Two independent assessments, commissioned by The Wilderness Society, warn that the state-owned entity could commit to long-term native-forest supply contracts before fully understanding the impacts of the new Commonwealth environment laws. This could leave Sustainable Timber Tasmania and Tasmanian taxpayers exposed to compensation claims of between $155 million and $300 million.
The first report examines how the new contracts would replace agreements with the state’s remaining sawmills when the current deals expire in 2027. The Tasmanian Government, which confirmed the renewals in parliamentary scrutiny hearings, wants to extend them through to 2040. The report identifies timing as the key issue.
From 1 July 2027, native-forest logging carried out under Regional Forest Agreements, including in Tasmania, will lose the exemption from federal environmental scrutiny that it has held for 25 years.
The change stems from the Environment Protection Reform Act 2025, which passed federal parliament on 28 November last year and received Royal Assent days later. How much forest remains open to logging after that date, and under what conditions, will depend on National Environmental Standards and approval pathways that are still being drafted and may not be settled for some time.
Sustainable Timber Tasmania is moving to guarantee timber supplies it may not be able to deliver. (see notes below)
Legal advice from barrister Benedict Coyne, quantifies the risk. Renewing the contracts prematurely, before there is any certainty about future supply, could give rise to “significant and probable” liability for STT, the state and potentially the ministers responsible.
Should STT later find itself unable to honour those contracts because of the law change, sawmillers may have solid grounds to sue. Breach of contract is the most obvious claim, but the advice canvasses others, including a breach of statutory duty, misleading conduct, negligence, and even misfeasance in public office. Coyne is careful to note that the strength of any claim could only be judged against facts that have not yet occurred.
Where compensation is ordered, it would generally come from the Tasmanian public purse or from whatever insurance STT or the State happens to hold.
The obvious escape hatch for STT would be a force majeure clause, a standard provision that excuses a party when something beyond its control, such as a change in the law, makes performance impossible. On the evidence available, the advice suggests it would be unlikely to succeed.
The reasoning is straightforward. Because the reforms have already passed and the loss of the exemption is public knowledge, any future shortfall would be foreseeable rather than a genuine surprise. Having examined the publicly available Smithton and Huon supply contracts, Coyne concludes that a force majeure argument would be “likely to be a difficult argument to make good.”
Nor should Tasmania count on Canberra stepping in. Without specific guarantees or indemnities from the Commonwealth, which are not in place at this stage, the advice finds it “difficult to see how the Commonwealth would be liable” for losses flowing from reforms the State has been on notice about since December. That casts doubt on correspondence from Minister Ellis to The Wilderness Society on 17 March, in which he argued that “the Australian Government should be prepared to pay appropriate compensation.” Stripped of any statutory footing, the advice suggests, this claim amounts to little more than hope.
The second report examines how this legal exposure could affect an organisation that may be far more fragile than its accounts suggest.
That report, by In Economics, acknowledges that STT has recorded an accounting profit in each of the past eight years; however, it argues that the surplus “masks underlying financial vulnerability.” Strip out government subsidies and a favourable revaluation of forest assets, and the business “may have traded at a loss” on an underlying basis, for much of the past decade. In the year to 30 June 2025, the cost of managing the forests outstripped the revenue STT earned from its customers.
Production tells a similar story. Sawlog output last financial year came in almost 20 per cent below target. Looking beyond 2027, the agency projects an annual yield of around 58,000 cubic metres which is well down on the roughly 115,000 cubic metres its remaining mills process today, and below the 137,000-cubic-metre quota set in legislation.
Behind those figures is an industry in decline. In the 1980s Tasmania supported more than 200 sawmills – only 14 remain today. Direct native-forest jobs fell from 4,120 in 2006 to 1,112 by 2018, representing less than one per cent of the state’s workforce.
Against this uncertain industry backdrop, STT proposes to enter into fixed commitments lasting until 2040 without publicly stating how it will mitigate this risk. If a compensation bill does arrive, the Tasmanian coffers would be poorly placed to absorb it.
Tasmania carried no net debt as recently as 2019. The most recent budget papers forecast that state debt will climb past $10 billion by 2029, roughly a quarter of the state’s annual economic output, with deficits projected across the forward estimates.
The $155 million to $300 million figure sits in the middle of the range estimated by In Economics; better and worse scenarios would shrink or increase it, and the assessment flags further reputational and operational risks beyond the financial exposure.
Neither assessment claims that the liability is inevitable. Much will depend on the final shape of the federal standards, the precise wording of any contracts signed, and whether STT can secure guarantees or indemnities along the way.
While the industry is understandably keen to secure certainty around future supply, the prudent course may be to wait until the rules are known first. Otherwise the implications could be significant.
Please note: These reports were announced by the Wilderness Society on the 18th of May 2026 with little Tasmanian or national media attention. In light of the recent ABC 4 Corners story on Tasmanian log supply being shipped to Victoria we decided to run it as a related piece.
Also worth noting, ABC stated in the Tuesday news bulletin that STT had already signed log supply contracts out to 2020. We are yet to confirm if this is correct.
AND…Sustainable Timber Tasmania, Minister Eric Abetz MP and Shane Broad MP were contacted for comment but did not reply by the deadline.
GREENS COMMENT
Signing new native forest logging contracts in Tasmania would not only continue the destruction of ancient forests and threatened species, it could expose the Government to serious financial and legal risks.
Signing contracts before the implications of the new federal environment laws become clear could result in the Government having to pay millions in compensation to sawmillers if forest supply isn’t available as promised.
Victoria has already had to pay hundreds of millions of dollars in compensation to forest contractors after signing native forest contracts they couldn’t fulfil. The Liberals should learn from Victoria’s mistakes.
Tasmania’s finances are already dire because of the Liberals’ warped spending priorities. We can’t afford any more financial risks. With a year until native forest contracts are due to expire, the Liberals should not rush to sign any new wood supply agreements.
In a biodiversity and climate crisis, the Liberals shouldn’t be continuing the public-funded destruction of native forests. Now is the perfect time to end native forest logging for good.
Rosalie Woodruff MP, Tasmanian Greens Leader & Forestry spokesperson
If you’re interested in this article, please join our Free Newsletter
If you have any comments you’d like to add to this article, please contribute via this form. We’re trialling this while we work through replacing our comments section.
A strong truly independent media is a cornerstone of democracy and the only shield against autocracy. What value do you put on democracy and living in a free country?
Remember, after the power grab the first action of every despot in modern history is to take control of the media, so please consider supporting us so we can grow stronger and be a better shield!
Your kids will thank you and so will your Granny, but the aspiring despots won’t…and you never know when one will pop up.
