Unions representing prison wardens have vowed to fight Government plans to let private companies manage some existing jails.
The Corrections Association says prison officers started on just $18,000 a year the last time prison management was privatised - at the Auckland Central Remand Prison for the first five years after it opened in 2000.
The starting salary in public prisons at the time was $27,000.
Association president Beven Hanlon said the union had to go to the Court of Appeal to win the right to represent prison officers in the prison, but it would be harder to exclude the union from existing prisons where it already operated.
"It will be a lot more difficult to privatise an existing prison because we have got provisions in the collective employment agreement regarding severance and redundancy. That would be a very expensive exercise," he said. "It would be decades before the Government would be able to recoup the cost of making all those people redundant."
Prime Minister John Key yesterday confirmed a Herald report that legislation would be introduced soon to allow private management of prisons.
The Public Service Association, which also represents some prison officers, said the Government seemed to be "blinded by ideology".
But criminologist Greg Newbold, who has visited private prisons in Australia and the United States as well as the Auckland remand prison when it was privatised, said privatisation worked.
"The private prisons have an atmosphere of vibrancy and enthusiasm which I have never seen in a publicly run prison," he said.
"The reason they are better is that there are powerful performance incentives built into a good contract to ensure that the private prison will perform according to the requirements of the contract."
He confirmed that floor staff at the Auckland remand prison were paid less than their counterparts in public prisons when the remand jail was run by Australasian Correctional Management, a US-owned company that is now called the GEO Group (Global Expertise in Outsourcing).
"What tends to happen is that they pay good money for top operators. They tend to pay less money for the people on the floor, the unskilled people who just open and shut doors," he said.
"If they show commitment and intelligence and ability, they can rapidly be promoted, which isn't the case in the public system."
In his book The Problem of Prisons, Dr Newbold said the Australian company running the Auckland remand prison was fined $50,000 for every escape under its contract, and as a result had only one escape in the five years it ran the jail.
"In 2004, for example, filled to maximum capacity with 360 inmates, the prison had one suicide and only three serious assaults - a low level of serious incidents for an institution of this type," he wrote. "Only 5.5 per cent of inmates returned positive drug tests, compared with over 20 per cent in the public sector."
But Mr Hanlon said assaults on both staff and prisoners in the US and Australia were higher at privatised prisons than in public jails because of understaffing. He said the Auckland remand prison ran on a staff to prisoner ratio of 1:50 compared with 1:15 in public prisons.
Former Corrections Minister Matt Robson, who cancelled the Australian contract at the prison, said he suspected the Australians ran it as a "loss leader" to bolster their chances of winning more contracts in New Zealand.
The GEO Group's Australasian office in Sydney did not return calls yesterday.