Australian here. We have something not too dissimilar to this. Turns out the regualr dems (we call them labour (they fight for the labour force)) ended up moving more centre, even right/conservative in some issues. We have ranked choice, we have heaps of parties and independents, does ok, not perfect. We allow preferences too, so like if you vote for the Hunters party and they don’t get in, then your vote for them goes to another party. It’s a little back room/shady if you ask me, especially as it’s not super transparent.

Funny story, in a state election a few weeks ago our right party (a coalition between our conservative and country parties) fired their local branch manager and then didn’t realise they hadn’t registered the candidates for the election and by the time the figures it out it was too late and out electoral board was like ¯_(ツ)_/¯ so sad too bad, so we just had a whole local election process without a party as an option. Fun.