Privately run prisons are on the Government's agenda after Parliament today passed a bill allowing them to be handed over.
Against strong opposition from the Labour Party, the Government pushed the legislation through under urgency on a vote of 68 to 53.
The previous National government put Auckland Central Remand Prison under private management but when Labour won the 1999 election it refused to renew the contract.
That was the only time a New Zealand prison has been under private management, and Corrections Minister Judith Collins said the experience had been "generally positive".
Ms Collins said she wasn't planning "wholesale privatisation" and was considering putting two new prisons under contract management.
She has previously said Auckland's Mt Eden Prison could be the first when redevelopment is completed in 2011.
Ms Collins said the legislation allowing contract management ensured public accountability and the prisons would be under the umbrella of the Department of Corrections.
"Contract prisons will have to comply with all relevant legislation, like the Bill of Rights Act, and international conventions," she said.
"There will be prison monitors with significant powers of access, reporting directly to the chief executive of the Department of Corrections."
Labour's Lianne Dalziel said deprivation of liberty was a core function of the state and should never be contracted out.
"There's nowhere they would draw the line, everything is up for privatisation," she said.
"Profit motive would drive the prison system. People would be kept in longer and they would make sure they kept coming back because that's where their profit lies." Ms Dalziel said in Britain 10 of the 11 private prisons were in the bottom 25 percent of all the prisons on performance measures.
Green Party MP David Clendon said privatising prisons didn't make any more sense than privatising the courts, the police and the defence force.
He wanted to know what would happen if a privately-run prison got into serious financial difficulty.
"Would the state allow it to go broke, or would it be bailed out with taxpayer money?" ACT's David Garrett said international data showed privately run prisons were cheaper and delivered better outcomes.
"Privatisation isn't a right-wing conspiracy, around the world it has become the norm," he said.
"And there's no tablet in stone that says incarceration of prisoners convicted by the courts must be the responsibility of the state."
