On May 5th the UK will be voting on (among other things) a referendum to use "Alternative Vote" instead of "First Past the Post" in electing members of Parliament.
The proposed system appears to be identical to that used in Australian Federal elections for the House of Representatives, with the difference that assigning additional preferences is explicitly optional. (In Australia votes missing full preferences are counted, but only by virtue of Electoral Commission practice and court rulings, and it's illegal to advocate partial preference voting - something Albert Langer went to prison over.)
AV is going to require very little change, contrary to some of the more ridiculous claims made by opponents. The ballot papers won't need to be changed at all - when I voted last April (as an Australian resident in the UK I get to vote in UK elections), I had to check with the electoral staff that I was only supposed to mark one box, as the ballot paper looked identical to an Australian one and my instinct was to write in a full set of preferences.
The counting will be a little bit more complicated, but not hugely so - this isn't anything like the proportional quota transfer system used in Australian senate elections! At Australian elections, only a handful of House seats remain uncertain after the first night's counting. The last election was unusual in not having a government decided immediately - and the UK managed that itself with FPTP, anyway.
Informing people about the change will involve some effort. Provided that "old style" votes (with say just an X marking one candidate) continue to be counted (as a first preference with no additional preferences), however, those who fail to understand the new system won't be disenfranchised. So if an education campaign fails to reach 100% of voters that's not a critical failing.
So what are the advantages of AV? It will drastically reduce the number of safe seats where sitting members are reelected without any effort. In the UK, members with 40-50% of the primary vote are pretty much shoe-ins. Even in Australia that there are a significant number of electorates where this happens (I've voted in both Bradfield, one of the safest Liberal seats, and Sydney, one of the safest Labour seats), but vastly fewer - a candidate needs 55% to 60% of the primary vote to feel really secure.
Practically, AV should help the small parties: people will be more likely to vote Green or UKIP if they can preference one of the major parties. On the other hand, these votes will mostly "come back" to the major parties as preferences anyway so that may not hurt them. The Greens in Australia have had only one real victory in the lower house (Melbourne at the last election) which is no better than they've managed in the UK (Brighton at the last election).
What will be interesting is the effect on the three-way dynamics of the major parties, which has no parallel in Australia (three-way Labour-Liberal-National contests are rare and rather different). The assumption is that AV will benefit the Liberal Democrats - and it's certainly something they've campaigned for - as a "middle" party who will collect preferences from both sides. On many social issues, however, they are more progressive than the other parties, so it's likely that BNP, UKIP etc preferences will pass them by, as will a good chunk of Tory and Labour votes. It also seems likely that the LibDem primary vote is in for a plastering at the next election, and AV won't help them if they're pushed to third place. (I predict a Labour landslide if the Coalition government lasts till 2015, since the economic outlook for the UK seems moderately dire.)
As an aside, I think Australia could really use a centrist "small l liberal" party. The Australian Democrats were half there, but the other half were left-wing progressives closer to the Greens. (And it was that divide which eventually crippled the party.)
Actually pretty much the exact form of voting proposed is in use in the Australian states of New South Wales and Queensland where it's known as Optional Preferential Voting. That is, you may enter numbers in one or more boxes, in order of your preference, but you may stop allocating your preferences at any point.
On the last point which you raised; Australia did have a small l liberal party, ( well, sort of ) the Australia Party. http://en.wikipedia.org/wiki/Australia_Party It was a flash in the pan. The gains made by the Greens in Australia are not at the expense of the conservatives. Zero gain in terms of countering the rising tide of conservatism.
For the March NSW state elections, the retiring Greens MLC Ian Cohen warned the conservatives would have unfettered power to pass legislations in the upper house if the Greens direct their preference away from Labor in order to keep a distance from it. Fred Nile and the Shooters will dictate to the Coalition what they want.
I am strictly a spectator on federal and state elections. My name is not on the electoral roll. The last time I voted was in 1972. This came about in 1973, when I was spending a lengthy period in Hong Kong. I went to the Australian High Commission to enroll to vote. When the day came around, the electoral officer at AHC could not find my name. As one Tony Abbott would put it " shit happens".
Once back in Sydney, I turned up to vote, only to find my name had been removed from the roll. Oh well, I was never meant to be a voter. So I let it lapse, and quite happily so. If an electoral officer knocks at the door, I just say," sorly no speaka Englisee". Works every time.
DL, I'd forgotten about the Australia Party. From the Wikipedia article, it sounds like they were a predecessor of the Australian Democrats - as many as four Democrats senators had previously been AP members.
Simon, I think the Federal system is effectively Optional Preferential, except that (following Langer) no one is allowed to advocate opting out!
Danny, the Australia Party was a little before your time. Hard to believe it, the Murdoch press was in support of it. The Australian newspaper gave it good press as it were.
What ripped the Democrats (AKA Fairies at the Bottom of the Garden), was that they actually did something when they voted for the GST.
AV with optional preferences in the UK will make very little difference. All it does is mean that one side of politics has two strong candidates they don't split the vote.
Anthony Green has analysed NSW since 1981 when optional preferences were introduced. Over 50% of preferences exhaust. There have been 846 contests in elections and by-elections and only in 29 has the 2nd candidate won on preferences. In 97% of contests the result was the same as FPTP. Only in one election, when Carr won two seats on preferences and gained a one seat majority in 1995 haver preferences effected the result (which saved us from a hung parliament IIRC).
Of the 29: 12 were independents winning with the backing of one of the major parties, 10 were Lib/Nat not splitting the vote, 5 were Lib/Nat winning on minor party preferences and 2 were ALP wins on minor party preferences.
In Federal Elections where full preferences are compulsory preferences had have more effect. Compulsory preferences just result in trading over party tickets.
http://blogs.abc.net.au/antonygreen/2011/03/how-important-will-preferences-be-at-the-nsw-election.html