The decision to build Western Plains Correctional Centre was made pre-COVID-19 when detainee numbers were increasing, Corrections Victoria Commissioner Larissa Strong explained on Wednesday.
Since construction finished in November, it has been handed to corrections to maintain and secure at an estimated cost of $36 million, she told the Yoorrook Justice Commission.
"We don't have money to operate that prison because our demand has dropped, so we don't need to use those beds," Ms Strong told the truth-telling inquiry.
"It's a very large footprint. It has a number of security features.
"One of the things about the integrity is, you do want to know that someone hasn't broken into it and built a tunnel, should you ever want to use it into the future."
Authorities had discussed possibilities for the prison's future based on operating jails' projections and the state of their facilities, Ms Strong said.
She agreed it was a concern the $1.1 billion was spent on a prison now sitting empty, saying "it's an enormous amount of money", but contended it would be a greater concern if a prison was opened unnecessarily.
Inquiry commissioner Travis Lovett suggested the same amount of money could have made a huge difference to the land's traditional owners, the Wadawurrung people.
Aboriginal organisations were missing out in the meantime, he said.
Commissioners also noted prisoners had to fight to get adequate health support in jail.
Commissioner Sue-Anne Hunter said detainees were "crying out for mental health facilities, putting in form after form, not wanting to complain and not wanting to upset any prison guard because they know that their form won't get through".
Officials conceded that while they were exploring whether there could be direct Aboriginal Health Service delivery within prisons, a recently signed primary health contract had a five-year lifespan.
Ms Strong accepted it could be of great benefit to Aboriginal prisoners if they were able to serve sentences in the community.
As of Monday, more than 820 Aboriginal people were in adult prisons in Victoria, representing 12.5 per cent of the state's entire prison population, she said.
Earlier, Youth Justice officials told the inquiry they were determined to achieve zero Aboriginal young people in custody, regardless of legislative change.
Youth Justice Commissioner Andrea Davidson said the goal was unashamed and something authorities had "all intention of getting to".
Between 2016 and 2017, there were more than 120 Aboriginal young people under Youth Justice's supervision on an average day - a number that dwindled to 42 last year.
Despite the progress, Youth Justice deputy secretary Joshua Smith conceded the number was still "grossly too high".
There were 11 Aboriginal young people in custody as of Wednesday, nine of them on remand and two who were sentenced.
Commissioner Hunter said the construction of a new youth detention facility at Cherry Creek, west of Melbourne, contradicted officials' mission to keep Aboriginal children out of custody, as well as government plans to raise the age of criminal responsibility to 12.
Ms Davidson acknowledged opening the new facility was "certainly not cause for celebration" but said it would be able to provide a more nuanced service and cater to children with complex needs.
The addition of the Cherry Creek facility meant 300 beds across Victoria while there were about 100 children in the system, Mr Smith noted.
Ms Davidson acknowledged acute staffing shortages in youth custody - particularly over the past six to eight months - had led to lockdowns.
