KEY POINTS:
National's refusal to say how it will pay for bigger tax cuts than Labour leaves more questions than answers over possible reductions it might make in Government spending.
Party leader John Key yesterday unveiled his plan for a big push to build more road, electricity, telecommunications and water infrastructure - to be financed by borrowing.
The overall financial direction outlined by National at the weekend has drawn heavy fire from Labour.
This morning on TV One's Breakfast programme Prime Minister Helen Clark said the plans were hilarious and crazy.
"We're not borrowing for tax cuts? yeah right," she said.
"I just think it's mind boggling stupid. You go out and borrow at a time when the international markets are in crisis?"
On Newstalk ZB she described National's plan as incredible.
"The big idea is just borrow the money. Run up the debt. All our students know how hard it is to pay a debt back, all our families know how hard it is to pay a mortgage back and here we are in the middle of international financial market turmoil and the National Party want to borrow the money."
But Mr Key said the increase in debt was conservative - two percentage points of GDP.
He denied Labour's suggestion that National was planning to borrow so it could increase the size of its tax cuts.
The infrastructure plan, for which National will borrow $750 million more a year than Labour, is aimed at reducing bottlenecks and improving economic growth.
Its unveiling by Mr Key at National's annual conference in Wellington confirmed that the party intends to increase the country's debt if it wins this year's election.
National has also promised a more generous tax cut programme than Labour.
It says it will follow Labour's October 1 cuts with a second round on April 1 next year and another on April 1, 2010.
"We're borrowing for infrastructure, we're not borrowing for tax cuts," Mr Key said. "It is blindingly obvious what we're doing."
But it remains anything but obvious how National intends to finance its more-generous tax cut programme.
It appears some Government spending will get the chop, and changes will be made to the KiwiSaver scheme.
Mr Key said that when National's tax cut programme was announced in the first week of the election campaign, it would be clear the party had made some choices.
"We've got some priorities ... New Zealanders will have to assess the merits of what we're supporting and what we're not to make that change."
Mr Key refused to outline what spending National might cut, saying only that there were some things the current Government was funding that he would not.
The argument over debt, spending and tax cuts is shaping as a dominant feature of the election campaign as Labour tries to paint National as a reckless and risky option for voters.
Finance Minister Michael Cullen said it was the worst possible time to increase borrowing, as international financial markets were under pressure.
National wants voters to see it as a party that has ambitions for the country and is prepared to raise debt to improve long-term conditions.
The infrastructure plan, which would invite more private involvement in major projects and more Government spending, is an important element in creating this image.
Mr Key said that even after the borrowing, New Zealand would be one of the least-indebted OECD countries.
It is not known if National has new projects in mind or intends to borrow to pay for projects already planned.
But it is understood the party will identify specific projects during the election campaign.
They are likely to include Auckland's Waterview motorway link.
