Illustration: David Rowe

Illustration: David Rowe

The new year is going to be a defining one in where our nation ventures. There has developed a polarisation of the political world, and love them or dislike them, Tony Abbott and Julia Gillard do not leave people ambivalent.

There is one thing you are certain to get from the public when discussing either in any forum and that is an opinion - a very strong one.

This is the election year and it has turned into a political title fight worthy of intense public interest. Labor is playing on the typecasting of Abbott as the ultra-conservative with a hidden agenda on social policy. This is something I have not seen in any form from Abbott. However, as a tactic, to try to portray someone as the new version of the Spanish Inquisition, it has had some success.

Equally absurd is the wink-and-nod assertion from my side that Gillard is an unrepentant Communist. Abbott, I am afraid to say, is going to greatly disappoint those who are waiting for some new wave of puritanical policy reform. Gillard is not going to commit Australia to deserting the towns and cities for a return to the blue overalls of collective farms.

The election is going to rotate around Labor promising a bright future with no money. The Coalition will say that would require Labor not having left us in the financial predicament of being more than $261 billion in debt. Labor will say it was money well spent and we are not in as bad a position as Europe. We will inform them that we live in south-east Asia, and a comparative analysis in our area is not good. We will remind Labor that a lecture on how we prevailed through the global financial crisis would be a lecture on geology (how we became endowed with coal and iron ore) and geography (north of us is a few billion people making their way to the middle class), and nothing to do with domestic economic policy.

Two years ago I offered a $1000 bet that Wayne Swan would not deliver the 2012-13 surplus that he and Treasury so earnestly said they would. A year ago it looked even less likely, so I doubled the offer and there was only a deadly silence. Now the bleeding obvious has happened and the forthright economic bards are all finding new excuses for the latest fiasco in predictions.

You cannot have week-in, week-out deficits with no real action on cost control and say with a straight face that the shop will make a profit. You cannot keep borrowing money to cover your financial management imbroglio and say that the show is under control.

For me, it is not the deficit that is a problem. It is the debt and the fact the nation's accountant cannot get his actuals within a bull's roar of his budget figures. Sorry, I cannot take them seriously any more. They are simply incompetent, and incompetent management will have no hope of paying off a record debt.

Now our domestic economic mismanagement has to contend with other curveballs that could change the global situation in an instant. North Korea is the match in the powder keg of east Asian politics and has lately been seen happily clapping at its recent developed capacity to launch a three-stage rocket capable of landing a nuclear bomb on Australia.

China continues to expand its military capacity. At this point in time there are territorial questions being asked in and around the South China Sea between China and Vietnam, China and the Philippines, China and Japan, China and South Korea, China and Taiwan, Japan and South Korea, and more. In this environment, our defence spending is as low as it has been in GDP terms since 1938.

The US fiscal cliff should be resolved in the short term - why, after all, would any politician want to sign up for mutually assured economic devastation? However, they will be merely kicking the can down the road to a latter date of reckoning.

In the new year we should celebrate any Australian who has the capacity to earn export dollars and lots of them. Australia has to make the way clear for Australians in business to get going and get ahead quickly. Australia has to have a reality check of exactly what our situation is and completely discount any promise or statement made by the present government as nothing more than air theft. Next year will be crucial far beyond the election.

>> Barnaby Joyce is the Nationals' Senate leader and the opposition spokesman for regional development, local government and water.