Serco was penalised $300,000 for failing to reach performance targets in its management of Mount Eden Prison in 2014/15, Corrections Minister Sam Lotu-Iiga says.
His comments follow a meeting today with two of the company's executives following reports of fight clubs, contraband and an inmate's death.
During parliamentary question time today, the minister was asked whether Serco has had any money deducted from the performance-related fee in its contract for Mount Eden Prison.
Mr Lotu-Iiga told the House Serco had a $300,000 penalty for the 2014/15 year.
"Some of the incidents include insufficient staffing levels, mixing accused prisoners with other prisoners, minimum entitlements and incident notification."
Green MP David Clendon asked the minister, in that case, why he had recently praised Serco for "performing exceptionally".
In response, Mr Lotu-Iiga said he was referring to the performance tables, where Serco has been given an exceptional performance rating.
A screenshot from a video showing prisoners fighting in Mount Eden Prison Photo: YouTube
However, the minister has told Serco to make safety and security improvements at Mount Eden Prison.
Mr Lotu-Iiga met with two Serco executives at the Beehive today to talk about the prison's management following reports of fight clubs, contraband and the death of an inmate.
On his way into Parliament, he was asked what message he delivered to Serco during their meeting.
"I laid out clearly to Serco that I have certain expectations of performance in prisons, particularly Mt Eden and I made it clear that they need to improve.
"I wouldn't say they've failed but we've got a review underway and we need to investigate some of the incidents that we've seen in the last few days and we'll assess it from there."
Mr Lotu-Iiga was asked by reporters what sort of improvements he expected.
"Well, until the review is concluded, I'm going to reserve judgement on that, but the pictures are pretty clear. We need to see some improvement in terms of security, in terms of safety in our prisons - so I've made that quite clear to Serco.
"It means staffing issues, clearly, it means how they monitor prisoner movements... but they know exactly what they need to do in their contract and they need to meet those terms."
The minister was asked whether he was considering any financial penalties for breach of contract.
"It's a bit premature to talk about financial penalties at this point, but you know certainly Serco know that if they don't perform they know there are financial penalties involved."
There have been reports of a another prisoner falling off a balcony - Mr Lotu-Iiga said he was told about that in February.