The Rudd media operation has been slipshod by its own high standards of late but the machine fired up on Barnaby Joyce yesterday and worked in exemplary fashion.

The Prime Minister took aim on the issue at his lunchtime press conference announcing a new package of national security state measures (intended to complement Monday’s overhaul of the Skilled Migration program, to send more signals about how in control of our borders the Government is).  Unprompted, Rudd devoted his closing remarks to castigating Joyce, and then he, Swan and Tanner hopped into Joyce in Question Time.

This is where Abbott’s misjudgement in appointing Joyce is really biting.  And I use “misjudgement” deliberately.  It was not a mistake — that suggests a casual error, like he got Joyce’s name stuck against the wrong column when he was preparing his shadow ministry.

Abbott’s strategy in putting Joyce into Finance was intended to exploit Joyce’s fabled “retail politics” skills to sell a message the Coalition had failed miserably to sell since the start of the GFC — that the Government had borrowed too much.  Joyce is doing exactly what Abbott wanted him to do — condense the debt’n’deficits message down to a line that your average pub inhabitant would understand.

The ensuing chaos caused by Joyce, complete with Joe Hockey joining the line-up of commentators and analysts rebuking him, can be directly sheeted home to Abbott.  Far from being out of control, Joyce is operating exactly as Abbott wanted him to.

With a gallery doyen such as  Michelle Grattan coming out today and calling for Joyce to be dispatched, Abbott now has a real problem.  On radio this morning, Joyce was sticking closely to his talking points on the debt default issue — and sounding exactly like any of his more robotic colleagues.

But Joyce is only the idiot fringe example of the Coalition’s difficulty.  The trouble with the debt’n’deficits narrative isn’t that they haven’t found the right way to tell it, it’s that it’s complete nonsense.

That’s why Hockey was making a fool of himself this morning over the issue.  Hockey this morning claimed the RBA backed his claim that Government borrowing was pushing up interest rates and crowding out business.

There is a danger of crowding out — that means because the Government is borrowing so much money in financial markets its squeezing small business which isn’t able to compete with the 800lb gorilla known as the Australian Government to borrow money.

Hopefully Hockey knows this is complete rubbish and is simply being political, otherwise the Coalition is in deeper trouble on economics than we’d hitherto suspected.

The RBA has said that business credit has indeed fallen over the past year, mostly due  — duh — to the GFC. “In large part, the decline in business credit over the past year reflects the repayment of bank loans by listed corporates, mostly funded by equity raisings, with companies reducing their leverage. Corporates that continued to raise debt funding during 2009 tended to do so in non-intermediated markets, rather than through banks.”

And syndicated lending actually went up in the December quarter, when interest rates were rising.  Moreover, as the RBA said vis-à-vis small business, “the contraction in business credit over recent quarters has been more pronounced for large businesses than for small businesses”.

Crowding out because of Government borrowing simply isn’t happening, at least according to the RBA.

Plus there’s the painfully simple truth that Australia has the lowest debt in the OECD — indeed, as Shane Oliver has shown has a level of debt that is not merely a fraction of those no-hopers in the OECD, but a fraction of that of emerging economies.

If Hockey concentrated on the restructuring of the banking sector and the ensuing shrinkage of competition over the past 12 months, he might be onto something on business lending.  There’s a perfectly good case to be made by the Opposition that the Government has failed to support competition in the banking sector out of fear of the impacts of the GFC, and should be moving more quickly to support greater competition.

Hockey has made this argument before when he suggested in mid-2009 that the Government guarantee investment-grade mortgage-backed securities.

But that doesn’t fit the debt’n’deficits narrative that the Coalition has been flogging since Malcolm Turnbull’s fateful decision to oppose the second stimulus package. Indeed, it might complicate the issue and suggest economics couldn’t be condensed to a bunch of folksy utterances about how borrowing is evil.

And to think Hockey is supposed to be the one with economic credibility.