Reoffending rates are expected to drop when the country's first public-private prison opens in South Auckland with a focus on rehabilitation, Corrections Minister Anne Tolley says.

Construction of the $840 million, 960-bed facility began in Wiri today with the announcement it would bring up to 1300 jobs - 1000 in the construction industry and 300 in the prison when it opens in 2015.

The prison, next to the Auckland Regional Women's Correctional Facility, will be operated by the SecureFuture consortium of Fletcher Construction, Serco and Spotless Facility Services.

Reports show it could also bring a hefty benefit to the companies involved; Serco announced to the British Stock Exchange this month that it expects revenue of up to $30m per year once the prison is built.

However Tolley, who turned the first sod herself, said taking the public-private route would cost $170m less than if the prison was procured through "conventional means".

Serco already runs Mt Eden prison, where it failed to meet 48 per cent of its performance targets, according to its year-end performance results released yesterday.

Conditions it didn't meet included those for escapes - two offenders had managed to evade authorities so far.

But Tolley said she continued to have faith in the company as it was improving, with the August results showing it met 34 out of its 37 targets.

She said the company's expected revenue was not important if it achieved its goals - which included performing 10 per cent better than Corrections in reducing reoffending rates.

"I'm interested in performance, I'm interested in how many people leave this prison and go out and live decent lives in the community," she said.

The custom design and build would help achieve that, Tolley said.

"It's not all about buildings but buildings can play an important part in the way prisons run and rehabilitation."

Serco managing director Paul Mahoney said he was confident the company could meet the rehabilitation goals.

He didn't have figures on the success of the rehabilitation programmes at Mt Eden, but was sure they were working.

Mahoney said the company used the Eight Pathways system, which had a "lot of evidence around the world" showing it worked.

He also said lessons learned at Mt Eden would help.

"Mt Eden was a good test case, we now know we can do it and we've got two more years before we get to Wiri."

- © Fairfax NZ News