"We took the view that it was better to upgrade the stock with the new prison at Wiri.''
Corrections Minister Anne Tolley has already said Corrections was looking at closing Mt Crawford Prison.
Labour's justice spokesman Charles Chauvel said sources had suggested New Plymouth, Invercargill and Wellington prisons were among those slated for complete closure, while Waikeria and Paremoremo prisons would also be cut back.
Mr Chauvel said prison closures would deal big blows to regional economies, as a significant number of jobs were lost.
"Prison beds are still needed, and smaller institutions, spread across New Zealand, are better than mega-facilities concentrated in a few centres. These reasons include risk management and rehabilitation, as well as their contribution to regional economies,'' Mr Chauvel said.
"But more importantly, they're already there, and the taxpayer has already spent millions of dollars over decades to keep them open.''
The new Wiri prison is to be run by Serco, a private company that also manages Mt Eden prison.