Victorian Premier Daniel Andrews’ announcement that industry super funds will support the socialisation of the energy grid will create the wrong kind of circular economy with Labor’s political funding at the centre.

Many people may not know that management fees from industry super funds can end up supporting the Labor Party (or in the case of non-aligned unions, the Greens).

The Albanese government recently wound back reforms to disclosures in industry super funds’ annual statements. This means that while political donations have to be itemised, payments to unions can be hidden in an aggregate figure for non-political donations.

Labor has created a back door to ensure its political donations via industry super funds remain opaque.

Mr Andrews’ surprise announcement about the socialisation of Victoria’s energy grid claims it will reduce electricity prices. The announcement comes on the back of federal Labor’s decision to fund non-priority infrastructure in Victoria. This will commit Victoria to further public funding of up to $200 billion to complete and operate the project over a fifty-year period.

While there is some merit in leveraging Australia’s vast superannuation capital to fund major infrastructure projects, the opaque funding of unions through industry super funds is another slap in the face for the so-called end to the rorts and waste federal Labor promised during the election campaign. Winding back disclosure reforms in industry super funds is the very opposite.

One way that management fees from industry super funds go to unions and then to Labor is through board member’s fees. Union representatives often sit on industry fund boards and are paid to attend a few meetings per year. The money does not go to the individual as income, but is paid to the union. Unions can then use these funds for political donations.

This opaque third-party political funding model is just one way that Labor receives funding at the expense of industry super fund members, some of whom are in sectors where there is no real choice other than to be a member of the industry fund.

Mr Andrews’ socialisation of the energy sector in Victoria creates a vicious cycle that ultimately funds Labor and the unions by drawing on public monies and the money of super fund members. This model is anti-democratic.

The cycle works like this: The Victorian Labor government uses public funding to purchase energy assets and recreates union jobs in the sector. Union numbers and therefore union funds increase. The industry super funds grow and reinvest in government-controlled energy assets. Unions receive money from increased member contributions. Industry super funds pay unions via opaque management fee arrangements. Unions provide money to Victorian Labor. Federal Labor funds Victorian Labor’s infrastructure socialisation, and the cycle repeats.

This is a dangerous challenge to liberal democracy in Australia as we know it. To be sure, Scott Morrison lost the election because he was on the nose with voters. But that is how democracy works. Victorian Labor’s circular economy will only benefit Labor, and it will be harder to vote them out because they will have even more funding hidden by the transparent arrangements that federal Labor overturned despite their endless promises to cut the rorts and waste.

Mr Albanese promised to work with the Victorian government to build infrastructure whatever the outcome at the state’s election in November, including the East-West Link if the opposition wins. But this week’s announcement to fund the controversial Suburban Rail Loop indicates that federal Labor is already betting on an Andrews win in Victoria.

If Mr Andrews’ plan to socialise the energy grid in Victoria goes ahead, it will be harder to dislodge Labor and the unions with their elaborate and lucrative political funding subsidised by taxpayers and industry super fund members (whether they like it or not).

Federal Labor promised to cut the rorts and waste, but Victorian Labor’s plan promises to be the biggest rort and waste in Australian political history. If anyone could let the federal and Victorian opposition know it would be great to hear from them occasionally.

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