Privately-run prison firms chosen
The Government has chosen the private firms to build and run a new prison in Auckland, but facilities in Wellington and Christchurch are under threat.
SERCO - which already runs Mt Eden - will operate the 960-bed prison and Fletcher Construction will build it.
Although the prison muster has been falling, the Government says it needs extra capacity in Auckland.
And seismic surveys are underway in all prisons to assess if they can stand up to earthquakes.
Corrections boss Anne Tolley said she would be making an announcement about older prisons, such as Wellington's Mt Crawford.
Tolley said the department needed "flexibility to respond to ageing capacity and other future pressures."
"Some prisons in the network are very old and are coming to the end of their viable life. In future, some of these ageing prison units will need to close, but the department will consult with affected staff and unions before that occurs."
Announcing the project, infrastructure minister Bill English said the consortium - known as SecureFuture - would face financial penalties if it didn't meet recidivism rates.
"The contract will have strong performance incentives, ensuring we receive a superior service compared to publicly run prisons or we pay a lower price," he said.
"SecureFuture will need to achieve lower recidivism rates than the average for publicly run prisons to receive incentive payments.
"It will also face financial penalties if it fails to meet short-term rehabilitation and reintegration measures including prisoner health and employment targets, and safe, secure and humane custodial standards," English said.
The firms would expect to have recidivism rates ten per cent better than the public sector prisons.
Corrections wanted to reduce re-offending by 10 per cent by 2020, which gave Serco a target of 20 per cent less than current levels.
The 25 year contract would set out penalties if Serco didn't meet targets. The firm was fined $150,000 last month after a prisoner nicknamed 'Houdini' escaped from Mt Eden in October.
Discussions about the future of Mt Crawford had been underway since 2007.
The Miramar prison, which was built in 1927, held about 120 prisoners and was temporarily closed from June 2008 until July 2009.
Last year former Corrections minister Judith Collins called it a disgrace, and said she wanted to close it down.
All three prisons in the Canterbury region sustained only minor damage from the February earthquake.