I don't quite get it. If the government were to embrace the coalition's position, what exactly has to pass through parliament? Can they just get on with it?
Yep. Nothing has to pass the Parliament. The High Court, in the judgment which trashed the Malaysia Solution, said as much at paragraph 128:
Two points may be made about this submission. First, it is by no means clear what use the Minister and the Commonwealth sought to make in the proper construction of the provision of what they asserted to be facts known to those who promoted the legislation. The facts asserted do not identify any mischief to which the provision was directed. Rather, it seemed that the facts were put forward as indicating what those who promoted the legislation hoped or intended might be achieved by it. But those hopes or intentions do not bear upon the curial determination of the question of construction of the legislative text[121]. Second, even assuming them to be in some way relevant, the arrangements made with Nauru were very different from those that are now in issue. Not least is that so because Australia, not Nauru as the receiving country, was to provide or secure the provision of the assessment and other steps that had to be taken, as well as the maintenance in the meantime of those who claimed to be seeking protection. Thus it was Australia, not the receiving country, that was to provide the access and protections in question. Further, although the arrangement between Australia and Nauru was recorded in a very short document, the better view of that document may be that it created obligations between the signatory states. But whether or not the arrangements with Nauru had the various features that have been identified, the question of statutory construction should be resolved in the manner indicated.
Here's the link:
http://www.austlii.edu.au/au/cases/cth/HCA/2011/32.html
The way it happened at the hearing in the High Court is exactly the way it came up in the judgment. The Commonwealth's argument, briefly was that "No one has invalidated Nauru as an illegal offshore processing centre, so you should let Gillard/Bowen have Malaysia as well. This appears in paragraph 127:
The Minister and the Commonwealth also submitted that the circumstances in which s 198A was enacted pointed against the adoption of this construction of the section. They submitted that s 198A was enacted with a view to declaring that Nauru is a country specified for the purposes of s 198A and that it was known, before the enactment of s 198A, that Nauru was not a signatory to the Refugees Convention or the Refugees Protocol.
Don't underestimate how bloody-minded this scorched-earth submission was. If the Government couldn't get its way with the Malaysia Solution (which was the only issue before the Court), it was going to do its best to tear down Nauru as a future solution as well. But it backfired spectacularly.
And the High Court's answer was, well it didn't matter that Nauru wasn't a signatory (at that time) to the Refugees Convention, because it was the Aussies who were running the detention centre and the processing, so the human rights were protected. The Court was saying - that's why Nauru is LEGAL whereas the agreement struck up with Malaysia was explicitly stated to be 'non-binding' and ILLEGAL, as the Malaysians could do what they wanted once the hapless 800 arrived there, including send them home. No guarantees, hence the Coalition condition that the Malaysians sign the Refugees Convention is a real and pragmatic one.
Since the days Nauru was used as an offshore processing centre, they have now signed up to the Refugees Convention, so sending them there would be even more legal now, if that was possible. So no legislative amendment needed. Gillard could pick up the phone to the Nauruan President, literally, and it would be done.
So it's Gillard's stubbornness. It's not lack of knowledge, as she's a lawyer and this is pretty basic stuff. She cannot swallow her pride and go back to Nauru without also having Malaysia in the mix to claim some of the credit for solving the problem (if it's solvable). If it's not solvable, then Malaysia and Nauru are in the same failed boat as well, so to speak.