The preferential voting system in Australia was introduced just over 100 years ago by a butt-hurt Nationalist Government who lost a safe “Nationalist” seat to a 21 year old Labor candidate for the WA then rural seat of Swan. Edwin Corboy became the youngest person ever to be elected to either house of the Parliament of Australia by polling 34.4% of the vote and won, ahead of the Nationalist candidate on 29.6% and the Country Party candidate on 30.4%. This pissed off the Nationalist government and prompted them to change the voting system to the preferential voting system by rewriting the Commonwealth Electoral Act 1918.
Preferential voting is a political innovation more or less* unique to Australia. In almost all other countries, you get the right to cast a single vote for your party or candidate of choice. This single vote may be for a candidate in a single member electorate, as occurs in the United Kingdom, Canada or the United States, or it may be for parties elected by proportional representation as in European countries. (Some countries, like Germany, New Zealand and Scotland, use variants on proportional representation where you get two votes.) All these systems work on the basis that if your choice of candidate or party does not get elected, your vote does not get a second chance to be counted.
The essence of preferential voting is candidates are ranked in order of preference on the ballot paper. You put the number 1 next to your first choice candidate, 2 next to your second choice, and so on. If your first choice candidate is not elected and no candidate receives half of the vote, your vote may be re-examined for its next preference.  The system allows a voter to vote for the candidate he or she truly prefers, and then mark his or her second preference for a candidate who might still be appealing to the voter — the political equivalent of having one’s cake and eating it too. Precisely because of this logic, of course, preferential voting can have the effect of encouraging a multiplicity of candidates and so reducing the likelihood that any one of them will receive a majority of the first preference votes cast,  which to me, feels like a win for democracy.
Another way I’ve come to understand it is using a scenario most can relate to, being a guest at a wedding. Wedding 1 you have can ask for meat, fish or vegetarian option, but only your first preference counts. If most of the room vote for meat, the vegetarians and pescatarians have to deal.
Wedding 2: same scenario, same meals, but you can order the meals in rank of preference. At this wedding you could be getting the fish because the vegetarians and pescatarians voted meat last, and the meat lovers voted the vegetarian meal last, and most were happy with fish second, so fish would win because the majority were happy to settle for second choice.
Its a clunky explanation but conceptually it works.
So what’s so undemocratic about second best?
For many Australians, the preferential system conjures scenes of back room deals and shady negotiations resulting in representatives that nobody wanted or liked. Many doubt the system improves democracy and in recent times the system has come under mounting criticism, increasingly so from the Coalition, Labor and the Greens.
This perception was personified in the 2013 half-Senate election, interestingly where the three largest parties didn’t fair very well. According to the Electoral Regulation Research Network’s Democratic Audit of Australia , the 2013 half-Senate election prompted a review of the Senate voting system, especially the ‘Group Vote Ticket’ (or GVT) (i.e. the option that electors have to vote for a party ticket rather than fill in preferences for all candidates), as it appeared to provide scope for administrative executives of political parties to seek to exercise influence over electoral outcomes by leveraging preference orders. Thus parties could (and did), enter into negotiations over the allocation of preferences (the colloquial term for this being preference “wheeling and dealing” (Mayer 1980)).
Prior to the 2013 half-Senate election analysts noted a surge in party registrations and learned that many of these new minor parties (later dubbed “micro parties”) had entered into agreements to direct preferences to each other, resulting in an aggregated vote of more than 14.29 percent (the vote share needed to be able to secure a seat), thus the cross-preference deal would ensure one of their number would be elected. 
The main beneficiary of the swing in the Senate vote was the Palmer United Party (PUP), but candidates from the Liberal Democratic Party (LDP) in New South Wales and the Family First party in South Australia also won seats. 
A sense of outrage started to develop around the election of Ricky Muir from the Australian Motoring Enthusiasts Party (AMEP) in Victoria, who won his seat with a very small share of the primary vote (17,083 primary votes, or 0.5 percent). The composition of the Senate then became a problem for the newly elected Liberal-National coalition government as it found it very hard to dictate to the cross-bench to force its more contentious legislation (also known as democracy in action).This would have been particularly galling given that the influx of cross-benchers was from the right of Australian politics, and that, in the case of senators Muir and Leyenhjelm, had been secured at the expense of what might have otherwise been Liberal seats. Herein lay the incentive for the Coalition to seek to alter the Senate voting system.  — anyone else noticing a pattern here?
It appears to me that the preferential voting system was first introduced by the Nationalist government in power because they were butt-hurt from loosing a “safe seat”, and that recent voting system changes were justified for almost the identical reasoning.
Personally I am in favour of more independent voices in Parliament. As I have said in pervious articles, I believe diversity of thought, background and perspective is a sign of good governance. However it appears to me that the “powerful” political parties have a habit of altering the election rules when newer, smaller voices threaten their seats — but was that what happened?
So after doing a bit more research, I sought out the perspective of Glenn Druery, the undisputed “preference whisperer” who I figured would be the most knowledgable about our unique system, having leveraged his knowledge to secure seats in Australia’s state and federal parliament for possibly hundreds of independents and micro parties (who likely had a lot to do with that 2013 half-senate election).
During our chat I explained that my biggest bugbear with preference voting concerns the transparency of it all. I started thinking about it over the weekend in relation to a growing number of potential Independents in the Parliament for the 2019 election, and whether or not there was a risk that voting in more Independents (while arguably more democratic) might inadvertently deliver a Liberal government under the preferential voting system.
Druery explained that for a Group Voting Ticket, candidates must publish their preferences online, and that anyone could look up online to see the preferences of their favourite candidates in the two weeks leading up to the election. This was news to me. Bit of a game changer to be honest.
