Feb 19, 2009

Time to take the axe to province’s dubious forest-related budget projections


Two words sprang to mind this week when perusing the provincial government’s latest revenue projections from BC’s once healthy, wealth-producing forests – confusing and misleading.

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.