Hasta la vista, McPherson.

Well maybe not, but it’s going to be a lot, lot closer than most people realise.

We are talking of course, about the most South Eastern seat in Qld, based around the area of the southern Gold Coast. For you Mexicans reading this that rarely get above the Rio Tweed, let me introduce to you McPherson:

This map is proudly brought to you by the AEC via Parliament House.

For more info, Adam Carrs exceptional site has the rundown on it HERE plus many other glorious tidings to boot.

 

McPherson is currently held by Margaret May and is firmly embedded in the Liberal Party safe ‘list’, being held by a margin of 13.9%.

But not all is as it seems with this seat. The demographics are changing rapidly, and so with it the politics.

First, an overview of the demographics where we’ll compare the 2001 census results with the 2006 variety. This can only come about at the moment due to the great work of George “Meganomics” Megalogenis (voted Journo most likely to become a Greek porn star) over at The Oz who collated the 2006 census data for us to use. George, you’re a champ.

The Median income of McPherson in 2001 was $786 pw (the 122^nd highest) whereas now its $864 pw (the 74^th highest).Quite a move up the old income ranking.

Obviously something has changed for that to occur – and that change is families with rugrats (or having aspirations of rugruts) that buy houses.

In 2001 Couples with dependent children made up 32.9% of the electorate (132^nd highest) but now make up 41.6% of the electorate (118^th highest).

The proportion of the electorate paying off their home in 2001 was 22.1% (105^th highest), now its 31.1% (80^th highest).

So far, that’s all good and well. It tells us that the demographics have changed a fair bit since 2001 with a lot more families or ‘families to be’ moving into the seat and buying houses. As they came in, they pushed the median income up along with the proportion of the electorate paying off their home.

But what makes this seat particularly interesting is the composition of that group of blow-ins.

The current median household income for those families in McPherson that are paying off a home is $1495pw ( 86^th highest) while the median home loan repayment is $1500 per month (44^th highest).

That makes the Mortgage Burden (calculated as the median home loan repayment divided by the median household income of those families with a mortgage) a whopping 23.2%.

That gives McPherson the 11^th highest mortgage burden in the country. Of the ten seats with a higher mortgage burden than McPherson, 8 of them are held by the ALP on margins of greater than 6%, one of them held by the ALP with a margin greater than 3% and only Greenway at number 9 is held by the Coalition.

So what makes McPherson so special that despite its mortgage burden, it’s so naturally inclined to be Liberal?

Well its not – and the population of McPherson is becoming more Labor oriented as time progresses.

If we look at the State electorates that make up McPherson – Burleigh, Currumbin, Mudgeeraba and Robina we find that the ALP at the State level hold two of those seats with the Libs holding the other two. But what’s important here is how the vote in those state seats has changed and continues to change with the demographic movement.

In the 2006 election, the Beattie government had a swing against it while the Liberals had a 1.6% swing to them. Yet in these four seats, the ALP vote increased in all of them.

 

Comparing the ALP TPP vote from the 2004 State election to the 2006 State election:

Burleigh went 55% to 58.3%

Currumbin went from 46.8% to 47.8%

Mudgeeraba went from 51.85% to 52.9%

Robina went from 41.2% to 47.5%

All seats swung to the ALP despite the overall state swing against the ALP.

I whacked the numbers from the State seat booths into the McPherson booths, and if the population of McPherson voted federally in the same way as they vote at the state level – the result would be somewhere between 52-48 for either party.(I say either party as there was a little bit of booth mismatch creating uncertainty and I made the assumption that the pre-poll and postal votes would flow to the Coalition 2.5 points higher than the broader electorate… which seems to fit the pattern of this type of seat elsewhere in Qld).

So far from McPherson being demographically Liberal – it’s arguably more demographically Labor than Liberal. Far from the denizens of McPherson being rusted on Coalition supporters, they are far more non-aligned than the 13.9% margin suggests, with the voters of McPherson having elected ALP representatives at the state level and with increasing amounts of them voting for Labor at the state level. That suggests to me that McPherson has become swinging voter central, with an increasing level of Labor base support.

What is also interesting is the numbers of people that are moving into the electorate. If we go over here and check out the enrolment stats for McPherson we find that:

 

In October 2004 enrolment was 83,820

In June 2006 enrolment was 83,022

In January 2007 enrolment was 87,205

In July 2007 enrolment was 90,415

By the election this year, that will likely have increased by another 3 thousand people to be an electorate 11% larger in enrolled voters than it was at the last federal election, with nearly all of that population growth being new urban development.

