There are three major problems confronting Australian journalism — and the good news about the media inquiry announced this week by Senator Stephen Conroy is that it contains a specific mandate to address each of them.

The first problem is credibility. Very few Australians trust or respect journalists. The revelations about News Corp’s illegal phone hacking in Britain have reinforced that mistrust and, because News Corp dominates Australian journalism, acted as the key catalyst for this inquiry.

The second problem is the collapse of the business model that currently funds quality journalism in the commercial sector, mainly the journalism produced by four newspapers (SMH, Age, Financial Review and The Australian).

The third problem is the concentration of newspaper (and therefore journalism) ownership in the hands of News Limited — a problem that has actually been compounded by the arrival of the internet as a news source, which in terms of audience size is dominated, as in print, by News and other newspaper publishers.

The government media inquiry has been instructed to investigate journalistic credibility by addressing the effectiveness of the Press Council, ostensibly the body that regulates the behaviour of newspapers.

Many people refer to the Press Council as a toothless tiger, but that grossly exaggerates its importance. In reality, it is a meek pussy cat funded primarily by the newspapers it purports to regulate. Its wisps of hot air represent the self-regulation you have when you don’t want any regulation.

If the inquiry can formulate a regulatory structure with teeth — one that compels newspapers (and websites such as this one) to correct their editorial misdemeanours prominently (not buried at the bottom of page two) and quickly (within hours or days, not months) and therefore shames media companies into acting responsibly — that will be a major achievement.

Then there’s the collapse of the funding model for quality journalism, which is explicitly addressed in the terms of reference. The inquiry’s panel — former Federal Court judge Ray Finklestein and journalism lecturer Matthew Ricketson — have been given the task to investigate “how such activities can be supported … in the changed media environment”.

This allows them to evaluate a whole range of alternative funding and subsidy models, as well as how start-ups and entrepreneurs are encouraged and fostered in all kinds of industries in all kinds of countries, to recommend relevant mechanisms that potentially provide replacement funding for existing quality journalism as its revenue sources erode. And to encourage mechanisms to fund alternative journalism start-ups that would expand the 30% of the market that News Limited doesn’t own.

As for the unaddressed issues of bias and of News Limited’s dominance of journalism — these are red herrings. How could any inquiry possibly recommend anything in these areas other than rhetoric? News Corp and bias (often co-jointly) are permanent fixtures on the Australian media landscape, and short of forcing News to divest mastheads or trying to regulate bias — both ridiculous propositions — there is nothing an inquiry could do and therefore no point in putting such spurious topics on its agenda.

Don’t listen to the cynics and the vested media industry interests. The truth is that a retired judge known as The Fink, and former reporter who loves essay-writing, have been handed a grand opportunity by the federal government to make valuable reforms to the fraying institution that is Australian journalism.