Improve Private Prison Contracts To Cut Costs And Reduce Reoffending

“Stronger incentives for rehabilitation can improve private prisons and lead to reduced reoffending, less crime, and lower costs for taxpayers,” said Andrew Bushnell, Research Fellow at the free market think tank, the Institute of Public Affairs.

The IPA today released a new research report on private prisons in Australia. Eight of Australia’s 98 prisons are operated by private companies. These prisons house an estimated 18 per cent of Australia’s prison population. The report, Cutting costs and reducing reoffending: Redesigning private prison contracts for better results investigates recent moves by governments in Australia and overseas to include incentives for reduced reoffending in private prison contracts.

“Recent independent reviews of private prisons in Victoria and Queensland found substantial savings for taxpayers from prison privatisation,” said Mr Bushnell.

“Along with costs, policymakers also need to consider how private prisons can be most effective in reducing reoffending, which is one of the main drivers of the massive increase in incarceration and related costs that we have seen across Australia in recent years.”

Australia’s incarceration rate is at a record high of 222 per 100,000 adults. Nationally, taxpayers spend more than $15 billion per year on criminal justice, including $4 billion on prison running costs. Despite this expenditure, 46 percent of released prisoners return to prison within two years of their release.

“The introduction of incentives for reduced reoffending is a positive step for private prison contracts. But our research indicates that the existing contracts are likely not optimised for getting the results that we all want,” said Mr Bushnell.

“The performance components of the contracts needs to be more substantial, and should be connected to simple, transparent measures.”

The paper makes a number of recommendations for strengthening private prison contracts. These include increasing the proportion of payments to operators that is based on performance, using a bonus model connected to individual prisoners, and standardising measures of performance across all private and state prisons to enable comparative analysis. The report also discusses some of the possible limitations of pursuing this approach.

“Following the recommendations in this report gives this important experiment the best chance of succeeding,” said Mr Bushnell.

Download the report here.