In Australia, a private prison company gets a bonus for every freed inmate who does not come back

Not a bad problem to have.
Not a bad problem to have.
Image: CC Neil Conway
We may earn a commission from links on this page.

Authorities in one area of Australia are trying a new tactic to fight criminal recidivism: For every former inmate who stays out of prison more than two years, the private company that ran the prison will get a cash bonus.

This payment scheme is taking place in West Australia, in a new women’s prison called Melaleuca. The prison, run by Sodexo, an international corporation with headquarters in France, opened earlier this week. For every convict who does not return within two years, Sodexo gets $11,000 (15,000 Australian dollars).

The local government came up with the idea as a solution to its overcrowded prison system: About 34% of women in the state re-offend after completing their sentence. If the company succeeds in providing support programs for a woman so that she does not reoffend, the government will pay it more than it would if she ended up back in the system, local authorities told Australian Broadcast News.

The UK government has been experimenting with similar “pay-by-results” pilot programs over the past several years in two privately-run prisons. Upon their release, ex-convicts are helped with services such as housing and employment. Such programs have had mixed results, although overall re-conviction rates have slightly fallen. These programs are also criticized by watchdogs as creating incentive for prison services providers to focus on cheap, short-term solutions, or to help only those inmates who seem easiest to help.

In the US, the system of incentives is wholly opposite. Authorities pay companies by the bed, creating an incentive to keep more people behind bars, and government contracts with private prisons often include “lock-up quotas,” according to a 2013 report from In the Public Interest. Lock-up quotas guarantee that if the government does not send enough convicts to a private prison, it will have to pay a hefty fine. This creates a situation in which lowering incarceration can cost money to the state.

Time will tell if the Australian solution works in reducing recidivism. But the UK and US examples show that even if you introduce healthier incentives, a prison system where profit is the motive remains a tricky solution.