Agriculture Minister Tony Burke said after last night's defeat that Australian racing and recreational horse owners have been shouldered with a major financial liability as a result of the defeat.
"The Opposition showed reckless opportunism in voting against this Bill - and ignoring the agreement of peak industry groups," he said.
The defeat of the Horse Disease Response Levy Bills meant horse owners may have to outlay millions of dollars to deal with any future outbreak of equine influenza, or other exotic diseases.
The legislation was drafted to provide the mechanism allowing the government to recover the cost of containment and eradication from horse owners through a levy.
The biggest controversy surrounding the legislation centred on which horse owners would be subject to the levy and how it would be made equitable.
The bills would have allowed the horse industry to come under the Emergency Animal Disease Response Agreement (EADRA).
Other livestock industries are already signatories to the agreement, including the chicken meat, honey bee, cattle, dairy, laying chicken, sheep, lamb, goat and pig industries.
Burke said last night: "Now there is no emergency response and no eradication framework in place for the horse industry.
"The Rudd Government worked hard to try to reduce the risk to horse owners of future disease outbreaks. It was the Opposition's decision to block the Bill, but they're not the ones who could have to pay the consequences.
"It's the horse owners who may face heavy expenses in the event of an exotic disease outbreak.
"The 2007 equine influenza outbreak had a devastating impact on the industry, which is still recovering from the financial losses," he said.
"According to some estimates it cost industry more than A$1 billion, but we will never know the full cost.
"The Greens understood the importance of putting a framework in place to prevent those losses, but the Bill was still blocked.
"These protections already exist for the chicken meat, cattle, dairy, laying chickens, sheep, lamb, goat and pig industries. The Opposition has decided that the horse industry should be afforded no such protection."