The big question for 2013: who will 'own' middle Australia?

THE release of new official economic forecasts today could put us on the fast train to dullsville - not because the milestone is unimportant, but because we'll be back faux finger-pointing over the faux surplus.

 You can hear the scratchy sound bites now. That $2.53 isn't a surplus, it's just slippery accounting trickery! Hang on, don't lecture us about black holes when you've got a $70 billion one! We'll always do better than you! Nah, you won't. A proxy battle so war-gamed and ritualised and scripted for the hourly news update that it has been stripped of meaning.

Meanwhile, the big question hovering before the nation - is government ready intellectually and fiscally for the economic and social policy challenges of the future - takes a back seat.

This question is not a partisan point: it has nothing to do with who is more deserving of occupying The Lodge at this moment in time. This is a structural issue, as big picture as it gets. Do we have the revenue we need to deliver the services people in Australia expect? Is our tax system geared to promote equality and economic efficiency in the 21st century? Can we afford our deep-etched sense of egalitarianism, and is it worth championing?

Politics around the world is currently attempting to define what government does in an era of globalisation and profound economic uncertainty. And despite all the sound-bite chaff here, our major parties are well aware that hard policy work looms to ensure Australia remains prosperous, cohesive and solvent.

Politics is working out how to neutralise the disaffection of the middle class. In the US presidential campaign, this dynamic is particularly stark. Republican Mitt Romney is struggling to overcome his tycoon typecasting and be the everyman. Democrat Barack Obama is pitching aggressively to the people Tony Abbott would call the forgotten families. Economic conditions in the US make the empathy offensive a necessity. Times have been really tough. People have lost their jobs and their homes, and the country is locked in an anxious debate with itself about its own tattered exceptionalism.

The candidates in a way are proxies for a fascinating debate in economics about whether there's ''good'' and ''bad'' inequality. (Is inequality something we have to have to spur entrepreneurship? Or is it a recipe for economic inefficiency and instability?)

Obama is pinning himself to the aspirations of the middle class - America does best when we all prosper. It's both a political and a philosophical pitch. He's asserting intervention can be positive; government is on your side on health care, or if you are a manufacturing worker in Detroit.

Whereas Romney is Mr Meritocracy and Mr Small Government.

The contrast in their world views is best summarised by jokes the candidates made at last week's Al Smith dinner. Romney of Obama: ''You have to wonder what he's thinking - so little time, so much to redistribute.'' Obama of Romney: ''Earlier today, I went shopping at some stores in Midtown. I understand Governor Romney went shopping for some stores in Midtown.''

Here in Australia, Wayne Swan talks a lot about the sanctity of the middle class and the risks associated with trends or policies perpetuating inequality. In his mind, this is the central preoccupation of the new progressivism.

Tony Abbott (like Romney in the US) has branded Swan's intervention old-fashioned class warfare. Swan's communication lacks light and shade, so it's easy to marginalise his contribution. But this is a worthwhile conversation, whatever your political stripe, because experts tell us there's a link between societal equality and sustained periods of economic growth.

Thinking ahead to our own election contest next year, who ''owns'' middle Australia, or more pertinently, who will claim they do, and on what terms?

The reflexive response is Tony Abbott. Suburban Dad. The daily cost-of-living offensive. Those forgotten families. ''I'll get that carbon tax monkey off your back.'' A centrist in Liberal Party terms, a person comfortable with activist government, and a populist,not a hawk.

But then there are the blanks. If you were asked to outline Abbott's broad-ranging economic policy vision, what would you say exactly? Would you say he's anti-redistribution? No, not viscerally. But you wouldn't say he was for it either.

Then there's events. Current fiscal circumstances and Abbott's anti-carbon tax and mining tax stances boxes the Coalition in to making a virtue of austerity.

Labor is playing up Liberal budget cuts in the states, roping Abbott in. Does Abbott play his hand before the election - arguing this isn't shrinking government, it's big society? Or do voters get a shock afterwards?

And what of Labor? The government has to navigate difficult cross-currents. There's the gap between progressive vision and the money to pay for it, in the here and now at least - diminished political capital makes new taxes a hard sell. There's a gap between fighting equality rhetoric and measly government benefits for society's most vulnerable.

Swan is doubtless sincere in sign-posting this important issue, but the government will have to have the courage of the whole debate, not just the parts that are politically convenient.

Katharine Murphy is national affairs correspondent.

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