Small swing from National to Labour over last two weeks, but still no plausible left-wing combination for government, iPredict says

There has been a 1.5 percentage points swing in voters from National to Labour over the last fortnight, although there is still no plausible combination for a Labour-led left-leaning government, according to iPredict in its latest weekly snapshot.

Forecast vote shares are now: National 45.0% (down from 46.5% two weeks ago), Labour 29.7% (up from 28.1%), the Greens 6.7% (down from 7.0%), Act 6.7% (up from 5.8%), New Zealand First 4.7% (down from 5.0% last week), UnitedFuture 2.2% (up from 1.5%), the Maori Party 1.7% (down from 2.0%), the Mana Party 1.6% (up from 1.5% two weeks ago, 1.3% three weeks ago and 1.1% four weeks ago), the New Citizen Party 0.7% (steady) and the proposed Reform New Zealand Party 0.7% (up from 0.6%), iPredict said.

These figures reflect the predictions made by those using iPredict's prediction market, rather than any survey of voters.

Based on this data, and the electorate results above, Parliament would be as follows: National 57 MPs, Labour 38 MPs, the Greens 9 MPs, Act 9 MPs, the Maori and UnitedFuture parties 3 MPs each and the Mana Party 2 MPs.

There would be 121 MPs, requiring a government to have the support of 61 MPs on confidence and supply, so that John Key's National Party could govern with the support of the Act Party alone, or with both the Maori and UnitedFuture parties, or with some other combination of these three.  There would be no politically plausible combination that would allow Labour to govern, iPredict said.

See the snapshot below.

This week's snapshot from New Zealand's online predictions market, iPredict, suggests a small swing from National to Labour, a continued strengthening of Labour's position in the Maori electorates and a Labour win in West Coast-Tasman.  Nevertheless, Prime Minister John Key continues to be overwhelmingly favoured to form the next Government, and could do so with the support of the Act Party - which is now strongly favoured to retain the Epsom electorate - with both of the Maori or UnitedFuture parties, or with a combination of all three.

Economic Context

Recession fears have eased slightly in the last two weeks, with the probability the economy will be in a recession in the June quarter now only 11%, down from 14% two weeks ago.  The probabilities the economy will be in a recession in the September and December quarters remain at 13% and 12% respectively.

Expectations for growth have also remained largely the same.  Growth for each of the next five quarters to be reported is 0.0% for the March 2011 quarter (steady), 0.4% for the June 2011 quarter (steady), 0.7% for each of the September 2011 and December 2011 quarters (steady) and 0.6% for the March 2012 quarter (down from 0.7% two weeks ago).

Unemployment forecasts are mostly unchanged from two weeks ago.  Unemployment is expected to be 6.8% in the June 2011 quarter (up from 6.7% two weeks ago), 6.3% in the September 2011 quarter, 6.3% in the December 2011 quarter, and 6.4% in the March 2012 quarter (all steady).

Inflation expectations are also largely the same as two weeks ago.  Annual inflation is expected to be 5.2% for the June 2011 quarter (steady), 4.8% for the September 2011 quarter (down from 4.9% two weeks ago), 2.7% for the December 2011 quarter (down from 3.0% two weeks ago), and 2.8% for the March 2012 quarter (steady).

The market continues to indicate strongly that petrol prices will be capped at a maximum price of $2.30 this year.  The probability that unleaded petrol will exceed $2.30 per litre in 2011 is 33% (down from 45% two weeks ago), the probability it will exceed $2.40 per litre is 13% (down from 21% two weeks ago), and the probability it will go above $2.50 per litre is 13% (down from 15% two weeks ago).

The market continues to expect Reserve Bank Governor Alan Bollard to leave the OCR at 2.50% through to the end of the year and into January 2012.  There is a 98% probability he will leave it unchanged on 9 June (steady), a 97% probability he will leave it unchanged on 28 July (down from 98% two weeks ago), an 87% probability he will leave it unchanged on 15 September (down from 89% two weeks ago), a 73% probability he will leave it unchanged on 27 October (up from 69% two weeks ago), a 52% probability he will leave it unchanged on 8 December (up from 50% two weeks ago) and a 53% probability he will leave it unchanged on 26 January.

Expected yields for 90-day bank bills are largely unchanged from two weeks ago.  The expected 90-day rate on 1 June 2011 is 2.48% (down from 2.49% two weeks ago), the expected 90-day rate on 1 September 2011 is 2.74% (steady) and on 1 December 2011 is 2.93% (down from 2.95% two weeks ago).

Average floating-rate mortgages are expected to stay low.  The probability they will reach 6.50% in 2011, from the 5.90% reported by the Reserve Bank for March 2011, is 17%, up from 16% two weeks ago.

There is now a 90% probability that a Current Account surplus will be reported for the year ending March 2011, up from 87% two weeks ago, 83% three weeks ago and 66% four weeks ago.  There is now just a 5% probability that Fitch Ratings will announce a downgrade of New Zealand's long term currency rating before 1 July (down from 15% two weeks ago, 22% three weeks ago and 28% four weeks ago).

Election Date, Parties & Personnel

The probability of an early election has fallen back again.  There is now a 94% probability the election will he held on Saturday 26 November, up from 89% two weeks ago.  All current leaders of parliamentary parties have at least an 89% probability of remaining in their positions until then.  The most vulnerable continues to be Labour Leader Phil Goff, but he has just an 11% of being replaced prior to the election.

