Merlino says Vic must act on mental health

Acting Victorian Premier James Merlino has defended the state’s controversial mental health levy, saying the cost of not taking action is too great.

Lobby groups have slammed the Victorian government’s plan to tax Australian businesses to help pay for the overhaul of the state’s mental health system.

But as Mr Merlino and Treasurer Tim Pallas spent Friday morning spruiking the budget, the acting premier said the state and business was already taking a massive hit because of the mental health issue.

“It’s a 14 billion impact on our economy and a $1.9 billion impact directly to employers,” he told ABC Radio on Friday.

He added the state’s mental health royal commission found a 15 per cent decrease in the level of need for mental health help would lead to a $1.1 billion increase in econonic activity per year.

“This is in everyone’s best interests,” Mr Merlino said.

“There’s no doubt that as we rebuild our mental health system it will save lives, it will change lives and it will have a massive positive impact on our economy.

“What’s the alternative? Is the alternative to make the investment in mental health by reducing services in other areas? These are really, really targeted revenue measures.”

The Mental Health and Wellbeing Levy, unveiled by Treasurer Tim Pallas on Thursday, will hit businesses that pay more than $10 million in national wages with a 0.5 per cent increase.

Businesses with national payrolls above $100 million will pay one per cent.

The tax was a main mental health royal commission recommendation and will affect less than five per cent of employers, Mr Pallas said.

It will begin on January 1 and is anticipated to raise almost $3 billion in four years.

The mental health funding totals $4.8 billion, including $1.5 billion for 20 local mental health hubs and $954 million to replace 22 existing services.

Mr Pallas argued businesses that did well in spite of the pandemic should help the community, “so that no one gets left behind”. 

But the move has been slammed by business groups, and opposition leader Michael O’Brien described it as a “new tax on jobs.” 

Business Council chief executive Jennifer Westacott said the tax “sets a very dangerous precedent of fiscal repair which ultimately harms growth”.

“An approach that pits some Victorians against others by taxing jobs makes everyone a loser,” she said. 

Victorian Chamber of Commerce and Industry boss Paul Guerra said the government “needs to stop treating business as a fund of last resort”. 

Victorian Council of Social Service chief executive Emma King said the levy “must not become a political football” and “mental health should be above politics”.

A new windfalls gain tax and increased land tax and stamp duty on high-end properties has also drawn the ire of all four of the property sector’s lobby groups. They are planning a major campaign against the changes. 

Victoria’s big-spending budget delivers $7.1 billion to hospitals and healthcare, $3.5 billion for education and $3.2 billion for public transport.

It forecasts an $11.6 billion deficit in 2021/22 – down from a projected $13.1 billion – though the treasurer predicts Victoria can achieve an operating cash surplus of $1.1 billion by 2022/23.

Net debt will hit $102.1 billion this year before growing to $156.3 billion in the 2024/25 financial year. 

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