National has earmarked the $5 billion to $7 billion it expects to make from partial assets sales for feel-good projects such as modernising schools, in a bid to sweeten up its most controversial election policy.
Prime Minister John Key announced his plan for a Future Investment Fund at National's campaign opening in Auckland yesterday, with just under four weeks to go to the November 26 election.
Asset sales promise to be one of the big issues tonight when Mr Key goes head to head with Labour leader Phil Goff for the first time in one of three television debates.
Mr Goff announced some spending plans of his own yesterday, promising to cancel work on the "holiday highway" from Puhoi to Wellsford and use $1.2 billion of the $1.7 billion this would save on an Auckland City rail loop.
National says $1 billion of its future fund would be tagged for education, including wiring schools for ultra-fast broadband and an IT network between schools called Network for Learning.
It would link schools to other schools enabling, for example, students at a school without a Latin teacher to be taught the subject by a teacher in another part of the country.
But the policy statement issued yesterday indicates that any government would have to be ready for a large education spending programme, as 44,000 more school students are expected in the system by 2020, which could require more than 2000 new classrooms.
It says 60 per cent of schools are more than 50 years old and many are earthquake risks.
As well, "96 per cent of new buildings modified between 1995 and 2005 have weather-tightness issues".
Finance Minister Bill English said using the asset-sales money for schools would mean the Government would be borrowing less.
Speaking after the campaign opening, Mr Key also said the fund could be used to invest further in Kiwibank.
"It could invest in another [state-owned enterprise] - for instance, you could put money into Kiwibank if you wanted to strengthen its capability to go into the SME [small and medium-sized enterprises] sector."
National announced its asset sales policy in January.
It plans to sell up to 49 per cent of four energy companies - Genesis, Meridian, Mighty River Power and Solid Energy - and reduce the Government's 75 per cent shareholding in Air New Zealand.
Polls have shown the policy is not popular with voters - 62.6 per cent disapproved of it in a Herald-DigiPoll survey in May - but this has not dented National's huge lead.
Although National calls its holding fund for asset sales the Future Investment Fund, it won't be an investment fund in the traditional sense.
It would be handled by the Treasury to manage money in and money out over five budgets.
Mr Key said: "The calculated decision we are making is we would rather as a Government own 51 per cent of Meridian and have a world-class education facility for our 800,000 youngsters than own 100 per cent of it."
National's launch yesterday was disrupted by a group of protesters who infiltrated the event and chanted, "Stop the war on the poor", as they were escorted out.
Mr Key stopped his speech briefly.
Referring to Labour's decision not to have a traditional campaign launch, he quipped that the protesters had come to National's because they weren't having one themselves.
Last night, Mr Goff said that the proposed fund was National using "shonky accounting to justify its dumb policy to hock off our valuable assets".
"It is unbelievably short-sighted to sell assets that are already owned by Kiwis and return almost $1 billion in dividends to be spent each year on services like health and education.
"If they're sold, you get a one-off bonus but the dividend stream is lost. It's like selling your house to pay off the mortgage."
A 3News-Reid Research poll last night showed a drop of more than five points for National and a rise for Labour from the 20s to the safer 30s.
The results were similar to a Herald-DigiPoll survey published on Saturday, which showed National on 53.5 per cent voter support, Labour on 30.3 per cent and the Greens on 9.5 per cent.