Treasury spokesman Joe Hockey says Shadow Finance Minister Barnaby Joyce was "absolutely right" to highlight the government's debt position, but disagrees that Australia may not be able to repay its debt.
"Australia can repay its debts, no doubt about that," Mr Hockey told ABC Radio on Wednesday.
Treasurer Wayne Swan said the discrepancies between Senator Joyce and Mr Hockey's comments proved the coalition's economic team was a divided, brawling rabble.
"The slapdown of Mr Joyce by Mr Hockey today shows just how shambolic the Liberal Party team is and how little they understand the major challenges facing the Australian economy," he told reporters.
Australia had the lowest deficit and debt of any major advanced economy, Mr Swan said, adding that Senator Joyce's comments were damaging to Australia's international reputation.
"When the alternative government go out and slur our record and ... push that commentary into the international arena, that is damaging to Australia," he said.
"It just shows how inexperienced these people are, and how dangerous they are, and what a risk they are to the economic future of this country."
Senator Joyce was more circumspect about the government's ability to repay debt when he arrived at Parliament House on Wednesday.
He said the trajectory of government debt was not sustainable.
Asked if he thought Australia could risk defaulting on its debt, Senator Joyce told reporters: "Not now, but if we continue on this trajectory ... how long can this go on for?"
Liberal backbencher Dennis Jensen said the senator was "probably right" about Australia's ability to repay debt.
"Immediately, right now, today, that's probably correct," he said.
"But obviously in the longer term you will have capacity to repay debt."
Australian Greens Leader Bob Brown said Senator Joyce's comments did not help the wider debate on winding back spending and interest rates.
"And I don't think Barnaby understands the difference between the debt accrued by private enterprise, which is huge, and government debt."
However, Country-Liberal senator Nigel Scullion said Senator Joyce had always reflected the concerns of average Australians.
"And they are concerned," he said.
"People listen to what he's going to say ... they know when Barnaby Joyce stands up they are going to reflect the concerns of everyday Australians."
Liberal frontbencher Eric Abetz said it was wrong to put pressure on Senator Joyce to resign given cost blowouts in Labor programs.
"I would have thought Lindsay Tanner, with those blowouts, as finance minister should be resigning, not the one that is sending a warning that Australians have to look after their debt levels."
Senator Joyce had a style all of his own, his Nationals colleague Fiona Nash said.
"But he very genuinely understands those finance issues and the needs of the people out there in the community."
Another of his colleagues, John Williams, said Australia did not want to be telling international investors that it would default on its debt.
"But just be aware there is a limit to debt," the Nationals senator said.
Independent senator Nick Xenophon said the economic debate had been stimulated by Senator Joyce.
"That's not a bad thing, he said, adding it was quite legitimate to ask and raise the issue of how public money was being spent.
Liberal frontbencher MP Stuart Robert said it would be up to the coalition to once again pay off Labor's debt.
"The coalition is in the business of getting the public accounts back in order," he said.
"We've done it before, we'll do it again."
Labor backbencher Mark Dreyfus said Opposition Leader Tony Abbott had no choice but to sack Senator Joyce over the remarks.
"That sort of irresponsible comment is not something that should be allowed to stand," he said.
"Mr Abbott should either repudiate the comments or sack Senator Joyce today."
Nationals leader Warren Truss said the reaction to Senator Joyce's comments showed he was getting under the government's skin.
"He's telling the truth, he's telling people there will be serious implications of this debt binge and that Australians will suffer for it in the long term," he said.
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