TWO key industry leaders have taken the witness stand on day two of court proceedings in the class action claim against the commonwealth over the 2011 Indonesian live cattle export ban.
Consolidated Pastoral Company (CPC) CEO Troy Setter and former Meat and Livestock Australia Chair Don Heatley gave evidence about their recollections of conversations at meetings with the then Agriculture Minister Joe Ludwig, regarding the live export trade and challenges with the Indonesian market.
Lead litigants the Brett Cattle Company of the NT are spearheading industry’s claim to recoup about $600 million in damages due to the sudden trade suspension.
Legal argument is centred on trying to prove malfeasance in the use of powers by the former minister, in signing the second control order of June 6, 2011 that shut trade for up to six months.
Senior Counsel Noel Hutley has spent most of the first and second days at the Federal Court trial in Sydney presenting argument and evidence for the plaintiff’s case, while the defence began their argument towards the end of day two.
Evidence and debate regarding the availability of secure closed loop supply chains in the Indonesian market for exported Australian cattle, as a policy option for the former Labor government to consider regarding animal welfare concerns, rather than a blanket trade ban, was again ventilated during day two’s proceedings.
In taking the witness stand, Mr Setter confirmed CPC was the largest privately-owned beef producer in Australia with capacity for over 370,000 head of cattle and operates two feedlots in joint venture arrangements, in Indonesia.
Between 2010 and 2014 and when the Indonesian suspension occurred, he was chief operating officer for the Australian Agricultural Company (AACo).
Mr Setter’s testimony focussed on a conversation he had with Mr Ludwig at a Northern Territory Cattlemen’s Association conference at Katherine in April 2011, standing outside a shed, next to a prime mover and helicopter.
“My discussions with the former Minister in Katherine were in regards to the trade of live cattle from northern Australia to Indonesia,” he said.
Mr Setter said he told the minister Indonesia was important to northern Australia and the cattle industry was important to northern Australia.
“I then said to him that we’ve heard that animal activists have been taking footage in Indonesia and he said, ‘the trade is important to Australia…we need to continue to work together’.
“I then explained…that Indonesia is difficult - not every supply chain is the same.
“I spoke about how Elders and Santori and others, like Tung, have closed supply chains where they have full control of their cattle but not every supply chain has full control of their cattle because it was in context of a conversation we had had previously around the supply chain work that we had been doing with him.
“He then said, ‘We will need to work together, and we will stick with you, Troy. We will stick with the industry’ and that was the end of the conversation.”
Under cross examination, by defence Senior Counsel Neil Williams, Mr Setter was asked about a statement made by then AACo CEO David Farley on the ABC FourCorners program that exposed animal welfare issues in the Indonesian market and ignited the savage public backlash, which led to the government’s ban.
Mr Williams said Mr Farley’s comment to a question about ruling out sending cattle to Indonesian abattoirs was ‘We actually don’t know what abattoir our animals (are) going to’.
Mr Setter said “I can remember David speaking in the program - I can’t remember those exact words, though, until you’ve shown them to me”.
Mr Williams said immediately after the second control order was made AACo came out publicly in support of the suspension via a statement to the ASX, on 9 June 2011.
He also asked about AACo’s use of National Livestock Identification System tags, on cattle, before they arrived in Indonesian feedlots, and suggested the use of NLIS tags in the NT at the time was “very limited indeed”.
As the cross examination continued, Mr Setter said his conversation with the minister at the time in question lasted two to three minutes.
“I’d met the Minister in Canberra before this,” he told the court but admitted he didn’t keep notes of the conversation.
Mr Williams said “I suggest to you that the conversation you had with the Minister that day was, in fact, limited to the merits of the helicopter that was in front of you?”
Mr Setter said, “I don’t know much about helicopters, so I wouldn’t have been talking to him about a helicopter”.
“When he came out from the meeting, I went up and spoke to him, and…I was quite surprised he remembered my name.”
Arthur Macedon Heatley speaks up
After being sworn in by his full name - Arthur Macedon Heatley - Mr Heatley agreed he was known as Don rather than Arthur and is a cattle grazier in Queensland running about 10,000 head on two properties.
Mr Heatley’s conversation with the minister that was the focus of his appearance in court, took place at the minister’s parliamentary office, on the morning of June 2, 2011.
“The people attending the meeting or intending to attend the meeting were myself, obviously, Jock Laurie, who was the president of the National Farmers Federation, Peter Kane who was the then chairman of the Australian Live Exporters Council, his CEO was Lach MacKinnon and also was Roly Nieper who was the chairman of LiveCorp,” he said.
