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.

STT: Another year of deceptive profits and economic unviability

 

Sustainable Timber Tasmania's (STT) 24/25 Annual Report attempts to project an image of strategic progress and financial health, proudly declaring "eight years of consecutive profitable results." However, a rigorous, critical examination of the financial statements, viewed through the lens of industry realities and basic economic principles, reveals a far harsher truth: STT's reported profitability is an accounting construct, propped up by non-cash revaluations and heavily reliant on a substantial government grant for unavoidable public land management duties,  and crucially, benefits from the undisclosed, massive subsidy of free access to public land and its timber resource. This deceptive facade of success not only masks a core operation that is economically unviable but also obscures the ongoing accrual of significant, unquantified societal and environmental liabilities that would largely cease if native forest logging operations were to stop.

UTAS at the crossroads

UTAS is at a pivotal moment in its history, facing a dramatic outflow of local students, controversy around its management decisions and mounting financial pressures.

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.

 

UTAS' sustainability: A comment on the 2024 Annual Report

 

It’s a toss up between UTAS and the State government as to who is in worse financial shape.

UTAS’ 2024 Annual Report has now been released. It reports on a calendar year basis so it’s only 8 months since the year ended. Unreasonably slow nevertheless.

The following are some observations about the 2024 financials and some of the slides from a recent PowerPoint presentation to staff titled Our financial context.

UTAS' broken model

 

It cannot be stressed how crucial it is for interested parties to understand the earnings challenges confronting UTAS.

Parliament is about to resume consideration of a Bill that relates to UTAS’ Sandy Bay land which UTAS wishes to sell to fund its future plans.

It is ludicrous however to assert that Policy A will have Beneficial Effect B without an adequate understanding of UTAS’s current position.

But that’s what’s happening.  

UTAS’ unique status of being able to stack its own Board and not have to report to members as does every other public entity of any significance, has meant it has operated with less constraints than other public bodies.

As a consequence, the public understanding of UTAS’s financial position is woeful. Asking UTAS to explain the mess they’ve created for itself is unlikely to produce full and transparent disclosure.

An attempt by the Public Accounts Committee (PAC) to obtain info from UTAS about its financial position via a short inquiry led to a snow job from UTAS. UTAS took advantage of an under resourced and overworked committee dominated by party members either disinterested, unable or unwilling to look at issues other than through a party political lens and flooded the committee making it difficult for members to distinguish wood from trees.

UTAS gave PAC a slide show back in August 2024 (posted on the PAC website) which contains much useful information even though a little inaccessible at times. It was essentially a lecture from Rufus, basically telling the committee what he wanted them to hear.

UTAS' STEM is a furphy

 

There’s a eerie similarity between UTAS’s current predicament and that of the State government.

In the case of the latter, it has been made blindingly obvious by Saul Eslake and others that the State is on an unsustainable path. The Government’s Strong Plan for 2030 is not simply a smokescreen. It’s a blatant untruth. There is no possible way the State will be able to run cash deficits at any stage in the foreseeable future without radical changes. Debt servicing and paying other past liabilities is taking an increased share of the stagnant pool of State government revenue leaving less to fund current services.

The government knows it. So does the opposition. Although they don’t readily admit it. Both are united by omerta, the code of silence adopted because neither have a clue what to do.

Fortunately brush fires keep flaring which distract mug punters. The TTLine debacle for instance diverted attention and whilst symptomatic of our woes helped everyone avoid discussion of the terminal diagnosis of the body politic. For a time at least.

 Likewise, the Mac Point Stadium debate acts as a distraction. Although important as a sub-issue it lulls people into thinking it’s part of the main game. It’s just a side show. There are much more serious problems which our current head in the sand approach to future sustainability is helping us avoid.

Likewise, in the case of UTAS the elephant in the room is the lack of sustainability of its current model.  Current attention is focussed on funding a $500 million STEM building as if that is the only thing needed to secure UTAS’s future.

But just like the $775 million Mac Point Stadium the cost of STEM hasn’t changed for 8 years. Are we supposed to take these guys seriously? UTAS has been talking about new STEM facilities for at least 12 years.  Buildings at 62-82 Argyle St Hobart first valued by UTAS in 2013, purchased for STEM purposes for $9.8m in 2015 are still unused for their intended purpose.

Minister Ferguson lost his job over his failure to deliver Berth 3 on the Mersey River Devonport in time for the new Spirit ferries. STEM is UTAS’ Berth 3.

UTAS:Things must be bad -- Part 2

 

Tasmanian Labor continues to berate anyone not supporting the disposal by UTAS of its Sandy Bay land for residential housing. Liberals, Lambies and Greens are all portrayed as being disinterested in solving the housing crisis by building 2,000+ new homes and/or helping to fund a new STEM building.

