MONTREAL — Quebec is coming to the aid of the province's beleaguered forestry products sector with a package worth almost $1-billion over four years, including $350-million in loans to companies that have been hit by punitive countervailing duties in the Canada-U.S. softwood lumber dispute.

The measures, announced in Thursday budget, are on top of $450-million the provincial government earmarked for the industry last fall, and $167-million in last year's budget.

The forestry sector, particularly in Eastern Canada, has been battered over the past few years by the impact of the high dollar, competition from lower-cost producers such as Brazil, and soaring energy and raw material costs.

Quebec's forest industry employs about 82,000. Over the past year alone, more than 3,300 forestry jobs in the province have been lost.

Major producers such as Tembec Inc. have been scrambling to find ways to cut costs and to streamline and consolidate operations.

"Certain companies are threatened by the current context, and the government decided to respond with energetic measures," Quebec Finance Minister Michel Audet said in his speech.

But he added at a news conference later that the government action should not be misinterpreted as major state intervention.

"The government isn't about to replace the private sector," he said. It can only do so much and, ultimately, it's up to the companies to work diligently at cutting their costs, upgrading assets and spearheading a drive back to profitability, he said.

The new measures include: $425-million in loan provisions to help forestry companies invest in modernization and productivity-improvement projects. A total of $350-million of that will be available to companies that can offer security in the form of the countervailing and antidumping duties they have paid to the United States and that are held in trust. The balance of $75-million will be set aside for small and medium-sized producers in the form of repayable loans. $436-million to support investments in better forest management, infrastructure such as roads and bridges, and primary processing of wood products. The package includes a boost in the capital tax credit on investment in new manufacturing and processing equipment to 15 per cent from 5 per cent. The tax credit will be in force until the end of 2009.$44-million to help laid-off workers find new jobs within or outside the sector. Quebec says it's in talks with the federal government aimed at securing additional funding.

Guy Chevrette, head of the Quebec Forest Industry Council, said in an interview that the investment incentives are insufficient because they top out at $20-million per loan, peanuts in terms of the amounts actually needed at the bigger companies.

"This [program] is not for major, hefty investments," he told reporters, adding that many of the companies his group represents are in fragile financial shape and in no position to embark on their own significant capital spending projects.

In its budget plan document, the Quebec government noted that the province's forestry companies have substantially reduced their investments in fixed assets over the past 10 years.

Investments dipped to $728-million in 2004, about half of the $1.4-billion reached in 1995.

According to provincial government estimates, the $425-million loan package will back investment projects worth more than $1.7-billion.

Mr. Audet said the forest industry plan also includes measures to ensure a more secure supply of raw materials, which he said will soon be announced by other ministries.

Quebec last year slashed logging activity in the province by 20 per cent after a hard-hitting report warned of unsustainable forestry practices. The move has had a major impact on the supply of wood fibre, resulting in higher costs.