And we know where they’re moving too and why they’re moving in such large numbers– anyone that drives through the electorate cannot but miss the vast new tracts of suburban Lego Land opening up. To give an idea, I’ve pulled some shots out of Google Earth of McPherson. I’ve pencilled in the electoral boundaries with a blue line (just click the thumbnails to blow them up).

McPherson North

McPherson Central

McPherson South

This seat is simply not as safe as it looks. Last election, the increased population in the new urban developments would have been, in demographic terms, prime target number one for the Coalitions interest rate campaign strategy. New home buyers moving into this area before the last election and swinging against the ALP at a level higher than their normal inclination would have hidden the actual demographic shifts and the subsequent political shifts that McPherson has been undergoing.

Qld swung as a state by 2.2% towards the Coalition at the 2004 Election, yet McPherson only swung 1.4%. Even the interest rate campaign aimed at mortgaged up new home buyers that are rapidly filling McPherson couldn’t prevent the seat from swinging less than the state average.

But not this time.

When you combine this with the growing number of lowish income, young service workers populating the seat via the rented townhouse developments, and which service the booming retail and tourism industries of the Gold Coast (read Workchoices) – this seat faces a perfect storm.

The politics of interest rates, Workchoices, and the nexus between those two issues, “interest payments to disposable income” and reduced discretionary spending budgets that flow from it (remember its discretionary spending budgets which fund lifestyle and self-perceived standards of living, not disposable income) will unleash the changing demographics of McPherson on the Coalition vote.

This seat will swing, and it will swing big simply because it will be catching up with its own demographic dynamics.

 

 

Site Additions

I’m currently sprucing up the place getting it ready for the election, so I thought I’d better give a quick overview of these new bits and pieces.

The Contact page speaks for itself – it has a built in mail form plus my email address.

The current 4 poll average is the last Morgan, ACN, Newspoll and Gallaxy averaged out.

“Swing for Seats” is the national and state pendulums so you can easily find what a uniform national swing would deliver, or what a uniform state swing would deliver in terms of seat gains for the ALP.

“Swinging Voter Movement” graphs how voter movement has happened between the ALP, the Coalition and the Others since the 2004 Election.

I’ve added a little social bookmarking thingymebob at the bottom of each post, but it only works if you are actually on the page for that particular post (otherwise you just end up bookmarking the front page).You just click it and it gives you a list of just about all the bookmarking sites like Digg, delicious etc.Click on the one you want and it should (if you have an account with those things) take you through to where you add it.I don’t exactly use these things, but a few people have asked me for it, and that’s the best way I could find to do it.

That Meebo chat thingy at the bottom basically creates a private chatroom between myself and every visitor on the page (visitors can’t see other conversations going on, just the one between them and myself).I’m just testing this out to see how it goes.It also shows when I’m online, so if you have a simple question or feel the need to flame me senseless or something, feel free to whack it into the little box and we’ll give it a whirl.Try to keep it simple though, as you can see it’s not exactly a great platform for gratuitous monologues…. anything longer, the email form in the contact page is probably your best bet.

And if you give me about five minutes or so to answer, I should get it done in time.I’ve noticed a couple of times that a question is asked, and by the time I finish an answer the person that asked it has left the page – hence I cant reply.It would also help to keep track of these things if you entered in a handle rather than the “Meeboguest8744422” name that is the default if you want to send a message.

I thought I’d also whack up an open chat room – if it gets used it gets used, if it doesn’t, it doesn’t:

http://www.meebo.com/room/possumspollytics/

I’ll throw a link in below the Meebo thingymewap.

I’ve still got a bit of widget room left, so anyone have any suggestions for what else could be whacked up?

Finally, to you cheeky bastards out there – leave my Opossum alone! 😉

You know who you are.

Sure he might look a little mission impossible(ish), sure he’s an O’possum, and sure its probably not that cool having an avatar that sounds like a transvestite comedians fav cliche.

But I’m growing to like it and you’ll have to lump it.

To Marginals and Beyond!

In the Pantheon of Polls, Galaxy has consistently been the most favourable to the Coalitions fortunes, showing them to be two to three points better off in their primary and TPP vote than the other polling outfits. Subsequently, Galaxy became the poll de jour for Coalition members, supporters and assorted hangers on – their last refuge in the storm of polling annihilation.

Yet, todays Galaxy poll tears away their last remaining veil of delusion. It has the Coalition primary down 2 on 39, the ALP primary up 3 on 47 for a TPP split of 57/43 to the ALP.

This puts the Galaxy results right between the last Morgan, Newspoll and ACNielson polls -perhaps it’s the start of a larger polling convergence, but only time will tell.

