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