Report on Performance

Overview of Ministry Goals and Linkage to Government Strategic Goals

The Forest Service has three long-term goals to provide overall direction in achievement of its mission and vision. The government's strategic goal of "a sustainable environment" guides the ministry's goal of sustainable forest resources. The ministry is responsible to balance the use of the forests to generate sustainable economic forest benefits, which in turn support a strong and vibrant provincial economy, with the long term health of the forest and range resources. The ministry's third goal enables the effective achievement of the first two goals.

Table 3: Linkage of Ministry Goals to Government Strategic Goals

Report on Results

Key Outcome Indicators

The ministry uses 16 key outcome indicators to report progress and trends towards the achievement of its three long-term goals. Although key outcome indicators are not in the direct control of the ministry and therefore are not considered part of the ministry's performance results, they provide important information for ministry decisions related to strategic planning and target setting for performance measures. The results for key outcome indicators are provided in a synopsis below and described more fully under each goal or objective as appropriate.

Synopsis of Ministry Key Outcome Indicators

Progress on Strategies and Performance Measure Results

This section reports on the ministry's accomplishments and performance measure achievements under each goal, in the context of its core business areas, objectives, and strategies. The objectives are results-oriented statements of what the ministry intends to achieve in the short-term. The strategies outline the actions that were taken in 2004/05 towards achievement of the objectives and the goals. The performance measures were chosen to indicate the degree of success the ministry has in achieving these objectives and strategies. The accountability for the performance measures and targets resides fully with the Ministry of Forests.

Performance at a Glance

Performance Measure Target Achievement

The ministry established 34 corporate performance measures and targets for 2004/05 to evaluate ministry performance in its core business areas. As shown in the pie-chart above, 31 measures are reported on, yielding five targets that were mostly achieved (>80% to 95%), 18 targets that were achieved (95% to 105%), and six targets that were exceeded (>105%) for a total of 94% target achievement (29 measures). Two measures (6%) had targets that were missed.

The following three measures do not have updated data to report in 2004/05:

• The performance measure on client satisfaction with research, scheduled for assessment every three years, will be evaluated again in 2005/06.
• The measure for implementation of the market-pricing system in the Interior, although originally scheduled for 2004/05, is still dependent on the outcome of negotiations with regard to softwood lumber.
• The measure on achievement of free growing obligations under the Forest Stand Management Fund required no activity during the year.

A synopsis of the links between goals, objectives, strategies and performance results is provided below. Explanations of each measure and its performance target achievements are provided in the following sections.

Synopsis of Ministry Performance Measure Results

Goal 1: Sustainable Forest Resources

As stewards of British Columbia's forest and range resources, the Ministry of Forests will ensure that appropriate forest and range management practices are used to maintain and improve the long-term sustainability and health of the province's forest, range and recreation resources. The ministry will also ensure that incremental investments in the forest resource are effective through the Forest Investment Account.

Core Business 1: Forest Protection

The Forest Protection Core Business includes Fire Protection and Forest Health. The ministry provides fire management expertise and fire suppression capability to protect natural resources and investments in the forest land-base. Our forest fire response is primarily focused on protecting lives and public forest assets, particularly timber. Without fire protection, some 500,000 hectares of productive forest could be lost annually costing the province billions of dollars in potential direct and indirect revenue through forestry, tourism and other sectors. The ministry undertakes cost sharing with the forest industry for fire protection of industrial activities. In addition, cost sharing is undertaken for fire protection with other landholders including other governments, forest industry, utilities, and managed private forestland. As well, the ministry is working with local governments to improve the wildfire safety of their communities.

A key outcome indicator of how fire impacts forest resources is the total area lost to wildfire annually. The ministry has been tracking this measure since 1950. Graph 1 demonstrates the range and impact of total hectares lost to wildfire since 1970.

Forest Protection also includes Forest Health, or the detection and management of insect pest outbreaks on areas under the responsibility of the province. Of key significance are bark beetles and gypsy moth infestations, described below. Other defoliators, endemic pests and outbreaks of local significance are also managed.

Graph 1: Total Hectares Lost to Forest Fires 1970 to 2004

Unwanted wildfire is unplanned or accidental, with the potential to cause damage to or loss of timber, range or public resources. The exceptionally severe 2003 fire season, the worst since 1958, together with the hot dry weather that continued during the summer of 2004 will impact the five-year rolling average of area lost for the next five years. Therefore, the area lost will continue to be projected at <65 000 hectares per year, in order to reflect this impact.

Objective 1: Prevent and manage unwanted wildfire, pests and invasive plants to ensure that forest and range resources are protected.

Responding to natural events such as wildfire or pest epidemics is important to the ministry's ability to plan for sustainable forest resources. Achievement of this objective is shared with forest licensees and the public through legislation and regulation. Risks to achieving the objective include extreme fire danger conditions and extreme rates of spread where known treatments become less effective or the cost to treat is prohibitive, as with the bark beetle epidemic.

Strategy 1: Ensure fire preparedness and rapid effective initial attack.

As part of ongoing efforts to improve fire management policies, streamlined regulation and improved accountability by forest users have been confirmed under the new Wildfire Act and Regulation which were brought into force March 31/05. The Wildfire Act was developed to replace the wildfire sections of the Forest Practices Code Act and involved extensive consultations with government agencies, communities and industrial operations and was adjusted to help fulfill key recommendations from both the B.C. Auditor General's 2001 report and the Firestorm 2003 Provincial Review.

In April 2004 the government committed to implementing all the recommendations from the Firestorm review. During 2004/05, in addition to the new Act, the Ministry of Forests added 100 more fire fighters, two more large airtankers to its fleet, re-emphasized prescribed burning and selective vegetation removal to reduce fuel loads, funded communities to develop Community Wildfire Protection Plans, and helped to expand the FireSmart program. Additionally, the ministry has worked with counterparts in Natural Resources Canada to further the development of a Canadian Wildland Fire Strategy. Through these actions, all levels of government are better prepared to deal with wildfires into the future.

Performance Measure and Results for Strategy 1

Performance Measure	Year	Target	Actual	Variance	Result
1. Per cent of unwanted wildfire contained at less than four hectares.	2004/05	92%	92.4%	+0.4%	Achieved
	2003/04		91.8%
	2002/03		93%
	2001/02		91%

This is a measure of the ministry's success rate of initial attack on wildfire that is unplanned or accidental, and has potential to cause damage to or loss of timber, range or public resources. If containment is kept to under four hectares, damage and costs for fire suppression are kept to a minimum. Data is from the ministry's Historical Fire Statistics Database.

Abnormally hot dry weather experienced in the summer of 2003 resulted in over 2,500 wildfire starts and continued in 2004 with 2,399 wildfire starts. The ministry's success rate of initial attack was achieved and the hectares burned were significantly reduced from the summer of 2003.

With projected increasing dry summer conditions, wildfires will continue to be a significant threat to B.C. Interior communities.

Strategy 2: Forest licensees will take on greater responsibilities for protecting the health and forests under their management through the defined forest area management model.

Early in 2004/05, in part due to the Bark Beetle epidemic, direction on this strategy was changed (as described in the section on Strategic Shifts) resulting in the ministry continuing to oversee forest health activities.

Strategy 3: Early detection and treatment of insect infestations, including monitoring and treatment of mountain pine beetle and defoliators.

The ministry is working closely with forest industry, affected communities and other government agencies to implement the Mountain Pine Beetle Action Plan in British Columbia. The 2004 provincial overview survey identified over 7 million hectares as infested by mountain pine beetle (red attack areas, prior to the beetle flight). This has grown from an infestation of only 200,000 hectares in 1999 (although 1999 to 2003 does not include trace numbers, which were included for the first time in 2004). The estimated total infested volume, cumulative over 43 years, is 283 million cubic metres (data provided by the Council of Forest Industries). The long-term consequences of the epidemic will affect the social, environmental and economic aspects of life in central British Columbia.

Performance Measures and Results for Strategy 3

Performance Measure	Year	Target	Actual	Variance	Result
2. Per cent of Crown forest aerial surveyed to monitor forest health	2004/05	100%	100%	0	Achieved
	2003/04		100%
	2002/03		100%
	2001/02		100%

Annual province-wide aerial surveys are used to monitor forest disturbances caused by insects, diseases, animal and abiotic factors, which is critical to the early detection and treatment of forest health. The wording of the measure was changed in 2004/05 from monitoring insect infestations to monitoring forest health. This more accurately reflects the overall purpose of data collection, although it is especially critical for early detection and treatment of insect infestations.

The findings of these surveys are posted on the ministry website for access by licensees and ministry staff. The data is used to track damage trends, estimate impacts on forest resources, plan management activities strategically, and direct more detailed surveys.

The overview survey was completed as planned.

Performance Measure	Year	Target	Actual	Variance	Result
3. Per cent of high priority bark beetle infestation sites treated by MOF (largely parks and protected areas).	2004/05	80%	75%	-5%	Mostly Achieved
	2003/04		88%
	2002/03 (baseline)		89%

High priority sites present an opportunity to stop or reduce the rate of spread by treating through felling and burning, setting up pheromone trap trees, or other methods. By agreement with the Ministry of Water, Land and Air Protection and the Ministry of Sustainable Resource Management, the Ministry of Forests is responsible for treatments in parks and protected areas.

Despite the continued exponential expansion of beetle infestation during 2004/05, the number of sites in parks and protected areas that presented an opportunity to stop or reduce the rate of spread was relatively high.

