FEDERAL COURT OF AUSTRALIA

Brett Cattle Company Pty Ltd v Minister for Agriculture [2020] FCA 732

ORDERS

THE COURT ORDERS THAT:

1.    The parties confer and, on or before 25 June 2020, file draft orders to give effect to the reasons for judgment published today, and in the event of disagreement file, in mark up, the draft orders identifying the points of difference each proposes together with written submissions limited to 5 pages in support of their respective positions.

2.    The proceeding be stood over for case management on 29 June 2020 at 9.30am.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

RARES J:

1.    Introduction

1    Otto von Bismarck is often credited with coining the aphorism “Laws are like sausages; it is better not to see them being made”. This representative proceeding under Pt IVA of the Federal Court of Australia Act 1976 (Cth) arises from the public outcry following the broadcast by the Australian Broadcasting Corporation on 30 May 2011, on its Four Corners program, of graphic video footage of inhumane slaughter of Australian cattle exported to Indonesia and the decision in response on 7 June 2011 of the then Minister for Agriculture, Fisheries and Forestry, Senator the Hon Joe Ludwig, to make the Export Control (Export of Live-stock to the Republic of Indonesia) Order 2011 (the Second Control Order) that prohibited the export of livestock to Indonesia for six months.

2    Brett Cattle Company Pty Ltd, the applicant, operated Waterloo Station, a property of nearly 189,500 hectares located about 540 kilometres south-west of Katherine in the Northern Territory. Brett Cattle had about 17,300 head of cattle at the beginning of 2011. It was one of many live cattle exporters affected by the Second Control Order. It claims to have lost the opportunity to sell about 2,776 head, principally into that market in 2011 because of the impact of the Second Control Order and to have suffered losses of $2,480,939.

3    Brett Cattle contends that the Second Control Order was invalid and that, in making it, the Minister acted in misfeasance of his public office because, first, he was recklessly indifferent as to whether the order was beyond power under the Export Control Act 1982 (Cth), and secondly, he knew that the order was likely to harm Brett Cattle or the class of live cattle exporters, of which it formed part, or he was recklessly indifferent as to whether the order was likely to cause such harm. Brett Cattle contends that if the Minister had not made the Second Control Order, one of two scenarios would have eventuated, first, he would have made no further order affecting the export of live cattle to Indonesia or, secondly, he would have put in place, around 7 June 2011, a system that created an exception to a general prohibition that would have allowed such exports to occur provided that an exporter could satisfy conditions that ensured that the cattle would not be subjected to any unacceptable or inhumane conditions or treatment.

4    The Minister and the Commonwealth, the respondents (collectively the Commonwealth), deny both that the Second Control Order was invalid and that the Minister committed misfeasance of his office. They also deny that Brett Cattle suffered any loss, or loss of the magnitude it claimed, on the basis that, even had the Minister made a different order that permitted exports to occur before he repealed the Second Control Order on 6 July 2011, Brett Cattle and other class members would not have been able to obtain any approval for exports of cattle in the intervening period or sooner than actually occurred. That is because the Commonwealth contends that no exporter would have been able to establish that there was, or would be, a secure supply chain to ensure that any Australian cattle exported to Indonesia would not be treated inhumanely. The Commonwealth pointed to the fact that it was only on 10 August 2011 that the first live shipment of cattle left Australia for Indonesia under the new Export Supply Chain Assurance System (ESCAS), that the Minister had approved on 6 July 2011, as indicative of the time that it would have taken, in any event, before any live exports could have occurred had the Second Control Order allowed the Minister to permit a shipment that satisfied appropriate conditions.

5    I will consider the issue of liability by first describing the legislative context, Brett Cattle’s operations, the factual situation in the industry, including what was known to the Minister’s Department, and the Minister’s state of mind prior to the making of the Second Control Order, and the circumstances in which the Second Control Order came to be made, namely whether it was valid and, if not, the Minister committed misfeasance in his office. I will make findings on the legal issues in respect of liability. Next, I will consider the factual context for the damages issues, namely the steps taken by the industry and the Department to establish the conditions under which exports could resume and the particular claims for damages that Brett Cattle makes. I will then make findings on the remaining legal issues and address the common questions.

6    The trial occurred in two phases. The first, in July 2017, dealt principally with issues of liability, while the second, which was delayed because Brett Cattle amended its statement of claim in October 2017 and there was a need for further substantial discovery, occurred in December 2018. The Commonwealth called no witnesses in the first phase, but called two in the second phase.

2.    Background

2.1 The legislative context

7    The Export Control Act provided for the control of the export of certain goods, including animals. In the period between 19 April 2011 and 7 July 2011, the Act relevantly provided in s 3 that, unless the contrary intention appeared:

goods means:

(a)  an animal or a plant, or part of an animal or a plant;…

order means an order made by the Minister or Secretary under the regulations.

prescribed goods means goods, or goods included in a class of goods, that are declared by the regulations to be prescribed goods for the purposes of this Act.

regulations includes orders.

8    Next, s 7 provided:

7  Prohibition on export of prescribed goods

(1)  The regulations may prohibit the export of prescribed goods from Australia.

(2)  Regulations made for the purposes of subsection (1) may:

(a)  prohibit the export of prescribed goods absolutely;

(b)  prohibit the export of prescribed goods to a specified place;

(c)  prohibit the export of prescribed goods unless specified conditions or restrictions are complied with; or

(d)  prohibit the export of prescribed goods to a specified place unless specified conditions or restrictions are complied with.

(3)  Without limiting the generality of subsection (2), regulations made for the purposes of subsection (1):

(a)  may provide that the export of prescribed goods, or the export of prescribed goods to a specified place, is prohibited unless a licence, permission, consent or approval to export the goods or a class of goods in which the goods are included has been granted as prescribed by the regulations; and…

(emphasis added)

9    Under s 25(1), the Governor-General could make regulations not inconsistent with the Act prescribing matters necessary or convenient to be prescribed for carrying out or giving effect to the Act. The power included, as s 25(2)(g) and (h) provided, regulations that empowered, respectively:

    the Minister to make orders, not inconsistent with the regulations, with respect to any matter for or in relation to which regulations could provide (s 25(2)(g)); and

    the Secretary to make orders not inconsistent with the regulations or any order that the Minister made under the power conferred in s 25(2)(g), with respect to any animals that were prescribed goods for or in relation to which the regulations could provide (s 25(2)(h)).

10    The Export Control (Orders) Regulations 1982 provided in reg 3:

The Minister may, by instrument in writing, make orders, not inconsistent with regulations made under the Act, with respect to any matter for or in relation to which provision may be made by regulations made under the Act.

11    The Australian Meat and Live-Stock Industry Act 1997 (Cth) (the AMLI Act) provided for, among other matters, the issue of licences for export of meat and livestock from Australia and the regulation of meat and livestock export businesses. The AMLI Act defined “meat” to mean and include the flesh of animals and the by-products of animal slaughter (s 3). The Secretary of the Department had power under the AMLI Act:

    to grant licences to export meat or to export livestock from Australia (s 10); and

    to make orders, by a legislative instrument, not inconsistent with the regulations made under the AMLI Act, including orders prohibiting absolutely, or subject to compliance with conditions, the export or sale for export of meat or livestock by reference to the countries or places to which the meat or livestock might be exported or any other matter that the Secretary thought appropriate (s 17(1)(a); (3)(a)(iii) and (v)).

2.2 How Brett Cattle operated

12    Brett Cattle purchased Waterloo Station in October 2004. The late Dougal Brett was the manager of the station until his death in a helicopter accident in 2015. His wife, Emily Brett, assisted him in operational decision making for the company. Mrs Brett explained in her evidence that during the period leading up to June 2011 Brett Cattle had about 10,000 breeding cows which were predominantly grey Brahmans, because the Indonesian market preferred that breed. As at June 2011 Brett Cattle had recently started to conduct a cattle cartage business using two road trains for carrying cattle as well as fodder. This generated a small proportion of its income.

13    The wet season in 2010–2011 was long and the rainfall was so significant that by early May 2011 the roads were still not passable for cattle trucks. The dry season usually ran from April to October and sales of cattle usually occurred during the dry season.

14    Brett Cattle managed its herd on a year to year basis by mustering breeder cows and their calves to separate, after weaning, all the steers (castrated males) for sale and all but the best heifers (females that have not produced a calf) which would be retained for breeding. Mrs Brett estimated that about 800 to 1,000 heifers would be retained each year in this process. She said that in 2011, the sole market for Brett Cattle’s steers and heifers was the one for Indonesian live exports. Those cattle were well suited to being placed on Indonesian feedlots for fattening in a similar climate before slaughter. That was because it was impractical to cart cattle to the Eastern States. For example Southern Queensland was about 3,300 kilometres from Waterloo Station. If cattle were sent on such a journey it would be necessary to spell them on the way, which would be difficult, especially for large numbers.

15    Mrs Brett explained that the land in the Northern Territory was considered to be good for breeding the species of cattle that are grown there but not suitable for fattening them. That was why it was necessary for Brett Cattle, and other cattle breeders, to sell most of each year’s progeny, apart from the need to retain some heifers and bulls to replace those that had come to the end of their useful life. Mrs Brett said that there was not enough feed to keep the cattle bred for sale on stations after they were between 18–24 months old. Waterloo Station had carrying capacity of about 20,000, but did not have enough feed or water to support larger numbers. There was a constant breeding cycle and no particular calving (or breeding) time. Brett Cattle left bulls in the paddocks with the cows and heifers and would muster twice in April to May and August to September to cull the herd.

16    Around October each year Mr Brett would take stock of the number of heifer weaners and steers there were on Waterloo Station so as to be in a position to understand how many of each would be available to be sold in the following year’s dry season. He then made enquiries of either livestock agents or live cattle exporters to ascertain the likely demand and prices for the forthcoming dry season so that he and Mrs Brett could prepare a budget for Brett Cattle. The station experienced rates of stock loss between 1.5% and 3% depending on whether Brett Cattle could provide supplement feeding. Each new year, around the time when cattle could be put on road trains to move out of the station, Mr Brett began negotiating sales in earnest and then concluded contracts by email. The contracts would provide Brett Cattle with information as to the number of head of each sex, their required maximum weight, and price. Generally the contracts were for exports to Indonesia and involved Brett Cattle dealing with one of North Australian Cattle Company Pty Ltd (NACC) that was a subsidiary of Elders Ltd, Australian Rural Exports Pty Ltd (Austrex), Wellard Rural Exports Pty Ltd (Wellard) and South East Asian Livestock Services (SEALS).

17    Brett Cattle treated its cattle with hormone growth promoters, which was not a widespread practice in southern Australia and made its cattle less attractive for the domestic market. Indonesia introduced a maximum weight of 350kg for imported cattle in 2010. The Australian feedlots preferred that cattle weighed between 380kg and 400kg when delivered. Mrs Brett explained that there was not enough space on Waterloo Station to grow cattle out to that weight range and so Brett Cattle had to pay for their agistment whilst they fattened on better pastures in areas such as Blackall in Central Queensland. On good growing pasture the cattle could grow close to one kilo per day, but would not grow as much if kept in a feedlot.

18    Prior to despatching cattle for export to Indonesia, Brett Cattle had to muster them using helicopters, stockmen on motorbikes and horseback, depending on the terrain and distance from the holding yards. It owned one helicopter but would charter two or three more to do the mustering. The cattle were chosen on the basis of their weight. They had to be dipped to get rid of buffalo fly and ticks in readying them for export and were held in the yards for four or five days before the road trains took them to the port of loading. During the time the cattle were in the yards, three to five Brett Cattle staff, on a daily basis, gave them feed, cleaned the water troughs and checked their condition as part of standard animal husbandry practice.

2.3 Australia’s live animal export industry

19    The live animal export industry had had a history of controversies that emerged from time to time about inhumane or inappropriate treatment of animals after they left Australia, either in relation to conditions on ships transporting them to their ultimate destinations, or as to their treatment after arrival there. There had been various government reviews and specific regulations or orders under the Export Control Act to address problems as they arose.

20    Most recently, prior to the publication of the Four Corners program on 30 May 2011, the Secretary had made an order under the AMLI Act in relation to the export of livestock, particularly cattle, to Egypt (the 2008 AMLI Order). The Explanatory Statement for that order (issued pursuant to s 26 of the Legislative Instruments Act 2003 (Cth), now called the Legislation Act 2003 (Cth)) and the regulation impact statement explained that the Australian and Egyptian Governments had entered into a memorandum of understanding in September and October 2006 on the handling and slaughter of Australian live cattle exported to Egypt. That had occurred following the suspension by a predecessor of the Minister of all trade in live cattle into Egypt. The suspension was the consequence of a broadcast on 26 February 2006 in the 60 Minutes current affairs program of video footage that raised serious animal welfare and handling concerns relating to the then treatment of Australian live animal exports to Egypt.

21    The memorandum led to the establishment of a new facility at an Egyptian port that Australian officials and industry representatives assessed in November 2007 as meeting the Australian Government’s requirements and the then version of the current guidelines for animal welfare promulgated by the World Organisation for Animal Health (known by the acronym OIE). The facility consisted of a feedlot and slaughterhouse that ensured that the live Australian cattle that had been tagged before export would be able to be traced individually from before the time they left this country to the point of slaughter in a “closed system” (or what is also called a “closed loop”). In 2010, the OIE replaced that version with the 2010 Terrestrial Animal Health Code that was in force in 2011 to which I will refer in these reasons as “the OIE Code”.

22    The purpose of the closed loop system was to ensure that no Australian livestock could be exposed to handling or slaughtering conditions en route to, or in, Egypt that did not meet the then version of the OIE guidelines and any other conditions that the Minister or the Secretary imposed. This objective would be achieved because a livestock export licence to Egypt would require, pursuant to the Secretary’s powers to impose conditions under the AMLI Act, that the livestock remain, at all times, within the verifiable closed system. One particular concern that the memorandum of understanding and the new closed loop system addressed was the previous “high risk of leakage”, where animals were slaughtered under unapproved arrangements such as street slaughter or unapproved slaughterhouses. The new arrangements required that prior to export, each live animal be tagged individually with a functioning radio tracking device and that on arrival, there would be adequate quarantine for the animals to mitigate the risks of poor handling and slaughter practices. The Secretary subsequently could, and did, approve new Egyptian ports and facilities.

23    Perhaps prophetically, the regulation impact statement for the 2008 AMLI Order stated:

The tracking of individual animals and installation of electronic inventory systems is achievable in Egypt given the relatively low numbers of animals (30,000 animals per annum) and the limited (approved) holding and slaughtering facilities available. Applying the same requirements to a market such as Indonesia that imported more than 386,000 cattle in 2006 (and where there are 80–90 feedlot/holding facilities and 350 slaughtering facilities) would not be feasible.

(emphasis added)

24    Nonetheless, both the Australian Government and the live cattle export industry recognised that live cattle exports continued to require attention to ensure the application of appropriate animal welfare standards in the processes of export, the receipt and slaughter of the animals in the countries of destination, not least because of the potential for future exposés like the February 2006 60 Minutes broadcast.

2.4 Restraining boxes for cattle

25    From 2000, the live cattle export industry, through industry bodies including Meat and Livestock Australia Limited (MLA) and LiveCorp sought to develop cattle restraining boxes to promote humane methods of holding an animal immediately before slaughtering it in lieu of more primitive and brutal methods to disable and hold steady a beast, such as cutting a tendon, gouging its eye or hoisting it aloft while attempting to kill it. As this description reveals, ad hoc or traditional methods of slaughter, outside a modern abattoir, could be crude and very cruel.

26    The idea behind the restraining box was that it would hold the individual animal in a restraint and then turn it into a position where a slaughterman could easily, humanely and quickly kill it. As the Four Corners program later revealed graphically, that idea fell well short of ensuring an acceptable result. The first and crudest versions of the restraining boxes were called ‘Mark I’ boxes and these were progressively deployed in Asia, particularly Indonesia, by the Australian live cattle export industry. A June 2009 review, that MLA and LiveCorp commissioned, portrayed the development of restraining boxes as seeking to avoid causing animals severe pain and distress. It reported that at 30 June 2009, 96 Mark I boxes were in use, while subsequent models were in development. The review noted that the OIE Terrestrial Animal Health Code 2008 required the minimisation of avoidable pain and suffering at every stage of the pre-slaughter and slaughter processes until the death of the animal, and:

The development of the code involved a study of specific issues associated with slaughter without stunning, acknowledging religious and cultural requirements. The OIE concluded that the process of slaughter without stunning should not be exempt from the guidelines and consequently methods of restraint have to comply with several basic requirements, as detailed below:

•    Provision of a non-slip floor.

•    Ensuring that the restraining equipment does not exert excessive pressure, thus causing the animal to struggle or vocalise.

•    Engineering equipment to reduce the noise of hissing air and clanging metal.

•    Ensuring equipment has no sharp edges that would harm animals.

