Now we've voted to retain MMP (by a bigger margin than when we first adopted it in 1993), the statutory review clause kicks in, and we get a chance to improve it. The review will be conducted by the Electoral Commission rather than politicians (though politicians will still get the final say, since they'll have to pass the legislation through parliament), and they'll release an initial consultation paper and call for submissions in February. It will focus on six specific questions, which do not include the Maori seats or the size of Parliament. The first of these is obviously the threshold, so here's my thoughts on it:
What thresholds parties should have to cross to qualify for an allocation of list seats in Parliament? None. The threshold distorts our democracy, preventing the natural rise and fall of parties, and creating perverse and downright toxic incentives for parties to either gift seats to others or attempt to disenfranchise large blocks of voters. Many European proportional systems have no threshold, and our system would work perfectly well applying the Sainte-Laguë formula directly to the party vote.
The "justifications" for the threshold - "extremism" and "instability" - turn out to be myths when examined closely. There simply are no political parties in New Zealand toxic enough to justify disenfranchisement (if it can ever be justified). Looking at the counterfactuals (with the caveat that voting patterns would undoubtedly change without a threshold), the 2011 election would have seen the Conservatives and ALCP gain representation; 2008 would have given us NZ First, the Kiwi Party, and Bill & Ben. None of these parties represent anything to be afraid of (well, no more so than ACT), and they are as worthy of democratic representation as you or I. And none of those results would have led to the feared "instability". While there would have been more small parties in the middle, there would also be easy governing coalitions available, and the presence of multiple possible support partners dilutes the power of each. The oft-cited bogeymen of Israel and Italy are the result of those countries' respective political cultures, not of their electoral systems.
Which is why supporters of the threshold seem increasingly to be relying on the idea of "effective parties" as a defence. The ideas is that a small party of less than six MPs cannot function effectively in Parliament, due to lack of debate spaces, primary questions, and select committee spots (not to mention punitive proxying rules). Against that, we've seen several small parties - the Progressives in 2002 - 2005, ACT and United Future in 2005 - 2008, ACT and the Maori party in 2008 - 2011 - do exactly that. But more generally, the question of whether a given party is "effective" or not can only be answered by the voters it represents. If Parliament's rules reduce the effectiveness of small parties, then the onus is on the House to change those rules, not on voters to change their preferences.
