Background

6.1	New Brunswick is Canada’s most forested province with 85% of 
its land area covered with forests.  This forest is an important legacy. In 
our opinion it is the government’s duty to ensure that forest resources 
are properly managed to provide a sustainable forest resource for all 
citizens.

6.2	Three significant groups of owners currently manage the forests 
of New Brunswick. The Crown is the largest with ownership of 47% of 
New Brunswick’s productive forest lands. Private woodlot owners are 
the second largest group with 30%, followed by the mills and wood 
processors with 21%. Besides representing 98% of the productive forest 
these groups are also significant since they all have somewhat different 
goals for the resource.

6.3	The majority of the Crown forest lands are managed by the 
provincial government through ten licensee agreements with forest 
companies. The goals for Crown lands are contained in section 3(1) of 
the Crown Lands and Forests Act (the Act). This section of the Act lists 
several goals for the Crown lands including fish and wildlife habitat 
maintenance and harvesting and renewal of timber resources.

6.4	Lands owned by mills and wood processors are commonly 
referred to as industrial freehold. The main goal for these lands is to 
maximize their value to the wood processing facilities.

6.5	Private woodlots are generally smaller tracts of land than 
industrial freehold. Woodlot owners maintain their land for a variety of 
uses such as recreation, tourism and/or eventual harvest. These 
woodlots are owned by a wide variety of New Brunswickers with 
different goals, resources, and management abilities. 

6.6	The overriding objective of all the stakeholders in the forest 
industry is to increase or sustain the benefits being derived from the 
forest resource, however those benefits might be defined. The last 
decade has seen a great increase in the demand for, and value of, forest 
products. This has put great pressure on the resource and highlighted the 
need for careful planning to ensure these benefits can be maintained. 
Critical areas include the capacity of current processing facilities, a 
sustainable supply of timber and the anticipated future demand.

Scope 

6.7	Due to the significance of the industry to the social and 
economic well being of the Province we decided to carry out a project in 
this area. Section 3(2) of the Crown Lands and Forests Act states that 
“The Minister shall encourage the management of private forest lands as 
the primary source of timber for wood processing facilities in the 
Province”. Therefore, we decided to undertake a review of the primary 
source of supply first. 

6.8	In the course of conducting this audit we reviewed legislation in 
New Brunswick as well as Nova Scotia and Maine. In addition we 
interviewed representatives of all seven forest products marketing 
boards, representatives of two key wood processors, the New Brunswick 
Forest Products Association, the New Brunswick Federation of Woodlot 
Owners and the Department of Conservation in Maine. We 
communicated closely with departmental employees in Forest 
Management and the Forest Products Commission and addressed a 
board meeting of the Forest Products Commission. Our senior field 
auditor also attended a conference on forest certification held in 
Fredericton in February 2000. 

6.9	Our objective was to determine if appropriate systems and 
practices are in place “to encourage the management of private forest 
lands as the (sustainable) primary source of timber for wood processing 
facilities in the Province.” In connection with our responsibilities for 
“effectiveness” reporting, we also wanted to know if adequate measures 
are in place to determine if the goals and objectives of the program are 
being achieved.

6.10	To assist us in conducting our work we developed the following 
five audit criteria: 

•	   the Crown Lands and Forests Act and Regulations should 
clearly define the Department’s responsibilities for private 
forest lands;

•	   the Department should have appropriate goals and objectives 
to carry out its responsibilities for private forest land as 
assigned under the Crown Lands and Forests Act and 
Regulations; 

•	   programs, policies and procedures should be consistent with 
the Crown Lands and Forests Act and Regulations for private 
forest lands;

•	   the Department should monitor the results of programs that 
address private forest land and take corrective action when 
necessary; and 

•	   the Department should have procedures in place to report on 
the effectiveness of private forest lands programs. 

Results in brief

6.11	The Crown Lands and Forests Act requires attention. Some of 
its definitions and provisions are vague and confusing. As a result, 
the Department has not been able to articulate a clear mandate for 
private forest lands in the Province.

6.12	There are a number of other Acts having an impact on 
private forest lands. The Department should consider whether all 
private forest land legislation should be incorporated into one Act.

6.13	The Department has not established goals and objectives 
relating to its responsibilities for private forest lands.

6.14	The Department’s programs are consistent with its governing 
legislation. However, we noted a lack of accountability by 
landowners for silviculture funding provided by the Department. 
Further, the proposed elimination of the Department’s Forest 
Extension services could have an adverse impact on the management 
of private forest lands.

6.15	The Department is not obtaining timely and accurate 
information to enable it to monitor harvesting activities on private 
forest lands. It has no tracking system for wood that is not sold 
through a marketing board, and it does not monitor out-of-Province 
sales from private forest lands.

6.16	The Department’s annual report does not contain sufficient 
information to enable a reader to assess the effectiveness of the 
Department’s private forest lands programs.

Mandate and 
responsibilities

6.17	Our first criterion was:

The Crown Lands and Forests Act and Regulations should 
clearly define the Department’s responsibilities for private 
forest lands.

6.18	The first criterion questions whether the Crown Lands and 
Forests Act has given the Department a clear indication or mandate as to 
what its involvement should be in relation to private forest lands. The 
first step in determining what goals are to be pursued and how they 
should be achieved is to have a clear idea of what mandate has been 
legislated. 

6.19	As well as determining the Department's clear responsibilities, 
we also wanted to determine if the Act has sections in which the 
direction given to the Department is unclear. Unclear mandates can 
cause departments to spend considerable time and resources in areas 
where legislation does not direct them. Unclear legislation could also 
cause an organization to overlook or inadequately address areas where 
involvement was intended. 

6.20	Further, we also wanted to determine if other legislation has a 
significant impact on the Department’s responsibilities for private forest 
lands. The criterion focuses on the Crown Lands and Forests Act, stating 
that Act “should clearly define” the Department’s responsibilities. In 
our opinion, one component of clearly defining, is completeness. That 
is, if other legislation has a significant role in defining the Department’s 
mandate, then it may be said that the Crown Lands and Forests Act does 
not clearly define the Department’s responsibilities. Other legislation 
must be consulted.

Our conclusion on the 
criterion

6.21	In our opinion, this criterion is partially met.

6.22	Under section 3(2) of the Act, the Minister does have the 
mandate “to encourage the management of private forest lands as the 
primary source of timber for wood processing facilities in the 
Province.” In fulfilling this mandate the Minister can “with the approval 
of the Lieutenant-Governor in Council, .... initiate programs for such 
purposes.”  

6.23	And there are some very specific responsibilities assigned by the 
Crown Lands and Forests Act to the Minister. These include the 
monitoring of operating plans and, especially in the case of private 
woodlots and freehold lands, the monitoring of planned and actual 
harvest. The Minister also has a responsibility to review the price 
charged for Crown timber to ensure it is at fair market value. This has 
an obvious impact on “encouraging management of the private forest 
lands”.

6.24	But, despite this, there are a number of factors that prevent us 
from reaching a positive conclusion. To begin, the Act is rather vague in 
some of its definitions, particularly around the terms private forest 
lands, private lands and historic market share. As well, the Act could be 
clearer in its use of the term “primary source”. In addition, it has very 
little to provide in terms of specific responsibilities for private lands of 
5,000 hectares. There is also the possibility of an inherent conflict 
between the terms proportional supply and sustained yield.

6.25	Further, there are three other significant pieces of legislation 
which give the Minister responsibility for private forest lands. Finally, 
despite what seems like a clear, overarching mandate with several 
specific responsibilities, staff administering the Act appeared to be 
uncertain about the Department’s mandate with respect to private forest 
lands. They appeared to be limiting their efforts largely to private 
woodlots.

