KEY POINTS:
Act leader Rodney Hide sure ruffled feathers as he tried to use the post-election negotiations to set the economic agenda for John Key's new Government.
At issue was Hide's determination to wage war on all fronts at once.
What seriously got up National's nose - or the very sensitive nose of Finance Minister-elect Bill English - was Act's ceaseless promotion of an over-arching private sector-led taskforce to drive an examination of Government expenditure.
Not just in the particular areas where everybody (well, at least the business sector) knows the public service is dripping with fat - wasteful programmes, endless committees, consultants engaged in major churnalism in Wellington coffee bars; high-priced policy analysts and communications consultants by the bucketful - but right across the board.
Revolution on a grand scale was not on English's plate, particularly as Act's plan to give a supreme taskforce the ability to probe into every nook and cranny in official Wellington would basically be allowing Hide's team to second-guess the Finance Minister.
Nothing doing.
What Hide has settled for instead is a much more scaled-back version. The taskforces will look into "identified" sectors and examine whether particular programmes are in the "national interest"; and take a look at whether other alternatives would do the job for the taxpayer better.
Hide's bravado disguises a serious point. In reality, Wellington is in need of root-and-branch reform. Any political tourist coming back to the capital after a decade or so away would be astounded at the expansion of officialdom.
The problem is English should have been the one to come up with the bold plan - not Hide.
The behind-scenes tensions at one stage were so bad that National officials were wondering whether the support deal with Act would in fact be inked.
But Key managed to talk Hide around.
Where Act has scored is in getting an agreement out of National to make a concrete goal of closing the income gap with Australia by 2025. This will require a sustained lift in New Zealand's productivity growth to 3 per cent a year - something that has so far eluded this country.
To get some focus on this ambition a "high-quality" advisory group will be formed to probe into the real reasons behind New Zealand's decline in productivity performance, investigate the kind of institutions that Australia sports to drive its superior performance and report annually on progress made towards the 2025 goal.
Frankly, this is the real winner in the National-Act agreement.
The advisory group should move quickly to examine the runs on the board that the Australian Productivity Commission has notched up. The commission undertakes exhaustive investigations into various sectors, interviewing the key players before coming up with in-depth recommendations. It has been a powerful force in driving efficiency into Australia's economy over the past 15 years.
The formation of a Productivity Commission here has been talked about from time to time but there has been little action so far.
The advisory group will not have to look far for new ideas.
Act founder Sir Roger Douglas' latest book, Just Do It - Beat Australia by 2020 , is readily available on the internet for downloading as a PDF file. It's brimming with ideas which National might care to examine if egos are kept out of the way.
Sir Roger's profile has been rather low while the negotiations have been taking place but he will not remain dormant for long.
The beauty of the "Catchup with Australia by 2020" proposal is that the advisory group must report progress towards achieving the goal annually.
This covers off the major defect in outgoing Prime Minister Helen Clark's goal to get back into the top half of the OECD.
There were no metrics in place to measure progress and there was an aversion at Government level towards publishing balanced scorecards or other such devices to ensure policy-makers' feet were kept to the fire.
Key understands the need for measurable goals. But he has cautioned the economic outlook may make it difficult to gain quick purchase.
The new Prime Minister is moving fast in persuading a raft of willing suspects to put their brains to work in the national interest. On the list are: NZ Institute chief executive David Skilling, the McKinsey team, NZX's Mark Weldon and PricewaterhouseCoopers' John Shewan.
He is expected to move quickly to ensure that the various taskforces and advisory groups to be established are not stacked with Act's own friends but contain a wider mix.
What does seem clear is that Wellington is due for significant change.
It will require considerable flexibility if it is to work, particularly from English, who has waited many years to get back into the driving seat, and from Act.
The major problem that could upset relations is if the public sector is bogged down in too much reform at the expense of daily delivery.
There is a fine judgment to be made which will require all of Key's proven executive ability if English and Hide are not to end up at each other's throats.
