Key Points:

National will fast track a second round of tax cuts and is likely to increase borrowing to pay for some of its spending promises, the party's leader John Key says.

But Mr Key said the borrowing would be for new infrastructure projects rather than National's quicker and larger tax cuts which would be "hermetically sealed" from the debt programme.

In opening remarks to the party's annual conference in Wellington today Mr Key said National would incorporate Labour's October 1 tax cuts, bring forward a second round to April 2009 - a year earlier than Labour - and a third round to April 2010.

Labour's planned third round would not take effect until April 2011.

National is yet to explain how it will pay for the promised larger cuts.

But deputy leader and finance spokesman Bill English told delegates National was prepared to borrow more to fund infrastructure.

He said New Zealand had one of the lowest levels of debt of any developed country and "additional borrowing" for infrastructure would boost economic growth.

Their comments led to immediate accusations from Finance Minister Michael Cullen that National was playing word games and in reality would be borrowing to fund its larger tax cuts.

But Mr Key argued that increased borrowing overall - ostensibly to fund infrastructure - could be separated from National's tax cuts.

"What effectively will be happening is you will be able to see exactly what our tax cut programme costs, exactly what Labour's cost, exactly what we are delivering, what differences or priorities we've chosen over Labour's.

"So that will be extremely clear cut and rather hermetically sealed."

Any increase in debt for infrastructure would be transparent and voters could trust National to be a "conservative" manager of the economy.

The admission on borrowing comes as National faces growing calls to explain how it will pay for its promises, which include the larger faster tax cuts, a $1.5 billion broadband plan and a new prison in its first term.

It has also promised to keep many of Labour's big spending policies including Working for Families and interest free student loans.

Mr Key today said there would be "modest changes" to KiwiSaver.

In part National's admission on borrowing seems designed to neutralise Labour claims the party will have to cut services in order to afford its spending programme.

Mr Key will deliver his main speech, which is expected to unveil more details of National's infrastructure and economic plans, tomorrow morning.

National Party president Judy Kirk told delegates today the party was the most unified it had been for years and ready to fight the election, but party members could not be complacent as Labour would fight to the death to stay in power.

National's law and order spokesman Simon Power announced to delegates the party would axe the Government's sentencing council which would free up $6 million over four years. National would put that money into services for victims.

British Conservative Party leader David Cameron also addressed the conference with a video message.

Mr Cameron said social and technological changes now gave centre right parties the opportunity to combine economic efficiency with social justice, something the left had failed to do.

- NZPA