Defining private forest 
lands

6.26	The term “private forest lands”, although present in the Act, is 
not directly defined by the legislation. Even though it is not defined, the 
term would appear to be differentiating all private forest land from 
public or Crown land. 

6.27	Section 3, which is found in the “General Administration” 
section of the Act, appears to be a statement of “purpose” or 
“mandate”, such as is common in a number of Acts. This section has 
two distinct subsections. The first, subsection 3(1), outlines six broad 
responsibilities for the Minister for Crown land. The second, 
subsection 3(2), outlines the Minister’s broad mandate for private forest 
lands – that is, the non-Crown land. In other words “private forest 
lands” would be virtually anything that is not public, and owned by the 
Crown.

6.28	The Act does refer to three distinct categories or types of 
non-Crown land that would seem to make up all of what could 
reasonably be referred to as private forest lands. Those three categories 
are:

•	private woodlots;

•	freehold lands; and

•	private lands consisting of an aggregate of 5,000 hectares owned by 
one person.

6.29	In our opinion, however, the Department may need to make 
some changes to the Act to clarify definitions. Firstly, it should be noted 
that the words “more than” or “at least” have apparently been omitted 
inadvertently from the definition of the third component of private forest 
lands – private lands consisting of an aggregate of 5,000 hectares owned 
by one person. It is unlikely there are too many landowners in the 
Province owning exactly 5,000 hectares of forest property.

6.30	Secondly, the definition refers to “one person”. The land could 
be controlled by a group of individuals, such as a company or a 
non-profit organization, and have the same impact on the forest and its 
ecosystems. The term “one person” should be replaced with “one person 
or jointly held by a group of persons or company.” 

6.31	The term “private lands” appears to be used by the Act in 
different ways. In one instance “private lands” is a combined term 
representing the private woodlots and the lands of 5,000 hectares owned 
by a single person. Elsewhere in the Act, it appears that the term 
“private lands” may be being used synonymously with the term “private 
forest lands”. Section 5 in talking of the duties of a forest service officer 
notes the officer “may enter upon private lands whenever necessary for 
the proper performance of his duties under this Act.” Since that section 
does not mention freehold land separately, we have assumed that the 
intent is that the forest service officer can enter any of the three 
components of private forest land. It would seem illogical to restrict the 
access of the forest service officer from one component of private forest 
lands. 

6.32	Similarly, in a section of the Act dealing with protection of the 
forest, it notes “the Minister may protect forests, whether on Crown 
Lands, other lands vested in Her Majesty or private lands, from fire, 
insect and disease.” The provision is there so that the Minister may 
protect all forests in the Province. A fire does not stop at the border of 
Crown and freehold land.

Background and development 
of mandate 

6.33	The Crown Lands and Forests Act was assented to in 1980 after 
much consultation. One key point of the resulting consensus was that the 
Crown should be the “residual” supplier of timber for wood processing 
facilities in New Brunswick.

6.34	This principle was inherent in subsection 3(2) of the Act which 
at that time stated:

The Minister shall encourage the management of private 
forest lands as the primary source of timber for wood 
processing facilities in the Province, and, with approval of the 
Lieutenant-Governor in Council, may initiate programs for 
such purposes.

6.35	This was the section of the Act that generated the Department’s 
overall mandate concerning private forest lands from 1980 to 1992. The 
reference to “consistent with subsection 29(7.1)”, which appears in the 
subsection today was added in 1992, and we will comment on that later.

Meaning of “primary”

6.36	What is meant by “primary” in section 3(2) is not defined in the 
Act. The Gage Dictionary of Canadian English defines primary as “first 
in time; first in order” and also as “first in importance, chief”. Using 
the words of “first in importance, chief” as the meaning for primary, 
then the supply from all three categories of private forest land would be 
the chief source of timber for wood processing facilities in the Province. 
This is consistent with the “Crown as residual” concept under which the 
Act was developed. It is also consistent with our observations in our 
1988 Report of the Auditor General. In our section on Forest 
Management in that Report, we discussed the various assumptions the 
Department used in determining the level of silviculture activities on 
Crown lands. One of the key assumptions in the Department’s model 
was that “Crown lands will be used as the residual supply.”

6.37	The respective roles of private forest land as primary and Crown 
land as the residual make sense when one considers the multiple uses of 
Crown land mandated under the Act. The Minister is responsible “for 
the development, utilization, protection and integrated management of 
the resources of Crown Lands.” Subsection 3(1) lists six different uses 
for the Crown land. And only one of these refers to the harvesting and 
renewal of timber resources on Crown lands. Others include habitat for 
maintenance of fish and wildlife, public access, and forest recreation. 
The Crown, then, must balance a variety of forest objectives.

6.38	From 1980 to 1992 the private forest lands were in fact the 
major or primary supplier except for two years. In 1988-89 and 1991-92 
private forest lands supplied 50% of the timber to provincial wood 
processing facilities and the Crown (public) supplied 50%. We examined 
timber utilization statistics from 1960 to 1980 as well. During that 
twenty-year period, the Crown exceeded the supply from the private  
forest lands in only three years. In other words, prior to 1992, it was 
clear that, taken together, the private forest lands were the primary 
source of timber for wood processing facilities in the Province – both in 
the Act and in fact.

6.39	Prior to 1992 the Department required that contracts with private 
woodlot owners (through their representatives, the seven marketing 
boards or Producer Associations) be in place before it permitted 
harvesting of Crown lands by wood processors. Or, alternatively, the 
parties had to at least be engaged in an arbitration process before the 
Crown would grant access to its wood.

6.40	Up until 1992 this “private woodlots first” was actually specified 
in subsection 29(5) of the Act. At that time the subsection read as 
follows:

29(5) An operating plan shall, for a five-year period 

(a) identify, in the following order of  priority, the 
proportions of wood supply to be used in any wood 
processing facility of the licensee or any sub-licensee

  (i)  from Producer Associations in the Province,

 (ii)  from freehold lands owned or controlled by the  
licensee,

(iii)  from other sources within and without the 
Province, 

(iv)  through exchanges of wood or wood products,

 (v)  from Crown Lands; 

6.41	In 1992, the words “in the following order of priority” were 
removed from subsection 29(5). In effect, the pre-1992 wording 
specified an order or priority of supply, with the private woodlots (as 
represented by the Producer Associations) first on the list, followed by 
freehold lands, and then other sources. Other sources would presumably 
include the private lands of 5,000 hectares. The Crown wood came last. 
Up until 1992, private forest lands were not only “first in importance”, 
they were also “first in time; first in order”. They were primary in both 
senses of the word.

Complications resulting from 
1992 amendments to Act

6.42	This “private woodlots first” situation gave the private woodlots 
and the seven marketing boards that represented them negotiating power 
to aid in the setting of timber prices. Our understanding is that in some 
cases this negotiation and arbitration process was perceived as too 
cumbersome by the wood processing facilities. In the 1992 debates in 
the House on the proposed amendments to the Act, the Minister of the 
day said “Under the old Act there were two or three instances where 
there were disputes with regard to the law.”

6.43	Our understanding is that wood processing facilities argued that 
the threat of restricting their access to Crown wood created an unfair 
advantage for the marketing boards. Given that the Crown is the single 
largest supplier – that is, it clearly supplies more than any of freehold 
lands or private woodlots individually and supplies almost the same 
amount as the sum total of the two taken together- many mills cannot 
operate without Crown wood. By effectively barring access to that wood 
until the private woodlots had contracts or arbitration was in place, the 
Crown had given the marketing boards an important bargaining chip. 

