Federal taxpayers could be hit with compensation claims running into the hundreds of millions of dollars if Canberra’s overhaul of national environment laws cuts across state-run native forest logging, with Tasmania now signalling it will press the Albanese government to cover the cost. That is according to new information obtained by Matthew Denholm of The Australian, who has seen correspondence from Tasmanian Resources Minister Felix Ellis warning that his state will expect federal compensation for any logging impacts arising from the reforms.
The changes, struck under a deal between the federal government and the Greens, will end forestry’s long-standing exemption from the Environment Protection and Biodiversity Conservation Act from July 2027. The Greens described the move at the time as “a spanner in the works of the native forest logging industry”, whilst the sector warned it could make logging close to impossible in the two states where it continues.
Environment Minister Murray Watt has sought to settle those fears by floating new agreements under which the states would assess their own compliance against national environmental standards. Significant uncertainty remains, however, and state forestry ministers have held talks with Watt in Canberra in recent weeks as they press for firmer guarantees.
The correspondence obtained by The Australian shows Ellis wrote to The Wilderness Society on 17 March, arguing that Canberra should carry the cost where its decisions stop Tasmanian timber businesses producing the wood and fibre the nation needs. Ellis has separately rejected calls to suspend the signing of new long-term wood supply agreements until the reforms take effect, saying the state must give its processors the certainty to invest.
“No Tasmanian forestry business will be worse off,” Ellis told The Australian.
Federal Forestry Minister Julie Collins has dismissed the case for compensation, pointing to roughly $600 million in Commonwealth funding already provided or promised to the forestry industry and a further $28 million to help states implement the changes.
“It is a significant federal investment in a sustainable industry,” Collins told The Australian.
Legal advice commissioned by The Wilderness Society points in the opposite direction, suggesting any liability is more likely to rest with state rather than federal taxpayers. The society’s Tasmanian campaigns manager, Alice Hardinge, said modelling put the potential claims at between $155 million and $300 million — the same exposure flagged in two reports released earlier this month.
“An industry with no social licence and with declining market demand,” Hardinge said.
Any compensation push by Tasmania could be joined by NSW, the only other state where native forest logging continues under a Regional Forest Agreement. Tasmania’s native forest industry has drawn more than $1 billion in payouts and subsidies since the early 2000s, including the protections locked in under the 2012 forest peace deal.
