Hampton keeps forestry issue at forefront

Ontario’s forest industry was the hot topic of discussion at Queen’s Park last Thursday as NDP leader and local MPP Howard Hampton dedicated his party’s opposition day to the issue.
Hampton introduced a motion calling on the provincial government to recognize the crisis in the forestry sector, and to “immediately implement an energy strategy for northern industries and stop the electricity rate increases that put the entire Northern Ontario economy at risk.”
While the motion was defeated 39-12, the debate that ensued for more than two hours allowed many northern MPPs to express their concerns regarding the issue.
Hampton introduced the subject by highlighting the difference between the what mills are paying for hydro and how much it actually costs to produce.
“The deliberate, intentional policy of the McGuinty government to drive electricity rates through the roof is literally putting mill after mill after mill out of business—thousands of jobs, community economies devastated, regional economies devastated,” charged Hampton.
“What really rubs salt in the wound, though, for people in Northern Ontario is that in almost every case where you’ve got a paper mill, a pulp mill, a sawmill, within 10 kilometres, 20 kilometres, 30 kilometres, there’s a power dam.
“What are the reasons that these mills were established where they are? Well, there are two reasons: one, the best wood fibre in the world, and the second reason, the potential to produce hydroelectricity at a very affordable rate,” he noted.
Power can be produced for as little as $20 or $30 per megawatt at local power dams, but mills are paying $80 a megawatt, he said.
“Every once in a while, you’ll hear the premier or the minister of natural resources say that these mills are outdated,” Hampton noted. “[But] Ontario mills are not outdated.
“The mill in Dryden has one of the most recent paper machines that you’d find in North America; one of the biggest, one of the fastest. . . .
“The mill at my hometown, if you look at it over the last 10 years, has probably had half-a-billion dollars of new investment,” the Fort Frances native added.
Other mills, including ones in Ear Falls and Kenora, also have had upgrades with state-of-the-art technology, he continued.
“Because of the McGuinty government electricity policy, they can’t make money,” he argued.
“If they have to pay $80 a megawatt for their electricity, while competing mills elsewhere in North America are paying half that or a third that, they can be as modern, they can be as high-tech, they can be as razzle-dazzle as you want them to be, and they won’t be able to make money.
“Let me say very directly, if those issues are not addressed within three or four years, we’ll be lucky if we have even a couple of paper mills, a couple of pulp mills, across Northern Ontario. That is how severe this situation is.
“Companies are simply not prepared to invest in Ontario given the electricity policy and the wood fibre policies of this government. They will invest in Quebec,” he warned.
The solution is not necessarily to throw money at the problem, Hampton remarked.
“The forest sector is not asking for money. They are not asking for subsidies,” he said. “They’re simply asking that they be allowed to pay the cost of producing electricity where they are located.
“If you can produce electricity 10 kilometres from the mill for $20 a megawatt, they’re quite willing to pay that.”
Hampton also refuted arguments that forestry is a sunset industry, noting Manitoba has requested proposals for a new milll, and a mill in British Columbia that has sat idle for more than two years is about to reopen.
He also pointed out the immense emerging middle classes in China and India, where the demand for paper and wood products will increase dramatically over the next few years.
“The only thing that is ‘sunset’ is the thinking of the McGuinty government,” he charged.
Natural Resources minister David Ramsay countered by saying the crisis in the forest industry goes beyond energy rates and delivered wood costs. For instance, Abitibi-Consolidated has announced it will close one of its paper operations in Newfoundland, where the energy costs are relatively low.
Two weeks ago, Weyerhaeuser announced the closure of its mill in Prince Albert, Sask., where the delivered wood cost is $35 per cubic metre, compared to Ontario’s cost of $55.
“So you can’t say it’s just electricity prices that are causing these companies to reduce their operations,” Ramsay argued.
Rather, the industry is going through a transformation.
“When I look out ahead, what I see, whether you like this or not, is fewer but probably larger sawmills. That’s the trend of the industry so that they can run efficient operations,” he noted.
In Kenora, for example, the goal is to streamline operations.
“What we’re going to see with this transition is one machine rather than two paper machines. We’re going to see an increase in sawmilling jobs,” Ramsay said.
“Nobody in the McGuinty government has ever said, ‘This is a sunset industry.’ I don’t know where you’re getting that from,” he told Hampton.
The solution to the industry crisis will not be found is simply providing lower hydro rates, Ramsay argued.
“If it was as simple as just changing one policy here, it could be done, but it’s not that simple. It is very complex and it requires working with the companies to make sure we do this,” he stressed.
John Yakabuski, Progressive Conservative MPP for Renfrew-Nipissing-Pembroke, said the government’s $350-million loan guarantee program and its subsequent investment package will do little to stem the crisis.
“What good are matching funds to someone who simply cannot afford to operate under the current circumstances?” he asked. “They’re not going to make an investment into their business if the climate that this government is responsible for creating simply isn’t there.”
Yakabuski was one of six PC members who supported Hampton’s motion for an immediate energy strategy, along with six members of the NDP.