Hence allowing party members a direct say in the leader of their party should provide a good incentive for people to both become and remain a member. It also will encourage MPs who aspire to the leadership to ensure they support the party and its members.
There is a risk that the party members could elect a leader who does not have the support of the caucus. For example David Cunliffe had obviously more support from Labour members than David Shearer. It is possible under the rules proposed by Labour's NZ Council, that Cunliffe would have won the last leadership election. This could have posed challenges for a caucus that seemed to have a majority in the ABC (Anyone but Cunliffe) faction. However they would just have to accept that he had won, if he had.
The proposal is that the MPs make up 40% of the electoral college. With 37 MPs, that effectively gives each MP 1.1% of the vote. It is not known how many members Labour has, but if we assume 5,000, then each member gets only 0.008% of the vote. That may not sound a lot, but consider in general elections your vote counts for about 0.00004% - yet most of us still vote.
The affiliated unions get 20% of the vote. There are five affiliated unions. This means on average each union gets 4% of the vote. It is not clear if the unions will have the union boss cast their vote in one bloc, or if they will split their votes according to an internal ballot. However either way it will make union leaders very very powerful, and no aspiring labour leader is likely to win without their endorsement.
We saw this in the United Kingdom where unions endorsed Ed Miliband, and even sent out his promotional material for him in the same envelope as the voting ballot! Miliband went on to win due to the union vote. He got only 47% of the caucus vote and 46% of the party members vote yet got 60% of the union vote. So the UK Labour Party has a leader whom the majority of his caucus and members voted against.
So while the proposed changes by the NZ Labour Party to give their members a vote for future leaders is, in my opinion, a good thing, I do think it is regrettable they give the unions a direct vote. It would be far better if unions just encouraged their members to join Labour directly, than give unions voting rights for the leadership.
But overall the proposed reforms for Labour should result in a stronger party for them. It will be interesting to observe the first leadership election under their new rules, whenever that may be.