Soaring prison population growth has led to a budget blowout of $45 million on jails in the last year, and forced the Government to further expand its prisons to fit more inmates.
The Government has now earmarked a further $41 million above baseline funding to cope with pressures on the prison network. Total spending on prison services is nearing $1 billion a year.
The extra funding comes as the prison muster climbs towards 10,000, driven by tougher bail laws, stricter sentencing on domestic violence offences, and repeated reoffending by people with alcohol and drug dependency.
The rising numbers are testing prison capacity - the Corrections Department confirmed plans yesterday to expand four prisons to meet demand.
Corrections Minister Judith Collins said she was not concerned about the rising costs of housing more offenders.
"People are in prison because they should be in prison," she told the Herald yesterday.
"The fact is we have longer sentences for violent offenders and issues like methamphetamine supply. It is right that we should treat these very seriously.
"It's better than going back to soft sentences for extremely violent, recidivist offenders."
Ms Collins said New Zealand's imprisonment rate was equivalent to similar jurisdictions, such as New South Wales - around 200 prisoners per 100,000 people.
As Justice Minister, Ms Collins reformed bail laws in 2013, reversing the burden of proof for serious offenders and denying bail to 350 more people a year. The minister did not resile from those changes yesterday.
"I'm not aware of any suggestions that we change those [laws]," she said.
Labour Party corrections spokesman Kelvin Davis said the growing muster and its related costs appeared to show that rehabilitation measures were not working. "We are simply locking up more and more people. We have got this big washing machine where people are going in dirty and coming out extremely dirty."
Blaming the rising costs on violence or drug-related offending was avoiding the problem, he said.
"[Most prisoners] need help because they've got mental health issues, they've had traumatic head injuries, they are damaged through being sexually violated, through family violence, drug and alcohol abuse. What we are doing is punishing people for being unwell."
Ms Collins conceded that the Corrections Department needed to cope better with mental illness issues. A secure unit was being built at Auckland Prison for this purpose.
The prison muster last week passed 9500 - an increase of 700 inmates in a single year.
Corrections' national commissioner for prison services Jeremy Lightfoot said yesterday that the department had agreed to increase capacity by 271 beds at four prisons - Arohata, Whanganui, Hawkes Bay and Christchurch.
The expansion of these prisons would not be at the cost of staff safety or prisoner welfare, Mr Lightfoot said.