web analytics
The Standard

Rortwatch: closing prisons to justify Wiri

Written By: - Date published: 9:15 am, March 23rd, 2012 - 15 comments
Categories: capitalism, prisons, privatisation - Tags:

1,200 prison beds, 1 in 8, are empty plus the 1,300 bed reserve. Prisoner numbers are projected to keep falling. So, why are the Nats spending a billion dollars on the Wiri private prison? And where will they get the prisoners? By closing existing public prisons. Rather than upgrading what we have more cheaply they’ll let a foreign company make a profit off locking people up.

This is part of the problem with private prisons. The prison owners have a profit motive to make sure they have enough prisoners. In the States, that often means they fund ‘tough on crime’ lobby groups (btw, how come Sensible Sentencing never releases a list of its major donors?). Here, it’s closing down existing private prisons. I would love to see the correspondence between the government and Serco over these prison closures (you would never get it, they would claim commercial sensitivity – a nice fig leaf for National to hide its privatisation plans behind).

And the government has an incentive to direct prisoners to private prisons, as well. Beyond the political motives of needing a full prison to show private prisons work there is a fiscal element. The old prisons’ capital value is long depreciated on the government’s books but it will be shelling out $300m to build this new prison and then be locked into paying for its $30m+ operating costs for 25 years. It makes more sense in the government’s accounts to keep the private prison well stocked, since it’s paying for it regardless, and stop using some old prisons that have a minimal cost associated with them if they sit empty. The alternative is to let the new prison sit empty, which is what happened with a lot of the public-private partnerships in the UK and those PPP ‘ghost roads’ in Australia, until the government realised the ‘solution’ was to cut public capacity.

Even Treasury sees that paying someone a profit for providing a service the government does on a non-profit basis just means more costs and being locked in for 25 years adds to the costs: “there is little reliable empirical evidence about the costs and benefits of PPPs” and that there “are other ways of obtaining private sector finance”, as well as that “the advantages of PPPs must be weighed against the contractual complexities and rigidities they entail”. Simply, government’s cost of capital is lower than the private sector’s – for that reason paying the private sector to provide a public good like prisons or electricity is always going to be more expensive. Unless you think there are ‘productivity fairies’ at the bottom of the garden that only the private sector knows about for some reason.

Of course, the more sensible thing is just not to build this white elephant prison in the first place. The old prisons need upgrades but its hard to see how that could cost as much as a new prison plus all the transition costs for prisoners and staff. And, by not signing into a quarter-century long deal with a profit-making entity, the government wouldn’t be locking us into a situation of having to pay for beds whether we need them or not so that some foreign shareholders can make a profit.

But can you see this privatisation-obsessed government taking the sensible option?

15 comments on “Rortwatch: closing prisons to justify Wiri”

  1. Clashman 1

    Time to get the pitchforks out and head to Wellington, methinks.

  2. ghostwhowalksnz 2

    AS I pointed out before the ’empty prison beds’ you refer to is just a sleight of hand most of which is double bunking.

    And total prison numbers projected to fall ? They have NEVER been correct in any projection of prison numbers before. Why should they be suddenly have clear foresight now. And if you think falling crime numbers will be responsible, that is a political figure now which is massaged to give the result the politicians want.

    In New York city they have an emphasis on stats so you get crimes that are ‘armed robbery’ which become ‘lost property’ for statistical purposes. And if you are a serving policeman who becomes a whistleblower on the stats falsehoods, then you end up in a psychiatric hospital after a raid on your home by the equivalent of a police superintendent and a assistant commissioner
    http://www.nytimes.com/2012/03/09/nyregion/officer-sues-claiming-police-retaliation-for-truth-telling.html?

  3. (A different) Nick K 3

    Putting aside the economic argument (which itself stacks up against private prisions) there are certain functions that should always be the government’s responsibility and running prisons is clearly one of them.

    • tc 3.1

      Problem is that with the NACT ‘certain functions that should always be the government’s responsibility ‘ doesn’t fit in to their ideology so you can forget about them taking any responsibility.

  4. DH 4

    The big alarm with these PPPs is the finality of the contracts. The Audit Office advised that contracts of this type should not be longer than about 5yrs after auditing the Papakura Council water contract. It’s standard business practice to insert an escape clause in contracts of this nature. No-one signs up to an inescapable payout for 25-35yrs, it’s just not done.

    If Labour has any business nous they’d concentrate on the length of these PPP contracts and the inability of the Govt to end them. They should IMO be pushing for criminal investigations into every PPP contract that doesn’t have a reasonable escape clause. Keep it simple; if the contract can’t be broken then someone needs to go to jail for reckless incompetence or actual fraud.