•    Using restraining devices appropriately and not jerking them or making sudden movements.

The installation of a restraining box will only achieve all the desired outcomes of the OIE Code if it is operated by a knowledgeable and skilful stockman and maintained to ensure that acceptable standards of animal welfare are consistently achieved.

(emphasis added)

27    The review concluded that the use of the restraining boxes improved “the aesthetics of the casting process and is likely to improve animal welfare” but that scientific verification of its actual impact on animal welfare was yet to occur. Importantly, it added that the Mark I boxes demanded “a higher degree of skill and stockmanship to ensure a good welfare outcome”.

28    In May 2010, MLA and LiveCorp received a final report of a study they had commissioned titled “Independent study into animal welfare conditions for cattle in Indonesia from point of arrival from Australia to slaughter” and published it in January 2011. The Minister read this in early February 2011.

29    On 22 December 2010, the Royal Society for the Prevention of Cruelty to Animals Australia (RSPCA) provided the Minister with its response to the study. The study’s four authors wrote to the Minister on 27 January 2011 in reply to the RSPCA’s criticisms saying that they unreservedly stood by their assessment process and reiterated their conclusion that “animal welfare was generally good and that Australian cattle in Indonesia were generally coping well with the conditions to which they were exposed”.

30    The study stated that the OIE guidelines had “guided” its assessment including of feedlot management, slaughter processes, animal handling and restraining boxes. The study authors attended six feed lots and 11 slaughter facilities and observed the use of “15 industry funded restraining boxes and 6 improvised ‘copy’ boxes”. It noted that while several advanced facilities used stunning, most were unsophisticated and would not find it feasible to adopt stunning.

31    Stunning involved using an electrically powered or mechanical device to render the animal senseless so that it could be manoeuvred readily into a position for a slaughterman to kill it promptly and efficiently without it offering resistance or suffering pain or discomfort.

32    The study noted that in about four (or 17%) of the 26 acts of slaughter using the restraining boxes that the researchers had witnessed, the animal regained its feet after release. The researchers said that they witnessed a total of 29 acts of slaughter, including ones using the restraining boxes, and observed that the process of casting the animals down in the box on average resulted in moderate, rather than mild, severity of fall and 3.5 head lifts per animal after casting, and that this posed “a significant risk to animal welfare” and:

While restraining boxes were observed to significantly improve animal welfare, where severity of the fall was severe and head slapping occurred, significant animal welfare issues were identified that should be addressed through SOP [Standard Operating Procedure] and training.

(emphasis and acronym definition added)

33    The study observed that operators at the facilities with replica boxes lacked training and posed a potential animal welfare issue. It noted that slaughtermen did not appear to appreciate, and the SOP did not provide guidelines dealing with, the need to cut the animal’s carotid arteries appropriately and to manage occurrences of occluded arteries and false aneurisms that posed issues for an animal’s welfare because it could remain conscious for an extended period. The researchers observed one occasion when 18 cuts were made to kill the animal. They observed that this was “a potential animal welfare issue” (emphasis added) but that the resulting colour of the meat did not appear to affect its saleability in the wet market, i.e. the market for immediate local consumption. They also noted some instances of animals having their eyes harmed or tails twisted in the slaughtering process and inconsistent use of SOP in restraining animals and using the restraining boxes including for significant periods before slaughter and that:

Following the Halal cut, there were occluded carotid arteries in 48% of cattle and possible extended consciousness in 10% of cattle.

34    They said that stunning “deliver[ed] the single biggest animal welfare benefit” and said that its use “in the slaughter of Australian cattle in Indonesia should be an aspirational goal. In appendix 4, the study reported its recommendations for compliance with the OIE Code and gave those priorities, including giving high priority to ensuring that there were competent and experienced animal handlers because of the significant variations between the excellent and poor treatment of animals that researchers had observed in relation to numerous provisions in the OIE Code.

2.5 The Minister assumes office

35    On 16 September 2010, soon after he had become the Minister, Senator Ludwig spoke at the 2010 AgForce Conference in Rockhampton saying that he did not intend to make “any drastic changes to Government Policy within the portfolio. This includes areas such as live animal exports”.

36    The Minister’s practice was to read Departmental in-confidence minutes, and other material, such as briefs, on or reasonably contemporaneously with the date on which his office received those documents from his Department. If he first read those in an electronic form on an iPad, his not invariable practice was to sign them at a later time, dating them when he first recalled reading them. A Departmental in-confidence minute was in the form of a document that the Minister could submit to Cabinet for its consideration. I will describe such a document as a ‘Departmental minute’.

37    The Minister had received a Departmental briefing for his new portfolio that informed him that Indonesia was Australia’s largest market for live cattle exports, comprising in 2009 about 80%, with 768,113 cattle, valued at $478 million.

38    On 30 November 2010 the Minister received a Departmental minute to inform him that officers of the Department would visit Indonesia with an industry delegation in mid-December 2010 to present Australia’s concerns about the Indonesian Government’s policy to achieve self-sufficiency in beef. The minute noted that, in January 2010, Indonesia had begun limiting the number of import permits that it granted, which the Department expected would result in a 17% reduction in Australian live cattle exports there in 2010. In addition, Indonesia had also begun limiting the arrival weight of imported cattle to 350kg which posed a risk that, if Indonesia were to reject a shipment, there could be quarantine issues were the cargo to be returned to Australia. The minute informed the Minister that Australia had raised its concerns about these changes with Indonesia, including at Ministerial level in carefully targeted and nuanced representations so as “not to overplay Australia’s interest in maintaining trade”, and foreshadowing a proposed visit by Senator Ludwig in early 2011. The minute included statistics showing the volumes and value of live cattle, beef and offal exports to Indonesia and an overview of the live cattle trade with Indonesia that had developed in the preceding twenty years. It noted that the live cattle export industry was attractive and convenient to producers in areas in northern Australia, but that in the first half of 2010 there had been a sharp decline in exports to Indonesia.

39    As noted above, the RSPCA wrote to the Minister on 22 December 2010 with a detailed critique of the May 2010 study which the Department had provided to it on 15 December 2010. In her covering letter, Heather Neil, the chief executive officer of the RSPCA wrote:

From the information available in the report it is clear that the majority of the animals observed (and likely the majority of animals exported) were subjected to significant levels of pain, fear and distress during their handling and slaughter.

The scale and significance of the animal welfare issues described in the report show that in terms of risks to animal welfare, the situation in Indonesia is equal to the Middle East. Given this, it is not a trade that the RSPCA believes should continue….

It is the way in which the majority of cattle were slaughtered that has shocked us. While the introduction of restraining boxes is offers some improvement on traditional slaughter methods, we are very concerned that Australian-driven developments have served to entrench practices that involve significant risk to animal welfare.

(emphasis added)

40    On 17 January 2011, the Minister wrote to Peter Kane, the chairman of the Australia Livestock Exporters’ Council (ALEC) referring to their meeting on 30 November 2010 in which they had discussed issues concerning live sheep exports to the Middle East. The Minister also referred to the broadcast on the ABC’s 7.30 Report on 1 December 2010 of footage that Animals Australia had obtained of poor handling, transport and slaughter of sheep to those countries. He reminded Mr Kane that he had told him then that the Government “was very concerned about the mistreatment of animals, and, as part of Australia’s live trade, had committed to assessing proposals to improve animal welfare outcomes”. The Minister asked Mr Kane for his advice on the use of a closed loop system for the importation, lot feeding and slaughter of livestock in importing countries, similar to the system in use for exports to Egypt.

41    On 21 January 2011, MLA and LiveCorp wrote to the Minister responding to the RSPCA’s 22 December 2010 letter. The letter also attached what the industry bodies said was a “detailed action plan”. The response stated that the two bodies had employed a full time animal welfare manager based in Jakarta to ensure regular training for SOP at all locations, which they noted was critical. They wrote that the industry recognised that stunning was “a further animal welfare improvement” but that OIE standards did not require it and that a number of practical impediments in Indonesia limited its adoption, including the lack of electricity in some areas and the classification of hand held “captive bolt stunners” as weapons in that country. They wrote that their “first priority is reaching these internationally recognised standards”. They included a table that identified industry actions and outcomes. The table noted that a new restraining box (Mark 4) had been designed and the first Mark 4 box had been installed in January 2011.

42    On 14 January 2011, the Department provided the Minister with a minute on the imminent release on its website of the live trade animal welfare partnership 2009–10 project reports. The minute informed the Minister that he could expect media attention and criticism from animal welfare groups, including the RSPCA, given its concern about the operation of the restraining boxes, slaughter techniques and the (scil: lack of) uptake of stunning. It noted that after the Department had provided the RSPCA with a copy of the May 2010 study, the ABC had enquired about the release of the reports.

43    The minute summarised that study as “a thorough review of the animal welfare outcomes in Indonesia” that found “overall…animal welfare in Indonesia was generally good” and that industry had accepted its recommendations in the area of animal management, slaughter practices and animal welfare standards and was expanding its programs to address them. It referred, under the heading “Sensitivity”, to the study’s observation of one animal being “struck with a knife using a hard impact to sever the skin about the larynx and then up to 18 cuts were made to sever the neck and both arteries”. The minute advised the Minister that the MLA had stated that this incident was not representative of normal practices in the region and it was providing training and equipment at the abattoir in response to the study’s recommendations. The Department also advised the Minister that the RSPCA was likely to focus on specific examples of poor animal handling or slaughter practice in the study and to demand immediate action from the industry and the Government. It annexed “talking points” for the Minister that indicated that the May 2010 study had been funded by the Government as to 50% and by the two industry bodies as to the balance. The talking points noted that the study was independent and that industry had considered it and was developing a suite of measures to address its recommendations. The talking points also noted one observation in the study of poor slaughter technique but stated that this did not represent normal practice.

44    On 28 February 2011, the Minister replied to the RSPCA’s letter of 22 December 2010. He noted that the May 2010 study’s authors had “described the improvements in animal welfare at the point of slaughter in Indonesia as ‘profound’ and ‘undeniable’”.

45    On 21 March 2011, the Minister wrote to Mr Kane reiterating what he had said at the AgForce conference in September 2010, namely that the Government’s support for live animal exports had not changed. He noted having written to ALEC in January 2011 asking the livestock animal export industry to develop proposals to ensure higher standards of animal welfare and was looking forward to receiving ALEC’s response.

46    On 22 March 2011, Mr Kane responded on behalf of ALEC. He told the Minister that ALEC, MLA and LiveCorp had held forums with exporters that had “reaffirmed that animal welfare was the most important social issue affecting the live export industry”. He said that to improve welfare standards in the Middle East, the industry was proposing adoption of the concept of “supply chain assurance” over the next five years. Mr Kane referred to the Minister’s suggestion for a closed loop system similar to that in Egypt but stated that each market in the Middle East was different. He wrote that the supply chain assurance would “encompass elements of a closed loop system to contain livestock” as much as commercially feasible within port, feedlot and processing facilities to minimise leakage. However, ALEC’s letter focused only on the Middle East and said nothing directly about Indonesia.

47    On Wednesday 30 March 2011, Lachlan MacKinnon, the chief executive officer of ALEC informed the Department that Animals Australia had footage of cattle being slaughtered in four Indonesian cities and that, although it did not know what the footage portrayed or when it would be used publicly, ALEC was “very nervous”. Mr Kane had tried to inform the Minister’s chief of staff, Michael Carey, of this development and Mr MacKinnon had briefed Alistair Lawrie, a senior adviser in the Minister’s office. They were aware that the Minister was then in Darwin. The Department’s Jo Evans, the executive manager of the trade and market access division, emailed various other officers, including a Deputy Secretary, Philip Glyde, to confirm that the Department’s strategy advice was to prepare defensive talking points for the Minister in anticipation of a “worse case” scenario of what the footage might contain, but would defer convening its animal welfare working group until more was known.

48    As events unfolded, Mr MacKinnon’s information concerned the footage that became the central focus of the Four Corners broadcast two months later.

49    On 31 March 2011, the Department provided the Minister with talking points that referred to the unreleased video footage. The talking points stated “stopping the live trade will not improve animal welfare in any of the countries we currently export to” and also referred to a taskforce that the Australian and Indonesian industries had established to identify and address animal welfare issues in Indonesia.

2.6 The Indonesian live cattle market

50    The parties agreed a number of facts about the Indonesian market for live cattle exports from Australian to Indonesia on which I have drawn here.

51    Throughout the period of time relevant for this proceeding, Australia was the sole source of live cattle imported into Indonesia. Between 2005 and 2009 the number of live cattle exported annually from Australia to Indonesia increased from 347,267 to 751,143. In about July 2010 the Indonesian Government indicated to exporters that it would only issue import permits in 2010 for a total of 452,000 head. However, in the event, 514,935 head were imported into Indonesia during 2010.

52    In December in each of 2010, 2011, 2012 the Indonesian Government announced an annual quota for live cattle imports for the next calendar year. On 28 December 2010, it announced that the annual quota for 2011 would be 500,000 head. In 2011, the Indonesian government issued ‘quarterly in advance’ live cattle import permits, that were valid for three months. In the next six months, January to June 2011, Australia exported 220,163 head of cattle to Indonesia.

53    Prior to June 2011, only an Indonesian importer licensed to import live cattle could apply for an import permit within its quota allocation. The importer had to apply to the Ministry of Agriculture and, when issued, had to have its import permit validated by the Australian Embassy. The Australian Quarantine Inspection Service (AQIS) would not allow a shipment of live cattle to leave Australia unless there were an import permit that the Embassy had validated.

2.7 The Minister attends a cattleman’s conference on 1 April 2011

54    On 1 April 2011, the Minister made a keynote speech at the Northern Territory Cattleman’s Conference in Katherine at which, among others, Indonesian diplomats were present. He spoke about his recent visit to Indonesia and the importance of the live cattle export trade with that nation. He told the conference:

The live animal export sector is the backbone of many rural and regional communities across Australia, including northern Australia, as it provides a valuable market option for producers.

55    The Minister referred to the recent Indonesian restrictions on the number and weight of cattle as:

…a concern for industry and for the Government. However I can assure you all that there has been no change to the Government's policy to support Australia's cattle industry, including live animal exports.

During my visit I stressed the importance of maintaining the live cattle trade to my counterparts.

I outlined the importance of providing certainty to both Australian exporters and Indonesian importers with regard to live export and boxed beef.

56    The Minister then spoke on improving animal welfare, saying that it remained “a significant issue” and expanded on this theme as follows:

Both the Government and industry recognise the importance of improved standards of animal welfare, and the need to clearly demonstrate commitment to those standards to the broader Australian and international communities.

Being part of the international live export trade means Australia can help improve the way it operates-benefiting animals from Australia and other countries as well.

In conjunction with industry, the Australian Government is jointly investing a total of $3.2 million to the Live Trade Animal Welfare Partnership to further improve animal welfare conditions in importing countries.

This is a continuing process of improvement, and more still needs to be done to achieve higher standards of animal welfare practices, particularly in importing countries.

I have asked the Australian live export industry to review the progress they are making on improving animal handling practices in importing countries, as well as other ways to achieve higher standards of animal welfare.

The Australian Livestock Exporters Council has provided me with their views on this topic, and we will be examining these proposals in coming months.

The Gillard Government will continue to work with current trading partners to improve trade conditions for the benefit of both the live cattle and beef industries.

(emphasis added)

57    During the morning tea break at the conference, the Minister had a conversation with Troy Setter, who was then the chief operating officer of the Australian Agricultural Company (AACo). Mr Setter had been a director of ALEC since 2009 and the Northern Territory Live Exporters Association. Between 2007 and 2010, Mr Setter had been the Darwin manager of NACC, that was one of the world’s largest cattle exporters. In that role he was responsible for exporting, supplying and marketing over 270,000 head of cattle annually.

58    Mr Setter told the Minister that “we’ve heard that animal activists have been taking footage in Indonesia”. The Minister told Mr Setter that the trade was important to Australia and that the industry and Government had to continue to work together. He said that the Government understood the challenges. Mr Setter said that Indonesia was a difficult market because not every supply chain was the same. He told the Minister that large importers such as Elders (which owned NACC), Santori (being PT Santosa Agrindo), AACo and TUM (being PT Tanjung Unggul Mandiri) had “closed supply chains where they have full control of their cattle”, but that not every other supply chain did. Mr Setter said that NACC had a closed supply chain. He also said that AACo “followed” its cattle throughout its chain, which I infer was not closed.

59    Mr Setter gave evidence that he had had an earlier (but some time before April 2011) discussion with the Minister about “the supply chain work that we had been doing”, but did not elaborate on that topic, beyond saying that in the conversation in Katherine, the Minister stated that “we will need to work together; we will stick with you, Troy; we will stick with the industry”.

