iPredict Election Update #44: Nats could govern alone

Key Points:

* National at record high, expected to govern alone
* Dr Pita Sharples now predicting to re-take Tamaki-Makaurau
* Trevor Mallard expected to increase majority in Hutt South while Clare Curran’s majority in Dunedin South expected to fall
* Inflation, current account deficit, unemployment, OCR and future Fonterra payout forecasts all down this week

Commentary:

Following last week’s World Cup wobble, John Key’s National Government has recovered with its forecast party vote reaching a record reported high of 49.0%, this week’s snapshot from New Zealand’s prediction market, iPredict, suggests. Maori Party Co-Leader Dr Pita Sharples is now expected to retain Tamaki-Makaurau, although the gap with Labour’s Shane Jones remains narrow. Labour’s Trevor Mallard is expected to improve his majority in Hutt South while Labour’s Clare Curran is expected to reduce hers in Dunedin South. In economics, forecasts for inflation, the current account deficit, unemployment, the OCR and future Fonterra payouts have all fallen.

Economic Context

Expectations for GDP growth have remained steady this week. The market predicts growth to be 0.5% in the June quarter, 0.7% for the September quarter, 0.6% for the December quarter and 0.6% for the March 2012 quarter. Forecast unemployment has improved this week and is now expected to be 6.4% for the September quarter (down from 6.7% last week), 6.2% in the December quarter (steady) and 6.2% in the March 2012 quarter (also steady).

iPredict’s inflation expectations, which were cited by the Reserve Bank of New Zealand in its Monetary Policy Statement this week, have improved. Annual inflation is expected to be 5.0% in the September quarter (steady), 2.7% in the December quarter (down from 2.8% last week) and 2.5% in the March 2012 quarter (down from 2.6% last week).

The market expects prices for 91 unleaded petrol will be $2.08 for the Week ending 30 September 2011 (steady), $2.09 for the week ending 28 October 2011 (steady), $2.07 for the week ending 25 November (up from $2.06 last week), and $2.06 for the week ending 30 December (up from $2.05 last week).

Fonterra’s final payout for the 2010/11 financial year is predicted to be $8.17 per kilogram of milk solids before retentions (steady). The payout in 2011/12 is expected to be $7.41 (down from $7.44 last week), the 2012/13 payout $7.74 (down from $7.77 last week), the 2013/14 payout $7.41 (steady) and the 2014/15 payout $7.41 (also steady).

The OCR predictions have reduced further than iPredict’s afternoon snapshot last week. The market predicts that the Reserve Bank Governor Alan Bollard will hold off an increase in the OCR till March 2012, when it will rise to 2.75%, and then again in April to 3.00% and will remain steady through June.

The expected 90-day bank bill rate for 1 December is 3.08% (down from 3.12% last week).

The market’s expectations for the Current Account deficit have shifted markedly this week, with the market forecasting the deficit will be 4.00% of GDP for the year to June (down from 4.79% last week), 4.69% of GDP for the year to September (steady) and 4.29% of GDP for the year to December (up from 4.15% last week).

Parties & Personnel

All current leaders of parliamentary parties have at least a 92% probability of remaining in their positions until the election. The most vulnerable remains Labour Party leader Phil Goff, but with the market forecasting just a 8% probability he will be replaced prior to the election (down from 9% last week). There is a 39% probability (up from 35% last week) that there will be changes to the top ten of Labour’s party list, announced on 10 April 2011, when it is registered with the Electoral Commission.

The market forecasts Annette Sykes has an 86% probability (down from 88% last week), of being the highest ranked person on the Mana party list other than Party Leader Hon Harawira while Don Nicolson has a 24% probability (down from 37% last week) that he will be the highest ranked person on the ACT party list (other than Brash, Banks, and Boscawen).

There is a 16% probability that a Minister will depart before the election, while the market suggests Conway Powell (the next candidate on National’s list) has just a 2% chance of entering Parliament this term. The market also predicts there is an 11% probability that Trevor Mallard will announce he will not stand next election.

