Experts say Government forecasts of 300 extra prisoners each year means NSW will need to build a new jail every two years to handle the consequences of its hard-line "lock-'em-up" policies.
At a cost of about $73,000 a prisoner a year, the Department of Corrective Services will have to find about $170 million extra each year from 2015 to run its jails, which by then will hold about 12,300 inmates.
Prison populations have been increasing in the Western world and other Australian states, but the problem is acute in NSW due to its tougher law-and-order policies.
Changes to bail laws have led to an explosion in numbers of inmates awaiting trial (on remand).
The director of the Bureau of Crime Statistics and Research, Dr Don Weatherburn, said while tougher policies initially reduced crime significantly, they were now having less of an effect.
"We seem to have reached the point where rising imprisonment rates are bringing diminishing marginal returns … (by) 2004 the rising rate of imprisonment in NSW exerted little if any measurable effect on property or violent crime," he said.
Experts say the failure to seriously tackle recidivism means the State Government will almost certainly break its commitment in the State Plan to reduce by 10 per cent the number of criminals who reoffend within two years of being convicted.
The cost of holding a prisoner is now $196 a day, and each new 600-bed jail adds an average of $43 million to the annual Corrective Services budget at a time when collapsing revenue is forcing the Government to slash services and increase taxes.
Previous jail time is the best predictor of whether someone will reoffend, but concern is rising over the relentless increase in prisoner numbers and the fact that 70 per cent of inmates have been in jail before.
Michael Edwards, who worked for Corrective Services for 26 years and who designed the department's major sex offender program, described that percentage as "a truly scary number, if it's correct". To combat the huge number of repeat offenders, the Government promised in its State Plan that by 2016 it would cut by 10 per cent the number of criminals who reoffend within two years of being convicted.
But numerous experts have told The Sun-Herald prison numbers will continue to climb because so little is spent on rehabilitation.
The latest Bureau of Crime Statistics study was pessimistic, stating: "Without improvements in the level and type of treatment and support for offenders placed on community-based sentencing orders, it will be very difficult to achieve the State Plan goal of a 10 per cent reduction in reoffending by 2016."
Justice Minister John Hatzistergos conceded the State Plan target might not be met, calling it "a significant challenge".
University of NSW emeritus professor of law David Brown said the department had not done enough to help offenders reintegrate into the community, while the Government and Opposition kept ratcheting up sentence lengths and denying more people bail.
"The key to reducing recidivism levels for the department is better programs and more targeted post-release assistance, such as housing," Professor Brown said.
More effort should also go into keeping juveniles out of prison, as once they had been in juvenile detention they were more likely to end up in an adult prison.
"The Government should reconsider the bail law changes and in particular remove juveniles from the scope of recent changes such as loss of presumption of bail for those with previous property offences," he said. "They are wrecking one of the major social policy successes of the last 20 to 30 years."
It's a trend that infuriates many inside Corrective Services, and the few organisations that try to keep prisoners out of jail once they are released.
"The current inaction by the State Government to address more effective alternatives to imprisonment and the perpetuation of the politics of fear is summed up clearly by Albert Einstein's definition of insanity - 'continuing to do the same things and expecting a different result'," said Alison Churchill, chief executive of the the Community Restorative Centre - the main government-funded group helping offenders after release from jail - in her 2006 annual report.
Overtime bills for prison officers are running at $43 million a year, more than double the budgeted $20 million, and the Government wants private companies to take over the running of Cessnock and Parklea prisons in an effort to save about $16 million in the next three years.
The decision is expected to escalate the industrial war between the prison officers' union and the department, which has already led to one 24-hour strike across many jails.
Experts say cutting wages and jail running costs is only playing at the margins and that unless major policy changes are made the prison population will continue growing.
Dr Weatherburn said entrenched attitudes were the main problem.
"The biggest challenge facing us is … the widespread belief … that trying to change offenders is a waste of time. It isn't," he said.
Corrective Services Commissioner Ron Woodham declined interview requests.