3.    Indonesian live cattle importers

3.1 The nature of the industry’s supply chains

60    As Mr Setter told the Minister in April 2011, there were several large importers of live cattle into Indonesia that had supply chains over which they had control of the cattle in them, at least, to the point of slaughter if that occurred in an abattoir operated by one of them. Those importers were PT Elders Indonesia, a subsidiary of Elders, and Santori, but, as I explain below, not TUM or PT Agro Biri Perkasa (AGP). It is necessary to understand the precise nature of the supply chain that each of those four importers operated in the period prior to the making of the Second Control Order on 7 June 2011. I deal with that issue in the following section of these reasons in relation to each of the four importers.

61    Ashley James was the manager of NACC in 2011. He held that position for four years. He said that NACC’s business was to export live cattle to South East Asia, but predominantly to Indonesia. The live cattle for slaughter market was known as the “wet market” as opposed to the market for pre-packaged or boxed beef. NACC’s Indonesian customers were, in order of amount of purchases, TUM, Santori, Elders Indonesia and PT Widodo Makmur Parkasa (and its subsidiary, Pash Tengah.

62    Mr James said that an Indonesian import permit required an importer to take the cattle to only one specified location. I infer that the importer would have to specify the feedlot to which the cattle would be taken after the 14 day quarantine period following their disembarkation from the ship. However, after the cattle arrived at the feedlot specified in its import permit, the importer was not constrained from selling or moving the cattle elsewhere.

63    In June 2010, Mr James was involved in the preparation of customer profiles for each of TUM and Santori for use by the board of Elders. These revealed that in 2009, Santori imported (from all sources) into Indonesia a total of about 134,000 head (or about 20% of the total Indonesian market), TUM 82,000, Widodo 51,000 and Elders Indonesia 22,000. TUM purchased exclusively from NACC.

3.2 Elders Indonesia

64    From 2003 to 2013, Richard Slaney was president and director of Elders Indonesia. He explained in his evidence that Elders Indonesia operated as a part of the Elders group. He was in charge of Elders Indonesia’s day to day operations and had been involved in the Indonesian cattle industry since 1999. Elders operated several feedlots in Australia. Elders also owned and operated a livestock carrier, MV Torrens, and chartered other vessels as needed to carry live cattle to Indonesia. Each of the ships Elders used for this trade complied with the regulatory requirements of the Australian Maritime Safety Authority.

65    Before the Second Control Order, Elders Indonesia acquired from NACC live cattle for export from Australia to Indonesia, which met all Australian domestic requirements for the care, health and handling of the animals (including for AQIS) up to the point of export. Once the cattle arrived from Australia, Indonesia required that they be held in quarantine in a feedlot for 14 days where they were vaccinated and had blood samples taken. About half of Elders Indonesia’s imports of live cattle were tagged in the ear with a visible RFID (radio frequency identification device) or a National Livestock Identification Scheme (NLIS) tag. Those names for the tags were interchangeable and did not signify that there were different tag types (I will usually refer in these reasons to all these tags simply as NLIS tags). Before July 2011 the use of NLIS tags was mandatory in Western Australia and voluntary in both the Northern Territory and Queensland.

66    If cattle did not have an NLIS tag, Elders Indonesia caused them to be tagged with a Z tag when the cattle arrived at the quarantine facility that it used as part of its (Elders Indonesia’s) inventory control system from the animal’s induction into that inventory until the point of its slaughter. Unlike the NLIS tags, a Z tag was a visual, but not electronically readable, means of identifying each animal individually. Elders and Elders Indonesia used the Z tags and NLIS tags to trace each animal’s overall movement in the Elders supply chain.

67    Elders Indonesia owned a feedlot in Lampung province on Sumatra (about ten hours drive and a ferry ride away) and leased an abattoir at Bogor to the south of Jakarta in which it owned all the plant and equipment. Cattle were kept for fattening at that feedlot typically for between 80 to 110 days (a fattening cycle) (although that could last 120 or even 150 days on occasion) and its capacity was about 21,000 head annually. Mr Slaney said that prior to June 2011, Elders Indonesia was intending to expand the feedlot’s capacity to 30,000 head per annum over the next two years. The abattoir’s about 40 employees worked on a single shift of six days per week that had the capacity to process about 21,000 head annually. Some of those employees had been trained and accredited in Australia.

68    As soon as Elders Indonesia began operating the Lampung feedlot in 2008, Mr Slaney implemented a quality assurance system for it that used substantially the same procedures as Elders applied in its feedlot in Charlton, Victoria. Similarly, by 2007 (about one year after commencing operations) Mr Slaney had Elders Indonesia implement a quality assurance system at the abattoir. At that time Elders Indonesia obtained accreditations for the abattoir under the ISO 9001 standard, which applied for processing and manufacturing, and the Hazard Analysis and Critical Control Points (HACCP) standard, which applied a systematic approach for food safety there. Neither standard dealt with the way in which cattle were slaughtered. And, the abattoir had used stunning since 2000. Mr Slaney gave unchallenged evidence that Elders Indonesia managed the lairage of cattle (i.e. the livestock yards in which cattle are held) and the slaughtering process, and had always used stunning at the abattoir so that the animals “were always very well looked after”.

69    Mr Slaney said that this abattoir’s capacity per shift could not have been increased but its overall capacity could have been increased by running a second shift. As at 6 June 2011, the abattoir ran a day shift processing boxed beef. This involved animals being stunned, then killed, chilled overnight and deboned before being packaged into vacuum sealed bags. The abattoir could be readily converted to also run a night shift to supply the “wet market”, as occurred immediately after Elders Indonesia obtained its ESCAS approval.

70    Elders Indonesia also imported and sold Australian cattle to about six or seven small abattoirs in Indonesia, one near Jakarta and the others in Sumatra. Mr Slaney decided to which abattoirs cattle were sent based on prevailing market prices. Thus, if the prices for boxed beef resulted in better margins for Elders Indonesia, he would maximise their processing through its own abattoir near Jakarta. These other abattoirs had Mark I boxes and processed a total of up to about 50 head per day or roughly half of the total number of cattle that Elders Indonesia imported. However, as noted above, if the Elders Indonesia abattoir worked two shifts daily it could process the total of 21,000 cattle that matched the annual capacity of its Lampung feedlot. Thus Elders Indonesia had the ability to process all the cattle that it imported in its own feedlot and abattoir, rather than sell any of them to its six or seven customers, and to ensure that it could account for every animal by use of its Z tags that it placed on animals that did not already have an NLIS (or RFID) tag.

71    The audit of Elders Indonesia’s feedlot and abattoir that SAI Global Ltd conducted on 6 to 8 July 2011 (as part of the implementation of the ESCAS approval process) established that “computer software and records are excellent and enable complete traceability of individual animals from exporter to slaughter”. The audit found that the documentation required existed and included the procedures that the Department had specified. SAI Global noted that it had identified some areas that “top management” needed to review and consider “so as to ensure appropriate preventative actions are implemented prior to the next audit” and, importantly, that “staff at the feedlot exhibited good knowledge and practice with regard to animal welfare”. SAI Global noted that, initially, some animals had slipped when being discharged from trucks and that three others out of ten had needed to be stunned a second time, but that the Elders Indonesia staff had taken corrective action that remedied those problems.

72    I accept Mr Slaney’s unchallenged evidence that the remedial actions were “tweaking” and that:

in a processing situation with cattle, we will get those variants on a given day in most situations. And so, therefore, the auditor would often go back and …let you process again or …do it again, and ..that was …. quite a normal situation. It’s very difficult to maintain 100 per cent stunning of those cattle. Likewise, cattle could be coming off a truck after a rainy morning and cattle slip. He will recognise those variations we get in in the normal processing of cattle. So but, certainly, there’s always room for improvement, yes.

73    I am satisfied that prior to the Second Control Order, Elders and Elders Indonesia (including NACC’s sales to it) operated a closed loop system for cattle processed in Elders Indonesia’s feedlot and abattoir that used internationally accepted and humane practices to account, care for and slaughter Australian cattle exported to Indonesia.

3.3 Santori

74    Santori was a subsidiary of the publicly listed substantial Indonesian enterprise, Japfa Group, and the largest importer of live cattle into Indonesia. Santori had two mechanised western style feedlots in Sumatra, one at Barki and a smaller one at Probolinggo. It sourced its live cattle from three suppliers, one of which was NACC. Mr James regularly visited and checked on how the cattle were progressing though those feedlots, as well as those that TUM operated, in addition to visiting the bigger abattoirs to which Santori and TUM sold. Santori’s two feedlots had the capacity of feeding about 60,000 per fattening cycle (equivalent to a total of about 180,000 head annually). It owned an abattoir that, according to the Elders customer profile of Santori (see [63] above), processed about 20% of the cattle in its feedlots and sold the balance into the wet market.

75    Santori was NACC’s second largest customer. Mr James acknowledged that prior to June 2011, not all cattle that NACC exported from Australia to Indonesia were tagged. He said that NACC’s cattle were not scanned as they were loaded or unloaded and that, depending on the importer, they might have been scanned or not when they arrived at the importer’s feedlot.

76    There was no direct evidence as to the standards of animal welfare or slaughtering methods in the Santori facilities prior to 7 June 2011. On 13 June 2011, Santori’s Group General Manager, Samuel Wibisono, said in an email, a copy of which the Secretary of the Department, Dr Conall O’Connell, received the next day, that its abattoir was ISO accredited and that it was installing readers for NLIS tags there to set up the closed system that the Minister required. He wrote that Santori’s two feedlots already operated NLIS readers and that he believed “we can be ready for an overall feedlot and abattoir audit in as early as 2 months” (emphasis added). However, it is not quite clear what Mr Wibisono meant by “an overall…audit”, for earlier in his email he said that he envisaged perhaps, relevantly, Santori and Elders “could pass an audit to comply with the current requirements of Minister Ludwig”. However, by 16 June 2011 MLA had provided the Department with information about Santori’s then position with respect to ensuring compliance with animal welfare standards from which I infer that it was, if not then fully, substantially compliant and, so, capable of achieving immediate compliance with the OIE Code after whatever minor shortcomings there may have been in its processes.

77    This inference is reinforced by Santori’s ability to show such compliance in material that it gave to the Department on 22 June 2011. As at 16 June 2011, Santori was using stunning in its abattoir to process 50 head of chilled beef cuts per day, had the capacity to process up to 160 head in an eight hour shift and could work more than one shift. It stated that it had documented standard operating procedures, complied with both the HACCP and ISO 2200 standards as well as the OIE Code and had the ability to trace individual animals using NLIS tags that it placed on every animal. Given its substantial financial position, Santori would have been able to source and readily install any necessary equipment.

78    Therefore, I find that prior to 7 June 2011 Santori was capable of establishing without delay or difficulty that it could, or did then, operate a closed loop supply system that complied with then OIE Code for all cattle that it processed through its feedlots and abattoir.

3.4 TUM

79    TUM was a family owned business that imported live cattle exclusively from NACC. It had two feedlots near Jakarta, the larger one at Tanjung Burung, that could process about 25,700 head per fattening cycle, and the smaller at Pulo, that could process about 5,600 head per cycle. Both feedlots had concrete floors in which the cattle were hand fed.

80    TUM sold only into the wet market. Prior to 7 June 2011 TUM did not own an abattoir, having sold the one it had owned in about 2008 or 2009. Thus, at that time, TUM could have been part of a closed loop supply chain that, however, would finish prior to the cattle being despatched from TUM’s feedlots to an abattoir. All the cattle could be accounted for from the time NACC exported them to when TUM was ready to despatch them for slaughter.

81    Accordingly, the abattoir at which any cattle that NACC sold to TUM were to be slaughtered would have to be identified as one that complied with appropriate quality assurance standards and the OIE Code before Mr Setter’s assurance about it to the Minister on 1 April 2011 could be relied on in respect of how its cattle would be slaughtered.

3.5 AGP

82    Between 2000 and 2017 Gregory Pankhurst was chief operating officer of AGP. In 2002 AGP entered into a joint venture with Consolidated Pastoral Co to conduct a cattle feedlotting business in Indonesia. Mr Pankhurst lived in Indonesia and was responsible for AGP’s purchases of livestock, arranging their transport from Australia to Indonesia, fattening them after their arrival and then marketing them to abattoirs for sale at, in Mr Pankhurst’s words, “the farm gate”.

83    AGP had two feedlots on Sumatra, a larger one at Lampung, with a capacity of 28,000 head and a smaller one at Medan, with a capacity of 7,500 head. It used a fattening cycle of 120 days so that it had a total annual capacity of about 105,000 head of cattle. However AGP tried to maintain the feedlots at between 60% to 70% capacity. AGP applied the OIE Code or better in caring for cattle at its feedlots. Mr Pankhurst said that prior to 7 June 2011 the majority of AGP’s imported cattle came from Western Australia and had NLIS tags. In addition, on arrival, AGP put a manual tag on each animal that had visually readable means for its identification. AGP did not scan the NLIS tags or add the manual ones until the animals came out of quarantine and arrived at one of its two feedlots. When a tagged animal left the feedlot, AGP scanned its tag. However, the purchasing abattoirs did not scan the tags.

84    AGP did not own any abattoirs in Indonesia, but in the first half of 2011 sold to between 22 to 25 abattoirs, some of which were government owned and others privately owned. Most processed between 5 and 25 head each per night and had a total capacity between them on a single shift of about 250 to 300 head. Only three of the abattoirs that purchased from AGP before June 2011 used stunning. At particular times of year, such as festivals, the abattoirs would increase their intake by working one or more extra shifts so that up to 1,000 animals were slaughtered each day.

85    I accept Mr Pankhurst’s evidence that AGP had total control of each of the animals it imported from the time of disembarkation from the ship to when it left the feedlot for the abattoir. However, that meant that, like TUM, prior to June 2011 AGP could only provide a closed loop supply chain up to when the cattle left its feedlots and thereafter it had no control over them, including over their welfare.

3.6 Brett Cattle agrees to sell cattle to Elders

86    On 4 April 2011, the late Mr Brett, on behalf of Brett Cattle, entered into an Elders standard form agreement to buy and sell for delivery 1,100 Brahman steers for $2.15 per kg and 1,100 Brahman heifers for $1.95 per kg. The purchaser was NACC. Delivery was to be on or around 31 May 2011 FAS (free along side) a wharf at Wyndham, Western Australia.

4.    The Four Corners broadcast

4.1 The lead up

87    On 6 April 2011, Ms Evans emailed Mr Glyde and others in the Department with an update on the Animals Australia footage. She said that industry and the RSPCA had informed the Minister’s office that Four Corners might be working on a story about the issue of live trade to Indonesia, with a broadcast later in April or May 2011 and that the Minister’s office “is getting prepared”. She referred to the footage, a recent Parliamentary debate on the subject and a Senate estimates hearing, including questions on notice and questions that the RSPCA had raised in a meeting with the Department in March 2011. She said that the Minister’s office had requested talking points in anticipation of a request for him to be interviewed.

88    As is apparent from the above facts, by early April 2011 both the Minister and his Department knew that there was likely to be a major public affairs broadcast in the near future that would feature some graphic and disturbing footage of cattle being slaughtered or mistreated at probably four sites in Indonesia. Yet, the Department did not prepare, and the Minister did not seek, any policy response beyond talking points, despite the potential impact on a substantial domestic industry, Australia’s international trade, reputation and its relationship with the Indonesian Government. Likewise, the industry was hardly being proactive, beyond cooperating with the producers of Four Corners.

89    On 29 April 2011, the Department, through Mr Glyde, provided the Minister with a minute on the topic of live cattle exports. It dealt with the need for the Minister to decide about possible responses to the Four Corners program once it was broadcast, including possibly consulting with Cabinet. This minute referred to the possibility that Four Corners would air footage of facilities where Australian Government funding had been provided to improve facilities or train handlers and that the Minister may be asked about this. It suggested three options, first, that the Minister refer to an existing set of actions, including his request for industry to develop options, including closed loop systems, to improve animal welfare throughout the live export supply chain, secondly, release a public options paper (and a possible outline was attached to the minute) and, thirdly, announce a new set of actions. The minute recommended the first of those options that was broadly along the lines of the supply chain assurance model that industry was working towards. It said that issuing an options paper had “significant risks” of stirring up controversy and would take some time to develop and the announcement of new actions, while feasible, might require Cabinet discussion.

90    The options paper proposed using the OIE Code as the minimum animal welfare standards, however it noted:

Preferred approach - industry assessment against standards/goals and/or importing country assessment. The cost of trade for most export industries is the establishment of commercial linkages and. at times, infrastructure to support the trade. In the live animal trade this equates to ensuring that minimum agreed standards (OIE for example) are being met. Therefore, it is an industry responsibility to assess and report on the welfare standards of receiving countries. This approach is closely aligned with the industry's suggested Supply Chain Assurance model. A target of 100% compliance for all shipments with OIE standards is unlikely to be achieved other than through a closed system, and industry is unlikely to agree to such a target. Animal welfare groups will push for such a target and call for exports to be suspended/banned for any breach of the standards.

