$400 mill. shortfall in Nats' law and order budget
Hon Phil Goff
Minister of Justice
31 August 2005 Media Statement
$400 million shortfall in Nats' law and order budget
National's alternative budget totally fails to provide the sums necessary to meet the cost of their promises on law and order, Justice Minister Phil Goff revealed today.
"Don Brash, following his policy launch in July 2004, said the total cost would be $600 million over existing spending," Mr Goff said. "Our own estimate is that it would cost $700 million per year.
"However John Key has only set aside $100 million, rising to $300 million by year three, to meet the cost of abolishing parole. And that is just the operational cost. Nothing has been set aside to meet the estimated $1.4 billion capital cost for the seven additional prisons that would be required.
"In saying that the private sector would pay for the prisons, John Key is disingenuously pretending that private owners would not want any return on their capital. That is patently nonsense.
"What is more, Key has set no money at all aside to pay for all the other promises such as more police, more DNA testing, denial of bail for repeat offenders, etc.
"The discrepancy in just this one area of policy is significant. Multiplied across many policy areas, National's failure to properly, or even consistently, cost their policies leaves a massive credibility gap.
"John Key's budget deletes the costs but not the promises. The message is clear. Either the promises are unfunded and can't be believed; or the budget will blow out, requiring major borrowing, boosting inflation and mortgage interest rates; or the full hidden Business Roundtable agenda will be implemented with the decimation of health, education and superannuation spending.
"All this is further evidence that National is neither fit nor ready to govern," Mr Goff said.
Attached: Transcripts of Brash and Key on law and order costings.
National's Law and Order costings, in their own words
Scoop interviews John Key on National's alternative budget, 24 August 2005
Scoop: In terms of the detail of the budget. Is this money for law and order?
Key: Yes. It's the cost of increasing parole … no, of effectively cancelling parole for the worst offenders. So –
Scoop: And it's no – I just find that rather difficult to believe. That you can cancel parole for a hundred million dollars.
Key: Well it costs three hundred of course by year three, but 'cause don't forget it takes some time, because –
Scoop: But then don't you have to build a whole lot of prisons.
Key: Not really, actually. Um – we're looking at all sorts of issues like double-bunking and it takes some time to flow through, ah, so, no, it's … and don't forget –
Scoop: When the policy was announced there was, I think there was a $2 billion capital expenditure. Assumption.
Key: Yeah – well, no, $300 million was the funding number. That ties up exactly with the funding number we had, $300 million. I'm not sure we'd actually build any more prisons, I mean for instance Labour had built four prisons, I saw Michael Cullen say the other day they'd built four prisons, he's arguing, for a billion dollars in the last three years or so. We certainly wouldn't need more – well, you know, four more prisons. Ah – and secondly, we're quite keen to use the private sector in prisons, I mean Labour closed the Auckland remand prison, we actually thought that worked tremendously well and so did the public, um Labour just for ideological reasons closed it, so, no, we – well this is our operating budget and it's –
Scoop: But, I mean, private prisons aren't free.
Key: No, no, but I mean, what you were asking about are capital expenditure and we don't necessarily need capex if we use the private sector we don't need our own capital, so –
Scoop: But the operating expenditure I would have thought was also –
Key: No – we – it's fully costed. Tied up with what we said when we did at the time.
Extract from Don Brash's speech on 4 July 2004
To operate the prison service now costs around $600 million annually. If the prison population increased by 50% as a result of the abolition of parole (which is possible if offending rates do not reduce), the increase in annual operating cost could rise by around $300 million after about five years. Additional prisons will also involve significant one-off capital costs, possibly of up to $1 billion, though to keep taxpayer costs as low as possible we would contract the running of these to the private sector.
Morning Report, 5 July 2004
Presenter: How many more prisons will you need?
Brash: Well of course it depends how big the prisons are. I don’t think you can talk about how many prisons you’ll need. What you talk about is how many more prisoners you have and as I say we judge that to be an increase of about a half.
Nine to Noon, 5 July 2004
Presenter: So that’s 3000 more people in jail?
Brash: Yes, that’s true.
Presenter: And where would you put them?
Brash: Well, clearly we would need
more prisons, no doubt about that.
Brash: I estimate that it would cost approximately $300 million operating costs annually by the time this policy is in place. Currently prisons cost about $600 million. We’re assuming that a 50 percent increase in prison population would add about a further $300 million a year. That is less than one percent of government spending a year, less than one percent.
Presenter: But that’s also just the tip of the iceberg isn’t it, because implicit in this policy is more spending on police, is more spending on the DNA collection and housing.
Brash: Let’s supposing you double the figure from $300 million to $600 million and that I think would be more than sufficient, you’re still talking about less than two percent of government spending.
Holmes, 5 July 2004
Wood: The Prime Minister says you've way under-estimated the cost of this. She puts ah 10 prisons she reckons, 200 million each, ah that's $2 billion plus $3 billion in operating costs. That's a lot of money.
Brash: Well let's put it this way. She says $3
billion in operating costs over a 10 year period about $300
million a year, that's exactly the figure I quoted in my
speech. So it's quite consistent with my
Wood: But it is not just more prisons you're talking about building, you're talking about attacking it one end, you're talking about more police, you're talking about obviously better labs because, you know, they're struggling now to cope with the work they have so you're talking about a range of costs aren't you.
Brash: Absolutely. Let's take DNA testing as an example. It's been estimated that that would cost about $20 million a year. Add that to $300 million, add a bit more for, for additional ah post release monitoring, a bit more for police, let's say $500 million in total. You're still talking about barely more than 1% of Government spending.