Victoria’s opposition has backflipped on its pledge to scrap the Andrews government’s mental health levy, saying the revenue is now a necessary part of the state’s finances.
Announced in last year’s state budget, the mental health and wellbeing levy on big businesses is forecast to raise $843m each year to fund mental health services.
The levy, which began in January, was a recommendation of the royal commission into Victoria’s mental health system.
On Monday evening, the opposition leader, Matthew Guy, conceded he had changed his intention to axe the levy due the revenue it creates.
“It is highly difficult for us to remove these taxes when the budget has been screwed by the Labor party to the extent that it has,” Guy said.
“The blowouts in a number of major projects, alone, could have paid for the entirety of the mental health budget in one year.”
But the deputy premier and mental health minister, James Merlino, seized on the development and claimed the opposition had been “spooked” by the South Australian election, which delivered a landslide victory for Labor on Saturday.
In South Australia, Labor ran a campaign on the issue of health funding and ambulance ramping.
Merlino said the opposition understood it could not “go to an election talking about cuts to health”.
“They’ve come out today, they’re claiming that they’re not going to cut $3.7bn in mental health funding, yet that is exactly what they’re going to do,” Merlino said.
“That’s their form when they’re in government.”
The opposition had previously argued that mental health reform should be funded with existing revenue.
In February, when asked if he could “categorically” confirm the mental health levy would be scrapped if the Coalition won the state election, Guy replied: “Yes.”
On Monday, the shadow treasurer, David Davis, said the “mental health levy will remain”.
“We did oppose it at the time but the bill is now legislated, it’s now through,” Davis told reporters on Monday.
“We accept that the levy is there now … it’s part of the costs of funding our system.”
Under the levy, businesses paying taxable wages of $10m or more in Victoria pay a 0.5% surcharge on them. This rises to 1% for businesses paying wages over $100m. For the transition period – 1 January until 30 June – the respective annual thresholds are $5m and $50m.
The levy was designed to fund the Victoria’s government’s spend on mental health reform – estimated to provide $3.7bn over the four years to 2026 – announced in the wake of the royal commission.
The scathing report found the state’s mental health system was “crisis-driven” and not designed to support people living with mental illness or psychological distress.
The levy backtrack comes a week after the state’s opposition said it would support the government’s plan to cut greenhouse gas emissions by 50% by 2030 – which it opposed during the 2018 election.
Emma Kealy, opposition spokesperson for mental health, said if Victoria did not hire more mental health workers it would “never see the end of the impacts of the Covid pandemic”.
“Labor failed to develop and to train mental health workers in the state of Victoria,” she said.
“As a result, children can’t get the support they need when they need it. And they’re turning up to emergency departments in droves.”
Last month, the opposition vowed to offer incentives to attract more health workers within its first 100 days in office if it wins the November election.
The incentive scheme would include financial support to train more workers at undergraduate and postgraduate levels, relocation packages to attract international workers, and additional internship and student placements for psychologists and psychiatrists to expedite their transition into the field.
