On May 10, the board of directors of Forest Renewal BC will sit down to a critical meeting to try and unravel the potential mess the politicians have made for them…
On May 10, while most of us will be dealing with the din of the election and other government weapons of mass distraction, the board of directors of Forest Renewal BC will sit down to a critical meeting to try and unravel the potential mess the politicians have made for them. Last week, just before the writ was dropped, Cabinet produced an Order in Council instructing FRBC to come up with as much as $25-million for a trust fund to deal with some of the collateral damage to communities and workers contained in government¹s compromise with the environmental movement over logging in the Mid Coast. That was actually the second OIC directed to the board regarding the Central Coast Interim Land and Resource Management Plan. The first one announced a few weeks earlier was for a $10-million trust fund donation. Forest Renewal BC is now on the hook for up to a total $35-million to assist affected Central Coast communities ³in transition² as a result of the agreement. ³In transition² is a euphemism for deep trouble.
On the surface the figures look bleak for Forest Renewal BC. This fiscal year¹s FRBC business plan includes a $140-million deficit to maintain a forecasted $280-million program. That shortfall will come out of the corporation¹s continuity fund which stands at around $210-million. At the current draw-down rate it looks like it will expire in two years. FRBC revenues for this year are forecast at $154-million.
And that¹s not all of the funding dilemma the corporation¹s board faces.
They recently committed in principle $17-million to deal with the province¹s worst environmental catastrophe in decades, the Interior beetle infestation. Until we can convince both federal and provincial governments to recognize this world-class blight as the natural disaster it is and fully fund it accordingly the FRBC board has put up its own ante. Noble, perhaps, but it brings the so far unfunded burden total to $52-million.
Simple arithmetic leads you to ask where¹s the money going to come from and which programs will be sacrificed to make up the difference.
Fortunately, it¹s not that simple. There is some fluidity to all those numbers particularly around just when the monies will actually be needed. The cash flow for the Central Coast mitigation won¹t likely be turned on all at once. Ten million dollars is required up front and sources at FRBC say they can manage this without compromising this year¹s program. Of the other money up to $10-million is matching funds which will only be set aside as industry comes up with its share. The remaining $15-million is described as ³as needed.² Just when it will be needed is up to a mitigation strategic group headed by former New Forest Opportunities Ltd. CEO Bob Beard. That group will report to the board May 10 and outline some options.
As for the beetle money; throwing that at the forest all at once could produce the paradox of an artificial explosion of work followed by a collapse which might, in the long run, harm the frail Interior logging economy. Given that, the beetle money will not likely be required in one lump allowing the board some long term planning options. Add to this the general conservative tendency in many of the revenue forecasts and there is room for some optimism. There may be a little more money in the system than we think and FRBC programs might only get singed as opposed to fried. But this picture is predicated on some notional accounting which may not be much against the overriding implications of the collapse of the softwood lumber agreement and the low prices for B.C. wood on the international commodities market. We are still facing some hard times which could take a further toll on FRBC making these latest demands crippling if not fatal.
The board will have to pull off something close to prescience to come up with a strategy that anticipates all the variables we face in B.C. at the moment. What will the Americans do with the softwood lumber agreement? Are the rising dimension lumber prices‹usually a good sign‹actually symptoms of already decreasing Canadian exports to the U.S and as a result decreasing stumpage revenues? What will the Liberal FRBC election rhetoric actually mean if they form the next government? How many more resource communities face calamities resulting from reduced harvests? I doubt these issues were much on the minds of the NDP when they ordered FRBC to finance the negative fall out from their Central Coast agreement.
Like any political decision it was a case of act now and figure out what it means later. And it is not the first time FRBC has been interfered with for political reasons. The IWA was clearly behind this last initiative as they have been in past misadventures such as the Jobs & Timber Accord and New Forest Opportunities Ltd. What must be hardest for the FRBC directors is to have their considered strategies meddled with for naked political reasons.
If the Liberals want to overhaul FRBC they should make it immune from short term political interference. That would be a truly drastic overhaul.