What’s the Impact of Winston Gonna be?

John Key will lead a National/Act government with 63 seats and a three-seat majority in a 123-seat Parliament after the next General Election, this week's snapshot of New Zealand's prediction market, iPredict Ltd, suggests.

This is the second week in a row the market has suggested a National/Act government, but with the forecast majority up from a single seat last week. The result depends on Rodney Hide being re-elected in the Epsom electorate for his party, and the situation becomes more complicated if the New Zealand First Party returns to Parliament by achieving the 5% threshold required under MMP.

The market continues to forecast that the General Election will be held in Q4 2011 (75% probability, down from 76% last week), with a 21% probability of an early election in Q3 2011 (up from 19% last week) and a 4% probability of an early election in Q2 2011, down from 5% last week.

Forecast party vote shares are: National 45.6% (up from 44.5% last week), Labour 34.4% (down from 35.4% last week), Greens 7.5% (down from 8.2% last week), New Zealand First 4.6% (up from 4.2% last week), Act 2.8% (steady), Maori Party 2.7% (down from 2.8% last week) and UnitedFuture 0.3% (steady).

The probability of Act Leader Rodney Hide winning Epsom for his party has fallen back to 57% from 60% last week but he remains favoured.

National remains favoured in Ohariu, continuing to have a 37% probability of winning the seat, although the probability of it being retained by UnitedFuture Leader Peter Dunne remains close at 34%, down from 35% last week.

The Maori Party is forecast to retain all five of its seats and gain Ikaroa-Rawhiti, although this remains close with 52% probability compared with 48% for Labour. Labour is forecast to retain Hauraki-Waikato.

Winston Peters is not forecast to win a seat in Parliament, with only 31% probability that he will, although prices in the New Zealand First party vote stock have been volatile, and in recent days the party has on occasion been above the 5% threshold following a surprise Horizon poll published in this week's Sunday Star-Times.

Based on this data, which assumes New Zealand First does not make the threshold, the market is forecasting the following Parliament: National 59 MPs, Labour 44 MPs, Greens 10 MPs, Maori Party 6 MPs and Act 4 MPs. There would be 123 MPs, requiring a government to have the support of 62 MPs on confidence and supply. National and Act would have a combined 63 MPs and could govern with or without the Maori Party.

The market continues to forecast a National prime minister (steady compared with last week).

iPredict has again analysed what parliamentary balance would exist in all eight possible combinations of results in the Epsom, Ohariu and Ikaroa-Rawhiti electorates. It has also analysed each of these eight scenarios with the inclusion of the assumption that New Zealand First achieves 5% of the vote.

In all scenarios in which Rodney Hide won Epsom for Act, and New Zealand First did not reach the 5% threshold, a National/Act government could be formed, with or without the Maori Party or UnitedFuture. In all scenarios in which Mr Hide did not win Epsom for Act, and New Zealand First did not reach the 5% threshold, the Maori Party could decide between a National-led or Labour-led government. The result in Ikaroa-Rawhiti would not affect this, nor would that in Ohariu. This suggests that if New Zealand First is not returned to Parliament, the result in Epsom will be pivotal.

In all eight scenarios in which New Zealand First achieved 5% of the vote, John Key would be able to govern with the support of either the Maori Party or New Zealand First. The fate of Act and UnitedFuture in Epsom and Ohariu would not change this. In all eight scenarios in which New Zealand First achieved 5% of the vote, Phil Goff would be able to establish a Labour government if he achieved the support of both the Maori Party and New Zealand First. He would also need the support of the Green Party. On the face of it, while the return of New Zealand First would make coalition building more difficult, it appears it would be easier for National to form a government under those circumstances than Labour, although this does not take account of personalities.

The probability of a by-election before the General Election in Manurewa is now 55%, up from 50% last week. By-elections are not expected in Botany or Te Atatu.

In electorate races for which stocks have recently been launched, Labour's Andrew Little has a 73% probability of winning New Plymouth, currently held by National's Jonathan Young. No surprises are expected in Ilam, Tukituki or Wigram which are expected to be won by National's Gerry Brownlee (88% probability), National's Craig Foss (90% probability) and Labour's Megan Woods (89% probability).

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

iPredict is owned by Viclink, the commercial arm of Victoria University of Wellington. Details on the company and its contracts 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 9.00 am tomorrow for the Rangitata, Rangitikei, Rotorua and Waimakariri 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 1.40 pm today.

ENDS

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