iPredict: Election still close despite polls

Despite TVNZ and TV3 polls to the contrary, this week's snapshot from New Zealand's prediction market, iPredict, again indicates that next year's General Election will go to the wire. Market prices suggest that the Maori Party will have to decide between supporting a continuation of the current National/Act/UnitedFuture/Maori Party government or forcing new elections. The market believes it will decide to back a John Key-led government with a 10-seat majority in a 122-seat Parliament.

However, if Act Leader Rodney Hide is not re-elected in Epsom for his party, or if the Maori Party's Na Rongowhakaata Raihania wins Ikaroa-Rawhiti, currently forecast to be narrowly held by Labour, the Maori Party will genuinely hold the balance of power. The result in Ohariu does not affect the parliamentary balance.

Sentiment in favour of the General Election being held in Q4 2011 has hardened to 83% probability, compared with 74% last week and 75% the week before The probability of an early election in Q3 2011 is now just 16%, down from 26% last week and 21% the week before.

All current party leaders are expected to remain in their roles until the election, although there is a 31% probability Labour Leader Phil Goff will lose his position prior to the election (down from 34% last week) and a 17% probability that Maori Party co-Leader Tariana Turia will lose her position (up from 10% last week).

Forecast party vote shares are: National 44.5% (steady from last week), Labour 35.9% (up from 35.4% last week), Greens 7.7% (down from 7.8% last week), New Zealand First 4.4% (up from 4.1% last week), Act 3.3% (down from 3.6% last week), Maori Party 2.3% (down from 2.5% last week) and UnitedFuture 04% (down from 1.1% last week).

Act Leader Rodney Hide has a 58% probability of winning Epsom for his party, down from 60% last week.

UnitedFuture Leader Peter Dunne is forecast to be re-elected in Ohariu, with 39% probability, compared with 32% probability for National to win the seat and 28% probability for Labour.

The Maori Party is forecast to retain all five of its seats. The race in Ikaroa-Rawhiti remains close, with Labour continuing to have a 53% probability of retaining it. 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 46 MPs, Greens 10 MPs, Maori Party 5 MPs, Act 4 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 not have enough to govern, with a combined 61 MPs, and would need the support of the Maori Party. If the Maori Party backed Labour and the Greens, Parliament would be hung 61-all and there would likely be new elections. If the Maori Party decided to abstain on confidence and supply, this would also allow National, Act and UnitedFuture to govern. In practice, the Maori Party's decision would be between supporting a government led by John Key or new elections.

The market continues to forecast a National prime minister (79% probability, up from 76% last week) indicating it expects that the Maori Party would favour a National-led government over new elections.

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 Act Leader Rodney Hide does not win Epsom for his party, the Maori Party would hold the balance of power and would have a genuine choice between supporting a National-led or Labour-led government.

The Maori Party would also have a genuine choice between a National-led or Labour-led government if it won Ikaroa-Rawhiti.

Under no scenario based on the current party-vote forecasts does the result in Ohariu affect the post-election parliamentary balance.

There are no surprises in any of the electorate races for which stocks were launched last week. Labour's Ross Robertson is expected to be re-elected in Manukau East (90% probability), National's Nick Smith is expected to be re-elected in Nelson (92% probability), Labour's Phil Twyford is expected to be elected in Te Atatu (79% probability) and National's Paula Bennett is expected to be re-elected in Waitakere (68% probability).

There is an 83% probability voters will elect to retain the MMP voting system in the referendum to be held on election day, up from 81% from last week and 80% the week before.

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 Christchurch East, Hamilton East, Rimutaka and Waikato 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 9.04 am today. The next weekly snapshot is planned to be taken during the week beginning Monday 11 January.

ENDS

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