Labour is demanding a review into Serco's fitness to run a correctional facility after a report found shortcomings in its management of Mt Eden Prison.
The party is also questioning the government's decision to award it the contract to manage the new prison at Wiri.
The British company has been running Mt Eden Prison for nine months and a report released on Thursday shows it failed to reach nearly half its performance targets.
Only 28 per cent of prisoners had a management plan in place within the required time, there were three wrongful releases and three wrongful detentions, and one escape.
Labour's corrections spokesman, Charles Chauvel, says the government is determined to privatise at all cost.
"Instead of a review of Serco's fitness to operate Mt Eden, its reward remains another lucrative contract from the state to operate the new Wiri prison," he said on Friday.
Mr Chauvel says Serco's ability and willingness to comply with government policy is a worry.
Prisoner rehabilitation is an important part of its crime reduction policy, announced on Monday, and central to that are the management plans that Serco failed to put in place for most of the Mt Eden inmates.
"When Wiri is up and running, Serco will be responsible for up to 25 per cent of the overall prison population," Mr Chauvel said.
"If there are only 28 per cent of inmate plans in place on time, that puts a serious dent in the government's stated commitment to rehabilitation."
The new prison in South Auckland will have 960 beds and is due to be completed in 2015.
NZ First's corrections spokeswoman, Asenati Lole-Taylor, says Serco's poor performance is proof private companies should be involved in running prisons.
"New Zealanders deserve better than the sort of management shambles being dished up by Serco," she said.
Serco managing director Paul Mahoney told NZ Newswire: "We are taking our responsibilities at Mt Eden Corrections Facility seriously. We acknowledge that we need to improve, and we are improving."
Corrections Minister Anne Tolley says Serco is making "decent progress".
Mr Chauvel says a better description would be embarrassing progress.
News home