The Senate committee said ASIC missed early warning signs of corporate wrongdoing or troubling trends that posed a risk to consumers. It was "a timid, hesitant regulator, too ready and willing to accept uncritically the assurances of a large institution that there were no grounds for ASIC's concerns or intervention''.

ASIC has encapsulated "soft-touch" regulation, "co-regulation" and the idea that problems can be headed off at the pass by education, information and preaching, rather than close and critical scrutiny, accompanied by inevitable detection and condign punishment of those who do wrong.

It has tended to be too complacent about its performance, and to ignore the fact that some of the industries it supervises – such as the financial services industry – contain many unethical, dishonest rogues, all too willing to put their personal interests ahead of clients', and full of people always looking for ways to circumvent the law, or to test it to its limits.

(The parliamentary committee did not add, though it might have, that this culture of testing the law to its limit – presumably deplored by the overwhelming number of good honest chaps – is but a first cousin to the tax avoidance industry, and the corporate and business culture of using "legal" artificial entities, trusts, pretend loans and repayments schedules, and overseas tax havens to avoid paying proper rates of tax. That the culture of this industry is deployed by most of the best chaps and captains of industry, corporations and some of our leading "philanthropists" to avoid paying taxes in Australia might inspire the criminal behaviour of others is never discussed. But, then again, ASIC and the accounting and legal professions have never believed that paying taxes falls within the zone of corporate governance or regulation.)

ASIC has said it was focused on being "pro-active, not just being the ambulance that arrives at the scene of the accident''. But the Senate committee thinks it believes its own propaganda, and that "many people who lodge complaints of suspected corporate wrongdoing with ASIC, including Australia's key gatekeepers, are dissatisfied ... [and think the] regulator is unresponsive and indifferent".

A standard defence of the Australian corporate and prudential regulation system, which embraces ASIC and the Australian Prudential Regulation Authority, reminds everyone that the chummy Australia co-regulation system helped Australia survive the global financial crisis relatively unscathed.

Yes, but, as Professor Justin O'Brien pointed out to the committee: "There is a danger of succumbing to hubris.

"It is true none of our major banks collapsed. But we have seen widespread bad behaviour in the marketplace. We have seen the failure of boutique investment companies. We have seen the failure of managed investment funds. We have seen identified problems in this marketplace; and we are beginning to see through the LIBOR and the currency manipulation scandals [with] Australian banks being implicated in that process.

"If industry really wants co-regulation, it has to actually accept its responsibility for the integrity of that co-regulatory structure rather than simply leave it to ASIC.''

If the report was tough on ASIC, it was feral (and rightly so) on Commonwealth Bank, and on a group of people that the bank had claimed were rogue operators, cheating the bank itself as much as its vulnerable and trusting clients, as they churned their investments and ripped them off. The bank itself continually obfuscated and stalled in facing up to its responsibilities, failed to properly investigate (sometimes, it seems, for fear of how it might be compromised were it to discover the truth), and ripped off the customers yet again by trying to avoid, or limit, damages for the actions of its operators.

How inconvenient that this would come out just as Parliament is about to consider whether disclosure rules ought to be significantly watered down (at the behest of relentlessly lobbying banks) in the name of co-regulation and the assumption that the industry has by now cleaned up its act, with all the "chaps" now able to be trusted for their capacity to put the clients' interests ahead of their own first, second and last.

And how inconvenient too that it should happen against a background of the government spending tens of millions on politically motivated royal commissions and inquiries, designed to show criminality, misconduct, mismanagement and incompetence on the part of Labor mates and ministers.

If the government's hopes for the evidence, and the inclinations of its handpicked judges, counsel assisting and media apparatus are realised, these inquiries will inevitably suggest civil or criminal culpability by Labor figures who were either not sufficiently honest in the first place, or too trusting of others who were not, or too inclined to assume that the systems that were in place (such as state building regulations) would be properly and competently managed and operated. Such malfeasance can be stopped only by very close scrutiny and regulation, one imagines.

Yet the government is simultaneously arguing that, when it comes to corporate regulation, the overwhelming proportion of corporate or financial operators are honest and can be trusted to do the right thing, that doing the wrong thing will be obvious and automatically detectable, and that the chaps can manage the chaps over cups of tea, and a few (but a diminishing few) prosecutions with mild penalties from time to time.

