iPredict: National vote falls following World Cup wobbles

iPredict says:

* Forecast National Party vote slips following World Cup wobbles
* Simon Bridges expected to increase majority in Tauranga while Gerry Brownlee’s majority in Ilam expected to fall
* Gap narrows in Tamaki-Makaurau
* Mana predicted to have just one MP
* Unemployment and growth figures worsen
* Fonterra payout forecasts up

Commentary:

World Cup wobbles appear to have had an effect on John Key’s Government, with National’s forecast party vote share down from 48.0% to 46.5% and the probability Mr Key will be re-elected down from 94% to 93%, this week’s snapshot from New Zealand’s prediction market, iPredict, suggests. Labour’s Shane Jones is still expected to win Tamaki-Makaurau, although the gap to Maori Party Co-Leader Dr Pita Sharples has narrowed, while the Mana Party is now expected to only have one MP elected. In economics, short term forecasts for growth and unemployment have both worsened, while inflation and current account deficit forecasts remain largely unchanged. There has been an increase in Fonterra’s forecast payouts.

Economic Context

Expectations for GDP growth in the June quarter have fallen this week to 0.5% (down from 0.8% last week). Growth is expected to reach 0.7% for the September quarter (up from 0.6% last week), 0.6% for the December quarter (steady) and 0.6% for the March 2012 quarter (also steady). Forecast unemployment has also moved this week and is now expected to be 6.7% for the September quarter (up from 6.4% last week), 6.2% in the December quarter (steady) and 6.2% in the March 2012 quarter (also steady).

Inflation expectations have remained steady this week. Annual inflation is expected to be 5.0% in the September quarter, 2.8% in the December quarter and 2.6% in the March 2012 quarter.

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

Fonterra’s final payout for the 2010/11 financial year is predicted to be $8.17 per kilogram of milk solids before retentions (up from $8.14 last week). The payout in 2011/12 is expected to be $7.44 (up from 7.40 last week), the 2012/13 payout $7.77 (up from 7.76), the 2013/14 payout $7.41 (steady) and the 2014/15 payout $7.41 (also steady).

As forecast by iPredict, the Official Cash Rate released today remained unchanged at 2.50%. At 8:59 this morning the market indicated that the Reserve Bank Governor Alan Bollard would hold off an increase in the OCR until December, when it will rise to 2.75%, and then again in March 2012 to 3.00%, and in April to 3.25%.

However, following Dr Bollard’s OCR announcement this morning, iPredict took a second snapshot of the OCR today at 12:08pm. At this later point, the market indicates that the OCR will not rise until March 2012 when it will move to 2.75%, and then again in April to 3.00%, and in June 3.25%.

The expected 90-day bank bill rate for 1 December is has remained steady at 3.12%.

The market’s expectations for the Current Account deficit have again shifted this week, with the market forecasting the deficit will be 4.79% of GDP for the year to June (down from 4.94% last week), 4.69% of GDP for the year to September (steady) and 4.15% of GDP for the year to December (also steady).

Parties & Personnel

All current leaders of parliamentary parties have at least an 91% 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 9% probability he will be replaced prior to the election (down from 11% last week). There is a 35% probability (up from 31% 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 88% probability of being the highest ranked person on the Mana party list other than Party Leader Hon Harawira, while Don Nicolson has a 37% probability that he will be the highest ranked person on the ACT party list (other than Brash, Banks, and Boscawen).

Key Electorate Contests

New stocks released this week track the probability that parties will attain greater majorities in selected seats than they achieved in the last election.

The probability that National will beat last election’s majority in Tauranga is 86%, in Helensville 69%, North Shore 62%, Bay of Plenty 50%, Rangitikei 23% and Ilam 21%. The probability that Labour will increase its majority in Dunedin South is 58%, Mount Roskill 53% and in Hutt South 30%. Labour has a 55% probability of increasing Jim Anderton’s 2008 majority in Wigram.

Act has again fallen back marginally 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 (down from 86% last week).

In Ohariu, the odds of United Future’s Peter Dunne retaining the seat has slipped this week with the market now forecasting he has a 76% probability of being re-elected (down from 77% last week).

New Zealand First remains below MMP’s 5% threshold, with a forecast 4.5% vote share (down from 4.9% last week). Party leader Winston Peters has just a 14% probability of returning to Parliament (down from 21% last week).

Expectations that Mana Party leader Hone Harawira will retain the Te Tai Tokerau seat in the General Election have reduced to 83% (from 85% last week).
Tamaki-Makaurau remains a tight race with Labour’s Shane Jones still predicted to win. Mr Jones is sitting at 48.3% probability (down from 50% last week) with Maori Party Co-Leader Dr Pita Sharples marginally behind at 46.7% (down from 47% 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%, down from 83% last week).

For the Labour Party, Nanaia Mahuta is expected to retain Hauraki-Waikato (87%, up from 86% last week) 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.

In marginal electorates other than those mentioned above, the probability National’s Jonathan Young will retain New Plymouth has remained steady at 74%. There is a 74% probability that National’s Nikki Kaye will retain Auckland Central (down from 79%) and a 74% likelihood National’s Paula Bennett will retain her Waitakere seat (down from 77% last week). In the Te Atatu electorate, Labour’s Phil Twyford has a 73% likelihood of winning the seat (steady). Damien O’Connor is expected to win back West Coast-Tasman for Labour (55%, down from 57% last week), and Iain Lees-Galloway has a 72% probability of victory in Palmerston North (down from 73% last week).

On a seat-by-seat basis, National is expected to win 40 electorate seats, Labour 25, the Maori Party 2, and Act, United Future and the Mana Party 1 seat each.

Party Vote and Election Result

Forecast party vote shares are now: National 46.5% (down from 48.0% last week) Labour 31.4% (up from 29.3% last week), the Greens 7.9% (down from 8.0% last week), New Zealand First 4.5% (down from 4.9% last week), Act 4.4% (up from 3.9% last week), UnitedFuture 1.5% (up from 1.4% last week), the Maori Party 1.5% (up from 1.4% last week), the Mana Party 0.9% (down from 1.3% last week), the Conservative Party 0.9% (steady), and the New Citizen Party 0.4% (steady).

Based on this data, and the electorate results above, Parliament would be as follows: National 59 MPs, Labour 40 MPs, the Greens 10 MPs, Act 6 MPs, and the Maori Party 2 MPs, UnitedFuture 2 MPs, and the Mana Party down to just 1 MP. There would be 120 MPs, requiring a government to have the support of 61 MPs on confidence and supply, meaning John Key’s National Party would require the support of one of the ACT, Maori, or UnitedFuture parties.

Overall the market indicates a 93% probability there will be a National Prime Minister after the election (down from 94% 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 decreased to 84% (down from 85% last week).

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 8:59am today.