The essential issue: The big problem with the MMP threshold is the wasted votes that result. Giving voters a second choice of party vote can virtually eliminate wasted votes, and does not require any change to the threshold.
Yes, the 5% threshold is a very high one. But it is made much more difficult to overcome by the wasted votes that go with the present threshold.
The risk of wasted votes distorts the behaviour of voters, of small parties, and of larger parties. Because wasted votes can change the overall result of an election.
The second choice of party vote eliminates the issue of wasted votes, by making it much easier for voters to avoid wasting their votes. A voter may vote for a small party, but if this party misses the threshold, the voter’s second choice can count.
The present parliamentary inquiry into the 2020 election should consider how to eliminate this serious problem of wasted votes. Two-choice party voting would do it simply and easily.
The size of the threshold, and whether the electorate seat threshold should be retained, are separate issues.
Two-choice party voting 