(emphasis added)

91    On 6 May 2011, Mr Lawrie sent to Ms Evans for comment a copy of an ALEC draft “Strategic vision for in-market animal welfare” dated April 2011 that he had received. The draft contemplated that all animals exported from Australia be managed through known supply chains and treated humanely under OIE Code and standards to be achieved by 2015. The draft set out a timetable to that end.

92    On 10 May 2011, Mr MacKinnon sent the Department a final version, now headed “Indonesia animal welfare action plan”, that stated a timetable for achieving what it identified as its desired outcome:

From 2015, Australian livestock will only be supplied into facilities where supply chains meet relevant sections of the OIE […] standards.

93    On 11 May 2011, the MLA informed the Department that the Indonesian action plan had had significant input from, and was endorsed by, the Indonesian importers and that the Indonesian Government had been consulted and also supported the plan.

94    On 13 May 2011, the Department provided a minute to the Minister addressing both the strategic vision and action plan. The minute noted that the industry sought the Government’s support for those documents so that the industry could launch them on the ABC’s Landline program (a rural affairs focused current affairs show) prior to the Four Corners broadcast going to air. The minute gave the Department’s initial assessment of what the industry proposed, prior to the Minister meeting with its representatives. The Department considered both documents to be positive initiatives and “a good starting point for further discussion and development”. The minute observed that a key policy question was what the Government would do if the industry failed to achieve the goals set on time, noting that the timing “lacks urgency”. That question included whether the Government would impose a ban on exports to countries in which the milestones were not met by the due date. The minute reminded the Minister of the likely imminence of the Four Corners broadcast and its likely high sensitivity. The Minister annotated, signed and dated 27 May 2011 a version of the minute that was unsigned by the Department. He wrote on it “please add to reading pack”.

95    Also, on 13 May 2011, Mr Glyde signed a further minute for the Minister with the Department’s review of the Government’s policy settings for the live export trade and suggested that he select one of the policy options for approval. The Minister noted, by hand, “Overtaken by events: NFA” [scil: No further action]. I infer that, since the Minister took no decision on the policy options, the events that overtook the subject matter of the minute were the aftermath of the Four Corners program that was broadcast over two weeks later. The three options in the minute were to allow the live export trade to continue on the basis of, first, supporting the current industry approach, which involved accepting that some animals would be treated inappropriately, secondly, ensuring the OIE Code’s standards would be met, in default of which trade would be banned to non-compliant markets or, thirdly, allowing the industry to work towards minimising cases of animals being treated below the OIE Code’s standards within an agreed time frame.

96    On 17 May 2011, the Minister made a statement to a current affairs journalist, George Negus, that he took animal welfare seriously and had asked the industry for proposals at the beginning of the year to improve the position. The Minister’s office anticipated that this interview would go to air on 24 or 25 May 2011. The Minister’s statement did not evince any indication of a clear position.

97    On 24 May 2011, Mr Carey sent to Ben Hubbard, the chief of staff of the Prime Minister, the Hon Julia Gillard MP, the Minister’s statement to Mr Negus together with an updated brief dated 17 May 2011 prepared for a Senate estimates hearing on 24 May 2011. The updated brief noted that the Government had a number of policy options including an immediate outright ban, a ban phased in over time, stricter supply chain controls introduced either immediately or over time, or a discussion paper presenting options for public response.

98    Also on 24 May 2011, Mr Lawrie emailed Ms Evans noting that the Department was unlikely to provide signed briefs on live exports until the following Monday, 30 May 2011. Mr Lawrie told her “we approve” the Department consulting with the industry about its (but not the Department’s) proposals. He noted that one issue that arose in a “portfolio business meeting” or “pbm” “which we would like specific advice on before the end of the week” was the ability to prohibit exports going to specific abattoirs within countries or to allow exports only to specific abattoirs considered suitable. As will appear, this reflected the approach that the Minister adopted immediately after the Four Corners program in the Export Control (Protection of Animal Welfare) Order 2011 that he made on 2 June 2011 (the First Control Order).

99    In addition, on 24 May 2011, Mr Lawrie emailed the Minister with some “lines”, being answers, including which he had already told Mr Negus that, I infer, he might say in answer to questions in Senate estimate hearings on the topic of live animal exports. Mr Lawrie’s lines foreshadowed that he thought that the Four Corners broadcast would occur on 30 May 2011. Mr Lawrie noted that the RSPCA and Four Corners had refused requests for the Minister and the Department to see the footage.

100    On 25 May 2011, Ms Neil wrote to the Minister on behalf of the RSPCA and Animals Australia. She referred to Animals Australia having brought to his attention in November 2010 the treatment of Australian sheep exported to Kuwait and to her own meeting with the Minister on the day the evidence of that matter was released. Ms Neil referred to being initially encouraged by his response but then being disappointed by his leaving it to the industry to come up with a solution. The letter referred to the history of industry inaction since 2003 in the face of evidence of cruel treatment of animals in countries of export. Ms Neil reminded the Minister that she had sought a meeting with him in February 2011 to discuss matters of concern, including the treatment of Australian cattle in Indonesia and continued:

We were advised that such a meeting could not be facilitated. Shortly afterwards, Animals Australia conducted an investigation in Indonesia into the treatment of Australian exported cattle. On viewing the footage I informed your adviser, Alastair Lawrie, that the extent of the cruelty documented exceeded that of the Bassateen abattoir in Egypt and that the only course of action for the government should be to halt the trade to Indonesia.

As you are now aware, the evidence from this investigation was provided to the ABC Four Corners program. Had you taken appropriate action over the Kuwait evidence, independent of industry, to ensure Australian livestock were protected from future abuses in that country, and agreed to see us in February, RSPCA Australia and Animals Australia would have, without hesitation, brought this evidence directly to you. Instead, we sought a meeting with the Prime Minister, which was then passed to your office. This meeting request was also denied. We note that no approach has been made to either organisation to provide the Government with the evidence from Indonesia.

(emphasis added)

101    Ms Neil also referred to the previous weekend’s release of the industry’s action plan saying that the industry had a track record of only acknowledging welfare concerns after they had been exposed by others. She said that the suggestion that animals should continue to be exposed to a further four years of abuse while the action plan was unimplemented would be unacceptable to the community.

102    On Friday 27 May 2011, at about 2.40pm, the industry published a media release that said it had received footage on the previous Tuesday (24 May 2011). As a result of viewing the footage, LiveCorp’s chief executive officer, Cameron Hall, said that the Australian industry had requested the Indonesia industry to immediately suspend supply of Australian cattle to three facilities.

103    On 27 May 2011 at 4.07pm, the Minister’s press secretary emailed a statement by him to the Four Corners reporters. She referred to a conversation earlier that week saying “We remain disappointed that we have not been provided with the footage in question”. The Minister’s statement was in terms similar to what he had given to Mr Negus.

104    On 30 May 2011, the Department provided an urgent minute to the Minister on options for regulating exports of live cattle on which, it suggested, he might wish to draw in response to the forthcoming Four Corners broadcast. The minute recommended that the Minster note that there were powers to make orders under the Export Control and AMLI Acts including specifying facilities to which exports could occur but that these were disallowable legislative instruments and that some of those options would require a regulatory impact statement. It also asked him to note that, first, some options “would have a moderate to high probability of being disallowed” and, secondly, any new regulation would raise community expectations that the Government was taking a stronger role in enforcing animal welfare overseas which would be very difficult to enforce. The minute recommended that the Minster, first, continue to work collaboratively with industry to encourage voluntary improvement of animal welfare including restricting supply of Australian cattle to abattoirs that had the potential to meet OIE standards within an acceptable time, and secondly, revisit the issue if voluntary steps failed to achieve an improvement. The Minister annotated the minute by indicating that he wished to discuss the recommendations.

105    The minute attached legal advice from, first, Blake Dawson that was undated but given in respect to a request by the Department on 19 May 2011, and secondly, the Australian Government Solicitor (AGS) dated 25 May 2011.

106    Blake Dawson noted that the Department had requested urgent “high level advice” on four options that were discussed at the 19 May 2011 meeting for implementing the industry’s plans to improve animal welfare in importing countries. The advice discussed the four options raised in that meeting, namely, first, making no change, secondly, introducing “light touch” regulation under which exporters would be obliged to declare, as a condition of being able to export, the destination import facility for the livestock and that it was on the list of acceptable facilities, thirdly, making an order under the AMLI Act prohibiting the export of livestock other than to an import facility listed as acceptable and, fourthly, making a more extensive order under the AMLI Act that prohibited exports to countries or import facilities in respect of which industry had not developed, or there was not in place, a market plan that had set a timetable for, or achieved in time, particular objectives. Blake Dawson advised that a regulatory impact statement may be required for any legislative instrument that was made that had impacts on business.

107    Significantly, none of the four options on which Blake Dawson gave its “high level advice” included the Minister exercising any power under the Export Control Act.

108    AGS’ written advice to Ms Evans of 25 May 2011 was in response to her request, made on 29 April 2011, for advice on the Commonwealth’s power to enact legislation creating offences in respect of the participation by Australian individuals and companies in activities occurring in other countries that adversely affected the welfare of cattle exported from Australia. AGS referred to the reason for the Department seeking advice in respect of options for the Government’s response to the expected Four Corners broadcast. AGS advised that it was possible to create such offences but that enforcement could be problematic unless the accused was present here.

109    At about 2pm on 30 May 2011, Ms Evans emailed Blake Dawson asking for urgent advice by later that day on whether to amend “one of the pieces of legislation” by adding a schedule of facilities to which it would not be acceptable to export cattle in which the Minister could add names in a list that he could table in the Parliament with reasons in a manner so that the list would not be a disallowable instrument.

4.2 The broadcast

110    On Monday 30 May 2011 at about 8.30pm, the ABC broadcast its Four Corners program on national television. The title, “A Bloody Business” was a foretaste of its content that the presenter, Kerry O’Brien, described with telling accuracy, in his opening sentence, as “a program that will shock you”.

111    The program depicted animals being cruelly treated in a considerable number of instances by incompetent or inhumane slaughtermen who attempted to kill them in a manner that was supposed to be in accordance with Islamic requirements for halal meat. However, the depicted inhumanity had no foundation in those religious requirements.

112    The program included interviews with LiveCorp’s Mr Hall and Dr Temple Grandin, of Colorado State University, who was an advisor to the cattle industry. Mr Hall said that she was well known internationally and that the Australian industry had adopted, in its training programs, a number of her principles for yard design and movement of animals. The following passage from the transcript of the program, in which the reporter, Sarah Ferguson, interviewed Dr Grandin while they were watching some of the Animals Australia footage, captures the essence of the cruelty and the issue of the Australian Government’s role:

TEMPLE GRANDIN (Speaking at a meeting of Australian cattle producers): I want to go over some cattle behaviour principles ...

SARAH FERGUSON: She also co-wrote the international slaughter guidelines. Watching the footage from Kaliawi, Grandin was shocked.

TEMPLE GRANDIN: The conditions are absolutely terrible. I mean you've got a box designed to make a cattle fall down. That violates every humane standard there is all around the world. What I want to know is why is Meat and Livestock Australia's name on the side of this chute?

SARAH FERGUSON: Meat and Livestock Australia say they trained the slaughtermen here in January this year. One of the distressed animals falls on the slope leading to the box.

TEMPLE GRANDIN: They've got a skating rink for a ramp that the animals can barely, you know, walk up. This is just an absolutely horrible set-up. Now the guy's on top of the animal kicking it because he can't get it to move. I'm really shocked that Meat and Livestock Australia would be involved in building facilities this terrible.

SARAH FERGUSON: When the slaughtermen fail to move him, they drive another steer over the top.

TEMPLE GRANDIN: (Watching footage of Kaliawi abattoir) With a Brahman-type cattle they can get so stressed that they'll just go into tonic immobility and I think this animal's tired. He's just down now and not even protesting he is so stressed.

SARAH FERGUSON: Grandin was particularly critical of the role of the Australian Government and industry.

TEMPLE GRANDIN: Is the Government of Australia going in and providing these really horrible facilities? Something's really wrong. I was really shocked to see Meat and Livestock of Australia's name on this equipment.

CAMERON HALL: I accept that Temple Grandin may well have concerns. At times we have concerns about the standards at, at facilities, at certain facilities. That's why ...

SARAH FERGUSON: Which ones?

CAMERON HALL: We continue ...

SARAH FERGUSON: Which ones are you concerned about at the moment?

CAMERON HALL: I can't be specific. There are a hundred facilities receiving Australian cattle in the Indonesia marketplace.

SARAH FERGUSON: The restraining box was designed to replace the traditional method of roping animals to posts before the slaughter.

CAMERON HALL: I don't think it's acceptable for Australian animals to be processed in a traditional manner.

SARAH FERGUSON: Despite this, the Australian industry continues to send cattle to abattoirs without boxes.

At the Kota Binjai abattoir in Medan, a steer is readied for slaughter.

The forlorn animal slips repeatedly and is repeatedly abused. The slaughterman appears oblivious to the presence of the camera. The animal's bellowing is haunting.

LYN WHITE [of Animals Australia]: I remember thinking so clearly at the time that this animal just didn't understand why he was being beaten, and it was almost like he was calling out why? And there were no answers to that question.

    (emphasis added)

113    During the program, David Farley, the chief executive officer of AACo, said that it did not know to which abattoir its cattle were sent. At the end of the program, Mr O’Brien informed viewers that after viewing some of the broadcast footage in the preceding week, the industry announced that it had immediately moved to suspend the supply of Australian cattle to three abattoirs. But, the presenter said, as recently as the evening before the broadcast, Australian cattle were still being slaughtered at one of them. At the very end of the program Mr O’Brien told viewers:

Although he chose not to be interviewed for the story, the Minister, Joe Ludwig, said in a statement that despite the improvement of animal welfare over the past decade due to industry and government efforts, he accepts that more work needs to be done.

Something of an understatement.

4.3 The aftermath

114    The Four Corners program caused an immediate public furore and presented the Government and, in particular, the Minister, with a major political crisis. Later on the evening of 30 May 2011, the Minister issued the following media release:

Statement from Senator the Hon Joe Ludwig – Four Corners

This evening the Four Corners program aired evidence of animal welfare mistreatment in Indonesian facilities.

I was shocked by the footage and the treatment of the animals involved.

I have ordered an immediate investigation into the footage by the Department of Agriculture, Fisheries and Forestry and have asked them to provide me with all available options in response to the evidence.

I have tonight directed the Department to implement a moratorium on the installation of any new Mark I restraint boxes, as seen being used in the footage. This will apply to the instalment of any new boxes with Commonwealth funds across global markets.

Further, I have asked the Australian Chief Veterinary Officer to coordinate an independent, scientific assessment of the on-going appropriateness of both the Mark I and Mark IV restraint boxes.

Finally, I have requested a thorough briefing on all of the legislative and regulatory responses available to me for responding to evidence of animal mistreatment, including the banning of trade to specific facilities or destinations.

I asked industry at the beginning of this year for proposals on how welfare outcomes could be improved, particularly after animals arrive in importing countries. I am currently considering these proposals. It is clear that industry reforms to animal welfare standards have not gone far enough or been fast enough and much more needs to be done.

115    During the broadcast on 30 May 2011, Blake Dawson replied to Ms Evans’ email of earlier that day, copying in Mr Glyde. They said that they made no comment on the non-legal issues of prohibition on export of livestock to specified countries or facilities, including the reaction from importing countries, but assumed that this had been taken into account. They noted that Ms Evans had discussed with them that evening that the Minister was “open to taking more direct action in terms of a prohibition” and thus they had added an additional option in their response. In response to the request about creating a non-disallowable instrument, Blake Dawson advised that one possibility was to amend the AMLI Act to exclude expressly the disallowance provisions of the Legislative Instruments Act for such a result, although the Bill for such an amendment was likely to be the subject of adverse comment, including, by the Senate Committee on the Scrutiny of Bills. Blake Dawson advised that there was one further option for the Minister to take more direct action, namely making an order under s 7 of the Export Control Act prohibiting the export of prescribed goods from Australia absolutely, or to a specified place, or unless specified conditions or restrictions were met. The solicitors advised that such an order would be a disallowable instrument, adding:

However, if the order is drafted so that it is clearly based on animal welfare concerns (the welfare of Australian live-stock in importing countries/facilities) disallowance may not be an attractive option.

For example, and without considering the drafting in detail, the order could provide to the effect that the export of live animals to [insert names of facilities/countries] is prohibited unless the Minister is satisfied that there are adequate arrangements in place between the Australian export industry and the facility/country to ensure that live animals exported from Australia to that facility/country are treated in accordance with OIE standards or will, within a specified timeframe, be so treated.

