Key Points:

National's plan to make the New Zealand Superannuation Fund invest more of its money at home has started an election argument about political interference.

But it has also been welcomed as a boost for the economy.

National leader John Key yesterday revealed the unexpected policy in Christchurch, saying that if elected, his party would change the law so a finance minister could direct the fund's guardians to invest some of their billions in New Zealand.

The target would be set at 40 per cent - a big rise on the 23 per cent that the fund had in New Zealand assets at the end of its last financial year.

Mr Key said the decision made sense because it would make more investment money available for local projects and businesses in the short term - as global conditions tightened - and in the longer term it would help stimulate economic growth.

"I argued right back in 2004, why would we be exporting so much capital in a country that has such a current account deficit?" Mr Key said.

"Don't we want to get in there and back New Zealand companies? We want to give New Zealand companies the opportunity to access some capital, across a broad range of options."

National plans to let the fund work its way up to the 40 per cent level, so it does not have to dump international investments.

No deadline has been set, but Mr Key said it was likely the fund would be able to reach the target during the first term of his government if National won the election.

It could do so by investing locally most of the $2 billion in new money it gets each year from the Government.

The move would change the convention the burgeoning "Cullen Fund" has operated under since it was established in 2001.

Under its founding legislation, the fund operates independently of politicians and a minister can only order it to target a particular return on its investments.

Finance Minister Michael Cullen this week hinted he, too, was interested in getting the fund to invest more in New Zealand.

But yesterday, he said there was no way Labour would change the law so a minister could tell the fund what to do.

"The whole purpose of making the fund independent of the government was to ensure investment decisions are made by professionals," Dr Cullen said.

"This is not the finance minister's piggy bank to raid for pet projects."

Calls to get the fund to invest more in this country usually come from parties such as the Greens and New Zealand First, rather than National.

That is why Mr Key's move is a surprise, although it also underlines his willingness to look at ideas that may not traditionally fit his party.

He said he had been looking at the move since 2004 and had always planned to unveil it during the current campaign - although the day of the announcement was brought forward because of the global financial crisis.

Brian Gaynor, an investment strategist and analyst at Milford Asset Management, said he was disappointed by the announcement because instructions from politicians affected the fundamental structure of the fund.

"Where does it stop? It leads to pork barrelling - go and build an airport in Kaitaia, or something like that."

Mr Gaynor said his concern was not with the 40 per cent target, but with the principle of the move.

But two high profile backers of the idea - New Zealand Institute chief executive David Skilling and New Zealand Exchange boss Mark Weldon - said the local market would be able to absorb the extra money, which would be very welcome.

Both men suggested such a move last week to help get the local economy through looming tough times and growing beyond that.

"I think it's very much a step in the right direction," Dr Skilling said.

Having an amount of 40 per cent did not mean the fund had all its eggs in one basket, particularly with the wide range of things it could invest in locally, he said.

Mr Weldon said the idea was brave and came at the right time.

THE SUPER FUND

* Had assets of $14.5 billion as at August 31, with about 23 per cent invested in New Zealand.

* Receives around $2 billion every year from the Government to help fund future super payments.

* Cannot currently be told by politicians where to invest.

* National would change the law to order it to put 40 per cent of its money into New Zealand.

* Labour says it wants the fund to invest more locally, but would not change the law.

* National would leave it up to the fund to decide what to invest in within NZ. Mr Key suggested it could invest in infrastructure bonds, shares, local government bonds, property or forestry.