Taxpayers hand over $1b a year for a mental health levy. No one knows exactly how it’s spent

A former mental health royal commissioner has called for a detailed breakdown of where exactly taxpayer money from the mental health levy is being spent, with a lack of transparency fuelling concerns it’s not being used as promised.

Professor Allan Fels was a key architect of the levy and has backed demands, made by the Coalition and Greens, for the Allan government to improve monitoring of the cash that is supposed to be quarantined to cover billions of dollars in services.

Former mental health royal commissioner Allan FelsCredit: Nikki Short

“When there’s a specific levy, there should be full detailed accounting of how it is spent,” Fels told The Age.

The public stance from Fels comes as the state government has quietly shelved mental health pledges, and last week rejected a recommendation, from parliament’s Public Accounts and Estimates Committee (PAEC), for there to be an annual breakdown of the specific mental health services or initiatives funded by the levy.

Despite the levy acting as a new revenue measure, May’s budget failed to deliver a promised mental health organisation and delayed the rollout of 35 local mental health and wellbeing hubs, prompting questions about how the extra revenue is being spent.

The levy, which was announced in 2021, is implemented as a payroll tax surcharge on wages paid in Victorian businesses with a national payroll of more than $10million per year.

The charge brings in about $1 billion in revenue each year.

An analysis of Cladding Safety Victoria’s annual reports revealed the authority has been receiving partial subsidies from the state, of up to $38,000 a year as a mental health levy grant, to help it pay the surcharge to the government.

In its response to PAEC’s recommendation of a spending breakdown, the government said the Department of Health already publishes “performance measures relating to these outputs”.

But opposition mental health spokeswoman Emma Kealy said this wasn’t good enough because performance measures – such as satisfaction with mental health services – were different to detailed spending breakdowns.

“Premier Allan is proving to be a heartless leader,” Kealy said, referencing the broken mental health promises. “She should make a detailed report fully available to the public as Victorians have every right to know how billions of their money is being spent, particularly when access to mental health support is getting tougher.”

Kealy wants proof that the levy is not being used to bolster the budget bottom line. State debt is projected to hit $187.8 billion by mid-2028.

Greens mental health spokesman Dr Tim Read also said the levy needed more transparency.

“We would like to know whether all the money is going on bricks and mortar and perhaps not enough is going to staff retention. I worry we may still be losing staff who are underpaid and, because of a staff shortage, overworked.”

Fewer than half of mental health patients were transferred from an emergency department to a mental health bed within eight hours last financial year, the latest Department of Health annual report shows. Just 45 per cent of families and carers reported an “excellent” or “very good” experience with the mental health system. The target is 80 per cent.

The mental health and wellbeing surcharge commenced on January 1, 2022, following a recommendation from Victoria’s mental health royal commission.

Mental health advocate Simon Katterl, who assisted the commission when its report was drafted, said more transparency would enhance future decisions about funding.

“When the government dodges questions on the royal commission spendings, it could be because we don’t like the answers,” he said.

“This information should be given by the government. And, if it isn’t, it should be taken up by the auditor-general or the Mental Health and Wellbeing Commission.”

The Age asked the Allan government for a specific breakdown of spending drawn from the mental health levy for the 2023-24 year, but did not receive one.

Instead, a government spokesperson said the revenue raised from the mental health levy was allocated in full to the Health Department, with the total figure published in its annual report.

The levy raised $1.2 billion last financial year and $1.1 billion in 2022-23. Victoria allocated $2.74 billion for mental health in the May budget, up from $1.3 billion in 2022-23.

“Since handing down the royal commission, we have invested more than $6 billion – the largest-ever investment by an Australian government ever into mental health – and commenced work on more than 90 per cent of the recommendations,” the government spokesperson said.

“One hundred per cent of the mental health and wellbeing levy goes to mental health services so Victorians can get the specialist and dedicated care they need, when they need it.”

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