A State of Care report says New Zealand is moving backwards when it comes to breaking the cycle of youth offending.
The report, which analyses the practices of Oranga Tamariki, says putting young offenders in custodial remand is unnecessary.
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"We have too many young people in New Zealand needlessly, unnecessarily locked-up, awaiting trial," Children's Commissioner Andrew Becroft told The AM Show.
"The detention centre has become, as it were, the default option: 'bung them all in there and wait'. We can do much better by keeping them in the community. Oranga Tamariki have started, I applaud that.
Becroft says community-based housing needs to be brought back and the public should understand that troubled youth will benefit from being part of normal society.
"They were either moth-balled or closed down... sadly, there will always be a need for the lock and key secure environment, sometimes for the young person's own safety, but generally it's a better approach to do it in the community.
"They'll be well-watched and well-monitored. What we've got to do is try to help them to act like thinking, responsible young people who turn out to be good adults."
Early results from the placement of youths in community-based housing have been promising.
"We've already started, we have great models in Rotorua.. and we have a very good model in Northland involving Nga Puhi social services and Oranga Tamariki with one-on-one care.
"The Iwi's stepping up, it's involved, it's well-resourced. That sort of partnership, that should be round the whole country."
Suggestions that sending youth from the care system into boot-camp style training or the military was shot down by Becroft as an ineffective strategy.
"We had it, it was called corrective training, it had a 94% re-offending rate. Yes, they were fitter, faster, better fed... they were just harder to catch when they were released."