Monday, March 30, 2015

The electoral math of four parties competing over a seat

The number of serious contenders in a riding dramatically changes the electoral math of what it takes to get elected.

Normally in first part the post elections you have two primary parties competing for a seat which means a close race 45% of the vote is what is needed to win.  

When there are three parties competing for seat it take about 35% of the vote to win.   With only 35% of the vote needed to win, a seat can be won by a strong minority view point.

When you have four parties seriously competing 30% becomes enough to win the seat.  This sort of race makes it much easier for a small party to win seats because they do not need to try and reach the majority of the population.   A minor party with 5-10% of the vote in the past can realistically win in most four party races.  

In 2015 we will see four party races in the following areas
CPC. LPC, NDP and Greens:
On all of Vancouver Island other than Saanich-Gulf Islands, parts of the lower mainland,  Yukon, and some places in Ontario

CPC, LPC, NDP, and Bloc
About 25-30 ridings in Quebec

What it means is that in these 50 or so ridings no one will able to call any of them with any confidence.

State of Treaty Negotiations - Dead in the Water!

The BC Treaty Commission is back in the news for the first time in a very long time because the BC cabinet would not approve George Abbott as Chief Commissioner even though he was the one suggested for the job by the province.   With the BCTC in the media because of this event there has been commentary about the state of Treaty negotiations in BC but very little of that has been well informed about the reality of what is going on in Treaty negotiations.

Ts'Kw'aylacw Negotiating Team in 1999
The BCTC was created as a tripartite "Keeper of the Process" as part of the 1991 BC Claims Taskforce Report.   The purpose of the Treaty Commission was to make sure each of the parties would take the negotiations seriously.   By 2000 it was clear to everyone that the BCTC was toothless and could do nothing other than mildly scold the parties if someone was not taking the process seriously.   Ultimately the BCTC is little more than giving the negotiations a veneer of non-partisan respectability but can do nothing to make the Feds or the Province seriously negotiate.    The BCTC oversees a Treaty process that has been fundamentally flawed from the start.

Old church on the Leon Creek reserve
Negotiations in the BC Treaty process started in 1993.  After 22 years there have only been four final agreements representing a total of eight Indian Act Bands.    Why have there been so few settlements and why have those taken so long?

The primary reason Treaty negotiations are stalled in BC is because there is a fundamental disagreement between the Crowns and First Nations on Aboriginal title and rights.

First Nations assert their ownership over much of the province and come to the negotiations from the perspective that they would not have to surrender their ownership of the land.    First Nations assumed that by being accepted in the negotiations that this was a tacit recognition by the Crown that there are Aboriginal title and rights held by the First Nation.

Pavilion Lake in the winter
The previous comprehensive claims process required the First Nation to prove what lands they had aboriginal rights to.    It was a costly research process and many First Nations were insulted they had to prove they existed.

The two Crowns come from the perspective that any Aboriginal title or rights not specifically recognized by the courts de facto do not exist and that the Treaty negotiations would replace any possible Aboriginal title and rights with new Treaty rights but since there were not court recognized ownership, any Treaty rights would be an improvement.    The Crown has acted as if the First Nations came with nothing to the table and were mere supplicants seeking government largess.

This fundamental difference has lead to the very different assumptions about how the negotiations would go.   First Nations assumed that each settlement would be unique and based on the title and rights of each First Nation.   The negotiators from the Crown have approached the negotiations with a one size fits all model in which an Indian is worth X in cash and land and that all settlements would be broadly the same in value.

The Chilcotin - no need for Treaty negotiations here
This difference in assumptions means that what First Nations expect is dramatically more than what the Crown is willing to agree to at the table.   For a typical First Nation in BC the scale of the land settlement most likely on offer is only about 10% of what the First Nation is willing to accept.  

