THE NSW Government is charging traumatised families thousands of dollars to bring convicted relatives back to Australia - a cost-recovery measure that has infuriated the Rudd Government.

Under the NSW prisoner transfer policy, the families of people convicted overseas who want to serve the remainder of their jail terms in a state prison must pay for a police escort's airfare and accommodation.

The parents of convicted drug smuggler Rachel Diaz, a 20-year-old Australian jailed in Hong Kong, are among those who cannot afford the $10,043 charge to bring their daughter home to serve the rest of her jail sentence in Sydney.

Arrested as a 17-year-old, Diaz has already been imprisoned for three years, and with good behaviour she could be released in late 2010.

But her parents worry she cannot survive that long.

Her cellmate committed suicide, and Diaz is now an emotional wreck, medicated and frequently in tears. Her family says she was hospitalised earlier this month because she had a panic attack.

According to police reports, Diaz willingly testified against her two co-accused in Sydney last year, even though she was warned of possible reprisals.

Federal MP Daryl Melham condemned the NSW policy as "mean-spirited and counter-productive".

He said Diaz had potentially saved the NSW Government as much as $1 million in trial costs, because her co-accused had pleaded guilty following her testimony. "How can you treat someone who co-operates with the police like this and expect co-operation in the future?" Mr Melham asked.

Diaz's parents, Ferdinand and Agnes, are constituents of Mr Melham, and he said they were already deeply in debt because they thought it best for Agnes to live in Hong Kong for a year to be close to their daughter.

The Diazes now want their daughter back in Australia so they can visit her in prison and provide her with some emotional support and comfort. But Ferdinand Diaz said he could not afford the upfront payment the NSW Government had demanded for the police escort's travel costs.

"At the moment I'm just not in the position to afford it," said Mr Diaz, who works as a salesmen to support his wife and his two sons, aged 16 and seven.

He said he could pay the $10,000 off in instalments, but the offer had been rejected by the NSW Government.

Troubled and depressed, when she was 17, Rachel accepted a "free" shopping trip in Hong Kong and sneaked away from the Diaz family home in Sydney's outer suburbs. In Hong Kong she tried to back out of the heroin-smuggling deal, Mr Diaz said, but she was arrested and convicted.

Foreign Prisoner Support Service advocate Kay Danes said she had received a couple of offers of assistance for Diaz from members of the public.

"Now more than ever, it's absolutely imperative that the Australian Government moves to get this poor kid home," Ms Danes said.

"Her father is close to tears every time I speak to him. It's absolutely horrific to watch a family go through this. Let's hope the public shows a bit of compassion in this case."

A spokeswoman for federal Home Affairs Minister Bob Debus said no other state or territory charged cost-recovery fees to bring prisoners home.

"The minister doesn't believe it's in the spirit of the treaty," the spokeswoman said.

But a spokeswoman for NSW Attorney-General John Hatzistergos defended the policy.

"These matters are considered on a case-by-case basis, but generally the state Government does not think it is reasonable for NSW taxpayers to have to pay to transport Australians who have been convicted of crimes overseas back to prisons in NSW," she said.