Boy, hasn’t Joe Hockey copped it for his calls for a banking debate. From the Government — surprise surprise — from the press gallery, from the media at large and from his colleagues. It’s a rare unity ticket these days that has The Australian’s editorial, Laura Tingle and Wayne Swan all on the same page.

I’ve dished out plenty to Joe Hockey in his time as shadow Treasurer. I’ve cast doubt on his fitness for the role, and much more besides. And there’s no one suggesting he exactly communicated his views effectively early yesterday.

Still, it would be a terrible shame if that was allowed — or more accurately, if we allowed vested interests to use it — to distract from his key message, on which he is exactly right: we need to reconsider how we regulate the banking cartel in the wake of the GFC.

While Hockey is pilloried inside the Canberra bubble (Don Randall? Seriously? Who cares?), key officials were providing ample evidence that he’s right. Yes, Ken Henry at Estimates last night knocked off the idea that governments should be back in the business of regulating interest rates. But Treasury was also saying — bluntly saying — that the banks had no case for raising interest rates outside the RBA cycle and that consideration was being given to how best to provide additional competition for them. And Graeme Samuel would like additional powers for the ACCC to deal with the blatant price signalling the banks are engaging in when they speculate about the need to lift rates.

That comes on top of the RBA’s blunt statement about borrowing costs. Three key financial regulatory institutions are clearly saying we have a serious problem with an anti-competitive finance sector.Treasury, ACCC, RBA. Bank, bang, bang at the banking cartel.

And that’s in addition to the Future Fund’s David Murray calling for Australia Post to enhance competition by getting into financial services more heavily by providing an outlet for services offered by other firms. Christopher Joye has been kicking this idea around for a long time. At the start of the year, Crikey ran a story that the Government had commissioned a scoping study of a similar proposal. Wayne Swan’s office denied it vehemently.

When it comes to competition with the big banks, we can’t forget we have a second-tier of medium-sized banks. They should be the first target of efforts to boost competition with the big four. But medium-sized outfits such as Bendigo Bank are penalised for their smaller size and poorer credit rating — second-tier banks couldn’t afford to use the Government’s banking guarantee, for example, because it cost them more to access than the big banks, due to their credit ratings.

But as the big banks seek to use their secure profit flow from domestic banking, and an implicit government guarantee, to chase growth into riskier activities and foreign markets, there’s a different risk dynamic at work: it’s the big banking oligopoly that presents the greater systemic risk due to their pursuit of high growth and their too-big-to-fail status. The smaller banks, which stick to their core business of domestic borrowing and lending, present much less of a threat to the Australian economy if things go disastrously wrong.

A re-weighting of this comparative risk — which moves us away from the analysis framework provided by the discredited ratings agencies — should be one of the first considerations in any discussion about how to boost competition. And APRA should be focusing more clearly on monitoring the big banks’ chase for growth to see what risks they’re exposing themselves to.

Hockey has broken what has been a political conspiracy of silence on post-GFC banking regulation, based on the assumption that our success in avoiding the catastrophe endured by the US and European financial systems demonstrates that all is well here. Not merely is that assumption flawed, it fails to recognise that the GFC itself has dramatically reshaped our financial system — reshaped it in favour of the banking cartel, at the expense of consumers and businesses. The GFC has opened a major regulatory gap that we need to address.

The really strange thing is, why has it taken a Liberal shadow Treasurer to do this? You’d have thought a Labor Treasurer would have been keen to pursue ways of breaking down the market power of the big banks.