One thing though has now become undeniable; these polls now all reflect the type of Pollycide that Newspolls last quarterly breakdown suggested, with maybe only a slight reduction in its magnitude since the last quarter. Large numbers of seats are looking to change hands – the only remaining question is “where?”

Today we’ll look at the nature of marginal vs safe seat voting movement over the last few years.

To start off, we’ll have a squiz at the marginal seat movement. The most regular marginal seat polling results are done by Newspoll, however there is not a complete series, with large gaps in the polling over the electoral cycle, particularly between elections. So to account for this, I used the actual Newspoll polling in marginal seats, and modelled the missing parts using data from Newspoll, ACN and Morgan. For each series, I simply specced out the best fitting, forecasting regression model (some were complex, some were quite simple) using all of the available data I have (my polling database currently consists of about 55000 datapoints from over 100 series of raw, aggregated and derivated data).I’m pretty confident that the modelling that fills the gaps between the actual Newspoll marginal seat polling is only a point or two off the actual results – but it gives us a useful longer term marginal seat pattern to work with.

Below are the results graphed quarterly – note that “marginal” is defined by Newspoll as being any seat held with less than a 6 point two party preferred margin, which is what I also used in some of the modelling.

 

 

The last entry is for the 2nd quarter of 2007.I expect that the primary vote for the Opposition has dropped from its 51 to somewhere around the 47 mark at the moment, while the government primary vote is currently up somewhere around the 38/39 mark…… well that’s what the modeling suggests anyway. Let’s also take a look at the TPP breakdown of the marginal seats according to Newspoll. I didn’t fill in the gaps in this series because there is too much uncertainty to accurately model the TPP results between the gaps:

Over the history of the series, it’s interesting to see the effect of Latham (what will be a recurring theme in this post). When he was elected to the party leadership, he dragged the ALP primary up 6 points in the marginals to put them in a position to dominate the marginal seats at the beginning of 2004.But a few interesting things happened after that. Firstly, while he continued to increase the ALP primary into the 2^nd quarter of 2004, it came at the expense of the minor party vote rather than the Coalition primary vote. In fact, both major parties enjoyed primary vote growth in the 2^nd quarter of 2004.That should have been a warning sign to the ALP at the time, but apparently it wasn’t.

By the end of the Latham implosion, the Coalition had picked up a 2.5% primary vote swing to them in the marginal seats compared to the 2001 election results and a 0.7% TPP preferred swing. The swing in the marginals was extremely non-uniform in both numbers and composition. You might also notice that the Latham implosion didn’t fully wash out of the system until after the 2005 Budget, but instead of marginal seat voters changing their vote from the Coalition to the ALP, they changed from the Coalition to the minor parties – a long running theme in all of the Newspoll data.

The end result of the 2004 election was to turn 14 marginal seats into safe Coalition seats by pushing them through the 6% safety margin.

These seats were:

NSW: Paterson, Cowper

WA: Kalgoorlie, Canning, Moore

Vic: McEwen, Gippsland, Dunkley

QLD: Herbert, Longman, Petrie, Hinkler, Dickson, Bowman.

Note the number of Qld seats there, they’ll become extremely important in explaining a few things a little further down.

The blowout of the ALP vote in the marginal seats suggests that even if a non-uniform swing should play out in the marginals at the impending election, the size of the overall swing will lead to nearly all of the Coalition held marginals changing hands – Bennelong and Wentworth probably being the safest two Coalition marginals outside of WA because of the local issues involved, with Stirling and Hasluck in WA being the next least likely to fall because of the smaller swing in WA that seems to be happening (that said, I think the WA twins will fall anyway, as will Bennelong – but not Wentworth).

But while the marginal seats are interesting – let’s get to the really interesting movements; the safe government seats, those government seats held by a TPP buffer of more than 6%. Again, the Newspoll quarterly data left gaps to fill, so I modelled the safe government seat vote over the last few years in the same way as I did for the marginals.

And we’ll throw in the Newspoll TPP safe government seat vote while we’re at it:

 

A few things stand out here. The long slow decline in the Coalition vote between the last quarter of 2002 through to the third quarter of 2004 being one. Through that period, the Coalition lost 5 points from their primary vote and somewhere around 6 to 7 points from their TPP vote. When Latham imploded, that blew the Coalition out from 47 to 55.4 in their primary vote, and from 54 to 62.6 in their TPP. If Latham had kept momentum, or at least kept the level he was at before the implosion, over a dozen Coalition safe seats would have become marginal and a handful would probably have fallen. However, as a result of the implosion, barely safe seats like Pearce (6.9% margin) blew out to a over a 13% margin, Leichardt (6.4%) to 10.2%, Macarthur (7%) to 11% and things like Parkes (8.7%) out to over 17%.

