2007 Federal Election Briefing #3

Overview

• Echoes of the dying days of the Keating Government are beginning to emerge for the Howard led Federal Coalition Government with diverging elite and populist opinion.
• Gamblers are saying the Federal Election result will be closer than the opinion polls are predicting and on their previous track record they can’t be dismissed. They are however tipping the ALP to win.
• Maxine McKew will not defeat the PM and consign him to a historical footnote as the second PM to loose his seat thanks to IR reform.

Impact of the Federal Budget 2007 & ALP National Conference - Sydney 27-29 April

Two of the four key political events of the first half of 2007 have now come and gone. With the Budget and the ALP National Conference behind us there remains the Liberal Party Federal Council on June 1-3 in Sydney and the report of the PM’s Task Group on Emissions Trading due the day before.

Despite the acres of newsprint and electronic commentary nothing has changed. All opinion polls have the ALP maintaining a steady commanding lead over the Coalition. As bad as things are for John Howard they are worse for Senator Bob Brown and the Greens who seem to be irrelevant to the ongoing phoney election campaign. The Greens vote is trending down. The apparent fall in Greens and Independent vote should be worrying the Coalition as it probably means voters who were undecided are deciding. If the Coalition is to claw back the ALP it needs voters to remain undecided.

There are two possible explanations. Either the voters aren’t listening to the PM or their betters or they are and are still supporting Kevin Rudd and the ALP. Does 2007 represent another occasion when elite opinion and popular support diverged? Last time the elites supported Keating but Howard surfed the wave of popular concern into Government to the rage of the elites.

I suggest they are listening and ignoring elite opinion, evidenced by the dropping Green vote, as voters make a decision rather than have a “bet each way” by saying they’d vote for the Greens or Others.

In the US the Democratic/Progressive blogsphere has been angrily savaging MSM (main stream media) and the pundits/commentators/reporters who appear in and on it and who are themselves personalities for demanding the American people follow their opinions and attitudes – in particular on Irag and the Bush presidency. Has the situation now arrived in Australia where Dennis Shanahan, Paul Kelly, Greg Sheridan and Allen Mitchell will be called to account by an angry blogsphere? Has the PM begun listening to much to Canberra opinion and not the battlers? Has he like Keating become remote and will the proposed $500,000 dinner room extensions revealed in Senate Estimates by the ruthless inquisitor Senator Faulkner come back to haunt him?

The astounding thing is the absence of a backlash in the opinion polls against the ALP IR policy, the flop of the Government “Fairness Test” and the missing Budget bounce. Voters thought it was the best budget on record – 60% thought it would be good for the Australian economy. In the Newspoll survey 36% said they’d be better off, the highest number ever but still 31% said Kevin Rudd would have delivered a better budget. The Gillard/Rudd IR package was also twice as appealing as the Coalitions “Fairness Test”. For all that it had seemingly no impact on voting intentions.

Betting Markets - better than opinion polls?

In recent election campaigns, opinion polls have not been the only tool for attempting to predict the result - the profile of betting markets has steadily increased with both academic research and media coverage.

The ozpolitics blog provides a regular update on the Australian betting market for the forthcoming 2007 Federal Election averaging the odds from CentreBet IASBet , SportingBet , SportsBet and SportsAcumen. The Australian online bookies are tipping a much closer result than the opinion polls. Interestingly the betting markets didn’t dismiss the ALP IR policy and the Federal Budget and the odds of a Coalition win shortened and since lengthened. To follow the betting market visit http://www.ozpolitics.info/blog/category/betting-market/ Bryan updates his charts regularly (Chart below is at 8:25 am Thursday 24 May)

(Thanks to ozpolitics)

The underlying assumption of following betting markets to pick election results is that of the wisdom of crowds is more accurate than a small sample of the total population - investors/gamblers assimilate information faster, and because real money is involved make more rational decisions. For example in 2004 gamblers were never seduced by Latham and the Coalition remained the favourite to win throughout the whole election campaign.

Two young Australian economists have studied both the 2001 and 2004 Federal Elections, including the “horse race” poll (i.e. which party is going to win) and a sample of marginal seats on which bets were taken. The results show that the betting markets tracked the performance of each campaign on a daily basis more accurately, picked the winner and the overwhelming majority of winners in marginal seats. The predictions of the betting markets were more accurate than the opinion polls or pundits (i.e. elite opinion from the Canberra Parliamentary Press Gallery).

Copies of the 2004 report by Andrew Leigh and Justin Wolfers is available at http://econrsss.anu.edu.au/~aleigh/pdf/ElectionForecasting2005.pdf

Federal Division of Bennelong - Profile

According to the Malcolm Mackerras Pendulum, Bennelong is a marginal seat that the ALP needs to win to gain Government.

The member for Bennelong is The Hon. John Howard, Prime Minister and the second longest serving member of the House of Representatives. He is being challenged by the ALP’s star recruit Maxine McKew, a former high profile ABC reporter. The margin after the 2004 election and the redistribution is 4.3%, as the seat has continued to become less safe at each election caused by changes in both boundaries and residents' voting habits.

Bennelong is based in Northern Sydney, including the suburbs of Eastwood, Epping and Ryde, and has been held by the Liberal Party since its creation in 1949. In that time it has had only two members. John Howard has held the seat for the last 33 years.

Several opinion polls have been published recently that suggest Ms McKew could win (including one questionable one by IPSOS). The betting markets have a whole different perspective. Centrebet gives Maxine McKew only a 30% chance of winning the seat for example.

Of course the election she has to win, after a brave showing at the Federal Election, is the by-election when John Howard resigns following either his defeat or the crowning of Peter Costello as the new Prime Minister by a victorious Liberal Party.

Maxine McKew’s campaign creates a number of strategic issues for the PM, especially as the campaign will demand he spend a great deal of time in Queensland, SA and WA defending marginal seats. He will have to find the time to campaign in his own seat which will be a serious distraction. The response by the Liberal Party seems to be to campaign hard now, spending up big in local advertising for example to ensure the PM can campaign in the marginal’s during the last 33 days.

It would be an appalling historical (if unlikely) footnote to be the second PM to lose his seat - the first was the Tory Stanley “Spats” Bruce in 1929 as a result of seeking to abolish the federal system of industrial arbitration.