Some people on the First Nation side see the approach of the Crowns to the negotiations as settlement through exhaustion - if the talks drag on long enough eventually the First Nations will have to settle for the position of the Crowns.   Certainly that seems to be core to the Federal government negotiation position and has been so for the last 22 years.  

Cynical people would point to the fact that negotiating is cheaper than settling for the Federal government, so why rush to a settlement?

Few First Nations in the BC Treaty Process see the current negotiations as a path towards a settlement.

So why have only two First Nations left the BC Treaty Process if it is not something most First Nations see as a path to a settlement?   Money.    First Nations in BC have few revenue sources that allow them to decide what they will do and how.    The BC Treaty Process comes with loans and grants for the negotiations.   This money can be used to do a lot of the important capacity building work that needs to be done by First Nation governments.  It is also the only money that allows First Nations to do the research needed to know their land better.

Christy Clark was right in saying there have to be fundamental changes to the BC Treaty process.  The charade that are the current negotiations have to come to an end because of the Tsilhqot'in decision.

In June 2014 the Supreme Court of Canada released their decision on Tsilhqot’in Nation v. British Columbia.  With that one decision the courts affirmed that Xeni Gwet'in had ownership of a lot more land than anything that would be possible within the Treaty process.  Not only does Aboriginal Title exist, it exists as First Nations have always said, over a large amount of the land.

The current template that the Crowns are using for the negotiations are no longer viable because First Nations could get control again over a lot more land through the courts.  Not only is the court route more likely to offer a much better settlement, it also faster and much cheaper than the current Treaty negotiations.

It has been almost ten months since the Tsilhqot'in decision which should have marked an end to the BC Treaty process and finally forced the Federal and Provincial Crowns to come to the table with a process to recognize Aboriginal Title in BC.

From 1995 to 2002 I worked as a Treaty negotiator for the Ts'Kw'aylcw First Nation.   The First Nation chose to leave the process when it was clear that the governments would only agree to a tiny amount of the land being returned to First Nation control.

Monday, March 23, 2015

2014 Firearms Licenses per capita in Canada

Province/Territory Licences per 100,000 Population
Yukon 19,698
Newfoundland and Labrador 14,249
Northwest Territories 12,638
Nunavut 9,722
Saskatchewan 9,463
New Brunswick 9,171
Nova Scotia 7,957
Alberta 7,177
Manitoba 7,010
Quebec 6,270
Nationwide 5,942
British Columbia 5,731
Prince Edward Island 4,395
Ontario 4,362

Tuesday, March 17, 2015

With a large Scottish Nationalist Party caucus in Westminster can anyone form a stable UK government?

2015 could very well be an election that changes the nature of Westminster because of the likely large number of seats that the Scottish Nationalist Party could win.   What no one is considering is that the SNP could very well go to Westminster with no intention of making parliament work.

Post world war two until 1997  only had two parties winning almost all of the seats in Parliament.  In that year the Liberal Democrats rose to 46 seats and have been over 50 seats in the next three elections.   In 2010 this lead to a hung parliament, as they call it in the UK.   This lead to the Conservative/Liberal Democrat coalition government.   The 2015 election polls do not indicate this is likely to repeat itself.

The Parliament at Westminster has 650 MPs of which after the 2010 election 28 of them were not from one of the three main parties.  17 of the 28 are the Northern Irish MPs  

Non Major Party MPs
Nationalist MPs
6 Scottish Nationalist
3 Plaid Cymru
5 Sinn Fein

Other Northern Irish
8 Democratic Unionist Party
1 Alliance

The rest
1 Green
1 Independent

As long as all these parties together can not equal the number of seats the Liberal Democrats win they are effectively not an important factor in the formation of a government, but what we are looking at is a dramatic fall in the number of seats the Liberal Democrats are likely to win.

