Prisoners sleeping on mattresses on the floor wouldn't be "the best" situation, but is a real possibility as the number of inmates continues to rise, says the Corrections Minister.
The prison population is projected to increase from just over 10,000 to more than 12,000 by 2022. National's solution was to build a mega-prison with up to 2000 beds, which the Labour Government has scrapped.
"We looked at all the options that were presented to us - we looked at best-practise, we looked at the evidence, we took advice," Kelvin Davis told The AM Show on Thursday.
"I'm confident that we've arrived at the right place. We know American-style mega prisons don't work. They are factories for criminals - they swallow up young people and spit out hardened criminals."
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Instead, the Government has announced it'll build a 500-bed facility, with an additional 100 beds for inmates who need mental health treatment - of which Mr Davis says he's most proud.
"It was blindingly obvious to me when I first became Corrections Minister that we have a real issue with mental health in our prisons. Our Government is the first to take mental health seriously, both inside and outside of prisons."
But with the old prison being decommissioned, overall the facility will add only 174 additional beds to the prison system - a fraction of the 2000 extra prisoners expected over the next four years.
"If there weren't enough beds for whatever reason, then we'd have to look at all the options," said Mr Davis.
"For example, prison gymnasiums might have to be turned into dorms with mattresses on the floor."
He says this isn't a new plan - it's the same as it was under National.
"That's something that Corrections has always said… You hope it doesn't get to that stage."
Mr Davis says even if the mega-prison was going ahead, it would be years before it was ready - so Corrections would be facing the same tough choices regardless of who was in power.
Justice Minister Andrew Little wants the prison population to fall by 30 percent over the next 15 years, negating the need for new facilities.
But the Government is also putting more cops on the beat, and Cabinet papers have warned this will result in more arrests - ergo, more prisoners. Police Minister Stuart Nash rejected that advice, saying he believes the opposite.