Who will pay for future equine disease incursions?
Professor Peter Shergold was commenting on the defeat in February in the Australian Senate of the Horse Disease Levy Bill.
The bill would have put in place mechanisms allowing the horse industry to become part of the Emergency Animal Disease Response Agreement (EADRA), to which over livestock groups are signatories.
It would allow the federal government to levy horse owners for the cost of fighting disease outbreaks.
Professor Shergold, in a just-released report on progress into biosecurity changes in the wake of Australia's equine influenza outbreak in 2007, said in his dealings with representative groups he had become aware of the frustration of many in the industry about the defeat of the bill.
"My judgment is that nearly all the major industry bodies saw the bill as a way of providing financial certainty on government funding arrangements if there should be another equine disease outbreak," he said.
"There is genuine concern that, in the absence of legislation guaranteeing government aid, many horse owners could face crippling financial exposure if equine influenza was to reoccur.
"They do not now enjoy the protection afforded by a levy system, as is the case in other livestock industries.
"There is a well-founded fear that, without legislative authority, the planning and future implementation of any emergency disease response will be weakened."
The professor, secretary of the Department of the Prime Minister and Cabinet until early last year, said the horse industry in Australia still had no agreed arrangements to fund its share of obligations in response to another outbreak of equine influenza or other emergency disease.
"Unlike other livestock industries the horse industry cannot now be a signatory to the Emergency Animal Disease Response Agreement. In my view this significantly weakens readiness for another crisis."
Federal Agriculture Minister Tony Burke welcomed Shergold's latest report, and noted his concern over the preparedness of the horse industry.
"I have told Professor Shergold that I understand the horse industry is currently considering the implications of this outcome and possible next steps," Burke said.
"I share the concerns of the horse industry and agree with Professor Shergold's assessment that the defeat of the bill may significantly weaken the readiness of the horse industry for possible future exotic disease outbreaks."
Shergold's reports showed that good progress continued to be made in implementing the 38 recommendations contained in the report of former judge Ian Callinan into the equine flu outbreak.
The flu outbreak cost Australia at least $A1 billion.