Construction will begin today on New Zealand's first prison to be run as a public-private partnership.

Corrections Minister Anne Tolley will attend a sod-turning ceremony at the site of the new 960-bed prison in Wiri, South Auckland, this morning.

The prison will be owned by the SecureFuture Wiri consortium and largely run by Britain's Serco Group - the private prison operator which has had to improve its operations at Mt Eden prison after failing to meet almost half its performance targets in its first year.

Fletcher Building has signed a $300 million deal with the Government to design and build the prison, which is due to be finished by mid-2015.


It will be owned by the SecureFuture consortium which is made up of Serco, John Laing Investments, InfraRed Infrastructure and the Accident Compensation Corporation.

The 25-year contract to run the prison is worth $840m, which Ms Tolley has said will save the Government some $170 million.

SecureFuture will face financial penalties if it fails to meet custodial, rehabilitation and reintegration measures.

The prison will be the largest men's correctional facility in the country.

Privately run prisons have had a patchy run here so far.

The first, the Serco-operated Mt Eden Correctional Facility, was told to lift its game in April after a series of mistakes, including two escapes from custody.

A report this week on Serco's first year in charge of the facility found it did not reach 18 of 37 targets in the year to June.

Corrections has noted the company was showing improvement, failing only three of its 37 targets last month.