Appendix 2 - Mental health expenditure
In any examination of the cost of service provision it
is important to differentiate health funding and health expenditure. The
Australian Institute of Health and Welfare (AIHW) defines health spending as
Health funding is reported on the basis of who provides funds
that are used to pay for health expenditure. In the case of public hospital
care, for example, although the states and territories incur the related
expenditure, the Australian Government and the states and territories together
provide over 90 per cent of the funding. Some other funding comes from private
health insurers (for insured patients) and from individuals who choose to be
treated as private patients and pay any fees charged.
Health expenditure is defined:
Health expenditure is reported in terms of who incurs the
expenditure, rather than who ultimately pays for that expenditure. In our
example of public hospital care, all the related expenditures (that is,
expenditure on medical and surgical supplies, drugs, salaries of doctors and
nurses, etc.) are incurred by the states and territories although a
considerable proportion of those expenditures is funded by transfers from the
Accordingly, an important distinction must be made when
considering what the Australian Government provides, in terms of funding, and
what the state and territory governments provide.
As has been mentioned previously, the Australian
government provides direct and indirect expenditure for mental health. Direct
expenditure during 2001-02, relating to 'expenditure dedicated to the provision
of specialised mental health services and related activates', totalled $1 145.8
million and included the following expenditure items:
National Mental Health
Medicare Benefits Schedule
Pharmaceutical Benefits Scheme
Private health insurance rebates
Department of Veteran's Affairs
During 2001-02 the state and territory governments
provided $1 797.6 million in direct expenditure on mental health. Direct and
indirect expenditure by the Commonwealth, combined with direct expenditure by
the states and territories, totalled $6 592.6 million.
During the period 2001-02 the Australian government
contributed $94.2 million to the National Mental Health
Strategy (NMHS) . Under the National Mental Health
Plan 2003-2008 the Australian government will spend, on current National Mental
Health Strategy Initiatives: $6 million, annually recurrent,
on the National Mental Health Program; $66
million, in total over the life of the plan, on Australian Health Care
Agreements—Commonwealth Own Purpose Outlays; and, $331 million, in total over
the life of the plan, on Australian Health Care Agreements—Mental
Health to states and territories. The Australian government advised
that the funding of $331 million is specifically for states and territories to
address public sector health reform, and the $66 million is for national reform
activities. The $6 million recurrent funding is available for national
strategic mental health projects.
Given the implementation of the National Mental
Health Plan 2003-2008 (the Plan) and the subsequent
realignment of priorities under the new plan, it is difficult to compare and
make comment upon the current expenditure on the NMHS to that for 2001-02,
listed as $94.2 million.
The Medicare Benefits Schedule, essentially Medicare,
provides general benefits to all Australians through free treatment as a public
patient at a public hospital, and with the Medicare rebate which covers 100 per
cent of the schedule fee for a general practitioner and 85 per cent of the
schedule fee for attendances by a consultant psychiatrist. The Schedule also
provides specific benefits to persons suffering poor mental health in rural and
remote locations, including:
payment for clients located in rural and remote
areas for consultations via telepsychiatry for assessment, diagnosis and
treatment by consultant psychiatrist; and
payments for multidisciplinary team case
conferences organised by a consultant psychiatrist or other specialist and
conducted face to face, by telephone or by video link, or a combination of
The Australian government expenditure on the Medicare
items attributable to mental health service delivery in 2001–02 was $196.9
million to psychiatrists and $167.3 to general practitioners. During 2003-04 government
expenditure had risen to $201.3 million for consultant psychiatrists and $175.6
million for general practitioners, however, the government did point out that
due to MBS item structure developments since 2001-02 the data was not strictly
comparable, but there was close correlation.
The Pharmaceutical Benefits Scheme 'aims to provide all
Medicare eligible persons with access to a comprehensive range of
cost-effective prescription medications that are affordable both to the
individual and the community'.
During 2001-02 the Australian government contributed $497.8 million to this
scheme specifically for drugs relating to mental health, including
antipsychotics, anxiolytics, hypnotics and sedatives, and antidepressants. This
figure increased to $591.472 million during 2003-04.