Yet since then, there has been what can only be described as dramatic movement in the Coalition safe seats back to the ALP, to the point where the ALP is now ahead in these seats in both primary vote and TPP terms. That has probably slipped back slightly in the Coalitions favour since the 2^nd quarter of 2007, but only just. However what is really important here are those ex-marginal seats that Latham pushed back into the Coalition safe seat column, especially in Qld.

The swings in the safe government seats are simply not going to be uniform. Seats like Murray, Riverina and O’Conner with margins of 20% or more are safe Coalition territory. At the last election their margins changed from 21.9->24.08, 19.9->20.85 and 19.1->20.39 respectively. They aren’t moving like the 14.6% average safe government seat swing away from the Coalition since the last election. Likewise, seats like Lyne and Berowra would fall with such a uniform swing, but who can honestly say the denizens of the Manning Valley would be turfing out Mark Vaile, or that the folks of Galston and Wisemans Ferry will be kicking out Ruddock?

For these swings to be averaging 14.6% in the safe government seats, and with there being a fairly large number of seats where a swing of that size is demographically bordering on the impossible, that means that there must be a fair number of seats taking up the slack with swings approaching the 18-20% mark or more. This is where Coalition members should be completely shitting themselves, and its where those marginal seats that Latham pushed into the safe seat column are exerting their influence.

But even if they are reverting back to their pre-Latham levels as a starting point, and then swinging like the marginal seats they were before Latham – those swings simply don’t add up to the size of the swing required to balance out the Newspoll polling in conjunction with the assumption that many of those ultra-solid Coalition seats wont swing anywhere near the average.

What would make those swings balance out though is if the Qld seats are swinging, but the marginals are swinging a lot less than the safe government seats. For instance, a marginal seat swing in Qld of only 6 to 7%, but a safe government seat swing of 16-18% would start to balance the numbers out. And there is a decent narrative to support such an argument in Qld. The anti-Latham factor in Qld was big – it pushed a lot of people away from the ALP more so than just about anywhere else. The margin on nearly all government seats be they marginal or safe is significantly inflated by that Latham factor. Add to that the fact that nearly all of the coastal, non Brisbane safe seats have undergone serious demographic and economic change over the last 3 years and Qld has a long standing habit of swinging large when the swing is on, particularly in the regional seats and such an argument starts to look a serious possibility

The other key player influencing the safe government seat swing is NSW.

The last Newspoll suggested that NSW had the largest average swing of all states at 12.2%. In the process of speccing out some of my models, I found myself playing around with all sorts of data. What caught my eye was the results of regressing the estimated safe government and marginal seat series against the various primary votes of the states by quarter, as well as the reverse, regressing the various state primaries on the estimated safe government and marginal seat votes.

What the results started to hint at, and it really is only a hint as there wasn’t enough observations for me to be as confident I as usually like to be with these things, was that NSW and Qld safe government seats were taking most of the weight of explanatory power in any safe government seat analysis and had been doing so since 2000.Likewise, SA, Vic and WA movements were mostly in the marginal rather than the safe seats, SA particularly so – which is bad luck to the large number of commenters on this site that seem to have a long standing dream of Downer losing his seat – bad luck with that guys 😉

I can come up with an arguable explanation of how Qld could be shouldering a large amount of the weight of the swing against the government in their safe seats, but I cannot come up with how it seems to be playing out in NSW.

The data suggests NSW is swinging big in the safe government seats, all of the data points to that and it has to be happening for the Newspoll figures to even begin to balance out (even accounting for Qld).

If any one reading this has any idea at all about how the dynamics of the big swings in NSW safe government seats are working, or where they’re likely to be happening, or how the Latham effect might have played out in seats, or how other issues like housing and whatnot could have some role in explaining the hows and why’s of the big NSW safe government seat swings that must be there- I’d love to hear from you.

Because at the moment – I’m baffled.

On a slightly related issue, since the election is approaching I suppose its time to start putting up some predictions.

Over the last few weeks, especially after churning over the ever increasing amount of data coming out of not only the polling organisations, but the last ABS census – I’m starting to see a few things that I think are becoming pretty solid relationships. Being a Qld’er, I have a better sense of how the data relationships are playing out on the ground in Qld than I do in the other states.

So, at this stage, I’m becoming pretty confident that these 5 safe government seats in Qld are gone:
Herbert, Longman, Petrie, Hinkler, Bowman.

