112TH
INTERNATIONAL
TRAINING
COURSEVISITING
EXPERTS’
PAPERSVISITING EXPERTS’ PAPERSPRIVATE PARTICIPATION IN THE TREATMENT OF
OFFENDERS: CONTRACTING PRIVATE OPERATORS IN
CRIMINAL JUSTICEJohn Brian Griffin*
ABSTRACTOver the past decade, governments havebeen forced to critically review the way they
manage their economies in the face ofgrowing international competition. Debt
reduction and taxation imperatives,
coupled with raised community expectationof value of money from its public sector, has
underscored profound changes in the form
and nature of government worldwide.
In Victoria, the Kennett Government
since 1992 has pursued a significant
government reform agenda. Reforms
within the criminal justice system havebeen an important part of this ‘change’
agenda. Contractualism and privatisation
are now integral elements in the oparationof Victoria’s justice system, especially the
key aspects of policing and correctional
management. While the signs are positive,
the changes have required a fundamental
policy rethink in such areas as contracting
out, accountability, risk management,
regulation and performance monitoring.
There is no doubt these issues will be thesubject of on-going debate well into the next
millennium.
I. INTRODUCTION
Public administration worldwide has
been the subject of revolutionary changeover the past decade. Privatisation,
corporatisation, outsourcing, outcome/output budgeting and accrual accounting* Chief Exective Officer, Core-the Public Correctional
Enterprise, Department of Justice, Australia.

are but some of the contemporary businessconcepts that are now the hallmark ofmodern government administration. Past
practice no longer provides an adequate
basis to ensure the future viability of the
public sector.
A special edition of “The Economist” in
September 1997 entitled “The Future of theState”, succinctly summarised thesechanges in quite dramatic terms:“... the State is in retreat. At the turnof the millennium, it is argued,
governments are confronted by two oldenemies, stronger now than everbefore: technology and ideology. The
State is proving unequal to thechallenge. Its power to rule is fading.
A new industrial revolution is underway. Advances in computing andtelecommunications press relentlesslyon, eroding national boundaries andenlarging the domain of the global
economy. Increasingly, these changes
render governments mere servants ofinternational markets.”
In the face of international competition,
governments have realised that a high debt
burden and high taxing regimes undermine
the country’s level of competitiveness.
Increasingly, governments are wrestlingwith the paradox that voters want lower
taxes but want more public spending. This
has required governments to examine thebreadth of responsibilities they haveaccumulated over the years, to shed more
peripheral functions and to ensure residual3

RESOURCE MATERIAL SERIES No. 56
functions operate efficiently. Over the past
decade, there has been a greater
questioning of the efficacy of big
government and critical comment aboutpublic monopolies which, being free frompressures to innovate or become more
efficient, have been shown not to offer value
for money to the communities they serve.
II. REFORM OF GOVERNMENTIn the 1980s, there was recognition in
the UK and Europe that the high level ofgovernment spending could not besustained. The Thatcher Government in
the UK introduced radical reforms in a bid
to reduce public spending, which in 1980
comprised 43% of GDP. Similar programs
were pursued to a lesser extent in France(55%), Italy (52%) and Belgium (54%).
Government’s transferred the delivery ofservices to the private seczWr {B withdrew
from service delivery altogether.
In the USA, where big government had
not been a feature of the American politicallandscape, there was nevertheless ongoing
voter pressure to minimise taxation andincrease the responsiveness of the public
sector. In 1992, the seminal work of DavidO s b o r n e a n d Te d G a e b l e r t i t l e d“Reinventing Government” took the world
by storm. Osborne and Gaebler identified
ten principles around which
entrepreneurial public organisations arebuilt:
1. Steering more than rowing.
2. Enpower communities rather thansimply deliver services.
3. Encouraging competition rather thanmonopoly.
4. Being mission driven rather thanrule driven.
5. Funding outcomes rather than
inputs.
6. Meeting the needs of the customer not
the bureaucracy.

