KEY POINTS:
A controversial bill creating a transtasman drug agency passed its first reading yesterday, hours after Winston Peters strode out to confront a protest on Parliament's forecourt, angrily denying he'd reneged on promises.
If passed, the bill will mean complementary medicines - natural health products and dietary supplements - are regulated for the first time.
This has angered consumer groups, which believe the costs and the way the Australians have regulated the medicines will force many smaller producers out of business and products off the shelves.
Critics also argue it raises sovereignty questions and will remove New Zealanders' health choices.
The Government has been trying to get support for enabling legislation since 2003, after signing a treaty with the Australian Government.
New Zealand First and United Future have opposed the complementary medicines component of the bill - which also seeks to regulate other medicines and medical devices - but recently agreed to support it to select committee.
They won concessions on complementary medicines, but State Services Minister Annette King could not get Australian support to dump that component from the bill altogether.
The Australians were preparing to abandon the plans, seen as a template for other transtasman agencies, if the Government could not introduce the legislation by Christmas.
United Future and NZ First are sensitive about the issue and have given no guarantees they will support it further.
National began discussions about the agency in the late 1990s, but is refusing to support the bill - arguing the plan has been badly developed.
The Australian Embassy has been lobbying National MPs and Australian Foreign Minister Alexander Downer raised the matter with National leader John Key during his visit there last week.
Michelle Beckett, director of Natural Products NZ, which claims to represent 80 per cent of complementary health businesses and which is now supporting the bill as a result of the compromises, yesterday accused the NZ Health Trust of running a "dirty politics campaign".
The protest was organised by the trust - a charitable group which says it "promotes education of good health practices and the health options available to all New Zealanders".
The trust ran full-page advertisements in some newspapers yesterday and hired three "health police" to hand out leaflets at the protest.
Mr Peters arrived as Green MP Sue Kedgley labelled the bill a "sinister" infringement on health freedoms and democracy and called on the 100-strong crowd to put pressure on New Zealand First to pull its support.
As Mr Peters was booed by the crowd, he accused her of "peddling snake oil" and untruths and his audience of being bad-mannered.
He claimed the bill was "dramatically" different from the one initially proposed. NZ First had concerns about the sovereignty aspects and had ensured the overseeing ministerial council had just one New Zealand and one Australian minister, instead of a minister from every Australian state.
The Government had also agreed to a five-year, 50 per cent subsidy for the regulation costs of the complementary sector.
United First leader Peter Dunne, who did not attend the protest, said: "We've seen a lot of conflicting evidence in the last few days and the only way to resolve that is to have the arguments on the table at the select committee."
Natural Health Laboratories director Mike Cushman said the bill would stifle innovation and the production of small-scale products.
But Ms Beckett said many businesses believed there could be a number of export spin-offs - into Australia - as a result of the joint regulator.
Mrs King said the regulatory system here was "Third World".
The bill would put an end to New Zealanders buying "a product and then finding out it's got grass clippings in it, or lead, or arsenic, or Viagra, which is some of the things we've found in some complementary medicines".
THERAPEUTIC PRODUCTS AND MEDICINES BILL
The arguments for:
* It will address NZ's "Third World" regulatory system for medicines and medical devices.
* Will regulate complementary medicines for first time, weeding out bad products and ensuring consumers have better information about what they're buying.
* Cost-effective to establish a joint agency and will open new markets for NZ businesses.
* Sets template for further transtasman co-operation.
Against:
* Will push small NZ ventures out of business and force many products off the shelves.
* Over-prescriptive. Basic vitamins and foods, from manuka honey to garlic extract, shouldn't face the same regulation as pharmaceuticals.
* Concerns about ceding sovereignty, with critics pointing to history of being bullied by Australia