These 2 are probably gone:
Ryan and McPherson (big call on McPherson – I know)

These 6 will have their margins slashed, and one or two may even go down to the wire:
Fisher, Dickson, Forde, Leichardt, Widebay and Fairfax (watch Fairfax)

And the three marginals of Blair, Moreton and Bonner are gone.

That’s 8-10 seats gone in Qld, with maybe 1 or 2 others if it gets really nasty for the Coalition.

 

Howards Movements

When analysing what makes voters tick, we often get carried away with satisfaction ratings, preferred PM levels, trends, counter trends and notions of who can manage what best. Yet, after all the navel gazing and the statistical analysis of the goat entrails, some things stand out a hell of a lot clearer than others.

If we look back over the history of the Howard government, we know that they enjoyed, like all other governments before them, a honeymoon period.

We also know that One Nation kicked them around the paddock, we know that the GST pissed a lot of people off, we know that Workchoices is about as popular as canned cheese and we know that Rudd seems to have had a fairly large effect.

So taking these obvious things, let’s see just how they affected the governments primary vote and the size of that effect.

To start with, I simply turned these issues into dummy variables which had a value of one for when that issue played out on the political stage, and a value of zero for all other times.

I defined the Honeymoon dummy variable (DUMMYHMOON) has being active for the first 12 months of the government. The One Nation dummy variable (DUMMYON) was active from April 1997 when the party was formed through to the 1998 Election. I defined the GST effect (DUMMYGSTEFFECT) as being active over the first 12months of the GSTs life.Workchoices was defined as starting in November 2005 when the legislation entered the Parliament and extending through to today. And finally the Rudd dummy started in December 2006 and continues through to today.

Nice and simple.

With these issues all neatly operationalised, I then regressed the government primary vote on a constant C and these dummy variables using the period of the Howard government.

The results of the regression came out as:

Dependent Variable: GOVPRIMARY
Method: Least Squares
Date: 08/23/07 Time: 10:03
Sample: 1996M04 2007M08
Included observations: 137
Variable	Coeff	S. Error	t-Statistic	Prob.
C	43.85	0.245	178.691	0.0000
DUMMYHMOON	5.78	0.617	9.357	0.0000
DUMMYON	-3.22	0.529	-6.086	0.0000
DUMMYGSTEFFECT	-2.94	0.623	-4.720	0.0000
DUMMYWORKCHOICES	-2.33	0.604	-3.854	0.0002
DUMMYRUDD	-3.51	0.882	-3.970	0.0001
R-squared	0.641		Adj R-sq	0.628

The top image is the graphical representation of these results with the red line being the actual government primary vote and the black line being the fitted regression estimation. The blue line shows the residuals from the equation. Also note that all of the variables used are highly statistically significant.

What this suggests is that without any of these things happening, the government primary vote would be at around 44 (which is pretty close to its long run average).

It suggests that the governments honeymoon period gave them an average 5 point boost over the honeymoon period. It suggests that One Nation pinched an average of just over 3 points from the governments primary vote. It also tells us that the GST reduced the primary vote by about 3 points as well.

The two important issues lately have been Workchoices and the Rudd leadership. The way these two issues are interacting with the governments primary vote numbers is a little intertwined and the magnitudes on each issue may be slightly out as a result – but not by any great amount collectively.

It suggests that Workchoices has taken over 2 points off the governments primary vote and Rudd has taken 3.5 point off it. Although Workchoices by itself without the Rudd dummy suggests that it is probably closer to 4 points, with Rudd being closer to 2 points…. But I’m keeping this simple so we won’t go there.

All up, these 5 issues explain over 60% of the movement in the government primary vote since 1996.

This analysis doesn’t take into account the inertial behaviour of the primary vote series so the size of the effects above are slightly out. But after adjusting for that behaviour (which makes everything a lot more complicated to explain), the above results are only out by a maximum of about half a point thereabouts.

 

 

I Love the Smell of Interest Rates in the Morning

Well not really, unless I was a self-funded retiree – but before we head down that route, let’s fold the latest Newspoll into our monthly Newspoll average and see what’s been going on. The Libs and the ALP primary vote can be read from the left hand side, the Nats can be read from the right.

A great load of absolutely nothing happened. The absence of movement is becoming more important than movement itself. It’s better visualised with the following two graphs:

February 2006 was the last time that the Coalition was ahead on TPP terms – that’s 18 months ago.

Questions of trends arise here. Has there been a trend away from the ALP since May 2007? Has the TPP started to asymptote, as in flattened out at a level of solid political support?