(emphasis added)

116    Mr Glyde forwarded this email to Dr O’Connell early on 31 May 2011.

117    Meanwhile, late on 30 May 2011, the RSPCA and Animals Australia issued a media release calling for an immediate halt to the cattle trade to Indonesia. The media release asserted that representatives of MLA had visited one of the “most brutal” abattoirs shown in the Four Corners program six times in the previous 14 months. It criticised the use of the Mark I restraint boxes and adopted Dr Grandin’s criticisms of their use. Other animal welfare groups and the Australian Meat Industry Council (AMIC) added their support. AMIC asserted that the footage “clearly damages the global image of the $15 billion …Australian meat industry”.

118    On 31 May 2011, the Minister stated in a radio interview at 7.15am that he had launched an investigation into what he called the “shocking” footage broadcast the previous night. He said that he had placed a moratorium on the further installation of Mark I boxes and had had the Chief Veterinary Officer (CVO) commence a scientific review of them. He also said that he had asked his Department to provide him with all regulatory options for banning “exports to substandard facilities.” He told listeners that “the practices depicted in the footage are unacceptable to the Australian community.” When asked about the importance of the Indonesian market, he said:

Look, we have an important relationship with Indonesia, not only exports of live cattle, we have an important relationship with sharing intelligence, dealing with a whole range of issues, so it's an important relationship, but it doesn't excuse what I saw last night, the government will be responding to the footage in a comprehensive and considered way.

(emphasis added)

119    The interviewer also asked the Minister about the proposal by the independent member, Andrew Wilkie MP, to move that day in the Parliament to ban the export of livestock from Australia. The Minister responded by acknowledging the concerns but suggested that the interviewer should discuss those matters with Mr Wilkie.

120    At lunchtime on 31 May 2011 Mr Glyde, Andy Carroll, the CVO, Ms Evans, and another officer of the Department met with executives of the RSPCA, including Ms Neil, and Animals Australia at Parliament House. Mr Glyde informed the meeting of the Department’s concerns about the practices that had been depicted in the previous night’s Four Corners broadcast. He confirmed that the Minister had directed the Department to implement the steps that I have described in [118] when summarising the radio interview earlier that day. In addition Mr Glyde said that the Minister had directed the Department, first, to investigate all legislative and regulatory options available to improve animal welfare in the trade, and secondly, to establish an independent review to investigate the complete supply chain for live exports up to and including the point of slaughter. The RSPCA and Animals Australia agreed to provide all footage and other materials that would help and inform the CVO making his assessment.

121    Later on 31 May 2011, the RSPCA provided the Minister with further video material of cruel and inhumane treatment of cattle in Indonesian abattoirs together with its scientific assessment of that footage. That scientific assessment analysed in detail the mistreatment of Australian livestock at 12 named facilities in Indonesia. It pointed to the absence of evidence to suggest that the Australian export industry was in any position to have a significant impact on animal welfare in Indonesian slaughterhouses or to restrict the places in Indonesia to which their cattle could be sent. It stated:

Workers at slaughterhouses tend to be unskilled and subcontracted on a temporary basis. Unless the slaughter of Australian cattle could be restricted to locations where a skilled and permanent workforce was employed, pre‐slaughter stunning was effectively used, training and auditing programs were in place, and enforceable animal welfare legislation was introduced, it is difficult to see how their treatment could be reliably and sustainably improved.

122    At 1.40pm on 31 May 2011 the Minister held a press conference at which he announced that he had put in place steps to suspend exports to all the facilities in Indonesia that the RSPCA and Animals Australia had identified. He also said that the Department would undertake a supply chain assurance process to ensure that standards and guidelines for animal welfare were met. He stated “Indonesia has substantially good abattoirs”. When questioned about whether he might suspend the entire live export trade to Indonesia, the Minister said that that was a possibility “if we want to go that far: it’s certainly on the table because it’s important to ensure that we do have animal welfare outcomes that are acceptable and meet OIE guidelines” (emphasis added).

123    Also on 31 May 2011, Mr Glyde, Rona Mellor (another deputy secretary of the Department), Mr Carroll, Ms Evans and another officer met Mr Kane and Mr MacKinnon of ALEC. During this meeting Ms Mellor asked how many animals were then currently in the pipeline and the ALEC representatives estimated that 28,000 were on the water and a further 40,000 were due to be loaded on ships over the following three weeks. The meeting discussed the possible means of establishing systems to track animals in Indonesia after their export from Australian. The ALEC representatives said that even with the tightest controls on the supply chain, cattle could find their way into poorly run facilities. They said that the risk of such leakage was present in any system in the industry and they would provide the Department with possible scenarios.

124    The Minister’s notes for what he told the caucus meeting of all his political party’s (the Australian Labor Party) Members of the House of Representatives and Senate on 31 May 2011 explained the actions that he had taken to that point. He told them that he had ordered the Department to conduct an investigation into the footage of the Four Corners program and the practices it revealed, imposed a moratorium on the installation of Mark I boxes using Commonwealth funds, asked the CVO to review the appropriateness of using the Mark I and IV boxes, and required a briefing on all legislative and regulatory options available to address animal welfare concerns, including banning specific facilities. He told the caucus meeting that a decision to suspend, ban or phase out live animal exports “would have serious consequences”. He pointed out that there were no abattoirs north of a line between Townsville to Geraldton which “means that the live export trade is the main option for cattle produced from this region”. He also warned of the possibility of a negative impact on indigenous employment and income as well as the price of beef and lamb for producers across Australia, given the additional meat that would be placed on the domestic market in consequence of a ban.

125    On 1 June 2011 the Minister wrote to Mr Kane asking for the industry to cooperate in suspending the supply of Australian cattle to the 12 facilities the subject of the RSPCA and Animals Australia’s materials.

5.    The political and legislative response

5.1 The First Control Order

126    On 2 June 2011 the Minister made the First Control Order. It came into force on 3 June 2011 after its registration under the Legislative Instruments Act. It specifically prohibited the export of live animals to 12 named places (being those that the RSPCA and Animals Australia had identified to the Minister on 31 May 2011) except pursuant to an approval under cl 5 (the exceptions clause) (cl 4). Relevantly cl 5 provided:

5              Approvals where places conform to OIE recommendations

(1)   This section applies if the Minister is satisfied, in relation to a place specified in Schedule 1, that:

(a)   slaughter and related operations are being conducted in accordance with relevant OIE recommendations; or

(b)   arrangements are in force to ensure that, within a period satisfactory to the Minister, slaughter and related operations will be conducted in accordance with relevant OIE recommendations.

(2)  The Minister may grant approval in writing for the export of live animals to a place referred to in section 5(1). The approval may be granted subject to conditions specified in the approval.

(3)   The Minister must not grant an approval in the circumstances specified in section 5(1)(b), unless the Minister is satisfied that slaughter and related operations with respect to the animals to be exported pursuant to the approval will be conducted in accordance with relevant OIE recommendations.

(4)   Without limiting the circumstances in which the Minister may revoke an approval given under section 5(2), the Minister may revoke the approval if:

(a)   the Minister considers that operations at the place are not being conducted in accordance with relevant OIE recommendations; or

        (b)   conditions in the approval are not being complied with.

127    Thus cl 5 authorised the Minister to give an approval if satisfied that the slaughter of animals at any of those otherwise prohibited places complied with the recommendations set out in chapter 7.5 of the OIE Code.

128    Also on 2 June 2011, the Secretary made the Australian Meat and Live-stock Industry (Protection of Animal Welfare) Order 2011 (the First AMLI Order). It prohibited the holder of a livestock export license from exporting livestock to any of the 12 named places (cl 4). It required a license holder to provide the Secretary with a declaration that the holder had taken all reasonable steps to ensure that the livestock would not be taken to any of those places and evidence that there was no intention to do so (cl 5).

129    On 2 June 2011, Terry Nolan, the Chairman of AMIC, wrote to the Minister. AMIC represented the vast majority of meat producers in Australia, in particular those who exported meat products that had been processed domestically. AMIC recommended that all live shipments to Indonesia be suspended until an enforceable system for ensuring animal welfare to a standard equivalent to the world class ones in Australia was in place.

5.2 The 2 June recommendations

130    On 2 June 2011, Mr Glyde provided the Minister with a Departmental minute as to the available options. The minute recommended that the Minister sign a three page version of a draft letter to the Prime Minister seeking Cabinet agreement to impose a compliance regime that would ensure that OIE animal welfare standards applied to cattle through and up to the point of slaughter. The Minister signed and dated this minute on 6 June 2011. The minute advised that enforceable options to achieve the best animal welfare outcomes would have the most significant impact on trade to Indonesia, the domestic and other markets. It also advised that other options, for a targeted response, would allow trade to continue while being “extremely difficult to enforce and therefore would not merit the standard of assurance we understand you require”. The minute made the following points:

    a broad prohibition of trade could be enforced, in among other ways, by prescribing a particular period, a specific form of livestock, the achievement of a particular standard and or a specific country. Such prohibitions were relatively easy to implement but would involve significant impacts in Australia on the industry, the market and employment. It was likely that there would also be an impact on overseas markets;

    the Department, at that time, was only confident that exporters to Egypt could meet a standard of a closed loop to the point of slaughter that complied with the OIE Code standards;

    a standard that relied on the industry based approach or foreign regulation would not meet animal welfare objectives at that time;

    requiring mandatory stunning of animals in the importing country would be inconsistent with current Australian practice that allowed slaughter without the animal being stunned;

    targeted controls would vary in their efficacy in achieving animal welfare outcome and would be difficult to enforce, and

“Targeted controls based on negative lists would remain reactionary, addressing welfare concerns as they are identified and/or reported. Enforcement would be very difficult to achieve and leakage is likely. Positive lists also imply a level of ongoing monitoring and compliance activity that is not practical in another country without the full support of the importing country Government. This is unlikely to be provided.” (emphasis added);

    the likely leakage of animals (loss of animals from the controlled system) would result in ongoing criticism of the Government due to a perceived inability to deliver on commitments to address animal welfare issues;

    non-regulatory options, such as leaving industry to address the problem had failed; and

    there would be “substantial domestic impacts” from any restrictions.

131    Under the heading “Discussion”, the minute stated:

15. Regardless of the option, regulatory or non-regulatory, the establishment of traceability systems for exported animals from northern Australia and enhanced government to government engagement on animal welfare issues will be important. Implementation of the National Livestock Identification Scheme (NLIS) for exported cattle would allow for traceability and audit and would be needed to underpin the transparency of the future trade.

16. Depending on the approach taken, there will be a number of impacts including for example:

•    on the price of beef in Australian and overseas as well as domestic employment;

•    on animals on the water and in the supply chain. Consideration would have to be given to livestock shipments currently on water (in transit shipments) and shipments under various stages of preparation.

•    on other markets that are heavily reliant on Australian livestock; and

•    possible focus on domestic animal handling practices and animal welfare issues by animal welfare groups.

(emphasis added)

132    The draft letter to the Prime Minister (which remained unsent) proposed putting in place a compliance regime in which an export permit for each individual consignment could be issued only to a person who could demonstrate verifiably its full control over the welfare of the animals right up to the point of slaughter. The draft letter estimated that it would take at least six months to implement such a system effectively and proposed that, in the interim, the Government prohibit the export of all live cattle, except to Egypt which already had in place arrangements for a closed loop system. The draft letter stated that the live animal trade, as it then operated, was worth about $1 billion annually and supported about 10,000 jobs, most being in Northern Australia. It also provided data including that, in 2009 and 2010, total live cattle exports were worth respectively $666 million (for about 950,000 head) and $684 million (for about 875,000 head) of which about 770,000 and 520,000 head were exported to Indonesia (worth in 2010 about $400 million). It also stated:

Indonesia and other countries where trade would initially cease are unlikely to be fully supportive of the approach that I propose. Concerted effort from the Government will be needed to explain the importance of animal welfare in the Australian community to our trading counterparts in the live trade. In Indonesia’s case, it may cause friction in the agriculture arena (there are already tensions there over beef trade) and beyond. The Government will need to rely on the mature and deep relationship we enjoy with Indonesia and carefully handle the announcement and ongoing need for access to the supply chain so as to avoid the possibility of offence. I will seek the guidance of the Minister for Trade and the Minister for Foreign Affairs in this regard. I understand that any legal risks under the WTO and free trade agreements can be managed and that Australia would have good grounds to defend any international legal challenge.

(emphasis added)

133    The minute attached six suggested recommendations to Cabinet, including (the 2 June recommendations):

1              I recommend that the Cabinet agree to put in place a compliance regime for the export of live cattle for slaughter whereby export permits are only provided:

a. On a case by case basis for individual consignments

b. When an exporter can verifiably demonstrate that they have full control over the welfare of the animals they export through to and including the point of slaughter.

c. When the standard of welfare achieved is at least consistent with Guidelines in the Terrestrial Animal Health Code (2010) published by the World Organisation for Animal Health (OIE).

2            I further recommend that Cabinet agree to act immediately to prohibit the export of live slaughter cattle to any market with the exception of those where there is a closed loop system that meets the standard of welfare referred to in Recommendation 1 c), pending implementation of the compliance regime referred to in Recommendation 1).

3             I recommend that the Cabinet agree that consideration be given to provision of exemptions from the prohibition where there are contractual obligations with trading partners, predating the prohibition that would otherwise be breached.

(emphasis added)

134    On or shortly before 2 June 2011, Ms Evans sought urgent advice from Will Story, Principal Legal Officer of the Attorney-General’s Department’s Office of International Law (AGD). She told him that the Government was considering implementing an immediate prohibition on all exports of live cattle, except to Egypt, for six months as a transitional measure. The transition would be to a system under which such exports would be permitted if, in effect, there were a closed loop system in which the cattle would be treated and slaughtered only in accordance with the OIE Code. Ms Evans sought Mr Story’s advice on the main international trade law considerations that such a course of action entailed.

5.3 The Minister meets with the industry

135    On 2 June 2011, Jock Lawrie, the president of the National Farmers’ Federation, Mr Kane, Mr MacKinnon, Roly Nieper, the chairman of LiveCorp and Don Heatley, the Chairman of MLA were waiting to meet the Minister at his Parliamentary office. The Minister appeared and pointed to Mr Heatley and Jock Lawrie and said “I want you and you” and they followed him into his office with the only other person present being Mr Carey. Mr Heatley gave evidence about the meeting which lasted about two hours. (When I refer to a Mr Lawrie subsequently in these reasons, the reference is to Alistair Lawrie (see [47]), the Minister’s senior advisor). Mr Heatley said that Jock Lawrie said very little during the meeting.

136    The Minister told Mr Heatley and Jock Lawrie that the industry needed to put people on the ground in Indonesia. Mr Heatley said that the industry already had some, but intended to have more people in place as quickly as possible to raise the standard of abattoirs there to achieve OIE requirements.

137    The Minister asked what could be done to resolve the issue. Mr Heatley said that there were some supply chains in Indonesia, such as Elders, that were better than others, in particular the Elders abattoir, which was a world class facility. He said that the industry intended to bring about 25 abattoirs up to the same standard, indeed to the OIE standard, as quickly as possible. He was unsure, when giving evidence, whether the Elders abattoir then complied with OIE requirements, but he said it “clearly had the potential to do so” and that the MLA considered that there were approximately five abattoirs in Indonesia that could achieve the OIE standard “very quickly…and our plan was that we would, within two weeks, have approximately 25 up to that standard.”

138    The Minister wanted to know if the industry could move to a closed loop with supply chain assurance. Mr Heatley remarked that one of the major issues would be the prevention of leakage, and the Minister said that this was also one of his concerns. Mr Heatley said that the industry would be “raising the standard of these abattoirs to a point where that leakage didn’t occur as best we possibly could.” He said that there could not be “a complete fix overnight” to a supply chain in a country like Indonesia. Mr Heatley made the point that there were sovereignty issues in Indonesia that operated in relation to Australia “wanting to impose our will or our view on the Indonesia Government or industry.” He reiterated that there were currently about five facilities that were “capable of being OIE accredited” and able to be part of a closed loop supply chain system and the industry was looking to increase that number.

139    The Minister raised the topic of stunning which he said was important. Mr Heatley said that it would be necessary “to work very closely and carefully with…the Indonesian government and industry” to implement stunning in supply chains that complied with the OIE Code. Those present discussed what was needed to be done to achieve a closed loop with supply chain assurance. This included introducing stunning facilities and implementing the National Livestock Identification Scheme in order to prevent leakage from the supply chain in Indonesia. Under the NLIS each animal has a unique, machine readable tag so that it can be traced by reading the tag at every point in the process from the time it is tagged in Australia to when it is slaughtered.

140    During the meeting the Minister said “your social license is lost” and that the industry needed to take action in the next 24 hours. Near the end of the meeting, Mr Heatley asked the Minister that, if he were thinking of implementing a ban on the live trade, could he do two things, first, let the industry clear the pipeline of the tens of thousands of head of cattle moving in the supply chain in Australia, and secondly, consider the geopolitical fallout from any decision that he might take. Mr Heatley expanded on the first request explaining that currently there were people mustering, picking up or delivering cattle to depots or ships, there were ships on charter either inbound on the water or already in port and if there were to be “any cessation of the trade, then it was going to cause enormous issues for the Australian industry” and had the potential to cause major animal welfare issues. Mr Heatley said that, when he raised the second request, the conversation proceeded as follows:

His words to me were: “What would you know about Indonesia?”

