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.