What various prediction sites are suggesting for the number of seats likely to be won:

  • Conservatives 282 (278-286)
  • Labour        272 (265-279)
  • SNP            48 (40-55)
  • Lib Dems       25 (22-28)
  • DUP             8 (7-8)
  • Sinn Fein       5
  • Plaid Cymru     3 (2-4)
  • UKIP            3 (1-5)
  • SDLP            3
  • Other           4

The exact numbers are not vitally important, it is the broad reality that the SNP will likely hold almost as many seats as all the other small parties that matters.   As the Lib Dems were the only crucial factor for government formation in 2010, the SNP will be the ones in 2015.

325 MPs are needed for a majority, or 323 if one does not count Sinn Fein.  What you can see from the numbers above is that only the SNP  will likely hold enough seats to be a viable coalition partner for either major party.   The problem is that neither major party is going to want to form a government with the SNP

The Conservatives are a very unionist party and a coalition with the SNP is off the table for that reason alone,   The policies of the two parties are very much at odds with each other making coalition impossible on ideological grounds.

Labour would have trouble being in a coalition with the SNP because it would give the Conservatives a wedge issue to use in England to show Labour is not for the United Kingdom.   Labour and the SNP would also have troubles working as a coalition because they are primary political adversaries in Holyrood.  

Between the SNP, Plaid Cymru and Sinn Fein, nationalist parties wanting out of the UK are likely to hold 50 to 60 seats.   For the SNP there is no upside to making the United Kingdom work because this would delay independence.   The scale of what would have to be on the table in terms of more devolution would likely be more than the public in England would accept, not that this would be a problem for the SNP.  

Canada could show the UK what may be ahead.

The Bloc Quebecois held a significant number of seats in the Canadian parliament from 1993 to 2011.  With such a large block of seats in the hands of a party not wanting to see Canada function the path to a majority government was not easy for anyone.  The Liberals barely managed a majority in 1997, they managed to luck out on how the vote split to win a number of close races.  In 2008 when it was suggested that an Liberal/NDP colaition government would govern with the support of the Bloc, there was a huge backlash in the public to the idea of a government relying on the support of separatists.

Without the SNP how does one get to 323?   If the Conservatives managed to get the Lib Dems, DUP and UKIP into one governing coalition, they would only be at 318 or so, five seats short.  Though  a coalition including both UKIP and Lib Dems is highly unlikely.

Even if both Labour and the Conservatives are at the high end of their estimates, they still do not have any clear path to majority.  One or the other of them would have to break at least 300 seats.

This leaves one option for a coalition government that would have a working majority would be a Conservative/Labour one.   This would be a more realistic government than one including the SNP.

Wednesday, March 11, 2015

As many as 21 seats in BC may be won with less than 1/3 of the vote in October

The polling data for BC is indicating that there are four parties competing for the vote in the coming federal election.   The Greens look like they will achieve between 15% and 20% of the vote and the Liberals look like they will get double the vote they did in 2011.  What this means is that in various places across BC there will be serious four party races and that will lead to people winning with less than one third of the vote.

In total I think as many as half the seats in BC will be won by someone with less than one third of the vote.   One impact of having this many seats won by very low margins means there will be very surprising results.   None of the seats are entirely out of reach for any party.   It would take only a small shift in the vote to win seats for parties that are in theory in fourth.  It also means that

Vancouver Island - 6 of the 7 seats will be tight races, the only race that is not likely to be close is Elizabeth May in Saanich-Gulf Islands
  • Courtney-Alberni  
  • Cowichan-Malahat-Langford 
  • Esquimalt-Saanich-Sooke 
  • Nanaimo-Ladysmith
  • North Island-Comox-Powell River
  • Victoria  
Metro Vancouver - most of the seats that will be close are in the suburbs
  • Burnaby-North Seymour
  • Burnaby South
  • Delta
  • Fleetwood-Port Kells 
  • Mission--Matsqui--Fraser Canyon
  • Pitt Meadows--Maple Ridge
  • Port Moody-Coquitlam
  • Richmond Centre
  • South Surrey-White Rock
  • Steveston-Richmond East
  • Surrey Centre
  • Vancouver Kingsway
  • West Vancouver--Sunshine Coast--Sea to Sky Country
Interior - given the organizational weakness of the NDP, Liberals and Greens in most of the interior, I do not think more than 2 races will be close.
  • North Okanagan-Shuswap
  • South Okanagan-West Kootenay 
There are a couple of seats that I do not think will be that close and the Liberals will win
  • North Vancouver
  • Surrey Newtown
  • Vancouver Granville
  • Vancouver South

