The political dog fight over the flag referendum waged all yesterday and by last night both the Prime Minister and Leader of the Opposition appeared to be willing to talk to each other.

But it is still a question of who blinks first.

The Prime Minister is willing to meet Labour Leader Andrew Little, provided Mr Little puts no preconditions on the meeting.

Mr Little says he won’t but also says Labour’s bottom line has been that the first referendum include a yes/no vote on whether to change the flag at all.

However he is willing to consider “another way of approach” that would restore confidence in the process.

“Let’s hear it and let’s talk about it,” he told POLITIK.

This option was promoted in a petition by Labour’s flag spokesman, Trevor Mallard, but rejected by the Government’s majority vote on the Select Committee.

ACT Leader, David Seymour, who is promoting the inclusion of the Red Peaks flag in the first referendum says Mr Little has missed his “smacking” moment.

That is a reference to the way Mr Key, when in Opposition, agreed to support Sue Bradford’s Bill to make smacking of children an offence after Prime Minister Helen Clark persuaded her to give the police discretionary powers on whether to prosecute.

That move effectively defused considerable opposition to the Bill which Ms Clark believed was damaging Labour.

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Mr Seymour told POLITIK that what Mr Little needed to do was reach across the aisle.

“It can’t be for a yes-no vote,” he said.

“That’s not the point at issue.

“The popular momentum is for the Red Peak flag not for a yes- no vote.”

Mr Seymour said he had met the Prime Minister to talk about the flag impasse and concluded that the Prime Minister was in a “pickle”.

“Right now, if everything stays the same, we are destined to retain the same flag.

“Everyone is then going ask why the hell did you spend $26 million on this.

“Likewise there is a political problem.

“People are going to say what’s the Prime Minister been doing – oh yeah, that’s right, trying and failing to change a symbol.

“He knows he needs to shake it up so there will actually be some options and there will be a vote.

“He knows that the exclusion of Red Peak has created cynicism – or at least that’s my reading from talking to him and he wants to put it in but the Labour Party are now pushing their own bandwagon on the back of Red Peak.”

Other sources close to the Government more or less agree with Mr Seymour’s reading of the situation; that prior to the promotion of Red Peak the flag referendum looked like it was going to flop and that the Prime Minister was beginning to worry about the political repercussions of that.

Labour’s leader appears to be sensing a change in the public mood also and is beginning to make some subtle adjustments to Labour’s position.

For a start he is now happy to agree that Labour’s policy is actually to change the flag.

“We are not opposed in principle to a change in the flag but we are somewhat concerned about the process that has evolved so far and is set to continue unless we can get some sort of change.

“And it’s the Prime Minister who has opened up the possibility that he might be in a frame of mind to agree to some changes.

“It’s not just a matter of adding another design to please a group of people who have got behind one other flag design.”

So is including a yes/no vote on whether to change at all in the first referendum a bottom line for Labour?

“It’s a pretty firm kind of position from us,” he said.

“It could be conceded if we could find a suitable alternative.

“I’m open to a discussion about it.

“I’m not so fixated on it that it has to be that or bust.”

Whether that much of a concession by Mr Little will be enough to start talks with the prime Minister remains to be seen.

He wrote to Mr Little yesterday saying the decision to include the Yes/No question on whether to change the flag in the second referendum was taken by the government after considering advice from officials.

“I have been disappointed at the approach your party has taken in the period since to undermine the process that was carefully considered and enacted by Parliament,” the letter said.

“I remain willing to meet with you to discuss the possible inclusion of the Red Peak flag in the upcoming referendum, but only on the basis that Labour clearly accepts the rest of the flag consideration process and in particular the fact that the Yes/No question on change will take place as a second referendum.”

Mr Key has the support of the Ministry of Justice in his stance.

“Voters’ response to whether they want to change the flag will be strongly influenced by the alternative designs,” it  said in a regulatory Impact Statement provided to the Government.

“Asking people to vote without seeing what these alternative designs look like would risk the legitimacy of the referendum process. “

Labour’s proposal is a sort of half way house — it would have both yes/no and then the designs on the same ballot.

Sources close to the Government believe that that legitimacy the Ministry talks about  has already been comprised by the failure to include Red Peak which is why Mr Seymour may once again find that he ends up as a the cross party power broker as he did over the bar opening hours for the Rugby World Cup.