Live sheep exports to the Middle East during the northern hemisphere summer won't be banned, but sheep will have more room and better conditions on transport ships.
Federal Agriculture Minister David Littleproud has accepted all 23 of the recommendations of a review by livestock vet Michael McCarthy, including a reduction in stocking density of up to 28 per cent for voyages during the hottest part of the year.
"No sane human being would see animal cruelty as something they would accept," Mr Littleproud told reporters in Sydney on Thursday.
The minister had commissioned the review into live sheep exports after horrific footage was released showing sheep dying on a ship from Western Australia to the Middle East in 2016.
The government has proposed harsh new penalties for dodgy exporters, with jail terms of up to 10 years for company directors and individuals.
Fines ranging between $420,000 for individuals and $4.2 million for companies will also be included in legislation to be introduced in coming weeks.
Any voyage with a mortality rate of more than one per cent will be investigated by the independent regulator, down from two per cent.
All sheep and cattle ships will have an independent observer on board, feeding back vision and reports to the regulator on a daily basis.
"This is about getting truth and proof from those boats," Mr Littleproud said.
Labor's agriculture spokesman Joel Fitzgibbon said the opposition would stop the summer trade at the first opportunity, and phase out the wider industry over time.
"We want to end the cruelty," Mr Fitzgibbon said.
The Australian Veterinary Association and the RSPCA had called for a ban on the northern summer trade, which they say is not possible to do humanely.
But Mr Littleproud said people were kidding themselves if they thought the global demand for live sheep would go away.
"We have got a responsibility to stay and get it right. We have a responsibility to the animals, but also to our farmers."
Animals Australia's Lyn White said it was a "lily-livered" government response designed to protect exporters, not animals.
National Farmers Federation president Fiona Simson said there was no guarantee sheep would no longer die in large numbers on export ships.
"What I can give the public a guarantee about is that it is a better system than we currently have," Ms Simson told reporters in Canberra.
"From the farmers' perspective, we need to fix it, not ban it."
Australian Associated Press