A new 600-bed jail is set to be built in Grafton, Northern NSW.
Treasurer Gladys Berejiklian, will budget just under $1.2 billion for the correctional system on Tuesday.
Although the facility will be built on a public-private basis, it could be run and staffed entirely by the private sector.
The new jail is expected to create 100 permanent positions.
The announcement comes less than three years after the existing Grafton jail was downgraded.
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