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Private prisons and Public-Private Partnerships (PPP) in general could be used to the benefit of the country. The fact that they are run by private companies, for a profit, does not automatically mean that every other aim of such an organisation is compromised.


 
One of the better things about a PPP is that the Government can retain contractual oversight and control of the project, , while monetary savings are made through the use of a private model. The Government offers a contract; private companies tender a proposal. The contracts and laws around privately-run prisons can include standards to be met and minimum requirements. This allows the Government to drive a hard bargain, and ensure that the required standards are met by the private company.
The Government is in a strong position, and will only want to go ahead with PPPs if they make sense in terms of savings as well as service delivery. It would be a poor choice, as well as politically contentious, to go after the cheapest provider at the expense of a good service. Governments are in the business of being elected, and they are fully aware a poorly-performing prison will turn voters off.
Of course, there is no failsafe way to prevent a breach of standards, but then poor performance, often coupled with poor efficiency, also occurs in the public sector. Unlike with to public services, monetary incentives and penalties can have a greater effect on a private organisation: they are in it for a profit. This motive means that penalties built into a contract can ensure that PPPs perform well.
The first new private prison in New Zealand will save up to 20 percent over the 30 years it will be privately run. The Government has said that this will only go ahead if it provides better services than the best public models, at a lower cost. Contracts incentivising lower criminal recidivism and raised rehabilitation will put these goals directly in line with the private organisation’s profit incentive, providing new opportunities to provide better service.
Other models, which would create more certainty of service levels, might see private organisations involved in the construction of public buildings. Strict standards, performance bonuses, and the option to always refuse all private offers and remain publicly funded means we should consider the potential benefits of private prisons and PPPs in other sectors.