we've been able to do that in the past.

MR. BARNET: And I have no problem with that. The problem I have is when it's not the committee itself that makes those decisions. It should be the committee itself that makes those decisions.

MR. CHAIRMAN: The committee did make the decision.

MR. BARNET: So there was a motion saying that on Thursday, February 7^th, this item will be added to the agenda for Thursday, February 7^th at 1:00 p.m.

MR. CHAIRMAN: I don't know if the motion actually read that way. I know the issue came before the committee, raised by the people who would have been the subcommittee, so the committee dealt with it and said yes, this seems like a good item and asked the committee for agreement, and the committee said yes, that's fine, and then was trying to schedule it.

MR. GAUDET: That's exactly what happened.

MR. BARNET: All right. We'll have a look, we'll see.

MR. CHAIRMAN: Okay, look forward to having you.

MR. BARNET: Well, unfortunately, I can't be here and I guess that raises the reason why I'm concerned about the time and the date, it doesn't fit in my existing schedule.

MR. CHAIRMAN: Okay, thank you. Any other items?

MR. THERIAULT: So we should cancel any meeting that you can't be here?

MR. BARNET: No, no, that's not it at all. I understand that I'm only one member of the committee, but as the Chair correctly pointed out, there have been times when my

schedule hasn't allowed me to be here. I take very seriously the work that this committee does and my role as a Progressive Conservative member on this committee. I think these are issues that are important not only to me, but to my constituents and I want to be here when there are issues that are on the agenda.

Unfortunately, because I have Cabinet responsibilities and other duties, my schedule is extremely full and I wasn't aware this was scheduled for February 7^th until I saw the notice that came across through my secretary and I was concerned because I would like to participate in committee meetings - that's why I raised it. I think any member has the right to raise that and to express their concerns and that is why I am expressing my concerns today. I'm not saying that we adjust our meeting for me, but what I am saying is that the traditional schedule for this particular committee is the second Tuesday of every month from 9:00 a.m. to 11:00 a.m. and to the greatest extent possible, I have freed my schedule indefinitely to allow me to be here. There will still be occasions where that won't happen, but it is difficult for me to plan and then have things change on a month-to-month basis.

MR. CHAIRMAN: I think we all appreciate that, glad to have you whenever you can appear. The flexibility that we tried to inject into this committee was around the lack of a subcommittee, as we found out it had no standing by the Speaker. The Speaker's Office did allow us to have two meetings a month and he said he would fund those. The question of getting those quite often is purely scheduling, so you may find that there are going to be some things that show up yet in the future that might not match well with your schedule, depending on what comes out of this committee. As it turns out, the Resources Committee itself was the only committee that really had any legitimacy to deal with any of these other issues.

So we're looking for opportunities to schedule other presenters before this committee, other than once a month and the Speaker has told us we can do that and I take my direction from the committee. So if that ever changes and the committee wants it to change, then that's fine by me. Thank you.

MR. GAUDET: Motion to adjourn.

MR. CHAIRMAN: We stand adjourned.

[The committee adjourned at 11:13 a.m. ]