Tax to fund mental health overdelivers, but actual beds lacking

Vulnerable patients are languishing without beds, waiting eight hours in hospital emergency for treatment, and ill children are being secluded, even as the government collects $1.1 billion in taxes, earmarked to improve the mental healthcare system.

Victoria’s mental health watchdog says it is in the dark about how well the state government is delivering reforms recommended by the Royal Commission into Victoria’s Mental Health System, unable to get a clear answer on how many extra psychiatric care beds there are across the state.

Mental Health Victoria chief executive officer Phillipa Thomas says the state government has failed to reform the broken mental health system and vulnerable people are at risk.

It has called on the government to provide greater transparency about how the payroll tax – which is earmarked for mental health and reaping more than planned – is being spent, and to “restore hope” amid uncertainty over future funding.

Almost five years on from the royal commission, The Age is examining whether Victoria’s commitment to implement every recommendation in full will ever be realised amid a growing mental health crisis in the state.

A promise to add hundreds of desperately needed mental health beds for the most acutely unwell patients has become emblematic of these concerns.

The royal commission’s final report, in February 2021, called for 170 additional youth and adult acute mental health beds to address “critical demand pressures”.

In a response just weeks later, the government announced 144 additional acute mental health beds through an expansion program.

Later that year, the government increased that commitment to 260 when announcing it would impose a levy on the payroll of big business to fund the mental health reforms.

Victoria’s Department of Health retreated from the 260 promise last year, labelling the reform recommendation “fully delivered” after the opening of the 179th bed at Royal Melbourne Hospital.

Mental Health Minister Ingrid Stitt.Credit: Jason South

But patients, carers, families and mental health physicians struggling to access services say not all these beds are actually available.

The latest Chief Officer for Mental Health and Wellbeing data reveals there were 1353 acute mental health beds in Victoria in July 2024 – just 142 more than there were before the royal commission’s report.

When The Age asked Mental Health Minister Ingrid Stitt’s office where the new acute beds were, it provided a list detailing 155 beds across various hospitals, as well as an unspecified number of hospital-in-the-home beds delivered by Barwon Health and Orygen.

A Mental Health and Wellbeing Commission spokesperson said the watchdog was also struggling to gain transparency about how the reforms were being implemented.

“Since being established [in 2021], the commission has been working with the Department of Health to encourage transparent reporting. We are still waiting for responses from the department to our requests for data,” the spokesperson said.

The commission said that without specific data, it was “unable to gain a clear picture” about key objectives of the mental health reforms or innovations across the system.

The spokesperson said there were also no clear timeframes on when the government would meet planned future reforms.

A worker from a regional support service, who asked not be identified to protect their employment, said even carers involved in co-designing the department’s response to the royal commission were now struggling to get feedback on where the promised new measures and services were.

“In regional Victoria, they’ve reduced their beds but the need has increased,” the mental health worker said.

“They need to roll them out like they promised. We needed all those services yesterday. They didn’t recommend them for something to be put on hold for an unknown amount of years.”

Regardless of how many beds actually exist across Victoria’s mental health system, “overdemand” and the fact many are still being built mean they are not being used to capacity, according to this week’s state budget.

Although the health system was funded to treat 32,600 inpatients last year, fewer than 27,000 were actually treated, with the department citing “planned capital works and other operational factors” for the shortfall.

It blamed “high demand for services” for a failure to reach the 80 per cent occupancy rate target for patients in residential beds, which were only 71 per cent full.

Almost three out of five mental health patients waited more than four hours in emergency departments – well outside the target of fewer than one in five.

Fifty-five per cent of mental health patients arriving at emergency departments waited more than eight hours before a suitable bed was found. The budget documents say these delays were driven by challenges identifying patients with mental health needs and the fact that many may need medical care before they could be transferred.

According to the Victorian Agency for Health Information, more than 2300 Victorians are seeking support through hospitals – the highest rate of weekly mental health emergency department presentations since before the royal commission.

When they do make it to a bed, many patients have far more complex issues than expected, with budget figures showing the rate of children and adolescents being secluded is three times more than recommended, and twice as many adults.

Eliminating the use of seclusion was a major finding of the royal commission, but the department blamed an increase in the complexity and acuity of patients for the continued high rates.

Mental Health Victoria chief executive officer Phillipa Thomas said patients were effectively being punished because the government could not manage its capital works program.

She warned thousands of vulnerable Victorians could fall through the cracks.

“The accountability that is supposed to be in place is not there,” Thomas said.

“There has been investment in new patient beds and some have been built, but there has also been the closure of some beds.

“While it talks a lot about reform, the government has really dropped the ball on system stewardship. This is not reform.”

A state government spokesperson said some disruption was unavoidable due to upgrading mental health facilities “but we won’t apologise for making mental health care safer and better for Victorians”.

“We know demand for mental health services remains high – that’s why we’re continuing to invest in the mental health workforce, infrastructure and programs that put care into communities and ease pressure on emergency departments,” the spokesperson said.

Thomas said this week’s state budget had no measures to address shortages in critical services, and only managed to maintain the status quo of ongoing funding.

Positives included workforce growth funding, continuing funding for some community programs and making sure previously announced beds were funded to operate.

Health Minister Mary-Anne Thomas and Premier Jacinta Allan.Credit: Penny Stephens

Speaking on Thursday, Premier Jacinta Allan said her government understood the importance of reforms and had invested billions, but acknowledged workforce availability had been a challenge in implementing them.

“Which is why there has been significant investment targeted at training up and scaling up and bringing in the thousands of more mental health workers that we need to support the growing system,” she said.

The wider sector also remains concerned about funding certainty after a welcome $6 billion boost in the four years following the royal commission.

The introduction of the Mental Health and Wellbeing Payroll Surcharge levy, a tax charged on businesses with a national payroll above $10 million, is supposed to ensure every cent raised is spent in the sector.

This financial year, the tax generated $1.1 billion, while the government’s total expenditure on “mental health clinical care” was calculated at $2.9 billion.

The Department of Health’s annual report shows that over the two prior financial years, the tax has raised more revenue than expected, creating surpluses the department was not able to spend. The extra money was instead used to request less additional funding from the treasurer.

The levy was intended to provide a large increase in investment in Victoria’s mental health system, and an Allan government spokesperson said all revenue raised was used for these purposes.

“Since the royal commission, we’ve invested more than $6 billion into mental health, opened 15 free walk-in mental health clinics, doubled the capacity of our youth mental health centres supporting 900 extra young Victorians, and grown the mental health workforce by 25 per cent,” the government spokesperson said.

“All levy revenue is invested into mental health, allowing sustained and growing investment in mental health services, workforce, infrastructure and innovation.”

Opposition mental health spokesperson Emma Kealy said the government had botched its promised reforms.

“Even though Labor is collecting more than $1.1 billion through the mental health tax during a cost-of-living crisis, access to mental health support and workforce training levels are at an all-time low,” she said.

“Victorians are paying the price for Labor’s heartbreaking mismanagement of Victoria’s mental health system.”

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