    (any Govt contract with the private sector should be for no longer than 5-6yrs with right of renewal options)

    • Bored 4.1

      Could not agree more with where Labour needs to keep the pressure: limiting contracts to 5 years would have one salient benefit….the private sector would probably not invest. I base this observation on the cost of capital which tends to reward longer term “safe” contracts with lower interest rates. Most PPPs I have observed are highly marginal in terms of profit unless subsidised or offset against expected inflation effects.

      • DH 4.1.1

        I don’t think it would stop private investment, just establish a reasonable balance of the risk. With PPPs where the private sector is financing the building the contracts just need a 5-6yearly escape clause whereby the Govt can buy the prison or whatever at residual book value and end the contract.

        There is no commercial justification for unbreakable 25yr contracts, none whatsoever.

        • Bored 4.1.1.1

          Which sort of raises the question of why go private if the state can borrow at a lesser rate and does not have to receive minimized tax returns on any profits etc?

          • DH 4.1.1.1.1

            Yes it does raise questions. The fans of PPPs claim up to a 25% cost reduction which is really only the project management side of it; they reckon they can build the structures a bit cheaper. On the financial side a 25% saving doesn’t translate into any saving at all for the taxpayer because PPPs are essentiallly a mortgage and the interest rate from the private sector is a whole lot higher than what Govt can borrow for.

            The only real advantage from Govt perspective is it keeps debt off the books. The debt is still there but it’s not in the Crown accounts as debt.

  5. joe90 5

    Perhaps they’ve given their mates a guarantee that they’ll maintain a 90% occupancy rate for at least 20 years.

  6. Mount Crawford in Wellington is part of a Treaty settlement so we will see what they do with it.

  7. Draco T Bastard 7

    (you would never get it, they would claim commercial sensitivity – a nice fig leaf for National to hide its privatisation plans behind)

    An agreement with the government is an agreement with the people and thus the people have a right to see that agreement, what brought it about and the results of that agreement. Anything else is dictatorial oppression as it removes peoples freedom to govern themselves.

    The old prisons need upgrades but its hard to see how that could cost as much as a new prison plus all the transition costs for prisoners and staff.

    Actually, it could easily cost more to upgrade the old prisons. A lot of them just won’t be up to modern earthquake standards and so the upgrade would be less cost effective than a new prison but the new prison should be in the same geographical area.

  8. yeshe 8

    These things I believe to be true .. currently at Mt Eden there is no chaplain or equivalent for any prisoner to talk with or receive counsel from; all numeracy and literacy classes, even those offered by outside volunteers have been stopped; inmates are kept locked up together in larger numbers for longer due to staff shortages … ah yes, the free market. And when I tell people here in Auckland that American Express is one of the biggest owners of prisons in the USA, they can scarce believe it. Mr Key must be in line for some very big payoff at the end of his great And rapid destruction of New Zealand’s way of being and living.

  9. weizguy 9

    I’m 100% in agreement on the issue of private prisons. However, I can advise that it is cheaper to build a new prison than it would be to upgrade the older prisons – Wellington Prison is in an awful state, New Plymouth isn’t much better, and the Waikeria ones are the worst of the lot.

  10. Campbell Larsen 10

    Three birds with one stone?

    Corrections $$$ for private prison operators, land opened up for developers and a new park for Sir Peters Mirimar studio. Nice.
    Who said the Nats weren’t generous? Know the right people and anything is possible.

    Sir Peter Jackson is reported to have advocated a public park on the land, which overlooks his Miramar-based film studio.

    Courtesy of a Stuff ‘consult the businessman’ patsy interview with the far from impartial Enterprise Miramar spokesman.