In January 1999 the Australian government implemented
legislation to provide for a rebate to private health insurance of some 30 per
cent, replacing the private health insurance incentives scheme. The premise of
this rebate was to encourage more people to obtain private health insurance and
therefore assist in the private provision of health services including mental
health services. Issues surrounding private health insurance are covered in
more depth in chapter 12. Private health insurance rebates provided by the
government during 2001-02 amounted to $37.7 million. More recent figures are not yet
available for the committee.
Department of Veteran's Affairs expenditure, totalling
$133.8 million during 2001-02, included the provision of services to veterans
Vietnam veteran's counselling services
Australian Centre for Post-traumatic Mental
Other expenditure listed by the Australian government
during 2001-02 on mental health service delivery included funding the
establishment of the Divisions of General Practice, the OATSIH Emotional and
Social Wellbeing Action Plan, Medical Specialists Outreach and Assistance
program and the Rural Health Support, Education and Training Grants.
The Australian government advised the committee,
through their submission, of a range of areas where they provided funding in
the area of mental health through a number of their departments. The government
provided estimates of the cost burden through the provision of these services
for mental health as a percentage of their overall cost burden. The primary
figures provided by the government relate to the year 2001-02 as reported in
the National Mental Health Report 2004 and accordingly very little
detail was obtained in regard to current levels of spending and the potential
impact of current legislative change in the areas of welfare payments.
The National Suicide Prevention Strategy (NSPS) began
in 1999 and aims to build upon the strengths of the previous National Youth
Suicide Prevention Strategy (1995-1999) by increasing the focus across the
lifespan. 'The Living Is For Everyone (LIFE) A Framework for
Prevention of Suicide and Self-Harm in Australia'
was developed to guide action under the NSPS. The government advised that
'some 170 community-based suicide prevention programs have been funded in all
states and territories and 25 national projects have also been developed' in
line with the LIFE Framework.
During 2001-02 the government provided $9.8 million in funding to the NSPS.
Income support payments are indirect expenditure items
provided through a number of Australian government departments including, DEWR,
FaCS and the DVA. In determining the expenditure the Australian government
estimated the mental health burden as a percentage of the overall expenditure
During 2001-02 DEWR provided $1 693.6 million in income
support to persons apparently affected with poor mental health amongst other
disabilities through the following programs:
Disability Support Pension ($1 516.9 million,
23.7 per cent of total expenditure)
Newstart Allowance ($143.1 million, 2.82 per
cent of total expenditure)
Sickness Allowance ($21.0 million, 22.4 per cent
of total expenditure)
Youth Allowance— Job Seekers ($6.5 million, 1.33
per cent of total expenditure)
Mobility Allowance ($6.1 million, 9.0 per cent
of total expenditure)
During 2001-02 FaCS provided $179.7 million in income
support to persons apparently affected with poor mental health amongst other
disabilities through the following programs:
Carer Payments ($98.3 million, 16.5 per cent of
Carer Allowance ($81.4 million, 12.6 per cent of
During 2001-02 DVA provided $95.0 million in income
support to persons apparently affected by poor mental health, among other
disabilities, through the invalidity service pension.
Workforce participation program expenditure for persons
with poor mental health, like the income support payment figures provided by
the Australian government, relate to an estimate of expenditure based upon a
proportion of total outlays. Indirect expenditure for workforce participation
programs are provided by both DEWR and FaCS.
During 2001-02 DEWR provided $56.8 million in workforce
participation programs in the following areas:
Disability Open Employment providers ($29.4
million, 23.5 per cent of total expenditure)
Vocational Support Programme ($27.5 million,
26.4 per cent of total expenditure)
During 2001-02 FaCS provided $13.7 million in workforce
participation programs in the following areas:
Employment Services—Supported ($9.6 million,
9.09 per cent of total expenditure)
Employment Services—Open and Supported ($4.1
million, 19.84 per cent of total expenditure)
The Australian Government estimates that during 2001-02
approximately $180.0 million of indirect government expenditure was provided to
DVA disability compensation programs for people with accepted mental health
The Department of Families, Community Services and
Indigenous Affairs (FaCSIA) administers the housing and accommodation programs.