6.44	Of course, one might argue that this is exactly how the Act 
should have been working. The Crown should not dominate the market 
since it is to “encourage private forest lands to be the primary source of 
supply.” Given its huge land holdings as the single biggest individual 
supplier, if the Crown entered the market first, it could effectively set 
the market price. It could easily become the dominant supplier, the 
supplier of first choice. Therefore, by withholding access to Crown 
wood until the marketing boards and the mills negotiated contracts, the 
Crown would have been allowing other market forces to set a price. It 
would have been adding a little balance to its position as dominant 
supplier. 

6.45	This principle is reflected in a 1990 discussion paper prepared 
under the name of the former Minister, the Honourable Morris Green, 
“Private Woodlots: Consideration for Future Action.” This paper 
discussed the direction of the Department on the issue of primary 
supply. It noted the Department’s approach was “intended to ensure 
stable markets to the private woodlot owners and to ensure that Crown 
timber does not compete unfairly with woodlot timber.” In other words, 
it was helping to encourage the private woodlots to do their part in 
ensuring private forest lands were the primary source of supply.

6.46	Nonetheless, the situation was such that the legislation was 
amended. Our understanding is that pressure from the mills and from 
some private woodlot owners who wished to bypass the boards and sell 
direct, led to these changes. The threat of marketing boards effectively 
restricting access to Crown wood was seen as contrary to the so-called 
“open for business” philosophy of the government of the day.

6.47	The change in the influence of the marketing boards and private 
woodlot owners over the access to Crown wood was accomplished by an 
insertion to subsection 3(2) of the Act. It was amended to include a 
reference to a new subsection 29(7.1) in its definition of the 
Department’s mandate for private forest lands. Subsection 3(2) now 
reads: 

The Minister shall encourage the management of private 
forest lands as the primary source of timber for wood 
processing facilities in the Province consistent with 
subsection 29(7.1) and, with the approval of the Lieutenant-
Governor in Council, may initiate programs for such 
purposes. (emphasis ours to illustrate amendment to Act)

6.48	 Further subsection 29(7.1) states

The Minister, during the process of approving an operating 
plan under subsection (7), shall ensure that private woodlots 
are a source of wood supply consistent with the principles 
of (a) proportional supply, and (b) sustained yield.

6.49	This short statement - consistent with subsection 29(7.1) - 
interjected an additional element into the mandate. But section 29(7.1) 
only refers to the “private woodlots.” It excludes the “freehold lands” 
and “forest land consisting of an aggregate of 5,000 hectares owned by 
one person” components of the “private forest lands.”

6.50	The Department has informed us that the “proportional supply” 
phrase was the key to changing the negotiating position of the marketing 
boards. In the Department’s view, private woodlot owners no longer had 
to be the first (or primary) source of supply for the mills. As long as the 
private woodlots remained proportional, the Department had fulfilled its 
responsibility. Contracts did not have to be in place. The mills could 
access Crown wood. 

Department’s current 
interpretation of its 
mandate

6.51	When we began our audit, departmental representatives 
indicated that they had no clear mandate for all three components of 
private forest lands.

6.52	In some of our discussions the Department expressed a 
viewpoint that the phrase “proportional supply” overrules the “primary 
source” reference in 3(2), even though proportional supply relates to 
only one of the three components of private forest lands named in the 
Act. The Department now sees its role as assuring that the private 
woodlots have a market for their wood. One might say that this goal is 
strictly an economic one. It is not one that contemplates encouraging 
“the management of private forest lands”. It assumes that if private 
woodlots can sell their products, then no action is required.

Our opinion on overall 
mandate

6.53	In our opinion the overall mandate under section 3(2) is to 
“encourage the management of private forest lands as the primary 
source of timber for wood processing facilities in the Province”. 
Further, in pursuit of this mandate the Minister may, with the approval 
of the Lieutenant-Governor in Council, “initiate programs for such 
purposes.” The 1992 reference to subsection 29(7.1) merely adds an 
additional responsibility to the Minister for one particular component of 
the private forest lands – the private woodlots component. We note that 
this additional responsibility is very specific and not in keeping with the 
general theme of subsection 3(2) which is to “encourage the 
management of private forest lands” by initiating programs for such 
purposes.

6.54	In our discussions with the Department, we have received the 
impression that the changes made in 1992 were done quickly. The 
conditions in the market were such that a quick solution was sought to 
dealing with the influence of the marketing boards over access to Crown 
wood. In retrospect, it would probably have been better to seek another 
way of dealing with the issue as opposed to adding this additional 
responsibility for only one component of private forest lands in the 
middle of the Department's mandate for all private forest lands. The 
amendment is clearly out of place. It adds a reference to a rather detailed 
administrative type responsibility dealing with only one component of 
private forest lands into a high-level purpose or mandate section of the 
Act.

Specific private woodlot 
responsibilities

6.55	We have noted that subsection 29(7.1) of the Act provides a 
specific responsibility that the Minister must carry out for the private 
woodlot portion of private forest lands as he “encourages management.” 
The section refers to the operating plan that wood-processing facilities 
with Crown timber licenses must file each year. The operating plan is 
one of the requirements licensees must meet for maintaining a forest 
management agreement on Crown land. The plan describes the 
licensee’s plans for the volume of wood to be processed through their 
facilities and the sources of supply for that wood.

6.56	With respect to the Minister’s responsibilities for private 
woodlots, the two key terms in 29(7.1) are “proportional supply” and 
“sustained yield.” Proportional supply is defined by the Act as:

equitable sharing among the sources of wood supply 
……based on historic market share of supply to a wood 
processing facility. 

6.57	The Act or regulations do not define historic market share. This 
seems to be a significant oversight. The last time the Department 
established a historic market share was in 1992 based on a five-year 
average (1986-90) of market share by mill. These 1990 figures may have 
little relevance to the present market share or market conditions. 

6.58	Sustained yield is not defined by the Act. The Gage Dictionary 
of Canadian English defines sustained yield as follows:

in the management of forest, fisheries, etc. the principle of 
maintaining a steady yield by keeping annual growth or 
increase at least as high as annual output.

6.59	We can see then, that it is the Minister’s added duty to monitor 
two aspects of the planned harvest from private woodlots. First, the ratio 
of private woodlot wood supply to various other New Brunswick 
supplies for each “wood processing facility” must remain in compliance 
with its “historic market share of supply”. Secondly, private woodlots, 
to be sustainable, must have a projected annual growth rate at least as 
high as the planned harvest. And the Department’s review of the 
operating plans of each licensee is one forum through which these 
requirements can be assessed each year.

6.60	It could be argued that proportional supply and sustained yield 
are conflicting goals. For example, if the supply of timber from Crown 
lands, freehold lands or private lands to a “wood processing facility” 
increases, the supply of wood from private woodlots would have to 
increase in order to remain “proportional”. This may bring the private 
woodlot supply up to a level that is not sustainable. It is not clear how 
such a conflict could be resolved.

Responsibilities for monitoring 
actual yield

6.61	Subsection 29(7.2) also gives clear direction to the Minister 
concerning private woodlots. The subsection states that:

If, during the process of approving an operating plan of a 
licensee under subsection 29(7), the Minister determines that 
a licensee or any of its sub-licensees have, in the preceding 
year in relation to the wood used in a wood processing facility, 
failed to purchase ninety-eight per cent or more of the 
proportion identified to be used in any wood processing 
facility from private woodlots in the operating plan for that 
year, the Minister may amend the operating plan of that 
licensee for the subsequent year by reducing the volume of 
timber that may be taken by the licensee, or sub-licensee, or 
both, from Crown land in the subsequent year by a volume 
equal to the shortfall in volume of wood that should have been 
purchased from private woodlots in the previous year.

