Press Release – iPredict

This week’s snapshot from New Zealand’s prediction market, iPredict, suggests Phil Goff remains favoured to stay Leader of the Labour Party through to the General Election, although the probability he may be rolled has increased significantly from 10% last …

iPredict: Goff still safe; Key might govern alone

Key Points:

* Recession fears continue to ease
* Goff forecast to survive as Labour Leader
* Key could govern alone if Act loses Epsom
* Maori Party now favoured in Ikaroa-Rawhiti
* Goff could form five-party government if NZ First reaches 5%, Act loses Epsom, and Maori Party wins Ikaroa-Rawhiti and Te Tai Tonga
Commentary:

This week’s snapshot from New Zealand’s prediction market, iPredict, suggests Phil Goff remains favoured to stay Leader of the Labour Party through to the General Election, although the probability he may be rolled has increased significantly from 10% last week to 42% at the time of this week’s snapshot. Meanwhile, John Key continues to be strongly favoured to remain Prime Minister and could govern alone if Act’s Rodney Hide fails to win Epsom for his party.

Recession fears have again eased. The market strongly believes that there will be negative growth in the March 2011 quarter, with just a 12% probability Statistics New Zealand will report growth above 0% for that quarter and only a 52% probability growth will be above -0.5% for the quarter. Nevertheless, a recession is not expected, with the market indicated just a 22% probability the economy will be in recession in the June 2011 quarter, down from 35% last week, 40% the week before and 45% three weeks ago. Recession expectations for the September and December 2011 quarters are also down to 14% (from 18% last week) and 12% (down from 14% last week) respectively.

Inflation expectations are slightly up compared with last week. Annual inflation is expected to be 4.6% for the March quarter, compared with 4.5% for the last three weeks. For the June quarter, expectations are unchanged this week: annual inflation is expected to be 5.3%, steady compared with the last two weeks. Annual inflation in the September quarter is expected to be 5.0%.

Big petrol price rises continue to be forecast, although there continues to be some easing of expectations. The probability unleaded petrol prices will exceed $2.20 per litre in 2011 is 90% (steady compared with last week), the probability it will exceed $2.30 per litre is 60% (down from 62% last week), the probability it will exceed $2.40 per litre is 40% (down from 45% last week) and the probability it will go above $2.50 per litre is 33% (up from 31% last week).

Nonetheless, expectations that Reserve Bank Governor Alan Bollard will increase the OCR from 2.50% before October remain low. There is a 95% probability he will leave it unchanged on 28 April (steady compared with last week); a 93% probability he will leave it unchanged on 9 June (steady compared with last week); an 87% probability he will leave it unchanged on 28 July (down from 89% last week) and a 74% probability he will leave it unchanged on 15 September (up from 60% last week).

Expected yields for 90-day bank bills have been steady over the last week, ending a declining trend since last month’s Christchurch earthquake. The expected 90-day rate on 1 June 2011 is unchanged this week on 2.62%. The expected 90-day rate on 1 September 2011 is also unchanged on 2.68%, while the expected rate on 1 December 2011 has increased slightly from 2.86% last week to 2.91% this week.

Average floating-rate mortgages are ever-more-strongly expected to stay low The probability they will reach 6.50% in 2011, from the 6.39% reported by the Reserve Bank for February 2011 , is 17%, steady compared with last week.

The market continues to indicate a 97% probability that the election will be held on Saturday 26 November and all current leaders of parliamentary parties have at least a 50% probability of remaining in their positions until then.

However, at the time the snapshot was taken, there was a 42% probability that Mr Goff would be replaced as Leader of the Labour Party, up from 10% last week. The market believes there is a 70% probability the next Leader of the Labour Party will be someone other than David Cunliffe, Maryan Street or Trevor Mallard.

The probability of a new left-wing party being registered prior to the election involving at least two of Independent MP Hone Harawira, Unite National Secretary Matt McCarten and former Green MP Sue Bradford continues to fall, and is now just 26%, down from 34% last week, 40% the week before and 53% three weeks ago. The probability that a new party will be registered involving former National Party Leader Don Brash is back down to 12%, from 16% last week and 13% the week before.

Act Leader Rodney Hide is expected to retain Epsom for his party, but the probability he will do so continues to fall, from 69% three weeks ago, to 65% two weeks ago, to 63% last week and to 57% this week. There is now a 39% probability it will be won by a National candidate other than Mr Hide, up from 33% last week and 31% the week before.

UnitedFuture Leader Peter Dunne has a 57% probability of being re-elected in Ohariu, up from 55% last week and 53% the week before, well ahead of a National candidate (27% probability, up from 23% last week) or a Labour candidate (17% probability, down from 22% last week).