It depends on the way you analyse it. It if you treat each observation as completely independent, then there has been a trend away since May. If you treat the observations as an actual time series where each observation isn’t completely independent, but is a partial product of observations that came before it – then the answer is no. The movement since December cannot yet be separated from polling noise, margin of error and the usual small meandering around that poll estimations produce over time if you treat the polling series for what they are – time series.

If I could point out the obvious here, the longer the status quo remains, the more difficult it becomes for the Coalition to get the numbers they need to retain government. At the moment, to even have a remote chance of winning the election, the Coalition needs to claw back 5 points of primary vote while the ALP needs to lose 5 – yet that wouldn’t guarantee a Coalition victory, just that it would be possible as long as they picked up a slightly higher than usual preference flow. A movement in the primary vote of this size over this time frame has been done once by Howard – between June and September 2001 when the Tampa and September 11 were happening. The Coalition gained 6.5 points and the ALP lost 5 points from their respective primaries back then

The only other time that comes close is in the period of August to October 2002 where the Coalition gained five and the ALP lost 5.Yet that is more likely than not a margin of error issue as there was only one Newspoll in October 2002 and that gave the Coalition a primary of 47. They jumped to 47 from a monthly average of 41.5 in September and in November they dropped back to 45.5 then to 43 in December of that year.

So Howard has to do what he has only done once before – but without Tampa and S/11 to help him.

But getting back to interest rates, how do interest rate rises affect the vote estimations of the two major parties?

Since the Newspoll public database started in December 1985, the coalition primary vote has generally benefited by a fraction of a point following an interest rate rise and suffered by a fraction of a point following an interest rate fall at about the 5% significance level. Likewise, over just the period of the Howard government, the Coalition primary vote goes up with rate rises and goes down with rate cuts by a small fraction of a percent at the 10% level of significance.

But since 2003, things have changed.

If we regress the government primary vote on a constant and the banks standard variable interest rate using the Newspoll data we get:

Dependent Variable: Coalition Primary: Sample (adjusted): 2003M01 2007M08: Included observations: 55 after adjustments

Variable	Coefficient	Std. Error	t-Statistic	Prob.
C	69.08248	4.247783	16.26318	0.0000
INT	-3.674950	0.584621	-6.286039	0.0000

R-squared = 0.43

This suggests that a standard 0.25 percent interest rate increase takes nearly 1% off the governments primary vote. That drops to about to about 0.5% if we take into account the autoregressive nature of the polling series (where we add the value of the Coalitions primary vote in the previous month to the above regression equation)

If we do the same using Morgan data we get:

Dependent Variable: Coalition Primary:Sample: 2003M01 2007M08:Included observations: 56

Variable	Coefficient	Std. Error	t-Statistic	Prob.
C	78.19676	3.524834	22.18452	0.0000
INT	-5.380761	0.484139	-11.11408	0.0000

R-squared = 0.70

Which suggests a larger effect, with a 0.25% increase in rates taking 1.3% off the governments primary vote.That too drops to around 0.5% if we take into account the autoregressive nature of the polling series.

To give you an idea how that looks, the graphical results of the above equation using Morgan is:

So we can say that if interest rates have a causal effect (which Granger causality tests support at the 2% level of significance), according to the two most regularly published polls, a usual 0.25 percent rise in interest rates reduces the Coalition primary vote by between 0.5 and 1%.

So the question becomes – when does the effect happen?

The useful thing about finding out when it happens is that it also provides us with more information about how the interest rate rises spike the vote of the two major parties. We already know that on average a 25 basis points rise in interest rates lead to an average decrease in the Coalitions primary vote of between 0.5 and 1%.But that “average” wont be distributed evenly, it will spike before settling down to give us that average effect level.

To find out the timing and spike effects, I’ve created a dummy variable called “dummyraterise” which has a value of 1 in the first poll taken after the interest rate rise and a value of zero all other times.

We then regress the estimated vote on a constant C, the estimated vote in the previous poll (to account for the autoregressive inertial effects of the voting series) and on this dummy variable. We’ll use the same time period here starting in Jan 2003and using every poll through to the current poll.

First off, the ALP primary vote using Newspoll:

Dependent Variable: ALP PRIMARY:Sample (adjusted): 315 428:Included observations: 114 after adjustments

Variable	Coefficient	Std. Error	t-Statistic	Prob.
C	6.721322	2.257646	2.977138	0.0036
ALPPRIM(-1)	0.831032	0.055986	14.84363	0.0000
DUMMYRATERISE(-2)	2.671309	1.029682	2.594306	0.0108

R-sq = 0.66

After checking all the lagged periods of the rate rise for significance, I found throughout these regressions that the only statistically significant period for the rate rise effect kicking in was 3 polls after the rate rise had occurred (the first poll after the rate rise plus 2 lagged polls later… hence the (-2) after DUMMYRATERISE)).