“After we arrived, we waited a short while.
“The Minister appeared and he pointed to myself and to Jock Laurie and said, ‘I want you and you’ and we walked into his room.”
Mr Heatley said the minister’s chief of staff Michael Carey was also in the meeting that lasted about two hours.
He said he also took notes of the discussion that took place during the meeting, about two hours later.
Mr Heatley said numerous topics were discussed and it was “quite free ranging”.
He said when asked how to resolve the issue industry was faced with, by the minister, he talked about NLIS, whether industry could move to a closed loop supply chain or a supply chain with solid assurances that there would be no leakage from the system and the potential to implement stunning within various abattoirs.
“The closure to the whole process basically revolved around the fact that the Minister said to me that he was going to the press the next day, or the next evening, as I recall, were his words,” he said.
“Could I say at the outset, your Honour, that very, very little was said by Mr Laurie during the course of the entire meeting.”
Mr Heatley said he told the minister some supply chains in Indonesia were better than others, and the Elders supply chain was used as an example, “particularly their abattoir, which was….a world class facility”.
Mr Heatley said he told the minister the industry’s intention was, “as quickly as we possibly could” to bring approximately 25 abattoirs up to the same standard as the Elders ones and to OIE standards.
“Our plan was that we would, within two weeks, have approximately 25 up to that standard,” he said.
Mr Heatley said industry already had people “on the ground” in Indonesia and wanted more “as quickly as we possibly could” to facilitate the introduction of more abattoirs, at the higher standard.
“I made the comment to the Minister that one of the major issues in relation to any supply chain was going to be how to prevent leakage,” he said.
“He made the comment that that was one of his concerns as well, and at that point I said to him that we would be raising the standard of these abattoirs to a point where that leakage didn’t occur as best we possibly could.
“I also made the point to him that in any supply chain, and in a country such as Indonesia, that we would not have a complete fix overnight, and…that there were sovereignty issues in relation to Australia operating within Indonesia.”
Mr Heatley said the minister also told him ‘your social licence is lost’ but there was “nothing much I could do about that statement”.
Mr Heatley said he was unsure what the minister’s intentions were so he asked him to do two things - let the industry clear the pipeline of cattle and consider the geopolitical fallout from any decision that he might make.
“At any one time particularly in June, there are tens of thousands of head of cattle moving in the supply chain within Australia, that there were people mustering, there were people in trucks, either picking up cattle or delivering them to depots, and from depots on to ships,” he said.
“There were ships on charter that were inbound or alongside, and….if there was to be any cessation of the trade, then it was going to cause enormous issues for the Australian industry but, more particularly, for animal welfare.
“It had the potential to cause major animal welfare issues.
“I made the comment to him that would he consider the geopolitical fallout from any cessation of the trade, and…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…I did not believe that a cessation to the trade, if it was to occur, would be accepted very well by the Indonesians.”
Mr Williams said he had no questions of the witness.
Shoot first ask questions later
Earlier in proceedings, Justice Rares held a lengthy discussion with Mr Hutley about the six month suspension going ahead without a regulatory impact statement.
Mr Hutley said “they were conscious it wasn’t done….and they went ahead without it being done - no doubt about that”.
He said the urgency was, in effect, a response to the campaign concentrating on shipment by shipment, “which was apt to divert them, as we say they were diverted, from a proper response - divert the Minister”.
Justice Rares said “It tells me they made the decision in a rush, and no doubt due to political pressure”.
“That doesn’t necessarily get you anywhere.
“The very things that a regulatory impact statement is designed to tell you are the things that the Minister wasn’t, as it appears, ready to deal with until after he had made the decision.
“You’re suggesting it’s more a shoot first and ask questions later approach.”
Defence case gets underway
In presenting the defence’s argument, Mr Williams opened by saying that from the time of the FourCorners broadcast on May 30 2011, the minister and government faced a series of policy choices around live exports.
“Until then, settled policy had been to support self-regulation,” he said.
But he said “In the wake of the reaction to Four Corners, self-regulation in respect of Indonesia was no longer a viable option”.
“The public reaction had been very strong and sustained,” he said.
‘The practices depicted on Four Corners were universally regarded as simply unacceptable, including by the industry.
“The reputational damage to Australia was that it was threatening the much more valuable boxed meat trade, a trade which is worth somewhere between seven and nine billion dollars per year.
“The domestic sales of red meat fell by 15 per cent in the week following Four Corners, doubtless reflecting public revulsion of the cruelty and torture that was depicted on that program.
