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Serco budgets $3.2m for Mt Eden penalty

NZN 30/05/2017 Sophie Boot

Serco New Zealand, which operates Wiri Prison in South Auckland, narrowed its loss in 2016 despite the loss of the Mt Eden prison contract costing it an estimated extra $3.2 million in penalty charges.

The company posted a $10.5m loss for the year ended December 31, 2016, from $11m in 2015. Revenue dropped to $52.1m from $64.1m a year earlier.

Serco NZ made a $3.2m provision for onerous contract charges in 2016, after using up all of the $10.1m provision it had made in 2015.

In April 2016, it agreed to pay $8m to the Department of Corrections after chief Ray Smith invoked a step-in clause in the Crown's contract, taking back management of the Mt Eden Corrections facility following an investigation into organised fighting at the remand prison.

Under the agreement, Serco's involvement was shrunk back to labour supply and other transition services through until the end of the contract in March 2017.

It had taken over the management of the prison in 2011 after winning a $300m, 10-year contract.

In a statement, Serco Asia Pacific's chief executive Mark Irwin said the company supports the government's goals to reduce reoffending and create better outcomes for Maori.

"Our focus across the prison is to achieve the outcomes that we are contracted to deliver on behalf of New Zealanders," Mr Irwin said.

"Our contract sets clear performance standards, expects us to achieve significant savings for government and holds us accountable if we don't deliver."

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