The latest iteration of the Liberal Party’s war on industry superannuation funds comes from its acting, and outgoing, federal director Andrew Bragg. That’s not unexpected, because Bragg used to work at the Financial Services Council, the lobby and propaganda group representing retail super funds controlled by the big banks.

The gist of Bragg’s campaign is that industry super funds have directors appointed by both unions and employer groups and if union executives appointed by unions give their director fees to the union, and the union provides funding to the ALP, super fund members are therefore funding Labor’s “war chest”. The Liberals’ website attempt to mimic GetUp offered an “INTERACTIVE SUPER CHECKER: Which unions get your super funds?” — but only if you register your details with them.

The only media outlet to display any interest in this longest of bows has been The Australian, but even Brad Norington, who covered the story, was sceptical of it. Today, The Oz tried to push the issue along with an editorial. You could almost hear the chagrin when it was forced to acknowledge the long-term and significant out-performance by industry funds over retail funds: “Industry funds have performed well financially.”

Now, we confess to being a little confused. If a union official gets a director’s fee for being on an industry super board, what should they do with it? Given they’re not working for their union while they’re undertaking super business, surely they should give the fee to the union which has nominated them. Ditto an employer representative — after all, for every union-appointed director, there’s an employer-appointed director. But presumably according to Bragg and the editors of The Oz, union officials should be trousering the fee instead, so it won’t go into some ALP war chest. But in 2014, The Oz reported that employer-appointed directors were more likely than union-appointed directors to keep the fee for themselves — noting that the jailed Health Services Union boss Michael Williamson had pocketed his super fund director fees, too.

So if union directors pocket the fees, that’s bad. But if they pass them on to the organisations that employ them, now that’s bad too. And of course the fact that employer representatives might pass on their fees to the companies that employ them — and who also might donate to the Coalition — is mentioned neither by Bragg nor The Oz.

But that’s just a trivial point. Here’s the important thing. Bragg may not be interested in this, but maybe The Australian would be if they gave a damn about their readers’ super. If you want to see siphoning off of not just $50m (Bragg’s figure) but billions and billions of superannuation members’ funds, have a look at retail super.

In 2010, the financial regulator, the Australian Prudential Regulatory Authority, looked at the costs of outsourced services of super funds — how much they were charged by external providers to provide administration, say, or fund management. In some areas, industry funds paid a little more for outsourced services; in other areas, retail funds did, but overall there wasn’t a lot of difference — except in one area. Where retail funds outsourced to related parties — read, the big banks and their linked entities — they paid far more than comparable services than industry super funds.

That is, related party transactions saw members’ funds being siphoned off via overcharging for services. The APRA study concluded:

“when we consider whether the fund has been established on a not-for-profit basis, or as a retail commercial endeavour, we find that the trustees of retail funds pay significantly higher fees to related service providers. In contrast, the fees paid by trustees of not-for-profit funds to related parties are not significantly different than those to independent service providers. “

How much was this siphoning off worth? On average, retail funds were paying an extra $295 per member (2010 dollars) for services to related parties — i.e. the big banks. Doesn’t sound like much, but that’s for each and every member of a retail fund, for millions and millions of account holders. In 2015, the Industry Super Association had a go at updating the figures and found that the total cost to members across all retail funds was around $7 billion for the period 2006-14 — and more like over $8 billion if you assume the money had been left to earn a return for members.

You can dismiss the ISA’s numbers as biased if you like, but you can’t deny the big banks have been siphoning off billions from retail super funds via related party transactions for outsourced services.

Of course, the big banks are also big donors to the political parties, and the Coalition in particular — since 2013, the big banks, AMP and the Financial Services Council have given $2.58 million in donations to the Coalition and $1.71 million to Labor. Part of that funding has come from the billions big banks have earnt from retail super funds overpaying for services from related-party entities.

That retail super funds are having billions siphoned off in overpriced related party transactions should be the cause of a major scandal. Alas, APRA has never followed up its 2010 study. The unit that compiled it was shuttered in 2013. The timing is a funny coincidence, but for retail super fund members, it’s no laughing matter.