The federal government introduced laws to the lower house on Thursday that would commit to banning live exports by May 2028.
The legislation would still allow for live sheep to be exported but only by air, following animal welfare concerns. And cattle would still be able to be exported by sea.
The government has set aside $107 million for about 3000 farmers in Western Australia who would be affected by the bans.
At a senate estimates session, Agriculture Minister Murray Watt was pressed on why almost half of the new money committed to agriculture in the federal budget would be spent shutting down an industry.
"It's important that we provide a substantial amount of taxpayer funding for the transition for live sheep exports and that's what we've done," Senator Watt told the rural and regional affairs committee.
Introducing the legislation, Infrastructure Minister Catherine King said a planned phase-out date would provide certainty to the industry, rather than imposing harsher measures.
"This is the right thing to do for sheep welfare outcomes, but the government recognises that it does need to be done in a way that allows for an orderly transition," she said.
Labor pledged to outlaw live sheep exports by sea amid an outcry over onboard deaths in 2017.
"It is expected that phasing out live sheep exports will see this sector adapt through more sheep meat processing in Australia. Value adding can increase farm-gate returns. It keeps jobs in Australia and it boosts regional development."
But Nationals leader David Littleproud said the government was letting down farmers.
"It's important that when a government is about to make such an important decision ... that they show them the respect, not the contempt they have shown these men and women , who have lawfully gone about their business," he told parliament.
"Their livelihoods are being ripped away from them all because of ideology."
Attempts by the Nationals to have the laws examined by a parliamentary committee failed.
Mr Littleproud said while the live export industry had committed mistakes in the past, it had implemented animal welfare reforms.
"We have been able to make sure that the animal welfare standards in (countries that receive sheep exports) now mirror ours, but if we cut and run, that is lost," he said.
During the budget estimates hearing, Senator Watt defended his decision to hold an all-in briefing with animal activists and farmers on the morning he announced the timing of the ban.
"This was an issue that a very wide spectrum of people had an interest in, and that everyone deserved to know at the same time from me," he told the hearing.
Senator Watt was also quizzed on whether it was a good use of taxpayers' money to fly to Perth with four staff to announce the live sheep export ban when he did not meet with farmers on the ground.
The Coalition has vowed to overturn the laws should it win the next election, with farmers from WA intent on making it a major election issue.
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