Australians who spend a significant chunk of time overseas often complain about how cut off they are from news of the homeland: unless a news item can be tied to an adventurous croc or Kylie Minogue, chances are, it won't make overseas bulletins.

Usually this is lamented in a mixture of hurt pride and outrage (doesn't the world know who we are?). But perhaps at the moment, it is better for our international reputation that the rest of the world remains blissfully unaware of what's going in Oz.

On the surface, the facts and figures hardly look worrying. Treasurer Wayne Swan, voted "the world's best finance minister" by Euromoney magazine last year, has just handed down his fifth budget, in which he scraped together an (albeit nominal) surplus of $1.5bn (£950m). Having survived the 2008-09 global financial crisis virtually unscathed, Australia's unemployment rate is at 4.9%, the Aussie dollar is historically strong, we have a AAA credit rating and, as Swan argues, over the next two years we are set to outperform every major advanced economy.

Yet as Europe grapples with truly existential questions, Australia too is trying to convince itself that it is having a tough time. True, this week has seen billions wiped off the Australian stock market – Qantas took a huge hit – and the Reserve Bank made another small cut to the cash rate to buffer against the "further weakening in Europe" and "slower Chinese growth." Meanwhile, consumer confidence is down and still spooked by the global financial crisis. But the bottom line, as the OECD recently noted, is that Australia is in an enviable economic position (particularly with all those mineral resources and China).

Yet political debate here has been consumed by the idea that we're under threat and feeling the pinch. One of the biggest political arguments at the moment is the suggestion that foreign workers are taking Aussie jobs – thanks to a deal that will see 1,700 foreign workers brought in for a $9.5bn mining project in remote Western Australia. And Prime Minister Julia Gillard and her colleagues face a wipe-out at next year's federal election, in part due to anger over the introduction of a carbon tax on 1 July, and the widely held perception that Australians can't afford it.

The government is rolling out billions of dollars of compensation to small businesses, families and pensioners – some of it before the $23-a-tonne carbon price starts – but this has done nothing to lift their position in the polls (which has Labor at a seriously woeful 26% primary vote).

The hard-done-by vibe hasn't been helped by the fact that the government has spent much of this year talking up a "class war" – pitting low-income earners against big bad billionaire miners.

It's not that we're not aware of the European situation. The news may not flow freely from Australia to the rest of the world, but the news of the world certainly flows freely here. We've seen pictures of rioters on the streets, desperately unhappy about austerity measures. We've seen the footage of concerned conversations between German chancellor Angela Merkel and whatever European leader she happens to be meeting.

But Australia's political debate doesn't seem to register the difference. We are obsessed with rising costs and perceived threats to our quality of living. The coalition is fanning the flames of this. Opposition leader Tony Abbott used today's rate cut as proof that the government doesn't understand how hard it is for Australian families and their mortgages. "These are very, very difficult times," he said.

And Abbott has predicted the carbon tax will destroy the economy in a slow, painful death. As he said this week: "It's going to be a python squeeze rather than a cobra strike."

The government isn't necessarily helping matters either. Swan may be insisting that Australians keep the European situation in "perspective". But Labor is also talking in terms of economic storm clouds. According to the government, last month's budget needed to be "tough" and Labor has been at pains to tell families that they understand how hard it is right now – stumping up extra payments to prove the point. One wonders how Australians will cope if times really do become difficult here.

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