STT’s Accounting Illusion: A response

Tasmania’s debate about native forest logging has always been shaped by numbers—profit figures, asset valuations, operating cash flows, and claims about economic contribution. But numbers only illuminate the truth when the accounting model behind them reflects reality. When the model is flawed, the debate becomes distorted before it even begins.

My  recent Talking Point article argued that the accounting framework used by Sustainable Timber Tasmania (STT) does not reflect the true economics of a perpetual native forest estate. The CEO’s response (pasted below) published in The Mercury on 28^th July 2026 was welcome and constructive, but it did not address the structural issues at the heart of the matter. What follows is a fuller explanation of why the public is still not being given an honest picture of the financial sustainability of native forest logging.

Tas Irrigation in the Age of AI Factories

Tasmanian Irrigation (TI) is a State‑owned company that builds, owns and operates irrigation schemes across the state. On paper it looks like a business: it has customers, sells water, earns some renewable energy revenue and publishes annual financial statements.

But TI has never been a commercial enterprise. Its own segment reporting over more than a decade shows the same pattern every year: a small, low‑margin utility at the front, and a large, structurally loss‑making infrastructure delivery arm behind it. The operations segment roughly breaks even. The development segment — where dams, pipelines and pumps are built and held — depends entirely on government equity and grants. For every $1 spent on a scheme, only 25–30 cents is recovered through water entitlement sales.

This is not mismanagement. It is the design. TI builds infrastructure whose benefits are economic, social and regional — not financial.

What has changed is the context.

The recent Firmus inadvertent announcement — that its proposed AI data‑centre intends to source water from TI — has thrown TI’s purpose and legislative boundaries into sharp relief. TI’s charter is clear: water is supplied for agriculture and, more recently, hydrogen production. Supplying water to an AI factory sits outside that mandate and would require government approval, community consultation and irrigator confidence. TasFarmers has already described such a move as “highly unusual”.

Firmus’s disclosure highlights a deeper issue: TI is now being viewed as a potential industrial water utility by proponents whose projects have nothing to do with agriculture. Whether or not Firmus ultimately seeks TI water, the episode exposes how quickly new industries will test the edges of TI’s role — and how important it is to understand what TI is, what it isn’t, and why its financial structure looks the way it does.

MONA's Forest economics shared vision: Progress or just another motherhood statement

Preamble

The MONA Forest Economics Congress has done something remarkable. After years of careful dialogue, it has produced a Shared Vision that recognises native forests as living, perpetual systems — a statement now signed by conservationists, Palawa leaders, scientists, artists, philanthropists and, importantly, several major industry figures. That alone marks a significant shift in Tasmania’s forest debate. But it also exposes a deep contradiction: while the Shared Vision treats forests as ecosystems we inherit and steward, STT’s financial accounts continue to treat them as single‑rotation timber crops whose “value” rises automatically on paper each year. This briefing note sets out why that contradiction matters, how it shapes public narratives, and why honest accounting must come before any discussion about how much logging — if any — is compatible with the values the Shared Vision expresses.

STT's paper profits

 

The discussion about whether to process Tasmanian native timber logs here or in Victoria sidesteps the real issue and once again highlights the widespread misunderstanding of the financial realities of the native forest industry.

Industry defenders usually point to the accounting profits in Sustainable Timber Tasmania’s annual reports as proof that native forest logging is commercially viable.

But almost all the profits come from book entries not from cash. The core issue lies in how STT values its forests - as a single‑rotation horticultural crop. The standing timber is valued at fair value less costs to harvest and sell not including the costs to regenerate. Any increase in the 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 in roads, regeneration, land management and fire protection. These are not optional extras. They are the essential costs of accessing and maintaining the forest. Yet STT’s valuation model excludes them from the net harvest proceeds calculation that’s used to value timber. The result is predictable: trees are overvalued and the reported profit is overstated.

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.

The Economics of Tasmanian Wind

 

Why new projects face a wall

Tasmania’s energy debate still assumes that wind farms are profitable and Marinus will unlock a wave of new renewable investment. But the only audited window we have into the real economics of Tasmanian wind — the accounts of Woolnorth Wind Farms (WWF) — tells a very different story.

WWF supplies around 10% of Tasmania’s electricity, with 308 MW of generation across Bluff Point, Studland Bay and Musselroe Bay. It is also the only operator that files full financials with ASIC. Those accounts reveal the structural truth that now defines the future of Tasmanian renewables: Tasmania’s oldest wind farms are only profitable because Hydro Tasmania subsidises them — especially via Large Scale Generation Certificate (LGC) guarantees. Strip out those supports and WWF is loss‑making every year, even with its current low level of debt.

