The deaths of 2400 sheep on a live export ship didn't breach the Australian regulator's animal welfare standards because it was a heat stress event.
Horrific footage emerged last month of sheep dying in their own filth on a Middle East-bound ship in August last year.
On day 15 of the voyage, temperatures soared, killing 900 sheep. A further 1000 died in the two days following.
Agriculture Department live animal export branch head Narelle Clegg said there were no breaches found on the Emanuel Exports-chartered Awassi Express.
"What this episode shows, particularly the video footage, it shows the inadequacy of the information we're asking the vets to provide," Ms Clegg told a Senate estimates hearing on Thursday.
But Labor senator Lisa Singh believed it showed more than that.
"I think it shows the inadequacy of the department as an independent regulator," Ms Singh said.
Ms Clegg responded: "It may well, that's your view".
LiveCorp chair and West Australian farmer Terry Enright said he had never seen anything comparable to the vision.
"We're shocked because that footage represented the reverse of everything we work for," Mr Enright said.
Earlier, assistant secretary Malcolm Thompson said the department would fundamentally change the way it regulates the trade, admitting shortcomings in the way the industry was policed.
"The footage provided to the department was extremely distressing and completely at odds with community expectations and our expectations as the regulator," Mr Thompson said.
The department's culture and capability is under review following the controversy, as part of Agriculture Minister David Littleproud's push to clean up the under-fire trade.