See the High Court judgment in Plaintiff M70/2011 v Minister for Immigration and Citizenship
here if you want to read the whole thing or sample its reasoning.
So, good people, why is it so important, exactly, to "Stop the boats"? Are a few hundred escapees from various hellholes going to take over our country unless we deter them with threats of harsh treatment? Seriously? And is the paranoia about all this really based (solely) on paternalistic concerns about the exploitative and dangerous practices of people smugglers? Really? Or is it, well, largely just xenophobic paranoia?
The ALP government now has itself in a terrible mess. I get that we want some sort of process to determine which of these people who arrive here from time to time are genuine refugees, but there's no good reason why they can't be processed on-shore with ordinary appeal/judicial review rights in the nation's system of tribunals and courts. This idea of sending them off to another country to undermine their rights, and generally make things harder for them, is unprincipled. Likewise for any attempt to deter genuine refugees by making things harsher for them when they arrive here.
As for the judgment itself, it turns on a question of the construction of sub-section (3) of section 198A of the Migration Act 1958. This basically allows the Minister for Immigration and Citizenship to declare that a country meets certain standards of protection for people to be sent there to have their claims for refugee status processed. See the four matters listed in para (a) of the subsection:
(3) The Minister may:
(a) declare in writing that a specified country:
(i) provides access, for persons seeking asylum, to effective procedures for assessing their need for protection; and
(ii) provides protection for persons seeking asylum, pending determination of their refugee status; and
(iii) provides protection to persons who are given refugee status, pending their voluntary repatriation to their country of origin or resettlement in another country; and
(iv) meets relevant human rights standards in providing that protection; and
(b) in writing, revoke a declaration made under paragraph (a).
Such a declaration under s.198A(3)(a) was made in relation to Malaysia, so the question was about how much discretion the Minister had to make such a declaration irrespective of the actual facts. The judgments of the majority judges took different stands on this. At a minimum - see Chief Justice French, who agreed in the disposition of the case - if the Minister had some subjective leeway he could still not fail to take into account such facts as Malaysia's actual laws, the international obligations it accepts (or does not), and so on. That placed a limit as to how much the Minister can simply ignore such things or make a decision that flies in the face of the legal reality in Malaysia.
However, five [Edit - it was actually four] of the seven High Court judge appear to take a tougher stance: that the matters in (3)(a) one must be met objectively before the Minister has jurisdiction to make a declaration. Only one judge dissented, supporting the government's position.
The government came unstuck over this issue, and rightly so. We can't assume that the same thing would happen with a different country (let's say New Zealand ... or perhaps even Nauru), but it looks like the "Malaysian solution" is now dead.
Given the way successive governments (and large parties in opposition) have whipped up, rather than trying to calm, the paranoid xenophobia in the electorate, no good can come of this for the ALP. There is probably no real prospect of handling the issue by moving to some more humane and sensible regime, since it would be electoral suicide. Labor can largely blame itself for getting into that situation, as well as contributing to the callousness of the electorate and general coarsening of debate on immigration issues.
OTOH, the reality is that we will almost certainly see a change of government in the next two years, probably with some harsher regime introduced. Please tell me if I'm wrong, because I'd like to be.
The High Court judgment is the right one ... but from here the overall political situation looks like a disaster.
Edit: See here re update/correction.