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The Government has backed its privately-run prisons policy with a bill that will give it authority to make the change.
Prime Minister John Key said on Monday most prisons would continue to be run by the Corrections Department but it was "eminently possible" that some would by run by private contractors.
The Corrections (Contract Management of Prisons) Amendment Bill was introduced today.
The bill said it was government policy to allow competitive tendering of prison management on a case-by-case basis.
"Opening up prison management to contractors provides an opportunity for innovation and change in the way in which prisons in New Zealand are operated," it said.
"Providing for prisons to be run effectively and efficiently by contract managers also enables the Government to look for cost savings in the overall delivery of prison services."
The bill noted that Auckland Central Remand Prison (ARCP) was managed under contract from 2000 to 2005.
"During that time ARCP made a number of improvements that were subsequently adopted by the Department of Corrections."
Labour and the Greens strongly oppose privately-run prisons and say locking people up is the responsibility of the state.
The previous Labour government refused to renew the ARCP contract.