Secrecy surrounds huge taxpayer gift to forest company

VICTORIA - It’s not as if Weyerhaeuser made any sort of case for a $200-million gift from B.C. taxpayers.
But the Liberal government gave them one, without getting any identifiable benefit in return.
And both Mike de Jong, forest minister at the time, and Rich Coleman, in the job now, have not been able to come up with any answers to explain the gift.
Weyerhaeuser owned large tree farm licences on Vancouver Island. The licences covered both Crown lands and about 90,000 hectares the company owned as private lands, much of it in the Port Alberni area.
In 2004 Weyerhaeuser executives asked the government for a favour. They wanted the private lands - about the size of Manning Provincial Park - taken out of the tree farm licence.
The benefits for the corporation were huge. Land in the tree farm licence was controlled by the government as if it was Crown land. Stringent environmental and replanting requirements, a limit on the rate of harvest, a bar on selling the land for housing and strict controls on raw log exports - they were all part of the deal.
That’s why, in the 1950s the government encouraged forest companies to include their private lands in tree farm licences. Government wanted to be able to guarantee sustainable forest management and protect jobs for British Columbians.
Companies that agreed were compensated with additional Crown timber to make up for any lost profits. That’s how the private lands became part of these licences.
Now Weyerhaeuser wanted the deal cancelled. The benefits to the corporation would be huge - between $18 million and $24 million a year in extra profits.
But what about taxpayers? They had already compensated the company for including the land in the tree farm licence. The local communities and the province both stood to benefit for decades from the ability to manage the land in the best interests of British Columbians. Why give that up?
A ministry briefing note for de Jong at the time didn’t even contemplate the idea of a gift to the corporation. It assumed Weyerhaeuser would pay taxpayers compensation.
But even with that assumption, the ministry recommended that de Jong just say no to Weyerhaesuer.
For starters, the ministry briefing note warned de Jong that communities and forest workers considered the tree farm agreement a “social contract” that ensured local areas benefited from the forests and that sustainable management would mean jobs for their children. (That concern was prescient; the change allowed more log exports and cost local jobs.)
Senior ministry officials also said it would be difficult to get fair compensation from Weyerhaesuer and warned of a political backlash.
The only significant benefits cited were making the corporation happy and perhaps placating the U.S. in the softwood dispute (although that sure didn’t work).
But de Jong rejected the ministry recommendation. About 70,000 hectares were removed from the tree farm licence. Within a few months Weyerhaesuer was in negotiations to sell the whole operation business to Brascan, which ultimately paid $1.4 billion for it.
Nobody spoke up for taxpayers. But the Hupacasath First Nation took the government to B.C. Supreme Court, saying they should have been consulted. They won their case. (The Hupacasath, like local communities, had been kept in the dark.)
Brascan provided evidence in the case, because the company wanted to make sure the deal wasn’t undone. Getting the private land out of the tree farm licence was critical to Brascan’s decision to buy. Its profits from the private timberland were about $25 to $30 per cubic metre higher than on Crown land. The government’s gift was worth $15 million to $24 million a year in extra corporate profits.
Add to that the ability to take the land out of forest production and sell it for housing, and you have a benefit worth at least $200 million.
Why did the government do it? De Jong wouldn’t respond to questions. Coleman isn’t offering any answers. A deal was done, he says, but that’s it.
It’s none of your business.
Footnote: The New Democrats raised the issue in the legislature, but got no sensible answers from Coleman. “There was still a deal done,” he acknowledged in reply to a question from NDP forest critic Bob Simpson. “The member is telling the House pieces of what he thinks he understood took place at the time, but he actually has no idea what the total agreement was, because it isn't public.”