Key Electorate Contests

The probability that National will beat last election’s majority in Tauranga is 90% (up from 86% last week), in Helensville 69% (steady), North Shore 63% (up from 62% last week), Bay of Plenty 50% (steady), Rangitikei 23% and Ilam 21% (both steady). The probability that Labour will increase its majority in Dunedin South is 48% (down from 58% last week), Mount Roskill 53% (steady) and in Hutt South 57% (up from 30% last week). Labour has a 60% probability of increasing Jim Anderton’s 2008 majority in Wigram (up from 55% last week).

Act has remained steady in Epsom this week with the market forecasting an 82% probability that the seat will be won by a candidate other than a National candidate or incumbent Act MP Rodney Hide.

In Ohariu, the odds of United Future’s Peter Dunne retaining the seat has improved slightly this week with the market now forecasting he has a 78% probability of being re-elected (up from 76% last week).

New Zealand First remains below MMP’s 5% threshold, with a forecast 4.0% vote share (down from 4.5% last week). Party leader Winston Peters has just a 14% probability of returning to Parliament (steady).

Expectations that Mana Party leader Hone Harawira will retain the Te Tai Tokerau seat in the General Election have increased to 84% (up from 83% last week).

Tamaki-Makaurau continues to be a tight race with Maori Party Co-Leader Dr Pita Sharples now predicted to win. Dr Sharples is now sitting at 50.0% probability (up from 46.7% last week) with Labour’s Shane Jones marginally behind at 48.3% (steady from last week).
Maori Party co-Leader Tariana Turia is still expected to retain Te Tai Hauauru (93%, steady), and her colleague Te Ururoa Flavell is expected to retain Waiariki (82%, steady).

For the Labour Party, Nanaia Mahuta is expected to retain Hauraki-Waikato (87%, steady) and Labour’s position in Ikaroa-Rawhiti (currently Parekura Horomira’s seat) has remained steady at 81%

Te Tai Tonga remains forecast to change hands, with a 74% probability it will be won by Labour’s Rino Tirikatene from the Maori Party’s Rahui Katene (steady).

In marginal electorates other than those mentioned above, the probability National’s Jonathan Young will retain New Plymouth has reduced to 72% (from 74% last week). There is a 75% probability that National’s Nikki Kaye will retain Auckland Central (up from 74% last week) and a 73% likelihood National’s Paula Bennett will retain her Waitakere seat (down from 74% last week). In the Te Atatu electorate, Labour’s Phil Twyford has a 72% likelihood of winning the seat (down from 74% last week). Damien O’Connor is expected to win back West Coast-Tasman for Labour (57%, up from 55% last week), and Iain Lees-Galloway has a 72% probability of victory in Palmerston North (steady).

On a seat-by-seat basis, National is expected to win 40 electorate seats, Labour 24 (down from 25 last week), the Maori Party 3 (up from 2 last week), and Act, United Future and the Mana Party 1 seat each.

Party Vote, and Election Results

Forecast party vote shares are now: National 49.0% (up from 46.5% last week) Labour 30.2% (down from 31.4% last week), the Greens 8.0% (up from 7.9% last week), Act 4.1% (down from 4.4% last week), New Zealand First 4.0% (down from 4.5% last week), UnitedFuture 1.6% (up from 1.5% last week), the Maori Party 1.5% (steady), the Mana Party 1.0% (up from 0.9% last week), the Conservative Party 0.9% (steady), and the New Citizen Party 0.5% (up from 0.4% last week).

Based on this data, and the electorate results above, Parliament would be as follows: National 62 MPs, Labour 38 MPs, the Greens 10 MPs, Act 5 MPs, the Maori Party 3 MPs, UnitedFuture 2 MPs, and the Mana Party with just 1 MP. There would be 121 MPs, requiring a government to have the support of 61 MPs on confidence and supply, meaning John Key’s National Party would be able to govern alone.

Overall the market indicates a 94% probability there will be a National Prime Minister after the election (up from 93% last week).

MMP Referendum and Miscellaneous

The probability New Zealanders will elect to retain the MMP voting system in the referendum to be held on Election Day has remained steady at 84%.

iPredict is owned by Victoria University of Wellington. Details on the company and its stocks can be found at www.ipredict.co.nz The company is providing full election coverage this year, with contract bundles for the party vote and for every electorate race in the country now available for trading, along with other contract bundles on a wide range of economic, political and social issues. The weekly political snapshot is taken at a random time each week to avoid market manipulation by political parties or activists. This week’s was taken at 8:31am today.