Back in 1990, for example, forests in BC absorbed about half of the emissions that British Columbians put up into the atmosphere (total man-made emissions of 55.7 million tonnes of COs, with forests sequestering 27.7 Mt). The annual figures bounce around a bit due to harvesting of timber on forest lands and wildfires, both of which increase emissions, offset against the fact that reforested trees grow and as they do capture more CO2. The interplay between these two meant that the net amount of CO2 sequestered by forests between 1990 and 2001 ranged from a low of 20 Mt in 1992 to a high of 46.5 Mt in 1997. In 1997, this meant that BC forests essentially re-absorbed almost three-quarters of man-made CO2 emissions.

The bad news is that since 2003, BC forests have switched sides, and have turned into a source of CO2 emissions, and a pretty large one at that. In 2003, forests added about 37.6 Mt of CO2 to BC’s total emissions, an amount equivalent to half of BC’s total emissions. By 2007, the net addition was 52.5 Mt, equivalent to almost four-fifths of man-made emissions that year.

The main cause of the shift is the mountain pine beetle, and its rise to super-pest status due to winters that have not been cold enough to kill them off – an effect of climate change. Back in the early 1990s, pine beetle affected area averaged about 40,000 hectares. Then it took off starting in 1996, hitting 230,000 hectares by 2000, then 1.8 million hectares two years later, and in 2006 and 2007 about 7 million hectares affected. Killing trees and leaving dead wood standing means less sequestration of CO2, but also increases in wildfires, with surges in 2003 and 2004, that directly put CO2 into the air. 2009 will be another bad year for fires but we do not have any stats yet.

The case of BC forests is an example of a “positive” feedback loop that reinforces climate change itself: warmer temperatures lead to more CO2 being released from forests, which leads to more warming and so on. It is worth noting that more timber is being cut from the beetle-affected wood and this will lock away a certain amount of carbon in 2x4s and other wood products. Interestingly, the stats show that clearcuts were about 50% greater in total area by 2007 than in 1993, the year of the Clayoquat protests. And yet the area affected by the beetle is more than 30 times larger than what was clearcut.

Finally, added to this is net deforestation in BC – the conversion of forest lands to other uses such as agriculture, suburbs or oil and gas development (these are the top three reasons). Deforestation is offset by some modest afforestation (conversion in the other direction), but overall it contributes 3-4 Mt per year to BC’s total emissions. This is about the same as all commercial operations and institutions (businesses and the public sector but not heavy industry) contribute to BC’s annual emissions.

Add it all together and BC’s forests (and arguably our management of them) are big part of the climate change dilemma facing the province.

Like most of the data coming out these days, this economic report card is worse than expected. We should think about hiding it from our parents. For starters, BC’s real GDP fell by 0.3% – not a big drop, mind you, but the first actual fall in provincial GDP since 1982. Most observers now expect declining GDP for 2009, but a drop in 2008 is very much a surprise.

In the 2009 BC Budget, tabled just two months ago, economic growth for 2008 was estimated at 1.0%, slightly lower than growth of 1.3%, the average estimate of the Economic Forecast Council. This tells us yet again that our forecasting has been too biased toward good times, and we are not developing economic plans or fiscal policies with contingencies for bad times (that we hope will not materialize). The esteemed EFC did not even see a recession in 2009 as late as last Fall, and the BC government seems to have been equally delusional.

In 2008, the whole goods-producing part of the economy, i.e. the export sector, basically fall apart. That forestry got killed is probably of no surprise to anyone living in the Interior. Resource-based industries showed downward movement across the board, including a drop of 15% in forestry, agriculture and fishing. I’ve pasted Statscan’s summary below.

BC’s economy is facing a double-whammy: a demand shock as export markets to the US and Asia drop simultaneously (in 1998, it was just the Asian engine that sputtered); and a supply shock arising from the rapid drop of commodity prices, meaning it costs BC more in exports to buy the same amount of imports. On the way up, these forces, strong demand in export markets and rising commodity prices, essentially made a big part of BC’s boom overall, and almost all of it outside Vancouver, Victoria and Kelowna.

