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Powassan council passes resolution calling for probe into volatile lumber prices

Last year a piece of 2 by 4 Grade A lumber sold for $1.25 and one year later that same piece of lumber retails for more than $9
20140531 Raw Lumber in Hearst KA
File photo of raw lumber. Kenneth Armstrong/SooToday

Powassan council is asking for an investigation into what's caused the extreme price increases of lumber in Ontario.

Council wants Nipissing-Timiskaming MP Anthony Rota and Nipissing MPP Vic Fedeli to investigate if COVID-19 is behind the increase and to also look into the supply situation for building materials.

The resolution passed Tuesday states that the price of building materials has risen to the point that many residents and businesses can't afford to do construction projects.

Additionally, the resolution points out the shortage of lumber has created an inability for people to build affordable housing on budget.

Deputy mayor Randy Hall was the author of the resolution and he's also written letters to Rota and Fedeli where he explains what his research indicates is behind the increase and the impact it will have on building projects for years to come.

Hall says the rise in lumber prices “has very little to do with the do-it-yourself projects people forced to stay at home are doing” during the pandemic.

Hall also told his council colleagues the volatility in lumber prices is occurring at the milling and wholesale stage of the industry.

He's spent the last two weeks since first raising the issue at council April 6 talking to industry people, and the consensus is the price of building materials starts rising at the milling and wholesale stages.

What's driving the price up is a hot American housing market that is growing “by leaps and bounds.”

Hall says the United States is taking every bit of building material it can get its hands on and will pay what it takes to get that material.

And while he's not “trying to put the blame or accuse anyone of anything,” he acknowledges there's nothing wrong with Americans buying Canadian lumber, since we need commerce and trade.

But at a local level, this buying practice will substantially increase the cost of the new 96-bed nursing home in Trout Creek, in addition to any other government-funded infrastructure projects already announced in Ontario or soon to be announced.

“When you hear (numbers like) 30 and 40 per cent increases in building materials and you have something that's going to cost $100 million, all of a sudden you start to see $20-, $25- and $30-million increases,” Hall said.

Hall's resolution passed 3-1, with only Coun. Markus Wand opposing it.

Wand said we live in a free-market economy that's driven by supply and demand.

If council is going to ask for an investigation into why lumber prices are so volatile, Wand said, it should also ask the government to examine why the price of gasoline and recreational vehicles have risen.

No one, he said, is forcing people to buy overpriced items.

“If they cannot afford lumber to build a home, they shouldn't build a house,” Wand said.

“If someone has the money to spend on it, great.  If they don't have the money to spend on it, then don't buy it.”

But Hall countered that lumber is “desperately tied to our economy,” adding the ongoing increases will have an impact on how people are able to live.

As an example, Hall cited the 50-unit seniors complex currently under construction in Powassan, where some of the units are geared to income.

He said there's a concern the huge rise in building materials means the proposed rent for the units once complete “might not be as economically favourable to those who were looking at moving into it.”

Hall said last year a piece of 2 by 4 Grade A lumber sold for $1.25 and one year later that same piece of lumber retails for more than $9.

“That's an exorbitant increase,” he said.

Hall says it's not good enough when people say the price on building materials will stabilize in several years because he adds the cost to construct buildings today at a higher amount will have future ripple effects for everyone in Ontario.

Again using the nursing home proposed for Trout Creek as an example, Hall says it's the taxpayers who shoulder the burden of paying that extra money in the years ahead to cover the additional costs it will take to build the old age home.

And this is a scenario that's repeated across the province.

Hall told Wand that while he appreciates the argument that people shouldn't buy what they can't afford, something like a nursing home is a necessity and not a luxury.

Hall says he's not looking for the government to go after certain people.

In his letter to Fedeli and Rota, Hall writes “I do understand about exporting and its importance to international commerce, but something needs to be done to balance the scales and bring pricing back into line.

“The profits of the very few should not overshadow the needs of the many, (and) the taxpayers need your help.”

Coun. Debbie Piekarski supported Hall's letter, saying the request for an investigation “won't start a tsunami but it may start a ripple and that's okay.”

The original resolution made a reference to price gouging, but that was withdrawn at the request of Mayor Peter McIsaac .

McIsaac didn't want local residents who work in the lumber industry to get the impression the resolution was aimed at them and that there was gouging going on at the local level.

Rocco Frangione is a Local Journalism Initiative reporter who works out of the North Bay Nugget. The Local Journalism Initiative is funded by the Government of Canada.