6.62	This subsection requires that the Minister compare the amount of 
wood purchased from private woodlots to the operating plan from a mill 
that also harvests Crown lands. Usage of less than 98% of the planned 
consumption from private woodlots may cause the Minister to reduce the 
Crown allocation. This monitoring responsibility further emphasizes the 
importance of the private woodlots as a source of supply. Section 
29(7.1) gives the Minister responsibility for ensuring the operating plans 
deal with private woodlots from the perspective of proportional supply 
and sustained yield. And 29(7.2) requires the Minister to ensure that 
actual purchases are at least 98% of the plan. 

Minister’s responsibilities 
for freehold lands

6.63	As we have noted, subsection 3(2) of the Act clearly gives the 
Minister the responsibility for encouraging the management of private 
forest lands as the primary source of timber. Under that mandate, the 
Minister does have some direct responsibilities for freehold land. These 
are specified in various sections of the Crown Lands and Forests Act. 

Monitoring of planned and 
actual cut

6.64	In our earlier comments dealing with private woodlots, we 
discussed operating plans prepared by the Crown licensees. Section 
29(5)(b)(ii) of the Act notes that the licensee must provide the Minister 
with the planned wood supply to its mills from freehold lands it owns or 
controls. Section 39 of the Act goes on to add that:

On or before the last day of June in each year, a licensee shall 
provide the Minister with a report setting out . . .(b) the volume 
of timber by species and class harvested on the freehold lands 
owned or controlled by the licensee and his sub-licensees, 

6.65	Taken together, these sections would allow the Minister to 
monitor actual to planned cut on freehold lands.

Monitoring of non-timber 
objectives

6.66	Subsection 40(1) seems to suggest that for freehold land 
belonging to a company that cuts on Crown land, the Minister has the 
responsibility to ensure additional non-harvesting goals are pursued. It 
states:

Upon the request of the Minister, a licensee shall at his own 
expense provide the Minister with a copy of, and shall prepare 
if necessary, a current management plan and a current 
operating plan for freehold land owned or controlled by the 
licensee, such plans to be prepared in the same form as, and 
to contain comparable information to that set out in, 
management and operating plans prepared for Crown Lands.

6.67	Section 45 of the Act has an almost identical provision covering 
freehold lands owned by sub-licensees. 

6.68	It would seem that if the results of the Minister’s monitoring 
under 40(1) were not to his liking, the Department could use access to 
Crown wood as an important incentive to bring about improvements. 
However, we have been informed that the Minister does not ask for 
these management and operating plans for freehold land. This appears to 
be one clear part of the Minister’s mandate which has not been 
exercised.

Specific responsibilities for 
properties of 5,000 hectares 
owned by one person

6.69	The third component of private forest lands is what has been 
defined as “forest land consisting of an aggregate of 5,000 hectares 
owned by one person”. The Act contains very little in terms of direction 
for these tracts of land. This seems like a significant gap in the Act. A 
component of private forest lands has been identified, but then virtually 
ignored.

6.70	A situation could arise where the owner of a large tract of land 
of 5,000 hectares does not hold a lease on Crown land. The Province 
could not use the threat of canceling access to Crown wood to influence 
this landowner. He does not own a wood processing facility. There 
would be no requirement for the landowner to file a management plan 
like those that the Minister can request from owners of freehold land 
under subsection 40(1). It might be that the Province could not prevent a 
significant loss of habitat or sustainability if the landowner decided to 
cut every tree on the property. 

6.71	It should be noted that the State of Maine has regulations under 
its “Forest Practices Act” to protect all forest lands in the state. This Act 
has strict standards for forest practices such as clear cutting. It requires 
the landowner notify the government prior to commencing harvest 
operations. It would appear that the Department would be wise to 
consider the need to have more specifically defined responsibilities for 
these 5,000 hectare private forest lands.

Influence of other 
legislation on private forest 
lands

6.72	There are three additional Acts we would like to provide 
comments on because of their impact on private forest lands. The first is 
an important piece of legislation that has not yet been proclaimed. The 
other two Acts relate specifically to the private woodlots component 
only.

Transportation of Primary 
Forest Products Act

6.73	The Transportation of Primary Forest Products Act was assented 
to on 12 March 1999. The Minister of Natural Resources and Energy 
has been assigned responsibility for administering this Act. 

6.74	This Act deals with the requirement to possess and deliver load 
slips showing various information to be prescribed by regulation. The 
Act applies to all primary forest products, whether harvested on any of 
the three categories of private forest land or on Crown land. Our 
understanding is the Act is intended to deal with the growing problem of 
wood theft and to assist marketing boards in collecting levies for wood 
sourced from private woodlots.

6.75	The Act has yet to be proclaimed, but it represents a significant 
piece of legislation which will define key ministerial responsibilities for 
private forest lands in a totally separate Act. 

The Natural Products Act 

6.76	The Natural Products Act is an act jointly administered by the 
Minister of Agriculture and the Minister of Natural Resources and 
Energy. The Natural Products Act has a goal which appears to be 
complementary to the Minister’s responsibilities for private woodlots 
under the Crown Lands and Forests Act. Section 3(g) of the Natural 
Products Act states:

3    The purpose and intent of this Act is to provide ..... 

(g)   for the development, conservation and management 
of forestry resources on private woodlots in the Province.

6.77	Section 39(1) permits the Lieutenant-Governor in Council to 
make regulations giving the marketing boards authority to collect a levy 
on primary forest products sold off of private woodlots. These levies can 
then be used “for the purposes of implementing and administering forest 
management programs on private woodlots.” These purposes would all 
have a direct tie to the Crown Lands and Forests Act’s themes of 
encouraging management and monitoring sustainable harvest. This is 
also a significant piece of legislation that deals with private forest lands 
in a separate Act.

The Forest Products Act

6.78	The Minister of Natural Resources and Energy also administers 
the Forest Products Act. This Act establishes an important organization 
known as the Forest Products Commission.

6.79	The object and the duties of the Commission are in many ways 
complementary to the Minister’s role under the Crown Lands and 
Forests Act. And the Minister has significant influence on this 
organization. 

6.80	To begin, the Commission Chair is recommended by the 
Minister. The other six members of the Commission are from a variety 
of groups, including one representative of the Minister. They are 
appointed by the Lieutenant-Governor in Council. The Minister also 
appoints and pays the secretary to the Commission. The secretary role is 
much like that of an executive director. 

6.81	This is still another example of legislation dealing with private 
forest lands in a separate Act.

6.82	Based on our comments in this section regarding the 
Department’s mandate for private forest lands, we made the following 
recommendations.

Recommendations

6.83	We recommended that the Department revisit the Crown 
Lands and Forests Act and all relevant legislation dealing with 
private forest lands. We recommended several key components to 
the review as follows:

•	Clarification of the overall mandate and responsibility for 
private forest lands and a clear communication to departmental 
staff and representatives of all three private forest land groups.

•	Clarification of various definitions in the Act. For example, we 
recommended that the Act be amended to more clearly define the 
terms “Private Forest Lands” and each category or type of land 
included in this definition. We also recommended the legislation 
clearly define such terms as “proportional supply” and “historic 
market share”. Further, the Department needs a means of 
reconciling proportional supply with the concept of “sustainable 
yield” as it relates to Subsection 29(7.1) of the Act.

•	Clearer definition of what “encourage management” means for 
now and the future. For example, to what extent should the 
Province encourage and define non-timber objectives and 
certification efforts on private forest lands?

•	A decision as to whether all private forest land legislation should 
be incorporated into one Act.

•	A decision as to whether this private forest land legislation 
should continue to be incorporated in legislation covering Crown 
lands; this integration may be necessary due to the important 
motivational tool of access to Crown wood and the need for a 
total provincial forest outlook on issues such as disease and fire 
protection.

6.84	Our second criterion was:

The Department should have appropriate goals and objectives 
to carry out its responsibilities for private forest land as 
assigned under the Crown Lands and Forests Act and 
Regulations. 

