Introduction by Croakey: Non-government organisations providing mental health and wellbeing services in Queensland are caught in a funding crunch as the Queensland Government is indexing their funding at a lower rate than their wages costs are increasing.
If the Government does not heed the sector’s urgent calls, some organisations will face hard decisions about cutting staffing and service delivery, warns Chloe Jesson, Deputy CEO of the Queensland Alliance for Mental Health.
All of which suggests that Queensland’s mental health levy, introduced in 2023 with the aim of providing a sustainable funding source for mental healthcare, has not delivered the transformation promised, she says.
Chloe Jesson writes:
On 24 June, Queensland’s community mental health sector received confirmation of something we had been bracing for. The approved indexation rate for non-government organisations receiving State Government funding is 3.31 percent for 2026-2027.
That number matters enormously to the 140-plus organisations represented by the Queensland Alliance for Mental Health (QAMH).
From 1 July, those organisations are legally required to increase workers’ wages by 4.75 percent following the Fair Work Commission’s national wage decision. That decision was right; community mental health workers have been chronically undervalued, and the Commission’s separate finding of systemic gender-based undervaluation of the Social, Community, Home Care, and Disability Services (SCHADS) Award only confirmed what the sector already knew.
But the maths does not work.
A 4.75 percent wage obligation against a 3.31 percent funding increase leaves a gap that must come from somewhere. For not-for-profit organisations where wages represent 70 to 80 percent of operating costs, and where financial reserves are often negligible or non-existent, there is nowhere for it to come from except services and staff.
This is a major problem, and it is urgent.
Some organisations will face hard decisions about staffing and service delivery before the end of this month.
This was preventable
What makes this harder to accept is that Queensland Treasury’s own methodology includes a mechanism to respond when there is a material change in inflation forecasts after the indexation rate is set. That change has occurred.
The 2026-27 Budget revised the CPI forecast from 2.75 percent to 3.75 percent, up from the Mid-Year Fiscal and Economic Review (MYFER) figure on which the 3.31 percent rate was based.
QAMH wrote to the Treasurer on both 18 June and 24 June calling for an urgent review.
We are not asking for something unreasonable. We are simply asking for Treasury to apply its own methodology.
The sector already is stretched thin.
The indexation shortfall does not land in a vacuum. According to the most recent Report on Government Services data, only 4.6 percent of Queensland’s total mental health expenditure goes to the NGO sector, a proportion that has been declining, while per capita NGO mental health spending in Queensland sits 35 percent below the national average.
These are organisations that have been absorbing funding pressure for years. There is no capacity left to keep absorbing further cuts.
The Queensland Audit Office recently confirmed what the sector has long understood: the mental health levy, which has raised over $1.2 billion since 2022, has not been governed as a whole system.
The bulk of that investment has gone to the acute end of the system, with no coordinated plan to ensure it reaches the community-managed sector where early intervention and psychosocial support happen. The levy was meant to transform the system and the Queensland Audit Office has confirmed it has not done that.
Queensland has the second highest rate of mental health presentations to emergency departments in the country. Involuntary treatment orders have risen 50 percent since 2016.
A system that consistently underinvests in the community end produces exactly these outcomes. This 3.31 percent indexation rate is the latest instalment of that pattern.
One ask – apply your own methodology
QAMH is not asking for something novel or contested. We have written to the Treasurer with a single request: review the 2026-27 NGO indexation rate and apply the CPI adjustment mechanism that Treasury’s own methodology requires when there is a material change in inflation, as has occurred.
Community mental health organisations cannot absorb this gap. They are not-for-profits with wages representing 70 to 80 percent of operating costs and reserves that often do not exist.
When the shortfall arrives on 1 July, it will not be absorbed by shareholders or executive bonuses. It will be absorbed by services, by staff, and by the people those organisations exist to support.
The Government has a mechanism for exactly this situation. The sector is asking for it to be used.
• Chloe Jesson is Deputy CEO of the Queensland Alliance for Mental Health (QAMH), a peak body representing over 146 community-managed mental health organisations in Queensland. Previously at Croakey: Calling for national leadership to address workforce shortages in community mental health services.
See Croakey’s archive of articles on mental health
Add Comment