The Kevin Rudd narrative is a strange affair. One day he’s blasting extreme capitalism and bank pay packets and the next he’s sitting down with 150 business leaders as commander in chief during a rolling economic security crisis.

The solutions that Rudd is proposing is largely an offshore issue that would have worked well on the massively leveraged Bear Stearns and Lehman Brothers.

Australian banks have largely managed their risks prudently whilst still making a fortune thanks to delivering the world’s most expensive banking system to long-suffering Australian citizens.

However, at least Rudd has triggered a long overdue debate that will throw up some classic examples of hypocrisy and conflicts of interest.

There was Elisabeth Knight in The SMH today cautioning against Rudd’s move and concluding her column by declaring that Macquarie’s “excess bonus-granting days are long gone”. No disclosure that Elizabeth is married to well-paid Macquarie media analyst Alex Pollack.

It was also most amusing to hear everyone from Malcolm Turnbull to News Ltd executive chairman John Hartigan point the finger back at shareholders when it comes to responsibility for excessive executive pay.

That, of course, would be the same Malcolm Turnbull who made about $50 million from the original Millionaires Factory, Goldman Sachs, and the same John Hartigan who works for a bloke paid $40 million last year who denies 70% of the News Corp shares a vote. And they would be the shares his family doesn’t own, of course.

There is so much that needs to be changed in the Australian financial services sector, but linking executive pay to risk management is just one small component.

The really easy reforms would include things like requiring super funds to reveal the pay of top executives. Why should they vote on everyone else’s pay without revealing their own?

Even better, the Government should close the loophole which requires public companies to disclose the pay of their top 10 “executives”, the effect of which is that shock jocks like Alan Jones at Macquarie Radio and fund managers like John Sevior at Perpetual are not included in the public figures even though they earn millions.

However, the biggest and most fundamental reform needed is a separation of debt and equity in the economy.

It’s all very well to say shareholders should vote down executive pay, but the institutions which so blundered on banking risk also happen to be some of the largest fund managers in the world.

Swiss giant UBS is the world’s biggest fund manager for the wealthy and has just been bailed out overnight after dropping more than $50 billion on toxic loans.

The same applies in Australia where the Commonwealth Bank is both the biggest bank and the biggest fund manager with $100 billion under management.

Are fund managers across the country really going to launch a campaign against executive pay at financial institutions when they are the most overpaid group in the community?

By launching an attack on bank pay, Rudd has opened fire on the entire business community because the boards of the big banks also happen to dominate the boards of our biggest companies and fund managers. That will make today’s discussion in Sydney very interesting.