Performance Measure	Year	Target	Actual	Variance	Result
4. Per cent of high priority areas treated to manage defoliator outbreaks.	2004/05	Gypsy Moth 100% Other defoliators 50%	100% 54%	0%   4%	Achieved
	2003/04 (baseline)		Gypsy Moth N/A All Others 99%

This measure includes treatments to manage gypsy moth as well as other defoliators such as western spruce budworm, western hemlock looper and all others. The baseline was established in 2003/04 as 100 per cent for gypsy moth and 99 per cent for all other defoliators. No gypsy moth treatments were required in 2003/04.

In 2004/05 gypsy moth related activities included aerial spraying of two sites — South Delta and Saanich — as well as mass trapping at three sites — Abbotsford, S. Duncan, and Gabriola Island. MOF assists the Federal Canadian Food Inspection Agency (CFIA) in monitoring for new introductions of gypsy moth throughout British Columbia. Although 89 gypsy moths were trapped, there was no evidence of breeding populations in 2004. It was determined that another year of high-density trapping would better delineate the infested area prior to further treatments and therefore no treatments are scheduled for 2005/06.

Other defoliators included western spruce budworm and western hemlock looper, which remained active throughout the Interior and Coastal regions. Western spruce budworm continued to expand in 2004 to cover 623 735 hectares of Douglas fir forest from Williams Lake south to Princeton in the Southern Interior Forest Region and Pemberton in the Coast Forest Region. A total of 25 000 hectares of budworm affected forest in the 100 Mile House Forest District were treated with Bacillus thuringiensis var. kurstaki (B.t.k.). The western hemlock looper population collapsed in 2004 and no treatments were required.

Core Business 2: Stewardship of Forest Resources

The functions in this core business area are fundamental to ensuring sound environmental stewardship of forest and range resources to ensure that they are used in a sustainable way. This in turn supports global recognition of environmental stewardship for British Columbia and companies operating on Crown land by ensuring that an appropriate regulatory framework is in place. This can also provide a foundation for forest certification of company operations.

Stewardship includes the regulation of forest and range practices, timber supply planning and allowable annual cut (AAC) determination, range planning and management, control of invasive plant species, recreation management, applied research, forest gene resource management, and tree improvement.

Key Outcome: A Sustainable Forest Land Base

The area in provincial forest reflects provincial land use decisions. Changes would be expected if the government removed Crown land from forest management for other uses (e.g., preservation, parks or agriculture, or Crown land sales) or converted land from other uses to forest management.

Key Outcome Indicator	Year	Projection1	Actual	Variance
Area of provincial forest land in millions of hectares	2004/05	47.7 M	47.7 M	0
	2003/04		47.7 M
	2002/03		47.8 M
	2001/02 (benchmark)		47.0 M

Provincial forestland for the purposes of this measure is the Crown land in timber supply areas, tree farm licences, woodlot licences and community forest agreements. Data are from the Ministry of Forests AAC database, as at January 1 each year.

The small reduction in the productive forest area between 2002/03 and 2003/04 reflected updated inventory information and minor changes to land use and administration rather than a change to the land base.

Key Outcome: Sustainable Timber Productivity

The ministry uses a ratio of area reforested to area harvested or lost to fire and pest, based on data from the past five years, to represent sustainable timber productivity.

Key Outcome Indicator	Year	Projection	Actual	Variance
Ratio of area reforested to area harvested or lost to fire and pest (unsalvageable losses, based on a 5-year rolling average).	2004/05	.85	Data not available until September 2005	N/A
	2003/04		.82
	2002/03		.93
	2001/02 (benchmark)		1.2

• A ratio less than 1.0 indicates a trend toward more area being harvested or lost to fire and pest than reforested.
• The area reforested includes planting and natural regeneration and is net of reforestation failures. Areas reforested may include reforestation of harvested areas, as required by law since 1987, backlog reforestation (areas harvested prior to 1987) and reforestation of areas lost to fire and pest. Forest licensees are meeting their legal obligations to reforest harvested areas (as indicated by a Forest Practices Board report in 2002 — The Forest Practices Board has scheduled an updated audit for the summer of 2005).
• Areas harvested are by any method (including selection cutting). Losses to fire and pest are unsalvageable, and do not include areas denuded by the summer of 2003 and 2004 fires.
• In 2004/05, a portion of Forest Investment Account funds was directed towards reforestation of areas lost to fire and pest. In addition, government has created a new Forests For Tomorrow program and is allocating $86 million over the next 3 years to reforesting and managing key areas impacted by wildfire and mountain pine beetle. An improved ratio of reforestation to denudation will be seen in the next 5 to 7 years as government provides new focused and consistent funding to reforest backlog, wildfire and mountain pine beetle affected areas.
• By regulation, forest licensees and the BC Timber Sales must report 2004/05 data by May 31, 2005. Due to significant computer system changes and delays in getting information into the new computer systems, the most current data available to update the 5-year rolling average is for reforestation and harvesting activities completed up to March 31, 2003.
• It is expected that the ministry's databases will include updated fiscal 2003/04 data by June 2005 and 2004/05 data by September 2005. Beginning in fiscal year 2005/06, a new electronic submission framework which links industry and BC Timber Sales to the ministry, will result in more timely and accurate reporting of key outcome indicators and silviculture activities on Crown land.

Key Outcome: Healthy Forests — soil quality, water quality and ecosystem diversity.

Healthy forest ecosystems sustain the quality and quantity of soil, water and timber, and therefore, indicate sustainable forest resources. The indicators chosen are linked to national forest criteria and indicators of global forest sustainability. Although the indicators presented here are chosen to represent key elements of healthy ecosystems, these indicators are only meaningful at the ecosystem level, need to be considered over time, and none can be taken by themselves as a sufficient indicator of sustainability. The ministry intends to present more comprehensive information in a "State of the Forests" report published periodically.

Key Outcome Indicator	Year	Projection	Actual	Variance
Per cent of community watersheds with active logging for which watershed assessments have been completed	2004/05	100%	100%	0
	2003/04		100%

All community watersheds with active logging now have watershed assessments completed. Data are from the Ministry of Sustainable Resource Management's Community Watersheds website at http://srmwww.gov.bc.ca/wat/cws.

With completion of all assessments, 2004/05 is the last year that this indicator is reported.

Key Outcome Indicator	Year	Projection	Actual	Variance
Per cent of annual harvest area with soil loss due to establishment of permanent access roads (based on a 5-year rolling average).	2004/05	< 5%	Data not available until September 2005	0
	2003/04		4.4%

Permanent access roads include any un-rehabilitated roads, excavated or bladed trails, landings, pits or quarries. Harvest area is for harvest by any method and includes areas with retained mature timber and naturally occurring non-productive areas within the cut block boundary.

A percentage greater than 5 per cent indicates that the amount of permanent roads exceeds the long-term (17 year) average but is still within the 7 per cent limit set by the regulation under the Forest and Range Practices Act. A percentage less than 5 per cent indicates areas in permanent roads are below the long-term average.

By regulation, forest licensees and the BC Timber Sales must report 2004/05 data by May 31, 2005. Due to significant computer system changes and delays in getting information into the new computer systems, the most current data available to update the 5-year rolling average for this 2004/05 report is only for activities completed up to March 31, 2003.

It is expected that the ministry's databases will include updated fiscal 2003/04 data by June 2005 and 2004/05 data by September 2005. Beginning in fiscal year 2005/06, a new electronic submission framework which links industry, and BC Timber Sales to the ministry will result in more timely and accurate reporting of key outcome indicators and silviculture activities on Crown land.

Key Outcome Indicator	Year	Projection	Actual	Variance
Area of forests > 140 years of age within the province in millions of hectares	2004/05	24 M	Updated data not available	N/A
	2003/04 (benchmark)		24 M

The benchmark for this indicator was set in 2003/04 when a new definition of "forest" was introduced to align with the UN international definition¹ (trees are >5 m tall at maturity and tree crown cover is >10%).

Data used was the best available as of early 2001, compiled into a seamless forest cover inventory for the whole province including forests in parks and on private lands. Sources include detailed ministry inventories (90% of the province), detailed company inventories (6%), older, more general inventory for some parks (2%) and more general baseline thematic mapping from satellite imagery for the remainder (2%). When updated over time, any change in area will reflect both actual changes in the forests and changes to new inventory methods.

Updated data were not available within MOF in 2004/05. As of 2005/06 this indicator is no longer tracked in the Ministry of Forests Service Plan. A new inventory method is expected to be used to track this outcome in the State of the Forest Report, published periodically. Other up-to-date forest inventory information can be accessed at: www.pfc.forestry.ca/monitoring/inventory/overview_e.html.

Objective 1: Monitor the health of forests and grassland ecosystems in the province

Monitoring the health of forests and grassland ecosystems allows the ministry to make a periodic assessment of the sustainability of forest resources in keeping with nationally recognized criteria and indicators.

Strategy 1: Regularly evaluate and publish information on the state of the forests in British Columbia.

Performance Measure and Results for Strategy 1

Performance Measure	Year	Target	Actual	Variance	Result
5. Status of the "State of the Forest (SOF) Report."	2004/05	SOF Report with 12 indicators	Report on the SOF with 6 indicators was published — Report with 12 indicators is 70% complete	6 indicators not reported	Target missed
	2003/04		Report with 6 indicators 90% complete

The State of British Columbia's Forests report will provide a periodic assessment of the state of British Columbia forests, aligning with national criteria and indicators of sustainable forest management. The report with six indicators was published in March 2005 on the Internet at: http://www.for.gov.bc.ca/hfp/sof.