4

7. Concentrating on earning not justspending.
8. Investing in prevention not just cure.
9. Decentralising authority.
10. Solving problems by leveraging themarket place, rather than simply
creating public programs.
“Reinventing Government” became therequired reading of politicians andbureaucrats alike following the book’s
publication. The sentiments of the book
hit a chord with many in government andin communities around the world.
Within Australia, various Federal andState Commissions of Audit Report’s
recommendations echoed the book’s major
thrust. In 1995, the Council of Australia
Governments (COAG) endorsed the
National Competition Policy (NCP) Reportof the Independent Committee of Inquiry(the Hilmer Committee) set up in 1993.
The NCP established consistent principles
governing pro-competitive reform ofgovernment enterprise and of government
regulation. It was agreed that all
Commonwealth and State legislation
would be reviewed to ensure it did notunnecessarily restrict competition.
The NCP Independent Committee ofInquiry summarised the merits ofcompetition in the following way:
“Competition provides the spur forbusinesses to improve theirperformance, develop new products
and respond to changing
circumstances. Competition offers thepromise of lower prices and improved
choice for consumers and greater
efficiency, higher economic growthand increased employment
opportunities for the economy as awhole”.
The Hilmer Committee was at pains to112TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
stress, however, that it did not support
totally unfettered competition andindicated there were bona fide reasons
where governments would need tointervene in specific markets with theintention of protecting the public interest
or for generating other benefits for thecommunity as a whole or from particularsectors of the community. The committee
commented:“Competition policy is not about the
pursuit of competition per se. Rather
it seeks to facilitate effective
competition to promote efficiency andeconomic growth whileaccommodating situations wherecompetition does not achieve efficiency
or conflicts with other social
objectives. These accomodations arereflected in the content and breadthof application of pro-competitive
policies, as well as the sanctioning ofanti-competitive arrangements on
public benefit grounds”.
Implementation of the NCP wasunderwritten by the Federal Government
through the allocation of substantial funds
to States/Territories to address transitionalcosts and negative revenue implications
arising from the adoption of the NCP.
Following the Victorian State electionsin October 1992, the Kennett Liberal/
National Coalition Government proceededswiftly with major reform of the public
sector. In the face of a $32billion State debt,
significant budget cuts were made togovernment departments, programs werereduced or axed, services were outsourced,
many statutory authorities were
corporatised and there was a concerted
effort to privatise electricity generation andsupply, and gas retailing.
In 1993, the Victorian Commission of
Audit set the tone for subsequent change

through its identification of the key
principles for public sector reform:
•
•
•
•
•

a preference for market mechanisms;
empowered consumers;
minimised government regulation;clear accountability for results; andprofessional and buisiness-likemanagement of public agencies.

The “steering not rowing” metaphor soontranslated to a notion of “purchaser/
provider split” whereby the purchaser ofthe service would not also be the providerof the service. In a market context withmultiple suppliers, governments were seen
to be able to maximise public benefit in thepurchase of services and avoid thedownsides of departments as single service
providers.
The privatisation of government services
in Victoria over the last six years has beensignificant and has touched all Ministerial
portfolios. Major changes have occurredin the following areas:
•
•
•
•
•
•
•
•

utilities;
communications;roads;
trains, trams and buses;
regulation and inspection;
welfare services;educational and training services;
health services.

