Australia's federal MPs have left Canberra for a six-week winter recess, leaving behind a shambles of failed leadership, political paralysis and a pervading sense of impotence.

Last week, with public tears over the deaths of more than 90 men, women and children in two sinkings in the Indian Ocean, Parliament met with apparent determination to shut down the deadly crossing from Indonesia to Christmas Island.

It ended in a welter of cross-accusations and scrambling for the moral high ground as partisan stonewalling poleaxed any compromise on asylum seekers, effectively extending the vacuum into which policy on boat people is cast.

Both Labor and the Opposition now support processing asylum seekers offshore.


But the Government will not dump its favoured deal with Malaysia, in which 800 asylum seekers would be exchanged for 4000 refugees already processed by the United Nations, although it has agreed to reverse its earlier refusal to re-open the former "Pacific Solution" detention centre on Nauru.

The Opposition flatly rejects the Malaysian deal, citing human rights concerns. Kuala Lumpur has not signed the United Nations refugee conventions and even with its preferred option of Nauru back on the table, the Coalition will not agree to any proposal that includes Malaysia.

The Greens refuse to accept offshore processing at all, and will not support either of the major parties' policies. In the Senate, they used their balance of power by joining the Opposition to kill a compromise deal from independent MP Rod Oakeshott that, in amended form, would have allowed the Malaysian swap to go ahead and Nauru to re-open, limited by a 12-month sunset clause.

Prime Minister Julia Gillard's response has been to hand the stalemate to a three-member panel comprising former Defence Force chief Angus Houston, refugee advocate Paris Aristotle and former Foreign Affairs Secretary Michael L'Estrange.

The three are held in high regard by all sides, and will liaise with a planned multi-party reference group before reporting to Parliament when it resumes in August.

Gillard said the panel would be given complete freedom in consultations, with no restrictions on its recommendations. All options, including the Malaysian swap deal, Nauru and onshore processing, would be on the table.

Politically, all parties have suffered. Commentators, analysts and public commentary have lashed MPs for failing to reach any solution, no matter how flawed.

News Ltd tabloids headlined their stories "Crying shame" and blasted MPs for weeping over tragedy then leaving town for a break even as two more boats were intercepted off Christmas Island. The Australian accused Gillard of "outsourcing" policy, and the Age reported: "Houston, we have a problem".


The Greens were flayed by everyone but their own supporters, while commentators further turned on Gillard for not only absence of leadership, but also for bungling minority government and failing to force the Greens to reciprocate concessions made earlier to gain their support.

Nor is there any guarantee that anything the Houston panel recommends will be accepted. Both the Government and the Opposition have refused to say they will swallow proposals running counter to their entrenched positions.

What's been lost in the latest furore are alternatives to offshore processing. The idea behind keeping asylum seekers isolated from the mainland while their claims are being processed is to remove the key sales pitch for the people smugglers: landing on Australian soil.

By blocking the goal, the argument runs, the smugglers' business model is destroyed, people will stop paying A$8000 (NZ$9716) for the crossing, and the boats will slow to the trickle they had become under the draconian laws of former Liberal Prime Minister John Howard.

Critics reject the simple equation, saying far more factors are in play and noting, for example, that most of the detainees held on Nauru eventually established their claims and were allowed into Australia.

The raw numbers also show that most asylum seekers do not make the Indian Ocean crossing. Historically, more than 90 per cent have instead arrived by air and, even when boat arrivals have reached new peaks, they have still comprised less than half the total.

For Australia's political leaders, more heavy seas lie ahead.