The other shoe to drop in 2009 will be the construction sector. In 2008, construction was a source of growth, up more than 4%. With the sharp drop off in new building permits and construction starts, this sector will turn negative in 2009. In employment terms, consider that there were about 235,200 employed in construction at its peak last summer. By March this number had already dropped to 187,800. This pattern will have huge ripple effects throughout the rest of the economy. It bodes ill, for example, for retail trade, which plummeted to 0.6% growth in 2008 (though still positive) from 7% the year before; more unemployment and broader consumer retrenchment will lead to a decent drop in 2009.

All of this reinforces my concerns that the economy is in worse shape than either the NDP or the Liberals are willing to admit on the campaign trail. We need to press our prospective leaders in the next two weeks on what their economic plan is, and how they are going to handle a much larger deficit than what was projected at budget time. Is either prepared to run the types of large deficits that will be needed as the economy worsens (tip: appeals to the Bank of Canada to puchase provincial debt should be made loud and vociferously, as the Bank contemplates a new round of unorthodox monetary policy measures).

This has relevance for another storyline in the GDP statistics: the growth of the public sector. BC’s GDP performance would have been deeper in the red had it not been for 3% growth in education, health care and social services, and almost 4% for public administration. In times like these, when consumer spending, business investment and export markets are down, the only major sector that can step up is government. In 2008, the BC government leaned against those headwinds – but this is in hindsight, the government thought the wind was still at its back.

In 2009, with the storm gaining strength, the lesson is that the government must do more, not less, to avert a major drop in economic output. The meme of BC “living within our means” and the excessive attention paid to keeping the deficit small (and returning to budget balance within two years) are contractionary ideas that will make the economy worse in 2009. That attitude has already settled in in Victoria to some extent, but could get worse. Making large budget cuts to “share the pain” is exactly the wrong thing to do right now, and is the type of move that turns recessions into depression.

Anyway, here is the blurb for BC from the official publication:

The effects of a sharp drop in output of the forestry industry (-18%) rippled through the economy. The decrease was triggered by a slowdown in housing construction in the U.S. combined with a high Canadian dollar in the first half of 2008. Forestry-related manufacturing, including sawmills and paper manufacturing, posted large declines. Affected by these declines, the wholesale industry contracted while transportation and warehousing services remained flat. With economic activity slowing, demand for energy was also affected. The output of utilities was down 4.0%.

Exports fell 6.8% following a small decline in the previous year. The 2008 downturn was largely due to a drop in lumber products.

Output in the mining sector was down as oil and gas extraction and metal ore mining reduced production. However, with prices high, especially for commodities such as coal and natural gas, revenues poured in. This income helped to offset the losses in the forestry sector and corporation profits registered a small gain in 2008.

After a decline in 2007, construction grew again in 2008. Business investment in non-residential structures picked up with projects related to oil and gas extraction and electricity generation. Government capital expenditure increased 0.3% after a cumulative gain of 80% over the previous six years. Housing starts fell off putting a damper on housing construction. Investment in residential construction declined 4.1%.

Growth in personal spending decelerated in 2008 to 2.8%. This was the slowest growth since 2001. Purchases of durable goods fell as sales of cars and trucks declined.

Labour market conditions stayed strong. Labour income increased 5.6%. This pace was well above the national growth rate but below the British Columbia average of the previous five years. Employment advanced 2.1% while the unemployment rate edged up to 4.6%.

The slowdown in the economy was also experienced in the service industries. Only health and public administration grew more quickly than in 2007, benefiting from government expenditures on goods and services, which advanced at a similar rate as in the previous year.

Well since then, calls and emails have started coming in. Ministry of Forests personnel and contractors whose job it is to count the wasted logs left behind by the industry say they believe a whole lot more waste is out there beyond what the official record suggests.

