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The voter makes two votes: one for a constituency representative and one for a party.
In each constituency, the representative is chosen via first-past-the-post (i.e. the representative with the most votes wins).
On the district level, the total number of seats in the assembly are allocated to parties proportionally to the number of votes the party received in the party portion of the ballot. Subtracted from each party's allocation is the number of constituency seats that party won. The number of seats remaining allocated to that party are filled using the party's list. If a candidate is on the party list, but wins a constituency seat, they do not receive two seats; they are instead crossed off the party list and replaced with the next candidate down.
Because a party can gain less seats by the party vote than needed to justify the won constituency seats, overhang seats can occur. There are different ways of dealing with overhang seats. In the Scottish Parliament the number of overhang seats is taken from the number of proportional seats of the other parties, in Germany's Bundestag the overhang seats remain and in New Zealand the other parties get compensatory seats to obtain the proportionality.
In the New Zealand system, in order to be eligible for list seats, a party must either earn at least 5% of the party vote or must win at least one constituency seat. This is extremely important to the minor parties. A party which wins no constituency seats and fails to meet the 5% threshold faces oblivion. Having a leader with a safe constituency seat is a tremendous asset to a minor party in such a system as it ensures survival.
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