Authorities on Christmas Island have labelled the Federal Government's decision to reopen the territory's immigration detention centre as a "knee-jerk reaction", saying it is ill-equipped to deal with asylum seekers sent there in poor health.

Key points: Scott Morrison says the centre will reopen for asylum seeker arrivals and transfers

Scott Morrison says the centre will reopen for asylum seeker arrivals and transfers The island's shire says it was not consulted and it can't handle medical transfers

The island's shire says it was not consulted and it can't handle medical transfers Tourism groups say the island's recovering tourism industry will suffer as a result

Prime Minister Scott Morrison this morning announced the Christmas Island immigration centre would reopen, after amendments to the Federal Government's refugee medevac bill were passed into law by the Senate.

It came a day after the Government suffered a historic loss when the same legislation was passed by the House of Representatives.

The Coalition claimed the new law, which will give doctors more power to decide whether asylum seekers should come to Australia for medical treatment, would restart the people-smuggling trade — leaving border protection as a key battleground ahead of this year's federal election.

Christmas Island's detention centre closed in 2018, and locals say reopening it will hurt the island. ( AAP: Lloyd Jones )

But Shire of Christmas Island CEO David Price said he did not see how the legislation would "open up a flood of boats coming up over the horizon again".

He also said the island did not have the facilities to deal with 1,000 asylum seeker arrivals and transfers, the number he said had been suggested could be sent to the reopened detention centre.

"We've got a hospital [but] it doesn't do operations. People are medivaced out quite regularly here for medical reasons as it's only a small regional hospital," he told ABC Radio Perth.

"We just wouldn't have the capacity here to deal with people coming here for medical reasons, both physically and mentally.

"They'd have to be airvaced off to the mainland Australia and, if that's the case, why wouldn't we airvac them off to the mainland in the first place?

"For the life of me, I just can't see how we would be able to handle that."

The detention centre will handle asylum seeker arrivals and transfers, Scott Morrison says. ( Supplied: Mark Trenorden )

'Knee-jerk reaction,' shire says

The Christmas Island detention centre was closed last year, almost two decades after the first asylum seekers were sent to the territory.

Mr Price said the shire had not been consulted before the announcement was made to reopen the detention centre, and he described the Prime Minister's move as a "political knee-jerk reaction" to the passing of the legislation through the Senate.

"They've got an obligation if they make these decisions to say how they're going to process people with a medical condition by a small regional hospital that's in Christmas Island, where if people have a compound fracture they're airvaced out," he said.

"There's no operations done on Christmas Island and some of these people would have serious mental health problems that need to be done by a specialist. We haven't got the specialists to do that.

The local shire says the island doesn't have the right facilities to handle sick asylum seekers. ( AAP:Mick Tsikas )

"We'd be asking to get a proper explanation and detailed response as to how medically we could facilitate the transfer of unwell people from Manus and Nauru to Christmas Island and deal with them effectively in a humane way.

"Just opening the detention centre doesn't do that."

Island will go backwards: tourism chief

Christmas Island Tourism Association chairwoman Lisa Preston also expressed concern about the move, suggesting the same challenges the island faced when the detention centre was open would resurface.

"Effectively the island didn't move forward for 10 years," she said.

"We were robbed of that ability to develop tourism or even other industries for ourselves, because so many of our resources on the island — people, infrastructure — were focused on the detention centre and its activity."

"We were just starting to get back to the place where [we said] 'Hold on, there's nothing on the horizon, we really seriously need to start looking on our future'."

The island's tourism industry says it was constrained when the detention centre was open. ( Supplied: Gary Bell )

Ms Preston said the Federal Government had already invested in a strategic plan for the island.

"There's been discussions again about the Government re-instating a casino licence on the island," she said.

"There were serious discussions taking place to see about what direction we look at going forward, and my concern is that this will distract everybody again."

Political debate intensifies

Mr Morrison met with his national security committee before declaring Australia would reopen the island's detention facilities, in a bid to shore up border protection policies.

"We have approved putting in place the reopening of the Christmas Island detention facilities and a series of compounds there, both to deal with the prospect of arrivals as well as dealing with the prospect of transfers," he said.

Shadow Defence Minister Richard Marles, speaking before the announcement, told radio 3AW Labor would not reopen the Christmas Island detention centre.

"Our position is let's not get ahead of ourselves here," he said.

"Let's make sure that we maintain a strong turnback policy which we will do. We maintain a system of offshore processing which we will do and that question is then moot.

"We are not going to give fodder to people smugglers to start up their trade."

Greens leader Richard Di Natale hit out at the decision to reopen Christmas Island.

"Don't be fooled by the Prime Minister's attempt to reopen Christmas Island. It's a desperate tactic, from a Government that's got nothing," he said.

"The Prime Minister wants to run around the country, thump his chest, sound tough on innocent people seeking asylum, because he's got nothing else."