The six indicators published are:

• Environmental: Ecosystem diversity and Protected forests
• Economic and Social: Timber harvest and First Nations involvement
• Governance and Support: Law and Certification

The one-year delay in achieving the 2003/2004 target of publishing six indicators has contributed to a further delay in publishing the next report with 12 indicators. This has resulted in non-achievement of the 2004/05 target. The report with 12 indicators is expected to be completed by March 2006.

The next six indicators to be completed include:

• Environmental: Ecosystem dynamics, Species diversity and Genetic diversity
• Economic and Social: Ownership and management, Silviculture and Jobs and communities

Objective 2: Ensure performance standards for managing timber, forage, bio-diversity, water, soil, forest habitat, and scenic resources are established and evaluated.

In the ministry's role as regulator of forest practices, ensuring appropriate performance standards are in place is key to ensuring sustainability of forest resources. Effectiveness evaluations are undertaken regularly to review the effectiveness of legislated standards. In addition, ongoing research provides science-based support for policy development.

During 2004/05, a number of adjustments to the Forest and Range Practices Act legislative framework were aimed at strengthening government objectives and ensuring smooth implementation. A provincial interagency/stakeholder team is continuing to work to ensure the development and introduction of tools and processes to support the Forest and Range Practices Act implementation.

Strategy 1: Continue transition to the new Forest and Range Practices Act, through approval of Stewardship plans in 2004/05.

The first Stewardship plans were submitted and approved in 2004/05. The transition continues in 2005/06.

Strategy 2: Continue evaluation and ongoing improvement to forest legislation.

Evaluation and ongoing improvement to forest legislation included effectiveness evaluations as described in performance measure #6 below, setting new benchmarks for SMART regulation as described in performance measure #7 (listed under the deregulation section) and performance measure #31 (which also contributes to achievement of the ministry's third goal).

Performance Measures and Results for Strategy 2

Performance Measure	Year	Target	Actual	Variance	Result
6. Number of completed effectiveness evaluations of the legislation.	2004/05	3	6	+3	Exceeded
	2003/04		3
	2002/03		3
	2001/02		3

Effectiveness evaluations are reviews of the effectiveness of th Forest Practices Code and Forest and Range Practices Act. They are used to determine whether policies, plans or practices are resulting in the desired objectives being met; that is, are they effective Effectiveness evaluation indicators and protocols have been developed in conjunction with Forest Practices and Research program staff as well as other specialists (e.g., academic and consultants) using scientific methods, including research results and peer review. Science-based protocols are necessary to achieve ongoing improvement to the ministry's policy and legislation framework.

Seven effectiveness evaluation projects were carried out in 2004/05 with six of these completed. The target was exceeded due to additional funding and expertise being made available from the Ministry of Water, Land and Air Protection and the Forest Practices Board.

2004/05 Effectiveness Evaluations were:

• An Evaluation of Range Use Plan Content in Four Forest Districts in British Columbia — an assessment of 419 range use plans for content and effectiveness.
• An Evaluation of Rangeland Health and the Effectiveness of Plant Residue in Protecting Resource Values — assessment of rangeland health at 86 sites using indicators including site functionality, average stubble height, level of browse use, and the presence of invasive plants.
• Recreation Effectiveness Evaluation — assessment of 120 randomly selected Forest Service recreation sites to determine if sites are being managed in a safe, sanitary and environmentally sound manner.
• Timber Resource Value Evaluation — establishment of benchmarks for practices, policies, standards and legislation, and their effect on tree species diversity and genetic diversity.
• Baseline Data for Evaluating Wildlife Tree Patches — compilation of baseline data for wildlife tree densities in unmanaged CWH, ESSF and ICH forests. This is being used to compare post harvest wildlife tree densities to the pre-harvest conditions.
• Preliminary Assessment of the Effectiveness of Wildlife Tree Retention on Cutblocks Harvested Between 1999 and 2001 under the Forest Practices Code — assessment of the biological effectiveness of British Columbia's wildlife tree policies and practices in protecting habitat for wildlife-tree-dependent species. This was the second phase of an earlier study that focussed on assessing the implementation of wildlife tree retention policy in British Columbia.
• Evaluation of Cutblock Sizes Harvested under the Forest Practices Code in British Columbia 1996 – 2002 — this evaluation among other things, determined the range and average size of cutblocks harvested under the Forest Practices Code; and identified the trends in use for clearcutting versus partial cutting silvicultural systems from 1996 – 2002.

Strategy 3: Target applied research activities to support policy development and science-based support for statutory decision-makers.

Significant effort was put into increasing research capacity through partnerships and collaboration with other research providers. Genetics research supported testing of select material in support of gene resource management. Improving access to secure outside funding remains a priority.

Performance Measures and Results for Strategy 3

Performance Measure	Year	Target	Actual	Variance	Result
8. Client satisfaction with applied research completed by the ministry	2004/05	Not measured this year	Not measured this year	N/A	N/A
	2003/04		Not measured in 2003/04
	2002/03		70%
	2001/02		N/A

At the advice of BC Stats, the client satisfaction rating for applied research is determined by a survey of clients every third year. The next survey is scheduled for 2005/06.

In the 2002/03 survey, client satisfaction was 70 per cent. Results of this survey are published at: http://www.for.gov.bc.ca/forsci/. Clients are internal ministry clients, or client sponsors who assess progress and effectiveness of research within project groups linked by similar objectives. Ministry research activities are considered as a whole for this measure independent of funding source. Funding for research may be from the ministry, the Forest Investment Account, or other external sources.

Objective 3: Ensure that forest and range resources are managed and improved on a sustainable basis.

Managing and improving forest and range resources includes a large variety of activities, some of which are undertaken by the ministry, some by licensees and some by community groups. The strategies below reflect that resources are managed for timber supply planning, reforestation, invasive plants, range management and recreation use. Improvement in the area of seed quality enhances our reforestation efforts significantly.

Strategy 1: Implement the defined forest area management model for volume-based licences.

This strategy was modified during the year, as fully described under "Strategic Shifts."

Strategy 2: Continue to work co-operatively with forest companies to implement timber supply analysis within the defined forest area management model.

2004/05 was the second year of the timber supply review under the defined forest area management (DFAM) process. Under DFAM, licensees have the opportunity to collaboratively complete timber supply analyses for Timber Supply Areas (TSAs) in support of the chief foresters' legislated mandate to determine AACs. Timber supply analysis of six management units (Arrow, Cranbrook, Invermere, Robson Valley, Fort Nelson and North Coast TSAs) was substantially completed in 2004/05. TSR under the DFAM model was also initiated on an additional management unit (Kispiox TSA) in 2004/05. The ministry is also developing new modelling technologies and analysis tools to support the timber supply review including resource management decisions associated with the ongoing mountain pine beetle infestation. The approach to the implementation of the DFAM initiative changed during 2004/05 (see Strategic Shifts Section) extending the transition period until April 2007.

Strategy 3: Regularly review and determine AACs for forest management units.

Performance Measures and Results for Strategy 3

Performance Measure	Year	Target	Actual	Variance	Result
9. Per cent of timber supply allowable annual cut determinations achieved by their scheduled deadline	2004/05	75%	71%	-4%	Mostly achieved
	2003/04		83%
	2002/03		80%
	2001/02		83%

The Allowable Annual Cut (AAC) for each Timber Supply Area (TSA) and Tree Farm Licence (TFL) is reviewed and determined by the chief forester on a periodic basis, typically at least once every five years. This is a measure of the ministry's rate of success at achieving AAC determination schedules. Prior to 2004/05 the baseline for this performance measure was 80 per cent. Starting in 2004/05 the target was reduced to 75 per cent to reflect the increasing complexity in analyzing timber supply.

In 2004/05 the performance target was mostly achieved. AAC decisions were completed on a total of 12 (71 per cent) out of 17 management units. Completion and release of several postponement reviews and planned AAC determinations were not achieved. This was largely the result of urgent mountain pine beetle related priorities as well as additional consultation activities associated with postponement reviews.

Reviewing the timber supply of management units with severe bark beetle infestations was a major focus in 2004/05. Three expedited reviews and AAC determinations (Quesnel, Lakes and Prince George TSAs) resulted in substantial AAC increases aimed at facilitating management and salvage of bark beetle infested stands.

2004/05 also saw release of a new AAC for Tree Farm Licence 57 (Iisaak Forest Resources Ltd.), The first area-based determination under section 8 of the Forest Act and the Tree Farm Licence Area-based Allowable Annual Cut Trial Program Regulation. This trial program is intended to test the efficacy of regulating harvest levels by area rather than volume.

Strategy 4: Ensure prompt reforestation and achievement of free growing obligations on all recently harvested lands:

• By licensees and BC Timber Sales, through legislative requirements,
• By MOF, for Forest Stand Management Fund obligations.

The results of licensee and BC Timber Sales achievements on reforestation are captured in the Compliance and Enforcement core business area performance measure results. Performance on the ministry's obligations under the Forest Stand Management Fund is captured in the performance measure below.

Performance Measures and Results for Strategy 4

This was a new measure for 2004/05 representing the ministry's responsibility for enforcing legislative requirements and the licensee's responsibility for reforestation choices.

In 2004/05 there were no areas with a late free-growing due date. The late free-growing due date represents the latest date that a licensee must have areas under their responsibility reforested to a "free growing" stage.

Strategy 5: Develop and implement a strategy to address reforestation on areas lost to fire and pest.

In 2004/05, government created a new Forests For Tomorrow program and is allocating $86 million over the next three years to reforesting and managing key areas impacted by wildfire and mountain pine beetle.