This suggests that a rate rise increases the ALP primary vote by about 2.5 points, 3 Newspolls after the rate rise occurs.

Yet when we try the Coalition with Newspoll, there is no significant dummy variable effects at any lag. This suggests that the drop in the Coalition vote that occurs with interest rate rises happens slowly over time on the basis of the Newspoll.

So where does the ALP spike in the vote that occurs after a rate rise come from according to Newspoll?

It comes from the “Others”…. the minor parties.

Dependent Variable: OTHERS PRIMARY: Sample (adjusted): 315 428: Included observations: 114 after adjustments

Variable	Coefficient	Std. Error	t-Statistic	Prob.
C	6.397435	1.317989	4.853938	0.0000
OTHERSPRIM(-1)	0.637503	0.074541	8.552395	0.0000
DUMMYRATERISE(-2)	-1.903743	0.892724	-2.132510	0.0352

R-sq=0.40

According to Newspoll, when an interest rate rise occurs, 3 polls after it is announced the ALP primary gets an average boost of 2.5 points, about 2 points of which comes from the minor parties. The other half a point comes from the Libs or uncommitted voters.

How does the Morgan reading stack up:

Dependent Variable: ALP PRIMARY :Sample (adjusted): 186 320 :Included observations: 136 after adjustments

Variable	Coefficient	Std. Error	t-Statistic	Prob.
C	8.424555	2.303184	3.657787	0.0004
ALPPRIM(-1)	0.798993	0.054423	14.68110	0.0000
DUMMYRATERISE(-2)	2.082629	1.104975	1.884774	0.0617

R-Sq=0.62

Dependent Variable: COALITIONPRIM :Sample (adjusted): 185 320 : Included observations: 136 after adjustments

Variable	Coefficient	Std. Error	t-Statistic	Prob.
C	9.866994	2.353931	4.191710	0.0001
COALITIONPRIM(-1)	0.765045	0.055896	13.68692	0.0000
DUMMYRATERISE(-2)	-1.778497	0.996178	-1.785320	0.0765

R-sq=0.58

The “others” have no significant effects. There are two things interesting here. Over the period tested, there are more Morgans than Newspolls, yet the both suggest that it takes 3 polls from the moment interest rates rise for that effect to turn up in their respective polling. The other thing of note is that whereas Newspoll registers a spike in the ALP primary vote when interest rates rise and suggests that it comes at the expense of the “others” vote, Morgan suggests that a slightly smaller spike flows to the ALP but comes at the expense of the Coalition primary vote.

When we test the ALP TPP vote against interest rate rises, we get a 1.6 percent spike in the ALP vote, 3 polls after the interest rate rise occurred at a 10% level of significance.

So if history holds, there should be a small increase in the ALP vote: at the beginning of September for Morgan and at the end of September for Newspoll. Although the suggested spike would be smaller than the margin of error in either poll.

Also something to keep an eye on: Peter Brent of Mumble fame is doing something rather interesting over HERE and it will be well worth watching.

UPDATE

Theres a new Morgan phone poll out today (the 23 August)

ALP 60/40 on TPP, 51/36 on primaries.

It was taken over the 21st and 22nd.

Right on queue, the third Morgan poll after the interest rate rise showed an increase in the ALP vote… although the poll came earlier than expected.

I’d like to think it was an accurate prediction 😉

 

 

ALP scores rate rise first blood.

The latest Morgan face-to-face poll is in, the first measuring the affect of the interest rate rise on voting intentions.

http://www.roymorgan.com/news/polls/2007/4197/

Leading up to the polling, the question I was concerned about was whether the benefit the Coalition may receive out of higher interest rates (the economic management in tough times argument) would be greater than the cost to them of the broken promise (keeping interest rates low).

The first poll off the rank seems to answer that question – a 3.5 to 4% movement to the ALP in 2PP terms. The impact of telling fibs seems to outweigh the impact of the Coalitions economic management argument. If this result starts turning up in the polling more broadly, one of the key themes in the Coalitions re-election strategy would become worthless. That will be quite the conundrum for a government that seems to be running out of electoral bullets.

The Coalitions primary vote is 36.5%, a drop of 4% since the previous poll. The Nats are up 0.5% from 2.5 to 3%, the Libs are down 4.5% from 38 to 33.5%.The ALP primary is up 2.5% to 49.5% since the last poll.

The above graph shows the two party preferred estimates from Morgan derived from both the 2004 preference distribution and how the survey respondents stated they would allocate preferences.

