The Treasurer's proposed financial system Inquiry should focus on what needs to be done to facilitate improvements to Australia's physical and virtual infrastructure, a senior banker said yesterday.Westpac's chief executive for Australian financial services, Brian Hartzer, said: "Government is concerned about debt, but, as the Treasurer has said, we need to start differentiating between good and bad public debt."Good public debt involves investments… that create wealth and opportunity."Speaking at a Trans-Tasman Business Circle lunch in Sydney yesterday, Hartzer said Australian government debt currently sits at around 21 per cent of GDP, compared with around 82 per cent in Germany, 85 per cent in Canada, 91 per cent in Britain and 101 per cent in the United States."So, provided that the debt is used to fund the creation of productive infrastructure rather than current period spending, we should be open to a modest increase in public debt," he said.Hartzer said another important area to address was how to channel more superannuation fund investment into infrastructure.He said: "With an ageing population that increasingly needs fixed-income solutions rather than pure asset accumulation, there should be a natural opportunity to link these sources and uses of funds."Hartzer would also like to see a critical examination of the impact on economic development of the growing regulatory burden on banks."Banks also have an important role to play in financing the economy. But the cumulative effects of past and mooted changes in capital, liquidity and conduct regulations will have a material impact on banks' business models, and may limit our ability to support our customers' requirements for growth."The potential for unintended consequences is significant, which is why we welcome a broader view by the Inquiry of these cumulative impacts."