New Brunswick

Minister defends not raising Crown timber royalties, despite soaring lumber prices

Natural Resources and Energy Development Minister Mike Holland is defending his government's decision to keep the royalty fee for wood harvested on Crown land stable, despite record prices for lumber across North America in the past year.

Crown timber royalties haven't budged, despite lumber prices jumping as much as 300 per cent

Energy and Resource Development Minister Mike Holland said New Brunswick keeping its Crown timber royalties stable ensures the province doesn't lose revenue when the price of lumber drops. (CBC)

New Brunswick's natural resources and energy development minister is defending his government's decision to keep the royalties for wood harvested on Crown land stable, despite record prices for lumber across North America in the past year.

The province takes "a steady, stable approach" to the timber royalties it charges lumber companies for cutting trees on Crown land, which means it won't lower the fees when prices drop and won't raise them when prices rise, said Mike Holland, speaking this week on CBC's Political Panel.

"We have a steady, stable approach to our timber royalties to provide consistency and also to ensure that we don't leave money on the table. The conversation is around 'Why don't we raise them when the price is good?' But the conversation never centres around lowering them when there are hits to industry or the price is low."

In the past year, the price of lumber paid by consumers has climbed by as much as 300 per cent.

In Alberta, which ties timber royalties to the market prices of timber products, those record prices have also been generating record amounts of public revenue, with the province reporting timber royalties going $111 million over budget at the end of the last fiscal year.

New Brunswick, meanwhile, has kept its timber royalties steady while at the same time pulling out of tax-sharing agreements for gasoline sales on First Nations, with Premier Blaine Higgs saying those agreements deprived schools, hospitals and other public services of much-needed funding.

Holland said the province's stance on keeping timber royalties steady has meant the province hasn't taken hits to its revenue in the past when lumber prices were lower, such as when the United States imposed tariffs on Canadian lumber that were as high as 20 per cent.

"At that point, we didn't lower the royalty rates as well as in 2018, timber and the retail market was at an all-time low price. Again, province of New Brunswick did not lower royalty rates as well, like you refer to Alberta, following the commodity as it relates to the royalty rate."

Bathurst West-Beresford Liberal MLA René Legacy said he understands taking a stable approach that accounts for regular lows and highs, but doesn't think it accommodates "extreme circumstances like we're in now."

Bathurst West-Beresford Liberal MLA René Legacy said he thinks most New Brunswickers have a hard time comprehending how Crown timber isn't worth more now that lumber prices have skyrocketed. (Jacques Poitras/CBC)

"When you hear that wood is going up 100 per cent, 200 per cent, would it be, you know, sensible to think that maybe we could benefit 20, 30 per cent from that in our fees?" Legacy said.

"I think most New Brunswickers have a really hard time comprehending that our resources aren't worth more when times are good."

Green Party Leader David Coon said the value of the timber on Crown lands is the value of its income potential, and to reflect that, New Brunswick would need to either adopt a model similar to Alberta's or Maine's, which he described as a competitive auction sale.

Green Party Leader David Coon noted that revenues from Crown timber royalties are offset by management fees the province pays to companies that harvest timber. (CBC News)

Some of those timber royalty revenues are also offset by Crown land management fees the province pays forestry companies.

Coon also noted the timber royalties exclude any revenue sharing with First Nations, which in recent years have filed legal claims for land in the province.

People's Alliance Leader Kris Austin said he thinks it's great that companies in New Brunswick are doing well given the higher lumber prices.

People's Alliance Leader Kris Austin said taxpayers are losing "a significant benefit" of the value of Crown timber by the province not raising the Crown timber royalties. (CBC)

"But when you're taking resources off of Crown land, then the taxpayers need to benefit from that, and right now, they're losing a significant benefit from it," Austin said.

"And I think if we do tie it to the market and we look at ways to ensure that whatever we're paying out in management fees is being recouped to some extent from industry, we'd see a more level playing field and it would give the opportunity for taxpayers to get a better bang for the buck for the resources that they're giving to industry in the midst of this economic boom."

-With files from Information Morning Fredericton

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