If I have to listen to another month of the Coalition banging on about Labor's debt pushing up interest rates, I think I'll scream.
But with the Reserve Bank waiting to scrutinise inflation data due out next Wednesday to decide whether a rate rise in the middle of the election campaign is necessary, we'll hear plenty more of the debt scare campaign in the coming weeks. It's worth taking some time to pick apart the argument that higher government debt means higher interest rates.
In economic theory, there are only two possible mechanisms through which this could occur. One is so silly to argue it is disingenuous, the other so marginal as to be negligible.
Not that Tony Abbott and Joe Hockey ever take much time to explain their assertion - the debt bogeyman is just too good a soundbite to spoil the illusion with detailed explanations.
Here's what they're not telling you.
The first way in which government spending - financed by debt - could influence interest rates is through the impact on economic activity.
The argument is put something like this: the government is spending sooo much money it is overstimulating the economy, forcing the Reserve Bank to retaliate by lifting interest rates to cool the economy. The government has its foot on the accelerator, so the Reserve Bank is slamming its foot on the brake.
First of all, it is important to remember that not all government debt is the result of stimulus spending. Even if the government had not spent a single cent, its budget would still have gone into deficit due to what economists call the budget's ''automatic stabilisers''. That is, when economic growth slows and unemployment rises, money coming into government coffers from taxes on wages, profits and consumption falls. At the same time, as people lose their jobs, outlays on welfare benefits such as the dole rise.
Eventually, when the level of revenue falls below that of expenses in any given financial year the result is a budget deficit. We're on course to be $40 billion short this year.
To make up the difference the government must sell financial assets called ''bonds'' to investors. The government gets the investor's money up front so it can keep paying its expenses. The investor gets a promise that the government will pay back the money at some point in the future with interest. The government is in debt to the investor.
In late 2008, Australia was faced with the real prospect of a domestic recession caused by the sudden collapse in world trade and confidence sparked by the global financial crisis. The Rudd government decided to intervene and try to stop a vicious downward cycle in confidence and income forming.
It spent nearly $100 billion stimulating the economy with cash handouts, home insulation, school halls, concessions for first home owners and large infrastructure projects.
The result is that we avoided recession and growth is back on track. As a result, the Reserve Bank has returned interest rates to their historical average and is poised to lift them further if it thinks inflation pressures are emerging.
So yes, in that sense, government spending means interest rates are higher now than would otherwise be the case.
But is that such a bad thing? The only way to ensure that we have low interest rates all the time is to have a recession, with lots of people out of work and no growth in the economy.
The next time someone complains about high interest rates ask them this: would you rather not have a job? Or, if you kept your job, would you rather no pay rise this year? The only way to blame the government for higher interest rates is to also maintain that it should have let the economy collapse to ensure the Reserve kept interest rates low.
Silly.
The second economic argument as to why government debt might push up interest rates is through the ''crowding out'' effect - that is, the government, by becoming a competitor with the private sector for funds, reduces the overall availability of funds for business or pushes up the price.
The theory goes that money invested in government bonds is money no longer available to be invested in companies or simply parked on deposit with banks.
This might be true if the economy was a closed system with a limited pool of capital, but it's not. The global capital market is large and mostly liquid. Moreover, there has been strong demand for Australian government bonds - more than could possibly be met - not just from banks, but foreign pension funds and central banks too.
But perhaps, if less money is put on deposit with Australian banks because it is going into government bonds, the banks will be forced to borrow more of their money from offshore. Since the global financial crisis, this has become much more expensive, raising the banks' costs of funding, which could in turn be passed on to borrowers with out-of-cycle increases.
But Australia's net government debt is so small, expected to peak at just 6 per cent of gross domestic product, any impact would be marginal.
Let's be clear: if interest rates rise during the campaign, there is no sensible way in which to sheet blame home to either the government's stimulus packages or its level of debt.
If Abbott and Hockey really want low interest rates, perhaps they should move to somewhere like the US, where interest rates are practically zero - and the jobless rate is 10 per cent, double Australia's.
Still, given the economic qualifications they've displayed to date, their prospects for landing the jobs they want here might be pretty slim, too.
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