Labour’s chances are remote

Curia’s monthly newsletter summarising the public polls will be out later today. You can subscribe to it here.

A full month has gone by since the 2010 budget and National is as strong as ever in the polls, and Labour in a very weak position.

On the latest Roy Morgan poll, Labour would get just 36 seats – a decline of seven. This creates massive problems for not just 2011, but also 2014. With so few of their MPs retiring, they will get almost no new blood coming in, in 2011 unless they are prepared to sacrifice up to a dozen of their List MPs.

If one assumes the Greens will get 10 MPs (a record if they do), and you need 62 MPs to govern, then Labour need to get 52 MPs, not 36. It means they need to increase their party vote from around 29% to 42%. Now you might think hey that is only 13%.

But in fact that is 300,000 voters that need to change their votes from National to Labour. In each electorate that is 4,000 voters who need to change their mind.

It is not impossible, and events can always change things, but it is highly unlikely. This is seen in the iPredict stock which has the price for a National victory in 2011 at 83.2c. If the election was tomorrow that would imply an 83% chance of a National victory. However the election is 16 months away and the cost of locking up capital for 16 months is around 10%, so really the iPredict price is saying the market expects a National re-election with around 93% probability.

This graph gives a good idea of why National is doing so well, and Labour so badly in the polls. Certainly there are factors such as Labour’s line-up looking like a return to the past, not a march into the future – but most of all people are saying they are happy with the direction NZ is heading in.

To have only 20% saying the country is heading in the wrong direction is an incredibly low rating. I can’t recall any other time it has been so low, and more remarkably during the worst global financial crisis in 70 years.

There was some increased grumpiness during the first few months of this year, but it has declined for the last four months in a row.

A useful contrast is that in the US, the wrong direction sentiment sits at 62%.

So unless some major event (a scandal, a second recession etc) occurs, I can’t see 300,000 voters changing their minds before the election and saying essentially they want Phil Goff to be Prime Minister, instead of John Key.

Assuming that this happens, tomorrow I am going to look at who will be the next Labour Party Leader, when, and why.