Perhaps the most shocking revelations came from a contractor with decades experience. His estimate is that up to half of all company waste reports on the coast may not, in actual fact, involve any counting at all. That’s because companies can use the data from a “parent” block and apply it to a surrogate. In a nutshell, this means that a count of sorts is done on Clearcut A and that count is then applied to Clearcut B, even though no one has actually set foot on Clearcut B to take a guess at how much usable wood is left behind.

The same caller said that many people doing waste counts under contract to logging companies are essentially pressured to produce favorable summaries because the companies pay a fee to the province for the usable wood they leave behind. Consequently, higher value logs are routinely reported as of lower value while other logs are simply not counted at all. He also expressed surprise at government assertions that one tenth of all company waste reports are audited on the ground by MOF personnel.

An MOF caller, meanwhile, reported that it is exceedingly hard to catch under-reporting because there’s lots of wiggle room as far as interpretation is concerned. More to the point, there isn’t the staff or the travel budgets to get to more remote logging sites – something the companies know full well.

For obvious reasons, it is difficult for these people to speak publicly. But the encouraging thing is that they have told me to pass on their names to the Forest Practices Board, which is acting on a complaint filed with them at the time my wood waste research was published. Encouraging also, because they can speak their minds, open their files, provide records and suggest directions. And they can do all of that in confidence. Here’s hoping Board investigators take full advantage of what they have to offer.

This publication basically asks where the income in various BC communities comes from. In many communities the resource sector is the number one employer, and this usually means forestry, though in a few it means extraction of minerals or oil and gas. No surprise there.

But what is really interesting is how much the public sector is a player (and here we are talking only about federal and provincial jobs as money that comes from outside the community). In almost every community the public sector employs a major share of the local population, typically accounting for between 20 and 30% of local income (with a low of 14% in Fort St John and a high of 50% in the central coast of Vancouver Island). This includes civil servants in federal and provincial ministries, but also teachers, doctors, nurses, social workers and so on. All totaled, the public sector is the number one source of income in many communities in BC, and in the major resource communities it is a close number two.

In addition to employment in the public sector, another major source of income for all BC communities is income transfer payments (federally this includes the GST credit, the Canada Child Tax Benefit, Old Age Security, Canada Pension Plan and Employment Insurance; provincially, Income Assistance). These range from 5 to 26% of income in BC communities, with an average in the high teens.

If you add both public sector jobs and income transfers together, the broader public sector is the number one source of income in all but three of the 63 communities listed in Table 2.1 (pages 8-9). Which is why the budget cuts delivered by the Liberals in their first mandate (between 2002 and 2004) hurt so much. True, all of those communities also pay taxes that flow out of the local economy, but as we pointed out in a CCPA study a few years ago, this dynamic was a net loss for the vast majority of BC communities outside Vancouver and Victoria because the “hinterland” gets back more public sector income than they pay in taxes.

The impact of those cuts has been masked by a boom in resource extraction and exports due to high commodity prices and due to accelerated cuts in response to the mountain pine beetle. It will be interesting to see an update of the economic dependency numbers after the next census, as this BC snapshot was taken at the top of a commodities boom that has now gone bust.

The lesson is that the public sector provides a major bulwark against bad economic times. Without all of those public sector jobs and transfer payments, the closure of a mill would lead many a community to turn into a ghost town. Some are now arguing that in the current economic crisis, the public sector needs to tighten its belt by downsizing operations, and jobs. But that would only worsen the pain, and lead to a longer and deeper slump. If anything we need more public sector income to be a stronger counterweight that sustains BC communities.

February’s Speech from the Throne is a case in point. “Energy opportunities will transform the future of forestry in British Columbia with clean, carbon-neutral bioenergy, fueled by biomass from beetle-killed forests. It will mean new jobs, new revenue streams and new electricity.”

Sounds promising. But I have my doubts. It costs money – lots of it – to move trucks onto old logging sites, pay workers to gather and grind up waste wood, then load the chips onto trucks that drive back to facilities that take the chips and burn them under intense heat to fire turbines that generate electricity. Which is why the bioenergy industry has historically relied on chips and sawdust from sawmills as a “secure” source of extremely cheap fibre for its feedstock.

