Prison extension would be massive for Waikato

02 November 2017

Waikato is in for an economic tsunami starting next year if a plan to build a massive extension to Waikeria Prison south of Te Awamutu passes its final test in the Environment Court.

Construction of a new facility for 2000 extra prisoners at the prison on the border of the Otorohanga and Waipa districts is expected to pump $1.6 billion into the Waikato region over four construction years, 2018-2021. The value-added component of this is estimated to be about $500 million, according to an independent economic report commissioned by the Corrections Department.

The $1.6 billion is the direct injection plus flow-on effects that will be felt within the region, with the new facility anticipated to sustain employment equivalent to around 1960 full time jobs for a year in the Waikato region.

On average this means 490 full-time job equivalents will be created each year of the build, says the report by Market Economics Limited. Construction will require the employment equivalent to 45 percent of the current regional labour supply. Peak job creation will be in 2019 and 2020 when the majority of construction activity happens.

Corrections expects the $1 billion new facility to employ 595 custodial staff and 335 prison support workers, creating a total of 930 fulltime equivalent – and on-going – jobs.

While the proposal to lift the capacity at the prison by 1500 prisoners was approved by the Government last year, business leaders suggest the economic effects of the project have yet to sink in at Waikato Inc. (The new facility will have room for a further 500 prisoners if needed in future.)

With a temporary population explosion from the construction work and the prospect of hundreds of new permanent residents and their families from 2021, Waikato services and retail sectors can expect to be in the money.

As Waikato Means Business chairman Dallas Fisher has been heard to say: “This is big. Very big. All these people are going to need to shop, to be fed and housed.”

Put simply, people working on the build and later within the prison will need supermarkets and homes, their cars will need fuel and service, their houses will need tradespeople, their children will need schooling. They'll want to buy stuff. They'll want coffee. They'll want to eat out and socialise. They'll be spending.

Operating at full capacity, the 2000 prisoner facility is expected to spend on average $150 million a year, says the report.

The new build will add 16 percent to Otorohanga job numbers alone, and about 26 percent to non-primary sector job numbers, says the report. Currently there are around 4440 jobs within Otorohanga, of which 2750 are in the primary sector. Otorohanga district's population at the 2013 Census was nudging 9600 and expected to decline. Waipa district, which includes the large towns of Cambridge and Te Awamutu, had a population of 48,700, and a working age population of around 27,000.

To give an idea of the scale of the new facility, it will occupy up to 78 hectares of the 1278 hectare dairy farm which hosts the current prison.

It will be built by a public-private partnership. Construction hopefuls were shortlisted by Corrections in April and the successful contractor will likely be signed up in the second quarter of next year.

The report says around 11 percent of the estimated total $1 billion cost of building the new prison will be heavy and civil engineering construction. It expects the majority of construction employment to be within the Waikato region, in line with most construction project trends.

It assumes providers of design services and fit out suppliers will be Waikato-based.

Construction jobs are likely to go to a mix of current Waikato residents and workers who move into the region for the build or longer, says the report.

“A build of this scale, potentially requiring a large proportion of the current resources is likely to lead to price rises. Construction workers will be able to raise their salary and wage demands and this will attract more workers into the region to take advantage of those increased wages.

“It will also generate interest in both currently unemployed workers and those in other industries who may choose to switch – as well as those currently in training or education to look to this sector for employment.”
There will be scope for training organisations in the construction phase.

Corrections acting national commissioner Rachel Leota says the bid to change the existing designation for the prison in the Otorohanga district plan to allow for the expansion is now before the Environment Court. She says the department continues to work closely with the two district councils to ensure all opportunities for the local districts and Waikato region are maximised.

Consultation with local people and local iwi on community aspects of the proposal is ongoing, she says.

- Andrea Fox, Waikato Business News

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