The prison industry initiative, modelled on Long Bay jail in Sydney, will be funded using $7 million saved during the continuing expansion of the Alexander Maconochie Centre, a project which is now well below the expected $54 million cost and ahead of schedule.

Prison employment is considered a central plank to rehabilitation efforts for prisoners, teaching transferable skills, preventing boredom, structuring days, and fostering a sense of teamwork and fulfilment.

It is also said to aid prison security, largely by preventing restlessness.

Until now, large-scale industry programs were lacking at the Alexander Maconochie Centre, despite the government's vision that the facility would be at the cutting-edge of rehabilitative regimes.

The gap was criticised in an ACT Auditor-General's report early last year, which found the prison was failing to meet its aim to provide structured days. Only 41 per cent of prisoners were in some form of work, mainly in domestic-type tasks like cleaning, sweeping, emptying bins, and serving food.

No records of hours worked were kept.

Corrections Minister Shane Rattenbury, who visited Long Bay to observe itswork program, said the initiative was expected to provide 50 full-time positions for inmates.

Mr Rattenbury hoped the industry program, which would not initially "export" goods and services outside the prison, would be operational by the end of the calendar year.

"I think there is a gap in the way the AMC has been built so far, and certainly one of our key issues is that the inmates do have time on their hands," he said.

"It's a missed opportunity in the sense that they're not engaged in a constructive, confidence-building activity like working, but it also allows them time to focus on anti-social behaviours.

"So there's two sides to that coin of keeping people busy."

Unexpected savings of $7 million from a major expansion of the prison, being managed by local firm Construction Control Pty Ltd, will be used to fund most of the prison industry program.

The same company will be used for the new works, which will include the construction of a new bakery building, the expansion of the existing laundromat, and the building of a multipurpose facility next to the prison oval.

Mr Rattenbury moved to allay fears about the lack of a tender process, saying the government had complied with all procurement guidelines.

The reinvestment of the $7 million savings into the AMC had also been approved by cabinet, he said.

"All of the actual work will still be tendered out, the managing contractor is simply organising the project. All the trades components and actual construction work will still be tendered out," he said.

Mr Rattenbury said the substantial savings were the result of faster-than-expected work, good planning, logistics, and an effective relationship between the contractor and corrections staff.

The final stage of the project would see construction of a multipurpose facility, designed to give a larger activity space for visitor events, pastoral care, and recreational activities, Mr Rattenbury said.

A development application would be lodged, and, pending the approval, the buildings are expected to be completed by the end of this year.

"It's quite quick and it's because we're really taking advantage here of having a great partner ... who's on site, who's established, and who can get going really quickly."