ACT leader David Seymour has unveiled a new corrections policy at his party's conference - to teach prisoners how to read and write, with the incentive of weeks per year shaved off their sentences.

Offenders who study basic numeracy and literacy courses in prison should be rewarded with time shaved off their sentences, ACT leader David Seymour says.

Prisoners who entered prison with a higher level of education should also be eligible for incentives if they act as mentors to other prisoners and help them learn.

Seymour announced the policy at the party's annual conference at Auckland's Orakei Bay on Saturday, where he told a packed room of about 120 of the party's rank and file, prisoners needed "positive incentives" to better themselves.

While the policy could be perceived as a departure from the party's hardline stance on crime - ACT is the driver behind the three-strikes rule - Seymour said the cost of crime and the prison system was "running away".

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"Penalties should be tough on repeat offenders. But at the same time, prisoners need positive incentives to become productive, law abiding citizens after their time in prison," he said in his keynote speech.

"The fact is, a large chunk of the prison population simply lacks the skills to lead normal, productive lives. About 60 to 70 per cent of prisoners lack the functional literacy required to read a tenancy agreement, and employment contract, or even the road code.

"It's not wonder they return to crime after leaving prison."

The ACT policy would see prisoners rewarded with a sentence-reduction of up to six weeks per year, for attaining literacy and numeracy skills in line with National standards, as well as driver licensing courses.

So a prisoner on a three-year sentence could earn up to a capped rate of 18 weeks off their time in prison, if they completed courses of sufficient value.

Decisions on whether a prisoner would be suitable for the programme would rest with the Parole Board.

The policy would not apply to the worst violent or sexual offenders, and it would not help white-collar criminals to study diplomas or degrees. ACT was also proposing to cut red tape to make it easier for some volunteers to gain approval to carry out work in prisons.

According to Seymour, 48 per cent of prisoners had been returned to prison in the past four years. Of all prisoners, about 70 per cent had low levels of literacy and numeracy, and of the more-than 10,000 people in prison, 3240 participated in a programme in 2016.

There was no incentive for prisoners to take responsibility for their own success, said Seymour.

New Zealand's burgeoning prison population prompted former Finance Minister now Prime Minister Bill English to announce last year, $1 billion towards housing 1800 more prisoners, in new cell blocks and more beds at existing facilities.

The Howard League for Penal Reform chief executive Mike Williams said it was a welcome policy, that would make a difference.

The league is an organisation that works for a more "humane" prison system, and already runs literacy courses in prisons.

Williams - a former Labour Party president - spoke to the conference about the work of the league and the cases it deals with.

"Our course is 12 weeks [to teach someone to read]. In 90 per cent of cases that works - we have had occasions where it's taken a lot longer, and once we've had to teach the alphabet."

The league carries out its work with the help of volunteers, and Williams said it could be done relatively cheaply. The chance of a reduced sentence, combined with force of their peers learning to read and work with numbers would "inspire" many prisoners.

"Illiteracy is particularly important to them, but what we know is that every one of them wants to get out of jail. It's not a motel, they don't want to be there.

"So the possibility of a shorter sentence is a very strong incentive to improve yourself, and I understand that it's been tried and proven in California."

But while the policy might be simple in structure, there could be some initial barriers to implementation, Williams said.

"It's going to be difficult because you've got to ask yourself; 'what if the jail doesn't have the facilities'? For example, there's a very good online driver license training programme, but very few of the jails actually have computer suites and none of the are allowed to be online."

But the returns on a system that currently costs $100,000 per prisoner per year, would be worth it, he said.

Williams said he spoken to Corrections chief executive Ray Smith about the idea, who was supportive. He would speak with Labour as well.

He expected it would be a policy that could gain broad brush support.