Strategy 6: Treat critical invasive plant sites through an initial attack program (jointly delivered with public and private partners) to prevent spread of small infestations and develop and apply bio-control agents on larger infestations.

In 2004/05, substantially increased funding was provided to the ministry for treatment of invasive plants as part of a cross-government initiative. Of the approximately 4 437 sites identified as critical invasive plant infestation sites in 2004/05, 7 per cent were able to be treated by biocontrol methods and 40 per cent by herbicide and manual/mechanical methods.

Strategy 7: Meet Forest Genetics Council seed orchard production quality and quantity goals for improved seed production.

Performance Measure and Results for Strategy 7

Performance Measure	Year	Target	Actual	Variance	Result
11. Volume gain (cubic metres per year) of timber available for harvest in 65 years from all ministry tree improvement activities	2004/05	2 080 000	2 386 915	306 915	Exceeded
	2003/04		2 252 961
	2002/03 (baseline)		1 670 000

Funding provided by the ministry and the Forest Investment Account has resulted in substantial incremental increases in meeting and exceeding targets for this measure. In 2002/03 the baseline was 1.67 million cubic metres. The measure was tracked internally to Ministry of Forests in 2003/04.

The 2004/05 target, established by the Forest Genetics Council, was exceeded due to higher quantities of select seed seedlings being planted than originally estimated. This will result in areas reforested with select seed yielding greater volumes at harvest than those reforested with wildstand seed.

Strategy 8: Operate seed orchards on a cost recovery basis providing stewardship quality assurance, registration, testing and storage services for Crown land seed at the Tree Seed Centre.

The ministry operates 5 seed production facilities for production of seed of seven tree species. This capacity supplies approximately 42 per cent of the select seed used in Crown land reforestation, contributing an average genetic worth or volume gain of 11 per cent. In 2004/05, the Ministry of Forests received sufficient funding from seed sales to offset costs required to operate the provincial ministry seed orchards. The seed produced met the quality requirements for registration, including quality assurance testing and proper storage.

Strategy 9: Register all seed lots used in Crown land reforestation.

Performance Measure and Results for Strategy 9

This new measure for 2004/05 tracks the efficiency of MOF staff in responding to licensee and ministry requests for registering tree seed. Seedlots must be registered with the ministry prior to using them for reforestation on Crown land (seeding or growing seedlings for planting). Registration confirms that a seedlot meets prescribed standards. The achievement of 100 per cent demonstrates that in 2004/05 all eligible seedlots were promptly registered and made available for reforestation purposes.

Strategy 10: Monitor range condition and allowable use levels of rangelands.

Monitoring range condition may lead the ministry to adjust the season and timing of livestock use in certain areas or to restore areas to open forest or grassland. In 2004/05, 12 per cent of 1,749 Range Use Plan areas were monitored for compliance with standards, as planned.

Performance Measure and Results for Strategy 10

This was a new measure introduced in 2004/05 to track the work of the ministry in restoring rangelands that have been degraded by invasive plants or in-growth of trees. Areas may be restored through treatments such as partial cutting, controlled burning and biological or chemical control of invasive species.

The accomplishment in 2004/05 was lower than planned due to poor weather in the Northern Interior which prevented a planned range burn.

Strategy 11: Ensure that forage is available to range users through range act tenures.

Performance Measure and Results for Strategy 11

Performance Measure	Year	Target	Actual	Variance	Result
14. Per cent of available Crown range forage under a form of tenure	2004/05	90%	91%	+1%	Achieved
	2003/04		95%

This is a measure of the effectiveness of the ministry's administration of range available for grazing or haycutting. Forage was made available as planned in 2004/05.

Strategy 12: Focus recreation management on viable partnerships that will maintain recreation sites and trails for public use; and

Strategy 13: Manage sites and trails without partnership agreements as user maintained so that they will remain open to the public. It is expected that sites and trails will be decommissioned and closed where there are high risks to public safety or the environment.

Performance Measure and Results for Strategies 12 and 13

Recreation sites and trails may be managed under partnership agreements with the ministry by First Nations, forest companies, local government, outdoor recreation groups and other parties. Most sites and trails not under partnership agreements will be available for public use as user-maintained. Sites include campgrounds, day-use areas, cabins and other recreation facilities.

The ministry district offices keep detailed statistics of sites and trails by category, i.e., managed under agreement (with or without user fees) and user-maintained. In 2001/02 and 2002/03, the total number of recreation sites and trails managed by the ministry was tracked. The 2003/04 measure represents the transition to a new model of delivery using partnership agreements. In 2004/05, the measure changed again to the total number of recreation sites and trails available for public use, independent of how they are managed.

Core Business 3: Compliance and Enforcement

This core business includes all activities related to upholding B.C.'s laws related to protecting the province's forest and range resources under Ministry of Forests' jurisdiction. This includes:

• enforcing environmental standards for forest and range management carried out both by the government and by forest and range tenure holders under the Forest Practices Code and under the Forest and Range Practices Act;
• enforcing regulations to minimize fire, pests, and unauthorized activities that threaten the province's forest and range resources;
• enforcing rules governing the use of Forest Service recreation sites and trails;
• enforcing the revenue policies that govern removal and transportation of timber, marking, scaling, marine log salvage, etc.; and
• combating "forest crimes" (theft, arson, mischief) which are a significant drain on provincial revenue and a significant risk to other environmental, social and economic values.

Key Outcome: Effective forest protection and management by forest operators.

Compliance reflects management decisions and actions of forest operators, and is key to the outcome of sustainable forest resources.

Key Outcome Indicator	Year	Projection	Actual	Variance
Per cent of forest operators' compliance with standards that regulate forest practices.	2004/05	>94%	91.4%	-2.6%
	2003/04		92.1%
	2002/03		93%
	2001/02		>90%

Forest operators include all major and BC Timber Sales licensees. Information is from the ministry's Compliance Information Management System. The rate of compliance has consistently been in excess of 90 per cent for the past eight years.

The 91.4 per cent compliance rate in 2004/05 is within the expected normal variation for this measure.

Objective 1: Promote compliance and ensure statutory obligations are enforced.

While part of managing for sustainable forest resources is ensuring that appropriate regulatory requirements are in place, an equally important part is to ensure that forest operators are achieving these statutory obligations. Achieving both objectives will provide confidence that our forest and range resources are being managed sustainably.

Performance Measures and Results for Objective 1

Performance Measure	Year	Target	Actual	Variance	Result
16. Per cent of high and very high priority sites inspected for forest and range practices compliance	2004/05	86%	81.6%	-4.4%	Mostly achieved
	2003/04		82.6%

Inspections, or site visits, are targeted to very high and high priority sites where environmental and/or social values have been identified as being at high risk.

In 2004/05, the transition to full implementation of the Forest and Range Practices Act with five different vintages of forest practices legislation active on the same landbase continued to add complexity and challenge inspection performance. These were: th Forest Act, the Forest Practices Code of British Columbia Act, the Forests Statutes Amendment Act (No. 2), 2002 (Bill 75), the Forest and Range Practices Act (Bill 74), and the code pilot projects established by regulation under Part 10.1 of theForest Practices Code of British Columbia Act.

Performance Measure	Year	Target	Actual	Variance	Result
17. Per cent of alleged compliance contraventions successfully concluded	2004/05	80%	82%	+2.0%	Achieved
	2003/04		84.3%

Alleged compliance contraventions were successfully concluded as expected during the year. Data for compliance are from the Compliance Information Management System.

The ministry slightly exceeded the target for this measure in 2004/05. The ministry will be re-examining this measure for future changes that more adequately communicate performance objectives.

Performance Measure	Year	Target	Actual	Variance	Result
18. Per cent of alleged enforcement contraventions successfully concluded	2004/05	80%	67%	-13.0%	Mostly achieved
	2003/04		56.6%

While there are generally less alleged enforcement contraventions than compliance contraventions, these require substantially more work to conclude successfully. In 2003/04 and 2004/05, a significant number of contraventions were noted as taking longer than one year to conclude successfully. In addition, contraventions introduced late in the year cannot be expected to be concluded by year-end. It was acknowledged in the 2003/04 Annual Service Plan Report that since the performance measure requires tracking across multiple reporting years it was costly and time-consuming to maintain and the measure needed to be reviewed.

A review of the measure during 2004/05 resulted in a new measure to track the "per cent of investigations successfully completed within one year of discovery." This measure will be tracked internally to the ministry starting in 2005/06. Using the 2004/05 data with the new measure results in 77.5 per cent of alleged enforcement contravention investigations being successfully completed within one year of discovery. The 2004/05 data reflects a concerted effort by the Ministry to improve the data tracking and systems used in reporting.

Data for enforcement actions are from the Enforcement, Administrative Review and Appeal Tracking System.

Strategy 1: Implement a new compliance and enforcement regime for the Forest and Range Practices Act and a new compliance and enforcement regime for pricing and revenue.

In 2004/05, progress on this strategy included:

• All staff have completed training on FRPA and Forest Act changes. Training priorities for each level in the organization have been identified within a compliance and enforcement Training Matrix.
• Regional Quality Assurance principles and procedures were implemented during 2004/05. The Provincial Quality Assurance model is under development.
• Special Provincial Constable (SPC) applications were approved by the Solicitor General.
• An approximately 80 per cent completion was achieved on policy development for implementation of an independent/integrated organizational model.
• Assessment of FRPA implementation and new Forest Act provisions is ongoing. Resources have been reallocated from forest practices to revenue and forest crimes as required.

