By: Nathan Vanderklippe – National Post – June 4, 2008-07-30

Vancouver – There was little doubt that Canada’s forest industry would embrace a House of Commons committee report yesterday that recommended the federal government pour more money into innovation and bio-energy, re-examine competition constraints on the industry and give it credit for greenhouse gas reductions it has already made.

The report of the Standing Committee on Natural Resources, tabled in the House of Commons yesterday, makes 23 recommendations in total, many of them torn nearly verbatim from demands made by industry and labour groups.

“We’re happy with it for a bunch of reasons,” said Avrim Lazar, president and chief executive of the Forest Products Association of Canada. “For one, it gets the role of government right. It doesn’t talk about government saving the industry. Instead, it talks about business conditions, tax and regulatory conditions that would invite investment.”

Nearly all of the recommendations are aimed at flexing government policy in ways that will make it easier for companies to innovate, pursue new lines of business and receive tax breaks – and in at least one case, refundable tax credits – for investments they make.

The report is intended “to lay the groundwork for the industry’s renewal, prosperity and sustainability,” and receive a similar thumbs-up from labour groups.

“We’re pleased,” said Steve Hunt, the western Canada director of the United Steelworkers. “I just hope they’ll take it up and run with it.”

The report does not calculate the total financial impact of implementing all of its recommendations and thought Natural Resources Minister Gary Lunn must make a response within 120 days, it also does not come with any guarantee of action. In fact, the federal government is constrained in what it can do on forest policy by the softwood lumber agreement, which bars forestry subsidies, and by the provinces, which have domain over most forest matters.

Some criticized the report for focusing on saving industry from its current crisis – the worst ever – while skirting around future potential forest values like carbon sequestration or even water.

“I don’t see a lot in these recommendations that’s going to set us up for the long term,” said David Cohen, a professor of wood science at the University of British Columbia. “We’re sitting there looking at the trunk of the elephant, forgetting there’s a tail, legs and a body.”

Still, CIBC World Markets analyst Don Roberts said the report, which does emphasize branching the industry into new markets like bio-refining and bio-chemistry, serves a useful function as forestry undergoes “one of the most fundamental changes since the end of the colonial era.”