Editorial: Competition coming for jails, ACC

With its modest election programme well under way, the Key Government has lately turned to topics it did not want to say much about before the vote. Private management of prisons is one example. Changing the thrust of accident compensation is another. The Opposition is probably right to suggest that returning the scheme's focus to accident insurance is a precursor to private provision.

Yet these moves were not a totally "secret agenda"; National made no secret of its attraction to public-private partnerships in principle even if it was less keen to discuss specific intentions. Prisons and workplace insurance were obvious candidates. Both had been opened to private providers late in the term of the previous National Government and neither had time for a fair trial before Labour cancelled them.

Of the two, prisons are probably more problematic for private responsibility. Accident compensation is a standard service offered by private insurance in other countries. But imprisonment is a power reserved for the state and most states have been reluctant to entrust the welfare of prisoners to private contractors. That reluctance can be understood in principle, though principles may play little part in the stance taken by prison officers this week.

Their union, the Corrections Association, complained that starting salaries in the Auckland Central Remand Prison were nearly $10,000 a year lower than the rate in public prisons when the new remand facility had been run by a private company for five years.

As usual, a simple pay comparison may hide more than it reveals. Criminologist Greg Newbold explained that private companies tended to "pay good money for top operators and less for people on the floor, the unskilled who just open and shut doors. If they show commitment and intelligence and ability, they can rapidly be promoted, which is not the case in the public system."

A private employer's greater flexibility in organising and rewarding staff not only serves the interests of able and committed officers but gives the prisons, according to Dr Newbold, "an atmosphere of vibrancy and enthusiasm which I have never seen in a publicly run prison".

If the atmosphere in private custody is so much better, part of the reason probably has to do with the fact that the right to restrict an individual's liberty is reserved to the state. Those entrusted to carry out the state's prerogative must be careful to do so with standards of service and security beyond reproach.

Public prison staff should be as conscious of this as a private firm but in the event of incidents or escapes, public censure will fall more heavily on the private operator and the Government that permitted its engagement. The private operator risks losing its contract, state management risks little more than a rebuke from an official inquiry.

As could be seen this week in the outcome of an inquiry into parole deficiencies, governments have no power to dismiss public servants. They could more easily hold private providers to a contract. In fact, after this week's experience, National should seriously consider extending its privatising policy to parole.

But there is a caution. Public-private partnerships can too easily mean a private provider is assured of profit and the public funder underwrites any financial risk. National's contracts with prison companies, insurance firms and any other service providers will need to be scrutinised to see that risks fall where they should. It is the private sector's risk assessments that allow the whole economy to benefit from its participation in public services. With that proviso, the Government's not-so-secret agenda should proceed.