A new discussion paper released by the Liberal National Party Government canvasses views on electoral reforms ranging from scrapping compulsory voting to public funding of elections.
Senator Joyce says optional voting could lead to Australian politicians becoming less honest and more prone to self-censorship.
He says the move would be out of keeping with Australian culture.
"I think compulsory voting in Australia is important," he told ABC radio's AM program.
"If voting wasn't compulsory, a lot of people just wouldn't bother voting. At times, you can only get half the people in America to vote.
"In Australia I wouldn't be surprised if it ended up with 30 or 40 per cent of the people turning up to vote and I don't know whether that would be a good outcome."
He also believes a move away from compulsory voting would give oxygen to extreme political groups.
"The next thing is you'd have a rise of the capacity of parties on the far right ... you'd have a White Australia policy and things like that coming back into the fore," he said.
"On the far left we'll have a carbon tax on breathing and people saying all development is evil.
"Both these sides would proliferate because people who are motivated in that way are motivated enough to turn up, but the vast majority in the middle would be worried about getting the kids to cricket or doing the shopping or have other things to do around the yard, and they probably wouldn't turn up to vote. "
Senator Joyce says compulsory voting forces politicians to be accountable.
"You have to make sure you don't startle the troops. If you startle the troops you will not get voted in," he said.
"In America, you have to startle them quite a bit to get them out to vote. You have to change your message around completely.
"It has to be a message that works more to the fringes, because [the motivation is] getting people out of bed to vote rather than knowing that they have to vote, because it is compulsory."
Federal Treasurer Wayne Swan yesterday , describing the proposal as "absolutely stunning".
But Senator Joyce says a debate is warranted.
"This is a discussion paper and people are entitled to their views and to express them," he said.
"I see Mr Swan and others hyperventilating over it and I don't think they should. I don't think they should be scared of a debate.
"I think a mature debate is something that is you know always warranted and I look forward to people having it."
Opposition frontbencher Malcolm Turnbull agrees it is worthwhile to have the debate, and says the US provides examples of the pitfalls of optional voting.
"Hot-button issues that will get people up and get them out to vote... that's why you see issues like guns and abortion and gay marriage and others being issues that get a lot more focus in America than probably they should," he said.
New South Wales Premier Barry O'Farrell has also spoken out against the proposal.
Mr O'Farrell says he has no plans to make voting voluntary at the next New South Wales state election in 2015.
"I think as citizens we have rights and responsibilities. One of our responsibilities is to vote," he said.
"We've got no plans to change our compulsory system of voting. I'd hate to have a situation [like] the United States in 2004 where a president is elected with the support of just 27 per cent of the population."