KEY POINTS:
Labour and Act have struck a co-operation agreement, and its first major effect could be resolution of the impasse over the proposed transtasman drug agency.
The deal means the minority Labour Government will no longer automatically ignore Act when it looks for backing for legislation.
Leftish Labour and right-wing Act will bridge their wide philosophical differences to work together where they can in good faith.
The two parties were in talks most days last week.
Act leader Rodney Hide said he initiated talks with Prime Minister Helen Clark two weeks ago.
"I've always said we should not be seen as a tactical appendage to National," he said.
The approach follows greater co-operation among small parties in Parliament, which has resulted in Act, the Maori Party, the Greens and United Future working together on issues of joint interest.
The new Act approach is in contrast to Mr Hide's crusades against individual ministers and on "perk-busting" missions.
His new approach to politics follows a life-changing appearance as a contestant last year on Dancing with the Stars. He has shed a huge amount of weight, and his politics are more focused on policy achievements than attack.
The agreement between Labour and Act to work together where possible has already had benefits for Act.
Labour last week allowed a private member's bill in Mr Hide's name to progress to a select committee, although it is very unlikely to support it beyond that.
Mr Hide said that in return, Act had agreed to seriously consider the legislation on a transtasman therapeutics drug agency, and in particular an amended proposal drafted by New Zealand First.
"There have been no deals done," Mr Hide said last night. But he was prepared to have a serious look at the compromise.
The bill has been one of the most contentious before the present Parliament.
When it was drafted, Labour thought it had the numbers to pass it, but the defections from Labour of Taito Phillip Field and from United Future of Gordon Copeland changed the voting landscape.
Mr Hide plans to meet officials of the minister involved, Annette King, again this week to discuss it and possible changes Act might suggest. "As the free enterprise party, we can work with anybody."
Mr Hide said his concerns on the therapeutics bill included compliance costs and the requirement for approval of products that had already been vetted by, for example, the United States Food and Drug Administration.
The New Zealand First compromise would establish an agency but give New Zealand makers of complementary health products the option of being regulated by it instead of forcing coverage on them.
Those who opted out would be covered by domestic rules.
If the makers wanted to sell their products in Australia, they would then have to come under the transtasman agency's rules.
Prescription medicines and medical and surgical devices would be covered by the transtasman agency, which would be run in Canberra and Wellington and governed by the health ministers of the two nations.
The compromise has been discussed with the Australian Government, which supports it.
