Opinion polls continue their merry dance with fluctuations up and down and the Crikey Election Indicator goes solidly onwards with minimal variation as the market seeks to make sense of what Newspoll, Neilsen, Galaxy and Morgan purport to be telling us.

As of this morning the Indicator stands at Labor having a 53.2% chance of becoming the Government to the Coalition’s 46.8%. That is virtually unchanged from a month ago (Labor was rated 53.4% on 23 April) and there was only a very temporary blip after the pundits applauded the budget where the market momentarily had the Liberals the narrowest of favourites.

Crikey Federal Election Indicator

ALP

Coalition

22-May-07

53.2%

46.8%

23-Apr-07

53.4%

46.6%

20-Mar-07

51.5%

48.5%

19-Feb-07

50.5%

49.5%

7-Dec-06

39%

61%

9-Oct-06

43%

57%

16-Aug-06

43%

57%

The Crikey Indicator is based on the market prices at the Betfair Betting Exchange and it seems to be forecasting that Labor will end up with a two party preferred vote at the forthcoming election of around 51.6%. According to the Mackerras pendulum Labor needs 51.3% to win so there is an assumption by those betting on the result that the Coalition will improve markedly from the current position indicated by the pollsters. Newspoll this morning, for example, had the two party preferred share at Labor 57% to the Coalition’s 43%. A decline of 5.5 percentage points in six months would be right at the top of the range of what has happened in previous election years.

Intriguingly, the Crikey Indicator on the Prime Minister’s own seat of Bennelong assesses the chances as 71.3% for the Coalition, 27.1% for Labor’s Maxine McKew with all other candidates a combined 1.6%. As Bennelong sits right in the middle of the pendulum as the last seat Labor needs to win office, the market thinks that John Howard will do better than his government by a couple of percentage points. If you think this is unlikely then a wager on Ms Maxine should appeal to you.

The political commentators, meanwhile, remain even more cautious than the market about believing the story the polls are telling. The accepted wisdom seems to be that the Australian electorate simply does not often stray outside the range of 54% for the winner and 48% for the loser and that a substantial comeback by the Coalition is therefore inevitable. If they looked more closely at the calculations on the site of the Australian Electoral Commission they would find that in five of the 23 elections from 1949 onwards the winner had a two party preferred share above 54% of the vote.