If the superannuation wars are over, then the good guys lost

And reassuring it would be, but for the fact that the good guys actually lost this one.

Those of us arguing against the ever-growing sequestration of income - compulsory regardless of personal circumstances - with massive fees and, at times, abysmal service, were defeated.

The forces of big super prevailed. To the victor go the spoils.

It's hasn't taken the new government long to tip its hand. Labor will lean on super funds, especially industry super funds, to use their financial muscle to support Labor's policy goals.

Indeed, it was reported that former prime minister Paul Keating urged super funds to invest more in Australia or lose their social license. The emphasis seems to be in areas like the energy transition and social housing.

It's hard to see how this is in the best interests of fund members in the long term. One participant even argued we need to leverage super for 'nation building' ... a phrase synonymous with bad investments.

Perhaps someone should get Tony Woodford and Nat Russell from the fictional Nation Building Authority on the case.

But this is no Utopia episode. Of course, reassuring noises were made about not forcing funds into bad investments, but it's clear that super will become more about the national interest at the expense of members' interests.

In fact, you can see a bad trade-off beginning to take shape.

The government is happy for the super industry, especially industry super, to use its significant financial clout - provided it gets a say in how and where that power is used. The government will plug the leaks from the system and everyone gets to clip the ticket on the ever-increasing pool of trapped funds.

The government will also embolden super fund shareholder activism, and encourage funds to incorporate broader 'stakeholder' concerns and macro policy considerations in their decision making. Many funds, which clearly want to move in that direction anyway, will be happy to oblige.

At the same time, it will shut down the control and options for fund members. It's not clear how this is supposed to make things better for retirees, but this isn't the only problem with this model.

Another big concern, picking up on Michael Roddan's point this week, is that the government will muscle the super industry into funding marginal infrastructure projects or paying inflated prices for privatised assets.

As we have seen in the past, in order to justify the price, the government agrees to a number of restrictive caveats that prevent competition and leave consumers worse off. This is quite aside from the governance and performance problems that have plagued many public private partnerships in the infrastructure space in recent years.

When it's well designed and the partnership involves an experienced and appropriate private sector partner, PPPs can work well, but there are significant downside risks. Especially when the investment is motivated by social or political goals, not financial ones - such as social housing.

Even if the returns stack up, the already sky-high fees can only increase with the complexity of the investment.

Unfortunately, this is another area where members will lose out. Labor is unlikely to take up the previous government's tough line on fund mergers and performance transparency and benchmarking. Underperforming funds will be protected.

It's important to understand that the super wars were ultimately a conflict between the super industry (which includes the funds' management and unions) on one side and super consumers (which includes self-managed super funds) on the other.

At times, it was erroneously portrayed as a fight between industry super and retail superannuation, but retail super has performed so poorly that, other than a few related parties, it has almost no defenders left.

The previous government, for all the good they did reforming the sector, could never bring themselves to go all-in for the consumer the way that the industry did in opposition to measures like super for housing.

So while the previous government opened super for emergency access during the pandemic, opposition from Labor helped ensure the union campaign to lock in super guarantee rate increases succeeded.

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Super has become of almost existential importance for the unions, and Labor will almost certainly seek to entrench the union/industry position in government.

You can expect the new government to act decisively to quarantine super from future attempts to access savings to meet life's necessities. As was once the case with Medicare, once nailed shut it is hard to see a future Coalition government reopening the box.

The end result is the somewhat absurd situation where the government cajoles super funds into investing in housing for others, while prohibiting members from investing their super in housing for themselves.

Housing has such an obvious connection with retirement and living standards that it would make sense for super funds to almost treat housing as a retirement asset within super or like super. Superannuation money could be a boost on both the supply and demand side.

If there is a lesson to learn from the super wars, it's that when big government, big industries and big unions join forces, it's the consumers who lose out. Perhaps something to keep in mind for the upcoming Jobs Summit.