Not a local, but... Proportional voting systems suffer from the problem that voting "power" is not proportional to representation.

Consider a parliament with 100 members and 3 parties. Suppose the breakdown is: A has 49 members, B has 48 members, and C has 3 members. Guess what... A, B, and C all have equal voting power! Any two parties are enough to reach a majority of 51 votes, and any one party is not. Despite A having, in theory, over 16 times the representation of C, it does not have any voting advantage.

Keep in mind that any voting system based on parties will tend to have very partisan voting blocs. Representatives in the US are more independent and likely to break with the party because they are elected in geographically isolated elections. Representatives elected directly by a party generally have about as much independence as the Electors in the Electoral College.

I'm from NZ...

To form a government, the party with the most votes, or a coalition of parties which collectively holds a majority petition the governor general.

For a single party this is quite straightforward.

To form a coalition the member parties agree on a 'Confidence and supply agreement" This is basically a statement that in the event of a vote of no-confidence, all of the coalitions members will support the coalition, and also a broad agreement on the budget. Getting an agreement on confidence usually involves a certain amount of horse trading about ministerial and vice ministerial positions. Likewise, the agreement on supply will probably involve some intense budget and joint-policy negotiations.

If you had a parliament of 101 seats, split into an opposition of 50 seats, and a government of 51, itself made up of a large party (48 seats) and a small party (3 seats) what you will probably see is the small party only has the tiniest influence on the coalition agreement. They probably traded everything else to get their senior member a ministerial position.