Heather Roy's Diary
Friday, 08 July 2005

Last Friday, Rodney Hide and I attended a ceremony at New Zealand's only private prison. We were the only politicians present. For the past five years, Auckland Central Remand Prison has been run by GEO (formerly Australian Corrections Management - ACM). The prison has run successfully with substantially lower prisoner costs than the state prisons (40% lower), better participation in rehabilitative and reintegration programmes, lower suicide rates and only two escapes in five years, one of which was in transit. Part of the success has been attributed to the considerable good will and co-operation that has existed between local Maori, the Pacific Island community and the prison management. This has been a true partnership with a Memorandum of Understanding in place and mutual respect and co-operation existing between these groups to produce good results with regard to rehabilitation of Maori and Pacific offenders.

The Labour Government believes, despite the obvious success of ACRP, that the running of prisons is the role of the state and at midnight on July 12th when GEO's contract expires the prison will be handed over to the Department of Corrections to run. The ceremony I attended was for the prison management to hand the Memorandum of Understanding back to Iwi Whanui - the representative body of local Iwi groups. The ceremony was very moving with obvious respect and affection existing between the 'partners' and sadness surrounding the dissolving of a successful partnership. There was much speculation about the future success of the prison and the harshest critics of the move to state control were the Maori and Pacific representatives who were obviously sold on the benefits of this particular private enterprise. They made no bones about the fact they would not be voting Labour this election.

The 'handing over' of the prison will result in costs off over $3 million for the transition and extra running costs of $2 million per year. But the true scandal is in the calculated destruction of the culture that so embarrassingly showed up the failures of the Labour Government's management of other prisons.

OECD Survey of the New Zealand Economy

The Organisation for Economic Co-operation and Development (OECD) is a club to which New Zealand belongs with a membership that roughly correlates with the rich developed countries. It has a committee that reviews the economic performance of each of its member countries and the most recent New Zealand review was released this week.

The report is cautiously optimistic about New Zealand's economic prospects, although it had several criticisms in the area of public spending.

In health, the OECD felt that the collection of statistics on hospital activity was so poor that it was impossible to form any opinion as to the efficiency of our hospital system, let alone improve it. My own feeling is that the re-organisation of our health system into 21 District Health Boards has proved expensive and added an extra layer of bureaucracy to protect the Minister of Health and the Government by devolving responsibility for the system further down the food chain.

In light of my recent experience at the Auckland Central Remand Prison, I was particularly interested in the OECD comments on provision of prison services. The report was critical of the Government's decision for prison services to be provided exclusively by the Department of Corrections saying: "This move contrasts with some international evidence that private prisons can generally provide both lower costs and better services and that opening up prison services to competition could encourage the publicly managed prisons to operate more efficiently". The report cited such arrangements existing successfully in Australia, Canada, the UK and US.

Another area that the report said New Zealand could do better, was opening up all areas of personal injury insurance to competition. It stated, "This is an area that has successfully been left to the private sector in many countries." It went on to say that when the portion of the scheme covering workplace accidents was opened up to competition in July 1999 and five private insurers entered the market, "Despite some promising initial results - prices dropped, especially for large and medium size enterprises - the new government re-instituted its monopoly over the scheme … no formal evaluation was done to justify this decision." ACT called on ACC to be opened up to competition long before it happened and has been calling on the reintroduction of competition ever since the monopoly was reinstated.

These examples, under the heading of Public Sector : resuming the privatization process and making more use of market-based principles, have predictably not been cited by Labour when they announced that the OECD report endorsed their careful management of the economy. The report, in fact noted the reversal of New Zealand policy toward increasing public ownership since 2001 and observed that this is against the trend of other OECD countries. The full report is available from my office. If you would like a copy please emailLucy.Stewart@parliament.govt.nzto request one.

ENDS

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