6.85	The second criterion addresses the next stage in the management 
cycle. This is the planning stage where appropriate goals and objectives 
are developed to fulfill the mandate of the program.

6.86	When we asked the Department for a listing of its goals and 
objectives for its responsibilities for private forest lands, staff were 
unable to provide any such document to us. We were shown various 
documents; but none of these contained a specific statement of results to 
be achieved over a specific period of time, which was our definition of 
goals and objectives.

Conclusion

6.87	Therefore, we concluded that the Department does not meet this 
criterion. Appropriate goals and objectives have not been set that would 
adequately address the overall mandate and responsibilities.

Recommendation

6.88	We recommended that the Department conduct a long term 
planning exercise to establish appropriate goals and objectives that 
adequately address the Department’s mandate relating to private 
forest lands.

6.89	Our third criterion was:

Programs, policies and procedures should be consistent with 
the Crown Lands and Forests Act and Regulations for private 
forest lands.

6.90	This criterion refers to the programs, and their related policies 
and procedures, that the Department has implemented to encourage the 
management of private forest lands. Our purpose here is to identify 
those programs, and to determine if they are consistent with the Crown 
Lands and Forests Act and Regulations.

6.91	The programs we have examined under this criterion are drawn 
from the program components of Program 60-01 – Forest Management 
of the Main Estimates for 1999-2000. These program components are 
Silviculture, Fire Protection, Insect and Disease Protection, Timber 
Utilization, Private Land Development, and Program Management. 
They combine departmental activities related to both Crown and private 
forest land. In our opinion, all six program components address, at least 
in part, private forest lands.

6.92	We did note, however, that it may be appropriate for the 
Department to add another program component to its description in the 
Main Estimates. Because the Department has a number of legislated 
monitoring responsibilities for private forest lands, we believe there is 
merit in having a formal program component for these important duties. 
We have called it “Timber Utilization on Private Forest Lands” for sake 
of discussion. 

Recommendation

6.93	We recommended that as part of the Main Estimates process, 
the Department formally recognize the importance of its legislated 
monitoring responsibilities for private forest land by designating a 
new program component. A title such as “Timber Utilization on 
Private Forest Lands” may be suitable for such purposes.

6.94	Although not named in the Main Estimates as a specific 
program, or program component, we believe the Department may have 
one other program related to private forest lands. This is the work 
carried out by the Forest Products Commission. Under our first criterion 
we noted how the Minister had certain responsibilities under the Forest 
Products Act and that the Minister had significant influence on the 
organization established by that legislation – the Forest Products 
Commission. The Commission’s duties are heavily linked to 
encouraging the production and sale of primary forest products from 
private woodlots. 

6.95	The Commission serves as a link between the producer and the 
consumer. From our discussions with the Commission, it appears its 
activities are mainly concentrated in the areas of arbitrating sales 
disputes between firstly, the marketing boards and the processing 
industry, and secondly, between marketing boards and private woodlot 
owners. The Commission also appears to have adopted a quasi-oversight 
function over the quality of governance of marketing boards. For 
instance, the Commission receives and reviews the annual audited 
financial statements of the boards. It also reviews the board minutes of 
these marketing organizations and it receives other pertinent reports. To 
the extent that these activities encourage management of private 
woodlots owned by the “producers”, they are consistent with the Crown 
Lands and Forests Act.

6.96	In our opinion, all of the other program components we 
identified are also consistent with the Crown Lands and Forests Act. We 
do have some specific comments we wish to make however, regarding 
the Silviculture and Private Land Development program components.

Silviculture

6.97	The 1999-2000 Main Estimates shows a total of $23,765,200 
budgeted for “facilitating of silviculture activities on both Crown and 
Private Land.”

6.98	The Main Estimates does not provide a specific breakdown of 
how much is to be spent on the private woodlots component of private 
forest lands. Based on figures provided to us by the Department, it spent 
about $8 million on private silviculture in 1998-99 and in 1999-2000. 
This $8 million is a portion of the total $23,765,200 budgeted for 
silviculture. Over the past five years the provincial and federal 
governments have spent approximately $27 million on silviculture on 
private woodlots. 

Administration of Silviculture 

6.99	The Department conducts the silviculture program on private 
woodlots through various arrangements with the seven marketing 
boards. Our understanding is that half of the Department’s private 
silviculture funds are allocated based on the percentage of private 
woodlots in each marketing board area. The other half of the funds is 
allocated based on the proportion of woodlot owners represented by the 
board to the total number of woodlot owners in the Province. 

6.100	Marketing boards draw funds from the Department by 
submitting claims. The Department’s employees conduct inspections to 
ensure the silviculture work it pays for is completed. The Department 
pays the marketing boards a standard rate for each hectare of land 
subjected to silviculture treatments. The board in turn removes a portion 
of the funding to cover administration charges or overheads and then 
passes on the remainder to the person or company that carried out the 
silviculture treatment. The Department does not mandate how much of 
the total subsidy can be retained by the various boards for 
administration. In one example we noted, the board kept 41% of the 
Department subsidy for administration expenses. 

Recommendation

6.101	We recommended that the Department review the funding 
formula for silviculture and provide guidelines as to what are 
acceptable limits for administrative expenses. The formula should 
work to ensure that the marketing boards optimize the area treated 
with the funds provided.

6.102	The Department has contrasting approaches to silviculture on 
Crown land versus private land. We have been informed that for 
silviculture on Crown land, the Department’s goal is to apply a level of 
silviculture treatments that will maximize the annual allowable cut. 
Silviculture is directed to maximizing the sustainable harvest. And the 
level of funding is based on this level of silviculture.

6.103	For its silviculture funding on private woodlots, however, the 
Department has no similar goal. Therefore, there is no indication as to 
whether the annual funding is more or less than needed.

Recommendation

6.104	We recommended that the Department establish a 
measureable goal or objective to assist it in determining the level of 
subsidy required for silviculture activity on private woodlots. The 
goal and the level of subsidy should give due consideration to the 
funding from all sources.

No landowner commitment 
required

6.105	We have been informed that the Department does not require 
landowners that benefit from the silviculture to maintain any ongoing 
commitments to the Department regarding that land. One might expect 
to see that in exchange for silviculture funding the Department might 
require a landowner to make a commitment to a sustainable harvest plan 
on the property. Or one might expect the Department to require these 
landowners to sell all their wood to a New Brunswick processor, thus 
helping to ensure the overall goal of private wood as the primary source 
of supply for facilities in the Province. 

Recommendation

6.106	We recommended that the Department adopt some form of 
contractual commitment for landowners who benefit from the 
silviculture funding. The commitment should be viewed by the 
Department as a means of encouraging private forest land to be the 
primary source of timber for wood processing facilities in the 
Province. 

Silviculture on private lands of 
5,000 hectares

6.107	We were informed during our discussions with the marketing 
boards and the Forest Products Commission that on at least one occasion 
a landowner of private lands over 5,000 hectares requested silviculture 
funding from the Department through his local board. After some 
discussion, it was decided that silviculture funding from the Department 
was not available to this 5,000 hectare class of private forest land. It is 
our understanding that the authority for such a decision was stated to be 
the Crown Lands and Forests Act.

6.108	We could not find any such restriction on silviculture funding 
based on our reading of the Act. In fact, one might argue that subsidized 
silviculture activities on these 5,000 hectare private lands would be one 
effective way to “encourage management” of these properties. This 
appears to be a case where an operating procedure for the silviculture 
program is not consistent with the Act.

Recommendation

6.109	We recommended that the Department review the funding 
formula for the allocation of silviculture funds to marketing boards 
to ensure that private lands of 5,000 hectares are appropriately 
considered in the distribution of funds. 

