The Auckland Council's top executives have shown realism by commissioning two leading consultants to come up up with recommendations to sell assets, in order to raise funds to underwrite the city's growth.
With Auckland facing significant growth pressure from immigration, and ratepayers increasingly opposed to rate hikes, the option to monetise the council's balance sheet rather than resorting to more debt funding ought to be attractive.
Behind the scenes, the Government has made it clear that an asset-rich Auckland can't expect the taxpayer to fund a disproportionate amount of the city's infrastructure spending.
But it will take political will from Auckland City's councillors to get the proposals over the line.
The reports out yesterday from investment bankers Cameron Partners and advisory firm EY have recommended either the full or partial sale of a swag of council-owned assets. These include Ports of Auckland, Auckland International Airport and Watercare -- as well as a swathe of other assets ranging from golf courses to public reserves.
The recommendations were hardly surprising, given their authorship.
Rob Cameron is known somewhat facetiously as "Mr Mom" by elements of the investment banking community.
Cameron was the Government's "go-to guy" in his role as chairman of the Capital Markets Taskforce.
The "mixed ownership model", known colloquially as "Mom", which the taskforce recommended involved the Crown selling down its shareholding in prime state-owned enterprises to 51 per cent.
The upshot was that the Government raised significant sums of money through a series of IPOs. This recycled capital so it could be reinvested in new infrastructure. Despite public opposition to the sales, they did not really impact on the Government's poll ratings.
The proposed sale of Auckland Council's shares in Auckland International Airport and Ports of Auckland, worth about $1.4 billion and $1.079 billion respectively, has been repeatedly recommended as a mechanism to release capital to invest in new transport assets like the City Rail Link, instead of adding to the council's growing debt tally.
Watercare, the city's water and wastewater network, is valued at about $8.5 billion.
EY also suggested the council should divest its rainy day fund -- a diversified portfolio of assets worth $345 million.
While council chief financial officer Sue Tindal says there is no need for hasty decisions, EY points out the obvious: that if a rainy day did occur (for instance, a global financial crisis) it would reduce the fund's value.
Though Tindal maintains the council's finances are in good shape, it is obvious that it is cash-strapped when it comes to building new transport infrastructure.
There is considerable investor appetite for such assets.
Metrics produced in a Herald story tell the tale: Auckland Council manages assets worth $42 billion, five times the size of one of New Zealand's biggest companies, Fletcher Building.
The region's population is also set to grow from 1.5 million currently to 2 million by 2033.
In 2013, Cameron Partners made similar recommendations to Christchurch City Council.
The southern council brought Cameron in when it was seeking to plug a yawning $800 million chasm in its accounts, which the Government has insisted is its share of the new anchor projects planned for the city.
Council finance guru Raf Manji and Mayor Lianne Dalziel acknowledged back then the investment bankers' commonsense approach.
But navigating the shoals of local government politics is proving problematic. Manji recently acknowledged that some of the bolder recommendations will have to wait until a mandate is built at next year's local body elections.
But in the interim, the city is looking at other avenues to expand its revenue base.
A proposal to form a Temasek model -- the name of the Singapore Government's investment company -- has also been suggested. This approach would involve the city putting the bulk of its commercial revenue-producing assets in one basket.
In Auckland, Len Brown has opposed privatisation in the past. But now he has announced his intention not to contest the Auckland mayoralty next year, his voice should be lessened.