My understanding is that Keating actually envisaged something closer to Singapore's Central Provident Fund as the ideal superannuation system. But we are not a virtual one party, benevolent dictatorship like Singapore has historically been. Hence in order to get such monumental changes through in our democratic system, he had to convince a lot of sceptical, disparate stakeholders. Therefore the compromise we ended up with was the Unions and the banking/insurance/financial services industry being the two disparate interests running the system.
Personally, I have taken a middle way. Didn't have much faith in the financial services run funds, for the reasons you outline. But at the same time, steered largely clear of the explicitly union backed industry funds. Hence I went to Queensland's public sector fund, when it opened to all-comers (even though I'm not from QLD). It was never set up as a Union backed fund, but with the same benefits of an industry fund of non-profit, mutually owned, and consistently good performance. For similar reasons, I'll be interested in how the newly established Vanguard superannuation products will perform - Vanguard obviously being a large player in the mutual funds management sector.
I've always had a strong preference for mutual banking/financial institutions and insurance (for example, health insurance) where possible too. Tend to take my business there. I think my life outlook was heavily influenced by my maternal grandfather who I was very close to. He was a self employed builder. Didn't have a particularly good relationship with the Union movement. But at the same time, having grown up dirt poor himself (fair to say, probably below working class) had no affection whatsoever for the big end of town and it's unadulterated greed. He introduced me to the mutual banking sector (old school building societies and such) when I was first starting out in the adult world.
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