Winston Peters continues not to be expected to be elected to Parliament, with a 27% probability he will be back, steady compared with the last two weeks. The probability he will stand in Epsom has fallen marginally from 18% to 17%, with an 11% probability he will stand in Helensville against Mr Key.

In the Maori electorates, the probability Mr Harawira will win Te Tai Tokerau as an independent or for a party other than the Maori Party is 78%, up from 76% last week.

In Te Tai Tonga, Labour’s challenger, Rino Tirikatene, continues to have a 50% probability of defeating the Maori Party incumbent Rahui Katene, who also continues to have a 47% probability of retaining the seat.

There has been a change of forecast winner in Ikaroa-Rawhiti. Previously expected to be won by Labour, last week it was too close to call. This week, there is a 47% probability it will be won by the Maori Party’s Na Rongowhakaata Raihania, with a Labour Party candidate having a 45% probability of winning the seat.

Forecast party vote shares are: National 45.5% (up from 45.0% last week), Labour 31.4% (down from 32.0% last week), the Greens 6.9% (down from 7.3% last week), New Zealand First 4.7% (up from 3.6% last week), Act 3.6% (down from 3.9% last week), UnitedFuture 2.4 (up from 2.2% last week), the Maori Party 2.0% (steady), a party around Mr Harawira 1.2% (up from 1.1% last week), the New Citizen Party 0.7% (steady) and the proposed Reform New Zealand Party 0.4% (steady).

Based on this data, and the electorate results above, Parliament would be as follows: National 58 MPs, Labour 40 MPs, Greens 9 MPs, Act 5 MPs, the Maori Party 4 MPs, UnitedFuture 3 MPs and a party around Mr Harawira 2 MPs, for a total of 121 MPs. A government would be required to have the support of 61 MPs on confidence and supply and National’s Mr Key could govern with the support of one of Act, UnitedFuture or the Maori Party.

iPredict has also looked at two alternative scenarios.

First, with the results in Epsom looking more marginal than previously, iPredict has analysed what would happen were Mr Hide not to win the seat but all other results remained as above. In this case, Parliament would be as follows: National 61 MPs, Labour 42 MPs, Greens 9 MPs, the Maori Party 4 MPs, UnitedFuture 3 MPs and a party around Mr Harawira 2 MPs, for a total of 121 MPs. A government would be required to have the support of 61 MPs on confidence and supply and National’s Mr Key could govern alone.

Second, with New Zealand First again approaching 5% of the party vote, iPredict has also analysed a scenario in which Mr Hide failed to win Epsom, the Maori Party won both Ikaroa-Rawhiti and Te Tai Tonga and New Zealand First secured 5% of the party vote. In this case, Parliament would be as follows: National 57 MPs, Labour 40 MPs, Greens 9 MPs, New Zealand First 6 MPs, the Maori Party 5 MPs, UnitedFuture 3 MPs and a party around Mr Harawira 2 MPs, for a total of 122 MPs. A government would be required to have the support of 62 MPs on confidence and supply and Mr Goff could form two possible governments: a Labour/Green/New Zealand First/Maori Party/UnitedFuture Government or a Labour/Green/New Zealand First/Maori Party/Hone Harawira party Government. A National/Maori Party Government would also be possible, with or without UnitedFuture.

In electorates for which bundles of stocks were launched last week, there is a 90% probability that National’s Tony Ryall will retain Bay of Plenty; an 87% probability that Labour’s David Clark will retain Dunedin North for the party; a 98% probability that Labour’s Trevor Mallard will retain Hutt South; a 95% probability that National’s Allan Peachey will retain Tamaki; and a 95% probability that National’s Simon Bridges will retain Tauranga.

In the Rodney electorate, where the National Party has scrapped its selection process and started again, Brent Robinson continues to be favoured with a 57% probability of being selected (up from 50% last week). Mark Mitchell is now second-favoured (23% probability up from 3% last week), ahead of Scott Simpson (22% probability, down from 43% last week).

There are only three marginal seats other than Epsom, Ikaroa-Rawhiti, Ohariu and Te Tai Tonga mentioned above. These are: New Plymouth (52% probability of being won by Labour’s Andrew Little from National’s Jonathan Young, down from 57% last week); Waitakere (58% probability of being won by National’s Paula Bennett over Labour’s Carmel Sepuloni, down from 65% last week); and West Coast-Tasman (52% probability of being retained by National’s Chris Auchinvole over Labour’s Damien O’Connor, down from 53% last week).

Otaki, which four weeks ago was marginal, is now strongly favoured to be retained by National’s Nathan Guy. Mr Guy now has an 82% probability of winning, compared with 80% last week, 76% two weeks ago, 65% three weeks ago and 63% four weeks ago.

There is an 80% probability voters will elect to retain the MMP voting system in the referendum to be held on election day, steady compared with last week.

iPredict 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.

The company 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 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 8.45 am today.

ENDS

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