People tend to believe that, like in the lower house, any preferences you put below one of the major parties are not going to count for anything so are not worth even thinking about.
As I say, this is true for almost every lower house seat in which it will basically boil down to a race between the Labor candidate and the Liberal/National candidate. The only exceptions to this are the few really left-wing inner-city seats in which the Greens are likely to poll better than the Libs, and a few country seats in which it will be a race between the Libs and the Nationals.
But the senate is a different story. The first thing to note is how your senate vote is counted. I don't mean the mechanics of how preferences are distributed and winners decided, I'll get to that, I mean physically how the senate vote is counted. You see, with the complexity of the senate voting system, before they can be counted, all of your preferences have to be put into a computer. All of them. From number one, through number 17, right through to that person/party you hate so much you put them last.
So, while in the house of reps vote, they stop counting your preferences once they get to the vote that goes to the eventual winner or runner-up, in the senate they must take note of every single preference simply by the fact that it all gets entered into a computer before the actual count begins. Therefore, this means that, although it is satisfying to put your most hated candidate last on the house of reps ballot, they will almost certainly never know that you did, since preferences will stop being counted before then. However, the protest you lodge by putting a particular candidate last on the senate ballot will have some kind official status, even if no-one really cares anyway.
Okay, with that rather spurious reason why every preference counts out of the way, I move on to the topic of why your preferences really do count in an actual, practical way that can affect the outcome of the election. To understand this you need to know how preferences get allocated in the senate.
The first thing to note is that, unlike in the lower house, you aren't electing a single candidate. Your vote will be used to elect the six new candidates to represent Victoria (or whichever state you are enrolled in). Because of this fact, preferences can't just stop once they reach a winning candidate, since there will still be five more candidates to elect, so therefore preferences are re-distributed from, not just the losing candidates as in the lower house, but from the winning candidates as well.
The re-distribution of votes that go to unsuccessful candidates work in exactly the same way as in the lower house: after the votes are tallied, the candidate with the least votes is excluded and their preferences flow on to the next candidate. Simple. This, however, is the last step in the vote counting cycle, before that happens preferences are distributed from the winners.
Okay, since six winners need to be decided, the number of votes needed to win is determined first, before counting begins. This is called the quota, and is determined by dividing the number of votes tallied by one more than the number of vacancies, and then adding one to the total. 6 vacancies means that a quota is basically one seventh of the total number of votes, plus one. So, for simplicity's sake we'll say that only 700,000 votes are cast. That means that to win a candidate will need 100,001 votes. Easy enough.
Hmm... actually, for later calculation, it's easier to say that 699,993 votes are cast making it a nice, round 100,000 for quota. Okay?
If your number 1 preferenced candidate gets more than 100,000 votes, the surplus votes get re-distributed down to the next preference. But, of course, not every 2nd preference will be the same, so how do they determine which preferences get re-distributed? Well, since they can't determine which votes are the "winning" ones they all get re-distributed, just at a fraction of their original value.
This is worked out by taking the amount in surplus and dividing it by the total number of votes received. So, let's say that the candidate gets 160,000 votes. We take the 60,000 extra and divide it by 160,000. This gives us 0.375. This means that every vote now goes to its second preference, but instead of being worth an entire vote, each vote is worth 0.375 of a vote, or 37.5% of its original value.
It may or may not be obvious that 62.5% of the votes were needed to get the first preference quota, which leaves 37.5% of the votes to be re-distributed. So, instead of unfairly choosing which 37.5% get re-distributed, they all get re-distributed at 37.5% of their original value. Makes perfect sense, right?
Anyway, what this means is that even if your first preference goes to a candidate from one of the major parties, the only way that your second preference won't count is if that candidate gets exactly the 100,000 votes they need to get quota and no more. This is unlikely in the first round of counting, but remember, once all the winner's preferences are re-distributed, the lowest polling candidates are excluded, and their votes are also re-distributed.
So, a candidate may win in the very first round of counting, but they will keep getting more votes (that will have to be re-distributed again) as the clear losers are eliminated. So, the preferences on your ballot that come below your vote for a winning candidate will actually gain in value as more candidates are eliminated.
In the second round, our hypothetical first preference candidate might gain 40,000 more votes on preferences, taking them to a full 200,000 votes. Which means, with a surplus of 100,000, divided by the total vote of 200,000, their re-distributed preferences are suddenly worth 0.5 of a vote each, or a full 50% of their original value.
So, even if candidate number 2 doesn't get a single first preference, they can still easily win a seat (which is generally more or less what happens with the second candidate on the ticket of the major parties). If candidate 1 gets 262,000 votes, and the surplus all goes to candidate 2 at just over 60% value, candidate 2 wins on candidate 1's surplus alone.
So, don't be fooled into thinking that once you have marked a major party on your ballot that all the votes after that are not going to count. The fact that the major parties get a lot of the vote mean that their preferences are vital for determining which minor parties, if any, get a senate seat. So, when you vote below the line, make sure that the parties and candidates you really hate are right at the bottom, because having them just underneath your preferred major party is not enough to stop them potentially getting a sizeable portion of your vote.
Apologies to those of you who already understand all of this, but I've noticed far too many otherwise astute political minds poo-pooing the idea that any preferences beyond Labor/Liberal or even Greens/Democrats will count for anything. They will, so watch how you vote. And, again, if you aren't voting below the line, please make sure you have a thorough understanding of your chosen party's group voting ticket.