Thanks for the comments. I feel a bit in a funk at the moment because I work hard and pay my taxes, and the only thing that keeps life interesting is my family and photography, and this incident has hit both.

The policeman kept repeating in amazement "I didn't know people were still taking film pictures, it's great that you're still doing it". In this day and age, I don't think anyone doing anything illegal would give their film to an external party for development, they'd be using digital. Which just goes to show how absurd the situation was. The police were actually quite apologetic, saying this incident only occurred because a "member of the public" complained.

It would have been nice to have been contacted by the lab. Unfortunately because there are so few film processors here in Australia the shop I drop them off sends the film interstate to be processed, so I have had no face-to-face contact with the actual lab doing the processing - might have made a difference, who knows. All I know is that because of their judgement, the police had to come to my house, evaluate how I was raising my children (which took all of one second) and write a report that goes into the system, even if it says no laws were broken.