So technically, if on the morning of election day, I could take the time to look up my favourite candidates, check their preferences to make sure I am happy with them, I can go into the polling booth confident that my second, third or subsequent votes, wouldn’t end up supporting a racist bigot that I despise.
So that was a win for democracy I hadn’t fully appreciated.
It got me thinking, if the preferences are actually published, and if the preferential voting system enables me to spread the love for the candidates I want to support, while ensuring the ones I cannot stand are right at the bottom, then why have I read so many articles about the preference system being misused or not being trustworthy or undemocratic?
The answer to this question was brought to my attention by a few knowledgable people on Twitter.
I was reminded of the important difference between voter-marked preferential voting (used for House & now also Senate elections) and the behind-the-veil preference deals under Group Voting Ticket systems (the old Senate system, still used for VIC & WA upper house elections).
So more digging — in 1984, there was an amendment to the electoral law to make it possible for voters in Senate elections to cast a single vote for a party (actually, for the party’s preferences) instead of for individual candidates. This meant that voters could cast their votes either ‘above’ or ‘below’ the line that now divides the ballot. Australians who choose to vote ‘below the line’ cast their votes in the same way that they did before, numbering all the candidates in order of preference (democracy win). Alternatively, a voter who casts his or her vote ‘above the line’ finds on the top half of the ballot only one box for each party, not separate boxes for each individual candidate. If the voter places a ‘1’ in the box of one of the parties, the voter thereby casts his or her votes in accordance with the preference ordering of all candidates that his or her preferred party has published. Bingo!
The 1984 amendments made it harder for Independents to get elected because it offered an opportunity for voters to gift their right to select preferences to the parties above the line, in exchange for a simplified voting experience. Immediately Independents were disadvantaged, unable to benefit from the preference ‘gifts’ voters bestowed on them.
The Australian Parliament website argues that the ‘Group Ticket Voting’ (GTV) has simplified voting and resulted in fewer spoilt ballots , sure, it did simplify voting, but they just reengineered the system so voters who don’t really give a shit could hand their right to select preferences to parties.
Apparently most voters now choose to vote ‘above the line’ in Senate elections — in other words, most votes in these elections now are cast for parties, not individual candidates. I argue that ‘above the line’ has made it harder for independent voices to get elected, and the 1984 amendments eroded the democratic value of preferential voting.
After the 2013 election, a Joint Parliamentary Standing Committee on Electoral Matters (JSCEM) convened and focused on two issues in particular: first, the cross-preference deals that were struck between the minor parties that resulted in the increase in minor party representation (the colloquial term for this is ‘preference harvesting’); 
Let’s just stop it right here. Increasing minor party representation, to me, equates to improving democracy. I see what they have done here — introducing a negative or neutral term “preference harvesting” instead of “increasing minor party representation” because its easy to say “preference harvesting is bad”, but alarming to say “increasing minor party representation is bad”. More independent voices only forces the big parties to work harder to pass crappy bills through the house, so I am going to change all future references to “preference harvesting” into “improving democracy” from this point forward… let’s continue…
and, second, the exponential increase in party registration that occurred in the lead-up to the election. On the question of party registrations, the committee was clearly of the view that this was being caused by a small number of political operators seeking to either register or encourage the registration of parties in a bid to ‘game’ the system by enhancing the environment in which “improving democracy” could occur. The JSCEM recommended increasing the number of bona fide members required for a party to be able to be registered with the AEC and for registration fees to significantly increase. Individuals would also be banned from registering multiple parties (JSCEM 2014).
So basically in 2013, the existing Government made it harder for minor parties to have a voice in parliament.
On the question of how best to deal with “improving democracy”, submissions from Labor, the Coalition and the Greens all argued the case for the abolition of the GVT and to allow instead for electors to be able to cast optional preferences. The independent senator from South Australia, Nick Xenophon, was also a strong advocate of this approach and had previously introduced a private members bill to institute optional preferential voting soon after the 2013 election (but I am also confident there is no way he didn’t benefit from the GVT at some point in his political career!?, so this feels very hypocritical). This bill languished for want of government support and the matter of electoral reform stalled under Tony Abbott’s prime ministership. However, upon becoming leader and wishing to call a double dissolution election partly to address the problem his government had with the upper house, new prime minister Malcolm Turnbull became very interested in Senate voting reform. With the Greens and Senator Xenophon indicating their support (but, interestingly, Labor changing its position), the government commenced the process of changing the electoral laws to ban the GVT and to allow for optional preferential voting. 
However you feel about the efforts of Druery to “harvest” preferences, the outcome of his efforts has been a greater number of independent voices in parliament. Independents are disadvantaged because of the 1984 amendments, they have no party to lean on for support, so I respect anyone who has attempted to help Australians get into Parliament independently of the three major parties.
I now feel confident to say that preference voting has the POTENTIAL to be MORE democratic, but it hinges upon the majority of Australian voters to vote below the line.
No one wants a voting ballot that is a mile long, but if that’s the price of democracy, so be it (perhaps they should just adjust the ballot paper layout so its more of a matrix and saves more trees?).
We should all be very concerned when the larger more powerful parties attempt to introduce electoral reforms that make it harder for independent voices to represent the Australian people in parliament.
Takeaway — vote below the line if you want to be in control of your own preferences, if not, be sure to check your candidates preferences in the two weeks leading up to the election.
 Electoral Regulation Research Network / Democratic Audit of Australia : Joint Working Paper Series, an instance of Cartel behaviour? The Politics of Senate Electoral reform 2016 by Dr. Nick Economou (Monash University)
*Preferential voting (in various forms) is not unique to Aus — it is also used in Ireland and Malta and in some jurisdictions in several other countries.