But what happens when all – or most – of the sawmills close? Well, we’re about to find out. And much may hinge on the outcome. In Williams Lake, EPCOR owns North America’s largest biomass power plant. The 66 MW facility, capable of supplying power to 33,000 homes, has been in operation since 1993, and has historically relied on 70 truckloads of waste wood chips and sawdust per day from the city’s lumber mills.

Now, most of the city’s mills are closed and EPCOR, locked into a 25-year power supply agreement with BC Hydro, must begin to pay – and pay dearly – for companies to go out and find the wood it needs to keep its facility running.

EPCOR, given its considerable size, is an exceptional example. But the bioenergy giant is not alone in feeling the pinch. Like EPCOR, BC’s infant wood pellet industry has so far hitched its fortunes on accessing waste wood from sawmills. That supply source is a shadow of its former self.

Ironically, in a province awash in “waste” wood in the form of millions upon millions of dead pine trees, supply issues may prove the undoing of the vaunted bioenergy industry. Cheap, readily available supplies, that is. Businesses used to getting something for virtually nothing often have a hard time making money and profits the old fashioned way – by earning them.

But in one important respect, Roundtable members got it right. BC’s First Nations remain largely on the outside looking in when it comes to the province’s forest industry. Cut off from lands and resources to which they lay claim, First Nations are the first to be affected by forest activities and almost always the last to benefit, if they benefit at all.

Beginning in 2003, the Roundtable notes, the province attempted to rectify this lamentable imbalance by awarding forest tenures and some forest revenues to individual First Nations. Well intentioned though its efforts were, they fell well short of the mark. “First Nation tenures should be increased in size and their term expanded, similar to what is done with Community Forest Agreements,” the Roundtable reported. “In addition, revenue-sharing formulas should be revised so there is a direct correlation between forest harvesting activity and revenue received by First Nations.”

I myself came to much the same conclusion in January 2007, when the CCPA published True Partners. The research offered a critical, independent assessment of the province’s “new relationship” with First Nations on the forestry front. Based on dozens of interviews with First Nations leaders and aboriginal foresters, it found that the province’s efforts frequently failed to deliver anything approaching economically viable opportunities.

It is highly unlikely that the Roundtable’s recommendations would have packed the punch they did without the forceful presence of Dave Porter of the Kaska Dene Nation and Chief Lynda Price of the Ulkatcho First Nation. But at the same time, it must be said, the province appears to have felt compelled to ensure that First Nation representatives were part of the process. Not only that, but following the Roundtable’s report, BC Forests Minister Pat Bell was quick to respond that in his view there could ultimately be a doubling of First Nation forest tenures to 20 per cent of the total forest holdings in the province.

Bell’s projections were the immediate subject of comment by Vaughn Palmer and other leading media commentators. Expect more of it in the months ahead as the Forests Minister or his successor in the post-election period wrestles with the next big – and frankly very messy – issue: Where, exactly, will the timber to address longstanding First Nations’ grievances come from? And if it comes from the very corporations that have lobbied successfully for language in the same Roundtable report calling for greater clarity around what they will be compensated in the event that their “rights” to Crown timber are affected, how much more will the public be out of pocket?

Stay tuned for interesting times ahead.

A longer shelf life, combined with “new” sawmill technology that allows beetle-killed logs to be scanned and rotated prior to cutting so as to avoid defects, will help to ensure that maximum value is extracted from the dead pines for as long as possible, Bell said.

Unfortunately, Bell’s optimism stands at odds with people whose job it has been to try and figure out how forest companies can economically cope with the increasing numbers of dead, defect-riddled pine logs entering their mills.

Three years ago, Igor Zaturecky, a research scientist with Canfor’s Wood Products Research and Development Centre, co-authored a paper with fellow researchers at Canfor and the University of British Columbia. The paper showed how the scientists had successfully subjected dead pine logs to special stress tests that revealed hidden defects in the logs prior to them being milled. This was big news because, as Zaturecky said, interior sawmills were even then overwhelmed with droves of sub-standard, beetle-killed logs that were wreaking havoc with their equipment.

