Silly question from a world away, but what do you all mean when you say some minor party gets the "Balance of Power" in your Senate? I'm assuming that it means these elected officials get to choose who they caucus/coalition with to tip the scales towards who they'd want to run the Senate.
It also sounds like the Senate is based on proportional voting whereas your lower house is based on individual districts. How does well does it represent the popular will?
OK, here goes, though the idea of Australian politicians "representing popular will" is rather quaint.
CRASH COURSE IN THE PURPOSE AND FUNCTION OF THE AUSTRALIAN SENATE, OR: A LESSON IN COMPARATIVE POLITICS
The framers of the Australian constitution were able to look to examples from the UK as well as from the United States and Canada, in deciding how to govern the Commonwealth. They therefore came up with a system which is a mix of the three. Australia's system is very much a westminister system, but in the place of a rubber stamp senate like Canada's or the anachronism of the UK's House of Lords, they chose to opt for a more American style senate, though with some differences.
The Senate and House of Representatives have equal legislative power except the lower house controls the budget (Supply). Theoretically the Prime Minister could be a senator, and members of the ministry often are senators. Custom, however, has it that the House leads and governs and the Senate follows or criticises. This is known as the concept of the "House of Review." The senate represents the states, all states get 12 senators regardless of population (New South Wales' 6 million versus Tasmania's 450 000) and the two internal territories get two senators. The Constitution also contains a clause that says the Senate should be as close as possible to half the size of the House of Reps.
Basically, in its function as a house of review the Senate can block whatever it wants, and even write its own bills. After several failed attempts to jam a bill through, a deadlock can be broken by a joint sitting of parliament (the HoR's 2:1 majority letting it overcome the Senate) or by the government calling a double-dissolution election where the entire senate goes up for election instead of just half like normal.
The other major function of the Senate as a House of Review is its ability to form committees to scrutinise the government, though obviously this depends on the numbers. When the government controls both houses like it does currently (for the first time in a generation) this tends to wane.
VOTING PROCEDURES
Australia uses preferential voting on all federal ballots.
This link on Wiki explains how they work (edit, so does the post above). We have a single electoral body, the AEC, which runs everything, and does so independently of politicians. America could learn a lot from it about removing the ability to draw electorate (district) boundaries from politicians.
Anyways, in the lower house, the preference system does not overcome major party hegemony because in virtually all cases, the major parties win enough votes that they're carried through the "instant run-off" by preferences. In the proportionally-elected senate, however, the distribution of preferences ensures that minor parties have influence. Basically there's a set quota, usually around 10% when there's 6 senators being elected from a state, and you get a seat when your Primary Vote plus Preferences fulfils that quota. Usually this means a good 15%-20% of the Senate is minor parties and they often hold the swing between the major parties (for our purposes the Coalition is a single party). It also leads to anomolies in the allocation of the final seat from a state which can sometimes be pretty significant.
Is it representative? There's one valid criticism, which is that the specific voting method in the senate elections (1 box above the line or hundreds below) gives too much power to the parties to determine how votes for their list get allocated, but I think that's been reformed for this election.
More broadly though, there's two schools of thought and which one you hold depends on whether you vote for a major party and whether that major party is holding office. One is the "unrepresentative swill" view (as espoused by one former PM), that only a minority of people vote for minor parties and therefore they shouldn't hold such a balance of power. The more reasonable view, though, is that the Senate pretty roughly refects the voting will of the average of the last two elections, much more so than a House of Representatives with individual electorates (districts) where only a fraction of the seats are competitive and half the voters don't get represented (like if I live in a safe Liberal seat and vote Labor or if I live anywhere and vote Green).
Plus, like, there's strong evidence many Australians engage in "tactical voting" and consciously split their upper and lower house votes because they don't want an unchecked government.
THE BALANCE OF POWER
The other thing essential to understanding the concept of the "balance of power" in Australia is that there is an abnormally high degree of party discipline in parliamentary votes (think of the group of senators and congressmen in the US whose party affiliations barely matter, or the rebellious Labour backbench in the UK). Here, the Whips and Cabinets of Australian major parties reign supreme. Very rarely does a member "cross the floor" and doing so essentially ends their chances of advancement in the party... and might even see them lose preselection for the next election.
The exception is the Liberals who allow "conscience votes" on controversial but peripheral issues like stem cell research or abortion, but this is basically a safety valve to keep the peace between the small-l liberals and the Tory/Christian right.
Therefore, the exact distribution of the senate matters a LOT. It is, ironically, the extreme voting discipline of the major parties that gives minor parties such power in a tightly split senate, because your hope of securing the individual votes of someone from the other major party is precisely zero. So when there's no govt majority in the senate, it comes down to the minors to decide an issue and leads to negotiations and moderation of a bill, or even working with the other major party to come up with something palatable.
Even the government's mere one seat majority is enough to carry the day virtually always, since it can only be overcome by crossing of the floor. That's happened once or twice, and only then thanks to the dallying of a dissident (read, attention whore populist idiot) Queensland National Party senator named Barnaby Joyce and the lone Family First senator who is the go-to man if Joyce is acting up. That said, the mere threat from several Liberal senators was enough to kill a rather odious immigration bill.
Basically: the balance of power matters because the voting system gives minor parties representation and because party allegiances are rigid, not merely notional, in the 76 member Senate.
