The government says it will implement all 38 recommendations contained in retired judge Ian Callinan's 343-page report.
The long list of shortcomings in Australia's quarantine service described in the report referred to its operation under the government of John Howard, which lost the recent general election.
While that fact may mute the pain somewhat for new Labor government of Kevin Rudd, taxpayers have little to smile about.
The documented failings of the quarantine service will add weight to likely civil action for compensation by the horse industry that may amount to hundreds of millions of dollars.
The government, in a statement coinciding with the public release of the report, acknowledged that the cost to the racing industy was in the order of $A1 billion.
Callinan concluded that the virus entered Australia in August 2007 via horses from Japan. The virus was most likely carried on a contaminated person or equipment leaving Eastern Creek Quarantine Station.
The Commission made no findings on legal liability.
"This comprehensive report is a disturbing commentary on Australia's quarantine and biosecurity arrangements for horse imports before August last year," said Agriculture Minister Tony Burke.
"While changes have been made to horse import systems since the outbreak, the Commissioner has highlighted serious and systemic failures in the system and the government is acting urgently to fix these failures.
"Our most important action was to establish a comprehensive review of our quarantine and biosecurity systems – led by Roger Beale AO – which is well under way."
Recommendations to be implemented immediately include:
According to preliminary estimates, it will cost about $1.3 million to implement the recommendations requiring immediate action.
Burke noted that the Callinan Inquiry report found that AQIS's shortcomings were due to acts and omissions over many years, with ultimate responsibility resting with several key positions held by various people in recent years.
"I have considered this issue carefully and the secretary of the department retains my confidence," Mr Burke said.
"Other staffing issues in the department are being addressed by the Secretary."
The government, he said, will continue to consult with a range of industry sectors, including the racing, breeding and recreational sectors.
"The outbreak of equine influenza had serious economic and social effects," Burke said.
"So far, the government has spent more than $A342 million in eradicating the virus and in financial assistance to individuals, organisations and businesses.
"We raised grave concerns about Australia's biosecurity and quarantine arrangements while in Opposition and the Commissioner's report shows our concerns were well-founded.
"We must drive cultural change in our quarantine and biosecurity systems so that Australians have confidence in those systems."