Private Land Development 

6.110	The Main Estimates explains this activity as the “provision of 
technical advice to encourage management of private woodlots and the 
marketing of products.” It also monitors the expenditure of private 
silviculture funds. Approximately $1.6 million was budgeted for this 
program in the year ending 31 March 2000. Over the last five years, the 
Department has spent approximately $ 7.1 million on these activities.

6.111	This program is often commonly referred to as Forest 
Extension. During the period of our audit, the Department had Forest 
Extension representatives stationed throughout the Province at various 
regional facilities. These Forest Extension personnel provide a variety of 
courses and educational materials to private woodlot owners in the 
various regions of the Province. The 1998-99 Annual Report of the 
Department noted that during that year around 1,800 of the 35,000 
private woodlot owners attended woodlot educational programs.

6.112	Education of private woodlot owners is a direct and visible 
means of encouraging management of private forest land. 

Future of private land 
development

6.113	As we entered the reporting phase of this audit, we were 
informed that the government has proposed elimination of the staffing of 
Forest Extension. We are uncertain as to how the Department will 
continue to deliver an important program component without any 
staffing. Further, it should be noted these same Forest Extension staff 
are the ones monitoring the silviculture expenditures on private lands. 

Conclusion

6.114	In our opinion, the Department has met this criterion. Although 
we have pointed out a couple of issues in the Silviculture and Private 
Land Development areas, in general, the program components we 
examined are consistent with the Crown Lands and Forests Act.

6.115	Our fourth criterion was:

The Department should monitor the results of programs that 
address private forest land and take corrective action when 
necessary.

6.116	Notwithstanding our general observation about a lack of 
documented goals and objectives for the Department’s programs for 
private forest lands, we would still like to make some comments 
regarding monitoring and measurement in this section. One reason in 
particular why we would like to do that is because certain monitoring 
activities are actually established in the legislation. For instance, the Act 
assigns the Department several specific responsibilities such as 
monitoring the planned and actual cut on freehold lands, and ensuring 
that private woodlots are a source of wood supply consistent with the 
principles of proportional supply and sustained yield. We believe it 
would be appropriate to comment on these legislated responsibilities in 
this section. In effect, one might say certain goals are established by the 
monitoring provisions of the legislation.

6.117	Further, as previously indicated, the overall mandate that the 
Department has been given from the Crown Lands and Forests Act is to 
“encourage the management of private forest lands as the primary 
source of timber for wood processing facilities in the Province”. 
Progress on this mandate must be measured. Whatever other goals the 
Department might develop, there should be some link to this broad over-
arching objective. Therefore, under our examination of this criterion, 
we are suggesting some measures which may help the Department 
determine if it has fulfilled its mandate.

Legislated monitoring for 
private woodlots

6.118	We have previously quoted subsection 29(7.1) of the Act, which 
gives the Minister the responsibility to monitor “proportional supply” 
and “sustained yield”. In order to ensure that the principles of 
proportional supply and sustained yield are upheld, the Department 
would seem to require some type of ongoing monitoring mechanism. If 
either proportional supply or sustained yield fell out of balance, there 
would seem to be some need for corrective action.

6.119	Subsection 29(7.2) of the Act requires that the Minister compare 
the amount of wood purchased from private woodlots as compared to the 
operating plan from a mill that also harvests Crown lands. Usage of less 
than 98% of the planned consumption from private woodlots may cause 
the Minister to reduce the Crown allocation. This paragraph clearly 
grants the Minister a further monitoring responsibility.

6.120	We did not find any evidence that the Department has been 
monitoring for the legislative requirements of either paragraph 29(7.1) 
or (7.2). The Department contends that the current state of the market 
has not indicated concerns in these areas. Therefore no efforts have been 
made to monitor them. In other words, private woodlot owners are 
essentially able to sell all the wood they wish. Thus, they do not 
currently need the Department to enforce the protection of the 
proportional supply clause and the 98% rule. 

6.121	Although this may very well be the case, we believe the 
Department is overlooking a legislated responsibility. Further, there 
may be strong pressures for private woodlot owners to harvest too early 
or to over-harvest. Without monitoring sustainability, the Department 
cannot be sure it is encouraging the right type of management of private 
woodlots. 

Recommendation

6.122	We recommended the Department comply with the 
monitoring provisions of sections 29(7.1) and 29(7.2) of the Act. 

Minister’s responsibilities 
for industrial freehold 
lands

6.123	Section 29(5)(b)(ii) of the Act requires the licensee, through its 
operating plan, to provide the Minister with the planned wood supply 
from freehold lands it owns or controls. The planned wood supply must 
cover mills owned by both the licensee and its sub-licensees. The 
licensees and sub-licensees own or control the vast majority of freehold 
land. Section 39 of the Act goes on to add that:

On or before the last day of June in each year, a licensee shall 
provide the Minister with a report setting out . . .(b) the volume 
of timber by species and class harvested on the freehold lands 
owned or controlled by the licensee and his sub-licensees, 

6.124	These sections seem to require that the Minister monitor actual 
to planned cut on freehold lands. 

6.125	Based on the information we reviewed, it does appear that the 
Department is receiving the operating plans as required. And the 
Department is also receiving figures for actual cut on freehold lands. 

6.126	It appears though, that one other monitoring responsibility is not 
being carried out. We have already quoted subsection 40(1) of the Act, 
which allows the Minister to request management plans and operating 
plans regarding freehold land owned by Crown licencees. Section 45 of 
the Act has an almost identical provision covering freehold lands owned 
by sub-licensees. 

6.127	We have been told that the Minister has never asked for a report 
under section 40(1). Management plans for Crown lands include 
provisions for fish and wildlife and other non timber objectives. It 
follows that the Minister would have a legitimate monitoring provision 
to ensure those holding large tracts of land are having the “right” impact 
on these non-timber objectives. 

Recommendation

6.128	We recommended that the Department implement the 
monitoring provisions of sections 40(1) and 45 of the Crown Lands 
and Forests Act.

Monitoring timber exports 
from private forest lands

6.129	If the Minister is to encourage management of private forest 
lands as the primary source for facilities in the Province, there should be 
a full appreciation of the extent to which private forest lands are 
supplying wood processing facilities out of the Province. There would 
seem to be a need to know the extent of such export pressures in order to 
better “encourage the management of private forest lands” to supply in-
Province facilities.

6.130	Based on our discussions, it appears the Department does not 
have an ongoing monitoring of the extent of the exports from private 
forest lands. Through contact with the State of Maine, we were able to 
obtain some export figures. We found that the net exports from New 
Brunswick to Maine averaged about 42,000 cubic meters of softwood in 
the last five years. This would have a value of about $3 million per year. 
In addition, net hardwood exports to Maine are about 635,0001 cubic 
meters per year. Depending on the market price, this would have a value 
of $25 to $30 million. Exports to Quebec and other markets may also be 
significant but we were unable to determine the extent. 

6.131	Given our close proximity to the U.S. market and the lower 
value of the Canadian dollar, the anticipated demand for New Brunswick 
forest products is expected to remain strong. In our view this makes it 
imperative that the Department adopt monitoring procedures with 
respect to the export of timber from private forest lands.

6.132	One of the factors that drives owners of private forest lands to 
export timber is price. If these owners can get a better price in Maine or 
Quebec, they have an incentive to export. Given this, it would seem 
prudent for the Department to be monitoring export prices. If export 
prices are significantly higher than New Brunswick prices, the Minister 
may need to take action to “encourage” the property owners to keep 
their wood in-Province. One way to encourage management in these 
circumstances would be to revisit the price on Crown timber.

