RUBY:

From Schwartz Media, I’m Ruby Jones, this is 7am.

As both sides of parliament brace for tomorrow’s by-election in Eden-Monaro, it’s been suggested that the timing of Scott Morrison’s $270 billion defence announcement was as much about votes, as the strategic future.

Today, Paul Bongiorno on what’s likely to happen in the all-in race.

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RUBY:

Paul, what are the issues that are dominating this week in politics?

PAUL:

Well, Ruby, there are two really. There's the impending end of the job keeper payment and the cliff that that would mean for the economy if it was suddenly stopped. And there's the major defence announcement from Scott Morrison.

RUBY:

Paul Bongiorno is a political columnist for The Saturday Paper.

PAUL:

But both these issues are being framed, at least for now, around tomorrow's Eden Monaro by-election, which has been set up as a big test to see whether Scott Morrison's record approval ratings, based on his handling of the pandemic, translate into votes for the Liberal Party.

RUBY:

And in what way does the by-election bring these two things, which seem quite disparate, together?

PAUL:

Well, I think JobKeeper’s obvious - employment has crashed and businesses are teetering everywhere, but particularly in this heavily dependent tourism electorate. But the defence announcement is a bit more interesting.

Andrew Wilkie actually made the point.

Archival tape -- Wilkie:

Well, I think most people were surprised by the announcement, it seemed to come out of the blue and it was curious timing.

PAUL:

He, of course, as a former soldier and intelligence analyst, and he's now an independent MP.

Archival tape -- Wilkie:

My first reaction was that, that is really excessive. You know, we don't need to be spending that sort of money, particularly at this point in time, when there are so many other pressing needs for taxpayers’ money being spent.

PAUL:

Wilkie said the spending announcement was excessive in his view and came at a suspicious time.

Archival tape -- Wilkie:

Now, let's not forget the Eden Monaro electorate includes the headquarters of the Joint Operation Command, a very significant defense installation. When you consider that the Eden Monaro by-election could go down to the wire, it could swing on mere dozens or hundreds of votes.

PAUL:

Numerous defence personnel live in the seat, and as Wilkie said, they'll be delighted with the huge spend Morrison is committing to, even though most of it doesn't happen for another five years.

Archival tape -- Wilkie:

This sort of cash splash pandering to the defense community who live in Eden Monaro - I think it's potentially got a political spin off and I think it's not unrelated to the timing of the announcement.

RUBY:

Right. So what is actually in the announcement poll? What is Morrison promising?

PAUL:

So the prime minister announced 270 billion dollars over the next 10 years on a massive sci-fi arms build up of things like hypersonic missiles and cutting edge weaponry..

Archival tape -- Morrsion:

Australia will invest in longer range strike weapons, cyber capabilities and area denial. As mentioned, we are expanding our plans to acquire long range maritime and land strike capabilities and to invest in more highly integrated sensors and weapons...

PAUL:

This was to combat the new menace presented by our biggest trading partner and hitherto economic saviour, China. And he didn't baulk from mentioning it in the speech

Archival tape -- Morrsion:

Tensions over territorial claims are rising across the Indo-Pacific region, as we have seen recently on the disputed border between India and China, in the South China Sea, the East China Sea...

PAUL:

On closer inspection, much of this is a repackaging with a small boost on the 2016 announcements called the Integrated Investment Plan. Now, many of the projects are not scheduled to commence until the mid 2020s. And already some that were announced with that integrated investment plan four years ago, well, they’ve been delayed.

And you know, Ruby, this more bellicose vision encompasses three general elections and ties Australia into an increasingly isolationist and problematic United States.

Opposition Leader Anthony Albanese supported the direction of Morrison's defence posture, especially its regional focus and the bolstering of our military capability.

Archival tape -- Albanese:

We are certainly supportive of the direction that says we need to concentrate more on our region...

PAUL:

He, like Bill Shorten before him, is determined not to be wedged on defence and national security. But as I was saying, with the curious timing of this announcement of funds and the by-election tomorrow, no doubt the Labor leader is also thinking of the residents - especially the ones that wear khaki - in Eden-Monaro.

RUBY:

We'll be back in a moment.

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RUBY:

Paul, we're talking about the Eden Monaro byelection in the context of the major policy concerns this week. One is defence and the other is JobKeeper. Can you tell me more about where Morrison is with JobKeeper?

PAUL:

Well, Ruby, to get some hard edged perspective, according to Labor, there are 8000 businesses in Eden-Monaro that are propped up by JobKeeper - and they employ 18,000 people.

Now, while Labor is being outspent on advertising in the seat, particularly on commercial television, it is still running hard with one particular message.

Archival tape -- Labor Party tape:

If you think small businesses need more support and can't afford to lose JobKeeper just yet, the Eden Monaro by-election is your chance to tell the liberals that.

PAUL:

So the Labor Party's going straight for the government's throat on this issue.

Morrison really doesn't want to extend JobKeeper. This week, he told shock jock Ray Hadley the jobs subsidy was costing 10 billion dollars a month.

Archival tape -- Morrison:

Well, just on JobKeeper, so not taking into account the old Newstart payment, I mean, that's got a cash burn of over 10 billion dollars a month.

Archival tape -- Hadley:

10 billion a month!

Archival tape -- Morrison:

A month.

PAUL:

And he lamented the fact that the latest budget deficit estimates - that is til the end of May - were already at 60 billion dollars.