In addition, there has been signficant
privatisation and contracting out within
the Justice portfolio in such areas as:• corporate services (payroll, humanservices, audit, building
maintenance, fleet management);• the police airwing;• computer aided dispatch of
emergency vehicles;• staff training;• prisoner transportation;

5

RESOURCE MATERIAL SERIES No. 56• the operation of police traffic cameras
and the administrarion of theenforcement of on-the-spot fines;• the management of police custody
centres;• building, owning and operating threeof the State’s thirteen prisons;• building, owning and operating the
proposed new County Court complex.
The results of the overall Government
reform program have been impressive. The
State debt has been reduced from
$32billion to $11billion, Victoria has moved
from being the highest taxing State,
unemployment has fallen below thenational average and there is growing
confidence in the business community (bothlocally and internationally) that Victoria
is a good place in which to invest.
The Productivity Commission’s 1999
report to COAG on the benchmarking ofgovernment services confirms the preeminence of Victoria in many of the key
performance indicators (in relation to thebenchmarking of a broad range ofgovernment services).
The reforms however have not been
without their critics. The speed andbreadth of change, the quantum of thebudget cuts, the apparent primacy of
economic imperatives driving so muchchange, and the extent of privatisation
have been the subject of much community
debate.
Perhaps one of the most controversial
reforms has been the Kennett
Government’s prison privatisation
program. It is a program worthy of further
analysis, as in many ways the issues withprivate prisons resonate in character withother reforms within the Justice portfolio.

6III. THE PRIVATISATION OF
VICTORIAN PRISONS
Before the Kennett Government’s
election in 1992, the Victorian prison
system was the responsibility of the Officeof Corrections. The previous Cain/ Kirner
Labour Government had made major
investments in the construction of four new
prisons at a total cost exceeding$170million. Notwithstanding thisinvestment, the large bulk of prisoners still
resided in accommodation built in the lastcentury.
The general productivity of the prison
system was poor. Sick leave rorting byprison officers was rampant (average 28
days annual sick leave per prison officer
at Pentridge Prison in 1992). The level ofprison staffing was the subject of on-going
tension between management and theunions.
Interestingly, the concept of contracting
out was not new to the prison system.
Private contractors provided many of theprison support services; health services
were provided by the Health Department;
and education provided by the TAFE
Division of the Education Department. A
separate statutory body (VicPIC) was
responsible for prison industries and thedelivery of many prisoner programs
involved both paid staff and volunteers
drawn from the wider community.
A key element of the Liberal/National
Coalition party policy platform was theprivatisation of elements of the prison
system. It was envisaged that privatisation
would reduce the annual unit cost per
prisoner, provide comparative benchmarks
against which to evaluate the performanceof public prisons and, no doubt, break thestranglehold of union influence on thesystem. In addition, through the adoptionof a build, own, operate (BOO) philosophy,

112TH INTERNATIONAL TRAINING COURSE
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the Government was able to construct three
new prisons which, given the size of thedebt burden, would be unlikely to havebeen built for a considerable time. The
BOO approach enabled the Government totransfer the construction and ownershiprisk onto the private sector. The issue of
inadequate asset maintenance provision
has long been a sore point with public
sector managers. BOO projects eliminatedthese difficulties, as well as avoidnig any
increase in State borrowings which was a
key priority of the new Government.
So how does the new Victorian prisonssystem now work?
The amended Corrections Act 1986 gives
the State direct authority for the security,
safety and welfare of prisoners; and for the
maintenance of standards, in both public
and private correctional services. In 1995
the Office of the Correctional Services
Commissioner (OCSC) was established tooversee the corrections system. The
Commissioner is responsible for:• strategic planning;• developing and setting state-wide
policy and standards;• the management of prisoner
sentences, including prisoner
assessment, classification andplacement;• monitoring the delivery ofcorrectional services by both public
and private providers;• adviding the Minister (the purchaser)
about each provider’s performanceand level of compliance with
contractual obligations;• providing overall leadership to theVictorian corrections system.
Specific prisoner health and welfare
standards developed by theCommissioner’s Offive include:• prisoner access to programs which
address issues related to theiroffending behaviour;• prisoner access to personal
development and life skills programs;• provision of health care services
which meet community standards;• prisoner access to adequate fitness,
sport and recreational activities;• prisoners being given opportunities
to develop the skills for employment
after their release through access toboth work experience in prison
industries and education andtraining programs.
The Commissioner enforces a rigorous
monitoring regime built around:• clear specification of requirements ofproviders;• monitoring providers from on-site
observation and the analysis ofperformance date;• validation of provider reports;• provision of formal feedback toproviders.
The Minister for Corrections, as thepurchaser of services, has assigned the taskof Contract Administrator to the Deputy
Secretary, Justice Operations within the
Department of Justice. This position is
supported by a separate Corrections
Contracts Branch. The role of the Contract
Administrator is to:• identify the correctional services tobe purchased by the State;• establish appropriate contractual
arrangements;• administer the contracts on behalf ofthe Minister for Corrections.
The Contract Administrator regularly
reviews reports from the Correctional
Services Commissioner concerning service
providers’ performance and levels of

