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This article is from the soc.culture.australian FAQ, by Stephen Wales with numerous contributions by others.
The Australian Senate is Australia's Upper House, which serves a
similar function to Britain's House of Lords. Senators are elected by
Australian citizens on a State-by-State basis; that is, each State can
be considered as a separate electorate returning separate candidates.
The Northern and Australian Capital Territories each return two
senators, while the States return senators in proportion to their
population.
The ballot cast by voters is in two sections. One section allows
voters to vote preferentially for their choice of candidate - that is,
to place a 1 next to the name of the candidate whom they most prefer;
a 2 next to the name of the candidate they rank second; and so forth.
The other section lets them tick the name of a political party, in
which case their preferences are allocate according to the wishes of
that party. This is easier, and most people do this.
The method of voting is as follows: Each vote is given a starting
value of 1. The number of votes cast is divided by the number of
candidates to be returned plus one, and one is added to the dividend.
This is called the *quota*.
Example: if there are 100 voters and 3 positions to fill, the quota
would be (100 / (3 + 1)) + 1 = 26. If you think about it, if three
candidates have each received 26 out of 100 votes they will certainly
have more votes than any other candidate.
If no candidates have received enough votes to fill a quota, the
candidate with the fewest votes is eliminated from the election and
his or her votes redistributed to the next person on the ballot papers
- that is, to the person the voter has nominated as his or her second
choice. This continues until at least one candidate has achieved a
quota.
When at least one candidate has achieved the quota, we calculate the
number of votes that the most successful candidate has received in excess
of the quota. This number, divided by the quota, is the *transferrable
value* of that vote, and all votes cast for the candidate are
redistributed with that value to the next person on the ballot papers.
Example: Mr Smith receives 39 first preference votes. As above, he
only needed 26 to be elected. He is declared elected, and the votes
cast for him are redistributed to other candidates with a value of
(39 - 26) / 39 = 1/3. That is, two-thirds of their "power" has been used
up in electing Mr Smith.
We now see if any other candidates have achieved the quota. If so,
they are elected and their votes transferred as above. If not, we
eliminate candidates until one has achieved a quota and continue as
above.
It's complicated to explain, but simple (albeit slow) in operation. It
is tends to result in a Senate evenly divided between the two major
parties, with a few Independents and minor party senators holding the
balance of power. As such, it more nearly reflects the voting pattern
of the populace than any system of which I know.
 
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