Mackey Moana: Corrections (Contract Management of Prisons) Amendment Bill — In Committee Speaker Recalled In Committee Third Reading 
Text is incorporated into the Bound Volume 
Mackey Moana: Corrections (Contract Management of Prisons) Amendment Bill — In Committee Speaker Recalled In Committee Third Reading 
[Sitting date: 24 November 2009. Volume:659;Page:8105. Text is incorporated into the Bound Volume.] 
MOANA MACKEY (Labour) 
: 
 I thank the Chair and the Leader of the House for allowing us to continue this very important debate. I am very pleased to take a call. I was not able to take a call in the debate on Part 1 but I am very happy to be able to do so now because I have a number of concerns and questions for the Minister in the chair Judith Collins that I hope she will take the time to address. 
I endorse the comments made by my colleagues thus far— 
Simon Bridges 
: She knows about everything. 
MOANA MACKEY 
: I say to Mr Bridges that I just care about everything. 
Simon Bridges 
: That’s a beautiful thing. 
MOANA MACKEY 
: Well that is what the Labour Party is about; we think about people other than ourselves. That is where I am going with this. I want to comment on one of the things Sandra Goudie said when she got up. She went on about how important competition is in innovation in the prison sector and how important innovation is within our prison system for getting great new ideas. Evidence from around the world has shown that although private companies are very very keen on showing how great they are when they are trying to get a contract there is no competition when it comes to follow-on contracts. In fact the bill as far as I am aware does not even stipulate a length of contract time. So on the one hand we have a situation that my colleagues have outlined where a private prison management company could get a contract for 50 years then it all goes pear-shaped the Government needs to get out of the contract and it will have to pay out for a very very long contract. 
Carmel Sepuloni 
: New Zealanders. 
MOANA MACKEY 
: That is right; it is taxpayers who will pay for that. 
The flip side of that argument is that when there are short-term contracts the contracts are not given to other companies. There is no competition overseas when it comes to follow-on contracts. There are arguments about how great it is that sustained competition throughout the sector will create these wondrous results but that does not actually happen. It only occurs at the point when companies are trying to grab contracts and then it all falls by the wayside and follow-on contracts often do not follow. That is what evidence from overseas has shown and I would like to know what protections have been put in this legislation to make sure that the claimed benefits of this law will eventuate. 
There are also concerns that the quality of these services may be reduced in an effort to maximise profits. I know that National members have rubbished this argument but it is an incredibly important point. I point out that private companies are fundamentally responsible to their shareholders. More than that they would be acting against their fiduciary duties if they engaged in projects that they knew would disadvantage their shareholders. To me that seems very much to run against the public interest in prisons being run properly. I would like the Minister’s comments on that as well. If these private companies are required to maximise profits for their shareholders how does that sit well with the public need for safety and the levels that the public may be expecting. 
I also know that the ACT member David Garret rubbished Labour members for saying that private prisons are bad by saying we are just ideologically opposed. I am and I am quite open about that. I think that it should be the State that incarcerates people not private companies. I think it is particularly repugnant to be making money off imprisoning people and the evidence backs that up as well. I am one of those people who think we should have an evidence-based approach to these things and in the area of law and order under this Government we absolutely have the opposite. I believe the evidence does not back that up. I want to say to the ACT member in particular that even if he does not believe in that moral argument—and of course ACT does not—how does he feel about a situation where the privatising of a prison may jeopardise public safety if there is a major emergency a riot a breakout or a strike? 
Hon Gerry Brownlee 
: Come on put the notes down. Say something you think yourself! 
MOANA MACKEY 
: I say to Mr Brownlee that I want to get it right because he is here and I really respect him and want to impress him. Government-run institutions are able to more effectively coordinate safety measures and emergency procedures than private companies. This is an important point and I would like the Minister in the chair Judith Collins to explain what she is doing to ensure that the private companies will have the same contact and the same ability to respond to an emergency as the State system because that has been a concern overseas. 
