Hugh McDermott for Prospect

How should the Gillard Government react to their latest challenge, delivered this time by the High Court's judgment on the Malaysia Solution? In the tight spot they're already in, sitting on a 27% primary vote and staring down a difficult fight on the carbon price, what to do about this latest policy dilemma?

The right thing, of course. Right now, there's nothing else they can do.

Saturday's headlines reported Tony Abbott calling Gillard to join him in a bipartisan return to the Pacific Solution, processing asylum seekers on Nauru and Manus Island. Some unnamed Labor backbenchers have even gone so far as to suggest that a return to temporary protection visas is the way forward.

Remember Kevin Rudd's experience with the CPRS and the 'greatest moral challenge of our time'? Tony Abbott is asking Gillard to join him on this for a reason - and it's not because he wants to help.

It's also not smart for the Government to be ignoring its base right now. Despite the considerable anti-refugee sentiment in the community, Labor's progressive base (including its members, who voted for a National Platform based on onshore processing) is passionate about a more humane approach.

Now is the time to treat members and supporters with more respect, not less. With a long, tough fight ahead of them, the Government needs to win back its progressive base, and give them something to fight for.

In the circumstances, the Government may as well just do what it knows is right. We need an asylum seekers policy based on compassion and human rights, not fear and loathing.

A policy based on deterrence is hopeless. A policy that relies on brutalising asylum seekers to deter others following suit is inherently, unavoidably flawed. It's horrible, and nasty, and there's no evidence that it actually works.

And what's so wrong about boat arrivals anyway? What's so horrendous about the idea of allowing the poor and the persecuted to share in our wealth? If they were arriving in their millions we might have a problem, but they're not. The largest number to arrive in any 12 month period in the last three decades is 4100 - about 2% of the 200,000 permanent migrants who come here each year.

Sure, it would be better if they didn't risk life and limb in leaky boats - but is brutalising them even further really the answer? Is an offshore processing system that costs hundreds of millions of dollars a year to run ($2.4 billion since 2000) the most cost-effective way to do it?

Years from now, Australians will look back at this sordid debate about 'boat people' and 'people smugglers' and be filled with shame. They will view it alongside the White Australia policy, and the criminalisation of homosexuality, and the dispossession of indigenous people - all of which were popular policies in their time - as a dark chapter in our history.

The High Court's decision has created a crisis for the Government, there's no doubt about that. But like all good crises, it's also given them an opportunity. They can end this shameful policy now, and adopt a humane and sensible approach.

They can return to the policies they implemented in 2008, but this time instead of doing it quietly, they can adopt a whole new narrative - one based on compassion, and human rights, and all the other things that make the Labor Party progressive in the first place.

Considering the parlous electoral state that the Gillard Government is in right now, it just might prove to be the best thing they ever did.

Mick Power is a public interest lawyer who is actively engaged in progressive politics and the progressive movement, most recently through Progressive Australia. Follow him on twitter at @mick_power.