iPredict 2011 Election Update #4

Having accurately predicted the result of last weekend's by-election in Mana, this week's snapshot of New Zealand's prediction market, iPredict Ltd, indicates that by-elections are likely in Manurewa and Botany next year, before a cliff-hanger General Election in Q4 2011 which will see the Maori Party hold the balance of power and choose to give John Key a second term as prime minister. Except under one scenario, detailed below, the post-election balance in Parliament does not change under different assumptions about the results of electorate races in Epsom, Ohariu and Ikaroa-Rawhiti.

The market continues to forecast that the General Election will be held in Q4 2011 (78% probability, up from 77% last week), with a 21% probability of an early election in Q3 2011 (up from 19% last week).

Forecast party vote shares are: National 45.0% (up from 43.8% last week), Labour 36.6% (up from 35.4% last week), Greens 8.3% (steady), New Zealand First 4.5% (up from 4.1% last week), Maori Party 3.1% (steady), Act 2.4% (up from 2.3% last week) and United Future 0.3% (down from 0.4% last week).

Act Leader Rodney Hide has a 55% probability of retaining Epsom for his party, up from 52% last week.

For the first time, the market is indicating that Labour will retain Ikaroa-Rawhiti so that the Maori Party will not increase its representation in Parliament from its current five MPs.

United Future Leader Peter Dunne is not forecast to be re-elected in Ohariu National is favoured with 37% probability, steady compared with last week.

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

Based on this data, the market is forecasting the following Parliament: National 57 MPs, Labour 46 MPs, Greens 10 MPs, Maori Party 5 MPs and Act 3 MPs There would be 121 MPs, requiring a government to have the support of 61 MPs on confidence and supply.

National and Act would have a combined 60 MPs and Labour and the Greens a combined 56 MPs. The Maori Party would therefore be able to choose whether to support a National-led or Labour-led government, with a decision to abstain on confidence and supply being a tacit decision to allow National and Act to govern.

The market is forecasting a 79% probability that there will be a National prime minister after the next election (up from 78% last week), indicating the market believes the Maori Party would decide to support a National-led government.

Because of the importance and closeness of the electorate races in Epsom, Ohariu and Ikaroa-Rawhiti, iPredict has again analysed what parliamentary balance would exist based on all possible combinations of outcomes in these electorates. Under six of the seven additional scenarios, the Maori Party would continue to have the balance of power.

Under the seventh scenario - the Maori Party to win five electorates and Act and United Future one each - Parliament would be as follows: National 57 MPs, Labour 46 MPs, Greens 10 MPs, the Maori Party 5 MPs, Act 3 MPs and United Future 1 MP. Parliament would have 122 MPs, with 62 being required to govern. Under this scenario, the Maori Party could choose to support a National/Act/United Future government or see Parliament hung 61-all leading to new elections. A Labour/Green/Maori Party/United Future government would also be possible.

Today's snapshot follows iPredict's indexed stocks on the share of the vote each candidate would win in the Mana by-election achieving very high levels of accuracy, especially with respect to the winning candidate. The stock for Labour's Kris Faafoi traded at an average of $0.457, suggesting he would win 45.7% of the vote, just 0.7% less than the 46.4% he achieved on election night. The iPredict stock on National's Hekia Parata suggested she would receive 36.9% of the vote, 4.7% less than the 41.6% she achieved. The share of the vote all other candidates would receive was overestimated by a total of 4.3%. iPredict's performance in predicting the results of this by-election compares favourably with public opinion polling for previous by-elections.

Stocks launched yesterday about the likelihood of by-elections before the General Election in Manurewa and Botany indicate both are expected, with a 72% probability of the former and a 60% probability of the latter. However, the market does not expect Botany MP Pansy Wong to resign from Parliament until next year, with a 64% probability she will still be the MP on 31 December 2010.

The market does not believe there will be a by-election in Te Atatu, indicating it believes Independent MP Chris Carter will not resign from Parliament before the General Election.

The market indicates an 81% probability voters will elect to retain the MMP voting system in the referendum to be held on election day.

iPredict is owned by Viclink, the commercial arm of Victoria University of Wellington. Details on the company and the two new stocks can be found at www.ipredict.co.nz 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 7.21 am today.

ENDS

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