By Nick Bryant BBC News, Sydney

Guillotine's owner fully expects his racehorse to be hit by equine flu

Mr Payne strongly fancied the horse to win the Victoria Derby.

Such a feat would have gained it automatic entry into the Melbourne Cup, the race on the first Tuesday of every November which has such a famously immobilising effect on the Australian nation.

Instead, his colt will not race for at least two months.

David Payne's stable is on "flu row" at Randwick racecourse in Sydney.

Now that equine influenza has been confirmed in the stables next door, he fully expects his thoroughbreds to go down with the disease.

And in a country suffering its first ever outbreak of equine influenza, he is better qualified than most to assess its impact.

A South African trainer who relocated here five years ago, he saw in his homeland the damage the disease can wreak.

"It will stick me out for three months at least, and that's a nightmare," he told the BBC.

There are 50,000 people that cannot earn a wage out of racing Peter V'Landys Racing New South Wales chief executive

"They'll be listless and depressed and their fitness will go to pieces, so you'll have to start from scratch to get them back racing.

"In South Africa, we might have had a worse strain but it took us three months to get over it there. It just ran rampant.

"This is our livelihood so we won't be earning any money. And, horse-wise, I thought this was going to be our best year."

For David Payne, this will be a season of thwarted ambition and economic pain.

There will doubtless have to be lay-offs.

Chris O'Carrigan, foreman at the stables, said: "I'm the guy who is going to have to turn around to three or four people and say, "sorry guys we've got no work left because all we have to do is look after 38 sick horses"."

"It becomes a financial strain on everyone. It becomes very difficult for an owner to continue paying training fees for a horse that's sitting in a box," he added.

"For a fully-fit racehorse to be confined to a box for a prolonged period of time, it would drive them as crazy as it would drive me looking after them.

Randwick racecourse is closed until further notice

"They are designed to race. That is their bred purpose."

In all, 700 horses are stabled at Randwick, Sydney's premier racecourse and the normally vibrant heart of the New South Wales racing industry.

Its Spring Carnival racing calendar has been thrown into chaos.

Racing New South Wales Chief Executive Peter V'Landys described the morning that equine influenza was confirmed at Randwick as "our darkest day".

"There are 50,000 people that cannot earn a wage out of racing," he added.

Knock-on effects

It is not only the multi-billion dollar racing industry which is facing a cash crunch.

Gambling, that addictive national pastime, has been devastated.

The bookmakers Tabcorp estimate that the week-long nationwide ban on racing has already cost it A$5m ($4m, �2m) in profits.

The day the flu was discovered at Randwick, a staggering A$968m ($797m, �396m) was wiped off the market value of betting giants Tabcorp Holdings and Tatterstalls.

Australia's racing industry has been hit hard financially

Then there is the knock-on effect on the pub and hospitality industry, where the racing drought is almost sure to depress beer sales.

And what of the rag trade and milliners, for whom the Spring Carnival delivers a welcome spike in sales?

The federal government's A$4m emergency fund set up to help people affected by equine influenza pales in comparison with the money being lost.

It is, of course, a different story over the state border in Victoria, which has not been touched by equine influenza.

After a seven-day ban, harness-racing was given the all-clear to resume at Moonee Valley on Friday night.

The Melbourne Cup is also due to go ahead on 6 November, though its field will be weakened by the forced withdrawal of horses from New South Wales as well as from Japan and Hong Kong.

Remember, it was won last year by a Japanese thoroughbred, Delta Blues. Another Japanese horse, Pop Rock, came in second.

But Racing Victoria's Chief Executive Stephan Allanson claims the showpiece event of the Australian racing industry will still be a star-studded affair.