No system to check how $1.2b levy is spent: auditor-general
Queensland’s $1.2 billion mental health levy was directionless and poorly managed, a review by the auditor general found; This raises fears that taxpayers’ money is being wasted on ineffective services.
The tax, a parliamentary recommendation to create a dedicated funding stream for mental health, alcohol and other drug (MHAOD) services, was introduced in early 2023 and is collected through payroll taxes.
Between January 2023 and June 2025, the tax raised $1.2 billion and is expected to raise half a billion dollars more in the first five years than originally anticipated.
But analysis by the Queensland Audit Office has revealed shortcomings in how the levy is being administered, amid fears millions of taxpayers’ dollars are being allocated to services with no evidence of whether the services are achieving their intended results.
Queensland Auditor General Rachel Vagg said this was largely due to the state government’s failure to create appropriate governance structures and systems to manage the funds when the levy was introduced three years ago.
“This included a failure to define the scope, consequences and responsibilities for the use of the tax,” Vagg said.
As a result, decisions about how and how best to allocate funding across the MHAOD system are poorly planned, and there is no system to monitor how money is spent or whether it achieves any intended purpose.
“Queensland Treasury and the Department of Health have each designed compatible processes and systems
Along with their responsibilities to manage the tax,” Vagg said.
“However, there are opportunities to improve how both agencies manage and oversee tax finance.”
The audit found that the government made decisions to allocate funds in response to requests from organisations, rather than adopting a coordinated planning approach.
In some cases, tax funding has been used to replace existing funding sources for certain initiatives.
To date, more than 90 per cent of the revenue raised through the levy has been allocated to Queensland’s health department, which has used the funds to implement the Better Care Together plan.
Revenue was also provided to other government agencies such as the Queensland Reconstruction Authority for disaster recovery programs and the Department of Justice for an initiative on domestic and family violence.
Queensland Health Minister Tim Nicholls said he was disappointed to read Vagg’s analysis and criticized the former Labor government for failing to establish governance regulations when the tax was introduced.
“When I came into government I also had concerns about the management and oversight of Queensland Health’s Mental Health Levy investment through Better Care Together and asked the department to conduct a mid-term review,” he said.
According to Nicholls, the review found that the tax was used to fund out-of-scope programs and various initiatives that were not properly funded.
Queensland Treasurer Paul Williams said the department had begun work to prepare draft guidance explaining the scope of activities to be financed by the tax and the processes by which funding could be applied.
Queensland Mental Health Commissioner Ivan Frkovic said the commission agreed with all the recommendations set out in the report and would work collaboratively with the government to support their implementation.
Start your day with a summary of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.