“The live export industry’s plans for reform failed to confront the reality that was facing the industry.”
Mr Williams said the plan put to the minister by industry on March 22, proposed implementing supply chain assurance over a period of five years with an aspirational goal of achieving OIE standards.
He said the later plans, while having some greater degree of urgency, “were only marginal improvements and were assessed by the department as wholly inadequate to deal with the problem”.
“Given the 18 year history of the industry, and the failures apparent from the footage, relying on the industry was clearly no longer viable,” he said.
Mr Williams said to have systems in place for supply chain evaluation, for the tracking of the animals to ensure no leakage, and audit arrangements to ensure compliance so there was an enforceable chain through to the point of slaughter, allowed the government to say to the Australian public, “who were crying out for action” that they had ‘stepped in to assure a system in which Australian animals exported to Indonesia for live slaughter will not be mistreated or tortured in the way that was displayed on Four Corners’.
But Justice Rares intervened strongly.
“I don’t think you can tell me that what the Australian public cried out for – I mean, there were political perceptions of what was necessary,” he said.
“I suspect there would be a body of the Australian public who wanted the live trade to go on, and not to stop.
“Yes, there was a loud and vocal section of the public who were advocating a particular policy point of view, and understandably so.”
Mr Williams said so far emphasis had been given to Animals Australia and the RSPCA.
But he said the representative organisation of 96 per cent of the Australian meat industry, the Australian Meat Industry Council - from the time of Four Corners onwards - put a strong view to the Minister, that the trade needed to be suspended until standards could be maintained.
“It’s in no sense a reaction coming from a limited group within the community,” he said.
“The organisation that represents…the overwhelming preponderance of red meat produced in Australia was calling, and calling vigorously and repeatedly, and publicly in the end, for the government to suspend trade and forthwith, urgently, and put in train supply chain assurance to ensure…Australia’s reputation was not damaged.
“Once it’s accepted that the practices that were shown on that FourCorners program and the RSPCA investigative report were simply unacceptable to the community – and everyone said that, including livestock exporters - the government is put in the position with media in Indonesia and with activists in Indonesia looking for Australian cattle that have been exported in the period following the FourCorners ban and looking for further footage, which the RSPCA said to the Minister they would have no difficulty obtaining of more examples of appalling cruelty and torture in abattoirs against Australian cattle.
“The government would, henceforth, be accountable for having let that trade go on.
“At the level of principle, once you say it’s unacceptable, you cannot say, ‘Well, it’s completely unacceptable, but we’re going to let these 40, 50, 60,000 go through’.”
But Justice Rares raised objection again saying, “That assumes that every person in Indonesia who slaughters cattle acted in the way that the appalling display on FourCorners showed and that isn’t the case”.
“I mean, that’s the assumption underlying what you’re saying,” he said.
“If you have people who are slaughtering them humanely and in accordance with international or best practice, as I understood at least perhaps a very small minority were, or were capable of doing, then that’s not unacceptable.
“What’s unacceptable is the practices that were shown on FourCorners and that’s what people were calling out to be stopped.”
Why should the good ones be penalised?
Mr Williams said the RSPCA and Animals Australia were calling for a ban.
But Justice Rares said “And they were never going to change that view and they had been calling for it for years - this was good ammunition politically for them”.
“It didn’t mean everybody else who was slaughtering animals around the world or Indonesia was acting in that way,” he said.
“I’m simply cavilling with your proposition that you had to have a blanket ban in order to stop all exports where is – appears to be the case, from what I understood Mr Hutley to be saying, and from what I understood the FourCorners program to be saying, and what the Elders or Santori people seem to be saying, is that there are facilities in Indonesia that were slaughtering cattle in a way that was relevantly humane.
“I mean, there are people who will oppose slaughter of animals for any purposes.
“And people (who) are vegans, for example, would have philosophical objections to this and that’s all perfectly legitimate and understandable.
“And there are others who, you know, think this is acceptable, but to say this is the only way of ensuring this, and to have no exception – you know, the industry’s plan, as you say, had its weaknesses and didn’t look like it would meet things, but why is a blanket ban the only solution?
“Why, if there were people who were able to satisfy these standards, why are they to miss out because the other people are bad?”
Mr Williams said the key point was that, at that time, there no system of supply chain assurance put before the Minister that had any “realistic prospect of success”.
“The applicant’s entire case rests on a conversation that was said to have been had between the Minister and an officer of an exporting company standing on the sidelines of a conference during a morning tea break,” he said.