Government waives $6M in tax for mill

James McLeod
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The Corner Brook Pulp and Paper mill, pictured in this 2003 photo, has received an extension to its tax exemption from the provincial government.  — File photo by The Canadian Press

The Corner Brook paper mill got another financial boost from the provincial government last month, when the provincial cabinet quietly extended a tax exemption until at least 2017 worth around $6 million.

In an order in council issued by the provincial cabinet in early March, the government waived the “managed land tax” for a period of five years, from the 2012/13 budget year through to 2016/17.

Natural Resources Minister Tom Marshall said the tax break has been in place since a previous restructuring effort at the mill in 2009, and the government chose to extend it for five years as the mill struggles to remain financially viable.

“If the paper mill goes down, I’m advised that the sawmills will go down as well,” Marshall said. “It’s not just one plant; it’s the whole industry.”

Marshall said that the company is currently in negotiations with skilled trades workers trying to hammer out a long-term deal when it comes to labour issues.

If the company comes up with a long-term sustainability plan then the government is ready to step in with some sort of financial support.

“Government determined that it is going to provide support to Corner Brook Pulp and Paper,” Marshall said. “So obviously there’s money provided for in the budget to help provide that financial assistance.”

There’s a $90-million mystery pot of money set aside in the 2013 budget for unspecified “business opportunities” or “industrial development.”

When Marshall was asked if the money for Corner Brook Pulp and Paper would come from that $90 million mystery fund, he said, “It’ll come from a number of places.”

Neither the Liberals or the NDP objected to the government’s decision to extend the tax exemption for five more years.

But Liberal Leader Dwight Ball said he’d like to see the whole picture now, instead of having the government try to support the paper mill bit by bit.

“What we’ve seen here is kind of this piecemeal approach,” Ball said. “What we need now is to get a commitment from the company that kind of matches with the type of commitment that current employees and even retirees have made.”

New Democrat MHA Christopher Mitchelmore also said in the short term, the government needs to help the company stay afloat.

“In the very short term, without Kruger, it would basically have a devastating impact on the west coast, central and the Northern Peninsula,” he said. “I’ve been talking to the municipality (Corner Brook). I’ve been talking to stakeholders here. There’s a lot of concern and a lot of tension here in the street. A lot of people feel vulnerable about their jobs.”

Marshall said demand for newsprint is falling around the world, but he believes that if the government can help keep the Corner Brook paper mill afloat for a few years, they’ll be OK.

Basically, with too many mills producing paper for the marketplace, the hope is the Corner Brook operation can just ride it out until some other paper mills somewhere else in the world close up shop.

“Newsprint capacity comes out of the system as mills shut down,” he said. “The company has to make the decision as to whether or not this mill can be a viable operation, and that’s a process they're going through.”

Twitter: TelegramJames

Organizations: NDP

Geographic location: Corner Brook

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Recent comments

  • Bart
    April 24, 2013 - 11:36

    Seems to me that the PC have a hidden agenda. Aren't we a democratic society? Why does this secret sect which passes as our government oppose the right of the people to know what is going on? unknown amount of money to a private company while at the same time laying off thousands of workers. They need to come clean and stop d-stroyng the future of our children and grand the way we could have easily saved millions by cutting the number of MHA's .

  • Alec C
    April 16, 2013 - 14:15

    90 million dollars of unaccountable pork on the wall A Kruger strikes 84 million of pork on the wall 2015 rolls around and there's ZER-O pork on the wall $6 million in PRIVATE subsidies yet mass PUBLIC firings? NLPCs not worry about galvanizing rest of NL getting public cuts to aid an outdated shaky(at best) mill? Riding out the wave that is the collapse of the paper industry while Quebec mills are integrated with their printers(tele article) is wishful thinking not governance. Increase taxes? - the well off to rich just got $500 million annual tax breaks thanks to NLPCs. John Smith before proclaiming people should better educate themselves on Muskrat how about leading by example? 824MW 1,100KM transmission line is required for 330MW of Avalon power -tax/ratepayer funded too boot? 2.5 TIMES the only known market for MF power is similar to building Mile One without a committed long term contract from MLSE (10 years) Nalcor = SJSE in ability just scaled witch is a scary thought. $10 million accrued deficit on Mile One on $16.5 million STJ capital cost (1/3 of $50 Mile One cost) or 61% debt-capital ratio. $6.2B initial MF cost now at $7.4B (already 23% cost overruns and project isn't even finished yet). Deer Lake power combined with GFW, Stevenville and Bay d'Espior through updated/graded provincial transmission grid offers hundreds of MWs of already existing power for the Avalon. Sound argument for the Rabid Musketeers - industry COULD exist in the future so its wise to put the cart in front of the horse and have that power on standby or exporting it for a penitence. No industry will be willing to pay even the dismal export rates (up to 5 cent kWh) but if you're for subsiding CBPP offering a new industry power at HUNDREDS of millions under its production cost follows that line of thinking/ideology. Business will even buy power from bogyman HQ if it benefits their bottom line, as long as they DON'T have to pay for any new transmission lines ofc. Any new industry will have YEARS of advanced warning for new generation - Non megaproject generation easily scales to demand, unlike MF which we will be forever stuck with. NLPCs and Nalcor are going ALL-IN with 2067 MF without considering the odds and are thereby the biggest problem gamblers in NL history. #2013NLfallElection! let next government make final decision on MF!

