iPredict: NZ Nats below 40% for first time

Key Points:

·                   National below 40% for first time

·                   NZ First to have balance of power

·                   National can only govern if MMP threshold reduced from 5% to 4% to bring in Conservatives

·                   Labour favoured by a whisker

·                   New stocks launched on Act and Maori party leaderships

Introduction

This is the second newsletter summarising forecasts by the 7000 registered traders on New Zealand’s online predictions market, iPredict, of the results of the next New Zealand General Election.  Anyone else wants to trade can do so by signing up for free at https://www.ipredictco.nz/app.php?do=register.

The newsletter will be produced periodically, with greater frequency as we move closer to the election, which must be held by 24 January 2015.

Each newsletter will provide a snapshot of market forecasts, taken at a random time to avoid manipulation by political parties and activists.  Today’s was taken at 12.15 pm (New Zealand Time).

Election Date

There is a 75% probability the election will be held in the fourth quarter of 2014 and it continues to be overwhelmingly expected to be held in 2014, with a 90% chance of being held that year.

Economic Context

Traders believe there is only a 31% probability of a recession before the next General Election.  However, traders also believe there is only a 20% probability the Government will achieve its target of fiscal surplus by 2014/15, and instead expect a deficit of between 0.5% and 0.75% of GDP.  Stocks on New Zealand’s short-term economic prospects can be found at https://www.ipredict.co.nz/app.php?do=browse&cat=5 with stocks on its longer-term prospects available at https://www.ipredict.co.nz/app.php?do=browse&cat=885.

Election Rules

New Zealand’s system of Mixed Member Proportional (MMP) representation is being reviewed.  Traders now believe there is an 80% probability (up from 69% probability last week) that the review’s initial proposal paper will recommend reducing the threshold for seats in parliament from the current 5% to 4% and just a 29% probability it will recommend keeping the one-seat rule which waives the 5% threshold for additional list MPs .  The paper is not expected to recommend a ban on candidates standing as both electorate and party list candidates.

Party Leaders

Most party leaders appear safe until the election.  The leader of the NZ First Party is expected to be Winston Peters (92% probability), Peter Dunne is expected to lead UnitedFuture (87% probability), Prime Minister John Key is expected to lead National (86% probability), Russel Norman and Metiria Turei are expected to remain Green Party co-leaders (83% and 82% probability respectively), Hone Harawira is expected to remain leader of the Mana Party (81% probability), and Opposition Leader David Shearer is expected to remain leader of the Labour Party (73% probability).

Both Maori Party co-leaders, however, appear more vulnerable with just a 48% probability Pita Sharples will be male co-leader on nomination day and just a 45% probability Tariana Turia will be female co-leader.  A stock has been launched today asking if Te Ururoa Flavell will be a Maori Party co-leader on nomination day, and can be traded at https://www.ipredict.co.nz/app.php?do=contract_detail&contract=LEADER.MAORI.FLAV.

Act Party leader John Banks remains highly vulnerable, with just a 24% probability he will be keep his job through to nomination day.  A stock has been launched today asking if Chris Simmons will be Act Party leader on nomination day, and can be traded at https://www.ipredict.co.nz/app.php?do=contract_detail&contract=LEADER.ACT.SIMMONS.

Were there a change in National’s leadership, Judith Collins continues to be favoured, while Grant Robertson continues to be favoured should there be a leadership change in Labour.

Electorate Contests

Despite questions over its leadership, the Maori Party is expected to won two electorates at the next election and the Mana Party one electorate  None of the Green, NZ First, Conservative, UnitedFuture and Act parties is expected to win an electorate seat.

Party Vote

National’s forecast party vote has fallen below 40% for the first time. The following party vote shares are now expected at the next election: National 39.7% (down from 40.6% last week), Labour 35.4% (up from 34.1%), Greens 10.3% (down from 10.7%), NZ First 5.1% (steady), Conservatives 4.0% (steady), Act 1.5% (steady), the Maori Party 1.4% (steady), Mana 1.2% (steady), UnitedFuture 1.1% (steady) and the Aotearoa Legalise Cannabis Party 0.5% (steady).

Seats in Parliament

Under the electorate and party vote forecasts above, and assuming a 5% threshold for seats, iPredict is forecasting the following Parliament: National 51 seats (down from 52 last week), Labour 45 seats (down from 43), Greens 13 seats (down from 14 seats), NZ First 7 seats (steady), Maori Party 2 seats (steady) and Mana Party 2 seats (steady).  Parliament would consist of 120 MPs, requiring a group of parties to have 61 seats to govern.

However, were the MMP threshold reduced to 4%, Parliament would be as follows: National 49 seats (down from 51 seats last week), Labour 44 seats (up from 42), Greens 13 seats (steady), NZ First 6 seats (steady), Conservatives 5 seats (steady), the Maori Party 2 seats (steady) and Mana 1 seat (steady).  This Parliament would also consist of 120 MPs, requiring a group of parties to have 61 seats to govern.

Formation of Government

Under the 5% threshold scenario above, National, NZ First and the Maori Party would have a combined 60 seats, making it unable to govern.  A Labour/Green/NZ First government would have 65 seats and a Labour/Green/Maori/Mana government would have 62 seats.

Under the 4% threshold scenario above, however, a National-led government would have 62 seats with the support of NZ First, the Conservative Party and the Mori Party.  A Labour/Green/NZ First government would have 63 seats.  A Labour/Green/Maori Party/Mana government would have only 60 seats and could not govern.

In most scenarios, therefore, NZ First’s support continues to be critical and iPredict traders continue to believe there is a 65% probability that the NZ First Party will indeed hold the balance of power.  If it does so, traders believe there is a 48% probability it will back a National-led government, a 32% probability it will back a Labour-led government and a 20% it will choose to choose to sit on the cross-benches giving neither a National-led nor Labour-led government support on confidence and supply.

Overall, Labour is ahead by a whisker, with a 50% probability of a Labour prime minister (steady compared with last week) and a 49% probability of a National prime minister (down from 50%).

Miscellaneous

iPredict is owned by Victoria University of Wellington and operates under New Zealand law under the Futures Contracts (iPredict Limited) Declaration and Exemption Notice 2008.  iPredict traders warrant and undertake that they are 18 years of age or older and will comply will all laws in the jurisdictions in which they are present.

ENDS

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