Recent Comments

Recent Posts

  • What the Dickens is going on at SDHB?
    Problems at the financially-strapped Southern District Health Board appear to stretch to its HR department with information obtained by Labour showing it still records staff leave entitlements using manual book-keeping methods. “The Board’s draft 10-year plan document forecasts a cumulative… ...
    18 mins ago
  • Teachers turn backs on new professional body
      The fact that just 56 per cent of nominations for the Education Council came from registered teachers shows the profession has turned its back on Hekia Parata’s new professional body, Labour’s Education spokesperson Chris Hipkins says. “Answers to written… ...
    25 mins ago
  • No spade work done on big building plan
      Only a quarter of the 500 hectares of Crown land the Government wants to use for new homes is understood to be suitable for building on, Labour’s Housing spokesperson Phil Twyford says. “This was National’s bold new idea to… ...
    32 mins ago
  • National: Seven KiwiSaver cuts in seven years
    National’s campaign of KiwiSaver cuts has reached seven in seven years as it dismantles KiwiSaver block by block, Labour Leader Andrew Little says. “KiwiSaver is critical to establishing a savings culture in New Zealand but National has taken a jenga-style… ...
    59 mins ago
  • Tolley’s actions contradict reassurances
    Social Development Minister Anne Tolley has serious questions to answer following the forced closure of Relationships Aotearoa just days after her reassurances she was looking at ways to keep the service operating, Labour’s Acting Social Development spokesperson Annette King says.… ...
    4 hours ago
  • SkyCity downsize another broken promise
    The downsized SkyCity Convention Centre does not deliver on the promised iconic world-class centre and shows the true extent of Steven Joyce’s incompetence, Labour Leader Andrew Little said today. “New Zealanders were promised an iconic world-class convention centre that would… ...
    4 hours ago
  • Te Arawa partnership model a step closer
    Councils around New Zealand have an opportunity to improve their consultation with Iwi Māori by following Rotorua District Council’s Te Arawa Partnership Model, Labour’s Māori Development spokesperson Nanaia Mahuta says. “The Rotorua District Council will today decide whether to adopt… ...
    4 hours ago
  • Labour mourns Dame Dorothy Fraser
    Labour Leader Andrew Little said the party is today mourning the loss of the youngest person to join the Labour Party, Dame Dorothy Fraser, who went on to be a stalwart of the Dunedin community and tireless worker for others.… ...
    24 hours ago
  • The ultimate scapegoat: PM blames fruit fly for new tax
    The Prime Minister has found the ultimate scapegoat for breaking his promise not to introduce a new tax – the Queensland fruit fly, Labour’s Biosecurity spokesperson Damien O’Connor says. “John Key’s first policy upon taking office and assigning himself the… ...
    1 day ago
  • How many victims missing out on protection?
    Hundreds of domestic abuse victims could be missing out on getting protection orders because they are unable to get legal aid, Labour’s Justice spokesperson Jacinda Ardern says.“In the last two years some 351 people who applied for legal aid for… ...
    3 days ago
  • Government kicks hardworking whanau
    A major incentive to help young Kiwis and people on low incomes to start saving has been kicked out from under them with the National-led Government ramming through short-sighted legislation under Urgency today, Labour’s Maori Development Spokesperson Nanaia Mahuta says.… ...
    3 days ago
  • Speculator tax political stunt gone wrong
    Bill English’s admission he doesn’t know whether National’s new speculator tax will have any effect shows last weekend’s announcement by the Prime Minister was a desperate political stunt, says Labour’s Housing spokesperson Phil Twyford. “This Government is so desperate to… ...
    3 days ago
  • The value of parenting
    This week, as part of the Budget, the government introduced a bill to address child poverty. This bill will require parents receiving income support to look for part-time work once their youngest child is three years of age rather than… ...
    GreensBy Jan Logie MP
    3 days ago
  • Another new tax, another broken promise
    National has unveiled yet another new tax in this budget – a rural broadband levy that will almost certainly result in an immediate price hike for internet and telephone connections across New Zealand, Labour’s ICT spokesperson Clare Curran said “The… ...
    4 days ago
  • Anniversary of Sri Lankan Tamil Massacre
    This is not going to be a happy story but if the Green Party of Aotearoa doesn’t want to know who else will? May 18th marks the anniversary of what is known as the ‘Mullivaikal massacre’ of Tamils in 2009 at… ...
    GreensBy Catherine Delahunty MP
    4 days ago
  • Labour MPs join youth to take part in 40 hour famine
    A team of Labour MPs took part in the 2015 World Vision 40 hour famine and we were told by World Vision and the young people, that it was the first time MPs had joined them and how appreciative they… ...
    4 days ago
  • Rodeo: ‘Family entertainment’ or animal abuse?
    Recently  TVNZ ran a story with confronting footage showing rodeo animals being punched, repeatedly shocked with electronic prods and having their tails violently twisted over their backs. It was clear that significant force was being used behind the scenes to make… ...
