Economics on private prisons don’t add up

Written By: - Date published: 2:03 pm, May 11th, 2010 - 15 comments
Categories: prisons - Tags: ,

National is pushing ahead with its ideologically-driven plan to privatise prisons.

You know, I don’t think that the Left should argue against private prisons on the grounds that imprisonment should be a core public function, or that privatisation is just about ‘cost-cutting’. The argument against privatisation that will work, because it’s true, is that private prisons cost more.

We know that the last time Auckland Remand was privatised it didn’t save money. It cost $66,000 a year to imprison someone in Auckland remand vs $49,000 for a publicly-run equivalent. Remember, this was the Aussie private prison industry’s loss-leader!

Pro-privatisers can only vaguely claim that privatisation magically brings in new ideas that, for unexplained reasons, can’t be emulated by the public sector. The record proves them wrong. And so does common sense. You add the need for the provider to make a profit and you’ve got to increase the cost.

Any sensible economic analysis will tell the government that this is not a money saver, it’s a gift to the private prison industry, but they don’t care – they aren’t governing in the interests of New Zealand, they’re governing to give kick backs to their private sector backers.

15 comments on “Economics on private prisons don’t add up ”

  • Comments are now closed

  1. ghostwhowalksnz 1
    11 May 2010 at 3:02 pm

    Pravadblog is saying private prosecution services mean its OK for private firms to run prisons.
    But of course the judges are not private, they are the ones who decide the guilt or innocence , when no jury is involved and the sentence
    And remember that prisons serve a judicial function for their prisoners, since there are many infractions of prison rules, that can be punished by summary judgement by the prison management.

  2. Lanthanide 2
    11 May 2010 at 3:07 pm

    I think the only thing going for private prisons is the possibility for more culturally targeted rehabilitation programmes. Like send all people of a specific ethnicity to this specific private prison where they get programmes that are more likely to help them out than a ‘general’ prison would. Although there’s nothing stopping public prisons from having similar systems set up, for some reason this never seems to actually materialise? It could simply be that this sort of targeted programme costs more to run and so the public prisons, charged with lowering costs as much as possible, simply can’t offer it.

    I’m pretty ignorant about prisons and what programmes are being run at the moment, so it’s entirely possible that this sort of thing is already going on with public prisons.

  4. Rex Widerstrom 4
    11 May 2010 at 4:39 pm

    Pro-privatisers can only vaguely claim that privatisation magically brings in new ideas that, for unexplained reasons, can’t be emulated by the public sector.

    Do I have to, yet again, link to the independent reports by the Inspector of Custodial Services, that shows WA’s private prison – now it’s run by someone other than Wackenhutt / G4S / AIMS or whaetevr their disguise-of-the-day is – is performing many functions better than the state-run equivalets? Or mention again that prisoners are queueing up to transfer there?

    Nah, I’ve done it before and you still repeat these broad-brush assertions, so I think I’ll stop bothering.

    You add the need for the provider to make a profit and you’ve got to increase the cost.

    *sigh* No, you tie the profit to the achievment of positive performance indicators: everything from low escapes to low numbers of complaints by prisoners to, best of all, low recidivism by released inmates and you have the potential to create an excellent prison (albeit that that’s something of an oxymoron).

    Because you don’t have those levers to pull with a state prison, beause you’re dealing with Barry “I’m never responsible for the screwups that just happen to occur on my watch” Matthews, you can’t do a damn thing to improve conditions for the people held in them. Believe me, I’ve worn myself out trying.

  5. ghostwhowalksnz 5
    11 May 2010 at 5:25 pm

    Rex , have you heard of private offshore drilling wells. They Just have to provide better outcomes except when they really screw up. Heard of XT network?
    I would like to see private probation services , where a well funded management could make a difference, not running a service which is at the bottom end of the so called enterprenurial scale.

    Of course the funding for National party , which has dropped totally off the radar the last year wouldnt have anything to do with their decision.

    • Rex Widerstrom 5.1
      11 May 2010 at 9:13 pm

      GWW – there’s a lot of private well drillers and telecommunications network operators who don’t screw up (Optus seems to manage without any of the drama and failure of Telstra)… so what’s your point?

      Are you trying to tell me a Corrections Department, headed by the notorious Barry Matthews, doesn’t make mistakes?

      I have no idea what the government’s agreement over the last prison contained (and in event event GEO / G4S / Wackenhutt wouldn’t even be on my list of possible operators) but ones of the reasons private prisons might be more expensive per head than state prisons, for instance, is that smart governments negotiate a “trailing commission” with the operators, paying them for each year a former inmate stays out of trouble.

      That has seen private prison operators not only vastly improve the quality and availability of rehabilitation programs in jails, but also move into helping released prisoners with housing, jobs and welfare.

      Whereas Matthews and his administration have no such incentive. No matter how big a screw up that man makes of everything he touches, he keeps his job.

      I know which one I’d rather have running any prison I, or anyone I cared about, was sent to.