“I’ve been in mills and seen wood processed into lumber that was full of spiral checking,” Zaturecky said in a summary report on the research project he had participated in. “In one [mill] shift there’s so much breakage and waste it’s unbelievable, and that happens over and over.”

Coincidentally, the facility where Zaturecky witnessed all the log breakage was a new, state-of-the-art Canfor mill in Vanderhoof, with the same log-rotating equipment in it that Bell now boasts about.

Asked about conditions in interior sawmills today, Zaturecky, now an independent researcher, said in a telephone interview this week that log breakage due to beetle-attack-related defects “is still a big, big issue.” And it will continue to be so, he said, because “you can only do so much” to avoid log breaks by rotating logs prior to cutting them.

As droves of dead standing pine trees continue to age, more of them will develop defects that lead to messy and costly log breaks in mills. Such outcomes can be avoided, Zaturecky said, but will require investments by companies to “commercialize” the stress-testing he and others developed. In other words, companies like Canfor will have to spend more money up-front, perhaps at the logging sites themselves, using stress tests to sort logs into two streams – one stream for the sawmill, the other for pulp and paper mills or wood-based “bioenergy” plants.

If Bell’s optimistic projections are to have a shot at being credible, he better pray that an economic recovery happens soon and that ideas like Zaturecky’s catch on. Otherwise droves of dead pine trees won’t go anywhere any time soon.

Gian Sandhu isn’t buying it.

Owner of the Jackpine Group of Companies in Williams Lake, Sandhu was a leading light in British Columbia’s interior forest industry, at one point employing upward of 300 people. In December, with his workforce down to 116 employees and over 27 million board feet of product sitting on his lot with not a buyer in sight, he was forced into receivership. In an industry renown for turning out billions of board feet of commodity lumber, Sandhu’s workers took a different approach, making high-value, re-cut boards that were actually stronger than traditional lumber products. His workforce (non-union but paid close to union scale) turned out made-to-length, tension-tested floor joists and rafters as well as a range of laminated furniture and shelving panels.

But no amount of entrepreneurship could shield Sandhu from the economic havoc unleashed by the collapse in the US housing market. “I’ve never seen this in close to four decades in the industry,” Sandhu says. “There are no buyers. In previous downturn cycles you could sell. Not now. We’re pretty much dead.”

Sandhu is not alone in being stunned by the breadth of the downturn. Elsewhere in his central BC home city, three sawmills owned by Tolko Industries Ltd. are idled at a loss of another 600 jobs, plus a related 150 or so jobs in logging and related activities. And at least one locally owned independent mill – Sigurdson Bros – is also down putting another 100 workers off the job.

Sandhu says that that the breadth of the housing crisis in the US throws into question any economic recovery this year. “There’s 11 months of [new] unsold houses in the US,” Sandhu says. “Then there’s the existing inventory that the banks have taken over. That’s another nine months or so of inventory.”

The sheer size of that unsold inventory, will delay the advent of even a modest recovery for several quarters Sandhu believes. In the meantime, a steady deterioration in the quality of trees in BC’s interior continues, thanks to the ongoing mountain pine beetle attack. That likely means that only some of the many idled mills throughout the province will reopen when markets pick up.

To prepare for that reality, Sandhu says governments need to introduce new policies that encourage a transition in forest industry output – one where fewer commodities are made because there are less raw materials to work with, and more jobs are created by taking commodities and re-working them into higher value products. Barring significant changes in industry output, a 20 per cent increase in forest industry revenues, as Hansen predicts will occur in two years time, seems a stretch.

In its latest annual Service Plan report, the Ministry notes that jobs in compliance and enforcement will decline by more than a fifth or 63 full-time equivalent positions over the course of the coming fiscal year. Total C&E staffing will shrink from 292 FTEs to 229, a decline of 22 per cent.

