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Iron inquiry tests PM’s mettle

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Prime Minister Tony Abbott has backed down from supporting an inquiry on the iron ore price after the idea was rubbished by the big miners.

In the space of about five days he went from saying “I think we do need an inquiry” on Friday, to saying “we certainly haven’t made any decision to have an inquiry, this was something (Senator) Nick Xenophon was talking about last week” on Tuesday.

On Tuesday, mining giant BHP’s CEO Andrew Mackenzie took to the radio to launch a 13-minute demolition of the proposal to start an inquiry.

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The iron ore price has fallen from its unusual boom-time price of up to $180-a-tonne to below $60-a-tonne today.

But the price is 25 per cent above its long-term average, Mr Mackenzie said on Tuesday.

He said the iron ore price peak was a “once in a generation spike” driven by the “massive urbanisation” of China, and didn’t warrant an inquiry.

“This is a ridiculous waste of taxpayers money to provide a basic economics course on supply and demand,” Mr Mackenzie said.

Crucial cross bench Senator Nick Xenophon also backed an inquiry, and he has been discussing the make-up of a committee with Treasurer Joe Hockey, the ABC reported.

But on Wednesday Senator Xenophon continued to back the inquiry, and said the tone of the debate was “over-egged”.

“This is not just about a stoushe between Andrew Forrest and BHP and Rio, it’s also about the fundamental restructuring of the Australian economy with a huge hole punched in the budget to the tune of $18 billion a year as a result of the fall of the iron ore price,” he said.

He said as manufacturing declines in his state of South Australia, it was time to look at the impact the iron ore price will have on the economy.

“I just think this is a sensible thing to look at,” he said, admitting the political climate made it unlikely to proceed.

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