On this point about preference distributions, both the 2004 election distribution and the voters own allocation of preferences are pretty close to one another. Below is a graph that measures the TPP estimates from Morgan of both parties starting at Oct/Nov 2004 right through every Morgan poll to the current one. Attached on the left of the graph are histograms of each of the four measures.

 

 

There’s a few periods where the two preference distribution mechanisms get out of whack with each other, but they have been surprisingly close over the last 6 months.

 

For Whom the Inertia Tolls

In-er-tia : the property of polling by which a political party retains its voting level at a state of rest, or its voting level along a straight line so long as it is not acted upon by an external force….

…… such as the actions of its political opponents.

Take a squiz at this:

The ALP and Coalition TPP swings, by month, since the last election using Newspoll and where the bottom axis is the month/year:

There is no doubt that Rudd has made an impact upon the ALP vote, but that impact does not appear to be the orthodox narrative that gets peddled around the pages of some of the daily political commentariat.

Back in the pre-Rudd days, those long forgotten days when the Coalition occasionally won a poll (and strangely enough, when I used to be able to get a decent Caesar Salad) – the seeds of the Howard governments destruction appeared to have already been sown.

Bit by bit, polling point by polling point had Puntersville turned on Howard in the years since the 2004 election. The trend away from the government was clouded by the small recoveries, but each recovery continued to claw back less support than they had lost.

Not only can it be seen in the swing graphs above, but it can also clearly be seen in the TPP vote itself. If we regress the Coalition TPP vote on a constant and a time variable that starts at 1 for November 2004, 2 for December 2004 etc right through to 34 for August 2007, and graph the results we get the following:

R-Squared = 0.838 and the time variable has a coefficient of 0.306 with t-stat of -12.9 and a p-value of 0.0000. This tells us that a linear decline in the Coalition two party preferred vote of 0.3% per month explains approximately 84% of the movement in the Coalition TPP vote since the last election, at an extremely high level of statistical significance.

 

Likewise if we do the same for the ALP TPP vote:

As expected, we get the same result. R-square= 0.838, with the time variable having a coefficient of +0.306.

But if we throw in a Rudd dummy variable that has a value of 0 for the months he wasn’t leader and a value of 1 for the periods Rudd was the leader of the ALP and run the regression again we get:

Here we get an R-squared= 0.87, Adjusted R-Squared=0.86, with the time trend variable having a coefficient of 0.24 and the Rudd Dummy variable coefficient having a value of 2.02.

This tells us that the ALP were gaining 0.24 percentage points a month (and the Coalition losing the same) without Rudd, and that once Rudd was elected leader he brought to the table an extra 2% of the TPP vote for the ALP.

If the ALP TPP was already growing, how can one explain the massive surge in the ALP primary under Rudd?

Simple – the ALP TPP was getting boosted off the back of the preference flows from the growing minor party vote until Rudd came along. After that, the minor party vote declined and many of those votes that ended up with ALP through preferences came across to become ALP primary votes instead. All the while the ALP TPP vote continued to increase as it had before.

Longer term readers here will already know this to be the case. Voters started deserting the Howard government a long time ago, but parked their primary vote with the minors and preferenced the ALP.

If we take the difference between the ALP TPP vote and the ALP primary vote, and graph that difference against the minor party vote – they will follow a similar path and shape if what we are saying here is true.

So let’s do it and see:

Lo and behold.

Which gets us into this nonsense about Rudds vote being somehow “soft”.

The ALP TPP vote before Rudd was soft, as it relied on a large amount of preference flows from a large amount of minor party voters. But now those voters have come across and put their primary vote with the ALP instead of their preferences. That isn’t a soft vote – it’s as hard as it gets. It’s a primary vote. So the next time you read some dullard waxing lyrical about the soft Rudd vote – remember this:

What that person is really saying is that there are a number of voters which could easily switch back, not to the minor parties from whence they came and where they used to preference the ALP, but back to the government that they deserted over the last 3 years, mostly starting after the 2005 budget and whom have gone out of their way to vote for anybody BUT the government.

The voting behaviour running against the government has been inertial. The TPP trends show that clearly, and what the Rudd leadership has done is merely change the nature of that inertia.

Where before Rudd it was just a general retreat away from the government, it is now a general charge to the ALP. It has changed from people not voting FOR the government and letting preferences flow to the ALP via the minors, to people voting for the ALP directly.

For the government to win the election, not only do they have to turn the vote around, but they have to turn around 3 years of momentum running against them in 3 months.

BTW – I’m back now, so I’ll get stuck into answering the comments from tomorrow.