Sydney - The Australian Senate on Thursday rejected a bill to send boatpeople offshore for processing, leaving the divisive issue of asylum-seekers at a stalemate following a spate of deadly incidents.
The bill had passed the lower House of Representatives on Wednesday after an emotional debate sparked by another crowded asylum-seeker boat sinking off the remote Australian territory of Christmas Island, near Indonesia.
Around 130 people were rescued, one body was recovered and three people went down with the vessel. Wednesday's incident came just days after another boat capsized, with 110 people saved but an estimated 90 killed.
But the bill was always doomed to fail in the upper house, with the conservative opposition and the Australian Greens vowing to block it. It was defeated 39 votes to 29.
The opposition supports offshore processing in principle but refuses to back any option the government puts forward, seizing it as a potential opportunity to derail Labour's fragile coalition, which holds a one-seat voting majority.
The left-leaning Greens, on whom the government relies for its rule, are opposed to any offshore processing.
"I very much regret that after 24 hours of impassioned, sincere and at times very moving debate, the parliament has come to this deeply unsatisfactory impasse," said opposition leader Tony Abbott.
"We have not a solution, but a stalemate."
Prime Minister Julia Gillard said that with the bill's failure, there would be no effective message of deterrence to people-smugglers.
"What it will mean is people will [still] get on boats," she said.
With few options left, Gillard announced that she had commissioned an urgent expert review of asylum-seeker policy led by former defence force chief Angus Houston.
"[He will] provide a report to me and to the nation about the best way forward for our nation in dealing with asylum-seeker issues," she said, adding that she expected the report by the time parliament sits again in six weeks.
The Australian media have been scathing of the politicians' inability to find a compromise, with the Sydney Morning Herald blaring Paralysis in Parliament on its front-page.
"The Australian parliament is failing us. It is putting politicking ahead of human life," it said.
Gillard's Labour coalition government supported the private member's bill from independent MP Rob Oakeshott, which attempted to revive a deal clinched last year to send 800 boatpeople to Malaysia.
In exchange, Canberra would take 4 000 registered refugees from Malaysia.
The government was unable to pass the required legislation through parliament without the support of the opposition, which expressed concern that Malaysia was not a signatory to UN refugee conventions.
The Oakeshott bill, seen as a compromise, would have allowed the immigration minister to designate any nation as an "offshore assessment country" if it was party to the Bali Process - a framework for dealing with asylum-seekers involving more than 40 nations.
Working with Indonesia
As a sweetener, Gillard offered to re-open a detention centre on the Pacific island of Nauru if the opposition agreed to vote for the bill, which would allow processing in Malaysia.
But Abbott, who supports processing on Nauru and turning boats back where possible, said he would never back the Malaysia option.
The Greens said Australia's humanitarian refugee intake should instead be increased while working more closely with Indonesia, where many of the rickety boats originate.
"These are the lives of the people we are playing with," Greens Senator Sarah Hanson-Young told the Senate.
"When people arrive on your doorstep, you have an obligation to help them."