This is the starting point for understanding why new wind projects — the very projects Marinus depends on — face a wall.

ASH attempts to correct the record

 

ASH’s response to Four Corners (it appeared in a Facebook post which is pasted below) presents itself as a factual correction. In reality, it is a carefully constructed piece of misdirection that avoids the central financial facts, reframes definitions to obscure economic reality, and omits the single most important issue facing the company - the looming 2027 redemption cliff. Once the structure is laid out clearly, the Facebook post collapses.

Heyfield ASH to Ashes?

 

This is the third part of a three‑part series Heyfield–ASH: A Case Study in Public Risk and Private Control

PART 3: HEYFIELD -ASH TO ASHES?

The 2027 Redemption Cliff

By the time the 2025 financial statements were signed, the future of Heyfield ASH Holdings (HAH) was no longer a question of operational performance or market conditions. It had become a question of solvency. The business had reached the point where the structure created in 2017, and reinforced through the WJS years, could no longer be sustained by accounting treatments, inventory movements, or government grants. The numbers had converged on a single, immovable fact: in 2027, HAH must repay $33 million to the Victorian Government, and there is no internal source of funds to do so.

The redemption of the cumulative preference shares is not a technicality. It is the moment the entire structure is tested. And the closer we get to that date, the clearer it becomes that the structure cannot withstand the test.

Heyfield ASH The WJS Years

 

This is the second part of a three‑part series on Heyfield–ASH: A Case Study in Public Risk and Private Control

PART 2:THE WJS YEARS

When the private partners behind Heyfield ASH Holdings (HAH) purchased the Western Junction Sawmill (WJS) in northern Tasmania in October 2021, the move was presented as a pragmatic response to Victoria’s decision to shut down its native forest industry. The public explanation was simple: if Heyfield could no longer source logs locally, it needed a new supply chain. But the financial statements tell a more complicated story — one in which the Tasmanian acquisition did not merely secure log supply but reshaped the entire economic structure of the business. What emerged was not a conventional supplier relationship but a closed‑loop related‑party ecosystem in which HAH became the financier, WJS became the beneficiary, and Victorian taxpayers became the silent underwriters of a private Tasmanian enterprise.

To understand the WJS years, you have to look past the public narrative and follow the money. Once you do, the pattern becomes impossible to ignore.

Heyfield ASH The Beginning

 

Heyfield–ASH: A Case Study in Public Risk and Private Control

This three‑part series traces how a Victorian Government rescue of the Heyfield mill in 2017 created a financial structure that shifted risk onto the public while consolidating control in the hands of a private group; how that structure evolved into a closed related‑party ecosystem once the same private partners acquired the Western Junction Sawmill in Tasmania; and how, by 2027, the entire model now converges on a solvency crisis that the business cannot meet without further public intervention. Across the narrative, a single pattern emerges with clarity: public money flows in, private benefit flows out, and the financial architecture built at the beginning now determines the fate of both the Victorian mill and the Tasmanian native forest supply chain that depends on it. What follows is not simply a corporate history — it is a case study in how public capital can be captured, redirected, and ultimately exhausted in the service of a private arrangement that was never commercially sustainable.

PART 1: THE BEGINNING

How the related‑party structure was built from Day 1

The story of Heyfield ASH Holdings (HAH) does not begin with a struggling sawmill in Gippsland, nor with the closure of Victoria’s native forest industry, nor even with the later Tasmanian supply chain. It begins in September 2017, in the 24 hours before the takeover of Australian Sustainable Hardwoods (ASH), when a series of decisions were made that set the tone for everything that followed. Those decisions reveal a pattern that would later repeat itself: value flowing out to private interests, risk flowing onto the public balance sheet, and a corporate structure designed from the outset to favour the private partners who would eventually control both sides of the supply chain.

To understand the present, you have to understand the beginning. And the beginning is not pretty.

The Heyfield ASH story

This note traces an extraordinary eight‑year story, part of 4 Corners' report Timber Turmoil on 22nd June 2026 (see also ABC on-line report here): how private interests gained control of Australia’s largest hardwood operation with just $600 of capital at risk, and how the Victorian Government contributed more than $130 million to bankroll a privately controlled structure — including the purchase and ongoing operation of a major sawmill in northern Tasmania. The full analysis, including all financial data is available here

A more accessible narrative form of the tale can be found in a short 3-part series.

Part 1 HAH: The Beginning focusses on the purchase of the Australian Sustainable Hardwoods (ASH) business in 2017.

Part 2 HAH: The WJS Years describes the operations of ASH and the purchase of Western Junction Sawmill (WJS) in 2021

Part 3 HAH: ASH to Ashes looks at the looming cash flow crisis as redemption day for much of the Government’s  risk capital fast approaches.