Cost-effectiveness of Prisons

Cost-Effectiveness of Prisons

This fact sheet examines the cost of the prison system to New South Wales and the efficacy of imprisonment in comparison to alternative responses to crime.

The cost of imprisonment is comprised of both tangible (including the costs of building, maintaining and running prisons) and hidden costs (including psychological trauma, the impact on family members and the impact on employment and housing opportunities). 

The tangible costs of imprisonment

The cost of running the NSW prison system is over $530 million per year, up from $341 million in 1995-96.  The Government also spends and additional $90 million per year on building and maintaining prisons, up from $49 million in 1995-96.

The comparison of the daily costs of various sentencing options reveals that imprisonment is the most costly.

PenaltyCost per dayInformation Source
Imprisonment, females$223.03Bureau of crime statistics and research, (L15) NSW Drug Court Evaluation. (2002).
Imprisonment, males$170.82Bureau of crime statistics and research, (L15) NSW Drug Court Evaluation. (2002).
Imprisonment, high security$182.59Bureau of crime statistics and research, (B73) The impact of abolishing short prison sentences.  (2002)
Imprisonment, medium security$160.06Bureau of crime statistics and research, (B73) The impact of abolishing short prison sentences.  (2002)
Imprisonment, minimum security$138.93 – $144.67Bureau of crime statistics and research, (B73) The impact of abolishing short prison sentences.  (2002)
Imprisonment, average offender$160.00Second Report of the Inquiry into Crime Prevention Through Social Support.  (2000)
Imprisonment, short sentence (six months or less)$154.27Bureau of crime statistics and research, (B73) The impact of abolishing short prison sentences.  (2002)
Drug Court$144.00Bureau of crime statistics and research, (L15) NSW Drug Court Evaluation. (2002).
Periodic Detention$119.63Bureau of crime statistics and research, (L15) NSW Drug Court Evaluation. (2002).
Home Detention$56.43 – $59.00Briefing Paper on the No New Womans Prison Campaign and Prison Costs, and Bureau of Crime Statistics and Research (L15) NSW Drug Court Evaluation
Probation and Parole, general$8.63Select committee on the increase in prisoner population. (2001)
Parole$5.40Briefing Paper on the No New Woman’s Prison Campaign and Prison Costs Probation

These figures do not include “one-off” establishment costs, which are generally higher for prisons than for other forms of punishment.  

The sentencing alternatives listed above are explained in more detail in Alternatives to Custody.  Many of these alternatives are more effective at reducing rates of re-offending.  They deserve particular consideration for minor offences.

The hidden costs of imprisonment

The intangible costs of imprisonment are more difficult to calculate, but must be considered in any cost analysis. 

The loss of housing, difficulty in finding work and poorer health associated with imprisonment not only impact on prisoners’ wellbeing but also increase the likelihood of reoffending. 

Loss of Housing

It is an unfortunate reality that many prisoners become homeless on release from custody. Many recidivists claim that a lack of suitable housing is one of the main factors contributing to their return to jail, yet public housing in NSW has no special provisions for ex-prisoners.


The incidence of drug-related deaths and suicide is disproportionately high for recently released prisoners, particularly women.  This indicates the failure of our prison system to address the health needs of inmates. 

For people who enter prison with the need for rehabilitation, prison is often ineffective.  Poor resourcing of drug and alcohol programs, the availability of drugs in prison, boredom, the stress of daily prison life, as well as the absence of community and family support, can make stopping drug use very difficult.  There are many inmates whose drug use worsens while they are inside.  For others, prison may be the first time that they use illicit drugs.

Prison is a harsh and often brutal environment.  Intimidation, rape, violence, self-harm and suicide are common occurrences in NSW prisons.  For those offenders with mental and intellectual disabilities this atmosphere is particularly difficult.  For some offenders new mental health problems such as depression and paranoia arise in response to the brutality of the prison system. 

The level of mental health problems and disorders is 3 to 4 times higher among inmates than that of the general Australian population.  People frequently leave prison traumatised, depressed and angry.  This is not a useful starting point for those who wish to make a fresh start. 

Prison also generates physical health costs.  For example, prisoners are at very high risk of acquiring hepatitis C whilst in custody because of the prevalence of drugs and the absence of safe injecting equipment.

Employment and Esteem Post Release

Those offenders who experience prison are frequently burdened by the stigma attached to being an ‘ex-con.’  Their employment prospects are often severely and sometimes permanently damaged.

In addition to this stigma, a period of imprisonment can make already dislocated and marginalised people feel even more alienated from the broader community and can weaken personal identity, confidence and motivation. 

This exclusion from the workforce and from community life heightens the risk of social isolation and poverty, which in turn significantly increase the risk of re-offending.

