Tony Abbott finds news of another surrogate child abandoned in Asia distressing but believes surrogacy should remain a state government issue.
But there are increasing calls for a national inquiry into surrogacy laws after revelations that twins were born to a surrogate mother in India in 2012 but their Australian parents only brought one baby home.
"It's always distressing to think that a child has been brought into the world and then abandoned," the prime minister told reporters on Thursday.
"While I can understand the interest in this right around the country, I think there are some matters which are quite properly left to the state governments."
The parents applied for citizenship for only one of the babies, a spokesperson for the Department of Foreign Affairs and Trade says in a statement on Friday.
The Australian High Commission in New Delhi had no grounds to refuse the citizenship and passport application, the statement said.
"As the parents decided to apply for citizenship for only one child and consequently the other child was not granted Australian citizenship, India became responsible for the welfare of the other child and adoption arrangements became a matter for its legal system," the spokesperson said.
Family Court Chief Justice Diana Bryant says she was told the decision to leave a child behind was based on its sex, and that the High Commission had delayed granting the visa while they tried to persuade the parents to take both children.
The DFAT statement did not address those claims but said the Commission's involvement was limited to assessing the application.
The case prompted Federal Circuit Court Chief Judge John Pascoe to call for national inquiry into international surrogacy.
That was backed by the Family Law Section of the Law Council of Australia, which said proper consideration of the complex issues is critical to the protection of the rights and interests of vulnerable women and children.
Opposition leader Bill Shorten said Labor is open to a national inquiry in terms of surrogacy rules.
He said former attorney-general Nicola Roxon commissioned a report on the issue several years ago, which the Abbott government has been sitting on for eight months.
The ABC says sources told them there was concern a senior federal politician had been advocating on behalf of the Australian parents.
Former Labor senator Bob Carr, who was foreign minister from March 2012 until September 2013, said he made no calls to the Australian High Commission in India about a surrogacy case.
He doesn't recall surrogacy coming up in terms of the bilateral relationship between Australia and India.
His predecessor, Kevin Rudd, was also apparently not involved.
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