Courage in politics is seldom recognised when it is successful. It takes courage to challenge a sacred cow, but a well-aimed challenge can render the cow sacred no longer. John Key's announcement of public asset sales yesterday should be recognised as a decision both courageous and well directed.

Certainly, his promise three years ago of no asset sales in the Government's first term implied there may be sales in the second, but only commentators habitually wise after the event will dismiss yesterday's decision as predictable. There are still some Budget decisions Mr Key should take but probably will not, because his political opponents would feast on them. Asset sales were among them.

Not now. The Prime Minister has made a very good case for the decision to partly privatise the state's three power companies and its coal company and reduce its stake in Air New Zealand. He says the sales are primarily to finance the construction of other public assets that will be needed over the next five years.

These include new schools, highways, hospital operating theatres, the faster broadband network and other infrastructure. They would normally be financed with borrowed capital, but he also announced that this year, the Government plans a determined assault on public debt.

As he put it, "The only other developed countries with a foreign debt the size of ours are Greece, Portugal, Spain and Ireland. That is very uneasy company indeed. It is precisely the difficulties those countries are in that has led to Standard & Poor's putting New Zealand on negative outlook."

Both main party leaders have given their "state of the nation" assessments in the past few days. National sees this year's subjects as debt, savings and new opportunities for personal investment. Labour wants to debate tax rates and the cost of living. It will go into the election promising a tax-free threshhold of $5000 on all incomes and a new top rate, as yet unspecified, on six-figure incomes.

Speaking the day before Mr Key, Phil Goff made no more than the ritual nod to the sacred cow. It remains to be seen whether he will now try to raise the heat on asset sales or whether he senses the electorate has moved on.

Labour seems to have no interest in reining in the government spending that it allowed to expand by 50 per cent during the property and consumption boom. It has already announced extended welfare proposals for the election. It seems not to have noticed that the recession of its last year in office revealed its level of spending to be unsustainable.

While the nation's external debts are the immediate concern, and the Government is right to release some of the capital from its commercial assets for its other capital requirements, that is by no means the only benefit it cites. The partial floats of Meridian, Genesis, Mighty River Power and Solid Energy, will bring some much-needed new life to the stockmarket and begin to provide an alternative to property investment for superannuation funds and personal savers.

This privatisation programme will favour local share buyers over foreigners, much like the sale of power companies in the 1990s. Unlike then, the Government plans to retain a majority holding. Mr Key believes this makes for the "best of both worlds". The company is subjected to the discipline, reporting requirements and oversight of the sharemarket and the bulk of its dividends go to the public purse.

It is a bold plan and a sensible one. Public asset sales alone will not sustain the sharemarket or breed a new investment culture in the population. But they are a start.