Interim Recommendation 08

What the Royal Commission said

The Royal Commission has called for a new approach to mental health investment and funding. To support the plans for the reforms, and to ensure that the new mental health system is sustainable, the new investment approach will include:

a new revenue mechanism for the provision of operational funding for mental health services; and
a dedicated capital investment fund.

What are the opportunities?

The Royal Commission found that estimated the economic cost of poor mental health in Victoria is $14.2 billion a year. This included a cost of $1.9 billion a year to employers - with $1.6 billion in lost productivity and $300 million due to workplace injuries.

Improved mental health treatment, care and support that helps to reduce the intensity of symptoms and improves engagement in day-to-day life, also has economic benefits for the community.

The Royal Commission found that a 15 per cent reduction in the level of need experienced by Victorians diagnosed with mental illness would deliver $1.1 billion in extra economic activity in the Victorian economy every year.

What are we doing?

The Victorian Government has implemented the recommendation of the Royal Commission into Victoria's Mental Health System by legislating a new revenue mechanism for the supply of operational funding for mental health services.

The Mental Health and Wellbeing Levy will begin from 1 January 2022. It will be implemented as a payroll tax surcharge on wages paid in Victoria by businesses with national payrolls more than $10 million a year. A rate of 0.5 per cent will apply for businesses with national payrolls above $10 million, and businesses with national payrolls above $100 million will pay an additional 0.5 per cent. The surcharge rates will be paid on the Victorian share of wages above the relevant threshold. Existing payroll tax exemptions for private schools, hospitals, charities, local councils, and wages paid for parental and volunteer leave will apply for the Levy.

The Victorian Government has legislated that all revenue raised from the Levy will be spent on mental health services. This will support a large increase in investment in Victoria's mental health system, and supplement the current level and future expected growth of the Victorian Government's existing funding commitments.

The introduction of the Mental Health and Wellbeing Levy will support a substantial uplift in investment in Victoria's mental health and wellbeing system. In doing so, it will help to realise the economic benefits described by the Royal Commission. Many of these benefits will accrue to Victoria's business community, providing Victorians with the help they need will deliver economic benefits through higher workforce participation and greater productivity at work.

Reviewed 09 December 2024

Health.vic

Contact us

Mental Health and Wellbeing Reform

mentalhealth@health.vic.gov.au