Performance Measures and Results for Strategy 1

Performance Measure	Year	Target	Actual	Variance	Result
19. Per cent of high and very high pricing and revenue risk sites inspected for pricing and revenue compliance	2004/05	85%	84.4%	-0.6%	Achieved
	2003/04		83%

Inspections, or site visits are targeted to very high and high priority sites where social and/or economic values have been identified as being at high risk. Data is from the Compliance Information Management System.

The achievement in 2004/05 is within the acceptable variance for this measure.

Core Business 4: Forest Investment

Achievement of Forest Investment objectives and strategies are accomplished through program activities carried out by licensees under the coordination of third party administrators. Assessment of actual outcomes and outputs from FIA program activities is captured through performance measures identified in the plans and reports associated with the third party administrators.

2004/05 Forest Investment Account (FIA) program highlights, key accomplishments and web links to third party reports are provided in Appendix 2.

Objective 1: Actively foster sustainable forest management.

The objectives under the Forest Investment Core Business are similar but complementary to the Stewardship Core Business objective of "ensuring that forest and range resources are managed an improved on a sustainable basis." While the Stewardship Core Business objectives focus on regulatory requirements for essential forest management, the Forest Investment Core Business objectives build on these by funding investments in incremental forest management activities.

Key Strategies

1. Acquire better information about forest resources;
2. Improve the modeling of forest dynamics;
3. Foster comprehensive strategic land-use planning;
4. Facilitate science based utilization of the resource;
5. Support the creation of sustainable forest management plans; and
6. Support the feasibility of third party certification.

Objective 2: Improve the public forest asset base.

Key Strategies

1. Support the creation and deployment of improved seedlings and other germplasm;
2. Fund reforestation of areas denuded naturally, or by harvesting before 1987;
3. Reclaim and enhance site productivity; and
4. Restore damaged ecosystems.

Goal 2: Sustainable Forest Benefits

Forestry generates substantial revenues to the provincial government yielding a significant net benefit to the broader public interest and remains a major contributor to B.C.'s current and future economic health. Sustainable forest benefits rely on a strong forest economy and a globally competitive forest sector, which the ministry supports through its forest revitalization policies. The ministry also recognizes the interests of First Nations in accessing forest benefits now and in the future. The following key outcome indicators have been identified as contributing to this goal.

Core Business 5: Pricing and Selling Timber

The Forest Service has a major role in ensuring that the citizens of British Columbia benefit from commercial use of their forests. This relies on a strong forest economy and a competitive forest sector, which in turn is dependent on a fair pricing system, effective allocation and administration of timber harvesting rights, and a safe and cost effective road infrastructure to access timber.

Core business activities to achieve this goal include timber tenure administration, timber pricing, market access activities, maintaining a forest road infrastructure and First Nation's consultation.

Key Outcome: Revenue to the Crown

Key Outcome Indicator	Year	Projection	Actual	Variance
Crown forest gross revenue ($ billions)	2004/05	$0.962 B	$1.321 B	$.359 B
	2003/04		$0.987 B
	2002/03		$1.296 B
	2001/02		$1.164 B

Crown forest gross revenue is the total amount of money charged by the ministry during the fiscal year (includes BC Timber Sales, Timber Tenures and other MOF revenues). The 2004/05 actual revenue was $1.321 billion (unaudited) which was $0.359 billion higher than the original estimate. Table 4 below provides the revenue category details.

This increase in revenue is the result of high commodity prices and high Crown timber harvests through 2004/05.

Table 4: 2004/05 Revenues (unaudited) by Category and Forest Region

Revenue Categories	Coast	N. Interior	S. Interior	Victoria	Totals
(thousands of dollars)
Timber Tenure Stumpage	$228,813	$402,260	$372,888	($1,921)	$1,002,040
Harvest Rents and Fees	7,247	9,543	9,289	(7,293)	18,786
B.C. Timber Sales	98,390	72,992	95,832	(1,140)	266,074
Export	1,627	282	103	64	2,076
Range	4	484	2,061	(2)	2,547
Waste	2,850	26	3	171	3,050
Penalties	39	0	118	2	159
Interest	370	546	120	302	1,338
Miscellaneous	792	898	42	96	1,828
Softwood Export Tariff Refund				23,611	23,611
Totals	$340,132	$487,031	$480,456	$13,890	$1,321,509

Key Outcome Indicator	Year	Target	Actual	Variance
Crown net revenue from BC Timber Sales ($ millions)	2004/05	$121.1 M	$150.2 M	$29.1 M
	2003/04		$101.1 M
	2002/03		$143 M
	2001/02		$121 M

Net Revenue (gross revenue net of capitalized expenses) is an indicator of the success of the BC Timber Sales program in generating revenue to the Crown.

With actual gross revenues of $266.1 million and experienced capitalized expenses of $115.9 million BC Timber Sales earned net revenues of $150.2 million in 2004/05 - an over-achievement of $29 million. This over-achievement was primarily a result of a combination of higher than anticipated billed rates for timber harvested that increased gross revenues and a lower than projected volume of timber harvested during the year which resulted in decreased capitalized expenses. Projected timber volume harvested (scaled) was 11.5 million cubic metres. Actual timber volume scaled in 2004/05 was 10 million cubic metres - 13 per cent less than projected but 27 per cent higher than the previous year.

Gross revenue information is provided by the ministry's Revenue Branch. Capitalized operating costs for the program are reported in the government's Corporate Accounting System (CAS).

Key Outcome: Access to Export Markets

The provincial forest sector is highly dependent on exports. The health and diversity of export markets is a good indicator of the strength of the forest economy.

Key Outcome Indicator	Year	Projection	Actual	Variance
British Columbia's share of the U.S. softwood lumber market	2004/05	18.0%	18.1%	+0.1%
	2003/04		18.1%
	2002/03		17.6%
	2001/02 (benchmark)		17.0%

The U.S. is British Columbia's largest customer for softwood lumber. British Columbia's share of the U.S. softwood lumber market is determined from American Forest Products Association (AFPA) statistics on U.S. consumption and the Statistics Canada data on British Columbia and Canadian exports. Statistics for this indicator are updated on a calendar year basis.

U.S. lumber consumption remained high in 2004 at close to 60 billion board feet. U.S. housing starts were the highest on record at 1.956 million units, up 5.8 per cent from 2003. These very strong market conditions are the result of very low borrowing rates, increased incomes, a low inventory of unsold homes, combined with uncertainty and volatility in other investment markets.

B.C. lumber producers managed to maintain their market share in the U.S. despite countervailing duties and the increasing Canadian dollar, through improved productivity.

Key Outcome Indicator	Year	Projection	Actual	Variance
British Columbia's share of Japan softwood lumber imports	2004/05	40%	40%	0%
	2003/04		40%
	2002/03		43%
	2001/02 (benchmark)		45%

Japan is British Columbia's second largest softwood lumber customer. Import volumes are published annually by the Japan Wood Products Information and Research Center. Japanese wood based housing starts have been in a decline since 1998. In previous years, B.C.'s share of lumber imports had been on a decline as a result of increased competition from Northern Europe and Russia. B.C.'s import market share to Japan has however, stabilized, with lumber exports increasing by almost 10 per cent in value in 2004. Statistics for this indicator are updated on a calendar year basis.

Key Outcome indicator	Year	Projection	Actual	Variance
Increase in wood product sales to Taiwan, China and Korea	2004/05	20%	11.3%	-8.7%
	2003/04		34%

This indicator was added in 2003/04, to track the results of work targeted by the Market Outreach Network under Forest Investment. Increasing wood product sales to Taiwan, China and Korea indicates an expansion into new markets for B.C. wood products. Statistics for this indicator are updated on a calendar year basis using data from Statistics Canada reports of wood exports in dollars. Pulp and paper is not included. China includes Hong Kong.

In 2004/05 the rate of growth for wood product sales slowed in Taiwan and Korea, but continued to increase in China. The result is a growth shortfall of 8.7 percentage points.

Key Outcome: Competitive forest sector

Key Outcome Indicator	Year	Projection	Actual	Variance
Ratio of B.C. forest industry capital investment to depreciation and amortization.	2004/05	< 1.0	< 1.0	0
	2003/04		< 1.0
	2002/03		< 1.0
	2001/02 (benchmark)		< 1.0

This indicator represents the level of investment by forest industry. A ratio less than one indicates that capital is being depreciated, while a ratio greater than one shows that ongoing new investment exceeds the level of depreciation. A healthy level of capital investment is expected in a competitive forest sector.

This information is from PricewaterhouseCoopers; however, they no longer produce the information used to derive this indicator and therefore this is the last year of reporting.

Key Outcome: Globally competitive forest sector

Key Outcome Indicator	Year	Projection	Actual	Variance
Percentage increase in forest land certified by major forest certification processes.	2004/05	> 10% increase	33%	0
	2003/04		48%
	2002/03		99%
	2001/02 (benchmark)		—

Major forest certification processes are the Canadian Standards Association (CSA), Forest Stewardship Council (FSC) and Sustainable Forest Initiative (SFI). International Standards Organization (ISO) is excluded.

B.C. forest companies continue to obtain certification at a fast growing rate (see Table 5). A combination of reporting dates was used in previous MOF and government reports. Starting in 2003, the data is available only twice a year (in December and June). The data presented here have been adjusted to show a December to December, year over year performance. December was chosen as the reporting date in order to meet government's annual reporting timelines.

Table 5: Area (hectares) in forestland certified by major forest certification processes

Objective 1: Maintain access to export markets for B.C. forest products.

