The row encapsulated Australia's difficult balancing act in managing the event. On the one hand there is tremendous sympathy for the Tibetan cause among Australians, as well as a determination to uphold people's right to free speech.
On the other, the government did not want to antagonize China, which last year eclipsed Japan as Australia's biggest trading partner, thanks to its voracious appetite for Australian coal, iron ore, and other raw materials.
Australia's ties with China have gone from strength to strength in the past decade. They are likely to continue to grow under newly elected prime minister and former diplomat Kevin Rudd, the first Western leader to speak fluent Mandarin.
Australia is home to a huge Chinese diaspora, educates tens of thousands of Chinese students each year, and enjoys a booming economy largely due to selling minerals to China.
But the Australians also pride themselves in being forthright on China's flaws, and last month Mr. Rudd, in China as part of a world tour, said he was concerned about the "significant human rights problems in Tibet."
His frank remarks, which angered Beijing, were echoed yesterday by Mr. Stanhope in a speech at the welcoming ceremony of the torch relay. "We hope our friendship can bear a little plain speaking," he said, as smoke from a fire drifted over Aboriginal dancers in face paint and loincloths. "We do not muzzle dissent just because it might embarrass us or embarrass our friends."
Less than an hour later, as the torch passed in front of the federal parliament building, a pair of Tibetan protesters flung themselves on the ground in front of police motorcyclists before being dragged away, handcuffed, and arrested by Australian police.