New Reports Warn of Major Financial and Legal Risks from Rushed Forestry Contracts Ahead of 2027 Federal Environment Reforms

New independent economic modelling and legal risk assessments commissioned by the Wilderness Society Tasmania have found that signing new long-term native forest logging contracts before major federal environmental law changes take effect in 2027 could expose the Tasmanian Government and Sustainable Timber Tasmania (STT) to significant financial and legal risks.

The reports warn that signing new logging contracts before the 1 July 2027 environmental law changes could expose Tasmania to “significant and probable” compensation liabilities, with a conservative estimate at $155–$300 million by 2040 for high quality sawlog contracts alone. This follows statements from Resources Minister Felix Ellis in February calling for “compensation” for contracts that had not yet been signed. 

New logging contract renegotiations follow decades of structural decline for the Tasmanian logging industry, with STT reports long predicting a supply cliff in production of sawlogs from 2027 - the result of decades of overexploitation. This supply cliff will be compounded by anticipated protections of key habitat resulting from Federal law reforms, with failure of compliance to these new laws adding another layer of risk should logging continue unabated.

The Tasmanian native forest logging industry has already received over $1 billion in payouts and subsidies since the early 2000s. In recent years, the Victorian Government has also paid over $1.5 billion, with a pending lawsuit by Opal for a further $400 million. The Federal government has also promised $300 million in funding for the industry following changes to Federal laws, and another $28 million to facilitate the application of new laws in last week’s budget.   

In the midst of a climate and ecological emergency, leaders should be prioritising restoration, not further destruction of Tasmania’s iconic native forests. The Wilderness Society is demanding that the Resources Minister Felix Ellis, Treasurer Eric Abetz, and Premier Jeremy Rockliff immediately, unequivocally, and publicly confirm that native forest logging contract negotiations are paused. Instead of worsening the budget crisis by risking hundreds of millions of dollars paying out the native forest logging industry, the government should instead adequately fund the urgent protection and restoration that Lutruwita / Tasmania’s forests need. 

Environmental Justice Australia, Senior Lawyer, Natalie Hogan said:

“The writing’s on the wall – new federal environment laws will kick in next year, and rushing into long-term contracts now creates real legal and financial risk for the state and for Tasmanian taxpayers.

“Independent Legal advice warns there are “significant and probable” legal and financial risks if these contracts are rushed. Even the Minister has acknowledged these risks in Parliament.

“The Tasmanian government says the federal government should pay compensation if there’s not enough timber supply to fulfil these contracts. But legal advice describes this as “optimistic speculation” and “wishful thinking” with no legal backing.”

Stephen Walters, chief economist, Optimal Economics said:

“The forestry industry in Tasmania is not what it once was. Structural decline in the timber industry is long-running, including as a provider of employment.

“Federal legislative changes from mid-2027 come alongside difficult timber market conditions, including falling demand, persistently low prices, increased costs and more intense overseas competition.

“At a broader level, the report warns that forestry-related risks add pressure to Tasmania’s already deteriorating fiscal position, with rising debt, persistent budget deficits, and limited capacity to absorb additional contingent liabilities.”

Hughie Nicklason, Forest Campaigner, the Wilderness Society Tasmania said:

“The findings underscore the impossibility of financial prudence in signing long-term logging contracts, and an incredibly concerning lack of caution and transparency.  For a Minister to publicly call for compensation for contracts that have not yet been signed is beyond incompetence. This is emblematic of Tasmania - and why we find ourselves at the bottom of an ever-deepening financial hole.”

“The new draft federal environmental standards are riddled with weak language, loopholes and fail to set clear red lines to protect nature and only further uncertainty.”

“Locking in new long-term logging contracts in a time of ecological collapse and rapid environmental change constitutes a complete lack of foresight. Logging worsens risks of fire and flood, and these events will also inevitably affect supply.

“We must move to a restorative model of land management. We are calling on Premier Rockliff to intervene and halt contract negotiations altogether. Investment should be redirected away from the logging cabal and towards restoring Lutruwita / Tasmania’s iconic native forests and making our communities more resilient."

ENDS