Forest product exports represent close to 50 per cent of all goods exported from B.C. Increasing or at a minimum maintaining B.C. forest products export markets is important for maintaining a strong B.C. economy.

Strategy 1: Continue to pursue free access for British Columbia forest products to markets in the United States.

Progress on this strategy in 2004/05:

• The Ministry of Forests continues to pursue free access for British Columbia forest products to markets in the United States. In order to achieve the objective the province is following a two-track strategy that involves litigation and appeals of the U.S. countervailing duties and discussions aimed towards a negotiated resolution of the dispute.
• In addition, in order to diversify forest products exports, the B.C. Government through Forestry Innovation Investment Ltd. is investing in a number of projects, such as the Dream Home China project, that are intended to increase exports of forest products.

Performance Measures and Results

Achievement of this strategy is tracked by the key outcome indicator "B.C.'s share of the U.S. softwood lumber market."

Objective 2: Ensure that the public receives fair value for the use of its forest and range resources now and in the future.

Ensuring the public receives fair value and, therefore sustainable benefits, from the use of forest and range resources, is dependent on a fair timber pricing system.

Strategy 1: Implement a market-based pricing system to generate appropriate revenues to the Crown.

The timing of the implementation of the Interior Market Pricing System is dependent and linked to the outcomes and timelines of the provincial and ministry policy reforms and initiatives (i.e., softwood lumber litigation and negotiations) currently underway.

Performance Measures and Results for Strategy 1

Performance Measure	Year	Target	Actual	Variance	Result
20. Status of implementation of the market based pricing system (MPS)	2004/05	To be determined for Interior	MPS in Interior — readiness in 2005	Target not set for 2004/05, but for 2005/06	N/A
	2003/04		MPS on Coast — Implementation Feb. 29, 2004
	2002/03		Government decision made on an appropriate system.
	2001/02		N/A

The market-based pricing system is expected to increase the competitiveness of the forest industry and provide greater incentives for capital re-investment. It may also lead to greater variability in provincial revenues.

Objective 3: Provide opportunities to generate wealth from the forest resources.

The most significant opportunity to generate wealth from the forest resources is through the effective allocation and administration of timber harvesting rights, most commonly using timber tenures. A current challenge to achieving this objective is the substantial increase in requirements to achieve the disposition plan for harvesting timber killed by bark beetle.

Strategy 1: Ensure that timber apportioned in TSAs is available to licensees through tenure.

Performance Measures and Results for Strategy 1

Performance Measure	Year	Target	Actual	Variance	Result
21. Per cent of Timber Supply Area AAC under a form of tenure	2004/05	90%	88%	-2%	Achieved
	2003/04		94.7%
	2002/03		97%
	2001/02		97%

This is a measure of the effectiveness of the ministry's apportionment of the AAC within a TSA to various programs, and its issuance of tenures under these programs. Tenures are issued under programs such as Forest License and for Community Forest Agreements. Tree farm licences, woodlot licences and BC Timber Sales tenures are not included. Data is from the Apportionment System.

The slight reduction in achievement is attributed to increased administration needed to make timber available to licensees through tenure due to:

• large AAC uplifts to address the mountain pine beetle epidemic, and
• the reallocation of 20 per cent of the long-term replaceable logging rights from the 27 largest licensees to create new opportunities for new entrepreneurs, small operators and First Nations.

Strategy 2: Implementation of forest policy reform legislation, included:

i. The recovery, re-apportionment and tenuring of the 20 per cent AAC recovery from major licence holders as provided by the Forestry Revitalization Act. As of March 31, 2005, approximately 60 per cent of the volume has been returned to the ministry through Minister's Orders under the Forestry Revitalization Act and the remainder is due to be transferred by March 31, 2006. Compensation agreements have been entered into with five of the impacted licensees. A trust to help mitigate negative financial impacts on forestry contractors and workers was also made operational. Re-apportionment and tenuring of the returned volume is expected to take longer than expected and is dependent on client interests and First Nation's consultation requirements.

ii. The conversion of replaceable Timber Sale Licences to other forms of tenures as provided for by amendments to the Forest Act. In accordance with the legislation now in effect, decisions on licensee conversions of replaceable Timber Sale Licences were made as of March 30, 2005.

iii. Implementation of government approved recommendations from the MLA committee review of the Small-Scale Salvage Program. This included a target of generating sales volumes in excess of 210 000 cubic metres and revenues of at least $2.5 million in stumpage through the sale of competitive and non-competitively awarded forestry licences-to-cut and the piloting of a number of new salvage-based non-replaceable forest licenses. During 2004/05, mostly as a result of the Mountain Pine Beetle infestation, the Small Scale Salvage Program sold over 2.0 million cubic metres and generated revenues in excess of $3.7 million in stumpage. In light of this substantial increase and its potential effect on other forest management strategies and revenues, the strategy will be reviewed during 2005/06.

iv. In addition to invitations to 25 communities to apply for Community Forestry Agreements, three new agreements were issued, two of the existing eight Community Forestry Pilot Agreements were offered long-term licences and two were offered extensions.

Objective 4: Provide a reliable and safe forest road network through legislation, policy and standards.

A reliable, safe and cost effective road infrastructure is critical to accessing timber and providing economic benefits. The Forest Service road infrastructure is also used to access communities and recreation areas and therefore to provide the benefits associated with local economies and local tourism activities.

Unforeseen weather events and spring freshet can lead to road closures or costly emergency repairs and are significant risks affecting the ministry's ability to achieve this objective. Policy, funding and ongoing reviews are all used to manage the risk, in addition to the strategy of reducing the road infrastructure managed by the ministry.

Strategy 1: Maintain priority Community-Use Forest Service Roads until maintenance responsibility can be transferred.

• Complete the rationalized road maintenance strategy in 2004/05 to prepare for further transfers in 2005/06 and following.
• The Ministry of Forests will maintain 10 000 kms to the Wilderness Forest Road Maintenance Standard. 2 500 kms of this will be maintained by ministry in the short-term to a higher Community-Use Forest Road Maintenance Standard with funding from the Ministry of Transportation's Roads Serving Rural Residence Program.

Performance Measures and Results for Strategy 1

A reduction to the Forest Service road network may be achieved through transfers of roads to the Ministry of Transportation, other agencies and industry or by closing and deactivating. The forest road network baseline at the end of 2003/04 was approximately 12 500 km. A reduction to the non-industrial road network in 2004/05 of approximately 116 km, was primarily a result of deactivation of old roads in the North Island and the Kootenay Lakes Forest Districts.

The strategy is currently being reviewed, as the non-industrial road network is expected to increase in future years as a result of road transfers to the ministry due to timber reallocation as well as additional roads maintained for recreation access in 2005/06.

Objective 5: Increase First Nation participation in the forest sector and ensure forestry operations respect First Nation interests on the land-base.

The objective of increasing First Nation participation in the forest sector acknowledges that First Nation communities are largely rural or forest based, that First Nations often have an interest in increasing their participation in the forest sector, and that government has a legal obligation to consult and seek to accommodate potential infringements of asserted aboriginal interests regarding forestry decisions and actions on Crown forest land.

Strategy 1: Consult with First Nations in accordance with legal obligations.

Strategy 2: Negotiate agreements with First Nations:

• Implement the First Nations Forest Strategy (FNFS) offering access to economic forest benefits to First Nations through accommodation agreements. This is a three-year strategy with up to one-third of the province's First Nations engaged each year.
• Increase First Nations participation in the Forest Sector through direct award tenures. Timber volume will become available for award to First Nations through the timber reallocation as a result of the Forestry Revitalization Act.

Performance Measures and Results for Strategies 1 and 2

Performance Measure	Year	Target	Actual	Variance	Result
23. Total number of accommodation agreements signed with First Nations (cumulative)	2004/05	30–50	47	0	Achieved
	2003/04		22

Accommodation agreements provide a period of stability for forest and range resource development. They include the provision of economic benefits in the form of tenure and revenue sharing as well as consultative arrangements that define an agreed upon process between the ministry and a First Nation for consulting on and addressing aboriginal interests.

In 2004/05, 25 agreements were signed, bringing the cumulative total to 47 agreements. These agreements commit the ministry to make available to First Nations approximately 8.9 million cubic metres of timber volume and a total of $100.4 million in revenue sharing, over the terms of the agreements. The majority of agreements are for five years.

The targets for the number of accommodation agreements to be signed were adjusted in 2004/05 to reflect that negotiations with First Nations were taking longer than expected and that in some areas of the province First Nations have little interest in pursuing these agreements with government. The ministry was able to achieve the high end of the 2004/05 target range.

Performance Measure	Year	Target	Actual	Variance	Result
24. Number of tenures offered to First Nations	2004/05	20–30	51	+21	Exceeded
	2003/04		32

Under the Forest Act, the minister may invite, without competition, applications from First Nations for a forest tenure. The criterion measures the number of invitations from the minister, including tenures offered through accommodation agreements under the First Nations Forest Strategy.

In 2004/05, this measure was overachieved, reflecting the tenures offered as a result of signed Forest and Range accommodation agreements, as well as invitations made in furtherance of interim measure agreements, treaty related measures, or economic measures agreement between the First Nation and the province.

Core Business 6: BC Timber Sales

The Forest Service has a core responsibility to provide British Columbians with benefits from the commercial use of public forests. BC Timber Sales is an autonomous organization within the ministry, with financial and operational independence from regional and district operations. The division has an integral role in the implementation of government's Forestry Revitalization Plan and supports the ministry's goal of providing British Columbians with sustainable benefits from the commercial use of public forests.

