Native forest logging or carbon credit schemes?

 

Why Ending Native Forest Logging Delivers Far Greater Public Value Than Funding Short‑Term Carbon Schemes

“Why should the Federal Government incentivise foreign companies to buy up agricultural land in Tasmania for carbon credits?” Primary Industries Minister Gavin Pearce asked at a recent media conference, responding to the Clean Energy Finance Corporation’s backing of the reported purchase of the 22,000‑hectare Rushy Lagoon property in the state’s northeast.

Why indeed?

It is a fair question — but it is also a revealing one. Because the Commonwealth has been intervening in markets for years. Sometimes with good results, sometimes with questionable ones, and sometimes with consequences that only become clear long after the policy has been abandoned.

Take Marinus Link. The Commonwealth is incentivising foreign‑owned wind companies to build wind farms in Tasmania — coincidentally on properties owned by associates of Mr Pearce’s colleague, Acting Premier Archer— by underwriting a $3.8 billion interconnector that private capital refused to fund. Ms Archer who happened to be standing alongside Mr Pearce at the time barely blushed at the hypocrisy. Marinus is not a commercial project. It is a policy project. It exists because the Commonwealth wants to unlock renewable generation in Tasmania and support national decarbonisation. Commercial logic was overridden by policy logic. The private sector will not deliver national policy goals unaided.

The Renewable Energy Target (RET) is the clearest example. It was not commercially neutral. It deliberately shifted investment toward wind and solar by creating tradable certificates that increased the revenue of renewable generators. It cost consumers money — through higher retail electricity prices — but it also delivered something the market would not: a rapid expansion of renewable generation and a dramatic fall in wind and solar costs. The RET helped establish the modern renewable industry, even though new projects today still rely on Power Purchase Agreements, underwriting schemes and revenue‑certainty mechanisms to reach financial close. It was a policy intervention with a cost, but also with a clear, measurable benefit.

The same is true of the two‑year carbon price before Tony Abbott abolished it. It imposed a cost on emitters, raised electricity prices modestly, and was politically contentious. But emissions fell. Investment in cleaner generation increased. The policy worked exactly as designed — and at relatively low cost — before it was dismantled for political reasons rather than economic ones.

So when Minister Pearce asks why the Commonwealth is incentivising foreign companies to buy agricultural land for carbon credits, the answer is simple: because the Commonwealth often intervenes in markets not because the projects are commercially viable, but because they serve a national policy objective. Sometimes those interventions are effective, like the RET and the carbon price. Sometimes they are more questionable, like Marinus Link. And sometimes, as with Rushy Lagoon, they raise deeper questions about whether the public is getting value for money.

Senator Richard Colbeck’s Talking Point in The Mercury on 11^th July 2026 captures some of these concerns — but only some. He is right to highlight the secrecy, the nine FIRB extensions, the unanswered questions, the refusal to comply with a Senate Order for Production of Documents, and the timing of the approval during parliamentary recess. These are legitimate criticisms of process and transparency.

He is also right to raise concerns about market distortion: CEFC involvement gave the foreign buyer a competitive advantage over local farmers. That is true. But it is also exactly what CEFC is designed to do. Its mandate is to intervene where private capital will not — to support carbon markets, biodiversity markets, and nature‑based climate solutions. Colbeck criticises the distortion but does not acknowledge the policy rationale behind it.

He is right to raise regional‑economy concerns: the loss of dairy and beef production, the impact on milk collection networks, livestock transport operators, contractors, abattoirs and processors. These are real issues. But he does not address whether the land is actually suitable for pine plantations, nor does he acknowledge that the Commonwealth’s decision was driven by carbon policy, not agricultural productivity.

And he does not mention the most important point of all: this is not the first time a government has distorted land markets with noble intentions and unintended consequences. In fact, Senator Colbeck’s own government — and particularly Tasmania’s current Treasurer, in his earlier Federal role responsible for forests — championed the largest land‑use distortion in modern Australian history: the Managed Investment Scheme era.

If we are talking about government policies that distort land use, there is no better example than the MIS schemes of the 2000s. They were promoted as a rural development tool, a way to bring investment into regional Australia, diversify land use, and support forestry expansion. The intentions were noble. The outcomes were not.

