Prime Minister John Key says his government is committed to contracting private companies to run government services, despite having to step in at Mt Eden prison.
Corrections has been forced to step in and take over control at the Auckland remand facility, following revelations of "fight clubs", an inmate death, attacks and unreported injuries.
Mt Eden is run by international outsourcing company Serco.
According to Britain's Financial Times, Serco employs 120,000 staff in 30 countries, running air-traffic control towers, railways and prisons.
"The company has been trying to rebuild its reputation after a series of botched government contracts including overcharging taxpayers for tagging prisoners in the UK," the paper says.
Mr Key told The Nation the Government was following the proper process with Serco.
He was not yet talking about tearing up the $300-million, 10-year contract to run Mt Eden.
However, he did not comment on an accusation that Corrections and Serco's monitoring system was not working.
"All I can do is actually make sure that the company is held to account," Mr Key said.
There were advantages to private companies running prisons, he said, and there were penalties and remedies available to the Government.
The National government favours using private companies to run schools and prisons, and is proposing a "social bonds" scheme for social services normally run by Government.
Social Development Minister Anne Tolley has said she would be open to Serco providing social services for children and families.
Mr Key said the Mt Eden revelations had not changed the policy.
"Not in the slightest. We've had private providers in New Zealand for a very long time.
"There's definitely a happy marriage that can take place between the public and private sector."
However, Labour MP Kelvin Davis said the information Serco was providing about violence in Mt Eden could not be trusted.
"Let's keep Serco away from our kids," he said.
NZN / 3 News