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RESOURCE MATERIAL SERIES No. 56
compliance with their contracts.
The correctional providers within the
Victorian correctional system are a mix ofpublic and private providers. The public
provider - the public Correctional
Enterprise (CORE) - operates ten prisonsand manages the State’s community
correctional services.
In addition, there are three private
providers of prisons:• Metropolitan Women’s Correctional
Centre (125 beds) - Corrections
Corporation of Australia (opened
August 1996);• Fulham Correctional Centre (600beds) - Australasian Correctional
Management (opened April 1997);• Port Phillip Correctional Centre(600beds) - Group 4 Correction
Services (opened September 1997).
A preliminary observation of the multiprovider system relates to the impact thatprivatisation has had on CORE - The
Public Correctional Enterprise. It is a great
credit to the management and staff of
CORE that they have responded to thechallenge (or threat) in a very constructive
and effective way. Many would not haveanticipated how effective this response
would be.
Institutionalised work and staffing
practices have been reformed, facilities andservices improved, staff attitudes andmotivation improved and costs have been
reduced substantially. These reforms could
hardly have been contemplated in the
traditionl monopoly system. These reforms
give confidence to the notion that the public
provision of prison services can continue
in a multi-provider environment, where
performance in terms of service quality andcost will be the bottom line.

8

The Victorian correctional model has
been very deliberately designed to separate
the roles of the purchaser and providers,with the OCSC playing the key system
leadership role of policy, standard setting,performance monitoring and sentence
management. The key responsibilities of
the Commissioner (as outlined in Section
8A of the Corrections Act 1986), requires
the Commissioner to exercise these
responsibilities impartially between allproviders. In allocating to the Contract
Administrator the responsibility for
managing the commercial and financial
interests of the Government in thecontracts, the integrity of theCommissioner’s role in addressing the safe
custody and welfare of prisoners is
effectively preserved.
While there have been many calls forindependent monitoring of prison
performance, no other jurisdiction had
implemented a model as definitive as thatin Victoria, separating responsibility forsafe prisoner custody and welfare from theresponsibility for financial or budgetary
targets for the system.
The contracts with the private
correctional providers are built around anumber of commercial principles:• the Government purchases acomprehensive package ofaccommodation and correctional
services from the provider over set
contract periods for a defined
prisoner population;• the private provider owns the prison
through an equity investment in thefacility and the acceptance of design,
construction, ownership andmanagement risks;• the private provider supplies new
prison facilities and is responsible for
their on-going maintenance;• the private provider provides

112TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
correctional services, as well as
health and prisoner programs, which
maintain or enhance the standard of
those available in public prisons;• the private provider assumes therisks related to the development,
ownership and operation of thephysical plant and service delivery.
Each successful private provider
consortium therefore owns the prison
which has been built on crown land, leased
to the provider by the Government. In
these cases, the Government hascontracted with the provider to supply bothfacilities and services. The provider isrequired to develop, maintain and operate
the prison, including providing sevices andprograms, which meet the Government’s
corrections policy objectives in relation toprison safety and security, accommodation,and rehabilitation of prisoner standards.
Contract payments to private
correctional providers are divided into
three categories:• Accommodation Service Charge(ASC) is a monthly payment for theprovision of correctional facilities toa Government specified standard - itis in effect a debt servicing andfacility charge;• Correctional Service Fee (CSF) is amonthly payment for the operationof the prison and the provision ofcorrectional services, education,
traning, health, and other programs;• Performance Linked Fee (PLF) is anannual payment based on theachievement of specified outcomes forboth prison facilities and services - itis in effect a return on investment
payment.
A fundamental feature of the contracts
is the focus on outputs and outcomes rather
than the traditional focus on inputs andprocesses. Specific service delivery
outcomes are specified which must be
achieved to justify, for instance, thepayment of the performance linked fee.
Both the ASC and CSF payments areaffected by sub-standard provider
performance. For example, nonavailability of part of the accommodation
could result in ASC and PLF payment
reductions. While failure to comply withany of the forty-two prison management
specifications for correctional services could
result in CSF payment reductions.
To achieve full payment of the PLF,
providers must achieve specified outcomesfor accommodation and correctional
services, as well as meet specified
benchmarks in five key correctional
services:
•
•
•
•
•

prison operations;education and training;prison industries;
health;other prisoner programs (e.g, drug
education programs).

As a last resort, where the payment
regime to a provider has apparently notworked, the prison contracts provide a
default regime. The default process is mostappropriately applied where there are
significant and continuing issues that need
to be remedied by the provider within a predetermined timeframe. If the provider fails
to address the issues within the stipulated
period, a range of legal remedies areavailable to the Minister, including seeking
damages, “step-in” provisions and contract
termination.
In addition to the Minister’s ability to
reduce payments, a wide range ofincentives and safeguards have been put
in place to ensure private providers deliver
the appropriate standard of correctional

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RESOURCE MATERIAL SERIES No. 56
facilities and services:• the Government retains the right tore-tender the contract for correctional
services after the initial 5 year periodof the contract and every 3 years
thereafter;• overall responsibility for prisoners
remains with the State;• Government representatives have
unfettered access to all aspects of theoperation of a prison;• all prisons are open to public scrutiny
through the Official Visitors Scheme,
FOI, the Ombudsman and visits byprisoner visitors, clergy, TAFE
teachers, medical staff and various
other community representatives;• rigorous probity processes ensuresthat high standards apply to prison
contractors, sub-contractors and all
staff employed in prisons;• the Minister has clear “step-in right”
to maintain the security of thesystem, and can, in the event of aserious breakdown, take over the
management of a prison;• in defined adverse circumstances, theMinister can require the contracting
consortium to remove the operator
and appoint a new operator.
A number of commentators andacademics have challenged the efficacy ofthe private prisons “social experiment” inVictoria. This is often done, it seems,
without any appreciation of the safeguardsof the Victorian Model, in particular the
powers and status of the Commissioner in
relation to the safe custody and welfare ofprisoners.
Linda Hancock, University of
Melbourne, in her paper “Contractualism,
Privatisation and Justice : Citizenship, theState and Managing Risk” (Australian
Journal of Public Aadministration December 1998) provides a useful10summary of the key issues of debate on
privatisation. At the start of her paper she
states:“Much of the debate in Australia
around contractualism has concernedhuman services. However, those
opposing privatisation in justiceargue that justice is different fromother policy areas in that part of thework of justice departments involves
the use of delegated sovereign powerwith the potential to discipline,
punish and use force. They object tothe principal (sic) of delegating theState’s power to punish to private for- profit corporations”.
Hancock subsequently outlines thecounter-argument:“Others adopt the view thatdelegating the State’s powers to
private interests is acceptable,
provided adequate accountability andregulatory structures are put in place.
This view would dismiss arguments
about an integral role for the Stateand actions of non-delegatable powers(i.e, to punish) as unfounded.”
In concluding her article, Hancock gives
the impression she believes that the jury
is still out on the privatisation reforms injustice, especially in relation to key issuesof “accountability, quality of service
delivery, service gaps, balancing civil rights
and budget efficiencies, ethical issues andissues of democratic governance”.
It is worth briefly pondering theseissues, as they tend to recur through manyof the contemporary writings about private
prisons.
A. Accountability
Prior to the advent of private prisons,the accountability for the prison system

112TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
was vested with the Minister for
Corrections and the Director-General of
Corrections. The Director-General issued
Director-General Rules which
operationalised elements of the Corrections
Act and set guidelines for the general
operation of prisons. They were proceduralin nature and contained few quantifiable
performance measures.
A separate inspectorial unit would
conduct an intensive inspection of eachprison over a two to three year cycle.
Prisons were required to report incidents
as they occurred but there was norequirement for monthly performance
reports. Prisoner regimes were left largely
to the discretion of the Governor and outof cell hours were very much determinedby the prevailing staff levels.
The onset of private prisons introduced
a discipline that had previously not beenpresent. Because of the contractual natureof the relationship between the State andprivate prison providers, greater specificity
was needed in relation to all aspects
relating to prison design, facilities andprisoner services. No longer could thecorrectional system rely on informal andill-defined prison specific arrangements.
Contractors wanted to know what outputs
and standards were required before theywould commit on price.
A much tougher and specific prison
monitoring framework was establishedrequiring detailed monthly reporting bycontractors, on-site monitoring and service
validation audits by both theCommissioner and the health authorities
in relation to health services.
It is interesting to note that the private
prison providers comment that the breadthand depth of reporting and monitoring in
Victoria are more intense and demanding
than in other States or in overseas prison

systems.
The various other accountability
processes that existed previously in the
public prison system have also beenretained. One suspects the Government
understood the potential political risks ofprivatising prison management anddeveloped a “belt and braces” approach tothe issue of accountability. It would be
difficult to conceive how prisons could havebeen subjected to more accountabiliy.
There appears to be a misconception that
Government has abrogated its
responsibility for prisoners once they areplaced in a privately operated prison. Thisis clearly not the case. The Commissioner’s
responsibility for the sentence
management function encompasses
ongoing responsibility for the classificationa n d p l a c e m e n t r e v i e w, a s w e l l a s
monitoring prisoner welfare through onsite monitoring and other review processes
outlined earlier. The Commissioner
maintains an ongoing oversight andinterest in the progress of every prisoner
throughout the sentence to ensure proper
placements are made in each case andoutcomes delivered.
A good deal has been written and said
i n t h e Vi c t o r i a n m e d i a a b o u t t h eperformance of the three private prisonsin Victoria. It is necessary to make anumber of observations about this media
coverage.
The first observation is that the
progressive commissioning of three private
prisons, representing 45% of the prison
system, over the period from August 1996
to December 1997 was always going to bea significant challenge. The fact that it wasdone quite deliberately, with staff that were
new to prison work in order to minimise
the transfer of the “old culture”, did not
make the task any easier.

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RESOURCE MATERIAL SERIES No. 56
Secondly, the media and interest groups
pre-occupation with private prisonscertainly highlighted the incidents that did
occur. It is apparent that the first year or
so of commissioning new prisons was clealy
a difficult time, as was illustrated by thecommissioning of the Silverwater publicly
operated facility in New South Wales. The
final judgement about public versus private
prison performance cannot be realisticallymade on the basis of the performance inthe year of commissioning, but rather on
the sustained performance over at least two
to five years. Those claiming otherwise are
either exposing an ideological bias or are
unwilling to accept change.
Thirdly, the evidence in Victoria is thata multi-provider environment is now
delivering real and sustainable benefits inservice and cost terms.
B. Quality of Service Delivery
The quality of service delivery in prisons
is monitored by both individual prison
management and by the Correctional
Services Commissioner. Health service
quality is scrutinised by the Departmentof Human Services.
The experience in dealing with private
operators in Victoria belies this fear thatmany have. A well developed contract,
combined with thorough and wellstructured monitoring, has shown that thefocus now being made on quality far
exceeds the assurance that was everavailable in this regard under traditionalmonopoly provider systems. Monitoringneeds to be well targeted to key issues andbased on an open approach that rewards
sustained good performance. The incentive
for providers to maintain quality services
is a multi-provider business environmentthat is subject to thorough monitoring areself evident, and the cynical view that thefirst priority of private providers is to cut
costs is not well founded.

