Savings from PPP prison will come from paying staff poor wages

The savings that Finance Minister Bill English says will come from a new prison to be built under a private-public partnership will most likely be achieved by the contractor employing less staff to run it and paying staff less than public prison workers, says the Public Service Association (PSA).

The Government called for expressions of interest for the design, construction and operation of a new prison at Wiri in south Auckland this week.

“The Finance Minister says this project will offer savings and bring value for money for the taxpayer but it will be the prison’s employees who pay the price of these savings,” says Richard Wagstaff.

“Little evidence exists to support the government’s claim that PPPs are cost effective; their very nature makes that comparison hard because financial information that would allow such assessment to be made is deemed commercially sensitive

“Studies that do support the government’s claim reveal that the majority of savings are made because private operators pay poorer wages than public ones says Richard Wagstaff..

A 2001 study by the US Bureau of Justice Assistance found that rather than projected savings of 20 per cent, the average saving from privatisation was about 1 per cent and that was mostly achieved through lower labour costs.

“The government’s 69-page tender document for the new prison at Wiri offers no parameters on staffing levels or any guidance about being a good employer – that’s an obligation on all public employers under the State Sector Act.

“Despite that lack of guidance, the tender document does site union pay demands as a risk that needs to be managed by the contractor.

“This effectively means the contractor can do what it wants around staffing levels and pay rates, says Richard Wagstaff.

“If staff at Wiri are paid less than those in public prisons it’s highly unlikely that current officers will go to work there for lesser terms and conditions.

“Given that there will also not be any secondment of staff from the public system Wiri will be staffed by new, inexperienced correction officers. This is a potential risk, especially if the prison’s security rating is high.

“As well as prison staff most likely being the ones who pay for any savings on this project, there is a high risk that the taxpayer will pay for any escalation in costs. The only certainty here is that the private contractors will make a profit out of this project,” says Richard Wagstaff.

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