Simon Power
National Party Law & Order Spokesman

19 May 2006

Budget 2006: Prison construction costs still not nailed down

Budget documents reveal that the $490 million blow-out in the cost of building prisons could climb even higher, says National’s Law & Order spokesman, Simon Power.

“The cost of building the four regional prisons was originally estimated at $400 million, but as at January this year that had more than doubled to $890 million.

“Now the Budget has identified the construction costs as a ‘specific fiscal risk’, which may put pressure on the Government's spending programme.

“Although $121 million operating funding has been approved for Corrections’ capital projects in the coming year, it ‘has estimated that a further total of $209 million capital and $25 million operating funding may be required over the forecast period’.

"In other words, Labour still can't say how much they will spend on building prisons.

"This uncertainty seems to stem from an unusual contracting arrangement adopted by the department that, incredibly, does not appear to be capped.

“As the Budget Economic and Fiscal Update notes: ‘The actual amounts depend on the specification and timing of the individual projects and the contracted prices.’

“To make matters worse, there appears to be a lack of information about the impact that the 1,000 extra police will have on prison capacity.

“The potential flow-on impact of extra police on agencies such as the Ministry of Justice and the Department of Corrections is also identified by Treasury as a specific fiscal risk that has ‘yet to be quantified’, although a preliminary estimate of between $150 million and $200 million a year has been made.

"It's astounding that the impact of extra police on prisons hasn't been properly costed, given the mess Corrections already finds itself in.

"Clearly, a deal to buy off NZ First's support was made in isolation to the implications for the rest of the Government,” says Mr Power.

ENDS

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