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This article is from the soc.culture.australian FAQ, by Stephen Wales with numerous contributions by others.
The aim of a representative electoral system is to elect people who
represent their constituency. It is simple, intuitive almost, to see that
where you are trying to elect one person, that person should have the
support of over 50% of their constituents before they can claim to reflect
the views of their constituency.
There are two practical problems which this creates. Firstly, how do you
guarantee one person will end up with over 50% of the votes if more than
two people are standing? Secondly, is it fair, that in a worst case
scenario, with a close vote, that nearly 50% of constituents will be
unrepresented.
Answer 1 - Exhaustive Preferential Voting
-----------------------------------------
OK, we have one person to be elected, and more than two candidates.
The quota (the number of votes needed to be elected) is 1/2 plus 1, ie
50% plus one. This quota is commonly called a majority.
In exhaustive preferential voting, squares are placed next to the
names of each candidate. Constituents number these squares in order of
their choice. "1" goes against the person you most want, "2" against
the next person, and so on down the ballot paper.
After voting, all the ballot papers are sorted according to the number
"1" votes, and the papers are counted. If no-one has a majority (ie
has attained the quota) then the person who has the lowest number of
papers is removed from the ballot, and that person's papers a
distributed to the candidate of next choice (at this stage the number
"2" votes) and the results are tallied again. This process of
deleting the lowest, continues until a candidate finally gains a
majority. That candidate is then declared elected. In this way is is
ensured that there will always be one candidate with a majority.
Answer 2 - Proportional Representation
--------------------------------------
There are different forms of proportional representation around. The
most rigorous (and therefore most accurate in terms of reflecting the
constituents) is Hare-Clark, which is used in Tasmania, ACT, (and, I
think Eire?). Another name for PR is Quota Preferential. The
differences between these forms are minor in procedure, but major in
effect.
First, let's look at this conceptually. Remember that what we are
trying to do is select people who can represent their constituents, ie
the chamber of parliament being elected should reflect the diversity
of views in the constituencies.
In a single member system, the worst case is that 1/2 - 1 voters did
not want the elected person. Remember, 1/2 + 1 to get elected. If two
people were to be elected we can't have a quota of 1/2 + 1 to get
elected, because there aren't enough votes; if there are two to be
elected then they should represent at least a third of the
constituents. That is, the quota becomes 1/3 + 1. Similarly, if three
are to be elected, the quota is 1/4 + 1. The interesting thing, and
this is why there are multi member constituencies, is that the more
members you have representing a constituency, the fewer people are un
represented. This is easier to see in a table. Remember this is a
worst case scenario
No elected quota total people electing total unrepresented 1 1/2 + 1 1/2 + 1 1/2 - 1 2 1/3 + 1 2/3 + 2 1/3 - 2 3 1/4 + 1 3/4 + 3 1/4 - 3 4 1/5 + 1 4/5 + 4 1/5 - 4
 
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