BC Timber Sales does this by planning, developing, and selling through auction, a substantial and representative portion of the province's annual available timber volume. The bid prices received from auctioned timber drive the Market-based Pricing System for setting stumpage in coastal operating areas of the province. Over time, the program's costs of developing timber will also provide data for the Tenure Obligation Adjustment, another integral part of the pricing system.

Objectives

1. Provide a credible reference point for costs and pricing of timber harvested from public land in British Columbia.
2. To optimize net revenue to the province, within the parameters dictated by our benchmarking mandate and sound forest management.
3. Provide opportunities for customers to purchase timber in an open and competitive market.

BC Timber Sales seeks a balance between generating revenues, being a credible reference point, and providing opportunities for customers to purchase timber, while ensuring sound forest management practices.

Objective 1 is key to the ministry achieving its goal of Sustainable Forest Benefits by establishing a market price for Crown timber. BC Timber Sales contributes to this ministry goal by being a credible reference point for the ministry's Market-based Pricing System for costs and pricing of timber harvested from public land in British Columbia.

BC Timber Sales uses the "per cent of total provincial annual scaled timber volume attributable to BC Timber Sales Section 20 auction sales" as an indicator of its success in achieving a sufficient market presence to be a credible reference point for costs and pricing of timber harvested. In 2004/05 this per cent was 11 per cent compared to 8.3 per cent in 2003/04, a 33 per cent increase.

Objective 2 supports government and the ministry as major contributors to the current and future economic health of the province. Net revenue is a key outcome indicator of the success of BC Timber Sales in optimizing revenue return to the Province. In 2004/05 BC Timber Sales earned net revenue of $156 million compared to $101 million in 2003/04, a 54 per cent increase.

Objective 3 supports a strong forest economy and competitive forest sector. The timber volume offered for sale by BC Timber Sales indicates the program's success in providing opportunities for customers to acquire timber. In 2004/05 BC Timber Sales offered 12.8 million cubic metres of timber to the market compared to 11.2 million cubic metres in 2003/04, a 14 per cent increase.

Key Strategies

In 2004/05 BC Timber Sales made significant progress implementing strategies to support the achievement of objectives. Since its inception April 1, 2003 BC Timber Sales has continued to grow and mature in support of government and ministry objectives and the Forestry Revitalization Plan (FRP).

Program volumes:

• As part of the FRP and to address pricing requirements BC Timber Sales is increasing its volume towards representing 20 per cent of provincial allowable annual cut by 2007. In 2004/05, BC Timber Sales' timber volume advertised as a per cent of the provincial Allowable Annual Cut was 14 per cent. As the volume re-allocated from the major tenure holders is provided to the program to develop and auction BC Timber Sales is continuing to develop more timber inventory, and offer and sell greater volumes of timber.

Legislative reform:

• Legislation has been brought into force to enhance the rate of harvest and revenue return to the Crown and transform BC Timber Sales into an auction business only to ensure full market value is bid for all timber sold.

Marketing strategies:

• As part of an ongoing strategy to improve electronic access to services BC Timber Sales redesigned its public website to improve its functionality and provide better information to stakeholders and the public. Plans to explore E-commerce applications for timber sales transactions on the web in fiscal 2004/05 were deferred for operational reasons but are still a significant strategy in BC Timber Sales 2005/06 – 2007/08 Service Plan.
• BC Timber Sales continued to make substantial progress towards the achievement of its strategy to certify operations to support market access and forest stewardship. In total, five BC Timber Sales business areas have now achieved ISO 14001 Certification. Seaward-Tlasta, Strait of Georgia, Okanagan-Columbia, and Peace Liard all had successful registration audits in 2004/05 and joined the Chinook business area in holding ISO 14001 Certificates. In addition, the Fort Nelson Field Team of the Peace Liard business area achieved CSA certification and a number of other business areas are at various stages of investigating or pursuing SFM certification.
• As part of its strategy to reduce risk and uncertainty from bidders and increase revenue return to the Crown 89 per cent of all volume offered in 2004/05 was fully developed.
• BC Timber Sales continued to offer a range of timber sales to customers. In 2004/05, 95 per cent of the volume offered was advertised to ensure that all bidders had a fair chance to bid openly for timber.

Financial and Internal strategies:

• Implementation and integration of BC Timber Sales' Cost Accounting and Genus Resource Management systems into program business and operational processes continued to make progress in 2004/05. BC Timber Sales began full account coding of its direct costs to project codes (cut blocks and roads) in the government's Corporate Accounting System April 1, 2004. Further allocation of indirect and pooled costs to project codes is planned with the implementation of a BC Timber Sales cost accounting database system in 2005/06.
• BC Timber Sales continued to streamline operations in 2004/05 through the application of continuous improvement principles and the standardization of procedures generating significant budgetary savings for government.

For more information on BC Timber Sales goals, objectives, strategies and performance results please view the 2004/05 BC Timber Sales' Annual Service Plan Report on its website at http://www.for.gov.bc.ca/bcts.

Performance Measures and Results

The average inventory cost per cubic metre of volume developed is a measure of BC Timber Sales' performance in containing costs, providing a credible reference point for costs and pricing of timber, and optimizing net revenue. Inventory costs include all costs incurred to plan, develop and sell timber. Period costs such as administrative overhead and road maintenance, and post-harvest costs such as silviculture are not part of the cost of inventory.

Contracting efficiencies and other operational cost containment strategies during the year contributed to the achievement of significant budget savings which, combined with a an over-achievement in the volume of timber developed in 2004/05 resulted in BC Timber Sales over-achieving its target by 20 per cent. This over-achievement will contribute to lower capitalized expenses and higher net revenues in future years when this timber inventory is sold and harvested.

This was a new measure in 2004/05 replacing the previous "average cost per cubic metre of volume sold". The change from volume sold to volume developed is to reflect that the majority of costs are incurred during the development of a timber sale rather than later when the sale is sold.

The per cent of sales fully developed is a measure of BC Timber Sales' success towards the achievement of its strategy to reduce licensee risk associated with purchasing timber sales. The more developed a sale is when it is offered for sale the lower the risk to potential bidders. In 2004/05 BC Timber Sales achieved its target of 90 per cent of timber volume advertised during the year is fully developed.

Performance Measure	Year	Target	Actual	Variance	Result
27. Per cent of volume advertised for sale	2004/05	100%	95.1%	-4.9%	Achieved
	2003/04		104%
	2002/03		99%
	2001/02		97%

The per cent of volume advertised competitively is a measure of BC Timber Sales' success in providing opportunities for customers to purchase timber in an open and competitive market. The measure is the total volume advertised for sale divided by the total volume offered for sale to the market. BC Timber Sales achieved its target within five per cent.

The volume offered for sale indicates BC Timber Sales' success in providing opportunities for customers to purchase timber. BC Timber Sales exceeded its volume offered target in 2004/05.

The volume of timber sold indicates BC Timber Sales' success in providing economically viable opportunities for customers. In 2004/05 the volume sold was 98 per cent of target.

Performance Measure	Year	Target	Actual	Variance	Result
30. Instances of significant non-compliance with the Forest and Range Practices Act	2004/05	0	0	0	Achieved
	2003/04		1

This measure is used to show BC Timber Sales' success in practicing sound forest management. There were no instances of non-compliance noted by the Forest Practices Board in 2004/05.

Core Business 4: Forest Investment

The Forest Investment Account provides support to improve British Columbia forest sector performance in existing and new markets through international marketing initiatives and enhance sector competitiveness through the development of new products and manufacturing process improvement.

Forestry Innovation Investment Ltd. is the third party administrator responsible for overseeing the marketing and product development programs, for developing an independent Service Plan and an Annual Service Plan Report, as required by the Crown Agency Secretariat.

Goal 3: Effective and Responsive Forest Manager

While undertaking the many challenges and opportunities involved in revitalizing the Ministry of Forests as an organization, we will bear in mind that our core purpose is to ensure that sustainable forest resources deliver sustainable forest benefits for the people of British Columbia. The effectiveness of our organization continues to be dependent upon highly trained and knowledgeable staff who are responsive and performance-focused.

Key Outcome: Public Trust in the BC Forest Service

Key Outcome Indicator	Year	Projection	Actual	Variance
Percentage of those surveyed who believe the forest service can be trusted to protect and manage our public forests.	2004/05	> 60%	52%	-8%
	2003/04		Not measured in 2003/04
	2002/03 (benchmark)		60%

Public trust in the BC Forest Service is measured every two years through a telephone survey of one thousand British Columbians selected through random sampling methodology. In addition to measuring public trust, the survey identifies public perceptions of Forest Service effectiveness and assesses public values and attitudes toward forest management.

Results from the 2004 survey indicated that 52 per cent of British Columbians trust the Forest Service to manage and protect Crown forests for the long-term. This result is eight percentage points lower than the 2002 baseline of 60 per cent. Survey results also suggested that 69 per cent of British Columbians believe the Forest Service is an effective forest manager, a 4 per cent decrease from 2002 results. This decline was related primarily to perceptions of forest service effectiveness with forest fire protection and the control of forest pests and diseases. The 2004 results also showed a significant increase in the number of British Columbians who perceived the Forest Service to be effective in reforestation.

Core Business 7: Executive and Support Services

This core business includes corporate governance process and service delivery activities in support of all ministry functions.

Key clients for the strategic policy and governance aspect are the Executive, Minister and Cabinet. Activities are structured within key frameworks for policy and legislation development, performance management, internal audit and evaluation, and litigation support. Executive, regional and district management, and staff in the Corporate Policy and Governance Division play a key role in delivery of these functions.

