Auditor general provides new recommendations for timber royalties following special request20 October 2020
FREDERICTON (GNB) – A report tabled today by Auditor General Kim Adair-MacPherson includes a follow-up review of the 2008 audit on timber royalties. The review was carried out in response to a request by the Minister of Natural Resources and Energy Development (the Department) under section 12(1) of the Auditor General Act.
The report specifies that the department has made significant improvements to the royalty rate-setting process using private wood market surveys, but there is still no definition for fair market value in the legislation or regulation.
“We found that the Crown timber royalty-setting process in New Brunswick has significantly improved since 2008, but issues remain, and the department has yet to adjust and apply new rates as required under the Crown Lands and Forests Act since 2015,” said Adair-MacPherson. “According to the act, Crown timber royalty rates should be updated annually, and this is currently not the case.”
She said this report is important to New Brunswick’s forestry industry because it modernizes observations, findings, and recommendations from that of the 2008 Auditor General Timber Royalties chapter that have been referenced by various stakeholders in arguing their position on timber and stumpage markets in New Brunswick. Given that the forestry sector employs over 22,000 people and represents five per cent of New Brunswick’s gross domestic product, the impact of these new findings and recommendations is significant for the province and its economy.
The report found Crown timber royalty rates are not currently responsive to market changes. Crown timber royalty rates have not been updated to match private wood market average stumpage prices since 2014-15.
“With available technology improvements, we now recommend the move to a real-time data process by the New Brunswick Forest Products Commission. The use of a real-time system will allow more flexible and responsive updates to Crown timber royalty rates,” said Adair-MacPherson.
The report also identified that a department advisory committee required by the Crown Lands and Forests Act is non-existent; Adair-MacPherson includes a recommendation in the report to address this issue. In total, the auditor general made eight new recommendations aimed at supporting continuous improvement to the Department of Natural Resources and Energy Development current process. The Follow-up: 2008 Timber Royalties Chapter can be found in Volume I of the 2020 Auditor General Report. This volume and the one-page summary for this chapter are available online.20-10-20