Queensland’s $1.2 billion mental health levy is directionless and poorly run, a review from the auditor-general has found, prompting fears taxpayer money is being wasted on ineffective services.
The levy, a parliamentary recommendation to establish a dedicated funding stream for mental health, alcohol and other drugs (MHAOD) services, was introduced in early 2023 and is collected through payroll taxes.
Between January 2023 and June 2025, the levy raised $1.2 billion, and is projected to raise half-a-billion dollars more than originally estimated in its first five years.
But analysis from the Queensland Audit Office found shortfalls in how the levy is managed, with fears millions of taxpayer dollars are being allocated to services with no evidence of whether they are achieving intended outcomes.
Queensland’s Auditor-General Rachel Vagg said this was largely due to a failure by the state government for appropriate governance structures and systems to manage the funds when the levy was introduced three years ago.
“This included not defining the scope of the levy’s use, its outcomes, and responsibilities,” Vagg said.
As a result, decisions about how funding is and could best be allocated across the MHAOD system is poorly planned, and there is no system to monitor how money is spent or whether it is achieving any intended purpose.
“Queensland Treasury and the Department of Health have each designed processes and systems aligned
with their respective responsibilities for managing the levy,” Vagg said.
“However, there are opportunities for both entities to improve how they govern and oversee levy funding.”
The government was making decisions to allocate funding in response to requests from entities, rather than adopting a coordinated planning approach, the audit found.
In some cases, levy funding has been used to replace existing funding sources for certain initiatives.
To date, more than 90 per cent of the revenue collected through the levy has been allocated to Queensland’s health department, which used funds to implement its Better Care Together plan.
Revenue was also provided to other government entities, such as the Queensland Reconstruction Authority for disaster recovery programs, and the Department of Justice for a domestic and family violence-related initiative.
Queensland Health Minister Tim Nicholls said he was disappointed to read Vagg’s analysis and criticised the former Labor government for failing to establish governance arrangements when the levy was introduced.
“Upon coming into government, I also had concerns about the management and oversight of Queensland Health’s Mental Health Levy investment through Better Care Together, and requested the department undertake a midterm review,” he said.
According to Nicholls, the review found the levy was used to fund programs out of scope, and several initiatives that were not properly funded.
Paul Williams from Queensland’s Treasury said the department has commenced work to draft guidelines clarifying the scope of activities to be funded by the levy and processes to apply for funding.
Queensland’s Mental Health Commissioner Ivan Frkovic said the commission agrees with all recommendations outlined in the report, and would work collaboratively with the government to support their implementation.
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