An independent economist believes councils around New Zealand should be regularly reviewing the assets it holds, to make sure the balance sheet is fit for purpose.
It comes as Mayor Wayne Brown is adamant Auckland Council needs to sell its shares in Auckland Airport to help plug its $375 million budget hole, which includes $50 million needed for storm recovery.
He believes selling the council's 18 percent stake in the airport is the best way to avoid a significant rate rise.
Independent Economist Cameron Bagrie told AM on Tuesday councils should be regularly reviewing the assets it holds but said the shares in Auckland Airport should not be the only ones up for review.
"We've got a model that's fundamentally broken and we need to make some real hard, bold decisions," Bagire told AM co-host Ryan Bridge.
"What we are going through with the likes of Auckland Airport is an example. There's a conversation Auckland Council should be having every 12 months.
"They should be reviewing their portfolio, looking at, are we getting an adequate return on this investment relative to the opportunity cost of that investment which is holding debt on the other side."
Bagrie said even if the council sold the shares they had in the airport, they would still have a hole to fill.
He also believes the model used by councils in Auckland and around New Zealand "doesn't work".
"We've got a mismatch here between operational income, that's your rates and other levies versus operational expenditure," he told AM.
"If you look at $1.5 billion worth of losses against about $13 billion worth of operating income in the last 12 months, your expenditure line is around 10 percent higher than what your income line is.
"You've got to pull some levers and you've got to pull them in a pretty major way."
Bagrie told AM what's happening in Auckland is a "precursor" to what's occurring around the country and believes councils have four options to get out of their fiscal hole.
"You have broadly a few options. One, you raise rates, two you cut back on spending. Three, you increase debt or four, you don't look at asset sales, but you certainly look at reinvesting the proceeds from asset divestment into one other side of the balance sheet," Bagrie told AM.
"So those are the four options and everybody's going to have a different take on which one they think is the greater priority."
Watch the full interview with Cameron Bagrie in the video above.
