FREDERICTON – As the Liberals breathe life into to the province’s flagging forestry sector through tax cuts, investment credits and energy rebates announced Tuesday in the 2009-2010 budget, the province is also promising to prop up the province’s budding energy hub through investment incentives. Finance Minister Victor Boudreau introduced targeted measures intended to promote investment and protect jobs in New Brunswick’s forestry sector, which has been pummelled by a decline in global demand and weakened commodity prices. An investment tax credit for the forestry industry, first offered in 2006 and 2007, will be available for one year to help the sector make investments in manufacturing and processing facilities. Forestry companies that qualify will be eligible for a rebate of 50 per cent off their capital investments in manufacturing and processing equipment, up to a maximum of 50 per cent of the provincial property tax paid. “This credit is extremely important to the forestry sector right now,” said Mark Arsenault, president and CEO of the New Brunswick Forest Products Association. “For companies looking to modernize and make any type of investment, the credit will help get projects underway now instead of in a year’s time,” he said. Premier Shawn Graham said the investment credits will modernize the forestry industry and help towns in the province’s north, which have seen pulp and paper mills shutter over the last few years. “We need to get out in front of the problem and deal with crisis of the forestry industry,” he said during a press conference. The Liberals also extended the tax credit for high energy users by one year to March 31, 2010. This rebate reduces provincial property taxes payable and will help offset energy costs of up to three per cent from last year. But the credit requires pulp and paper companies produce at least 85 per cent of the previous year’s output and do not currently owe property taxes. The energy credit will provide roughly $5 million in savings to the pulp and paper industry and protect jobs. “This will help offset the recent NB Power energy rate increase of three per cent,” Arsenault said adding it will help the bigger pulp mills like Fraser Paper, J.D. Irving, Limited, AV Cell and AV Nakawick. “For these pulp and paper companies energy costs are about 30 per cent of total costs, so this tax credit is a significant amount of money,” he added. “It will help them keep competitive on global scale with companies in Quebec and Maine.” Arsenault also said the $4.7 million announced for silviculture on Crown land will not only help the forestry sector but provincial economy. “Silviculture jobs are shovel-ready and labour intensive so almost every dollar that is spent goes into labour,” he said. In addition to providing the forestry sector with tax cuts and credits, the government also hopes to diversify the economy in New Brunswick. “We need to position New Brunswick as the energy hub of the eastern seaboard,” Graham said. “We’re dealing with a number of working groups and seeking their input on how we can ways to push forward energy sector developments.” Graham said the province has been working with Atlantica Centre for Energy to develop new models for investments in the energy sector. Although Finance Minister Boudreau said in his speech in the legislature that the province plans to stimulate the development of New Brunswick as an energy hub, there are few details on the government’s plan of action. “This government will introduce an incentive for the energy sector to help encourage growth in this critical component of the economy,” Boudreau said. “Government will consult with industry and it is government’s plan to provide this incentive for qualifying projects as support to the energy hub by the 2010 taxation year.” This was good news to Tim Curry, president of the Atlantica Centre for Energy. “In order to make this energy hub actually work you’ve got to create a climate where you can attract people and you can attract dollars,” he said. “Part of attracting people is some of the tax measures, which I think they sound pretty positive. And business tax is part of the story about attracting dollars.” “That sets up a pretty positive story for continuing to attract a further investment in the energy space,” Curry said.