UTAS’ surrogate spokesperson Dean Winter has been instagramming images of the proposed development taken from Deloitte’s two reports into the feasibility of the development of Sandy Bay dated November 2021 and March 2022. It’s reasonable therefore to conclude the development plan Dean has been spruiking is the same as described in those Deloitte reports.

In summary this is what we learnt from the Deloitte Reports:

·        The planned development is a 30-year project, mostly for 2,656 new residences, a combination of 1, 2 and 3 bedroom units with an average area of 88 square metres to be sold at an average price of $880,000 (2021 prices).

·        The project will be conducted in stages. Needless to say, outlays will occur before revenue so funds will be required to fund the deficits in the early years. Peak project debt of $234 million will occur in year 5, in 2027, but the project is already 2 years behind schedule. The funds squirrelled away by UTAS to fund the project’s debt have all but disappeared, due to cost overruns and delays with the Hobart rebuilding and the increasing losses from core activities of teaching and research which UTAS is yet to fix. UTAS can’t borrow more without the Treasurer’s permission.

·        The project will reach cash break even in Year 17, after which time the project will start to rebuild UTAS’ equity. Over the ensuing 13 years cash profits of $800 million are predicted. That’s $800 million in future $s, which roughly translates to possibly $400 million in current $ terms. Not a great deal seeing UTAS’s current equity stands at $1,341 million.

·        UTAS initially hoped to run the project itself but due to its deteriorating financial position is now looking at ways to take on a joint venture JV partner and/or selling properties on a leasehold rather than freehold basis. The latter may result from restrictions that may be placed on UTAS by the recently tabled Bill in State parliament.

·        The Deloitte Reports stress that the project is currently only at the 5% design concept stage. To listen to politicians spruiking the deal one could easily start believing they’re ready to turn the first sod.

·        The project doesn’t even manage to meet the minimum target return if land and buildings to be redeveloped are given a zero value. For the project to achieve the target rate of return UTAS will have to pay the developer to take the land off its hands. This won’t occur of course, but what it means is that UTAS will have to accept a lower rate of return if a JV partner wishes to achieve a target rate.

·        If the project proceeds and the project land is given a value whatever that may be, whether it’s zero or $26 million, it will likely be far less than the current book value of the land and buildings. In which case UTAS will suffer a large drop in its equity position, which won’t start to be recovered until Year 17. Sceptics of the redevelopment have been labelled reckless if they don’t sign up as UTAS cheerleaders. It’s much easier to establish recklessness where existing assets are trashed in the hope of getting some back 17 years later. Its craziness on steroids.

·        Given that any surplus cash from the development won’t occur until at least year 17, that’s 2042 at the earliest, the redevelopment proposal has nothing whatsoever to do with funding a new STEM building. For the Labor Party to suggest otherwise reveals a wilful ignorance of reality.

·        Given that the existing land and buildings obviously have a value as part of a continuing institution for learning and research, it is that value that needs to be plugged into any model when trying to assess a rate of return on a project to convert a valuable asset to an above ground cemetery for cashed up baby boomers. It will certainly paint a different picture than the misinformed messaging from the Labor Party.

 

UTAS: Things must be bad when Labor is asked to assist

 

One has to overlook lots of evidence on the public record to pretend as the Labor Party has that UTAS can be trusted to embark on the largest housing development in Tasmania’s history just so it might be able to fund a new $500 million STEM facility in Hobart City.

A memory refresh is needed.

UTAS, like a lot of universities, has accumulated lots of assets over the years thanks to land gifts, land revaluations, bequests and endowments, and capital grants for building.

Historically any losses from core operations of teaching and research were covered by income from investments mostly bequests and endowments entrusted to UTAS to be spent as per the wishes of the donors.

Universities are mostly publicly owned and have had the freedom to operate without restrictions that are normally applied to public bodies, like say, reporting and being answerable to Parliament.

The one restriction that was imposed on UTAS was via Section 7(2) of its governing Act which required the permission of the State Treasurer if it wished to borrow money. Ivory tower academics who used to run universities were presumably thought to need a fail-safe mechanism.

Paradoxically the fail-safe mechanism failed when it was most needed. 

UTAS sells hotels?

 

UTAS may have sold the Mid City Hotel to the Singaporean owned Fragrance Group and the Fountainside Hotel to the State government for housing if the grapevine is correct. The sale prices aren’t known at this stage.

If true it will be a deft way for the government to inject funds into UTAS without poor old UTAS having to come begging to the government to allow it to borrow more.
Not that lenders are queuing at the door given UTAS can’t service existing borrowings from its core operations.