12

A visit to any prison in Victoria, public
or private, would challenge the objective
observer to discern material differences in
the quality of the services between the twocategories of providers.
C. Service Gaps
The Government made a major
investment in planning and policy
development to underpin the privatisationof nearly half of its prison system. Every
aspect of a prison’s operations wereidentified, analysed, specified andstandards defined. Forty-two prison
management specifications were definedand standards set. Each private prison was
required to develop an Operating Manual
around these management specifications
and this Manual is, in part, the basis fort h e e v a l u a t i o n o f e a c h p r i s o n ’s
performance.
The prison operator specifies the “howto” in terms of inputs and processes,
whereas the Government specifies theoutputs and outcomes required. The
operator has ‘ownership’ of the inputs andprocesses and carries the related risks.
D. Balancing Civil Rights andBudget Efficiencies
The Corrections Act specifies not only
the legislative parameters for the Victorianprison system but also defines prisoner
rights (Victoria was the first State tolegislate prisoner rights in the mid-1980s).
The Corrections Act makes no distinction
between public and private prisons on theissue of prisoner treatment. In agreeing
on a contract price for a private prison, theGovernment has needed to satisfy itself
that the provider had the appropriate
capability to deliver the services required.
The capacity of the bidder to provide aservice at the price quoted was animportant consideration in contract
evaluation.

112TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
Again, the argument that the profit
motive will result in a diminution ofprisoner rights in private prisons has notproven to be the case. There is considerable
evidence that the quality of prison
environments, for instance, in terms ofhours out of cells and access to training
programs has considerably improved. The
consequences of non-compliance withlegislative requirements would simply not
be risked by the operator. Empiricalevidence would suggest that the profit
motive is acting as a key focus on private
prison operators to pay close attention tocausal factors of tensions within the prison
and to adopt management and earlyintervention regimes to prevent more
untoward prisoner behaviour that impact
on prison operations.
E. Ethical Issues
The issue of ethics may arise in two
significant ways in relation to private
prisons.
Firstly, the ethical standards that apply
in the management of contact dealings
when tenders are let for private prison
consortiums. In Victoria, a rigorous probity
process saw a high quality approach to theletting, evaluation and selection of
successful tenderers. This probity review
is ongoing and any change in ownership or
key personnel is subjected to critical review.
Failing to notify such changes has serious
contractual consequences.
Secondly, there is the ethics that
operators of prison of bring to the way
prisons are managed. Neither theCommissioner’s Office, Official Visitors, theOmbudsman nor Chaplains have reported
ethical breaches in the conduct of any of
the State’s private prisons. Contrary to theperception created by interest groups andthe media, a wide range of groups visit
prisons on a regular basis. In addition,
there is a constant movement of prisoners

between prisons, as well as visitors toprisoners. There is no evidence that ethicalstandards are being compromised. The
ethical standards of the operators issomething in which they place greatemphasis given their active ongoing
involvement in tending for new businessaround the world. Unfavourable publicity
about their ethical standards would,
without doubt, hamper their chances in any
future bidding process.
F. Democratic GovernanceIn large part the issue of democratic
governance relates to the issue raised by
Hancock in her paper over the capacity of
the State to delegate its power to punish
private for-profit organisations.
This is a fundamental issue. This is whyin the Victorian model the role of theCommissioner in managing the sentence
given to the prisoner by the Court iscritical. It is the Commissioner who acts
to ensure that the sentence of the Court isproperly implemented, not the prison
operator. It is also the Commissioner who
decides the placement of the prisoner andperiodically reviews this placement. The“delegation” to the operator of the prison
is defined by the provisions of theCorrections Act, publicly available service
standards and operating manuals, and is
the subject of substantial accountability
and monitoring regimes.
Perhaps the most controversial issue
that arises with privatising in government
relates to the conflicting ideals of thepeople’s right to know, the public interest,and “commercial confidentiality” of theprivate prison contacts. In Victoria, thebulk of the private contact details andrelated documents have been released tothe public, however, provisions dealing
with security matters and specificcommercial details have not been released.
There is no answer to this conundrum that13

