> How does preferential voting favor bigger parties? It does the opposite.

It depends on what you are comparing it to. Preferential voting (aka ranked choice or alternative voting) is less favourable to bigger parties than first past-the-post is. But it is more favourable to bigger parties than other systems such as single transferrable vote (STV) or mixed member. The biggest reason why Australia hasn't moved to STV or mixed member for the House of Representatives, is that doing so would benefit smaller parties at the cost of the bigger ones.

> Use of the word gerrymander in this way ("having boundaries at all is gerrymander") is meaningless.

An STV or mixed member system would still have boundaries, but would be less advantageous to the bigger parties. Why isn't choosing a system which is intentionally more advantageous to the bigger parties a "gerrymander"?

> The biggest reason why Australia hasn't moved to STV or mixed member for the House of Representatives, is that doing so would benefit smaller parties at the cost of the bigger ones.

Where the evidence for that claim? More likely is that there's no impetus for change, at the least, and quite possibly no interest in it given people's feelings about how the Senate is voted and the proliferation of smaller parties there.

The current system was adopted for clearly political reasons - due to the outcome of the 1918 Swan by-election, which the ALP won because the conservative vote was split between the Nationalist and Country parties. The Nationalists were the direct ancestors of the current Liberal Party. If the system was invented to serve the needs of (one of) the major parties, who really believes that its survival isn’t because it serves the needs of both of them (or should I say, all 2.5 of them)

What you're describing is smaller parties benefiting from PV. You haven't addressed your claim. Labor is the big party and the smaller conservative parties are benefiting.

In the Australian context, the big parties are Labor and the Coalition. The Coalition is formally an alliance of two parties, but in many situations they act like a single one–indeed, in Queensland they actually merged into one (the LNP), and effectively they are a merged party in the NT as well (the CLP), although that technically was never a "merger" as such. The Nationalists and Country party in 1918 were the historical predecessors of the current Coalition. The "small parties" are the minor parties which are neither Labor nor the Coalition, but still manage to win some seats in Parliament–nowadays primarily the Greens on the left, One Nation on the right, and a random mishmash in the middle–although as we go back through the decades, other players have risen to prominence only to subsequently fade away (most notably the Democrats and before that the DLP). And then you have the "micro parties" which run candidates but never win any seats, or one or two of them might strike it lucky on very rare occasions (like the now-defunct Motoring Enthusiasts Party did in 2013).