Election Betting Says Coalition With Slim Majority, But Strong Possibility Of Hung Parliament

Last federal election I ran several simulations of the outcome, based on the betting odds on the 150 individual electorates. The initial post explained how the simulation worked.

This federal election, Sportsbet, Luxbet and Crownbet are all offering odds for every electorate. Interestingly, William Hill is not, despite doing so in 2013.

The simulation as of Tues 21 June gives the most likely outcome as Coalition 79, Labor 66 and 5 on the cross benches, made up of independents Bob Katter, Andrew Wilkie, Cathy McGowan, Green Adam Bandt and probably one Nick Xenophon seat in SA, most likely Mayo.

The first 4 are incumbents, strongly tipped to retain their seats. In particular, Cathy McGowan is benefiting from the Liberals’ insane decision to rerun lazy, arrogant and unpopular erstwhile member Sophie Mirabella. Why would they not find a new, more capable candidate in an electorate which will clearly vote conservative, given a halfway decent choice?

The number of cross benchers is a serious problem for both the Coalition and Labor, particularly as the phenomenon is looking to be not just entrenched, but growing. It certainly shows up in the simulation. Based on current betting, Labor has less than 1% chance of forming a majority government. However 20 - 30% of paths lead to a hung parliament. The large confidence interval is due to the sensitivity of seat distributions to the uncertain correlation parameter in the simulation. The 20 - 30% chance of a hung parliament is estimated from the range of reasonable voting correlation parameter estimates.

There are approximately 70 seats “in play”. Of these, some are under speculative attack from the Greens (Grayndler, Sydney, Higgins, Wills, Fremantle), but in the North Melbourne Labor heartland of Batman, the Greens are currently paying 2.10 - 2.30.

Tight contests are Eden-Monaro (as usual), Macarthur and Page in NSW, Dunkley and LaTrobe in VIC, Brisbane, Capricornia and Forde in QLD, Grey, Hindmarsh and Mayo in SA, Burt (new), Cowan, Hasluck and Swan in WA, Braddon and Lyons in TAS and Solomon in the NT.

Only 18 seats in the genuine 50/50 range and the government with a 30 seat majority goes a long way to explaining the low probability of an ALP majority.

The other problem for the major parties is the translation of the upper house voting strength of Nick Xenophon to the 11 lower house SA electorates. His team is polling strongly in 7 of these 11 electorates. More problematic for those who want to avoid a hung parliament is that 5 of the 7 would otherwise go to the Liberals.

Xenophon’s team will probably win 1 or at most 2 of these 5, however that increases the likelihood he will be in a strong position to negotiate in BOTH houses with Malcolm Turnbull (who has shown himself to be more eager to please all interests than a leader should be).

The most important outcome of this simulation is the higher than I thought probability of a hung parliament. Many other countries have them, however Australia has no tradition of it, so the minor parties and independents have no real experience of working WITH governments instead of in their own interests. This is a serious problem, given the level of global and political instability. Great for derivatives traders, bad for manufacturers.

I will run another simulation on Fri July 1, the day before the election.