Malaysia's decision to ban an Australian independent senator, Nick Xenophon, tells us a good deal about the state of its government, the world's longest-ruling outside the communist world, as it heads to an election. Australia's response tells us a few things about ourselves, too.

Before critiquing the ruling party, the party of Mahathir, now the party of Prime Minister Najib Razak, we should acknowledge that it knows a thing or two.

First, it's worked out how to hold power continuously for 56 years, ever since Britain granted Malaysia independence. That's a serious accomplishment.

Second, it hasn't done a bad job of running the economy. Malaysia's sharemarket was one of the best-performing in the world last year and the economy is growing about 4 to 5 per cent annually.

Malaysia is a pleasant, multi-racial country with the middle-income living standards that an average per capita GDP of $10,000 delivers, about the same as Turkey or Mexico.

So why is the government so afraid of Nick Xenophon? Why stop him at the airport with the confected explanation that he represents a threat to national security?

The reason is that he is an international observer campaigning in favour of a free and fair election. This is not a threat to Malaysia's national security, but it is a threat to the ruling party's grip on power. As the opposition leader, Anwar Ibrahim, told me some time ago: ''In a fair and free election, I am absolutely sure we will win.''

Xenophon says that his detention and deportation shows ''a high level of paranoia''. But is it paranoia, or does the ruling party really have something to fear at the election it must call by the end of April?

At the centre of the long success of the ruling party is racial politics.

The county had a history of communal violence; the coalition National Front or Barisan Nasional (BN) party addressed that problem because it was founded on the principle of power-sharing between racial groups, the Malay majority with the Chinese and Indian minorities.

This balance held in check the fear of racial violence on a communal scale. But another key concept in the long years of BN rule was that the native Malays were inferior. They may be numerically dominant, but they lacked the skills and abilities of the other races. ''Deep within them,'' wrote Mahathir in his 1970 book The Malay Dilemma, ''there is a conviction that no matter what they decide or do, things will continue to slip beyond their control; that slowly but surely they are becoming dispossessed in their own land. This is the Malay Dilemma.''

How to address it? By granting the Malays special privileges, including guaranteed dominance of the public sector and automatic, unearned shares of national wealth. In short, affirmative action. ''It should not be wrong,'' wrote Mahathir, ''for the Malays to cling to a system which can elevate them to the status of other races, thus creating a more equitable society.''

The system kept the peace, but one side-effect of such a long stasis was that the government's monopoly on power allowed it to wield a near-absolute control over the other arms of the state, including the courts.

Mahathir shocked the world when he demonstrated the way that he'd managed to compromise all parts of the system when he moved against his deputy and potential nominated successor, Anwar, by trumping up charges that he'd sodomised his aide and speechwriter. Anwar went to jail for six years.

This was supposed to discredit Anwar permanently. But after moving to the US, the aide who testified against him recanted. In the police cells he had been ''brutalised to make a totally false confession'', he said.

Anwar, freed, led a barnstorming campaign as the leader of the opposition. He delivered the BN government a terrible shock at the 2008 election - it lost its customary two-thirds majority of parliament.

And while the BN retained a big majority in the parliament, the actual voting figures show that the contest was much closer than it appeared. BN won 51.4 per cent of the votes while the greater opposition gained 48.6 per cent.

The BN is protected by a gerrymander which means that while some electorates have more than 100,000 voters, others have as few as 7000. It's also protected by other systemic factors including a restricted press - the opposition parties need government permission just to print their own newsletters.

These are some of the awkward facts that Xenophon, as part of a wider international observer group, pointed out in a report last year. That group reported that in its discussions with the secretary-general of BN, Adnan Mansor, he'd stressed the importance of ''avoiding racial strife'' in Malaysia. He had posed this question to the group: ''Are our people mature for freedom?''

The Malaysian government is afraid not of an Australian senator but of this question. In particular, the Najib government is frightened that the answer might be ''yes.''

''The status quo message,'' says one of Anwar's MPs, Liew Chin-Tong, is ''unlikely to have an impact on an almost Arab-spring demography: 48 per cent of Malaysia's population are below 25 years old and 70 per cent are below 40 years old.''

Mahathir anticipated in The Malay Dilemma a day when Malaysia's race-based construct would be obsolete, when the people would assert that they were no longer primarily Malays or Chinese or Indians but Malaysians. But he is not ready for the possibility that today could be the day, or that the people are the ones who have to make that decision.

The very tame reaction of the Foreign Affairs Minister, Bob Carr, to Xenophon's detention that it was ''sad'' and ''disappointing,'' displays the usual limpness of Australian governments in defending their citizens abroad.

But, above all, Malaysia's overreaction to Xenophon simply validates his point that it is not a mature democracy. This has been Carr's fig leaf to justify Australia's silence at Malaysia's lack of democratic freedom - that we have no place in criticising a mature democracy. The deportation of Xenophon is an implicit confession by the Najib government that Xenophon is right and Carr is wrong.

Malaysia's people deserve a free vote, and Australia should stand with them in calling for one.