BACKGROUNDER

March 26, 2003 Ministry of Forests

CONTRACTS, SUBCONTRACTS IN TIMBER HARVESTING

Bill 13 affects the business relationship between large forest companies and the independent contractors they hire to build logging roads and cut trees. It also affects the relationship between those contractors and their subcontractors.

The regulation was introduced in 1991, in an attempt to create a fairer balance of power between larger licence holders and their contractors. It provided more security for contractors by converting most harvesting and road-building contracts on the Coast and about half of those in the Interior into long-term, or replaceable, contracts. It also stipulated a process to settle rate disputes between the parties.

Since its inception, Bill 13 has been controversial. Under the legislation:

  • If allowable cuts are reduced, a detailed process must be followed that often results in every contractor losing volume and becoming less viable.
  • If there is a disagreement on contract rates, the parties must follow a dispute resolution process that both contractors and licensees say is complex, time-consuming and expensive.
  • Lack of clarity has resulted in arbitrations with varying interpretations of some important and fundamental issues involved in setting contract rates.

Government will work with licensees and contractors to modify Bill 13 in a way that allows the forest sector to be more competitive. Bill 13 changes to be addressed include:

  • Developing a more efficient and effective dispute-resolution process.
  • Providing the clarity and direction necessary to ensure a consistent, market-based approach to rate setting.
  • Discussing the elimination of replaceability provisions for new contracts (current contracts with these provisions will be grandparented).

These and other changes to Bill 13 should be in effect before the end of the year and will apply on the Coast and the Interior. These modifications will help restructure the forest economy, especially in the coastal region, making it globally competitive and ultimately sustainable.

-30-

 

Media contact:

Mike Hogan
Communications Director
250 387-8486