STT 's bogus sustainability

 

The following contain background notes to assist local groups in their efforts to prevent clear-felling by STT of their favourite bits of remaining Tasmanian native forests.

First there’s a detailed summary of the accounting issues which relate to STT’s approach to valuing its native forests which are shown to underpin STT’s highly questionable claim to being sustainable.

Second there’s a brief note looking at a particular coupe planned for logging in 2026 indicating the likely social losses that will ensue.

 

The Forest Valuation Practices of Sustainable Timber Tasmania: A Critical Summary

Examining the Valuation Methods and Sustainability Claims of STT

Sustainable Timber Tasmania P/L (STT) manages publicly owned commercial native forests, which are intended as perpetual assets for the benefit of future generations. However, STT’s annual forest valuations employ an accounting sleight of hand, valuing these forests as if they are single rotation crops rather than ongoing, regenerating ecosystems. This approach misrepresents both the true value and sustainability of Tasmania's native forests.

Valuation Approach and Accounting Standards

STT’s valuation of its forest estate is rooted in accounting standard AASB 141 Agriculture, which covers biological assets like trees. While plantation forests are explicitly referenced, native forests are not, yet they are clearly biological assets under STT’s management. The main critique is that STT values native forests as one-off crops, excluding the inevitable and mandatory replanting costs from its calculations of expected net proceeds. This omission is justified by a loose interpretation of AASB 141, which specifically exempts re-establishment costs for “plantation” forests, not necessarily for perpetual native forests. As a result, the valuation process ignores the ongoing costs required to maintain the forests’ perpetuity, despite such maintenance being fundamental to their ongoing existence and value.

Ignoring Non-Timber Values

The valuation model adopted by STT focuses almost exclusively on timber value, omitting the broader ecological, carbon storage, biodiversity, water management, and climate mitigation values provided by native forests. Although these additional values are widely recognised, they are rarely incorporated into formal forest valuations. This is partly due to STT’s mandate under the Forest Management Act 2013, which centres on timber production rather than the preservation of these wider ecosystem services. As a result, non-timber losses are regarded as ‘sunk costs’ and do not affect the profit and loss statements of forestry entities.

Separation of Asset Components

For accounting purposes, a forest estate is divided into land, improvements (such as roads), and trees. Only trees are considered biological assets, while land and roads are categorised as property, plant, and equipment. Changes in the value of trees affect the profit and loss statement, whereas land is not depreciated and roads are depreciated over time. However, the interdependence of these components makes it difficult to value them separately, leading to a practice where the total value of the forest estate is calculated and then apportioned among the components.

Controversial Assumptions and Changing Methods

STT’s valuation methodology has shifted over time, often in response to falling asset values which meant there was less to split between the three components. Notably, land is now assigned a zero value on the basis that STT controls but does not own it. That is a non sequitur. Ipso facto STT does not own the trees attached to the land either, yet it controls them and treats them as assets for accounting purposes.

When land had a value, an imputed rental cost was overlooked when assessing net harvest proceeds, because land was to be allocated a part of the forest value derived from those proceeds. But when land is assigned a zero value the value of a tree crop on that land will be greater than the value of identical trees on leased privately owned land where rents are included when calculating net harvest proceeds. This is an inconsistent result.

Roads have been alternately valued at cost less depreciation or based on toll income, with their assigned value fluctuating over the years. In 2014 for instance, roads were worth as much as the trees themselves, both attached to worthless land, raising further questions about the logic and consistency of the valuation framework. In 2016 Forestry Tasmania changed the way roads and trees were valued and in 2017 changed its name to Sustainable Timber Tasmania.

Another adjustment in valuation came with the introduction of a ‘make good’ asset, representing the cost to regenerate harvested forests. While this inclusion acknowledges the need for ongoing maintenance, the related replanting costs are still excluded from the net proceeds calculations that underpin forest valuation. Again, this approach is inconsistent, recognising perpetual maintenance needs in theory but not in practice when it comes to financial reporting.

Impact on Financial Reporting and Sustainability Claims

The exclusion of replanting and road costs from net proceeds calculations results in overstated valuations and profits. If outlays which otherwise would be capex costs are unlikely to yield future benefits they should be expensed immediately. This happens with Tas Rail for instance where below-line capex costs are expensed each year because Tas Rail is never likely to be profitable. Excluding regeneration and roading costs makes net harvest proceeds and hence forest values positive.  Costs are then capitalised (rather than written off) because future profits are possible, but that is only because costs were excluded in the first place. It’s a self-fulfilling convenience.

Meanwhile STT continues to suffer cash losses. The fact that the losses are funded by the progressive run down of the proceeds of the sale of over half its hardwood plantation assets a few years ago means a budget appropriation isn’t required each year leaving STT to continue flying below the radar able to make specious claims of sustainability.

NSW is now the only other State with a significant publicly owned native forest operation. The Forestry Corporation of NSW’s hardwood operation is roughly the same size as STT’s but is listed as fully impaired. In lay terms that means it has no value as future costs are expected to exceed future revenues.

Underlying Issues and Conclusions

Ultimately, the criticisms of STT’s forest valuation practices centre on two main issues: the application of crop-based accounting standards to perpetual ecosystems, and the assignment of zero value to land. These practices allow STT to ignore essential costs and non-timber values, bolstering claims of sustainability that may not be justified in reality. The foundation of STT’s approach is therefore seen as shaky, with the flexibility in valuation methods serving to obscure the true financial and ecological performance of native forest operations.

 

STT’s native forest logging – additional issues : A coupe viewpoint

Analysis of Economic Viability and Community Impacts

Overview

If Sustainable Timber Tasmania (STT) logs a native forest coupe, such as DL011C in the Dial Range  in North West Tasmania  comprising 22 hectares, planned for 2026, several significant financial concerns arise. Over an 80-year rotation, this coupe will yield only 5,100 tonnes—equivalent to a growth rate of just 3 tonnes per hectare per year. This slow growth is typical of native forests, which are far less productive than plantation forests.

Comparison with Plantations

Plantation hardwoods, grown on comparable soils and at similar distances from the coast, grow at least five to six times faster than native forests. Additionally, plantation timber offers more consistent and higher-quality pulp fibre, often attracting better prices than pulp sourced from native forests. In the case of coupe DL011C, pulpwood represents the main product, estimated at 3,700 tonnes or 73% of the harvest, yet it is not superior to plantation pulpwood.

Community Service Obligations and Misconceptions

STT frequently cites benefits to communities from native forest logging, such as firefighting, recreational access, weed and pest management. However, these services are separately funded through a government appropriation of $12 million per year. This funding would be required regardless of whether STT or another entity manages the land. Thus, these activities should not be portrayed as unique benefits derived from STT’s logging operations.

Rationale for Clear-Felling

Since native forests grow much more slowly than plantations and the main product—pulpwood—offers no quality advantage, there is little justification for clear-felling on social or economic grounds. The only apparent reason for such operations is to meet contractual obligations and generate cash to partially offset STT’s operational costs, such as wages and overheads. These activities result in cash losses and do not reflect genuine profitability or sustainability.

Community Impact

The local community must consider whether to support activities that deliver minimal direct benefit and are likely, if properly accounted for, to produce losses that outweigh any external gains. The economic justification for native forest clear-felling is weak, and the broader social benefits are either overstated or already separately funded.