Former prime minister Malcolm Fraser has called for a royal commission into Australia's management of offshore asylum seeker processing.

Speaking to ABC News Breakfast, Mr Fraser also suggested that an offshore processing centre be set up in Indonesia with oversight by the United Nations High Commissioner for Refugees (UNHCR).

He said the revelations of mistreatment of detainees on Manus Island pointed to a lack of oversight by Australia's Immigration Department, which he said lacked accountability.

"It's quite clear that the department is ultimately responsible for what's happened on Nauru and Manus Island," Mr Fraser said.

"They've allowed the most terrible conditions to prevail. What's happened on Manus is not new. It's been going on for months and months. The department have known that, and it's only public exposure that has brought it to light, brought about, hopefully, some change."

Mr Fraser also pointed to what he said was Australia's flawed policy approach to the asylum seeker issue.

"The policy is wrong - if you really wanted to stop people getting on boats, you'd establish a major processing centre in Indonesia with the UNHCR. Hopefully, Indonesia would agree to that, but then there would have to be an understanding that they would not be left with the problem.

"If you have a processing centre in Indonesia, the incentive to get on boats is taken away."

He added: "I do not believe you need the brutality of the policy of deterrent... If they are genuine refugees, there is no deterrent that we can create which is going to be severe enough, cruel enough, nasty enough to stop them fleeing the terror [they face] in their own lands."

Mr Fraser also asked why the Federal Government had not made an attempt to share the burden of resettling asylum seekers from the region with the United States and Canada, as his government did - or if it had, why any attempt had not been publicised.

He said such an approach had worked during the flood of Indo-Chinese asylum seekers during his term as prime minister.

"That was a real regional solution," he said.

"And we know the results - a vigorous, vibrant Vietnamese-Australian community."

Mr Fraser conceded that working with Indonesia on the issue could be problematic.

"We don't have all that many friends left in Indonesia because of the way we've gone on about turning boats back, and the general relationship is not as close as it once was," he said.

"But I believe that if we could persuade Indonesia that it's not only Australia, but New Zealand, the US, Canada and perhaps other countries would take people from that centre, they would accept that."