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iPredict Election Update #33

iPredict LTD

2014 ELECTION UPDATE #33

Friday 5 September 2014

www.ipredict.co.nz

www.electionresults.co.nz

Key Points:

NZ First bounces back and forecast to hold balance of power

National up slightly while Labour slips back

Conservatives still short of 5% threshold

Flavell favoured to win Wairaki, while battle in Port Hills remains tight

Forecast voter turnout up to 77%

Labour now favoured to win 2017 election

Economic forecasts broadly unchanged


Commentary:

The combined wisdom of iPredict’s 8000 registered traders suggests the election remains extremely tight with Winston Peters’ NZ First Party forecast to hold the balance of power and choose between a National or Labour Government. Support for National has increased fractionally this week, although it would be unable to form a government without NZ First. Despite support for Labour falling, David Cunliffe could ascend to Prime Minister with the support of the Greens, Internet Mana and NZ First and his position as leader has continued to improve. While its support has increased this week, the Conservative Party remains short of the 5% party vote threshold required for parliamentary representation, and it is not forecast to win an electorate seat. The Maori Party’s fortunes have also improved this week with Co-Leader Te Ururoa Flavell now favoured to retain his Waiariki seat. Economic forecasts are largely unchanged this week with short-term growth expectations slipping fractionally, counter-balanced by a slight improvement in the forecast current account deficit.

Economic Context

Growth expectations have slipped fractionally this week. Growth in the June quarter is now expected to be 0.8% (down from 0.9% last week), 1.0% in the September quarter (steady) and 1.1% in the December quarter (steady). Forecast annual growth for 2014 has slipped to 3.9% (down from 4.1%).

Unemployment expectations remain unchanged. Unemployment is expected to be 5.5% in the September quarter (steady compared with last week) and 5.5% in the December quarter (steady).

Forecasts for the current account deficit have improved fractionally. The forecast deficit for the June quarter is 2.5% of GDP (down from 2.7% last week), 3.7% in the September quarter (steady) and 3.9% in the December quarter (steady).

The fiscal outlook remains finely balanced. There is now a 50% probability of a fiscal surplus in 2014/15 (down from 52% last week, 50% the week before and 48% three weeks ago). The forecast size of the 2014/15 fiscal surplus remains 0.16% of GDP, (steady compared to last week). Future surplus forecasts are also steady at 1.0% of GDP in 2015/16, 2.0% for 2016/17 and 2.4% for 2017/18.

Short-term inflationary expectations are steady and remain below the Reserve Bank’s 2% target midpoint through 2014. Annual inflation to the end of the September quarter is expected to be 1.4% (down from 1.5% last week) and 1.6% in the December quarter (down from 1.7%).

Interest-rate expectations are also broadly stable. Compared with the rate of 2.5% at the start of 2014, the market is pricing that the OCR will be up 100 basis points in September (down from 102 points last week), 103 in October (down from 105), 108 in December (down from 111), 114 in January 2015 (down from 116), 131 in March 2015 (down from 132), 141 in April 2015 (steady) and 157 in June 2015 (steady). There is now a 96% probability the Reserve Bank will leave the OCR unchanged on September 11, nine days before the election (up from 92% last week).

Party Vote

The party vote turnout is expected to be 77.0% (up from 75% last week).

Of major parties, National is expected to win 44.4% of the party vote (up from 44.2% last week). Labour is expected to win 28.5% (down from 30.3%) and the Green Party is expected to win 12.8% (up from 12.0%) meaning the combined Labour/Green vote is now 41.3% (down from 42.3% last week).

Of smaller parties, NZ First’s expected party vote is up to 5.3% (from 4.1% last week and 4.5% the week before), the Conservative Party is on 3.5% (up from 3.0% last week although down from 3.6% the week before), Internet Mana is on 2.8% (down from 3.1% last week and 3.3% the week before), Act is on 1.3% (down from 1.8% last week), the Maori Party is on 0.7% (up from 0.5%), UnitedFuture is on 0.4% (steady), the Aotearoa Legalise Cannabis Party is on 0.2% (up from 0.1%) and the Civilian Party is on 0.2% (up from 0.1%).

Electorate Contests

In electorate contests, support for Mana has slipped and it now has a 79% probability of winning at least one seat (down from 85% last week). Its expected electorate representation is now 1.0 MPs (down from 1.2 MPs last week). The probability Mana leader Hone Harawira will win Te Tai Tokerau has also fallen to 71% (down from 83% last week) and its candidate in Waiariki, Annette Sykes, has slumped to 16% probability of winning the seat (down from 38% last week).

Act’s probability of winning at least one electorate seat is down to 80% (from 84% last week), although its expected electorate representation remains 0.8 MPs (steady). The market is pricing that its candidate David Seymour has a 79% probability of winning Epsom (steady).