    • seth 5.2
      11 May 2010 at 9:57 pm

      Thats an extremely poor strawman position, couldn’t you have at least come up with something better than that?

      So let me get this right…….because the XT network has failed that means private prisons won’t work, even though Rex has just pointed out a fabulously successful one in Australia.

      • lprent 5.2.1
        11 May 2010 at 10:14 pm

        Much as I respect Rex, it is just as easy to point to piss-poor ones that warehouse inmates like some kind of inventory, and who bride legislators to keep feeding them more units. Try Florida, I seem to remember writing a post about it last week.

        For that matter, as I remember this post, its main concern was about the higher costs per prisoner for taxpayers in private prisons. The point of the post was that if you fed the same amounts of money per prisoner to the existing public prisons to try and reduce the rate of recidivism, wouldn’t you also get better outcomes?

        Incidentally if you look at Florida’s private prisions, you’d swear that they’re trying to get people to reoffend for exactly the reasons that the XT network crapped out. Telecom accurately calculated the demand, and then installed insufficient capacity to met it – this was probably done to reduce costs and thereby increase profits. Just like a lot of the private prison systems I’ve been looking at.

        Really if you’re going to hop in here and sprout troll style lines, then at least do it intelligently – you’d then get some debate rather than having me simply call you a bit of an idiot dipshit.

        • Rex Widerstrom 5.2.1.1
          11 May 2010 at 11:02 pm

          I agree it’s easy to point to bad prisons, LP. Shocking ones… ones that, if they were mirrored in NZ, I’d be involved in protesting against in any way I could. The common thread between them seems to be the company that manages them… the very same company that “Crusher” seems to be tripping over herself to provide with front running in NZ.

          If they get to run NZ’s prisons then it will be a tragedy. But equally, there’s private operators who’ve proven their ability to run prisons better than the state. Certainly better than any department run by Barry Matthews could ever manage, despite my respect for the officers at the coalface.

          So why not just put any ideology aside and choose the solution that’s best for society (in terms of reduced recidiviam) and for the inmates? That’s not most private prisons, I agree. But nor is it most state run prisons.

          To suggest otherwise seems to me to be the equivalent of saying “many cars have an appalling safety rating. Therefore the only sensible option is to buy a bicycle”. Why not dispassionately check the history of each, and choose the one that performs the best?

          • Draco T Bastard 5.2.1.1.1
            12 May 2010 at 9:21 am

            If the state puts in the same incentives for state run prisons that you’re on about for private run prisons then the state run prison would invariably cost less because it wouldn’t have the deadweight loss of profit. No matter what happens, running the prisons will cost a minimum amount and no amount of privatisation can reduce that. But, as private systems need to make a profit, they can, and will, cost more.

            • Rex Widerstrom 5.2.1.1.1.1
              12 May 2010 at 4:14 pm

              I agree completely. But surely you’re not suggesting paying public servants based on measurable outcomes?!!

              Have you told the teachers’ unions of this sudden conversion? 😛

              Seriously though, if I thought for a millisecond I had a hope of successfully advocating that Barry Matthews and his senior management are paid on outcomes like lack of recidivism then that’s the line I’d be pushing.

              For me personally it’d be a win / win – either recidivism rates would plummet or (more likely, IMO) he’d end up paying the government for the privilege of coming to work.

  6. marsman 6
    11 May 2010 at 7:54 pm

    Get Dick Cheney’s outfit to run our prisons? Why not, we already have George W as a PM.

  7. marsman 7
    11 May 2010 at 7:57 pm

    Get Dick Cheney’s mob to run our prisons? Why not,we’ve already got a George W. as PM.

  8. JJ 8
    11 May 2010 at 8:26 pm

    The prison in question is currently publicly run, thuswe know exactly what the current cost per head is and we can quantify the quality of service provided.
    With this knowledge in hand, the government can run the tendering process with this in mind. If the tendering process produces an insufficenet discount to current operating costs, the government can decline the received offer. All contracts will no doubt be fixed term, fixed price. It is quite impossible for private management to cost more than public management in this situation, unless you are suggesting the government will consider paying more than the current price? Perhaps they will conspire to inflate the apparent costs of public management. After all this is a “NAct” government, and thus cannot be trusted.

    Your post is as sensible, insightful, and balanced as always, Marty G.

  9. gingercrush 9
    11 May 2010 at 10:24 pm

    One does have to laugh at Corrections Association who are all in a blather because Private Prisons (I assume in Australia) provide Televisions and this makes the prisoners happy and other prisoners from other prisons want to come to the private prison. I mean seriously. If you have happy prisoners that leads to less crime and less offences in Prison surely that is a good thing? No not to the idiotic Corrections Association. What a joke.

    And I love how the left play the “Ooh lets provide something private that has failed” logic shit. Basically our current prisons have failed. And as for Labour and their tripe press release, “Ideology leading Government by the nose”. Have a look in the mirror Clayton Cosgrove. Your ideology is fail because its the same bullshit we’ve had for years.