The byelection that means nothing - and also plenty

The Monday-to-Wednesday gathering will have a leaders' plenary session and retreat, and activities focusing on trade and investment, climate and clean energy, maritime cooperation, and long-term challenges.

Albanese relishes opportunities to rub shoulders with other leaders, and it's a big deal for Australia to host this meeting, which affords an opportunity to spruik our middle-power credentials.

But the prime minister's private mood as he greets leaders on Monday will be influenced by the outcome of a strictly domestic weekend event in Melbourne: the byelection in the bayside Labor seat of Dunkley.

On one level, nothing earth-shattering hangs on the Dunkley outcome. Labor could lose the seat and still have a narrow parliamentary majority. Albanese's leadership would remain rock solid.

But on another level, the byelection result could affect the political dynamic for months.

The government has become more jittery about Dunkley in the past couple of weeks.

A Labor loss would be dramatic, sending the government into a spin. The normally quiescent caucus would be agitated. Extra pressure would be put on the framing of the May budget, with calls amplified for the government to do more to address the cost of living, the major issue in the Dunkley campaign.

If Labor holds the seat but only just, the angst will be immediate but limited. A win is a win. Nevertheless, that result would be seen in classic terms as a "wake-up call".

A big swing against Labor would call into question whether Albanese had really got away with compromising his integrity by breaking his word over the stage three tax cuts. National polling suggests he has, but a bad Dunkley result could raise longer-term worries for Albanese on the trust issue.

The announcement of the reworked tax package was timed for Dunkley, despite Albanese's denials. The government has relentlessly pushed the tax cuts in parliament's question time, slicing and dicing their rewards for teachers, nurses, police, women and every other conceivable cohort. Most voters in Dunkley will benefit, compared with where they'd have been under the old stage three plan. But it's unclear how much they will reward the government.

A Labor setback would probably bring a sharper focus on Albanese's style. Already some in Labor believe he should cut back on the high-profile fun events he's seen at. Eyebrows went up last weekend when, after attending a Friday night Taylor Swift concert, he went on Saturday to a celebrity bash at packaging magnate Anthony Pratt's Raheen mansion in the Melbourne suburb of Kew.

Albanese could say he gave a speech to food-and-beverage industry people there, but with US pop star Katy Perry brought in at large expense to perform, this was undeniably a party.

Incidentally, this is the second time the billionaire has managed to lure a prime minister into a situation that didn't play entirely well for him. When Scott Morrison was in the US in 2019, Pratt invited him and the then-president Donald Trump to the opening of his $500 million paper mill in Ohio. But the event took on the hue of a Trump rally, which was awkward for Morrison.

A Liberal flop in Dunkley - a failure to get a substantial swing - wouldn't be the end of Peter Dutton's leadership. The suggestion Dutton should be replaced if he can't win Dunkley is overblown, not least because there is no viable alternative.

Nevertheless, a bad Liberal result would be a notable knock for the opposition leader, because Dunkley is the prototype of the seats he's targeting for the 2025 election.

In the final week, both sides have tried to manage expectations ahead of a result they've found hard to predict. They've set their own benchmarks for what "swing" figure is relevant.

Dunkley sits on a margin of 6.3 per cent. Albanese has painted this as a flimsy buffer, by pointing to a 7.1 per cent average byelection swing against governments in government-held seats since 1984. By contrast, the opposition casts 6.3 per cent as a mountain to climb, saying since the Second World War, the average swing against a government in a federal byelection has been only 3.6 per cent.

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One uncertainty is what the "Peta Murphy" effect will be. Murphy, the popular local member whose death prompted the byelection, increased her margin in 2022, picking up some who deserted the Liberals for various reasons. Will they now return to the Liberals? Labor has been trying to hang onto the "Murphy vote" by saying its candidate Jodie Belyea, a Murphy protege, would carry on her legacy.

Another unknown is the impact of the extensive anti-Labor campaign by advocacy group Advance. Advance, which had a big presence in the Voice referendum, is for the political right what GetUp! has in the past been for the left. If the Dunkley outcome and the post-mortems were to attribute significant influence to the Advance campaign, the group would be emboldened for the 2025 election.

Labor will have spent about $1 million on its Dunkley campaign. The Liberals declined to say what they've spent. Labor national secretary Paul Erickson says:"We estimate the Liberals have easily matched this, and then Advance have (according to Advance) spent a further $300,000 on top of that. So, the combined efforts of the Liberal Party and Advance put the Liberals at a distinct advantage. The campaign to defeat Labor has been 30 per cent larger than Labor's campaign to retain the seat."

After the tension of the Dunkley battle, there's relief on both sides that Labor has flagged it is unlikely to fight the byelection that follows Scott Morrison vacating Cook.