  • Confused
    April 15, 2013 - 07:22

    So they will bail out private industry but cut the services provided to NLers such as education, health care, EI staffers etc? Over 100 jobs could be saved by this 6 mill.....however, Cruger still makes a profit off the backs of NLers? This gov has to go.

  • Stir the pot
    April 14, 2013 - 10:31

    The bail-out that never ends.

    • a business man
      April 24, 2013 - 15:35

      Honestly, if we as a society are sick of this bail-out that never ends, we have to do something about it. The problem is not the government, it is the mill. We need to see the mill close, we need to see the mill die. Then, and only then will the mill be unable to drink the gravy at the expense of the taxpayer. Why are the workers at the mill more important than our health care? The government has chosen these workers over the health care of the general population. The next time this mill needs help, we have to firmly say NO. Only then will the mill close down forever, and only then can the fleecing of the taxpayers stop. I predict that this mill will get bailed out year after year while our services will get cut year after year. Enjoy your time in the waiting room, while the workers enjoy the bailout.

  • paul
    April 14, 2013 - 09:17

    Money well spent, it is still the backbone of corner brook.

    • Me
      April 22, 2013 - 10:36

      so as abitibi was the apparent backbone of grand falls and stephenville! fool!

    • a business man
      April 24, 2013 - 15:38

      Then let the Cornerbrookers pay for it. Why are people from all over the province forced to pay for this nonsense? The business is clearly a failure, and the work can be done in a foreign country for less. It doesn't have to be Asia, it can be done cheaper next door in the US! The mill is clearly not competitive, and the wages of workers are certainly part of the problem. This is great new for those in Cornerbrook, but horrible news for everyone else (AKA the majority)

  • John Smith
    April 14, 2013 - 07:20

    To those who say that we can do away with Muskrat falls if we use Deer Lake for power you are really embarrassing yourselves. Even if we the plant were shut down all that would be available is the power for 20,000 homes. The Vale plant alone will require much, much more power than that. Not to mention what would we do if other business wanted to come into the province? Another refinery, another mine processing facility? The government can't sit back in mommy's basement and ruminate about falsehoods. They have to worry about people's jobs, and industry, and making sure we have enough power to meet demand. We will be at a power deficit in 5 years with or without the pulp plant in stop embarrassing yourselves, and instead educate you can debate the topic.

  • wayne badcock
    April 12, 2013 - 23:25

    somewhere sometime the government of Nl has to be more concerned with the welfare of newfoundlanders than the welfare of Joe Kruger - just think please of all the cuts govt is making(and those they pretended to make) as in justice and came all about as a concerned government --- sad is it not----- as Mr Marshall said "the iron lady with compassion"-------something forthcoming - is it not?

  • dave
    April 11, 2013 - 23:02

    @ vomit. i dont think you follow..this is not CITY tax...this is provincial taxes. youre yelling at the wrong person

    • carlsburg lite
      April 12, 2013 - 13:48

      Actually it is really all the same pot of money floating aroud. Don't be fooled DAVE.

  • Corporate Psycho
    April 11, 2013 - 18:26

    It"ll come from a number of places? Yeah right. It's coming from my tax dollars. Brutal decision.

  • what a joke
    April 11, 2013 - 18:18

    A 6 million dollar tax break to a billionaire from quebec,while fish plants shut down,and over a thousand jobs cut here in our province.Money to an industry that cannot survive on its own.To a company that is steadily demanding cuts from thier employees or threating them with closure.Three locals still without contracts and this government is still filling krugers pockets.Way to go Cathy,may you never get another vote ever.

  • david
    April 11, 2013 - 12:19

    Meanwhile, the David Suzuki Wannabes in Corner Brook have now taken to stopping any and all other potentially job-producing activities in their "oh so special" area. A little knowledge is a dangerous thing...and even less is even more. What's for supper, ma? Why, fine arts son! ahhhh....again?!?

    • Information-Based
      April 12, 2013 - 13:28

      Whiny D, you're proof of your own second sentence, which is more proof than most of your sentences enjoy. You couldn't be more misinformed and misguided if you tried.

  • Joe Bennett
    April 11, 2013 - 11:58

    This Dunderdale government is not concerned about the people on the west coast or keeping Joe Kruger rich, their concern is the fact that Deer Lake Power would then come on the Grid which would make Muskrat Falls even on worse venture then it is already. I wish somebody would explain to me how Musrat Falls is going to make us a " have " province since the only people paying for this boondoggle is the ordinary citizen. I really understand why the business people and the banks like it - they're going to make millions.