    GreensBy Mojo Mathers MP
    4 days ago
  • Budget puts the squeeze on police
    The Government has cut funding to the New Zealand police force in the latest Budget, says Labour’s Police spokesperson Kelvin Davis. “The reduction is a whopping $15.3 million that could put front line officers at risk. ...
    4 days ago
  • Crucial social services take another hit
    The Government looks set to slash half a million dollars of funding for critical social services, including Women’s Refuge and Barnados, says Labour’s Social Development spokesperson Carmel Sepuloni “Taking $500,000 from organisations aimed at improving the lives of vulnerable families… ...
    4 days ago
  • Saying it Loud on Climate in Christchurch
    The Government’s Christchurch consultation meeting on New Zealand’s emission targets was inspiring – not for what was in the Ministry for the Environment’s (MFE’s) defeatist video about the obstacles to changing to a low carbon future, but for what the… ...
    GreensBy Eugenie Sage MP
    4 days ago
  • Budget silent on small business
    The Government has completely ignored one of the most important sectors of the economy – small and medium-sized enterprises – in Budget 2015, Labour’s Small Business spokesperson Jacinda Ardern says. "A stunning 41 per cent of jobs were created by… ...
    4 days ago
  • Thank you John, it’s been bloody marvellous
    The departure of John Campbell is a blow to current affairs investigative journalism, Labour’s Broadcasting Spokesperson Clare Curran says. “Campbell Live stood out in its field. Its axing comes as local broadcasting in New Zealand remains in a state of… ...
    4 days ago
  • KiwiSaver cut shows no long-term plan
    National’s cutting of the KiwiSaver kickstart is incredibly short-term thinking, typical of a Budget that is woefully short on ideas to generate wealth and opportunity, Labour’s Finance spokesperson Grant Robertson says. “New Zealand’s savings rate is far too low. KiwiSaver… ...
    4 days ago
  • National hits the panic button for its 7th Budget
    National has hit the panic button for its 7th Budget in a desperate attempt to look like they’re taking action to reduce our shameful child poverty rates, but they are giving with one hand and taking with the other, Opposition… ...
    5 days ago
  • Panic and back-flips can’t hide twin deficits
    National’s token measures to fight fires they have left burning for seven long years can’t hide a Budget that is long on broken promises, short on vision and fails to reach surplus, says Labour’s Finance spokesperson Grant Robertson. “After being… ...
    5 days ago
  • Auckland land measure seven years too late
    National are so desperate to look like they are doing something about the Auckland housing crisis they have dusted off Labour’s 2008 inventory of government land available for housing and re-announced it, says Labour’s housing spokesperson Phil Twyford. “Despite National… ...
    5 days ago
  • Access to gender reassignment surgery essential
    I was frankly disgusted to hear the Minister for Health say that funding gender reassignment surgeries is a “nutty idea”. A recent study found that in New Zealand 1% of young people identified themselves as transgender, and 3% were unsure… ...
    GreensBy Jan Logie MP
    6 days ago
  • Global milk prices now lowest in 6 years
    The latest fall in the global dairy price has brought it to the lowest level in six years and shows there must be meaningful action in tomorrow’s Budget to diversify the economy, says Labour’s Finance spokesperson Grant Robertson. “Dairy prices… ...
    6 days ago
  • Big risks as CYF checks stopped
    Revelations that Child, Youth and Family is no longer assisting home-based early childhood educators by vetting potential employees should set alarm bells ringing, Labour Children’s spokesperson Jacinda Ardern says. “Doing away with an extra mechanism for checking potential new employees… ...
    7 days ago
  • Housing crisis about real people not numbers
    The Government’s continued failure to tackle the housing crisis is seeing thousands of vulnerable Kiwis being kept off social housing waiting lists, while others, who are on the list, are being forced to live in cars and garages, says Labour’s… ...
    7 days ago
  • Housing crisis about real people not numbers
    The Government’s continued failure to tackle the housing crisis is seeing thousands of vulnerable Kiwis being kept off social housing waiting lists, while others, who are on the list, are being forced to live in cars and garages, says Labour’s… ...
    7 days ago
  • State of origin
    Kiwis are increasingly concerned about the food they give their families. New Zealand consumers have the right to know where their food has come from, particularly when it involves animals, and should be able to expect our Government to label… ...
    GreensBy Steffan Browning MP
    7 days ago
  • Relationships Aotearoa
    It is disturbing that Relationships Aotearoa, a voluntary organisation set up in 1949 to help couples struggling with their relationships following the upheavals of World War II, may be forced to close, says Acting Spokesperson for the Voluntary and Community… ...
    1 week ago
  • An economy that is just working for some is an economy that is not working
    The National Party presents itself as a great manager of the economy, but if the economy is only working for some we really need to question that assertion. Alongside the perpetually elusive surplus, the levels of risk in our economy are… ...
