A $1.2 billion mental health levy will not be scrapped, the state government has confirmed, despite a damning report that questioned the management of the levy.
On Friday, analysis from the Queensland Audit Office revealed there were shortfalls in how the levy was being managed, amid fears millions of taxpayer dollars were being allocated to services with no evidence of whether they were achieving intended outcomes.
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.
Asked on Saturday whether he could categorically rule out cutting the mental health levy, Health Minister Nicholls said: “Absolutely, the mental health levy will stay, and the Crisafulli government will ensure that the mental health levy delivers mental health services.
“I want to be abundantly clear on that.”
He confirmed he agreed with the levy, saying the demand for mental health services had continued to grow, and was a significant source of concern for the community.
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 had found there was no evidence of whether intended outcomes were being achieved, which was largely due to a failure by the state government surrounding appropriate governance structures and systems, Queensland’s Auditor-General Rachel Vagg said.
Nicholls said the department was working with treasury on what that would entail, and could not confirm the timing of when that would be implemented.
Nicholls said he had asked Queensland Health to identify where the money was being spent and what the measure of effectiveness was.
“I think what this report shows is that the mental health levy has been used to deliver outputs, rather than outcomes,” he said. “Yes, there are now more people employed, but are those employed people actually delivering better mental health outcomes?”
Nicholls said since Labor’s last budget, in 2024-25, the government had taken steps to ensure that the funding was allocated to where it needed to go in the scope of the mental health levy.
“We have done that by allocating $350 million to those services that are clearly within the scope of the mental health levy, which I think Queenslanders would appreciate receiving,” he said.
When asked about changes to the tax threshold, Nicholls said those decisions would be for the treasurer.
“What I can say to you is that the mental health levy, the money that’s granted to us by the people of Queensland, will be used in terms of delivering mental health services,” he said.
“So that levy, which is currently now 0.5 per cent … payrolls above $10 million will be used to deliver mental health services. There will be no cut to the mental health levy.”
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Cloe Read is the crime and court reporter at Brisbane Times.Connect via X or email.