  • Little Man Dan
    April 11, 2013 - 10:55

    Maybe I'll expropriate another mill; me and my fellow ministers of the clown and Tory brain-thrust did such a wonderful job last time; we have vast experience in taking over mills. Polluter pays, prosecute to the fullest extent of the law....blah, blah, blah... Hear Johnny, Johnny...where is my trusty lapdog lackie when I need him; Paul, Steve....

  • New Fracked Energy
    April 11, 2013 - 10:43

    Why don't we cut our losses and give the power to Emera so they can benefit from our giveaways. Its the right thing to do.

  • Joe it All
    April 11, 2013 - 10:42

    This was done quietly by Cabinet!!! Didn't the Premier "proudly' say that when this money was used we would all know about it??? Don't tell me they have another pot of my money tucked away. Jeez no wonder they fired all those workers!!

  • Corporate Welfare
    April 11, 2013 - 09:40

    I'd request a second opinion on the amount; afterall, this is Minister Missed by Millions Marshall. The real amount could be off by 2-300%.

  • vomit
    April 11, 2013 - 09:23

    How Dare You ! You increased EVERYONE'S taxes again, but CBPP gets off scott free? Something wrong with this picture. If you are not collectiog taxes from the mill group, then what benefit is there for the citizens?? Dumbfounded. Also, the city said just yesterday that they would never reduce someones taxes (cat house neighbour), but now here today, Mill dont have to pay any!! OMG

  • Brett
    April 11, 2013 - 07:47

    "Basically, with too many mills producing paper for the marketplace, the hope is the Corner Brook operation can just ride it out until some other paper mills somewhere else in the world close up shop." So we're supposed to keep throwing money at a 3 legged horse in a race in the hopes that it'll be the only one left standing? What are the competitive advantages the mill has over the other paper mills that we're hoping will shut down? Cheaper labour? Better access to markets? More efficient/updated paper processing technology?

    • bob
      April 12, 2013 - 08:40

      Brett, the competitive advantage it has is that it has 100% free energy to run the paper machines due to its Deer Lake power plant. That is a huge advantage. It also has all the raw material it wants and log exchange agreements with all the sawmills around. It also has a sea port in it's back parking lot which makes shipping cheap compared to newsprint that has to be trucked or sent by rail. Also, Corner Brook Pulp and Paper is certified to two environmental standards, the ISO 14001 Environmental Management System and the CSA Z-809 Sustainable Forest Management. The only disadvantage of this mill (and it is a big one) is that it is very very old and it's machinery needs a lot of upkeep that drive up labor costs way more than newer mills around the world. And Kruger is the second owner of this mill who for sure does not really care about the people of the region, but making money. So, why can the government due? Let the mill close to spite some guy from Quebec? This mill has been in operation for many many decades and the tax money and other economic benefits that have gone to the province in that time have been many. So now that it is in a rough patch, do we just watch her shut down and pick up and move on? Agreed the old mill has it's problems, but it still has the all the renewable raw material that it needs for the future, and it still has the free power, and it still has the excellent year round shipping port (right next to it's warehouse). It is just the old machinery that needs replacing. Remember, when this mill was newer, it was the biggest and one of the most profitable mills (if not the most profitable) in the world. Retail rental space on Broadway in Corner Brook was once as much as it was in New York City!. But now with the old machinery, the cost are up. So, reinvestment in this mill to update the machinery and keep the upkeep cost down can really pay off and have long term benefits. Just as the fishery sustained Newfoundlanders for decades (and centuries), this mill has a future. And just as the fishery had it's dark days of the 90's and is slowly making it's way back, so can this mill and this industry. It just takes investment and patience. The government just has to make sure that any money given to Kruger goes into modernizing the mill and not just into Kruger’s pocket as has apparently happened in the past. One advantage the mill has over the fishery is that the mill never ever had a shortage of raw material. Luckily, the foreigners have not figured out how to get their trawlers into our forests to steal the trees!

  • derrick
    April 11, 2013 - 07:13

    Corner Brook paper mill afloat for a few years, they’ll be OK" New Democrat MHA Christopher Mitchelmore also said in the short term, the government needs to help the company stay afloat." We are past the short term Chris, let the banks keep the mill afloat, they won't, as everybody knows it's over, to compete it would have automate to a point where there would be about a dozen jobs. Taxing profits to support loses never ends well in our system.

  • Jon Smith
    April 11, 2013 - 06:57

    Government should keep its nose and the peoples money out of private business, period. Joe Kruger can go off and get his millions in handouts elsewhere.

    • concerned
      April 11, 2013 - 11:18

      To the conspiracy theorists out there. Manitoba Hydro were very clear in their DG2 report that the closure of the Corner Brook mill would free up enough electricity into the grid that Muskrat Falls would not be required, nor would it be the lowest cost option. The government now has 90 million identiifed for the Corner Brook mill in the 2013 budget. I do support keeping the CB mill open, as it's closure would be devastating. I actually think we should look at running the mill only in summer, shutting it down in the winter to divert the Deer Lake electricity into the grid. Then with this cunning plan in play stop Muskrat Falls now and count our losses.