My response was that: “Minister, I had been in and out of Indonesia, South East Asia generally, and pretty much all the markets around the world to which Australia supplied livestock, and that I did not believe that a cessation to the trade, if it was to occur, would be accepted very well by the Indonesians.”

(emphasis added)

5.4 The pressure for action grows

141    By 3 June 2011 there was sustained public pressure for more Government action. The activist group, GetUp, had launched a television advertising campaign in association with the RSPCA and Animals Australia, calling for a ban on live cattle exports. Ms Neil of the RSPCA wrote to the Minister again on 3 June 2011, identifying more Indonesian abattoirs with poor animal welfare standards.

142    Also on 3 June 2011 Senator Bob Brown, the leader of the Australian Greens political party, wrote to the Minister, other senior members of the Government and the Opposition, informing them that members of the Australian Greens had given notice in both Houses of the Parliament of their intention to introduce Bills to prohibit live export of animals for slaughter. In addition, Mr Nolan, for AMIC, wrote to the Minister on 3 June 2011 saying that AMIC saw no alternative to the immediate suspension of all live animal exports to Indonesia until an enforceable system was in place there to ensure that, up to the time of slaughter, the same animal welfare standards as in Australia would apply to exported animals.

143    On 3 June 2011, Greg Brown, as president of the Cattle Council of Australia, Mr Heatley as chairman of MLA, Mr Nieper as chairman of LiveCorp and Mr Kane as chairman of ALEC wrote to the Minister with their plan, on behalf of the live cattle export industry, to assure the welfare of Australian cattle being processed in Indonesia in response to the Minister’s request for such a proposal. The letter acknowledged that the Four Corners broadcast had highlighted grossly unacceptable conduct. It said that the plan addressed the Minister’s request that “assurances be provided right along the supply chain” that the cattle be treated in accordance with acceptable animal welfare standards and directed to facilities that met OIE standards”. The letter said that the plan committed the industry to investing in abattoir equipment in Indonesia, including, as a central feature, a rapid increase in stunning to raise animal welfare standards. The four signatories wrote that through consultations with Indonesian feedlot owners, they were compiling a list of facilities that potentially met the OIE criteria and that they anticipated that there would be 25 or more facilities that would be accredited by independent veterinary experts of which five, that used stunning, were “modern, advanced facilities”. They said that the 25 facilities currently accounted for 40% of the trade. They added that it “is important that the plan be implemented quickly, with abattoirs accredited within two weeks”. The letter requested the Government’s cooperation in helping to achieve a paid accreditation process. It said:

We presume that dialogue has occurred between the Australian Government and Indonesian Government over issues highlighted in last Monday's Four Corners program. It will be important to have Indonesian Government support for the measures outlined in the Plan, including for increased stunning.

The letter warned “we cannot guarantee to immediately prevent any instance of unsatisfactory welfare practices in Indonesia – we have no power to do so”. It stated that the industry was in the process of increasing the number of Australian cattle handlers in Indonesia from four to over 20 during the following two weeks to ensure the appropriate use of restraining boxes in accordance with the OIE Code.

144    The plan attached to the industry’s letter acknowledged that, as it had been prepared only by the industry, it would be beneficial to receive input from each of the Australian and Indonesian Governments and Indonesian industry. The plan said that a preliminary audit of about 100 abattoirs slaughtering Australian cattle in Indonesia resulted in four categories of animal welfare standards ranging from the limited number of “A” (modern advanced facilities using stunning) and some “B” (facilities that met the OIE Code), at least two of which had recently begun using stunning (which, the plan noted, the OIE Code did not make mandatory) and others used restraining boxes “with a high level of proficiency”. The plan recommended that regular checks be made by an independent team of veterinary experts approved by the Australian and Indonesian Ministers of Agriculture to ensure that high levels of animal welfare continued. It expressed the intent, over time, to raise the animal welfare standards by raising as many of the ‘B’ level abattoirs to ‘A’ level as possible.

145    The plan noted that currently the supply chain involved Australian exporters selling cattle to Indonesian feedlots who then on-sold to butchers or other slaughterhouses. The letter stated “[w]ith a supply chain this long control is sometimes lost over where cattle are finally slaughtered.” It recommended shortening the supply chain to the point of slaughter in Indonesia in order to prevent leakage and to provide better assurance of maintaining animal welfare. The plan recommended establishing a list of accredited feedlots to which export permits for Australian cattle only could be issued. The accredited feedlots would have to provide assurances that they would retain control of the cattle to the point of slaughter, being only at an accredited abattoir. The plan contemplated that as soon as practicable an NLIS tagging system be introduced to verify that Australian cattle only went through the restructured supply chain of accredited feedlots and abattoirs. It concluded: “To be fully effective the plan requires the strong commitment of the Indonesian Government”.

146    On 3 June 2011 Wellard wrote to the Minister. It expressed its disdain for the treatment of the animals depicted in the Four Corners broadcast. It said that, in 2010, it had launched two ships to carry livestock, Ocean Swagman and Ocean Outback and had commenced construction of two more, all of which had, or would have, high standards of animal welfare. Wellard said that it was both a producer of livestock and commercial exporter of others’ animals. It attached its own animal welfare plan to the letter in which it warranted that all feeder cattle would only be exported to Indonesia after 2 June 2011 under tripartite commercial contracts between Wellard and both the importer and abattoir owner. It said that those contracts would bind the parties to scan and keep records of each animal that Wellard supplied and, relevantly, would require, among a detailed list of matters, the abattoir owner to evidence compliance with the OIE Code and to use stunning.

147    On 3 June 2011, Mr Lawrie asked Ms Mellor for information about the then current status of export permits and applications. She replied later that day, noting that six ships with a total of about 25,000 head were in transit to Indonesia, one ship was due to depart that day, and three more permits had been granted for exports up to 8 June 2011 for a total of about 12,500 head, including one for NACC to export 1,900 head from Port Hedland on Falconia, with her departure expected on 5 or 6 June 2011. Ms Mellor also gave details of seven further applications for export permits of livestock cargoes to be loaded on ships due to depart between 8 and 18 June 2011 totalling about 44,000 head. Mr Lawrie forwarded that email directly to the Minister at about 2.30pm that day in one of the very few documents, other than the three Departmental minutes and his media interviews, in evidence as to anything that the Minister saw or said in the lead up to his making the Second Control Order.

148    At 2.43pm on 3 June 2011, Mr Glyde emailed Mr Lawrie with the Department’s appraisal of the plan that the four industry bodies had sent the Minister earlier that day. Mr Glyde noted that officials of the Department were meeting with those bodies that afternoon. He wrote that “[t]he plan lacks substance, detail and precision and in our view should not be endorsed by the Minister”. He put forward several negative and positive comments on the plan, including its failure to explain how its proponents had suggested that some Indonesian facilities already complied with the OIE Code, its entrenching the use of Mark I boxes, its lack of timelines for the achievement of milestones and its limitation on the accreditation of feedlotters to account only for the movement, but not welfare, of cattle. In particular, Mr Glyde wrote “the compliance regime is entirely industry based”.

149    On the positive side Mr Glyde noted that the plan had included independent verification and accreditation, the acceptance of the OIE standards and an acknowledgment that the Mark I boxes were not the best available technology.

150    However, Mr Glyde’s assertion that the plan’s compliance regime was “entirely industry based” was not correct. That is because the plan contemplated that both the Australian and Indonesian Governments would need to approve an independent team of veterinary experts with responsibility to ensure that animal welfare standards were met and it required “the strong commitment of the Indonesian Government”. As the letter of 3 June 2011 enclosing the plan envisaged, the plan would require the involvement and cooperation of both countries’ Governments. And, as will appear, the Minister did nothing to seek any involvement of or cooperation from the Indonesian Government before deciding to make the Second Control Order.

151    At 3.30pm Mr MacKinnon met with Mr Glyde and other officers of the Department at its Canberra offices. Mr Glyde told Mr MacKinnon that at best, the industry plan presented an overall concept, but lacked detail and specificity and that this was the view of “the Minister’s Office”. The Department suggested that the industry needed to consider the impact of itself voluntarily pausing exports. Mr MacKinnon explained that there were already shipping contracts in place for up to the next two years and they had a high value.

152    The officers told Mr MacKinnon that in order for the Minister “to stand with industry” the plan would need to provide assurance that an appropriate, detailed framework could be implemented within a reasonable time. They said that the use of Mark I boxes was under consideration, but currently those boxes were unacceptable. They said that the Department had to provide the Minister with advice about stunning and whether it was achievable across the industry. Mr MacKinnon said that stunning was an issue that was dividing the industry. The officers said that the Department was not the setter of standards in Indonesia but that “the best opportunity” was for the whole supply chain to comply with OIE standards to the point of slaughter. Mr MacKinnon agreed that auditable standard operating criteria needed to apply throughout. The officers said that the plan “needed to answer the burning question for the public and other stakeholders – ‘How many more animals will be inhumanly slaughtered while you fix this?’” Mr MacKinnon responded saying that the plan would also highlight the roles of industry and the Government and that he would work with his industry members to address the required specificity, transparency and expectations of the public.

153    Late on 3 June 2011, Mr Story provided Ms Evans with the AGD’s draft advice that Australia would have a good arguable case that the measures to implement a six month ban on all live cattle exports would not infringe the General Agreement on Tariffs and Trade.

154    Also, late on 3 June 2011, Paula Svarcas, the Department’s acting general manager of bilateral trade, caused Departmental officers to make urgent enquiries of the Australian Embassy in Jakarta with a view to obtaining visas for two named Departmental officers and “an as yet unnamed additional person from the AVA” (viz: Australian Veterinary Association) to visit Indonesia. However, Indonesia did not grant any such visas before 7 June 2011. Ms Mellor also informed Mr Lawrie late on 3 June 2011 that the Department was seeking visas for two staff to travel to Indonesia as quickly as possible, after a discussion they had had that morning. She wrote “[a]s we understand [sic] the size and nature of this task, we will assess the best approach to continue the development of our knowledge of the supply chain over there”.

5.5 The weekend of 4 and 5 June 2011

155    During the weekend, officers of the Department worked on a Departmental minute and a redraft of the proposed letter from the Minister to the Prime Minister. In response to a query he had raised about existing contracts, Ms Evans told Mr Glyde that the Department did not “know much about what is involved at this point”.

156    On Saturday 4 June 2011, Cathryn Geiger, an acting advisor in the office of the Prime Minister sent Mr Lawrie and Ms Burgman a list of questions for “your two-step proposal” that she wanted them to consider over the weekend, presumably so that this would assist during the lead up to the Cabinet meeting on the evening of 6 June 2011. Ms Geiger stated in an email to other staff in the Prime Minister’s office that her purpose in posing those questions to the Minister’s staff “is to get them thinking through the consequences of an immediate suspension, prior to actually enacting it.” The questions included:

Suspension:

• What date would the suspension take effect? How will the 3 boats due to leave on Wednesday (presumably loaded on Tuesday) and the other boats later in the week be managed?

• What are the legal implications for the Government (and any flow on fiscal implications)?

• What is the expected diplomatic and trade impacts, particularly with Indonesia?

• What is the economic impact, particularly on jobs in the north?

Substantive policy response:

• The involvement of industry and animal rights groups will be important in establishing a satisfactory solution for all live exports – what is the likely process for their engagement?

• What is the expected direction for this industry in Australia?

(emphasis added)

157    As will become evident, there is no evidence to suggest that the Minister gave any substantive thought to the consequences of a suspension of all live cattle exports for the relationship with, and to any response by, Indonesia.

158    Later on 4 June 2011 Mr Lawrie forwarded Ms Geiger’s email to the Secretary, Mr Glyde and Ms Evans. He asked them for assistance in answering, among others, all but her first question under the heading “Substantive policy response” that I have extracted in the questions above. Mr Lawrie explained that Ms Geiger’s reference to the ‘two-step proposal’ related to “a possible temporary suspension then reopening (on either interim arrangements or on permanent basis in some months) noting that the Minister has not finalised his position and this is also subject to Cabinet”. He also sent a separate email to Ms Evans and Ms Burgman saying that revised talking points were probably more important now than the exact content of the letter to the Prime Minister, and that he agreed “that writing to Indo[nesia] would be a good idea, although that is probably a later priority for tomorrow or Monday morning”.

159    Ms Evans responded later on 4 June 2011. She said that the Departmental minute of 2 June 2011 attaching the draft letter to the Prime Minister (see [132] above) summarised all the Department’s advices on legislative and regulatory responses.

160    Late in the evening of 4 June 2011, Ms Mellor emailed Susan Reye, a senior general counsel with the AGS seeking urgent advice. Ms Mellor said that in “the range of scenarios we are developing, a suspension or temporary ban on the trade with Indonesia is under consideration within the Department.” She sought advice on, first, the Secretary’s powers, and secondly, the most effective way, to suspend trade with Indonesia or more widely, in the event that the Government wished to do so. She also sought advice on the consequences where a consignment of live animals was being loaded on a ship when a new order took effect.

161    On Sunday 5 June 2011 at 11.35am, Mark Laduzko of the Department of Prime Minister and Cabinet emailed Ms Mellor about the questions that Ms Geiger had sent Mr Lawrie the previous day. Mr Laduzko wrote:

Below are questions from the PMO to your MO. It’s a bit concerning that this appears to be coming to Cabinet without papers or agency consultation. Obviously, key issues in any proposal are managing the bilateral relationship and an industry and animal protection stakeholder role in developing the response. Would also be important to have legal advice on potential exposure to compensation claims from industry players that might be affected by a ban on trade.

(emphasis added)

162    Mr Laduzko’s references to ‘PMO’ and ‘MO’ were to the office (i.e. to the political, non-professional public service, advisers) of the Prime Minister and the Minister.

163    During the afternoon of 5 June 2011 the Minister met with, among others, Mr Glyde, Ms Mellor and Ms Evans. The Minister asked for more information on three topics; namely, first, the estimated costs of compensation for detriment caused by defective administration (or CDDA) in the event of there being a temporary or permanent ban on exports of live cattle to Indonesia, secondly, animal welfare, and thirdly, economic impacts. That led to the AGS being asked for its advice on the potential exposure of the Commonwealth to claims for compensation.

164    On 5 June 2011, Mr Glyde, Ms Mellor and Ms Evans received an update on the five ships that were either being loaded or about to load. The update stated that one was already sailing, and the next one due to load, commencing at 8pm to 9pm WST on 6 June 2011, was Falconia. The update noted that the cattle originated from properties through the Pilbara with the furthest about 900km away from the port.

165    At about 6.45pm on 5 June 2011 Ms Evans replied to the questions that Mr Lawrie had sent the previous day:

Possible Suspension:

•    What date would a possible suspension take effect? (any date between now and thurs/fri?)

THE SUSPENSION WOULD TAKE EFFECT 24 HOURS AFTER NEW ORDERS LODGED WITH FEDERAL REGISTER OF LEGISLATIVE INSTRUMENTS. THE TIMING WILL DEPEND ON WHEN POLICY DIRECTION IS CONFIRMED.

•    How will the 3 boats due to leave on Wednesday (presumably loaded on Tuesday) and the other boats later in the week be managed?

IF THE BOATS LEAVE PRIOR TO THE SUSPENSION THEY WOULD BE SUBJECT TO THE EXISTING ORDER THAT THE ANIMALS NOT GO TO ANY OF THE 12 BANNED FACILITIES. IF THEY ARE STILL LOADING/AT DOCK THE ANIMALS WILL BE UNLOADED AND WILL NOT DEPART.

•    What are the legal implications for the Government (and any flow on fiscal implications)?

ADVICE IS BEING PREPARED.

•    What is the expected diplomatic and trade impacts, particularly with Indonesia?

WE EXPECT INDONESIA TO BE DISAPPOINTED WITH ANY SUSPENSION OF TRADE. WHILE THEY HAVE BEEN UNDERSTANDING TO DATE, THEY WOULD LIKELY EXPECT TO CONTINUE WORKING SLOWLY TO IMPROVE ANIMAL WELFARE OVER TIME. THERE COULD BE RETALIATORY ACTION BUT IT IS NOT POSSIBLE TO PREDICT AND WILL DEPEND ON HOW MUCH EFFORT IS PUT INTO COMMUNICATING THE SUSPENSION AND ASSURING INDONESIA THAT EFFORT WILL BE MADE TO REOPEN AT LEAST SOME OF THE TRADE AND HELP FACILITIES TO MEET THE NEW EXPECTATIONS.