MIS encouraged taxpayers to buy tax deductions, not productive agricultural or forestry enterprises. Land was removed from agriculture at massive scale. Some was converted from existing forest. Most was planted to short‑rotation, fast‑growing crops — blue gums, nitens, and other species — often on land entirely unsuitable for forestry. The scheme rewarded tax write‑offs, not productivity. It rewarded expansion, not sustainability. It rewarded paper valuations, not real returns.

It became, in structural terms, a giant paper‑shuffling Ponzi scheme. When the tax rules changed and investor inflows slowed, the model collapsed — as all Ponzi schemes do. Almost everyone lost money except the promoters who extracted fees on the way through. Regional communities were left with failed plantations, abandoned land, degraded soils, and broken supply chains.

The policy aim was to benefit rural communities. It didn’t. And yet many of the same voices now decrying the Rushy Lagoon decision were enthusiastic champions of MIS when it suited their political narrative.

This is where the comparison becomes unavoidable. Public money is being used to subsidise a pine plantation that stores carbon temporarily, produces low‑value timber and leaves the land with diminished alternative use value after harvest. Meanwhile, Tasmania’s native forests — which store carbon for centuries, protect biodiversity, regulate water, support tourism and avoid the emissions released every time a coupe is harvested — remain locked in a loss‑making logging model that distorts both accounts and public debate.

The Rushy Lagoon project is being promoted as a flagship example of “natural capital investment”: a vast pine plantation generating millions of carbon credits. But a 25‑year pine crop produces mostly pulp, packaging and pallets — products that store carbon for only a few years before it returns to the atmosphere. The ACCUs generated are temporary, yet they are used to offset permanent emissions from major industrial polluters. It is a climate accounting illusion dressed up as climate action.

If the Commonwealth wants permanent carbon storage, biodiversity protection, water regulation and regional economic stability, the best asset for the job is Tasmania’s native forests.

Ending native forest logging would deliver permanent carbon storage, not temporary sequestration. It would avoid the emissions released every time a coupe is harvested — soil carbon loss, slash decomposition, machinery emissions. It would protect biodiversity, water quality and tourism values that plantations cannot replicate. And it would remove structural liabilities from the public balance sheet: regeneration costs and future compensation for long‑term supply contracts.

Yet native forests remain trapped in a financial model that is structurally unsound. Industry defenders point to the accounting profits in Sustainable Timber Tasmania’s annual reports as proof that native forest logging is commercially viable. But almost all those profits come from book entries, not cash. The standing timber is valued as if it were a single‑rotation horticultural crop — “fair value less costs to harvest and sell” — excluding the costs of regeneration and roads. Any increase in book value is booked as profit. In 2024–25, that revaluation added $7.5 million to STT’s bottom line — more than the entire reported profit.

But native forests are not a crop. They are perpetual ecosystems that require continuous investment. STT’s valuation model excludes those costs, overvalues the trees, and overstates the profit. STT discloses every year, buried in a note, that it only values the current crop of standing timber. But if it wanted to be transparent, it would add a simple rider: “If the forest estate were valued as a perpetual ecosystem and the full cost of roading, regeneration and long‑term ecosystem maintenance included, then the value of the forest estate would be negative, requiring a government guarantee for the business to continue as a going concern.”

A government that genuinely believes in natural capital accounting — and many ministers now say they do — would insist on a far more comprehensive set of accounts. It would require STT to report not just movements in the fair value of a single rotation of harvestable timber, but the condition of the forest ecosystem itself: soil health, water regulation, carbon stocks, biodiversity, fire risk, road liabilities, regeneration obligations and the opportunity cost of public land. If the industry is correct in claiming world‑leading forest management practices, then a full natural capital balance sheet should be something it welcomes, not fears. It would finally allow Tasmanians to see what is happening in their forests, not just what is happening in the ledger.

And this is where the shared vision matters. No generation owns a forest. We inherit forests from those who came before us and protect them for those who will follow. Forests are living systems, not simply resources. They hold ecological, cultural, spiritual, social and economic values. Good stewardship is not the triumph of one value over another, but the wisdom to recognise which values belong in which places, and to nurture them accordingly. If the Commonwealth wants to invest in carbon and biodiversity, it should start with the assets that already deliver both — permanently, naturally, and at scale.

Tasmania needs a more honest conversation. Public money delivers far greater climate, economic and social value when used to end native forest logging than when used to subsidise short‑term carbon schemes. The question is no longer whether the industry is sustainable. It is whether the public is getting value, or simply carrying its costs — and whether we are honouring our responsibility to the forests our children will inherit.