As construction of a new private prison began in south Auckland today, ONE News can reveal the scale of the Government's controversial deal.
The prison, located in the suburb of Wiri, had a sod-turning ceremony today but ONE News understands there are hundreds of prison beds lying empty in jails across New Zealand.
And Serco, the overseas company which will manage the new 960-bed facility, has confirmed it will be paid for 100% occupancy of the prison even if beds remain empty.
Opponents have slammed the new jail - the first of the Government's controversial public-private partnerships - saying it is a waste of taxpayers' money and a back-stop for what they describe as National's increasingly punitive social policy.
"It seems a very perverse use of a total of $900 million, " said Green Party MP, David Clendon.
But the Government estimates the deal will save taxpayers $170 million.
"I'm confident that SecureFuture will deliver a safe, secure modern prison along with the required success in rehabilitation rates, and that the whole prison network can benefit from its international experience," Corrections Minister Anne Tolley said.
And she said the contract "demands that this consortium performs at 10% better than Corrections".
But the current prison system has over 1000 empty beds. New Zealand has 10,171 prison beds and 8550 prisoners, leaving a total of 1605 beds lying empty.
Even taking into account the planned closure of two prisons and other units over the next year, the figures show New Zealand will still be left with more than 900 vacant beds.
"The solution, really, is to cut the losses and just say no to this project," said Clendon.
But the Government insists the country needs those beds, and more.
"It's not just numbers and beds," said Tolley. "You don't put men and woman together, we've got different classifications of prisoners."
New Zealand has one of the highest rates of imprisonment in the western world and National has set a target of 600 fewer people being locked up by 2017 with a view to lowering reoffending by 25%.
However one critic said the Government's welfare policy will do nothing more than help fill the Wiri prison.
"We are starting to see a very punitive regime, if that continues, then it is very likely that the number of people being placed into prison will increase," said Kim Workman, from Rethinking Crime and Punishment.
But Tolley slammed the criticism as "absolutely silly".
Private jail managers, Serco, told ONE News they will be paid for operating a full prison, regardless of inmate numbers. "We will be paid to operate for 960 prisoners," said Paul Mahoney, from Serco.
Opponents have said that makes the private prison a preferred provider and could lead to job losses in public prisons.
One investor that stands to profit is ACC, with its 30% share.
ONE News today discovered that the deal is worth about $10 million to the accident compensation provider.
The SecureFuture consortium of Fletcher Construction, Serco and Spotless Facility Services has been contracted to design, finance, build, operate and maintain the prison under the public-private partnership.
Up to 1000 construction jobs and 300 long-term positions will be created, with the new facility scheduled to open in 2015 as part of a 25-year contract worth approximately $840 million.