OTHER COUNTRIES WILL ALSO BE AFFECTED. WE EXPECT THE SUSPENSION WOULD PREVENT EXPORT OF SLAUGHTER CATTLE TO TURKEY AND CHINA. IT MIGHT BE ABLE TO CONTINUE TO JAPAN, EGYPT AND POSSIBLY ISRAEL (NO AUSTRALIAN OFFICIAL HAS SEEN THE ABATTOIR IN ISRAEL SO THIS WOULD NEED TO BE CONFIRMED).

•    What is the economic impact, particularly on jobs in the north?

ABARES REPORT ATTACHED.

Substantive policy response:

•    What is the expected direction for this industry in Australia?

DEPENDS ON POLICY RESPONSE. WITH NO CHANGE, INDUSTRY EXPECTED TO CONTINUE AT CURRENT LEVELS OR TO GROW. WITH A SIGNIFICANT RESTRICTION ON EXPORT MARKETS THE INDUSTRY WOULD BECOME SIGNIFICANTLY SMALLER BUT SUSTAINABLE.

(emphasis added in original formatting)

166    At about 7pm on 5 June 2011, one of the AGS solicitors wrote back to Ms Evans concerned that the AGS was “flying somewhat blind” in providing the requested advice (emphasis added). That was because the solicitors were not familiar with the nature of the contractual arrangements, the premises for holding livestock or the other possible claimants. Mr Glyde replied about 50 minutes later saying that the main focus was to get a legal opinion on the Government’s exposure to successful compensation claims by companies that could be affected by a temporary or permanent ban on the export of live cattle for slaughter.

167    At about 8.15pm on 5 June 2011, Mr Glyde asked Paul Morris, a Deputy Secretary in the Department, to obtain more information by noon on Monday 6 June 2011 about the consequences of any proposed suspension of live cattle exports to Indonesia, and to prepare a short summary for the Minister to use in explaining the matter in Cabinet, including the impacts of such a ban in both Indonesia and Australia.

168    At 10pm on 5 June 2011, Mr Lawrie emailed Ms Evans and asked her for a revised Cabinet cover brief (scil: Departmental minute) for the next evening’s Cabinet meeting. She responded at 10.25pm saying that she would do so by noon the next day and asked if Mr Lawrie wanted a set of recommendations “that just gets the minimal outcome we discussed today”. He replied immediately:

Yes please. Covering high level principle (of where we want to get to eg consignment based etc) plus possible suspension only to Indonesia for slaughter cattle.

Will let you know if that changes.

(emphasis added)

169    Ms Evans immediately forwarded that email to Mr Glyde and Ms Mellor commenting “Info: Fall back recs.” [scil: recommendations].

5.6 The events of 6 June 2011

170    At about 6am on 6 June 2011, Ms Evans sought clarification from Mr Lawrie about what he expected from the Department. He responded immediately saying that he wanted a brief (i.e. Departmental minute) revised from the previous week’s (i.e. the one with the 2 June recommendations) and a revised draft letter (to the Prime Minister).

171    Ms Evans forwarded to Ms Svarcas at 9.22am on 6 June 2011 copies of a two page revised draft letter, a cabinet recommendation and talking points that she had taken to the meeting with the Minister the day before. That version of the draft letter to the Prime Minister proposed prohibiting the export of live cattle for slaughter to any market where there was a significant risk that OIE standards were not being met, subject to “limited exceptions” to the interim prohibition where contractual arrangements would otherwise be breached, as being worth considering. The form of the draft Cabinet recommendations was the same as that in the 2 June recommendations (see [133]) except that they now proposed that Cabinet note that he, rather than Cabinet, relevantly, would act to prohibit immediately the export of live cattle for slaughter to any market unless there were in place, in effect, such a closed loop system (the 5 June recommendations).

172    The 5 June 2011 draft talking points stated that:

•    The only other option is an outright ban on live slaughter cattle exports [to Indonesia].

•    As this new approach will take time, an interim ban on live cattle (for slaughter) exports is the only pragmatic way to proceed.

•    The impacts on the industry, and the communities that depend on it, will be dramatic. Consideration may need to be given to transitional assistance.

•    A reduction in the supply of live slaughter cattle will also have adverse impacts on our trading partners, which will need to be managed.

•    I have given consideration to the full range of regulatory options available.

•    While there is legal scope to apply a number of arrangement that target individual facilities or exporters, the ability to ensure compliance limits our choices.

(emphasis added)

173    The draft talking points anticipated that it would take six months to implement the new system. The draft talking points also explained that other approaches, such as that in the First Control Order, were impractical because those would involve continuing revelations of facilities of concern and the Minister would have negligible capacity to assure the Government and the community about compliance with the OIE Code by each facility to which exports had been permitted. The draft also stated that the Government had no role or capacity to act overseas and it was unlikely that it could rely on assurances from other governments. It stated that, in the interim, such a regime of prohibition, was the only way to avoid ongoing criticism about animals shipped from Australia. The draft talking points stated that the live cattle export industry, including producers and other businesses in the supply chain, would experience immediate cash flow consequences and damages might be sought in relation to existing contracts with shipping companies and importers. The draft also stated that, in addition, relationships with other countries importing live cattle for slaughter (Turkey, China, Japan and Israel) would be “affected if we choose to extend the prohibition in a manner that would be consistent for all markets” and:

Announcement of the approach will need careful handling (it would be best if I can advise the Indonesians personally, before it is announced) and we will need ongoing cooperation from Indonesia to reopen compliant supply chains as soon as practical.

(emphasis added)

174    At some point on 6 June 2011, Mr Glyde provided a Departmental minute for the Minister. It recommended that he sign a draft letter to his Indonesian counterpart, Minister Suswono, formally advising him of the effect of the First Control Order. The draft letter referred to the Indonesian Ambassador having told senior officials in the Department that the behaviour shown on the Four Corners program was illegal. It sought in-country cooperation from Indonesia for officials and animal welfare experts to secure the outcomes in Indonesian facilities that the Government was seeking. Although the Minister signed the letter on 6 June 2011, it was never delivered to Minister Suswono.

175    As Mr Lawrie had requested on the previous evening ([168]), Mr Glyde wrote and dated on 6 June 2011 a second updating Departmental minute, which the Minister did not sign. In addition to repeating much of the material in the 2 June 2011 minute (see above [130]), it stated:

    Australia supplied 100% of Indonesia’s live export needs;

    There were precedents for suspending live animal trade, including two that had not been challenged by legal proceedings, namely in 2003 to Saudi Arabia, and in 2006 to Egypt. However, Wellard had sued a former Secretary in respect of his decision to prevent a shipment leaving for the Middle East, but this action had settled at a mediation (but the minute did not state on what basis); and

    The Indonesian Ambassador to Australia had apologised officially to Departmental officials and the Indonesian Consul General in Perth had complemented this by making a public apology for the unacceptable treatment of animals as shown in the Four Corners program. They and Indonesian Department of Agriculture officials had said that the slaughtering methods depicted in the broadcast were not halal and were “keen to work with Australia to resolve the issue” (emphasis added). Prophetically, the minute informed the Minister:

Nevertheless, Indonesia's Agriculture Minister Suswono, together with a number of Indonesian Parliamentarians, continue to voice concerns that there would be significant impact from a live cattle shortage before and during the Ramadan religious period, which could trigger retaliatory actions and potentially affect the broader trade and economic relationship.

(emphasis added)

176    The version of the 6 June 2011 minute in evidence attached both a two page and a four page long draft of a letter to the Prime Minister. As I have noted at [171] Ms Evans had taken to the Minister’s office the previous day a two page long version of that letter. The substance of the talking points attached to the 6 June 2011 minute remained the same as those Ms Evans had taken to the Minister’s office the previous day. The four page draft letter reflected those talking points more closely than the earlier, shorter versions, and contained a statement that the Minister had considered other options, including using lists of either prohibited or permitted facilities that could receive Australian cattle. But, the draft stated these options would not be “sufficiently enforceable to safeguard the Government’s reputation on animal welfare, which is the critical objective at this point”. It also stated that “Indonesia and other countries where trade would initially cease are unlikely to be fully supportive of the approach that I propose” (emphasis added).

177    At about 10.06am on 6 June 2011 Blake Dawson emailed its draft advice on the legal mechanisms that the Government could use to prohibit the export of all cattle to Indonesia, having regard to the fact that, at the time any prohibition came into force, some cattle may be in different stages of the export process. The draft advice referred to the powers of the Minister under the Export Control Act and of the Secretary under the AMLI Act. However, it did not discuss any particular draft order or any considerations relevant to its validity in the circumstances.

178    During the morning of 6 June 2011 the RSPCA and Animals Australia issued a press release headed “Minister’s Inaction fails Animals and Domestic Beef Industry”. The release referred to AMIC’s support of the cessation of the live cattle trade to Indonesia. Also during the morning of 6 June 2011 representatives of Animals Australian and AMIC met with the Minister at his office and drew his attention to the press release.

179    At about 12.10pm on 6 June 2011 Ms Evans sent an email to Mr Lawrie, Ms Burgman, with copies to the Secretary, Mr Glyde and Ms Mellor attaching three options (A, B and C) as draft recommendations for the Minister to put to Cabinet. There is no evidence that the Minister personally (as opposed to his “office”) received or considered the options or that they reflected his thought processes at any stage of his decision-making leading up to his making the Second Control Order. In making this finding I have had regard to an email chain between Mr Lawrie and Ms Geiger that culminated at 3.33pm that day which I describe below at [187] and to the inference that, because the Minister and the Commonwealth did not lead evidence about whether options A, B and C were before the Minister, any evidence that they could have given would not have assisted their case: Jones v Dunkel (1959) 101 CLR 298; Australian Securities and Investment Commission v Hellicar (2012) 247 CLR 345 at 412–413 [167]–[169] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ. Each option commenced with a provision that there be a compliance regime so that export licenses would be issued only if the exporter could demonstrate verifiably that the cattle, in effect, would be in a closed loop system up to the point of slaughter that complied with a defined (but unspecified) standard of animal welfare. Option A, prohibited export to Indonesia until the compliance regime was developed and implemented. Option B, limited exports to a list of abattoirs with acceptable animal welfare practices (including stunning prior to the ritual cut), as the industry had proposed, subject to a one month suspension of trade to enable the proposal to be tested. Option C, limited exports as in option B but without any one month suspension. Neither option B nor option C had any geographical limitation (i.e. applied worldwide).

180    At about 12.27pm on 6 June 2011 the Secretary emailed Ms Burgman and Mr Lawrie attaching the acting CVO’s preliminary desk assessment of the Mark I boxes. The Secretary’s email noted that the assessment was significant because, although preliminary, it found that the use of the Mark I boxes was not consistent with OIE standards. The acting CVO advised that the initial design of the Mark I boxes predated the adoption of the OIE Code. The assessment noted that its scope was limited to reviewing the design and operation of Mark I boxes without prior stunning. Dr O’Connell expected that the industry would dispute this finding and that, in any event, it would affect “how we view the current industry plan to focus on around 25 abattoirs as many will have Mark I’s”. The Department provided a minute to the Minister with this assessment (A276/2087) that asked him to note the acting CVO’s finding about the Mark I boxes. The minute said that a preliminary assessment of the Mark IV box would be completed by 8 June 2011.

181    At 12.28pm on 6 June 2011, Ms Evans emailed Ms Burgman, Mr Lawrie, the Secretary and others in the Department with the latest ABARES (Australian Bureau of Agricultural and Resource Economics and Sciences) trade statistics for exports to Indonesia of both live cattle and boxed beef. Those stated that in 2010, exports of 517,926 head to Indonesia represented 65% of Australia’s live cattle exports and almost all of Indonesia’s imports of live cattle for slaughter.

182    At 12.43pm Ms Evans emailed Mr Lawrie and Ms Burgman summarising what she had sent to them during the course of the day. She identified three more sets of material that were still to come, namely the AGS advice, advice about animal welfare issues and advice on possible reviewers.

183    At about 2.02pm on 6 June 2011 an officer of the Department sent Mr Lawrie, Ms Burgman, the secretary, Mr Glyde, Ms Mellor, Ms Evans and others a Departmental minute for the Minister on animal welfare consequences associated with prohibiting live cattle exports to Indonesia. The minute stated that producers did not have the feed reserves to hold all of the animals that were intended for export to Indonesia during the current dry season “without creating a serious on-farm problem”, and that overstocking would lead to cattle dying. The minute said that any alternative destinations for the cattle to be sold into the domestic market would involve long road journeys, probably to feedlots on and south of the Darling Downs or meat works on the Queensland coast that processed meat for export. It said that the recently endorsed Australian Animal Welfare Standards and Guidelines: Land Transport of Livestock required that long transport journeys had to be well planned, competently performed and only involve animals that had been prepared so as to be suitable for such a journey. The minute stated:

10. Compounding problems include continuing provision of feed and water to animals that cannot be moved off farm during the dry season, loss of income and cash flow issues for producers and its impact in regional north Australia, including any adverse impact on planned investments in the region. Furthermore, with the likelihood that not all animals will be in optimal condition when road transported, the risks of media presentation of the situation exists, even without incidents involving poor animal welfare outcomes.

SENSITIVITY

High. Welfare groups are unanimous that stopping the trade will automatically improve animal welfare however this is unlikely to occur without serious effort and support. In addition such a move may strain the Australian Government’s relations with both northern communities and the NT government as well as has potential to create economic and social problems the Indonesian Government will have to deal with.

(emphasis added)

184    Mr Glyde provided another minute to the Minister after about 2.10pm on 6 June 2011 that summarised and attached the AGS’ draft preliminary advice of the same date. The advice was that the risk of legal liability would be very low in respect of claims for negligence, negligent misstatement, misfeasance in public office, breach of statutory duty or intentional interference in contractual relations, provided that the decision-maker exercised the relevant statutory power to make legislative instruments or administrative decisions in good faith in accordance with the legislative requirements. The AGS also said that its advice “is general advice only” and that it could provide advice on particular circumstances if required.

185    At 3.05pm on 6 June 2011, Mr Lawrie emailed Ms Geiger the three options that Ms Evans had sent him at 12.10pm (see [179] above) saying:

See confidential draft recs.

At this stage, we will be arguing for b or c (and not a).

Happy to discuss, although I think ben h and Cecelia [sic] are talking.

(emphasis added)

The reference to ‘ben h’ and ‘Cecelia’ were to Ben Hubbard who was the chief of staff in the Prime Minister’s office and Ms Burgman (who was the Minister’s deputy or acting chief of staff).

186    During the early afternoon of 6 June 2011 Mr Glyde, Ms Mellor and, for a part, Ms Evans met with industry representatives. At about 2.45pm on 6 June 2011, Mr Lawrie asked Ms Evans for a short summary of the meeting. There was no evidence that any short summary found its way to the Minister or his office except for what Ms Mellor described as “a brief chat” with Mr Lawrie that made him aware of “some” of the following. However, the internal Departmental records of the meeting recorded that the industry’s plan currently focused on the five category A abattoirs that took 8% of the trade, used stunning and did not use Mark I boxes, and 20 category B ones, two of which used Mark IV boxes, two of which were trialling stunning using converted Mark I boxes and the balance were using Mark I boxes in accord with the OIE Code. However, two of the category B abattoirs were among the 12 the subject of the First Control Order. Ms Evans summarised the officials’ views that, first, conceptually, the industry had not developed the plan much beyond the version discussed on 3 June 2011 and, secondly, the plan would not meet public expectations for safeguarding animal welfare and carried a high risk of failure if further footage of unacceptable practices at an “accredited abattoir” emerged. Ms Mellor commented on Ms Evans’ summary at 3.28pm on 6 June 2011 adding that the industry did not have firm timeframes for implementation of the plan and that the industry could give no assurance about the further treatment of 100,000 animals then in the system in Indonesia.

187    At 3.14pm on 6 June 2011 Ms Geiger emailed Mr Lawrie and asked “which is his preferred?” as to the choice between options A, B and C. Mr Lawrie responded soon after at 3.33pm saying “Sorry, please ignore my previous email, was not authorised to send, please delete”.

188    At 5.37pm on 6 June 2011 AMIC emailed Stuart Stark, one of the Minister’s staff, with a letter referring to the press release and the meeting at the Minister’s office earlier that morning ([178]). The letter reiterated AMIC’s opposition to the industry’s plan and elaborated its criticisms of it. It is not clear whether the Minister saw the letter as Mr Stark emailed Mr Lawrie the next day asking if he had received the letter on the previous night.

189    Dr O’Connell gave evidence in chief. He was not cross examined. Dr O’Connell was called in the second phase of the trial, after the parties had put their substantive arguments on liability over one year before. He said that he had given oral advice to the Minister during the afternoon of 6 June 2011, before Cabinet met that evening. The Commonwealth sought to rely on his evidence as to that oral advice and elicited it in the following:

On or before 7 June, before the making of the orders of that date, did you give the Minister advice about a suspension of live cattle exports to Indonesia? --- Yes.

