If there is a "real agenda" for the forthcoming financial system inquiry, it is taking time to emerge.
Treasury has developed a tidier form of the
terms of reference for the inquiry, and these were released on the morning of Banking Day's final edition for 2013.
The document is anodyne, however. In shortened form, it says that the inquiry must:
-- refresh the philosophy, principles and objectives underpinning the development of a well-functioning financial system.
-- identify and consider the emerging opportunities and challenges that are likely to drive further change in the global and domestic financial system.
The inquiry will recommend policy options that:
-- promote a competitive and stable financial system that contributes to Australia's productivity growth.
-- promote the efficient allocation of capital and cost-efficient access and services for users.
-- meet the needs of users with appropriate financial products and services.
-- create an environment conducive to dynamic and innovative financial service providers.
Like the original draft terms, these give little hint of the direction the Government would like the financial services policy agenda to take.
This could be that of the big banks' preference for lighter regulation and the winding back of elements of the post-GFC reform agenda. Hopefully, the banks will be specific about which rules they want reversed or eased and why.
It could be a skewering the Four Pillars policy and a fostering of big bank mergers, an idea that can never be ruled out as inferior to the status quo.
Or it could be enabling the sale of one of more of the big banks to an irresistible foreign buyer (from China, Singapore or the UK, perhaps).
Numerous topics are worthy of detailed study. These include:
-- A long-term perspective on the waves of mergers, dating from the early 1980s, that set the foundation for the present industry structure.
-- The effect on industry structure and efficiency of the privatisation of government banks in the 1990s.
-- The (still continuing) demutualisation of building societies and insurers (which also dates from the 1980s).
-- Bank takeovers of life insurance and wealth specialists (a late 1990s and early 2000s phenomenon).
-- The relentless mergers of more than 700 mutual credit and building societies unions 20 years ago, bringing them down to fewer than 100 today.
Understanding industry structure warrants no mention in the terms of reference.
More fashionable topics that get a guernsey include '"developments in the payment system", which is really a nod to the scenario that one or other of the Silicon Valley giants is about to become a banking leviathan.
"Innovations" is touched on, but it is obstacles to innovation and identifying the real locus of entrepreneurship in finance that might need scrutiny. Why, for instance, has peer to peer lending made no impact in Australia, while payday lending is thriving?
What are the reasons monolines - in credit cards and exotic financial risk insurance, for instance - are either perpetually deterred from attempting market entry or an abject failure when they try?
And what is one to make of the damp squib of the threat of foreign bank entry?
Also, what is that stopping Australia's best small banks, such as AMP Bank, ME Bank and the many new mutual banks, gaining traction?
And what else might revive a flow of non-bank finance, a sector that recently received A$20 billion in federal aid? Recall that the market share of the Big Four in home loans bottomed out at 59 per cent in the closing years of the boom, compared with 90 per cent now.
Awkward policy priorities are already being proscribed by some in the know. John Laker's dismissal in November of the merits of narrow banking - a big theme in Europe - may provide an indicator of an anti-intellectual undercurrent to the entire project.
One regulator, the Reserve Bank, is more or less off limits for critical appraisal. Hopefully, the insular APRA will not get off so lightly.
The actual structure of the regulatory arrangements is not likely to be challenged, with the late 1990s model in use now (adopted wholesale from the Wallis review) recently being emulated in the UK.
The operational performance of regulators will be a sharp topic.
Hopefully, attention will shift from ASIC to APRA, which will have to defend its slavish adherence to the G20 regulatory reform program, its supervision priorities since the GFC and its productivity. It takes more than three years for it to decide on applications for banking authorities from internationally active banks, for example.
But there is at least some glimmer of interest in the case for explicit bank taxes. Joe Hockey's one-time adviser and now Australian Financial Review columnist, Chris Joye, reported last week that the treasurer, Joe Hockey, is privately supportive.
There is talk of "efficiency" and meeting the "needs of users", but little of the costs to users or the costs to banks of producing these services.
One service the inquiry can do the community is to shed light on unit costs, in detail, across the financial spectrum.
The escalating share of company profits attributed to financial services firms demands analysis, mainly in the context of the changes in industry structure highlighted above.
And please let there be no hand-wringing over asset allocation in superannuation, a A$1.3 trillion pool that's there for the taking.
The real risk to the banking industry may be the haphazard context in which the Government has progressed one of its signature policy priorities.
Australia's Liberal/National Coalition Government is a thorough mess and likely to trail in the opinion polls (as it does now) for the two and a half years to the 2016 election. Like its predecessor led by John Howard, there is every prospect this government will be casting around for "reform" ideas late in its first term.
A chronic need for new tax revenue is a particular threat.
The industry may not be in the firing line at the moment, but it might be soon.