2015 Election Stock Market for the October Federal Election

Werner Antweiler of the Sauder School of Business at UBC runs an election stock market during federal elections in Canada.   On March 1st the market for the fall federal election opened

My holdings as of March 11th
You can invest up to $1,000 in the market and buy and sell shares in how well the political parties will do in the election.   The market is an overall zero sum game.  

The concept behind the election stock market is that if people have to put their money where their mouth is they are likely to make their best estimates of the outcome of the election.  Can markets be used to predict outcomes of events?  With enough people taking part the wisdom of crowds comes into play.

One of the problems with the Sauder School of Business election stock markets is that often there have not been enough people taking part in them making the market not very liquid.   It also meant that one or two people with a few hundred dollars could significantly impact the results of the market.

In 2013 the election stock market did not do any better than most pundits in predicting the results of the BC election    The market predicted an NDP majority and had the popularity of the parties close to what the polls were showing.   In this case I do not think having a lot of traders would have made a dramatic difference to the outcome.    

If predicting the election is of interest to you, I highly recommend taking part in the election stock market.   I have averaged a 30% return over 7 elections - when I factor in 2013 it falls to 20%.

One useful thing that Werner provides is his Seat Distribution Forecaster.   You can enter in your assumptions on what the voters from the 2011 election will do in 2015     You can do the table for the whole nation, parts of the country or individual provinces.   The table reflects the new electoral boundaries in use for 2015
This is the table you enter you assumptions into about how the voters from 2011 will act in 2015
This tool has been available for numerous elections in Canada since the late 1990s.  Currently you can use it for not only the next federal election, but the next election in Alberta and Saskatchewan
This is one scenario I quickly input for BC.  

Saturday, March 7, 2015

As Oil Prices Fall, Global Oil Reserves will Fall

There is an impact of the falling oil prices no one has talked about, global oil reserves will drop.   Oil reserves are not only a function of the technology needed to extract the oil but also the economic viability of getting oil.  This means as oil prices rise the global oil reserves also rise.   When prices drop oil reserves drop.

Economics do matter.   If you do not look economics, the oil in the Canadian tar sands is enough to provide the world with 50 years of oil at current consumption levels.

Over the last five years the global oil reserves have increased a lot because of the tar sands in Canada and Venezuela.  With the falling price of oil the economics of new tar sands production becomes questionable and that reduces the oil reserves in both countries dramatically.  It also reduces the oil reserves of Brazil and the US because in both cases much of the new oil that has come online in the last five years is more expensive to extract than the current price of oil.
Notice the dramatic rise in the two tar sands countries oil reserves
With a lower price of oil this reserves go away
If I were to estimate it, the fall in the price of oil has made around one quarter of the oil reserves no longer economic to extract and therefore no longer part of the oil reserves.     This has taken the global oil reserves from a 40 year supply at current consumption levels to 30 years.

The price rise over the last decade were mainly because there was a narrow margin between oil produced and oil consumed.   The high price brought a lot of new production online which now has lead to an excess of oil in the market place and a falling price.

Where will things go?  Everything depends on the price of oil and the cost to extract it.   If  the prices falls further the oil reserves will fall further.   The cost of extraction can fall due to improved technology.  Extraction costs can also rise due to political instability.   There is no real reason to expect prices to rise much in the next five to ten years especially if we are headed towards a global recession and there are indicators out there, like the dramatic fall in the Baltic Dry Index, that show this could be possible.