Business columnist, with a political twist, for NZ Herald

Dita De Boni: Public service vs private profit

Who wins, when government hands core services over to corporate managers?

Illustration / Anna Crichton
Illustration / Anna Crichton

Should our councils mow our grass verges, or should we do the job? Should our governments own our essential utilities and seek to keep the profits, or is that better left to giant multinationals?

Should a government own and operate its own jails as part of its core task of maintaining law and order, or should private prison managers be paid millions to fulfil this function "more cheaply"?

In Australia, the answer is clearly that private prisons - and increasingly, privately run detention centres - are the new norm. One company that stands to reap huge amounts of money from this new paradigm is Serco, the Britain-based company that was paid almost A$2 billion ($2.3 billion) by the Australian Government this year for an ever-expanding suite of incarceration services, including most of those that detain and process asylum seekers.

Serco also has a 10-year contract to run Auckland's Mt Eden Prison and is part of a consortium that will build and operate a new prison at Wiri, in South Auckland.

The company had an inauspicious beginning at Mt Eden, totting up $300,000 in fines for not keeping a lid on assaults and wrongly releasing and detaining inmates. It has since improved, Corrections says, placing it in one of the "top three" prisons in the country in the latest measurements.

The Corrections union now says Serco seriously under-staffs Mt Eden Prison, leading to violence for wardens and a high churn of new recruits. It's a charge the company denies, and not for the first time.

The same charges swirled around Serco's infamous Christmas Island detention centre, where under-staffing was blamed for inmate violence and self-harm. (Serco countered that detainees created a culture of self-harm and used the practice as a "bargaining tool").

There's no doubt Serco buys itself a boatload of trouble by taking on such high-profile contracts as the Australian detention centres because there is money to be made - and what amazing money it is. Four years ago, says the Sydney Morning Herald, the company had contracts with the Australian Government of A$353 million; this year it will be paid A$1.86 billion for its services.

Last year its revenue got a fillip from the rising number of boat people - "irregular maritime arrivals", Serco calls them. Serco has yet to make a dividend from New Zealand, but there is no reason to doubt that it has done the numbers and sees plenty of scope for growth in our correctional service. The bigger question for us, though, is why segments of our justice system are being used to extract profit for an international concern whose revenue totalled £4.9 billion ($9.5 billion) last year.

Are we being co-opted into a "prison-industrial complex" based on promises of great cost efficiency, only to find that those savings are not realised for New Zealanders, but used to buttress bigger and bigger dividend payments to Serco's shareholders?

The fact is that private concerns such as Serco are divorced from, but dependent on, the justice and other societal systems that deliver prisoners to them. Somehow, governments have been convinced that they can outsource the detention of citizens to private corporations that have completely different incentives.

In the end it is a question that's every bit as fundamental as the one about grass verges, charter schools and state asset sales: where should government responsibility end and corporate opportunism begin?

- NZ Herald

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Business columnist, with a political twist, for NZ Herald

Dita De Boni is a columnist, commentator and TV producer/journalist. She first wrote columns for the NZ Herald in 1995, moving to daily business news in 1999 for four years, and then to TVNZ in Business, News and Current Affairs. After tiring of the parenting/blogging beat for the Herald Online she moved back to her first love, business (with a politics chaser), writing a column for Friday Business since 2012.

Read more by Dita De Boni

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