A prison rehabilitation group says running some jails privately could bring fresh ideas into the state system.
The Government is to hand the running of the joint Mt Eden and Auckland Central Remand Prison to a commercial company.
It is already building a prison at Wiri, in Manukau City, in partnership with the private sector.
The Prison Fellowship, which runs faith-based rehabilitation programmes, says running prisons for profit can make them more effective.
National director Robin Gunston says the remand prison worked better with community groups when it was run privately from 1999 to 2005, than when it was state run.
A penal reform campaign group says the move is pushing New Zealand closer to the over-crowded and poor conditions experienced in the United States.
The Howard League for Penal Reform says that although the Corrections Department is not perfect, prisons should not be about profit.
Spokesperson Peter Williams, QC, says private prisons have failed in the United States and will not be in the interest of prisoners.