The Separation of Families and Children

The family dislocation caused by imprisonment has obvious social and emotional costs, including increased risks of family break-ups and disruption for children.  Children may have to relocate or enter the care of the state.  Some studies have shown that children of prisoners are much less likely to complete secondary school, more likely to be come homeless unemployed and more likely to come into contact with the juvenile justice or criminal justice system.  Of course, these impacts also have economic costs for the community.

Family dislocation also has an impact on the likelihood of re-offending, as indicated in evidence to the NSW upper house inquiry into children of prisoners:

“Although the literature on controlling or reducing recidivism is dismal, the little literature that there is suggests that maintaining community ties is absolutely essential in maintaining the bond between the prisoner and his family…these bonds are central to any attempt to try and reduce recidivism”. (evidence of D Weatherburn, Bureau of Crime Statistics & Research)

The Increased Likelihood of Crime as a Result of Imprisonment

As indicated above, prison has many negative effects that can influence the risk of re-offending.  Because of the many damaging effects of imprisonment, it could be argued that incarceration in fact increases the chances of many offenders committing further crimes upon release. 

Crime itself is costly in many ways tangible monetary ways.  Besides obvious costs such as damage to property, costs also include the expense of building new prisons, increased insurance premiums and hidden costs such as the increase in community fear and the break down in community cohesion. 


In summary, prisons are expensive to build, maintain and operate but they also have intangible costs for prisoners and communities.  Perhaps most importantly, these costs can increase the likelihood of re-offending, making prison a questionable and costly means of responding to many forms of crime.

If less money was spent on prisons, in favour of expenditure on health, housing and community services, we could expect to have a greater impact on crime in the long term.  As recognised in a fact sheet recently published by the Department of Community Services, one 27-year US study showed that for every $1 invested in services to help families with young children, $4 was saved within three years on child protection, health, education and justice systems.  By the time the children were adults, $7 had been saved.

It is time for New South Wales to respond to the weight of this evidence.


Anderson, T. (October 1996). The Home Detention Experiment.  Framed, Quarterly magazine of justice action, i31.

Babcock, J.C. & Steiner, R.  (March 1999).  The Relationship Between Treatment, Incarceration and Recidivism of Battering: A Program Evaluation of Seattle’s Coordinated Response to Domestic Violence.  Journal of Family Psychology, v13. i1, pp46-59.

Bureau of Crime Statistics and Research.  NSW Drug Court Evaluation: Cost Effectiveness.  (L15).

Chisholm, J. (Feb. 2000).  Australian Institute of Criminology. Benefit-Cost Analysis and Crime Prevention. Trends and Issues in crime and criminal justice, no.147.

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Australian Institute of Criminology.  The Economics of Implementing Intensive In-prison Sex-offender Treatment Programs.  Trends and Issues in crime and criminal justice, no.134.

Ellis, T. & Marshall, P.  (2000). Does Parole Work?  A Post-release Comparison of Reconviction Rates for Paroled and Non-Paroeld Prisoners.  The Australian and New Zealand Journal of Criminology, v33, no.3, pp.300-317.

Figgis, H.  (1996).  The Home Detention Bill 1996: Commentary and Background.  Briefing paper.  NSW Parliamentary Library Research Service: Sydney.

Gittens, R (2002) The Flag Fall For Her Majesty’s Guests, in Sydney Morning Herald, 30/Oct/02

Law Reform Commission Publications (2000). Sentencing Aboriginal Offenders.   Report 96 – part 6 (female offenders.)

Lind, B. & Eyland, S.  (August 2002.)  The Impact of Abolishing Short Prison Sentences.  (B73).  Bureau of Crime Statistics and Research, no.73.

NSW Health Department, Drug Update (May 2001)

Ogilvie, E.  (October 2001.)  Post-Release:  The Current Predicament and the Potential Strategies.  Criminology Research Council.

Piehl, A.M., Useem, B. & DiIulio, J.J.  (Sep. 1999).  Right-Sizing Justice:  A Cost-Benefit Analysis of Imprisonment in Three States.  Center for Civic Innovation, Civic report. no.8.

Report on Government Services 2002 – section on Corrective Services.

Social Issues Committee, Legislative Council (July 1997)  A Report into Children of Imprisoned Parents

Second Report of the Inquiry into Crime Prevention Through Social Support.

Standing Committee on Law and Justice.  (March 1999).  Inquiry into Crime Prevention through Social Support.

Totaro, P (2003), ‘Scaring up the Votes”, Sydney Morning Herald, 27/Jan/03

Wilson, D.B., Gallagher, C.A. & Mackenzie, D.L.  (Nov. 2000).  A meta-analysis of Corrections-Based Education, Vocation and Work Programs for Adult Offenders. The Journal of Research in Crime and Delinquency. v37, i4, pp.347-68.

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