In the early months of 2018, Bill Shorten will have the tough challenge of juggling his pitches to Labor's two bases — its progressive and its traditional supporters.

The by-election in the inner Melbourne seat of Batman, which follows the exit of Labor's David Feeney on Thursday, is a race that will be run on the left side of the political field.

The Greens have a great chance to give their one lower house MP, Adam Bandt, a colleague.

Labor will be under particular pressure on awkward issues, especially the proposed Queensland Adani mine and its stance on refugees.

It was notable that this week Mr Shorten, asked about Adani, sounded more cautious and cooler than previously. The Greens, mobilised in Batman on that issue, will pursue him relentlessly.

There is a good deal of pessimism in Labor about the by-election, but some see a few bright spots.

Mr Feeney dragged down Labor's vote in 2016. There is bad blood within the Greens. And Labor's left-aligned candidate, ACTU president Ged Kearney, will strongly prosecute progressive and cost-of-living issues.

While Batman carries high stakes for Mr Shorten — losing it would be a major setback with implications well beyond the forfeit of a Labor number — it is also something of a niche contest.

The Liberals do not even intend to turn up with a candidate.

The main national game is firmly on the centre ground. And if by-elections come in other Labor seats as a consequence of the citizenship imbroglio, it would be mostly on that ground where Mr Shorten would be fighting.

As voting patterns show, Labor faces a tough battle to retain Batman. ( ABC News: Antony Green )

Citizenship saga continues

Especially worrying for Labor is the likeliest contest in the Queensland electorate of Longman, where ALP MP Susan Lamb did not provide adequate documentation to the British authorities and so remains a dual citizen.

Her argument is that she did all she reasonably could to renounce her British citizenship — a proposition which will be tested if, as expected, the Government refers her to the High Court, together with two other Labor MPs and crossbencher Rebekha Sharkie.

In a by-election in Longman, which Labor holds by less than 1 per cent, Mr Shorten would need to appeal to blue-collar and other workers who would be more likely to register any protest by voting One Nation (whose preferences helped the ALP last time) than Green.

The Government is likely to refer Susan Lamb to the High Court. ( Supplied: susanlamb.org.au )

The Liberal National Party believes the previous member, Wyatt Roy, lost it votes and that it would have a good chance of regaining the seat when it had another candidate.

Late last year the Government was in a world of pain with by-elections in New England and Bennelong (in the event, both turned out very well for it). Now the pain is all Labor's.

More broadly, Mr Shorten for a long time seemed to have the political breaks running his way, but suddenly things have turned. Beyond the citizenship crisis, the economy is looking better, and Malcolm Turnbull's performance has lifted.

A nightmare scenario for Mr Shorten would be to lose both Batman and Longman.

If Batman went, it would open a debate within Labor about whether it was doing enough to meet the challenge of the Green vote at the next election.

The timing of a Batman defeat would be in the run-up to the ALP's July national conference.

Probably it would sharpen the conference arguments, potentially making that much-publicised event look more like a battleground than the showcase Mr Shorten needs, given the election would be at most about nine months away and possibly much closer.

Shorten needs to tread carefully

If, in addition to a Batman loss, Longman changed hands, that would present a crisis for Mr Shorten and Labor.

It would increase the Government's majority and destabilise Mr Shorten's leadership. Whether that destabilisation would turn into any move against him cannot be predicted, except to say Anthony Albanese retains his ambition.

Mr Albanese, who slapped down a strong Green push in his Sydney electorate of Grayndler in 2016, will strut his stuff in the Batman campaign.

Mr Shorten's position is protected by Labor's rules, which make a leadership change very difficult. He has also had the security blanket of the polls, which have seen the ALP consistently in front.

But within the ALP there is concern that he is not liked by voters or fully trusted by them. Those worries would intensify if the Government's polling improved.

In the months ahead he has to be careful. He cannot afford the sort of exaggeration he indulged in last year when he claimed too vehemently that Labor had a foolproof vetting system to deal with dual citizenship.

The crowing brought a short-term sugar hit but the legacy is the perception that he was having a lend of us.

Speeches set the scene

On another front, he was careless this week with some loose language that invited speculation Labor might cut the health insurance rebate. This was quickly hosed down, but it allowed the Government to raise a scare.

Ahead of Parliament's return on Monday, both Mr Shorten and Mr Turnbull delivered scene-setting speeches this week.

Mr Turnbull had nothing new but again dangled the prospect of tax cuts for middle-income earners.

The timing of these and how much they would be worth — especially when the planned hike in the Medicare levy is taken into account — remain known unknowns.

While Mr Turnbull, polls notwithstanding, does seem to be reviving politically, he is still facing a cynical and disappointed electorate that will be hard to please. It will take more than modest tax cuts to bring many voters round.

Mr Turnbull has a strong case as the numbers show an improving economy and an impressive jobs record.

But with flat wages and the high cost of living, Labor can exploit people's feeling that the better times are not flowing through to their household budgets.

Mr Shorten highlighted "the disconnect between wages and productivity" in his speech, and held out the prospect of addressing it, and achieving an adequate "living wage".

That raises both the public's expectations and the hackles of a business community nervous about what changes a Labor Government might make to rebalance the strength of employers and workers in the industrial relations system.

No doubt there will be plenty of calls during the Batman campaign for some of the detail of what Labor plans.

Michelle Grattan is a Professorial Fellow at the University of Canberra and chief political correspondent at The Conversation.

Originally published on The Conversation.