There is an uphill election battle in the offing. Labor, the trade unions and retail funds would fight tooth and nail to block the Future Fund or any other public fund enticing people into a low-cost, economy-of-scale and less conflicted government fund.
The government, damaged by the financial services royal commission and struggling to gain voter trust, needs a game-changing policy idea in the finance sector.
Labor and the unions have stolen a march to the high ground on Kenneth Hayne’s royal commission, buoyed by industry funds coming up trumps over badly conflicted for-profit retail funds.
Not that all industry funds are immune from union conflicts and performance issues.
The Hayne commission and Productivity Commission have exposed that super is working better for the well-heeled money managers than many members.
Hence, the Liberals have fallen out of love with the poor-performing retail funds controlled by the banks and AMP.
Conservatives are spooked by the flow of retirement money that will see union-friendly industry funds hit $1 trillion in value by 2024, giving them immense economic, market and political power.
Many Liberals are not enamoured with Labor’s compulsory superannuation, but politically have learned to live with it because of the strong public support.
Some in the party figure that if they are stuck with government-compelled super, why not allow the government to offer a cheap, high-quality and unconflicted fund to drive fees down and performance up?
Of course some small government conservatives like Finance Minister Mathias Cormann have been dead against government involvement in the past, so there are barriers to climb.
Usually a left-of-centre party would wholeheartedly back a government fund.
Ironically, if the government follows through on the idea that Costello and Kelly O’Dwyer have pushed, Labor would certainly oppose it, given its links to unions and industry funds.
Costello would be the prime political target, so in some ways it’s unfortunate he’s the head of the Future Fund, given independent analysts on the left and right think the public fund idea has serious merit.
Then again, the Future Fund is not the only existing public vehicle that could manage retail super, as some insiders at other commonwealth super funds have been eager to point out.