prison privatisation in south africa issues, challenges and ...

manipulation of public perception in order to fuel demand or an intelligent business practice?
One of the criticisms of private prisons is that companies will have a profit motive to fuel a fear
of crime and will encourage reliance on prisons as a viable solution. This could then affect policy
making and criminal justice legislation in such a way that the profits of the prison company are
served rather than the safety and security of the general public. The danger arises when prisons
manage only to produce more criminals, and the result is actually an increase in crime. If
unchecked, the phenomenon could spiral as voters believe more prisons will decrease crime
and the opposite effect continues. In this scenario, the only winner is the prison company which
is provided with a constantly expanding market.
Cost
The proponents of prison privatisation, as with the supporters of privatisation in general,
maintain that the private sector can provide the same services as the public sector at a lower
cost. Privatisation in other sectors has not necessarily led to cost savings, and it remains
debatable that it can actually raise costs in the long run. The charge is that contractors, anxious
to break into the market, will submit extremely low estimates. Once a dependent relationship is
established, the contractor will raise prices in order to make up for the initial loss.
On the other hand, the government does have the option to switch contractors. This option is
only available when private contractors are involved; the state cannot opt to switch to a different
agency or department. Also, when contractors are involved, some of the costs associated with
paying these companies will return to the government in the form of taxes. Many of the
contractor’s expenses–property taxes, payroll taxes, telephone and utility fees–are actually
sources of revenue for the government.
Cost comparisons between public and private facilities are extremely difficult, and not one that
has been completed to date has been accepted as being accurate. This is because prisons vary
in terms of size, location, and classification of prisoners and these factors all impact on cost.
Without the existence of two identical prisons, cost comparisons are all but impossible. Even
assuming that two prisons could be considered comparable, assessing the actual costs is
extremely difficult. Construction costs are difficult to quantify accurately, because of the
changing value of land, and often costs for preparing the land or financing the purchase are
excluded.
The usual mechanism for government agencies is the budget, which is an inherently inaccurate
medium for assessing costs. The true cost of corrections is difficult to determine, as it is not
simply the budgeted amount spent each year by the department. Most government budgets for
prisons do not include construction costs, depreciation, debt service, rent, taxes (paid or
foregone), overhead, or indirect costs. There are also hidden costs for services provided or paid
for by other departments, such as the transportation of prisoners or the involvement of central
government accounting or legal services. In South Africa, the Department of Public Works builds
prisons and provides some of the maintenance, but these costs are not included in the
Department of Correctional Services’ budget.
Government budgets are not as detailed or thorough as those of contractors who will carefully
track each cost in order to obtain proper reimbursement. One of the advantages of contracting
is that it forces the government to determine the costs of a service. When negotiating a contract
for a government service, the true costs must be determined and quantified, and can then be
analysed, compared and minimised. This process provides valuable information that