UnitedFuture has an 81% probability of winning at least one seat (down from 82% last week) and its expected electorate MP representation is 0.8 MPs (steady). Its probability of winning Peter Dunne’s Ohariu electorate is 80% (steady).

The Maori Party’s position has strengthened this week. It now has a 72% probability of winning at least one electorate (up from 48% last week) and its expected electorate representation is now 1.0 MPs (up from 0.6 MPs). The probability co-leader Te Ururoa Flavell will win Waiariki is now 69% (up from 43% last week).

The Conservative Party, the Greens and NZ First continue not to be expected to win electorate seats.

The four most marginal seats, excluding Waiariki and Te Tai Tokerau mentioned above, are Port Hills, Palmerston North, Waimakariri, and Napier. In Port Hills, National challenger Nuk Korako maintains a 55% probability of defeating Labour incumbent Ruth Dyson (steady compared to last week). InPalmerston North, Labour incumbent Ian Lees-Galloway now has a 57% probability of winning the seat (up from 53% last week) from National’s Jono Naylor. In Waimakariri, National’s Matthew Doocey has a 60% probability of holding out Labour’s Clayton Cosgrove (up from 53% last week). InNapier, Labour’s Stuart Nash has a 71% probability of winning the seat (down from 86% last week).

Election Result & Alternative Scenarios

Based on the party-vote and electorate forecasts above, Parliament would consist of: National 55 MPs (down from 57 MPs last week), Labour 36 MPs (down from 39), the Greens 16 MPs (steady), NZ First 7 MPs (up from 0), Internet-Mana 3 MPs (down from 4), Act 2 MPs (down from 3), the Maori Party 1 MP (up from 0) and UnitedFuture 1 MP (steady). Parliament would have 121 MPs and a government would be required to have the support of 61 MPs on confidence and supply.

Under this scenario, National would require the support of NZ First to form a government with 62 seats. A Labour/Green/Internet Mana and NZ First Government would also be able to govern with 62 seats. The NZ First Party therefore holds the balance of power.

iPredict’s bundle of stocks forecasting NZ First’s decision-making, should it hold the balance of power, continues to indicate it would back National. There is a 48% probability NZ First would support a National-led government (down from 52% last week), and a 3% probability it would give confidence and supply to neither National nor Labour (down from 4% last week) favouring the larger bloc, which the market indicates would be National-led. There is a 33% probability NZ First would provide confidence and supply to a Labour-led Government (down from 43% last week).

iPredict has also analysed a scenario where the Conservative Party reaches the 5% threshold required for parliamentary representation. Under that scenario, parliament would consist of: National 53 MPs, Labour 34 MPs, Green 15 MPs, Conservatives 6 MPs, NZ First 6 MPs, Internet Mana 3 MPs, ACT 2 MPs, Maori Party 1 MP, and UnitedFuture 1 MP. Parliament would have 121 MPs and a government would be required to have the support of 61 MPs on confidence and supply.

Under this alternative scenario, National could form a government with the support of ACT, and either the Conservatives or NZ First, which together would hold 62 seats. There is no viable combination where Labour could form a Government.

Overall, National retains a 74% probability of leading the next government, up from 73% last week.

Post Election Developments

David Cunliffe’s position as Labour leader continues to improve. There is now only a 44% probability he will depart as leader by the end of 2014 (down from 48% last week) while in the longer-term, there is a 79% probability he will depart by the end of 2015 (down from 89% last week). There is an 81% probability he will depart by the end of 2016 (down from 92%) and an 83% probability he will depart by the end of 2017 (down from 93%).

In National, John Key’s short-term position continues to stabilise. He now has a 35% probability of departing by the end of 2014 (down from 40% last week), although he has a 62% probability of departing as leader by the end of 2015 (up from 58% last week), a 75% probability of departing by the end of 2016 (up from 73%), and an 89% probability of departing by the end of 2017 (steady).

Grant Robertson is still favoured to succeed Mr Cunliffe, and has a 60% probability of being the next Labour leader, (steady). Jacinda Ardern is second favourite with 17% probability of being the next Labour leader (down from 19%), ahead of Andrew Little on 9% (steady) and David Parker on 7% (steady).

In National, Steven Joyce remains favoured to succeed Mr Key as National Party leader, although his support has fallen to 39% (down from 45% last week). Paula Bennett remains in second place on 24% (up from 19%), ahead of Bill English on 19% (up from 10%) and Simon Bridges on 8% (down from 9%).

Labour has now moved ahead as the favourite to win the 2017 election, with 52% probability (up from 48%), ahead of National on 47% probability (down from 50%).

Miscellaneous

iPredict Ltd is owned by Victoria University of Wellington. Details on the company and its stocks can be found at www.ipredict.co.nz. The weekly political update is prepared by Exceltium Ltd on a pro bono basis and is based on a snapshot taken at a random time each week. This week’s was taken at 10.37 am today.

ENDS

© Scoop Media

 
 
 
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