6.133	Corrective action might also involve the marketing board levy. 
At the time we conducted our fieldwork, exported wood was not subject 
to the marketing board levy. This appeared to be a factor that 
encouraged exports of unprocessed wood. When the private woodlot 
owners sell to an in-Province mill, the local marketing board receives a 
percentage of the proceeds as a levy. But a landowner who exports the 
wood receives all of the proceeds. There is no “check-off” levy for the 
marketing board. During the course of our audit, we were informed that 
the Department and the Forest Products Commission were working with 
the Government of Canada to attempt to collect a levy on exported 
products. But to date, no mechanism has been established. Some form of 
levy on exported products would “encourage” private forest land owners 
to send timber to New Brunswick mills. 

Recommendation

6.134	We recommended the Department develop an active 
monitoring program over the export of wood from private forest 
lands. Appropriate corrective action should be taken as required in 
order to encourage the management of private forest lands as the 
primary source of timber for wood processing facilities in New 
Brunswick.

Monitoring of sustainable 
harvest

6.135	In our opinion the Department has a role in monitoring the 
sustainability of the harvest from private forest lands. The Department 
would seem to have, at a minimum, an ongoing role under the 
legislation to ensure that the Crown supplies less timber to the domestic 
market than private sources. But we believe the monitoring 
responsibility goes beyond that. If the Crown is not successful in 
encouraging private forest lands to be managed in a sustainable fashion, 
then eventually the private forest lands would not be the primary source 
of supply. Further, if private forest land is not managed sustainably, it 
may, because of pressure from consumers for environmental 
certification, be rejected as a source of supply by some processing 
industries. If wood can’t be certified for these consumers, then it can’t 
be sold. This “rejected” timber would not be available to help maintain 
private forest lands as the primary source of supply.

Annual allowable cut

6.136	One of the main measures needed in order to monitor sustainable 
management of the resource is the annual allowable cut. This figure 
details how much wood can be harvested each year without reducing the 
wood supply for future years. It is a planning figure.

6.137	The annual allowable cut for industrial freehold is determined by 
the industry itself and reported to the Department. The Department does 
not attempt to systematically verify these figures. But we are pleased to 
see that they are consistently obtained from the industry.

6.138	The process has not been as consistent for the annual allowable 
cut figures from the private woodlots. In four of seven marketing board 
areas the figures for annual allowable cut for private woodlots are more 
than ten years old. None of the annual allowable cut figures are less than 
seven years old. Marketing boards also indicated that these important 
planning figures were not accurate.

6.139	More timely and accurate annual allowable cut information is 
needed in order for the Minister to encourage management of private 
forest lands as the primary source of timber for wood processing 
facilities in New Brunswick. Although up to date figures are available on 
industrial freehold, improvements need to be made on figures from 
private woodlots.

Recommendation

6.140	We recommended that the Department obtain and develop 
objective and timely information on the sustainable harvest figures 
for private woodlots. 

Annual cut figures not 
complete

6.141	After the plan has been set in the “annual allowable cut”, the 
other critical measure needed to monitor sustainability of the resource is 
the “annual cut”. This “annual cut” is the actual harvest statistics for the 
various sources and types of wood. 

6.142	The Province does not have a single coordinated system to 
measure the annual cut. The Department has a system for Crown lands. 
And the owners of industrial freehold land have systems for providing 
the Minister with the annual cut on their lands. But there is no system 
for ensuring the completeness of the annual cut data for private 
woodlots. This is significant as these woodlots are approximately 30% 
of the Province’s total woodland.

6.143	Harvest statistics are prepared for private woodlots. Much of 
this information comes from the marketing boards. Many of the 
marketing boards have their own load slip systems for sales that they 
process and deduct a levy on. This allows them to develop harvest 
figures. But some boards indicated that as much as 30% of the “annual 
cut” from private woodlots does not go through a board. Therefore, this 
“30%” is not recorded in their annual cut statistics. 

6.144	This lack of a complete tracking system for unprocessed wood 
from private woodlots causes many problems. No reliable figures for the 
annual cut can be determined. This means the Department does not 
know if this harvest on private woodlots is sustainable. Furthermore, 
enforcement of marketing board levies is difficult. Proportional supply 
cannot be reliably monitored. And detection and prosecution of wood 
theft is difficult.

6.145	The lack of a tracking system may also have greater implications 
in the future. Environmental groups, consumers and major retailers are 
having a greater impact on the way wood is grown and harvested. 
Markets are beginning to demand that wood is grown and harvested in 
an environmentally friendly manner. A “chain of custody” must be 
established for wood sold to this market so that the source of the wood 
can be established. A tracking system is needed to verify this.

6.146	The State of Maine now requires a load slip for all shipments of 
wood. Nova Scotia is also implementing a system that will track all 
wood sales. In New Brunswick, the Transportation of Primary Forest 
Products Act will require load slips. However, the Act has not yet been 
proclaimed.

Recommendations

6.147	We recommended the Department develop the means to 
ensure the accuracy of the annual cut figures for all components of 
private forest lands. 

6.148	We recommended that the Province legislate a uniform 
provincial tracking system for all wood sales in the Province that can 
identify and monitor the source, destination, type and quantity of 
wood shipped.

Comparison of annual cut 
(actual) to annual allowable 
cut (planned)

6.149	If the actual amount cut exceeds the annual allowable cut then 
the sustainability of supply and future of the industry is jeopardized. 
Industry reports that its annual cut is at the annual allowable cut rate for 
softwood. For hardwood the harvest is not yet up to the annual allowable 
cut rate. Therefore they claim their industrial freehold lands are being 
managed sustainably. The Department also claims that it is harvesting at 
a sustainable level on Crown lands.

6.150	The same is not true for private woodlots. Four of the seven 
marketing boards reported that in the years from 1994 to 1998 their 
average softwood harvest exceeded the annual allowable cut. Province-
wide during this period softwood from private woodlots was over-
harvested an average of about 17% per year.

6.151	According to these figures, this means that in each of the last 
five years the forest industry has reduced the size of New Brunswick’s 
private woodlots. Unfortunately, the actual over harvesting is greater 
than these figures show. Earlier we discussed that the annual cut figures 
for private woodlots were not complete. These statistics do not report a 
portion of wood exported from the Province, direct sales and sales to 
small sawmills and residential markets.

6.152	If any one of the three internal sources of timber (Crown, 
industrial freehold and private lands) is not being managed sustainably, 
there will be increasing pressure on the other two sources. This 
combined with an uncertain import market may have a significant impact 
on the future of the Province’s processing industry. It would also create 
pressure on the Crown’s ability to achieve the non-timber objectives set 
out in legislation.

Recommendation

6.153	We recommended that the Department monitor the 
difference between the annual allowable cut and the actual cut from 
private forest lands to ensure that they are harvested at a sustainable 
rate.

Conclusion

6.154	The criterion is not met. The Department is not carrying out all 
of its legislated monitoring functions. Further, it has not established 
goals or intended results for each of the program components. This 
makes it difficult to monitor the results of its programs for private forest 
lands. 

Effectiveness of 
programs for private 
forest lands

6.155	Our fifth criterion was:

the Department should have procedures in place to report on 
the effectiveness of private forest lands programs.

6.156	In auditing against this criterion, we focused on the 
Department’s public reporting through its annual report. This is 
consistent with the focus in the objective section of the Province’s 
annual report policy. The objective of the policy is as follows:

The prime function of an annual report is to be the major 
accountability document by departments and agencies for the 
Legislative Assembly and the general public. It serves as the 
key public link between the objectives and plans of a 
government entity and the results obtained. 

6.157	We examined the Department’s 1998-99 Annual Report to 
determine how it had been reporting on its programs for private forest 
lands. This was the latest available report at the time of our audit. 