The coming cuts make it harder and harder to sustain the belief that anything approaching a proactive, rigorous and effective approach to monitoring forest company activities on public lands can be maintained by our Forest Service. Or that the public will not be shortchanged in some significant way either through unreported and unnecessarily destructive logging methods, insufficiently reforested lands, unacceptably high levels of usable wood waste at logging sites, or stolen timber on which no stumpage fees have been paid.

This is all the more troubling when one considers that it was only five years ago that the Sierra Club of Canada’s BC Chapter released a study documenting the elimination of 800 Forest Service jobs during the first Liberal mandate. The 2004 report – Axing the Forest Service – noted that 40 per cent of the jobs to disappear in the Ministry of Forests fell into a broad category called “Scientific Technical Officers”, which took in most of the men and women working in compliance and enforcement.

As goes the public’s eyes and ears in the forests, so goes the health of our publicly owned forests.

The reason for the closings, according to a Catalyst press release, is the collapse of newsprint consumption and pulp demand:

The rapid decline in North American newsprint consumption is unprecedented,” said Richard Garneau, president and chief executive officer, “and it requires us to focus sharply on cost management as we optimize production across our mills to match capacity with the order book.

As devastating as the closures are, they aren’t entirely surprising. Things have been rough at Catalyst for a while: Crofton curtailed production for 30 days in the fall, and the Elk Falls sawdust/containerboard mill near Campbell River closed at the end of November.

Reacting to the most recent news, Jim Sinclair, president of the BC Federation of Labour, remarked that we are witnessing the “slow de-industrialization of the province”. For the folks on the Island and in Powell River, of course, it probably does not feel slow, but whatever you want to call the pace of change, the problems are expanding.

Sinclair went on to call (again) for some cooperative efforts by industry, labour, and the province to find a way out of this mess, echoing the BC Fed’s letter sent to the Premier earlier in the month:

Contributing close to 40 percent of BC’s exports and 25 percent of our GDP, it is only fair, reasonable and just that British Columbians through their government join hands to assist workers and communities in that sector as it endures bad times. We believe a strong, sustainable forest industry can continue to be a vital component of our economy.

That letter contains some very concrete suggestions regarding what the government can do: extend forest workers’ EI coverage, fund retraining, reforest, and assist forest-dependent communities like Crofton with some money to cover tax losses.

These are excellent ideas. In the short term, the government must follow through on this. Failure to do so—and the budget sure makes it look like we are headed for a failure to do so—can only suggest that the provincial government has no idea how bad things are, and how much worse they are going to get.

As for taxes, it is only recently that Catalyst has laid all the blame on the global downturn. Last summer, when the Elk Falls closure was announced, the company said

The decision reflects the severe impact of a permanent loss of traditional sawdust supply, as well as significant energy and chemical cost inflation, high labour costs and the heavy toll being taken by the uncompetitive major industry municipal tax levied on the Elk Falls mill.

In January, Catalyst CEO sent a letter to officials in Powell River, Campbell River, Port Alberni and North Cowichan that threatened mill closure if annual property taxes were not reduced from $23 million to $6 million.

The heavy-handedness of this kind bullying may be offensive, but Catalyst’s annual losses show there is no denying that costs have to come down, and unions have been trying to help them do exactly that.

The government, in contrast, seems to feel that workers and communities need to eat all the cuts in costs. It apparently has no idea what it is getting itself, and everybody else in the province, into. The provincial forest industry is in freefall, and not just on the coast, of course. Whether it can ever be resurrected in a socially and environmentally acceptable form is a good question, one the province needs to take seriously.

What is essential right now is immediate short-term aid to forest-dependent communities, and a provincially-coordinated industrial restructuring with a long-term vision, the capacity to ask big, tough questions, propose a range of creative solutions, and the authority to follow through and work with communities to rebuild.

The government must step in to this morass, and do so with some enthusiasm and resources. This may mean taking a significant public stake in forest operations, even “provincializing” aspects of the industry and the coordination of industrial production.

