Leading article: The real political power Down Under

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The Independent Online

The message is clear: Australian politicians tangle with the mighty national mining industry at their peril.

The former Australian prime minister, Kevin Rudd, tried to impose a 40 per cent "super-tax" on the profits of the coal and iron-ore extracting multinationals. The mining industry responded with a huge and aggressive advertising campaign against the tax. The result was that Mr Rudd's popularity plummeted and he was removed in a palace coup by his own party last week. One of the first acts of the new prime minister, Julia Gillard, has been to ditch the super-tax and impose a watered-down substitute with significant concessions for the big mining firms.

The original super-tax proposal was economically sound. The former system imposed a flat tax on production. A tax on profits would have been more efficient. And there was no evidence to support the claims of the industry that the tax would stall investment, cost jobs and put Australia's miners at a competitive disadvantage. Mr Rudd might have been clumsy in the manner in which he went about implementing his plan, and it was not the only factor behind his downfall, but the awesome political power of the mining companies that has been revealed by this affair is, nevertheless, breathtaking.

Yet this is not a simple case of big business intimidating elected politicians. Around half of the Australian public took the side of the mining industry. There is a widespread belief that what is good for BHP Billiton, Rio Tinto and Xstrata and the rest is good for Australia. The flurry of protectionism last year when China was shopping for stakes in Australian mining firms confirmed that these businesses are seen as national champions. And, tellingly, the government's popularity has improved as a result of this retreat to the extent that Ms Gillard could now win the next general election. Australia is often described as "the lucky country". And there is certainly no Australian industry luckier than its miners.