Prisons for profit

The idea of prison conjures up many different images for people. For those on the right wing, prisons are often seen primarily as instruments of punishment and deterrence. In contrast, the left wing tends to view prisons as places for rehabilitation. Some people imagine the clanging of heavy iron gates shutting them off from the outside world, while others think of the unappetizing, bland food often portrayed in movies and TV shows. Almost nobody thinks of profit. 

Most people assume that much like the rest of the justice system, prisons are simply administered by some random branch of the government. However, this assumption is incorrect, at least in Australia. Here, prisons are run by private companies with the primary goal of generating profit. In this profit-driven system, every inmate, whether convicted of a violent crime or a minor traffic offense, is seen as a source of revenue. 

If you are unlucky enough to live in Victoria, South Australia or New South Wales the administration of prisons is dominated by four major private companies driven by profit. No wonder It’s no surprise, then, that New South Wales has the highest recidivism rate in the country, with 48% of inmates returning to jail within two years.

When the topic of private prisons comes up, most Australians likely think of the United States. However, despite America’s reputation, Australia has a higher percentage of its prison population in privately run facilities than any other country in the Western world. At the time of writing, more than twenty percent of Australian prisoners are housed in privately run prisons, a significant increase compared to the United States, where less than ten percent of the prison population is in private facilities. This alarming disparity highlights the extent to which Australia has embraced the privatization of its prison system.

In Australia, the prison system is heavily influenced by four major companies: Serco, G4S, Geo Group, and MTC-Broadspectrum. Each paid billions per prison with decade-long contracts. Each new prisoner represents additional revenue, akin to cattle on a farm. Together, these four companies are set to receive over half a billion dollars this year alone for their services.

Despite the obvious issues of a private company having sway over your freedom, the for-profit prison industry poses significant challenges for both society and the economy. Put aside for a moment the irony that if the criminal is lucky enough to have a superannuation account, they may very well have a vested stake in the very company that is imprisoning them. This paradox highlights just one of the many complex issues within the for-profit prison system.

To increase revenue, more people need to be incarcerated. That is the reality of how these companies grow. If the crime rate decreases, these companies make less money because there is less demand for their services. See the problem yet? Revenue is only half the equation. The industry is paid a fixed amount per prisoner. In order to grow their profit margin they have no choice but to bring their costs down.This is where the real problem lies. To maximize profits, companies often cut corners by providing inadequate staffing, supplies, and equipment. Medical supplies and costly renovations detract from the bottom line so why prioritize them at all. After all, shareholders won’t be happy if their dividends payment goes down. 

This business model provides no incentive to invest in programs that help offenders stay on the straight and narrow after their release. “In fact, rehabilitative programs that aid in reducing recidivism are viewed as financial liabilities, as they only eat into the prison’s cash flow. As a result, these essential programs are often neglected, leaving prisoners without the support they need to reintegrate into society successfully.

The companies that own and run prisons actually stand to benefit more when people reoffend. They only stand to lose revenue if a criminal is able to turn their life around, making rehabilitation counterproductive to their business model. So why would they want to rehabilitate their ‘cash cows’? The more people that are locked up, the better the financial report looks at the end of the year. Rehabilitating inmates would quite literally put them out of business.

The idea behind privately owned and operated prisons was intended to make the system more efficient. The primary goal was to reduce costs for the public compared to government-run prisons. Politicians assured us that outsourcing prison management would be more economical, with private companies handling the operations more efficiently. We were told that nothing significant would change and that these companies were simply experts at what they do. At the end of each financial year, we were promised that the costs would be lower, making the decision seem like a prudent choice. Let’s be honest, nobody really wants to stick up for convicted criminals anyway. 

Except it was all a lie. The cost of running prisons never got any better. The cost of running prisons did not improve. In fact, the expenses for the state actually increased. The areas in Australia that use for profit prisons have a much higher rate of repeat offenders. By all measures, our prison worsened. They didn’t even give the contracts to Australian companies, instead choosing largely international businesses that send profits back to England and the USA. What were we left with? A growing expense list and the added burden of increased crime for our communities to manage. In 2021 alone, organized crime was estimated to cost us around 60 billion dollars a year.

Over the past five years, there has been a lot of criticism directed at judges and the judiciary system as a whole. This is especially true in Victoria, where carjackings and home invasions feel more like an epidemic than mere crime statistics. Instead of solely blaming the bail system for our issues, perhaps we should scrutinize the individuals and entities responsible for rehabilitating criminals. “People go to prison not only to be rehabilitated but also to be punished for their unacceptable behavior. Punishment is the responsibility of the judge, not some foreign CEO running a for-profit prison.

A quick note on the article. While this article names specific companies involved in the for-profit prison industry, it is intended to discuss industry-wide practices and does not allege any wrongdoing by any individual company. The focus is on the broader systemic issues rather than the actions of specific entities.