Friday 24 March 2023

Delays in boosting timber royalties saved N.B. forest companies millions

 

Delays in boosting timber royalties saved N.B. forest companies millions

Higher rates were decided on last May, but took effect months later

New Brunswick applies 20 different royalty rates to trees cut on Crown land, depending on size, species and quality. Earnings this year are projected to be $92.8 million. It's both a record and well below expectations. (Submitted by Ben Sweet)

Government delays in setting up higher timber royalties in New Brunswick last summer to take advantage of elevated lumber prices helped forest companies escape millions of dollars in extra charges on wood they were cutting on public land at the time.

Budget figures released this week show forest companies are likely to pay $92.8 million in timber royalties by the time the current fiscal year ends March 31. 

That's a record amount for New Brunswick but well below the $118.1 million government was originally suggesting higher fees would bring in when they were announced last spring.

Jason Hoyt, a communications officer with the Department of Natural Resources and Energy Development, said a number of issues have led to timber royalties coming in below target, including rate increases that were set up by the province too late to reach the expected amounts.

A man wearing a suit standing in front of a brown building Natural Resources and Energy Development Minister Mike Holland said he expected higher timber royalties would bring an extra $50 million this year. They didn't, partly because of delays in setting them up. (Jacques Poitras/CBC)

"The new royalty rates were put in place in September," said Hoyt.

New Brunswick first decided to raise royalties it charges on timber last May, following two years of elevated lumber prices and record, multi-billion dollar sales by New Brunswick sawmills.

Just over half of the trees cut into lumber by New Brunswick mills are publicly owned.

In July, New Brunswick Natural Resources Minister Mike Holland gave interviews predicting higher new rates would raise an extra $50 million in revenue for the province, on top of the $68.1 million it had originally budgeted to receive under old rates.

A large spruce tree Single large trees often carry multiple royalty rates when found and cut on Crown land. In New Brunswick this year, large trunks used for making softwood lumber have had royalties increase, but rates on pulpwood made from the smaller tree tops have gone down. (Submitted by Ben Sweet)

"We've instigated an increase for this year, a fairly significant increase, " Holland told CBC News, adding it could mean "$50 million worth of additional revenue to the province for this fiscal year."

Delays meant $1 million a week in royalties

But after deciding to raise timber royalties sometime in May, the province spent most of June working out how high they should go. It then had to obey a required 60-day waiting period in July and August prior to the new fees being imposed.

The delays helped to save forest companies about $1 million per week in higher royalty fees.

A man smiling in front of a New Brunswick flag with two Canadian flags on either side of it New Brunswick Finance Minister Ernie Steeves unveiled his latest budget Tuesday. It included information confirming timber royalties this year are lower than expected. (Jacques Poitras/CBC)

"The Crown Lands and Forests Act does not allow retroactive charges to rates," said Hoyt.

"Therefore, timber that was harvested before September was charged the older royalty rates." 

Current projections are for timber royalties to end the year $25.3 million short of Holland's original expectation.

Hoyt said there were other problems in the woods responsible for some of that, including bad weather and a shortage of contractors and truck drivers that led to fewer trees being cut although he did not give a specific figure.

"There was significantly less volume harvested on Crown land this year than projected," he said.

ABOUT THE AUTHOR


Robert Jones

Reporter

Robert Jones has been a reporter and producer with CBC New Brunswick since 1990. His investigative reports on petroleum pricing in New Brunswick won several regional and national awards and led to the adoption of price regulation in 2006.

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109 Comments
 
 
David Amos
Surprise Surprise Surprise 




Samual Champlain  
So we bring in record royalties but somehow the lefties think this is bad. When the gov't in power is not the one you have blindly supported your entire life you have to make things up out of thin air. Been a tough week to be a Lib supporter.  
 
 
Rosco holt
Reply to Samual Champlain  
It's not bad but it's late, too late... 
 
 
David Amos
Reply to Rosco holt 
Way past too late 
 
 
Marcel Belanger 
Reply to Samual Champlain
Hilarious, here you are blindly supporting the cons and you bemoan any libs who do the same.

Also record royalties that are way, way below where they should be is bad, in any way you look at it.

It's the same as the governments continually saying their making record investments in healthcare every year.

It's a blatant falsehood, we don't see the spending estimates from various healthcare departments so the government is able to up it's spending, call it record breaking but is still under funding the system. This is cumulative and has been going on for years and is not necessarily this governments fault. BUT, they do have the revenue to fix it.....but won't. 

 

 

 

Alex Butt
You could not make this provinces lack of leadership in a tragic comedy! 
 
David Amos

Reply to Alex Butt
As I said Welcome to the circus  
 
 
 
 
 
Lou Bell 
Hilarious ! The Liberals don't seem to realize , you can't start collecting the Royalties until the changes have been implemented , INCLUDING a 6 day mandatory waiting period ! The change was NOT announces on the 1st day of the fiscal year , plus there was a MANDATORY 60 day waiting period ! The most collected even if it was announced on the 1st day of the last fiscal year was 10 months worth . They collectd 24 million EXTRA dollars +++ more than was ever collected before by any government , including and especially from the Liberals ! And they still complain .  
 
 
Alison Jackson  
Reply to Lou Bell  
Spin the story much 'Lou'?

What do you have to say about Irving's long line of successive tax breaks from a former Irving executive?

 
Samual Champlain  
Reply to Alison Jackson
You cannot argue Higgs has helped Irving any more than any previous leader. The facts show all political parties cater to corporations.  
 
 
Sam Smithers 
Reply to Alison Jackson 
And what about the tax breaks this gov't has ended that other gov's did not, do you care to comment? Tell me how things are different now than any other time in the last number of decades, prove a point................. for once. 
 
 
Alison Jackson 
Reply to Sam Smithers  
List the tax breaks, don't run away. 
  
 
 
 
 
Lou Bell
Many millions more being collected by the Conservatives to go in the provinces coffers that the Liberals just failed to get done !!! Although they love to complain about it ! 
 
 
Rosco holt  
Reply to Lou Bell 
Deflecting much.  
 
 
David Amos

Reply to Rosco holt
Methinks she has partaken of too many butter tarts today N'esy Pas?  
 
 

 
Lou Bell  
Another Liberal mess left for the Conservatives to clen up ! In a year they'll be complaining the Conservatives made money for the Province off the increase they put on the lumber royalties !!


 
Lou Bell 
Even with the delay , MILLIONS more than the Liberals ever collected in a year , and yet they complain about the large increase by the Conservatives ! Another Liberal mess left for the Conservatives to clean up ! 
 
 

Lou Bell  
Funny , even with the delay , RECORD amounts collected ! More funny , we didn't see any increase under the previous LIBERAL regime ! One month to set in motion how it would be handled ,then a MANDATORY 60 day delay ! Really , Liberals have no clue how to put things in operation ! Still haven't seen even ONE Nursing seat they paid NB Universities MILLIONS for !

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