RESOURCE MATERIAL SERIES No. 56
will be acceptable to everyone. Commercial
contractors when bidding for government
services do so in the full expectation thatcertain details of their bid remain
confidential. The community equally needs
to be assured that the Government isachieving value for money when entering
into contracts with the private sector.
There has been no complaint that the“product” specified in the project briefs forVictoria’s private prisons was inadequate.
Indeed, there is more information in the
public arena about what prisoner services
should be provided then has everpreviously been the case.
The issue seems to be how to engenderpublic confidence that what should be done
is, in fact, being done. This is not a newissue, as it has also existed in relation to
the traditional monopoly provision ofprison services. The introduction of private
providers has, it seems, brought aheightened level of suspicion, at least insome quarters.
Perhaps there is a middle path where
an independent broker, such as the
Auditor-General, can validate the overall
efficacy of private prison contracts, without
revealing the commercial details of thecontract. It is important that thecommunity has confidence in theprivatising of services while private
contractors can confidently bid forgovernment work on the understandingthat competitors are not privy to theirpricing details.
IV. SUMMARY
Public administration has been thesubject of rapid and substantial changeover the past decade. Governments havebeen confronted with the full force of
globalisation. To remain competitive,
Governments worldwide have taken

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difficult decisions to reduce debt andminimise taxes. As a result, the role of the
public sector has changed remarkably.
In Victoria, the public sector has beenat the cutting edge of reform over the last
six years. The Government has pursued asignificant program aimed at increasing
the productivity of the public sector. A
major part of the reform program has been
to privatise significant aspects ofgovernment services, including a range ofservices within the Justice portfolio.
The privatisation of around 45% of theState’s adult prisoner capacity has been thefocus of many debates. The advent of three
new private prison operators since 1996
has required the development of more
rigorous and transparent design andoperational standards for prisons,introduced new and additional
accountability mechanisms, and provided
an imperative for the public prison system
to become more efficient, responsive andinnovative.
While the transition to a new multiprovider system has not been without its
problems, overall results to date would
indicate that the prison privatisation“social experiment” in Victoria is bringing
substantial benefits in terms of service
quality, innovation, responsiveness andreduced costs.
REFERENCES
The Economist, A Survey of the World
Economy, “The Future of the State”, 20
September 1997.
O s b o r n e D & G a e b l e r T, 1 9 9 2 ,“Reinventing Government”.
Beazley R & De Silva D, 1998,“Outsourcing Democracy and Public
Accountability”. Conference Paper,

112TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
Biennial Conference of theInternational Bar Association, Canada.
Beazley R, 1998, “Government
Outsourcing and the Preservation of
Legal Remedies”, Conference Paper,
Biennial Conference of theInternational Bar Association, Canada.
Davies J, 1998, “The Effect of Prison
Privatisation on the Legal Position of
Prisoners”, Australian Journal of
Administrative Law, Vol. 6, November.
Hancock L, 1998, “Contractualism,
Privatisation and Justice: Citizenship,
the State and Managing Risk ”,
Australian Journal of Administrative
Law, Vol. 57, No. 4, December.
Weller P, 1998, “Prisons, the Private
Sector and the Market: Some
Queensland Lessons”, Australian
Journal of Administration, Vol. 57, No.
4, December.
Department of Justice, 1997, “TheVictorian Adult Corrections System”,
Brochure.

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