6.158	The Annual Report does not have a separate section for the 
Department’s activities on private forest lands. Its reporting on private 
forest lands is included in the section “Forest Management” beginning 
on page 8 of the report. “Forest Management” combines departmental 
activities on both Crown and private land. 

6.159	One thing that should be noted is that the program objective as 
stated in the annual report may be somewhat confusing to the reader. 
The program objective is “To manage Crown timber resources in 
accordance with government policy.” It is stated in bold print at the very 
beginning of this section on Forest Management. Therefore it is one of 
the first things the reader would see.

6.160	After seeing this objective, members of the Legislative 
Assembly and the general public might not expect to find that this 
section also deals with private forest lands. But yet it does. In our 
opinion this is not consistent with the annual report policy’s statement 
that “departments and agencies should give a clear account of goals 
(and) objectives.”

Recommendation

6.161	We recommended that the Department disclose its key goals 
and objectives for private forest lands in its annual report. 

Comments on specific 
program components

6.162	The Annual Report section on “Forest Management” is further 
subdivided by six program components. These six program components 
(Silviculture, Fire Protection, Insect and Disease Protection, Timber 
Utilization, Private Land Development and Program Management) 
relate at least in part to private forest lands. 

6.163	The Silviculture segment speaks almost entirely of the 
Department’s activities on Crown lands. Although not explicitly 
referenced to the text in the Silviculture section, the annual report does 
contain a table which summarizes silviculture activity on private 
woodlots. But there is no discussion of the effects of this activity. It 
would be useful if the Department reported on private woodlots 
silviculture in a manner similar to its reporting on Crown land 
silviculture. For Crown lands the annual report shows the additional 
harvest made possible by silviculture activity.  

6.164	It would also be useful for the Department to consider presenting 
information on the extent of the Silviculture program component. Later 
in the report under the heading of Private Land Development, the 
Department does discuss the fact there is combined federal-provincial 
funding of around $8 million per year for silviculture. It notes the 
funding was cost shared with woodlot owners and that 13,370 hectares 
were treated. But Members of the Legislative Assembly and the general 
public may be interested in knowing what percentage of private woodlot 
owners this funding is reaching. This information would address one of 
the important content provisions of the annual report policy; i.e. “how 
well a program was accepted by its client groups.”

6.165	The Fire Protection, and Insect and Disease Protection areas do 
not divide their commentary into separate components of private forest 
lands and Crown lands. The report does clearly state, however, that 
“Natural Resources and Energy is responsible for providing fire 
protection for all forest lands.” And it notes that the Department “also 
protects . . . private woodlots from insects and disease.” Further to this 
point is a statement that “New Brunswick’s forest did not require pest 
protection in 1998.” This comment would presumably cover all Crown 
and private forest land. Improvements might be made in these areas by 
showing how the Department’s work supports the management of 
private forest lands.

6.166	The discussion of Timber Utilization does not make reference 
directly to the link between the “value-added” policy and private forest 
lands. The Department could consider if such a link can be discussed in 
the annual report.

6.167	The section on Private Land Development deals, of course, only 
with private forest lands. Specifically, it addresses various departmental 
activities for private woodlots. The report has separate commentary on 
the activities relating to woodlot development, woodlot education, maple 
syrup production, and Christmas trees. One interesting point is that the 
report shows the Department reached 1,800 woodlot owners “through 
courses, seminars and field days” in 1998-99. This seems to be an 
important measure the Department could build upon in discussing client 
acceptance.

6.168	The Program Management section includes some discussion of 
the Department’s continuous ten-year forest inventory program, and a 
co-operative network to monitor growth and forecast development on 
various sample plots. These plots are on both Crown and private land. 
This too seems like important information. It touches on the 
Department’s responsibilities under all of section 3 of the Act – both for 
Crown and private forest lands. 

6.169	It might be more useful if the Department provided a few more 
details in this subsection. The importance of forest management 
planning cannot be understated given its significance to the Province’s 
economy. In our opinion, the annual report should provide more 
information on the relevance of these sample plots and the ten-year 
forest inventory program. The annual report policy notes the annual 
report should show “the extent to which a program continues to be 
relevant.” Here is the Department’s opportunity to show the reader just 
how relevant forest management planning is. It has tremendous 
repercussions for the future of this Province – economically, socially 
and environmentally.

Work carried out by the 
Forest Products 
Commission

6.170	The Annual Report for 1998-99 does not provide any substantive 
discussion of the work of the Forest Products Commission. The 
Commission has informed us it does not prepare a separate annual report 
for tabling in the Legislative Assembly. At times, however, the 
Commission is asked to appear before the Crown Corporations 
Committee of the Legislative Assembly. In our opinion, however, 
despite occasional appearances before the Committee, there has not been 
sufficient and appropriate reporting to the Legislative Assembly on the 
results achieved by the Commission.

6.171	One aspect of effectiveness is the achievement of intended 
results. We believe it would be useful to examine the object and duties 
of the Commission to determine if the role contemplated in the Forest 
Products Act is being fulfilled. In other words, is the Commission 
achieving what it was set up to achieve? 

Recommendation

6.172	We recommended the Department carry out an evaluation of 
the Forest Products Commission to determine if it has fulfilled the 
object and duties outlined in the Forest Products Act. The results 
should be tabled in the Legislative Assembly.

Performance measurement

6.173	The last area we would like to touch on is found in the 
“Performance Measurement” appendix to the Annual Report. 
Government policy clearly calls for performance indicators. We were 
disappointed that this appendix had no performance indicator with 
respect to the government’s responsibilities for private forest lands.

6.174	While it is up to the Department to formulate what that 
indicator, or indicators, might be, we believe some of the suggestions 
we have made in this chapter may be relevant. Certainly, as we have 
already discussed, the Department needs to be showing whether, in fact, 
the private forest lands are the primary source of supply for wood 
processing facilities in the Province.

6.175	Further, the Annual Report could provide information on the 
annual allowable cut. This could be matched each year to the actual cut 
harvest statistics, allowing for a quick overview of the sustainability of 
provincial forests. The Department might then refer to its various forest 
management planning efforts to achieve sustainability. 

6.176	This might include results of efforts to encourage the industry 
towards some sort of sustainability certification. Major players in the 
forest industry are actively pursuing this already. By reporting on this 
particular theme, the Department would show how well it was doing in 
encouraging management of private forest lands.

Conclusion 

6.177	The Department does not meet this criterion. Although the 
Annual Report does include a number of references to private forest 
lands, we believe these are not sufficient. We have pointed out that there 
is not a clear statement of goals and objectives and performance 
indicators for programs relating to private forest lands. The results 
achieved from these programs are not clearly displayed in the annual 
report. And there is not enough discussion of client acceptance and 
program relevance.

Recommendation

6.178	We recommended that as part of a planning exercise to 
review its mandate and goals and objectives for private forest lands, 
the Department should develop appropriate performance indicators 
for its private forest lands programs. The Department should then 
revisit its annual report to determine how it might best report on its 
programs for private forest lands in accordance with the 
requirements of the government’s annual report policy.

Departmental response

6.179	The Department provided the following preliminary comments 
on our observations and recommendations:

The document prepared by your office raises a number of 
issues relating to the Minister’s responsibilities and mandate 
under the Crown Lands and Forests Act with respect to private 
forest land.

It has been noted that several recommendations require policy 
direction from Government and we anticipate seeking that 
direction through the normal …… process. Notwithstanding, 
we will review all remaining recommendations to determine 
if any can be implemented quickly without seeking policy 
direction from Government. In addition the Department will 
be seeking clarification from Justice on certain aspects of the 
wording in the Crown Lands and Forests Act.

6.180	The Department also committed to providing a more detailed 
response to our recommendations.