Australia quietly ditches $4.6b detention contract with scandal-plagued Serco

Australia has quietly ditched its $4.6 billion immigration detention contract with controversial British multinational Serco after 15 years, and is finalising a deal with a new company to run its onshore facilities.

The Albanese government last week told Serco it had been unsuccessful in its fresh bid to provide immigration detention facilities in Australia, ending a partnership that began in 2009 and has been ridden with scandal, including claims of violence, drug trade and neglect.

The company told the London Stock Exchange it would lose £165 million ($322 million) in revenue and £18 million ($35 million) in profit because of the decision.

“Our performance levels have been high on the current contract, and we submitted what we believed to be a compelling bid that would have delivered continued strong performance to the Australian government as well as meeting our framework for achieving margins appropriate for the services we deliver,” it said.

“We will now work to ensure a smooth transition of these critical services to the new provider.”

The change comes as Australia’s onshore immigration detention regime has been thrown into disarray following last year’s High Court ruling that it was unconstitutional to detain people indefinitely if they could not be deported. The ruling has released 215 people with criminal records into the community and the legal ramifications are ongoing.

A new contractor will next year take over for the first time since Serco started providing immigration detention services in 2009. Serco signed its latest contract to run the onshore system in 2014, the same year that laws made visa cancellations mandatory for non-citizens sentenced to more than 12 months in prison, increasing the portion of immigration detainees with criminal convictions

There were 984 people held in Australian immigration detention at the end of September. More than 800 detainees have a criminal record and just over 100 are people who arrived unlawfully by boat.

An investigation by this masthead last year interviewed dozens of current and former Serco guards and detainees, many of whom claimed understaffing was entrenched, leading to violence, allegations of sexual assault and an illegal drug trade that puts both detainees and staff at risk.

Two refugees who died in their cells at Sydney’s Villawood Detention Centre in 2019 had a history of self-harm and substance abuse when they were transferred from prison into immigration detention, yet processes to manage these risks either did not exist or were not followed.

Detainees also claimed that drugs were easily accessible, and exposed people to addiction relapse, mental illness and violence. Some were openly growing marijuana plants in their rooms at Villawood while, separately, a Serco employee was criminally charged during a corruption investigation into drug trafficking in Melbourne’s immigration detention centre.

Data requested by Greens senator David Shoebridge showed there had been 714 incidents of self-harm in the past five years, and 1965 incidents where self-harm was threatened.

Shoebridge said Serco had profited from running a “brutal immigration detention regime” that separated families and subjected people to deeply harmful conditions.

“Whether it is Serco, or some other global punishment corporation, immigration detention in Australia is toxic. It needs urgent and systemic change,” he said.

“Look around the world: in the UK, US, Canada, and Germany, people rarely stay longer than two months in immigration detention; in Australia, it’s two years.

“Australia has a highly respected legal system that protects people’s rights. That’s why the government, through detention and private companies like Serco, have tried to get around the rule of law. We are a worse country for it.”

Serco will finish its contract on December 10, after which there is a transition period of up to 180 days.

A spokesman for the Home Affairs Department said it was finalising the tender process for a new immigration detention contractor.

“In line with probity requirements, and to ensure a fair and equitable procurement process, the department will not be providing any further information,” he said.

“Serco’s performance of the onshore detention contract is governed by an existing contract which is closely managed by the department and [Australian Border Force].”

Both the private companies that have run Australia’s detention centres under multibillion-dollar contracts for the past decade – Serco, with responsibility for security and non-health welfare services, and International Health and Medical Services, which runs medical care – will no longer operate them.

The IHMS health services contract, worth $789 million over 10 years, also expired this year. The federal government has entered a new $866 million contract with Healthcare Australia.

A Home Affairs official told Senate estimates last week that the new contractor would provide a “different type of service with a range of different supports like telehealth, increased hours of clinical teams being on site in centres, and clinical case managers.”

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