Support service activities include finance and administration, human resources, central infrastructure management, Freedom of Information, records management, continuous improvement and best practices initiatives, as well as application of information technology. These services are delivered at all levels of the organization - branch, region and district. While focused at supporting internal management and employees, they also serve industry and the general public.

Objective 1: Establish ministry policy and planning frameworks to meet government's strategic plan and direction.

An effective and responsive government organization ensures policy and planning work will guide achievement of corporate objectives.

Strategy 1: Implement policy and planning frameworks. In 2004/05 policy and planning frameworks will be established.

In 2004/05 policy teams supported key ministry policy initiatives including market-based pricing in the Interior, Mountain Pine Beetle Action Plan, and Defined Forest Area Management. In addition, a review of the ministry's policy planning process was initiated and a redesign of the ministry's legislation program was completed.

With respect to planning frameworks, the Performance Management framework was fully established with the pilot of an evaluation component and full use of the MAX online performance and budget planning system.

Strategy 2: Provide legislative support to the other core businesses who will be implementing the Forestry Revitalization Plan and the Forest and Range Practices Act; continuing the deregulation initiative; and addressing any critical operational issues.

Performance Measures and Results for Strategy 2

The ministry's Legislation Program ensures delivery of key legislation needed to facilitate forest policy changes.

In 2004/05, the ministry continued to focus on implementation of the significant legislation introduced in 2003/04 through the introduction and passage of Bill 33, Forests Statutes Amendment Act, 2004, and Bill 65, Forests Statutes Amendment Act (No. 2), 2004. These Bills included amendments to the Forest Act, Forest and Range Practices Act and Forestry Revitalization Act to, among other things,

• enable an expansion of the programs related to small scale salvage, woodlot licences and community forest agreements,
• facilitate the issuance of tenures to harvest beetle infested timber, and
• improve the means by which timber volume is taken back and redistributed under the Forestry Revitalization Plan.

In addition two new acts were tabled and later brought into force with their regulations:

• Wildfire Act (Bill 25) and Wildfire Act Regulation, and
• Range Act, 2004 (Bill 57) and Range Regulation.

In December 2004, the first significant amendments to the Forest and Range Practices Act regulations were made.

As the ministry's deregulation target was exceeded in 2003/04, all new legislation is now developed in keeping with Government's new "SMART" regulation focus and maintaining a 0 per cent increase in regulatory requirements.

Strategy 3: Review and implement an Enterprise Risk Management framework for the Ministry of Forests.

An Enterprise Risk Management framework was successfully piloted with the development of the 2005/06 Service Plan.

Objective 2: Be a high performing organization.

A high performing organization is client and performance focused, depends upon highly trained and knowledgeable staff and uses technology to its advantage.

Strategy 1: Refine ministry business processes and practices to meet the highest standards of efficiency and effectiveness.

Over the past year 600 ministry employees from around the province were introduced to continuous improvement (CI) tools to assist in refining ministry processes. The ministry will continue to ensure that sufficient capacity and depth of these CI skills and competencies are in place to help the ministry manage changes to our business and/or organizational structures.

Strategy 2: Implement a culture of being a continually learning organization.

The ministry initiated activities towards becoming a continually learning organization, including making this one of the five foundational goals of the ministry's Road Ahead revitalization strategy. In addition, the ministry planned staff workshops for 2005/06 to support a learning organization, and identified internal performance measures to further track our progress on this initiative.

Strategy 3: Develop a client service strategy.

In 2004/05, Corporate Policy and Governance Division initiated discussions to further emphasize a focus on excellence in client service. A baseline needs assessment was needed to inform the client service strategy being developed and a client satisfaction survey was commenced with the goal of having an analysis completed by June 2005 so that strategies can be developed and implemented as soon as possible in 2005/06.

Strategy 4: Maximize the benefits derived from the application of technology to ministry business - Implement Portal/eBC.

With respect to implementation of eBC in the Ministry of Forests, 99.9 per cent of Scale Return Sites are now being handled electronically and all Cutting Permit requests and Silviculture Obligations will be received electronically by June 1, 2005.

Performance Measures and Results for Strategy 4

Performance Measure	Year	Target	Actual	Variance	Result
32. Increase in the number of major client services available electronically	2004/05	4	4	0	Achieved
	2003/04		3
	2002/03		3
	2001/02		N/A

Electronic services are those provided to external clients via an internet link. The baseline in 2003/04 was a total of three client services available electronically. These were the automated transmission of appraisal data from licensees (ECAS), the automation of seed requests from the tree seed center (SPAR), and the automation of billing inputs in the Harvest Billing system (HBS).

The 4 client services added in 2004/05 were: The Electronic Submission Framework (ESF), RESULTS (the Reporting Silviculture Updates and Landstatus Tracking System), the Corporate Reporting System (CRS) and the Seed Planning Web Mapping System (Seedmap).

Core Business 4: Forest Investment

Under Goal 3, the Forest Investment Core Business of the Ministry of Forests addresses overall administration of the Forest Investment Account and agreements with third-party Administrators. This includes:

• implementing the recommendations of the forest investment council;
• overseeing service agreements with all third-party administrators;
• implementing program delivery processes; maintaining and administering eligibility criteria and standards for all ministry FIA activities;
• managing storage and availability of deliverables generated by FIA activities; and
• evaluating efficacy of the programs to meet FIA and ministry objectives.

Key Outcome: Effective Administration of the Forest Investment Account (FIA)

This measure introduced in 2004/05 is based on the number of performance targets developed by FIA third party administrators (PricewaterhouseCoopers, Federation of B.C. Woodlot Associations, and Forestry Innovation Investment Ltd.). Achievement is defined as within 85 per cent of target.

In 2004/05, third party administrators achieved 20 of 22 performance targets. Neither PricewaterhouseCoopers nor the Federation of B.C. Woodlot Associations achieved the performance target of an average of five business days from project approval to issuance of payment. In both instances, an average of nine business days was reported. The difference is largely attributed to delays in meeting administrative obligations on the part of the funding recipients.

The ministry will be reviewing the performance targets based on the 2004/05 results.

Objective 1: Ongoing improvement to the effectiveness and efficiency of FIA delivery.

Competent administration of large complex programs such as Forest Investment ensures that program objectives under the other ministry goals are achieved and is an indication of an effective organization.

Strategy 1: Administer and fund the Defined Forest Area Management (DFAM) forest health and timber supply review activities through a second transition year.

In 2004/05, FIA provided funding through the Land Base Investment Program for the core activities under the DFAM initiative. A total of approximately $6.7 million was expended towards forest health and timber supply activities throughout the province.

Strategy 2: Shift administration of the Research program from Forestry Innovation Investment Ltd. (FII) to a new administrator.

The transition from FII Ltd. to a new administrator was completed in 2004/05. After a competitive process the Ministry of Forests selected PricewaterhouseCoopers LLP as the new administrator for the Forest Science Program. A Forest Science Board was also established by the Deputy Minister of Forests to provide advice on program strategies and priorities. The Forest Science Board is comprised of both users and providers of scientific knowledge, with members from industry, governments, and the forest science community. A strategic plan (FIA - Forest Science Program, Strategic Plan 2004 – 2008) and business plan for the forest science program was developed in 2004/05.

Strategy 3: Effective process for the review and award of research proposals.

A two-stage process was developed for the Forest Science Program. In the first stage, proponents submit a letter of intent giving a brief summary of their project. The Letters of Intent are then reviewed for relevance to the strategic goals of the program. Successful proponents were requested to submit full proposals, which are evaluated for scientific merit. In 2004/05, of the 354 Letters of Intent submitted, 109 projects were approved for funding.

Strategy 4: Review and evaluate FIA program activities to maximize the efficacy of the deliverables in meeting FIA and ministry objectives.

Performance Measures and Results for Strategy 4

This audit will be carried out by the Office of the Comptroller General, Internal Audit and Advisory Services.

The complexity of the evaluation required a longer time than expected to establish the terms of reference. Required field work is now underway and the final audit report is targeted for completion at the end of July 2005.

The target is based on the evaluation of all standards administered by the Ministry of Forests, over a three-year period commencing in 2003/04.

The activity standards were evaluated as planned for the year. The focus of the evaluation was on standards associated with activities eligible under the Land Base Investment Program. The purpose of the evaluations is to ensure that the standards are adequately serving the activity/program needs.

Strategy 5: Improve the delivery model through ongoing consultation with proponents.

In an ongoing effort to maintain contact and discussions with FIA funding recipients, three meetings (in Prince George, Kelowna and Nanaimo) were held. The objectives of the meetings were to provide an update and to solicit feedback on the FIA.

Deregulation

The target of reducing regulation by one third over three years (by June 2004) was part of the Government's New Era commitments to streamlining government.

Performance Measure	Year	Target	Actual	Variance	Result
7. Per cent of forestry deregulation achieved.	2004/05	33%	56%	+17%	Exceeded
	2003/04		50%
	2002/03		3%
	2001/02		N/A

Deregulation is cumulative from the 2001/02 baseline. The one-third target was exceeded by 17 per cent in 2003/04. At June 1, 2004, the Ministry of Forests' count on regulatory requirements was 9,155 and this has been further reduced by 6 per cent as of March 31, 2005. The Ministry of Forests will continue to review its legislation to look for further regulation reduction and reform opportunities in the future. Over the next three years the goal is to maintain the regulatory requirements at or below the June 2004 baseline (0 per cent increase).