Australian cattle dogs (blue or red heelers) generally do not have their tails docked. Indeed, the American Kennel Club breed standard for heelers calls for an undocked tail.
The tail performs an important function in allowing this breed to do what it knows best "herding." The tail allows these dogs to maneuver themselves and is therefore important for balance. Without the tail, Cattle Dogs find it harder to maneuver themselves, and same goes when participating in the sport of agility or when simply playing games such as frisbee and tennis ball chasing.
Don't confuse the Australian cattle dog with the Australian Stumpy Tailed Cattle Dog which is a naturally bobbed dog breed. Many make the mistake of confusing these two dogs which leads to the misconception that heelers must be docked.