Tuesday, July 13, 2010

Judith Collins' Soft Cell

Something has been bugging me all day about the Economic Impact Statement lauded by Judith Collins as a money spinner for Wiri and region. Crampton sums it up nicely, saying the story confuses costs and benefits. He also helpfully links to other reactions around the blogosphere. Yep, they're all valid, but that wasn't it.

No, it took me a bit of a think but I finally put my finger on it. Indulge me with a bit of crude maths. It costs around $100,000 to keep a prisoner locked up for a year, excluding capital costs (building the thing and keeping it in good repair). Collins is crowing about the $1.2 billion return on investment over 30 years, which No Right Turn works out at around $40 million a year.

The new prison in Wiri will have 960 beds. 960 times a hundred grand works out to $96 million, all of which the taxpayers pick up. Only $40 million will enter the regional economy. Where does the other half go? Is there a better way for the government to spend half, burn half of $96 million a year in Wiri?