Do Scandals Help With Re-Election?

During an interview with MP Winston Peters this morning, Radio NZ put it to him that the publicity generated by new developments in the Owen Glenn saga would assist in Mr Peters' re-election. Mr Peters replied by saying stories like this never help.

So what does iPredict say?

iPredict has been running a contract MP.PETERS asking whether Mr Peters will be returned to Parliament. This contract pays $1 if Mr Peters remains in Parliament by any means after the election, and movements in the price this contract trades for over the past 36 hours gives us an answer.

The answer, in this case, is no. Mr Peters' re-election chances are not helped by the publicity produced by these developments, as indicated by a decline in the price of MP.PETERS.

These developments have been accompanied by an increase in the chance of Mr Peters' sacking, up from 10% two days ago to 15% this morning - a significant increase starting from a small base but Mr Peters sacking or resignation from his position as Foreign Affairs minister before the election remains a one in six chance according to iPredict traders.

New Stocks launch today: SEATS.MAORI and MAJORITY.NAT

Today we launch two contracts to do with Parliamentary seats that will be allocated to two parties – the Maori Party and the National Party, but with each stock we have a different purpose in mind.

SEATS.MAORI is a stock aimed at counting the number of electorate seats the Maori Party will win. The contract pays 10 cents for each seat won by the Maori Party. As with all our stocks, pay out is capped at $1 per contract. The purpose of this question is to measure one source of overhang in the next Parliament – that is, the total number of seats it will have.

Overhang occurs when a party wins more electorate seats than its share of the party vote would entitle it to. The current Parliament has an overhang of one seat because in 2005 the Maori Party won four electorate seats when their party vote entitled them to three seats. SEATS.MAORI asks how many electorates – Maori or General – the Maori Party will win in 2008. In combination with another contract on iPredict, VOTE.MAORI, we will be able to estimate the overhang the Maori Party will produce.

Overhang is important - it can determine who leads the next government - and tactical voting can produce large distortions. One idea floated recently was for Maori roll voters to split their vote: give their electorate vote to the Maori Party but their party vote to Greens. If every Maori Party voter did that, and if the Maori Party won seven electorate seats, then an overhang of 7 would occur, meaning a Parliament of 127.

As David Farrar pointed out earlier this year, overhang could determine the election:

Let’s say National gets 51% of the vote and 62 MPs. They should get to be the Government under MMP - this is exactly what MMP is meant to guarantee. But by this strategy of deliberate vote splitting to ensure over-hang, then Labour, Greens and Maori Party could gain 65 MPs instead of the 58 they would have on the party vote only, and get to form a Government which only a minority of NZers voted for.

SEATS.MAORI is trading at $0.5597.

Our second contract is MAJORITY.NAT, which asks a simple question: will the National Party win an absolute majority of seats in the next Parliament. This is a yes/no question which asks whether this election will produce the first FPP-style government under MMP. This contract is trading now at $0.3300.