One in four released prisoners housed in the Community Offender Support Program - to be dismantled by the O'Farrell government next month - is a serious sex offender.
An internal government review, obtained by Fairfax Media, has revealed one of only two halfway houses for the highest-risk sex offenders released from prison under strict supervision orders will be shut by Corrective Services to save money and the service outsourced to a charity instead.
The review said high-risk sex offenders, released on extended supervision orders by the Supreme Court, ''require a level of strict supervision and monitoring that was not available in any environment other than a COSP''.
The two centres specialising in sex offenders housed 186 men in 2011-12.
Corrective Services Commissioner Peter Severin announced the closure of seven COSP centres in August, stating the average stay at the centres was only 50 days and he cited the high cost of $357 a day.
But the June internal review shows the centre to be outsourced, located in western Sydney, was near capacity, with residents staying an average 83 days, at a cost of $275. In 2011-12, the centre housed 86 men over the year. The review warned any change to the program would need to ''effectively manage higher-risk sex/violent offenders''.
A Corrective Services spokeswoman said it had not been decided what type of offenders would be housed at the privatised service, and the new operator had not been appointed.
The release of Skaf gang rapist Mohamed Sanoussi last week to a halfway house run by Corrective Services in South Sydney has highlighted the role of the Community Offender Support Program. The centre where Sanoussi will live under close monitoring will be the only one to stay open and continue to be run by Corrective Services, but with capacity for only 45 offenders at any time.
The program was set up to reduce the risk of reoffending by parolees who were likely to become homeless upon release from prison because they had no family or their families refused to allow them home. But it soon expanded to provide monitoring of high-risk sex offenders. The centres have 24-hour supervision, curfews and drug and alcohol bans.
The review found that after leaving a COSP, 70 per cent of offenders found accommodation in the community, and 15 per cent found jobs.
Shadow attorney-general Paul Lynch said the government decision to privatise the program was all about short-term budget gains.
''It will lead to a revolving door where parolees reoffend and go back to jail. That will cost much more public money than will be saved by the privatisation,'' he said.
The current network offers 218 beds across NSW. The Corrective Services spokeswoman said under the new model, 65 beds would be available in two Sydney centres ''along with significant new accommodation and support services being provided by expert non-government organisations''.
The non-government groups will work with offenders nearing release to place them straight into housing.
She said Corrective Services had increased its checks on high-risk offenders living in the community by 20 per cent.