• John Key to have two-seat majority with Act and UnitedFuture, or 12-seat majority with Act, UnitedFuture and Maori Party


• If Rodney Hide loses Epsom, Maori Party to hold balance of power


• Contracts for Manukau East, Nelson, Te Atatu and Waitakere to be launched at midday today

Commentary:

John Key will lead a National/Act/UnitedFuture government with 62 seats and a two-seat majority in a 122-seat Parliament after the next General Election, this week's snapshot of New Zealand's prediction market, iPredict, suggests. Were the Maori Party to continue supporting this National-led government, the government would have 67 seats and a 12-seat majority.

The result continues to depend on Rodney Hide being re-elected in the Epsom electorate for his party. Mr Key's ability to form a government is not affected by the result in UnitedFuture Leader Peter Dunne's Ohariu electorate.

The market continues to forecast that the General Election will be held in Q4 2011 (74% probability at the time the snapshot was taken, down from 75% last week and 76% the week before), with a 26% probability of an early election in Q3 2011 (up from 21% last week and 19% the week before).

All current party leaders are expected to remain in their roles until the election, although there is a 34% probability Labour Leader Phil Goff will lose his position prior to the election.

Neither a new left-wing party around a combination of Matt McCarten, Sue Bradford and Hone Harawira, nor a new right-wing party around Don Brash, is expected.

Forecast party vote shares are: National 44.5% (down from 45.6% last week), Labour 35.4% (up from 34.4% last week), Greens 7.8% (up from 7.5% last week), New Zealand First 4.1% (down from 4.6% last week), Act 3.6% (up from 2.8% last week), Maori Party 2.5% (down from 2.7% last week) and UnitedFuture 1.1% (up from 0.3% last week).

Act Leader Rodney Hide has a 60% probability of winning Epsom for his party.

For the first time, UnitedFuture Leader Peter Dunne is forecast to be re-elected in Ohariu, with 37% probability compared with 35% probability for National to win the seat and 30% probability for Labour.

The Maori Party is forecast to retain all five of its seats. The race in Ikaroa-Rawhiti remains close, with the seat this week favoured to be retained by Labour (53% probability). Labour is forecast to retain Hauraki-Waikato.

Winston Peters is not forecast to win a seat in Parliament.

Based on this data, the market is forecasting the following Parliament: National 56 MPs, Labour 45 MPs, Greens 10 MPs, Maori Party 5 MPs, Act 5 MPs and UnitedFuture 1 MP. There would be 122 MPs, requiring a government to have the support of 62 MPs on confidence and supply.

National, Act and UnitedFuture would have a combined 62 MPs and could govern with or without the Maori Party. Even with the support of UnitedFuture and the Maori Party, a Labour/Green combination could secure only 61 seats, not enough to form a government but enough to force new elections.

The market continues to forecast a National prime minister (76% probability, down from 78% last week).

iPredict has again analysed what parliamentary balance would exist in all eight possible combinations of results in the Epsom, Ohariu and Ikaroa-Rawhiti electorates.

In all four scenarios in which Mr Hide wins Epsom, a National/Act or National/Act/UnitedFuture government could be formed. The result in Ohariu does not affect the likelihood of a National-led government, with National having 56 seats if Mr Dunne wins his seat and 57 seats if he does not.

In all four scenarios in which Act Leader Rodney Hide does not win Epsom for his party, the Maori Party would hold the balance of power. Under no scenario does the result in Ikaroa-Rawhiti affect the post-election parliamentary balance.

In electorate races for which stocks have recently been launched, National's Jo Goodhew is expected to be re-elected in Rangitata (86% probability), National's Simon Power is expected to be re-elected in Rangitikei (98% probability), National's Todd McClay is expected to be re-elected in Rotorua (93% probability) and Labour's Clayton Cosgrove is expected to be re-elected in Waimakariri (68% probability). There is an 81% probability voters will elect to retain the MMP voting system in the referendum to be held on election day, up from 80% from last week.

iPredict is owned by Viclink, the commercial arm of Victoria University of Wellington. Details on the company and its stocks can be found at www.ipredict.co.nz

The company will be providing full election coverage next year, including of every electorate race in the country. Bundles of contracts for every electorate will be launched progressively through to the end of March. Contract bundles will be launched at midday today for the Manukau East, Nelson, Te Atatu and Waitakere electorates.

The weekly political snapshot is taken at a random time each week to avoid market manipulation by political parties. This week's was taken at 5.19 am today.

ENDS

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