I notice that clause 199H of the bill “Control of contract prison in emergency” raises another issue: where there are concerns about public safety or other matters or emergencies the chief executive of the Department of Corrections can step in and take over. That raises the question that when things are going great the private prison gets to keep the profit but when things go pear-shaped the State has to step in pay the money and clean up the mess. How is that a good deal for the taxpayers of New Zealand? We saw this in the United Kingdom where a private prison company got into significant trouble within months of opening. It made all these claims about all the wonderful things it could do and all the targets it could meet. Within months the company had practically fallen over and it was the UK taxpayer and the UK prison system that had to step in to clean up the mess and pay for it. 
We have another case here of privatising the profits and socialising the losses. I would really appreciate the Minister’s comments on that as well because it is an important point. There is also the issue which members have rubbished but it has happened in the United States that it creates opportunities for corruption such as bribes kickbacks and political promises. We have seen political parties get a lot of money from these private prison organisations. They come up with “tough on law and order” policies because the more people there are in prison the more money those organisations get. 
If we look at Pennsylvania in the United States we see an absolutely terrible case that happened in 2007. Judges were being paid to put children into correctional facilities because the correctional facilities were privately run and the more children they had the more money they got. One kid threw a sandal at her mother I think and ended up being put into a correctional facility because the judge was getting a kickback. I ask the Minister what there is in this legislation to make sure— 
Hon Dr Jonathan Coleman 
: Where was this? 
MOANA MACKEY 
: —it was in the United States in Pennsylvania in 2007—it does not happen here. 
Before I finish I want to read a submission. We have heard a lot about New South Wales and a lot about Australia and I thought this submission was particularly good. Do members know who the submission is from? It is from the Police Association of New South Wales and this is what it had to say this year in its submission on the privatisation of prisons: “Private companies fundamentally are responsible to their shareholders to generate a profit on funds invested. Indeed company directors would be acting contrary to their fiduciary duties if they were engaged in projects they knew would be likely to not be profitable. It cannot be said that the interests of the shareholders and the public interest may always coincide—indeed all too often we know that this is not the case. The current world economic crisis is as a direct result of the clash of interests of private organizations and the general public.” 
That raises a number of questions that I would also like to ask the Minister. What will suffer as a result of the need to make a profit? How can there be a guarantee that corners will not be cut to meet the economic demands of making a profit for shareholders? If contracted services are remunerated on the basis of the size of the prison population what incentives would there be for the provider to rehabilitate offenders? Will the financial imperatives of filling prisons lead to overcrowding? How does the provider become accountable beyond the terms of the contracts and contract law? Private contractors are insulated from public scrutiny; they are not subject to the same controls and oversights that apply to the Government and public sector employees. 
Is there a real possibility that the safety of both inmates and the public will be jeopardised through inadequate staffing training and resources in order to increase profit margins? Will there be a higher staff turnover with private contractors meaning less experienced staff with less preparedness to respond to riots fires and escapes and what is the increased risk of opportunities for corruption within private companies that are not subjected to the very rigorous oversight and training of government prison officials? And what is the risk and potential impact if the private company goes bankrupt? Those were the questions put by the Police Association of New South Wales and I think they are questions that deserve to be answered before any member of this Chamber supports this legislation. 
David Garrett and the Minister in the chair said we should just give it a go and see how it goes. We are not talking about changing one’s hair colour or about getting a new haircut. We are talking about a significant shift in the way we run corrections facilities in this country. We are talking about a system that overseas has seen increased violence and prison deaths and lower reporting. If something is not reported the private company does not get pinged with the penalties and we have seen lower reporting in the private sector. Ten out of the 11 worst prisons in the UK were private prisons. I visited Her Majesty’s Inspectorate of Prisons for England and Wales when I was over there and I was told that the private prisons were diabolically bad and they cut corners at any cost. When MPs go through them the red carpet is rolled out and they are shown everything they want to see. It is like when we get that Microsoft Windows demonstration software that is nothing like the real thing. When we finally purchase the real thing it is very very different. We were told “Don’t go there.”