iPredict Election Update #46: Labour’s prospects better than in TV polls

Key Points:

* iPredict’s forecasts better for Labour than TV polls
* Greens again at an all time high and National still at 50%
* Labour attacks on Mad Butcher may have cost Damien O’Connor his seat
* David Cunliffe’s New Lynn majority expected to be slashed
* Government more vulnerable on Video Camera Surveillance (Temporary Measures) Bill
* Inflation, growth, and unemployment figures remain steady
* OCR to increase in March but second rise not expected until June

Commentary:

This week’s snapshot from New Zealand’s online predictions market, iPredict, forecasts an election-night gap between National and Labour much narrower than that suggested by the average of this weekend’s TVNZ and TV3 polls. While the average of the TV polls suggests National will win 56.7% of the party vote and Labour 27.8% – a gap of 28.9% – iPredict is forecasting a National party vote of only 50.0%, with Labour winning 28.5%, a gap of just 21.5%. The Greens have built further on last week’s all-time iPredict high, with their forecast party vote reaching 10.7%. In electorate contests, Labour’s electorate-only Damien O’Connor now risks leaving Parliament, with his chances in West Coast-Tasman deteriorating to just 45%. In economics, Fonterra’s payout predictions have deteriorated slightly, while inflation, growth, and unemployment figures remain steady. The OCR is expected to be increased in March but a second rise, to 3.00%, is not expected until June.

Economic Context

Expectations for GDP growth have remained steady this week. Growth is expected to be 0.6% for the September quarter, 0.6% for the December quarter and 0.4% for the March quarter.

Expected unemployment has also remained steady this week. Unemployment for the September quarter 2011 remains forecast to be 6.4%, in the December quarter 6.2%, and in the March 2012 quarter 6.2%.

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

In the yet-to-be released figure for the week ending 30 September 2011, the market expects the price for 91 unleaded petrol to be $2.06 (steady from last week). Other petrol price expectations have remained steady this week, being $2.09 for the week ending 28 October 2011, $2.08 for the week ending 25 November and $2.06 for the week ending 30 December.

Fonterra’s expected final payouts have reduced slightly this week. Fonterra’s final payout for the 2011/12 is expected to be $7.36 (down from $7.44 last week), the 2012/13 payout $7.74 (steady), the 2013/14 payout $7.41 (steady) and the 2014/15 payout $7.39 (down from $7.41 last week).

Predictions of an OCR increase have eased further this 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 June to 3.00%.

The expected 90-day bank bill rate for 1 December is 2.95% (steady).

Current Account deficit expectations have improved slightly this week. The market predicts 3.95% of GDP for the year to September (down from 4.14% last week) and 3.13% of GDP for the year to December (steady).

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 continues to be Act Party leader Don Brash, but with the market forecasting just an 8% probability he will be replaced prior to the election. There is a 18% probability (down from 22% 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 (up from 87% last week), of being the highest ranked person on the Mana party list other than Party Leader Hon Harawira while Don Nicolson has a 19% probability (down from 34% last week) that he will be the highest ranked person on the ACT party list (other than Brash, Banks, and Boscawen).

There is a 13% 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 8% probability that Trevor Mallard will announce he will not stand next election.

Key Electorate Contests

There has been a change of forecast winner in West Coast-Tasman. For the first time since March, National’s Chris Auchinvole is expected to retain the rugby league loving West Coast-Tasman (55% probability up from 47% last week). This follows media reports of attacks on prominent rugby league supporter Sir Peter Leitch (“The Mad Butcher”) by two Labour MPs.

In other electorates, the probability that National will beat last election’s majority in Tauranga is 89% (steady), in Helensville 69% (steady), North Shore 52% (steady), Bay of Plenty 50% (steady), Rangitata 80% (steady), Ilam 19% (steady), Clutha Southland 78% (steady), Rangitikei 26% (steady), and in Rodney just 22% (steady).

The market is predicting that Labour faces reduced majorities in a number of safe seats. The probability that Labour will decrease its majority in New Lynn is 79%, in Hutt South is 63%, in Wigram and Te Atatu 58%, and in Dunedin South and Manurewa 52%.

Act is also expected to reduce its 2008 majority in Epsom with a just a 26% probability it will be increase (steady), but there is still an 80% 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 have fallen slightly this week with the market now forecasting he has an 83% probability of being re-elected (down from 85% last week).

New Zealand First remains below MMP’s 5% threshold, with a forecast 3.6% vote share (steady). Party leader Winston Peters has just a 15% 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 fallen to 80% (from 83% last week).
The probability Maori Party co-leader Pita Sharples will win Tamaki-Makaurau have improved significantly this week, after new polling data over the weekend. Dr Shaples now has a 59.9% probability or retaining his seat (up from 50.0% last week) over Labour’s Shane Jones at 41.7% (down from 48.3% 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 (77%, down from 80% last week).

For the Labour Party, Nanaia Mahuta is expected to retain Hauraki-Waikato (86%, steady) and Labour’s position in Ikaroa-Rawhiti is now at 77% probability (up from 74% last week).

Te Tai Tonga remains forecast to change hands, with a 68% probability it will be won by Labour’s Rino Tirikatene from the Maori Party’s Rahui Katene (down from 73% last week).

In marginal electorates other than those mentioned above, the probability National’s Jonathan Young will retain New Plymouth is 83% (down from 85% last week). There is a 72% probability that National’s Nikki Kaye will retain Auckland Central (down from 77% last week) and an 83% likelihood National’s Paula Bennett will retain her Waitakere seat (up from 82% last week). In the Te Atatu electorate, Labour’s Phil Twyford has a 76% likelihood of winning the seat (up from 72% last week), and Iain Lees-Galloway has a 70% probability of victory in Palmerston North (steady).

On a seat-by-seat basis, National is expected to win 41 electorate seats (up from 40 seats last week), Labour 23 (down from 24 last week), the Maori Party 3 and Act, United Future and the Mana Party 1 seat each.

Party Vote, and Election Results

Forecast party vote shares are now: National 50.0% (steady) Labour 28.5% (up from 28.1% last week), the Greens 10.7% (up from 10.3% last week), New Zealand First 3.6% (steady), Act 3.2% (up from 2.0% last week), the Maori Party 1.4% (steady), UnitedFuture 1.1% (up from 1.0% last week), the Mana Party 1.0% (down from 1.4% 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 63 MPs, Labour 36 MPs, the Greens 13 MPs, Act 4 MPs, the Maori Party 3 MPs, the Mana party and UnitedFuture with just 1 MP each. There would be 121 MPs, requiring a government to have the support of 61 MPs on confidence and supply. John Key’s National Party would be able to govern alone.

Overall the market indicates a 95% probability there will be a National Prime Minister after the election (up from 94% last week).

MMP Referendum and Miscellaneous

The Video Camera Surveillance (Temporary Measures) Bill now has a 76% chance of being given Royal assent before the General Election (down from 84% last week).

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 85% (steady).

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 9:23am today.