WHERE TO NOW?

David Speers, Sky News Political Editor

1 September 2011

There's a sense of shock and awe after the High Court ruled the Malaysia Deal unlawful.

Shock that the government could botch this policy so badly.

Awe that it absolutely nothing is going right for it.

The decision is humiliating, leaves Labor back at the drawing board on a policy Julia Gillard vowed to fix and will cause lasting damage.

Labor will never again be able to criticise the Coalition for being inhumane on border protection after throwing up this diabolical and ultimately illegal policy.

So where to now?

This is a big setback for Chris Bowen, someone often touted as a future Labor leader.

As one of his ministerial colleagues put it, "he's certainly no longer on the elevator".

It's also yet another blow to Julia Gillard.

Even before this decision, rumblings were growing louder about a possible move to dump her this year.

But her defenders point out any leadership change will only give the independents the excuse they need to abandon Labor and save their own hides.

As for the policy, Nauru is being seriously considered.

But it would have to get through caucus, which is no certainty.

And Labor knows embracing Coalition policy wouldn't end the opposition attacks on asylum seekers.

Tony Abbott will always find a way to keep the pressure on the government on this issue.

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