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SYDNEY — With the government of Prime Minister John Howard still reeling from a by-election humiliation, along comes a morale booster — a corporate deal that makes Australia the dominant player in global-resources trade. Comeback Kid Howard has done it again, although his chances of staying prime minister after this year’s election still depend on a disgruntled electorate, not on multinational games.

A litmus-test by-election went horribly wrong for Howard’s conservative coalition government this month, with voters slashing their support for the coalition candidate by 10 percent. After an agonizingly slow count of postal preference votes, an unknown Labor Party candidate finally took the blue-ribbon Liberal seat of Ryan in Queensland.

After such a shock, Howard’s critics would usually have been calling for his head on a tray. But at that moment, BHP, the country’s corporate giant, announced a merger deal with London-based mining behemoth Billiton. Worth $58 billion, the merger will create the world’s largest mining and exploration conglomerate, with major operations in Australia, South America, southern Africa and Europe and projected annual revenues of $33 billion.

For Japan, the move is of key importance to its energy and minerals supply. BHP has long fueled Japan’s industrial might. Now it becomes the major partner in the world’s third-largest iron ore, copper and aluminum producer, the biggest producer of export steaming coal and the largest integrated producer of chrome, manganese and ferro alloys, as well as a big regional player in oil and liquid natural gas.

Japan’s electricity-supply companies already hold long-term supply contracts for natural gas from offshore West Australian oil fields and should benefit from the new group’s explorations. Where Japanese industry will have to be ready for tougher Australian contract negotiations is in coal, particularly steaming coal for powerhouse generators. Australian producers led by BHP still resent a 10-year depression in coal prices forced by Japanese industrialists.

The ink is still wet on the London merger papers and already some Australians are complaining that their beloved BHP, once called the Big Australian, will be dominated by foreigners, even though the merged company will be 58 percent owned by Australia’s 115,000 BHP shareholders. They talk darkly of Australia becoming a New Zealand-style branch-office economy.

Foreign takeovers are a sore political point here. The loss of iconic brand names, notably in foods, to U.S. multinationals, is becoming a nightmare for Canberra, pledged as it is to touting the benefits of globalization. Controversy is running especially hot over Shell’s bid to control oil and gas supplies from the North West Shelf offshore field.

The British-Dutch oil giant keeps extending its offer period for a share buy into the major Shelf partner, Woodside Petroleum. Mitsubishi and Mitsui, also partners and key buyers of the product, are keeping a low profile. Shell’s patience is running low as it watches the Australian public debate the merits of another foreign takeover of resources.

Enter the BHP merger with the British-South African company. Howard was quick to assure a doubting public, “This is a great resource opportunity for Australia.” Meanwhile, Opposition Leader Kim Beazley promises that if a Labor government is elected later this year it will seek assurances that BHP will not run down its domestic manufacturing operations or downgrade its commitment to Australia. Unions already hit by steel-mill closures threaten a national strike if the merger generates more job losses.

With a national unemployment rate stuck at 7 percent, nobody wants big business to rationalize so sharply that jobs are exported overseas or lost to corporate downsizing. If the trumpeted benefits of mergers are to extend beyond stock exchanges, politicians realize they must not only legislate enabling laws but also explain to voters the background to the flurry of globalizing moves. If they fail, they will be punished at the polls.

“We are listening”: If Howard said this once during the angry Ryan by-election campaign, he said it 100 times. Cynical Ryan voters sneered: “Yes, but are you hearing?”

The normally ebullient Howard is contrite. The veteran campaigner knows by-elections are meant to punish governments, but he also knows that even a small fraction of Ryan’s 10 percent swing will send him to the wilderness in the coming general election. He and Treasurer Peter Costello have already handed out sweeteners in the form of tax concessions. However, such options are running out if the healthy budget surplus they have restored from Labor-administration lows is to stay intact.

Not that Beazley is crowing over the Ryan vote. The by-election was make-or-break time for him. Accused of being too weak and lacking national policies, Beazley campaigned hard, not just for the Labor candidate but for his own skin. But opinion remains divided over whether he can actually lead the country back to Labor.

The only clear conclusion to be drawn from the evenly divided vote is that nobody now trusts voter opinion polls. They were all wrong. In the real test, tipped by some for Dec. 9, the parties will have to spend big regardless of the polls.

The trouble is, big spending in politics is not popular with voters. They are getting fed up with income-depleting taxes, often blaming the government excise on oil instead of OPEC’s high oil prices for their low saving rates. The economy may be as sound as Howard keeps telling them, yet the economic indicators look bleak. The falling value of the Aussie dollar may be great for exports, yet rising costs of imports are what immediately affect consumers. And with the dollar sinking below a rock-bottom 50 cents U.S., the electorate’s morale is sinking with it.

Nor does news from Australia’s major market get any brighter. Japan’s economic slump has blighted the Australian economy for a decade, and Australians look aghast at the Tokyo political system’s inability to bring about a recovery.

One blessing is that Japanese investors have not rushed into massive repatriation of their Australian assets. True, only Meiji now has an insurance office in Sydney — Nippon Life pulled out last week — but selloffs of big parcels of property bought by Tokyo investors during the “bubble” were responsible for that. The irony is that Japanese tourist resorts built here during the heady ’80s and now in the hands of other countries are still welcoming planeloads of Japanese tourists — all getting good value against the cheap Aussie dollar.

Europe has emerged among the new corporate investors in Australian assets. Australia has always been a good place for foreign investment, though with the current public fears of a stock-market downturn some nervous Canberra politicians are wondering how far and fast the wave of purchases of Australian corporations should go.

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