The NSW government makes no apologies for its massive $3.8 billion investment in the state's prison system, Corrections Minister David Elliott says.
The record funding, set to be included in next Tuesday's budget, comes as the state government prepares for prison bed capacity to surge to around 18,000 by 2020.
"This, it must be said, is not money the state government is happy to spend," Mr Elliott told reporters in Sydney on Thursday.
"My strong preference would always be that taxpayers money is spent on schools and hospitals.
"But with an efficient police force and with strong bail laws, the NSW government makes no apology for the fact that we have high demand," he said.
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The state's prisons have been struggling to deal with a record 17 per cent spike in inmate numbers in the past two years, with current prison numbers sitting at around 12,500.
The government will set aside $3.8 billion over four years in the upcoming 2016-17 budget, leading to 7000 new prison beds being built as early as 2020.
Capacity at the planned new Grafton jail will also be lifted from 1000 to 1700, while a long-term infrastructure plan will expand existing correctional precincts.
Corrective Services NSW Commissioner Peter Severin said the department was forecasting "a capacity in excess of 18,000 beds" by 2020, including beds that aren't being used.
"I hope we can switch off as many of the obsolete beds to bring the capacity down," Comm Severin said.
He said he was confident the funding boost would help deal with growing prison numbers.
Shadow Minister for Corrections, Guy Zangari, however criticised the government for allowing prisons to reach capacity.
"After closing down prisons across the state they're desperately playing catch up to try and curb the prisons crisis they've inflicted on NSW," he told AAP.
The funding would be better spent on justice reinvestment programs aimed at keeping people out jail in the first instance, Greens MP David Shoebridge said.
"Reducing crime requires a commitment to long-term justice reinvestment that spends scarce tax dollars on better schools, healthcare and social services, not just more and more jails and police," he said.
