Grattan on Friday: Saturday is crucial for Albanese but July 23 is more important for Morrison

Just under two years ago, Anthony Albanese was expectantly awaiting the “Super Saturday” byelections. Of the five contests, the outcomes in two, Longman in Queensland and Braddon in Tasmania, would be critical for Bill Shorten’s future as opposition leader.

Albanese had been circling Shorten, whose unpopularity was seen as a potential drag on the ALP’s prospect of winning the 2019 election. Everyone knew what the game was. But Albanese could only have a chance of moving if Labor lost one or both seats.

It didn’t happen and Albanese’s ambition was thwarted. Shorten was a hero and his victory helped trigger Malcolm Turnbull’s downfall. But the following year Shorten lost the election.

Just maybe, Albanese would have won in 2019. It’s one of the “what ifs” of history.

Read more: Border closures, identity and political tensions: how Australia's past pandemics shape our COVID-19 response

Now Albanese finds himself in Shorten’s nail-biting situation. Saturday’s Eden-Monaro byelection is vital for his leadership. Unlike 2018, there’s not a pretender seriously circling. But if Labor lost this seat it holds on a margin of just under 1%, there’d be muttering and likely destabilisation, which usually ends badly for the incumbent.

As the campaign neared its end, NSW Nationals leader and deputy premier John Barilaro, who flirted with running for the seat, was less than helpful to the Coalition when he said, “The loss actually in this byelection is … that we’ve lost [former ALP member] Mike Kelly”.

Amen to that, Albanese might say. Kelly’s resignation (on health grounds) threw the opposition leader into an unwelcome high stakes contest.

If Labor retains Eden-Monaro, that will be a boost for Albanese but say nothing about his prospects for the next election. Nor will it necessarily increase his ability to cut through, an enormous struggle during COVID. Even the development of policy is difficult for Labor in the new world.

This week underscored how volatile things are, when 36 Melbourne suburbs were locked down, and Victorians became the guests other states didn’t want to receive.

Victorian premier Daniel Andrews has a heap of trouble: high case numbers; a scandal around the quarantine security; the complications of a selective shutdown.

Locking down people once was hard enough – having to do it a second time becomes even more difficult, especially when those in one suburb see themselves being treated differently from people in another close by.

One Age reader wrote, “As a single person with no immediate family and already working from home, a month in effective solitary confinement is utterly devastating. … Literally all my friends live five minutes away, but all in non-lockdown suburbs. The sense of isolation is total and overwhelming. We are not ‘all in this together’.”

The question now is whether the new wave can be essentially confined to Victoria. The (unknown) answer will be relevant to the federal government’s next round of economic decisions, which are being considered now.

If this Saturday looms large for Albanese, July 23 is more important for Scott Morrison. A Liberal win in Eden-Monaro would be a sugar hit for the PM but it would do nothing to solve the huge problems his government is grappling with.

July 23 is when the government brings down its economic statement.

The statement will update the economic and budgetary numbers. It will also indicate what changes the government will make to JobKeeper - based on a Treasury review - and outline plans for after the scheduled late-September end of the six-month emergency JobKeeper and JobSeeker payments.

JobKeeper, a boon for businesses and workers, had certain design flaws, due in part to its hasty construction. Notably, some people receive more than they were paid before the crisis.

By late July the program will be due to run only two more months. It has been argued that alterations wouldn’t be worth the administrative effort. But if the scheme is to be extended for some businesses, it would be sensible to get it right quickly.

The government finds itself in a bind as it contemplates what to do post September, and indeed how much to put in the July statement.

Morrison and Treasurer Josh Frydenberg acknowledge there will be industries needing continuing assistance, including aviation, tourism, hospitality and parts of the entertainment industry. They also recognise business generally wants early certainty about the months after September.

If the July statement fails to provide enough detail about the next phase, that could damage confidence.

On the other hand, it’s risky to lock in initiatives for a future that might change dramatically in a couple of months, including on the health front. The government has to leave itself flexibility to adjust settings if necessary.

The government knows if support is removed too early, more businesses will collapse and even more people will be unemployed. But if it props up enterprises that haven’t a long term future, it will hamper the structural adjustment that will be part of this recession.

Read more: Politics with Michelle Grattan: two leading economists on Australia's post-COVID economy

The July statement is expected to indicate where the JobSeeker rate (currently around double the pre-COVID level) will go after September.

There will be a fall but how far? It’s generally agreed the rate can’t “snap back” to the old much-criticised amount. But Morrison won’t contemplate any level he thinks could be a disincentive to people seeking work. One option would be to phase the reduction.

Morrison stressed this week just how complex decisions now being considered are, with multiple “moving parts”.

Once it navigates the July statement, the government’s attention will turn to the October budget.

It has raised expectations this will contain significant reforms, always easier to pledge than deliver.

But one reform we won’t see any time in the foreseeable future is a change to the GST, despite the present buzz around that tax.

The NSW government elevated the GST debate again this week with the release of a tax reform review, chaired by business figure David Thodey.

Among other proposals, the report recommends state governments in consultation with the federal government look at options to lift the GST rate and/or expand its base over the medium to longer term. This would facilitate moving away from “harmful taxes including inefficient state taxes”.

Read more: Victoria is on the precipice of an uncontrolled coronavirus outbreak. Will the new measures work?

When treasurer in the Turnbull government, Morrison had ambitious plans to shake up the GST. After an analysis indicated it wasn’t worth doing, his aspiration came to nothing.

However rational GST reform might be, can anyone imagine the federal government having the stomach for a full-on debate about it as the country climbs out from under the virus? Or the public tolerating it? It would be a gift to Labor.

No wonder Frydenberg was quick to say the government has no plans to increase it.