Government unveils $3.8 billion plan to fix ‘failed’ mental health system

The Victorian government has committed to a $3.8 billion overhaul of the state’s struggling mental health system after the state’s royal commission found it had “catastrophically failed to live up to expectations”.

A new tax on businesses with more than $10 million in wages nationally will raise almost $1 billion a year to bankroll the changes to mental health to rebuild the failing system.

The focus of the mental health spending package is $1.5 billion on community-based care to minimise the need for people to travel far to access mental health services.

Royal Commission chair Penny Armytage releases the report into Victoria’s mental health system with Daniel Andrews.Credit:Eddie Jim

The Royal Commission into Victoria’s Mental Health System found it was overwhelmed and could not keep up with the number of people who sought treatment, with people turned away because “they weren’t sick enough or suicidal enough”.

The budget has allocated $264 million to build the first 20 of up to 60 new local mental health services statewide recommended by the Royal Commission.

This includes six fast-tracked sites at Benalla, Brimbank, Frankston, Greater Geelong, the Latrobe Valley and Whittlesea, which will open by the end of 2022. The next 14 sites are yet to be identified, with priority to go to areas experiencing the greatest level of unmet need.

Five key recommendations from the royal commission

The Royal Commission into Victoria’s Mental Health System published its 3195-page final report in March. Premier Daniel Andrews has committed to implementing all 65 recommendations made in the report, which include:

  • Establish dozens of local adult, youth and child mental health services in a variety of locations, reducing the need for people to travel a long way from home. 
  • Create new crisis facilities and “safe spaces” for adults and young people, designed with the help of people with personal experience of psychological distress. 
  • Create a new non-government agency led by people with personal experience of mental illness and psychological distress. 
  • Throw out the old Mental Health Act and enact a new one preferably by the end of the year, with a primary objective to achieve the highest attainable standard of mental health and wellbeing for all Victorians. 
  • Immediately reduce the use of seclusion and restraint in mental health, with the aim of eliminating the practices within 10 years. Immediately ensure compulsory treatment is only used as a last resort.

More than $950 million will be spent on establishing 22 “reformed” area mental health and wellbeing services, which will replace existing services.

Young people will be a focus, with two separate streams of care – one devoted to children aged up to 11 and one devoted to young people aged 12 to 25.

The special levy to fund mental health services, which the government says will be imposed on fewer than 5 per cent of employers, will apply from January 1, 2022.

The rate will be rate of 0.5 per cent for businesses with national payrolls above $10 million and 1 per cent for businesses with national payrolls above $100 million.

The levy will raise $386.7 million in 2021-22, rising to more than $800 million a year for the following three financial years to fund the majority of the mental health spend.

Asked why the government had chosen to impose the levy on big business and not all Victorians, Treasurer Tim Pallas said some sections of the community had benefited during the pandemic.

“So with regard to the Mental Health and Wellbeing Levy that the government is putting in place we have made a decision that it is only appropriate that big business makes a substantial contribution,” he said.

Mr Pallas said the budget reflected the Labor government’s belief that Victorians who faced challenges during the pandemic deserved the support and assistance of those who have done comparatively better.

A mental health levy was first recommended in the interim report of the Royal Commission in November 2019, with Commission Chair Penny Armytage saying the amount spent on mental health was “grossly disproportionate” to investment into physical health.

“We do not believe that the standard budget processes will prioritise mental health in the way that it needs to,” Ms Armytage said at the time.

“Given the significance of this issue to our Victorian community and the crisis that we believe our services are in … there needs to be a dedicated funding stream, which will ensure ongoing growth in capacity within the system.”

The new levy will be part of the State Taxation Act that will be introduced into Parliament on May 20.
Mr Pallas said he did not take Upper House and crossbench for granted: “I will simply appeal to the sense of fairness and reason that this sort of intervention is vitally important,” he said.

Each year one-in-five Victorians will experience mental illness, with about 200,000 meeting the criteria for severe mental illness, such as schizophrenia or bipolar disorder. Last year there were 698 deaths by suicide in Victoria.

The state government has pledged to implement all 66 recommendations from the Royal Commission, which it says will take a decade.

The $3.8 billion budget package includes $206 million to increase the mental health workforce, including nurses, doctors and allied health workers, which the government says will create about 3000 jobs.

About $700 million of the overall mental health package will go to the regions.

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