These are huge problems, and they call for unprecedented action. If we wait, this one may appear to “go away”, but I’d bet the farm that much bigger ones will have taken their place.

Williams’ well publicized decision in December to yank back AbitibiBowater’s public timber and hydro rights after the company announced that it would close its Grand Falls paper mill, commanded national headlines, laudatory letters of support from displaced mill workers, and scathing condemnation in many business journals and newspaper editorials. But say what you will, at least the guy did something.

Meanwhile in British Columbia, home to the vastest, most valuable public forestlands in Canada, the political response is nothing short of anemic with each mill closure. That includes in Mackenzie, poster child of all that is going wrong in rural BC, where none other than AbitibiBowater has shuttered its mills throwing 562 people out of work.

The big difference between Williams and BC counterpart, Gordon Campbell, is that under Campbell’s watch, BC formally severed any link between access to public resources and requirements that the companies gaining such access actually do something with what they were given. Newfoundland never went down that road, insisting on manufacturing requirements in its agreements with AbitibiBowater and its forerunners that date back more than a century.

Even with those requirements, Newfoundland may yet be sued by Abitibi under the North America Free Trade Agreement – a move Williams and his advisors surely foresaw. But that didn’t stop Danny Boy.

Meanwhile in BC, AbitibiBowater sits on a licence that gives it access to nearly 1 million cubic metres of publicly owned timber per year. All bets are that the company will never reopen its Mackenzie mills and that it is simply waiting for markets to improve prior to selling “its” forest holdings to a former competitor such as Canfor.

That, in a nutshell, is the big difference between Newfoundland and BC these days. Far to the east, our Canadian cousin views publicly owned assets as the people’s resources, whereas here they’re the company store’s.

Of course, it’s one thing to take public assets back, quite another to reassign them. More on that, in a later post.

Confusing because Finance Minister Colin Hansen projected that forest revenues will go up next year when all signs point the other way. And misleading because even a cursory review of revenues to date shows that the Minister’s latest numbers dramatically overstate how much money is likely to come in during the current fiscal year.

The latest budget pegs royalties from logging activities this fiscal year at $587 million. Yet the Forests Ministry, which collects the royalty fees and rigorously tracks them, says that for all of 2008 just $493 million was received. Worse yet, for the first 10 months of this fiscal year just $335 million has been collected. With only two months to go before year-end, it is possible that total forest royalties will amount to $400 million or less – a whopping 32 per cent below the Finance Minister’s projection, which, it must be pointed out, is actually a revised figure. Just last year, the Finance Minister predicted that BC’s coffers would be enriched by nearly $1 billion from this revenue stream!

The ugly truth, which the government ought to be forthright about, is that historically important sources of revenue are in far worse shape than some public accounts suggest. And they’re going to get worse.

Just five years ago, royalty payments from companies logging public forests stood just shy of $1.3 billion – a tidy sum that defrayed some public health and education costs. Those days – as thousands of laid off mill workers fear, aren’t coming back soon. Even, if by chance, the sickening slide in US housing starts abates, another ugly reality stands in the way of a healthy rebound in forest revenues – those tiny mountain pine beetles and the millions of trees they’ve killed.

In the past five years, never less than half and in some years more than 60 per cent of all the forest revenues generated in the interior of the province came from the logging of pine trees. As each year passes, the trees killed by the beetles continue their inexorable decline in quality. Under the circumstances, its very, very difficult to see how the government justifies forest revenue increases to $609 million in the coming fiscal year and $708 million the year after that.

It’s time to take the axe to such figures, give the public a true accounting of the real numbers and trends, and outline in clear terms how the government plans to reverse the slide in forest revenues and related forest industry activities.

Forest sector workers are looking for a little support for them and some solid new thinking for our industry. We had hoped that the recently completed Round Table consultation process would bring some innovative and successful ideas to the table, but alas, it was not to be. In this budget the government could commit to a few things that would indicate some commitment to workers and to the industry. Here’s a few ideas:

As the Premier himself has recently said, it’s about jobs. Indeed.