Archival tape -- Morrison:

And so obviously we said at the time it was temporary, yet it can't be sustained forever at that level.

PAUL:

But as Hadley noted, the prime minister did leave the door slightly ajar by saying he would have a look at the situation in September.

Archival tape -- Morrison:

We’ve got to get this right, Ray. I know people want to know what's going to happen at the end of September. We gave ourselves six months, not three months, with this program, which means when we make the next decision about the next phase, and there will be a next phase of this, that we get it right.

RUBY:

Paul, hasn't the government already reviewed the program?

PAUL:

Yeah it has. The Treasurer Josh Frydenberg received his department's review of the program and its recommendations five days ago. He's sitting on them, obviously, until after the by-election.

Shadow Treasurer Jim Chalmers says the only reason he's doing this is because he's concerned about a voter backlash.

Archival tape -- Chalmers:

It dawned on them that the Eden-Monaro by-election is not until the first weekend of July, so now they’ve pushed it back so a lot of businesses, which were...

PAUL:

The argument goes if there was not disappointing news in it, the government would have happily released it.

RUBY:

So if there was disappointing news, what would that be?

PAUL:

Well, the most disappointing news would be that the JobKeeper wage subsidy ended completely. The next disappointing news would be that it would be nowhere as generous and maybe it would be too restrictive. That is a number of categories of employees and employers could miss out completely and then have to fall back on an unemployment payment, and already we know the government is going to significantly cut the JobSeeker unemployment benefits. So the bad news, if you like, cascades down.

RUBY:

Have we had any updates on the program?

PAUL:

Well, we did get some analysis this week and it was pretty sobering. The Grattan Institute joined Deloitte Access Economics in arguing more previously unthinkable spending is needed if Australia is to avoid a longer and deeper recession - one that would inflict economic pain on hundreds of thousands of Australians.

The analysis was released last Sunday, and it said that if unemployment is to be brought below five percent in two years time, the economy needed an extra cash injection of 70 to 90 billion dollars on top of the 160 billion already spent.

There are three federal budgets between now and that next federal election. And all of them will demand tough, very tough decisions. Australia's longest serving treasurer, Peter Costello, chipped in this week. He told ABC Radio that it was very difficult to end stimulus programs.

Archival tape -- Costello:

Fran, in my experience, it's easier to turn on stimulus than to turn it off. The last time we turned on stimulus was in 2009 under the Rudd government. Never really turned it off before we got into this pandemic...

PAUL:

The truth is, though, Costello himself didn't have to turn off much for most of his time in government. His last years were marked by big spending that locked in future governments to deficits when the revenue he was collecting collapsed.

RUBY:

So how do you think tomorrow will go? What's likely to happen in the by-election?

PAUL:

Ruby this seat has a kind of mystic status. Unfailingly, the voters of Eden Monaro have picked the mood of the nation at every federal election since World War Two. Except, of course, when everything went strange in 2016 and 2019, when Labor's Mike Kelly took it, but Labour still remained in opposition.

Still, the seat on Saturday is an important weathervane of the national mood at the moment. It's a sprawling, diverse electorate that runs from the suburbs of Canberra, down the Hume Highway to the Victorian border and all the way back up the coast.

It, like the rest of the country, has been hit by the pandemic with burgeoning unemployment. But it was also particularly devastated by the catastrophic bushfires and before that, the drought. So it's no surprise Labor's been campaigning hard on the need for more serious climate change action. Despite that, the Liberals still have a strong chance of winning it back. Morrison's riding high, they've pumped a lot of money into the campaign, and leveraged their incumbency with big announcements. But look, it will be tight. And like all by-elections will change the political narrative in surprising ways after Saturday. These by-elections always do.

RUBY:

Who has the most to lose here, Paul? Is it Albanese as a sort of first test of his leadership, or Morrison who needs the vote of confidence at this time?

PAUL:

Look, I suspect it's line ball. There is no doubt if Labour loses a by-election to an incumbent government for the first time in 100 years, there will be questions and rumblings over Anthony Albanese's ability to be a vote magnet.
But on the other hand, if the Liberals lose, then the high riding of the prime minister in the polls will show that it doesn't necessarily mean that voters are all that enamoured of the Liberal Party itself.

RUBY:

Paul, thank you so much for your time today.

PAUL:

Thank you, Ruby. It's exciting, isn't it?

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RUBY:

Also in the news -

Australia is set to offer safe haven visas to Hong Kong residents, after China’s decision to instate a new national security law.

The law - considered a bid to suppress dissent in Hong Kong - allows for the penalty of life imprisonment for the crimes of subversion, terrorism and collusion with foreign forces.

Since it was imposed, there have been a wave of protests and arrests in Hong Kong, with police firing tear gas, and using pepper spray and water cannons.

Speaking yesterday, Scott Morrison said Australia was “prepared to step up and provide support” for residents of Hong Kong, although his cabinet was yet to finalise the details of the visas being offered.

It comes after the British Prime Minister Boris Johnson said he would offer eligible people in Hong Kong a path to citizenship in the UK.

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And, another 77 people in Victoria have been diagnosed with coronavirus, with the state recording its single biggest increase in community transmission to date.

Victoria has now launched an official inquiry into the state’s hotel quarantine system - looking at the actions of government, hotels, contractors, security and food suppliers.

I’m Ruby Jones, this is 7am, see you tomorrow.