This double-face, and endorsement of the need for the "light touch" and the "co-regulation" approach, is presumably also critical to the reception to the "Son of Wallis" inquiry into the financial system currently but quietly reviewing how corporate regulation is occurring in Australia.

An even lighter touch is, after all, what almost all of the "stakeholders" say they want. (Even the Senate committee, in its report, has fallen for the modern notion that the stakeholders of agencies are the interests that could be adversely affected by anything the agency does (which is to say, vested interests) rather than the public, on whose behalf and for whose interests the agency exists. While there is always room for argument about the lightness of the regulatory touch, and the spirit of co-operation that those being regulated may exhibit, the mere fact that people with power to damage the public interest would prefer not to be controlled, or to be spanked only occasionally and lightly, is hardly ever the critical consideration.)

A sickly system of corporate regulation fits in with a general crisis in the system among most of the watchdog, accountability and check-and-balance systems in operation in Australia. As I wrote on Wednesday, many are losing their way.

The most general and depressing sign, evident in the National Audit Office, was an increasing focus on paperwork, process, procedures and "ticking off", and a declining critical scrutiny on value for money, public interest and concepts of public stewardship. One sees bodies that have become conflict-averse and media-averse, and terrified of saying or doing anything that might draw political wrath upon them, particularly in an environment where many are struggling with, as they see it, inadequate budgets in decline because of efficiency dividends and general cutbacks in government.

Perhaps the lights are going off everywhere, at least at the federal level. Perhaps we are at the end of an era which began about 40 years ago, with the adoption of the Kerr report on reform to administrative law, its creation of the Ombudsman, the Administrative Appeals Tribunal, the Judicial Review Act, and freedom of information legislation, and a host of reviews and reports on improving public service, government financial accountability, efficiency and effectiveness, and substantial change in the level and quality of political scrutiny and control.

During this time the professionalism of review and control of public administration improved, as did, generally, the quality of expenditure review by ministers and Parliament. Formal rules were developed on conflict of interest, the behaviour of public officials, the principles of fair tendering. government departments were reorganised, and there was a great deal of attention to matters such as leadership, efficiency, effectiveness and responsibility to the public interest. There's also been a focus on equity, access and equal opportunity.

Perhaps it is becoming a bit of a bore simply because many of what were once radical ideas have been accepted, integrated into practices and are now routine and hardly controversial. After all, many of the changes were designed to become the DNA of public administration, no longer radical or confronting ideas. When everyone agrees, more or less, one moves on to other projects, ideas, perhaps ideals.

Yet it is far from clear that many of the reforms have been bedded down, or that everyone in the public administration is now behaving according to the ideal. And it is far from clear whether the residual watchdog agencies are well positioned, organised or motivated to make much of a fuss when they aren't. Rather than watching the sheep in the paddock, the watchdogs are barking at the passing traffic, or, often, engaging in non-stop activity of dubious value but of unlimited interest to dogs while the sheep are entirely untended.

The soon to be abolished Office of the Australian Information Commissioner complained ceaselessly of scarce resources from the time of its establishment in late 2010. Yet it had 90 people, and if it was swamped with work, that flowed inexorably from the bureaucratic shape it adopted, one that enabled its quasi-judicial arm to produce only about 200 decisions in three years; an average, say, of two per employee. Had the office deployed a third of its staff as interventionist busybodies with a licence to interfere once decisions were delayed or about to be refused, among the 10 top government agencies (which receive 80 per cent of requests), the office might never have become, as it did, the greatest single obstacle towards cheap, quick and efficient provision of access to government information.

Similarly, one could never have any particular confidence that all was well in the Commonwealth law enforcement system simply from the Australian Federal Police annual report on complaints against police, nor the long-established complacency of the all but invisible Australian Commission for Law Enforcement Integrity. Every state force has had to face humiliating royal commissions and similar inquiries. The results have not been pretty.

There is no particular reason to think that the AFP has in place systems and controls that would prevent the sorts of abuses that have occurred everywhere. There is every reason to think that the official culture (of hostility, opposition and resistance to external review) means that miscreants can develop confidence that they will not be caught and punished.

Some might think that avoiding trouble, and potentially harmful publicity, as a result of having tamed and timid guardians is safer. The trouble is that better guardians can head off trouble at the pass – before they become big scandals and bring down governments.