Key Electorate Contests

Epsom now looks very safe for Act with a near certainty its candidate will be former Auckland City Mayor John Banks.  The probability the electorate will be won by a candidate other than a National candidate or incumbent Act MP Rodney Hide - which, given the history of the electorate, is assumed to mean an Act candidate - is up to 84% from 69% two weeks ago.  The probability Mr Banks will be Act's candidate is 95%.

In Ohariu, the incumbent, UnitedFuture Leader Peter Dunne, continues to be favoured, with a 52% probability of being re-elected, down from 53% two weeks ago.  However second-favoured Labour continues to get stronger, with a 28% probability of winning the seat, up from 24% two weeks ago, 23% three weeks ago, 22% four weeks ago, 20% five weeks ago, 19% six weeks ago and 17% seven weeks ago.

The probability Winston Peters will be returned to Parliament is down to 28%, from 30% two weeks ago, and his party is again narrowly below MMP's 5% threshold.  The probability he will stand in Epsom is down to 14%, from 18% two weeks ago.

In the Maori electorates, there have been no changes in forecast winners, but Labour has continued the slow strengthening of its position evident over the last six weeks.  The probability Labour will retain Hauraki-Waikato has hit 80%, up from 78% two weeks ago, 76% three and four weeks ago, 72% five weeks ago and 70% six weeks ago.  Similarly, the probability it will win Te Tai Tonga has reached 65%, up from 63% two weeks ago, 58% three and four weeks ago, 52% five weeks ago and 50% six weeks ago.  Labour has slipped a little in highly marginal Ikaroa-Rawhiti, now having a 48% probability of winning the seat, down from 50% two weeks ago, but up from 45% three weeks ago and 47% four weeks ago.  Second-favoured in Ikaroa-Rawhiti is the Maori Party, but it continues to have just a 40% probability of winning, steady compared with two weeks ago.

For its part, the Maori Party has a 65% probability of retaining Tamaki-Makaurau (down from 66% a fortnight ago), a 77% probability of retaining Te Tai Hauauru (steady) and a 77% probability of retaining Waiariki (down from 79% two weeks ago, 80% three weeks ago and 82% four and five weeks ago).

In Te Tai Tokerau, Hone Harawira's Mana Party remains favoured for both the by-election and for the General Election but Labour is making up ground.  The probability the by-election will be won by the Mana Party or an independent (assumed to be Mr Harawira if his party is not registered in time) is now 69%, down from 72% a fortnight ago.  The probability it will be won by Labour has increased from 13% to 17%.  For the General Election, the probability the seat will be won by Mr Harawira's party, or Mr Harawira as an independent, is down to 62%, from 69% two weeks ago, 73% three weeks ago and 74% four and five weeks ago.  The probability it will be won by Labour is now 24% up from 20% two weeks ago.

In marginal electorates other than those mentioned above, there has again been a change in forecast winner in West Coast-Tasman.  There is now a 57% probability (up from 48% two weeks ago) that it will be won by Labour's Damien O'Connor over the incumbent, National's Chris Auchinvole.  New Plymouth remains too-close-to-call with both the incumbent, National's Jonathan Young, and the challenger, Labour's Andrew Little, having 50% probability of winning.

Waitakere has become safer for the incumbent, National's Paula Bennett, who now has a 60% probability of retaining her seat over Labour challenger Carmel Sepuloni, compared with 55% two and three weeks ago.  In Auckland Central, National's Nikki Kaye has also regained some ground over her Labour challenger, Jacinda Ardern, and again has a 72% probability of retaining the seat, up from 69% two weeks ago and 71% three weeks ago.

If National holds New Plymouth, that party will win 40 electorate seats, Labour 24, the Maori Party 3 and the Act, Mana and UnitedFuture parties 1 each.

Party Vote, Election Result and Alternative Scenarios

There has been an approximately 1.5% swing from National to Labour in the party vote in the last fortnight and some change in the votes of smaller parties.  Forecast vote shares are now: National 45.0% (down from 46.5% two weeks ago), Labour 29.7% (up from 28.1%), the Greens 6.7% (down from 7.0%), Act 6.7% (up from 5.8%), New Zealand First 4.7% (down from 5.0% last week), UnitedFuture 2.2% (up from 1.5%), the Maori Party 1.7% (down from 2.0%), the Mana Party 1.6% (up from 1.5% two weeks ago, 1.3% three weeks ago and 1.1% four weeks ago), the New Citizen Party 0.7% (steady) and the proposed Reform New Zealand Party 0.7% (up from 0.6%).

Based on this data, and the electorate results above, Parliament would be as follows: National 57 MPs, Labour 38 MPs, the Greens 9 MPs, Act 9 MPs, the Maori and UnitedFuture parties 3 MPs each and the Mana Party 2 MPs.

There would be 121 MPs, requiring a government to have the support of 61 MPs on confidence and supply, so that John Key's National Party could govern with the support of the Act Party alone, or with both the Maori and UnitedFuture parties, or with some other combination of these three.  There would be no politically plausible combination that would allow Labour to govern.

Overall, the market continues to indicate an 85% probability there will be a National Prime Minister after the election (down from 86% over the last five weeks).

Miscellaneous

The probability New Zealanders will elect to retain the MMP voting system in the referendum to be held on Election Day has fallen to 77%, from 80% two weeks ago.

iPredict is owned by Victoria University of Wellington.  Details on the company and its stocks can be found atwww.ipredict.co.nz  The company 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, along with other contract bundles on a wide range of economic, political and social issues.  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 8.20 am today.  A snapshot was not taken last week because of leave and work pressures associated with the Budget.