The Coalition said it would have the power to order the Independent Pricing and Regulatory Tribunal to include a charge for the fund when it set Hunter water prices.

That would in effect replace the current charges to Hunter Water users for the Tillegra Dam, which the Coalition said it would not build.

The money would instead be spent on infrastructure, which the Coalition said Labor had neglected.

The news prompted a response from the Combined Pensioners and Superannuants Association, calling for an end to paying for Tillegra Dam because their budgets were already stretched to breaking point.

A spokeswoman for the association said they and other Hunter Waters customers were already paying record prices for water, partly as a result of the $477million dam.

The association also called on Opposition Leader Barry O’Farrell to clarify the Opposition’s position on funding the dam.

Dr Kaye said on Friday that the proposal was ‘‘stupid’’, ‘‘unjust in the extreme’’ and unlawful, and the Greens would try to block in the upper house the legislation the Coalition would have to introduce.

‘‘They should show that they would be a government that can admit their mistakes and dump the idea now,’’ he said.

The shadow cabinet is due to meet in Maitland on Friday.

Liberal candidates Robyn Parker (Maitland) and Andrew Cornwell (Charlestown) have backed the fund proposal as a means of delivering infrastructure rather than ‘‘a dam nobody wants’’.

Port Stephens Liberal MP Craig Baumann said charging water users for the fund was ‘‘not my preferred option’’.

‘‘But the state is broke and we need to kick start the economy,’’ he said.

‘‘I see this as seed funding for when we get the economy moving.’’

Swansea candidate Garry Edwards, who was endorsed this week, declined to comment as he wanted to find out more information about the proposal.

A Liberal Party candidate for Newcastle has yet to be announced, but is tipped to be retired Air Commodore Tim Owen.

Other candidates are expected to be confirmed during the Maitland visit.