Did you give advice orally or in writing or both? --- I gave the Minister advice orally and as the Department, the Department gave him briefs which I had approved.

…

What did you say to the Minister on that subject? --- I said to him to the effect that in order to meet the requirement that no further animals be subject to the poor handling that had been exhibited prior while we put in place a regulatory framework which effectively control that management of behaviour, that in that interim period a suspension of trade would be necessary if we were to meet the Government’s objective.

And to what objective do you refer? --- The objective that …all animals that were going through the supply chains would be treated…humanely, to proper animal welfare standards.

(emphasis added)

190    Dr O’Connell told the Minister that it could take six months to put the regulatory framework in place. All of what Dr O’Connell described in that evidence repeated the advice that he said he had given the Minister “as the Department” in relation to a total prohibition of live animal exports that would have impacts on, among other countries, Indonesia, as part of a more general effect. So much is clear from the summaries above of the 2 and 6 June 2011 Departmental minutes, their attachments and related documents (see eg [130]–[132], [173], [176]). I understood Dr O’Connell’s answers, when he gave them, and now, to reflect that his oral advice was consistent with his, “as the Department[’s]”, written advice, namely that it was about a worldwide suspension, that necessarily, would affect Indonesia. As he said the “Government’s objective”, on which he advised, was applicable to all animals going through supply chains, not just ones in Indonesia. I am not satisfied, on the balance of probabilities, that Dr O’Connell’s oral advice went any further than the written advice of the Department. In particular, I am not persuaded that he discussed Indonesia specifically when giving that oral advice: see Communications, Electrical, Electronic, Information, Postal Plumbing and Allied Services Union v Australian Competition and Consumer Commission (2007) 162 FCR 466 at 479–482 [29]–[38] per Weinberg, Bennett and Rares JJ (CEPU).

191    In Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361 at 384–385 [62]–[64] Heydon, Crennan and Bell JJ referred to what Handley JA had said in Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418–419 as being authority “at least” for the proposition that where a party calls a witness but does not question him or her on a particular topic, a court “will be less likely to draw inferences favourable to that party from other evidence in relation to that issue”. They said that a witness, who was not a party, was only under a duty to answer questions put to him or her truthfully and that a failure to ask a question in chief of such a witness only permitted the court to infer that the answer would not have assisted (as opposed to would have damaged) the case of the party who called that witness.

192    I reject the Commonwealth’s contention that the answers that Dr O’Connell gave, that I have set out above, related to him giving the Minister specific advice about a control order applicable only to Indonesia to the effect of the Second Control Order: Kuhl 243 CLR at 384–385 [63]. In substance, Dr O’Connell’s oral advice simply confirmed what he, “as the Department” had already told the Minister about the worldwide prohibition that the Department had included in the 2 and 5 June recommendations, which, necessarily, would affect Indonesia.

193    Cabinet met on the evening of 6 June 2011. The Minister did not put any submission or document before Cabinet and there was no claim for public interest immunity in respect of any such document. By 8pm the Minister had decided to order a complete suspension of live cattle exports to Indonesia for a maximum period of six months and his media officer, Elliot Stein, was preparing draft talking points for him to use to explain the decision.

194    At 9.21pm on 6 June 2011 Mr Hubbard emailed the Prime Minister to inform her that the Minister believed that he had a duty to stop the scheduled departure of the ship due to load live cattle for Indonesia (i.e. Falconia) and would have an exposure if he did not do so, which might be the subject of media attention. He said that the next ships were scheduled to load and leave on Wednesday (i.e. 8 June 2011) and that if they were stopped that was likely to be become news while the Prime Minister was in Darwin. He said that Warren Snowden MP (who was a Member of the House of Representatives with a seat in the Northern Territory) did not agree with the decision to suspend exports to Indonesia and had advised the Prime Minister to speak to cattle producers before the Minister publicly announced the decisions.

5.7 The events of 7 June 2011

195    Early on 7 June 2011, just after midnight, Ms Mellor emailed Ms Burgman and Mr Lawrie with a draft of the Second Control Order that had no time limit, which she said was the Department’s view, but that she would also prepare another version of a draft order limiting the period of suspension to six months. She wrote that she was seeking advice about whether it could be effective on 7 June 2011. She said that all other documents, such as draft questions and answers, talking points and statements “will need to reflect the landing on this” and sought that there be clarification later that morning. She wrote in the email about the Falconia shipment:

Industry contact

The ship loading in Port Hedland has not been given permission to load. Phones have been ringing hot here – I have called our authorised officer in Port Hedland to let him know there is nothing than [sic] can be said. Likewise I called Ashlee [sic] James (the exporter, NACC) to say same – he asked me to call his boss, Tony Dage, Group General Manager - Trade, Elders International …I did this at 11.10pm to indicate that ship wouldn’t be going tonight and there was nothing else I could say (all he said was it was costing him money). Holding off reasins [sic] for not giving permission to load for very long tomorrow will be very difficult.

There has also been contact from Lach McKinnon and Cam Hall – both have received emails or texts saying that we are not in a position to talk.

(emphasis added)

196    Ms Mellor also said that decisions had to be made on the timing of the announcement of the decision and aligning it with other key activities “such as contact between the Minister and Indonesian Govt”.

197    At 9.25am on 7 June 2011 David Brightling, the acting principal legal officer in the office of international law in the Attorney-General’s Department enquired of Ms Evans whether there had been any changes to the export measures that had been discussed on 4 June 2011 (where Ms Evans had told him and Mr Story that it was likely that in addition to Egypt, Japan and Israel would have satisfactory standards and compliance regimes for animal welfare). Following a conversation with her, Mr Brightling reworked the background section to the draft advice to reflect that “the Government is considering an immediate prohibition on all exports to Indonesia of live cattle for slaughter for a period of six months” and that at the conclusion of that period it would permit exports only where, in effect, the exporter had full control of a closed loop system complying with the OIE Code up to the time of slaughter. But Mr Brightling did not provide any draft advice at that time.

198    At 11am on 7 June 2011 Malcolm Jackman, the chief executive officer of Elders, phoned the Secretary to express his concern that the Department was not giving its approval for the 1900 head of cattle to leave the registered premises at Port Hedland to load onto Falconia even though they were to be shipped to an Elders feedlot in Indonesia. He told Dr O’Connell that Elders would need to bring more feed into the registered premises if the cattle did not load as the fodder would run out. Moreover, Mr Jackman pointed out, Elders was incurring demurrage while the ship waited to load. Dr O’Connell told him that he could not comment when or if permission would be given and said that the operator of the registered premises had to be in a position to feed its animals daily, including managing contingencies.

199    Around the same time the Minister’s office requested Mr Glyde and others in the Department to prepare a “talking point pack” for him by 2pm that day. Mr Lawrie received the pack at about 2.37pm on 7 June 2011. This contained suggested comments on the industry’s plan of 3 June 2011 including one that said that, whilst the plan had some laudable elements, the Minister would not have been able to rely on it to assure the Australian public that the welfare of Australian cattle exported to Indonesia had been protected.

200    Of course, the talking points were not evidence of the Minister’s state of mind at the time that he took the decision because he had no input into their drafting. Rather his “office” staff asked the Department to craft the “talking points” for him to explain what, no doubt, the drafters thought his position might have been. It may be a feature of modern political life, but it is difficult to conceive how a Minister who has taken an important decision can be reliant on people to draft his explanation for it when they do not appear to have had any communication with him as to his actual reasoning process for that decision.

201    There is no direct evidence as to how the Minister actually came to decide to make the Second Control Order in its terms except that he appears to have done so in large part in or after the Cabinet meeting (although he may have only considered the duration on 7 June 2011 as Ms Mellor’s midnight email suggested ([195])).

202    At about 3.20pm on 7 June 2011, Ms Geiger asked Mr Lawrie who should call Elders “once the green light has been given for the announcement” and he responded that he thought that the Minister would do so later that day.

203    At about 6.03pm on 7 June 2011 Mr Lawrie, Mr Glyde and others received an update on the then consignments of cattle that were in transit on ships already sailing to Indonesia.

5.8 The Second Control Order

204    At 9.30pm on 7 June 2011, the Second Control Order was registered on the Register of Legislative Instruments kept under the Legislative Instruments Act. It commenced on registration (cl 2) and cl 4(1) provided:

“The export of live cattle to the Republic of Indonesia is prohibited for a period of 6 months from the date of commencement of this Order.”

205    The Australian Meat and Live-stock Industry (Export of Live-stock to the Republic of Indonesia) Order 2011 (the Second AMLI Order), that the Secretary also made on 7 June 2011 commenced at the same time. It prohibited the holder of a livestock export licence from exporting livestock to Indonesia for the next six months (cl 4(1)). Neither order applied to breeder livestock (i.e. animals not intended for slaughter).

206    The Explanatory Statement for the Second Control Order stated, among other matters, the following:

Purpose of the Order

The purpose of the Order is to suspend the export of live-stock to the Republic of Indonesia for a period of 6 months from the date of commencement of the Order. This will enable the Australian Government to develop a robust regulatory and compliance regime to address concerns regarding slaughter of live-stock in the Republic of Indonesia.

…

Consultation

Given the circumstances in which the Order needs to be made, detailed consultation with industry has not been possible.

(emphasis added)

207    However no regulation impact statement was issued for the Second Control Order. That was despite the Government’s best practice regulation requirements that such a statement be issued, as the Office of Best Practice Regulation in the Department of Finance and Deregulation subsequently pointed out to the Department on 20 June 2011.

208    During 7 June 2011 the Minister spoke to his Indonesian counterpart, Minister Suswono, to advise him of the steps that the Australian Government was taking. However, there is no direct evidence of the content or time of their conversation.

6.    After the Second Control Order

6.1 The immediate aftermath

209    On 8 June 2011 the Minister announced publicly, in a media release, that he had made the Second Control Order. He stated that the suspension would remain in place until the Government had established “sufficient safeguards to ensure there is verifiable and transparent supply chain assurance up to and including the point of slaughter for every consignment that leaves Australia”. He said that the decision was made “following serious consideration of the advice and evidence that has been presented to the Government since last Monday.” The media release also said:

Minister Ludwig said the Indonesian and Australian governments have agreed to work closely together, and with industry, to bring about improvements in practices in abattoirs and to make this important trade sustainable in the longer term.

"The Australian Government is committed to reaching the best possible outcome for the livestock, the industry and our important relationship with Indonesia," he said.

"The introduction of safeguards to foster a verifiable and transparent supply chain assurance system is the best way to achieve this.

"After meetings held in Jakarta yesterday, both governments have agreed that Australia and Indonesia will implement an immediate and a longer-term plan.

"Experts from both countries will work together to identify abattoirs that adhere to good practices that could form part of an approved supply chain, and to identify those that still need to be improved.

"As partners, both countries respect each other's way of working."

(emphasis added)

210    The Minister embarked on an intense number of media interviews that day. During an interview on the ABC Radio National Breakfast program with Fran Kelly she asked him:

FRAN KELLY: What about the industry itself – the beef growers, the farmers, the processing? Will there be industry assistance?

JOE LUDWIG: What I wanted to do was – and of course this impact will be difficult for industry; it will have an impact. What I want to do is listen to industry, see what the issues are as they come forward, because what we do need to do is work for the – to the end point, which is the trade will not be able to be resumed until the government, the community and industry are confident that we have safeguards in place to ensure appropriate animal welfare outcomes.

FRAN KELLY: Sure, but this is an immediate disruption to a $318 million industry. Cattle farmers have beef there that they were planning to send to Indonesia, presumably; the domestic market won't be able to take all of them, according to Cameron Hall. Will there be compensation in the short term?

JOE LUDWIG: This is about [e]nsuring appropriate animal welfare outcomes, Fran. That's what I'm focused on just today.

FRAN KELLY: Is that a no? No compensation to the…

JOE LUDWIG: What I'm focused on today is animal welfare outcomes. What I will do is hear from industry about the impacts.

(emphasis added)

211    Those answers revealed that the Minister had not given much, if any, consideration in making the Second Control Order to the obvious immediate impact of a suspension on persons in the industry such as Brett Cattle.

212    Later on 8 June 2011 the Minister held a press conference in Brisbane in which the following exchanges occurred:

QUESTION: Minister, there are at least 25 large abattoirs in Indonesia that already meet Australian standards, why couldn't you allow those abattoirs to continue processing while the bans apply to the others to bring them up to standards?

JOE LUDWIG: What we do have to ensure is that we have a verifiable and transparent system, a supply chain assurance. What I've asked industry to do is to come forward, work with my department to come up with a plan that ensures that we can verify cattle as they leave Australia, as they arrive in an abattoir and there is no leakage from the system because what we have to ensure is that no animal is mistreated in that supply chain.

What we don't have at the moment – what we don't have the moment is that supply chain assurance. So not withstanding that you say and you might argue that there are abattoirs that meet certain standards, what we don't have is the supply chain assurance that ensures every cow that leaves Australia on a ship that ends up in a feed lot that then goes to an abattoir is accounted for.

QUESTION: What about compensation? Earlier question about orders already in place and contracts already done et cetera, what about the exporters? Are they liable to get any compensation for this?

JOE LUDWIG: What I want to do is talk to industry. I do understand there's been significant impact to industry as a consequence of this decision. This decision is based on all the available advice that I've received and of course what we have seen in terms of welfare outcomes for animals.

What we then now do – need to do is to talk with industry, look at what those impacts are and sit down with industry and work out both a plan to ensure we have animal welfare outcomes for the supply chain assurance, but we also need to work with the industry to ensure that we've got a plan for the domestic industry….

QUESTION: Everybody knows – with respect you haven't answered the question. Will there be discussion about compensation for the exporters?

JOE LUDWIG: In fact I did answer that. I said that I'm keen to sit down and work with industry both in the supply chain assurance and the domestic industry to see what the impacts are.

QUESTION: So is that a yes or a no?

JOE LUDWIG: What I've said – what I've said is that I'm keen to sit down with industry, I do accept [indistinct] impacts both domestically and along that supply chain and listen to their concerns.

(emphasis added)

213    On 8 June 2011 Mr Glyde provided a Departmental minute to the Minister which attached a draft letter to Minister Suswono. The note emphasised the importance of advising Minister Suswono of the decisions and actions that the Australian Government had taken and its reasons for so acting. The note said that the draft letter followed up on the Minister’s phone call with his Indonesian counterpart on the previous day and explained the most recent decisions, including the Second Control Order. The Departments of Prime Minister and Cabinet, and Foreign Affairs and Trade had seen and supported the draft letter being sent. The minute explained that it was important to gain Minister Suswono’s support for the Second Control Order and the other actions of the Australian Government:

as Indonesian Government assistance will be required to facilitate the proposed work by Australian officials in Indonesia as revised arrangements are implemented in the coming weeks.

4. Without Indonesian Government support it will be difficult for Australian officials to access the Indonesian meat establishments where Mark I and Mark IV restraint boxes are installed. It would also be difficult to undertake the review of the live cattle supply chain in Indonesia without Indonesian Government support.

5. The delivery of your letter will also provide a key opportunity for the Australian Embassy in Jakarta to call on Minister Suswono and speak with him directly regarding the government's response to the footage in the Four Comers program.

(emphasis added)

214    The Minister did not send the draft letter in the form attached to the minute. During 8 June 2011, the Secretary met with the Indonesian Ambassador but there is no evidence of the content of their discussion.

215    Early in the afternoon of 8 June 2011, Mr Jackman wrote to the Minister, and sent a copy to each of the Prime Minister and the Secretary, seeking urgent approval for Elders to be able to export live cattle to Indonesia. Mr Jackman wrote that the cattle would be processed only in a closed loop system through Elders’ wholly owned facilities, being the Lampung feedlot and the Bogor abattoir. Mr Jackman wrote that Elders’ request was urgent because there were 1937 head of cattle at Port Hedland that had satisfied all other requirements for export on Falconia and that the original intention had been to send them to the Lampung feedlot. The letter pointed out, as was the case, that the Bogor abattoir had HACCP and ISO 9001 accreditation, was fully equipped with stunning and restraining equipment and operated by Australian management in the same manner as if it were located in Australia. Mr Jackman noted in the letter that the abattoir was subject to regular audits by SAI Global as part of maintaining its HACCP and ISO 9001 accreditations. He wrote:

In short, Elders is able to demonstrate that it can satisfy all of the requirements articulated by the Commonwealth for a verifiable and transparent supply chain that safeguards the welfare of the animals concerned and therefore is unaware of any reason why such approval should not be granted.

216    Soon after, on that afternoon Mr Jackman spoke with the Minister and then summarised that discussion in an email he sent to the Secretary. Mr Jackman asked Dr O’Connell to phone him to discuss making arrangements for officers of the Department who were to travel to Indonesia on the following Monday, 13 June 2011, to be able to visit the Elders Indonesia feedlot and abattoir. Dr O’Connell waited until 13 June 2011 to speak with Mr Jackman (see [220] below).