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Next steps for new public-private prison at Wiri

Hon Bill English
Minister of Finance

Hon Anne Tolley
Minister of Corrections

8 March 2012

Next steps for new public-private prison at Wiri

A new public-private partnership (PPP) prison at Wiri, South Auckland, will provide improved facilities, better services and a tighter focus on results, Finance Minister Bill English and Corrections Minister Anne Tolley say.

The Government has chosen a consortium of companies, SecureFuture, to design, finance, build, operate and maintain the new 960-bed facility, which is needed to meet growing demand for prisoner accommodation in Auckland.

Fletcher Construction will build the new prison, it will be operated by Serco and maintained by Spotless Facility Services. Construction will start in the second half of this year, once the 25-year contract has been finalised. The prison is expected to open in 2015.

"This is an important milestone for one of the first major PPP projects in New Zealand," Mr English says. "We are confident the new prison will reduce reoffending, improve public safety and help improve performance across the entire prison system.

"The contract will have strong performance incentives, ensuring we receive a superior service compared to publicly run prisons or we pay a lower price.

"SecureFuture will need to achieve lower recidivism rates than the average for publicly run prisons to receive incentive payments.

"It will also face financial penalties if it fails to meet short-term rehabilitation and reintegration measures including prisoner health and employment targets, and safe, secure and humane custodial standards," Mr English says.

The new prison will be strongly focused on rehabilitation and reducing reoffending.

"This PPP will give us exposure to world-class innovation and expertise,” Mrs Tolley says. "It will provide a modern facility that is safe and secure and well equipped to rehabilitate and reintegrate prisoners.

"There are a number of innovative approaches contained in SecureFuture’s proposal which I am confident will lead to significant improvements across the prison system.

"Even with the prison population forecast to fall - due to the Government’s focus on rehabilitation and cutting crime - there is a demonstrated need for a new prison in Auckland to meet population projections. We also need the flexibility to respond to ageing capacity and other future pressures.

"Some prisons in the network are very old and are coming to the end of their viable life. In future, some of these ageing prison units will need to close, but the department will consult with affected staff and unions before that occurs," Mrs Tolley says.

The exact price of the 25-year contract will not be finalised until negotiations are complete, but the maximum potential price has been capped at $900 million - 10 per cent cheaper than if the prison was procured through conventional means.
This covers design, construction, maintenance and operation over 25 years.

The capital cost of the new prison has already been factored into previous budgets and does not require new budget funding.

The new prison will still operate within the current Corrections framework and all prisoners will remain the responsibility of the chief executive of the Department of Corrections. It will have to comply with all relevant New Zealand legislation and international obligations.

Questions & answers

How much will the new prison cost?
The exact price of the PPP contract will not be finalised until negotiations with SecureFuture are completed, but the maximum potential cost of the 25-year contract is capped at $900 million - 10 per cent below the cost of procuring the prison through conventional means.

What better results are you expecting from the prison?
Proceeding with the prison via a custodial PPP will strongly incentivise improved rehabilitation results and cost efficiencies of at least 10 per cent compared to traditional procurement. It will also provide the opportunity for further service improvements if innovations are rolled out across the wider prison network.

What performance incentives/penalties will SecureFuture face?
The contract will have a combination of incentives and penalties to focus the contractor on achieving the Government's objectives of public safety and reduced re-offending. It is designed to ensure the department will be buying a better service to that provided by the public sector.

If the contractor does not perform at the required level it will face financial penalties and the department will pay less for the service. The contract is also designed to lift public sector performance, with the department having the right to use any successful innovations throughout the rest of the prison system.

What innovations are you expecting?
SecureFuture’s proposal focuses on reducing reoffending. It intends to invest in modern prison facilities suitable for rehabilitation and reintegration activities and will provide additional follow up services outside the prison gate for prisoners to access after they have been released from custody.

What happens if the provider consistently fails to meet its contract targets?
There are a range of interventions available. These range from enhanced reporting and monitoring, through to more direct intervention and ultimately termination.

Why are you building a new prison when prison numbers are projected to fall?
Building a new prison will provide more prison capacity in Auckland, in line with forecast population growth, and will provide new facilities, which are better equipped to rehabilitate prisoners compared with older prisons. The new prison is part of ongoing work to create a network of prisons that gives the modern, fit for purpose facilities we need to hold prisoners securely and work with them to reduce re-offending.

Some prisons in the network are very old and are coming to the end of their viable life. In future, some of these ageing prison units will need to close, but the department will consult with affected staff and unions before that occurs.

What will be the role of Maori in rehabilitation programmes?
The rehabilitation and reintegration of Maori offenders is integral to the operating model for the new prison and the preferred bidder intends to work alongside Maori service providers, other community organisations and government agencies to provide services to assist Maori prisoners.

How will the Government ensure prisoners are well treated?
The chief executive of the Department of Corrections remains accountable for everything that happens in privately operated prisons - placing privately managed prisons clearly within the ambit and oversight of the state. These prisons will operate within the corrections system and the accountability mechanisms set up within the Corrections (Contract Management of Prisons) Act 2009 clearly recognise and facilitate this.

Is the Government considering other PPPs?
The Government has signalled its intention to consider PPPs for other areas of the state sector, for example, in education. However decisions are made on a case by case basis as PPPs are appropriate only for some projects.


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