    GreensBy Jan Logie MP
    1 week ago
  • An economy that is just working for some is an economy that is not working
    The National Party presents itself as a great manager of the economy, but if the economy is only working for some we really need to question that assertion. Alongside the perpetually elusive surplus, the levels of risk in our economy are… ...
    GreensBy Jan Logie MP
    1 week ago
  • House prices to a crack $1 million in 17 months
    The average Auckland home is on track to cost $1 million in 17 months’ time if nothing substantial is done to rein in soaring price rises, Labour’s Housing spokesperson Phil Twyford says. “Auckland’s house prices have skyrocketed 63 per cent… ...
    1 week ago
  • Vital support services can’t be left in lurch
    The National Government has big questions to answer about how a provider of services to thousands of vulnerable New Zealanders is set to fold, Labour’s Finance spokesperson Grant Robertson says. Relationships Aotearoa which provides support and counselling to families, individuals… ...
    1 week ago
  • Treasury and IRD on a capital gains tax
    Both the Treasury and IRD have been advising the National Government on the benefits of a capital gains tax. Documents released to the Green Party under an Official Information Act request show that John Key has been selective with the… ...
    GreensBy Russel Norman MP
    1 week ago
  • Charity legislation needs review
    It is unacceptable that the big corporate based charities claim  millions in annual income tax exemptions, while small community based and operated non-profit organisations  struggle to gain official charity status, Labour’s acting spokesperson for the Voluntary and Community Sector Louisa… ...
    1 week ago
  • John’s panic-Key response to housing crisis
    John Key needs to tell New Zealanders what caused his sudden change of heart that led to the Government’s scrambled and last-minute housing measures, Opposition Leader Andrew Little says. “The Prime Minister’s sudden rush of blood to his head followed… ...
    1 week ago
  • Keep our Assets Christchurch Campaign: An update
    I recently presented my submission to keep Christchurch Council assets at the Christchurch City Council’s public hearings on its 10 year plan on 13 May. The hearings are live-streamed and recorded so you can watch them on www.ccc.govt.nz. The Council’s… ...
    GreensBy Eugenie Sage MP
    1 week ago
  • John Key finally admits there’s a housing crisis
    John Key’s weak measures to rein in the astronomical profits property speculators are making are an admission – finally – that there is a housing crisis, Labour Leader Andrew Little says. “But yet again National is tinkering with the housing… ...
    1 week ago
  • Government stifles voices in CYFs review
    The Government’s exclusion of the Māori Women’s Welfare League in a panel on the future of CYFs is a cynical ploy to stifle views, says Labour’s Māori Development Spokesperson Nanaia Mahuta. “It's unbelievable that a significant review on the future… ...
    2 weeks ago
  • Speech to the Otago Chamber of Commerce
    Thank you very much for the opportunity to be here today. It’s a pleasure as always to be back in the town that raised me. Growing up in St Kilda meant that there was one thing that was a big… ...
    2 weeks ago
  • Key can’t just be Prime Minister for Parnell
    John Key must show New Zealanders in next week’s Budget that he is more than the Prime Minister for Parnell, and is also the Prime Minister for Pine Hill, Putararu and Palmerston North, Labour’s Finance spokesperson Grant Robertson says. In… ...
    2 weeks ago
  • Stop the conversions
    This week, some Waikato locals took me and intrepid photographer Amanda Rogers on a tour of some  lakes and waterways in their region, and up to the massive dairy conversions in the upper catchment of the Waikato River. It… ...
    GreensBy Catherine Delahunty MP
    2 weeks ago
  • More regional jobs go in Corrections reshape
    News that 194 Corrections staff are to lose their jobs will have ramifications not only for them and their families but for the wider community, Labour’s Corrections spokesperson Kelvin Davis says. Prison units at Waikeria, Tongariro and Rimutaka face closure… ...
    2 weeks ago
  • Government’s climate meetings off to a bumpy start
    On Wednesday, I attended a hui and an evening meeting that the Government had organised in Nelson as part of its climate change consultation tour, to support the Nelson community telling the Government to take meaningful action on climate change.… ...
    GreensBy Steffan Browning MP
    2 weeks ago
  • Taxpayers the only ones left feeling blue
    Ministry of Social Development bosses could have saved themselves thousands of dollars in consultants’ fees by providing staff with rose-tinted spectacles, Labour’s State Services spokesperson Kris Faafoi says. A report out today reveals the Ministry is spending over half a… ...
    2 weeks ago
  • Why are the regions still facing restrictions?
    Labour's Housing spokesperson Phil Twyford is questioning why the regions should continue to be saddled with LVR lending restrictions announced by the Reserve Bank today. “Labour has been calling for the regions to be exempted from LVRs for the best… ...
    2 weeks ago

Public service advertisements by The Standard

Current CO2 level in the atmosphere