Picture this: You've just walked out of jail in a country town. You're given one change of clothes, about $275 and two nights at a motel. What would you do?

Key points: More than half of people leaving prison in Australia expect to be homeless on release

More than half of people leaving prison in Australia expect to be homeless on release Australia has a larger prison population than ever before, at least 40,000 people

Australia has a larger prison population than ever before, at least 40,000 people Since NSW unveiled a $330 million plan to stop reoffending, recidivism has gone up

This is the situation for many Australian inmates when they first get out of jail, if they have nowhere else to go.

Jason, 49, recently got out of Grafton Correctional Centre after serving six months for assault. He asked for his last name to be withheld.

He is small, with hair so short he looks bald. His hands are scarred from punching walls and windows.

He has been in and out of prison since he was 17, and many of his family relationships are frayed, leaving him with no support network.

"They may as well be on the moon. I can't ring them now 'cause they won't give me their numbers," he said. "I haven't seen any of them for probably 10 years at least."

Jason didn't take up the offer of two free nights at a motel. Instead, he went straight to the local park, where he's been sleeping on a bench.

Jason preferred to wake up on his favourite bench, with waterfront views, than short-term accommodation. ( ABC News: Liz Keen )

He didn't want to be cooped up in a small motel room straight from a prison cell.

"I plead with them," he said. "Parole, welfare, whoever's there to hear, 'get me some housing'. Then when it comes to the crunch, there's two days in a motel, see you later."

"They sort of set you up to fail as far as I'm concerned."

From behind bars to sleeping rough

Between March and June this year, 360 people went straight from NSW prisons into short-term accommodation, like the motel Jason was sent to.

The latest research shows more than half the people coming out of prison in Australia expect to be homeless on release.

In fact, two-thirds of people who turned up at specialist homelessness services last year were leaving prison.

Jason is used to bumping between prison and the streets. He's been doing it for 30 years, but now he is sick of living rough. He wants to start over.

"I wouldn't mind a bit of a sanctuary, somewhere to go to where I can shut the door and relax, instead of friggin' having to sleep with one eye open," he explained.

Jason told Background Briefing the biggest obstacle to staying out of prison was being homeless. He said that at times he had broken the law on purpose to get back into prison.

"I used to get in trouble just to go to jail for a roof for winter; a meal.

"I'd deliberately go there. I'd get drunk and smash a window just to go to jail for a few months."

There are at least 40,000 people in prison in Australia — more than ever before.

Forty per cent of them will be back there within two years.

The Northern Territory has the worst recidivism rate in the country at 57 per cent; NSW has the second-highest — 53 per cent.

The NSW Government has invested $330 million since 2016 to stop the cycle of reoffending and returning to prison, with a target of reducing recidivism by 5 per cent.

The exercise area in the maximum security area of the Grafton Correctional Centre. ( ABC North Coast: Samantha Turnbull )

Instead, the number of people returning to prison in NSW has continued to rise; by 1 per cent for each year the new policy has been in place.

Seventy per cent of the money has been spent, according to the Director of Statewide Programs for Corrective Services NSW, Danielle Matsuo.

But she said more effective policing in recent years meant while fewer people were committing crimes, more were now being arrested.

"So while we're doing all that we can and actually having an impact on those who are coming into custody with us, while the police are improving the way that they do their business in parallel, is actually confounding that effect," she said.

A prison town

Jason's home town of Coffs Harbour is booming — tourism was up 16 per cent last year.

The town is situated smack bang in between two prisons — the Mid North Coast Correctional Centre in Kempsey, which has more than 500 inmates, and Grafton Correctional Centre, which has capacity for just under 300.

The Kempsey prison is expanding, and will almost double in size by the end of this year.

A new "super prison" is being built near Grafton and will house 1,700 inmates from next year.

It will be the biggest prison in the country and is expected to create about 600 jobs.

The front doors of the Grafton Correctional Centre. ( ABC North Coast: Samantha Turnbull )

"At a time when regional Australia is looking for investments and looking for jobs, this is really great news," local National Party MP Chris Gulaptis said at the announcement of the new facility on Wednesday.

"Grafton is a jail town. We've had a jail for a hundred years. The fact of life is we do have bad people, and those people need to be locked away from the rest of society, and we're happy to look after them in Grafton," he said.

In a region with the second-highest youth unemployment rate in the country, the development was welcomed by many small businesses.

But many in the welfare sector say it's putting the squeeze on housing, and making it harder for former inmates like Jason to get off the streets.

One local not-for-profit support service, New Horizons, helped 2,800 people find accommodation on the NSW Mid North Coast last year.

With so little accommodation available, New Horizons staff said they'd even resorted to buying people tents.

Complicated challenges

Jason said he hit his rock bottom a couple of years ago when he lost his wallet and phone, and his anxiety and depression got out of hand. He spent four months sleeping on a bench in Hyde Park in Sydney's CBD.

"Had a big full beard and I was a homeless bum," he said. "I played the part."

He used to get drunk every day, and said when he got drunk he got angry.

"You're not there, you're not a human being in that state," he said. "[It is] lonely, pretty lonely."

Jason ended up in hospital, where he quit drinking. He has tried to stay sober ever since.

But he wound up back in prison again, for assault.

"In there, generally people take advantage of you if you don't stand up," he said.

"You got to pull them up straight away and let them know; stand up to them, take a bashing."

Violence led to respect on the inside, and he said it could be challenging to adjust to a different world on the outside.

"Respect out here is being friendly, being nice, you know just treating people as they should be treated."

He said he asked for help to manage his anger in prison, which he claims he never received, instead relying on self-help books at the local book exchange for support.

Ms Matsuo said there were programs available in NSW prisons to help men manage addictions and aggression, but they were only for eligible inmates.

She said about 75 per cent of inmates were offered some form of mental health support.

Hope

Jason asked the Department of Family and Community Services for help finding housing, but they said he needed to prove he was going to real estate agents and looking for a rental before they could help him.

Motels are sometimes used as short-term accommodation. ( Supplied: Simon Portus )

With no long-term stable accommodation for the last 30 years, no job and no references, Jason said applying for rental properties would have got him nowhere.

"I mean, who's going to take me on? No-one's going to give me a place," he said.

New Horizons was able to set him up in a motel, which offered three months of affordable accommodation in nearby Nambucca Heads.

If it went well, he would have been given a reference, which he hoped could lead to eventually finding a stable home.

But after a clash with his parole officer, Jason stopped attending compulsory meetings. This violation of his parole meant he had to return to prison for four months.

A segregated area of the Grafton Correctional Centre where inmates at risk of harm are housed. ( ABC North Coast: Samantha Turnbull )

He wrote to Background Briefing from inside prison.

"This stint has been a Godsend for me, it's given me a chance to gather my thoughts... I plan on going to AA's when I leave here as it's helped me stay sober in the past... I'm looking forward to doing some voluntary work and getting back to church. I'm feeling really positive about the future. I feel I'm getting my life back."

Jason was released in July after serving out his sentence.