During 2001-02 FaCSIA provided $108.9 million to persons with poor mental
health through the following programs:
Commonwealth-State Housing Agreements ($61.7
million, 6.0 per cent of total expenditure)
Supported Accommodation Assistance Program
(SAAP) ($47.1 million, 29 per cent of total expenditure)
National Homelessness Strategy ($0.2 million,
23.0 per cent of total expenditure)
Disability services are administered by FaCS and during
2001-02 FaCS provided approximately $42.6 million (8.5 per cent of total
expenditure) under the Commonwealth State Territory Disability Agreement for
provides resources for aged care residential and community services. During
2001-02 DoHA provided $1 258.5
million in indirect expenditure to person suffering poor mental health in the
Aged Residential Care—High Level (Nursing Homes)
($1 217.2 million, 35.8 per cent of total expenditure)
Aged Residential Care—Low Level (Hostels) ($37.2
million, 6.2 per cent of total expenditure)
Aged Community Care, including the Dementia
Education and Support Program, the Psychogeriatric Care Unit Program, the
National Dementia Behaviour Advisory Service, and Dementia Support for
Assessment ($4.1 million, 100 per cent of total expenditure)
provided $10.0 million (1.62 per cent of total expenditure) in indirect
expenditure on mental health through the Home and Community Care Program.
State and territory government
Mental Health Report 2005 provides a breakdown of each state and territory
government's spending on mental health and the relative expenditure on
different types of services across these jurisdictions. Interested readers are referred to
that report for a detailed review of state and territory spending. In addition,
every state and territory government provided written submissions to the
inquiry and details of their mental health programs and budget initiatives were
Recurrent expenditure on mental health services by
state and territory governments totalled 1 975.8 million in 2002-03. Just under half (49 per cent) of
this expenditure went to hospitals and 51 per cent to community-based services, including ambulatory services,
residential services and NGOs.
At an aggregate level, state and territory government
spending on mental health increased (in constant prices) from $75.49 per capita
in 1992-93 to $100.02 in 2002-03.
Expenditure levels differ across the states and territories and over the 1993-2003
period the gap between the highest and lowest spending jurisdiction increased.
The NMHR 2005 assessed that:
While some variation between state and territory expenditure can
be expected due to the different needs of their populations, the variation was
too large for this to be the full explanation.
In 2002-03, Western Australia
had the highest per capita spending on mental health ($119.07) followed by Victoria
($106.57), the ACT ($103.06) and South Australia
($101.61). The Northern Territory
($85.76) had the lowest per capita spending, followed by Queensland
($87.58), while Tasmania ($93.99)
and New South Wales ($97.07) also
had below national average spending.
Over the ten years 1993 to 2003, the ACT's and Western
Australia's per capita spending on mental health
services increased the most (by 62 per cent and 58 per cent respectively). Queensland
increased spending by 42 per cent, New South Wales
by 35 per cent, Northern Territory
by 32 per cent, South Australia
by 28 per cent and Tasmania by 22
per cent. Victoria's
expenditure increased the least (19 per cent), however Victoria
had the highest per capita spending of all states and territories at the start
of the period and remains the second highest.
There are differences across the states and territories
in the priority given to different forms of mental health care. In 2003, per
capita spending on community based services was considerably higher in the ACT
($76) and Victoria ($70) than the other states
and territories (ranging from $56 in both Western
Australia and Tasmania,
down to $37 in Queensland).
Overall 6.2 per cent of state and territory mental
health spending went to the NGO sector in 2003, an increase from 2 per cent in
dedicated the highest proportion (11.5 per cent) of mental health spending to
the NGO sector, followed by ACT (11.4 per cent). South
Australia (2.1 per cent) followed by New
South Wales (2.4 per cent) spent the lowest
proportions on this sector.
Reform to mental health services by the States and
Territories continues. Recent initiatives of governments were outlined in
Chapter 2, however the Committee also heard about new initiatives planned for
The Victorian Government has committed over $180
million in the next four years to expanding mental health services and
improving facilities. This
funding will deliver a range of initiatives:
Dual diagnosis services for people with both a
mental illness and a substance abuse disorder.
Sub-acute services to assist in the transition
from in-patient assistance to home based care.
Intensive housing support services for people
experiencing an acute mental health illness.
Enhanced management of mental health services to
deliver quicker responses to crisis situations, more intensive service
responses to ensure treatment is effective and improved follow-up to prevent
The Queensland Government has committed funding to
expand mental health services and facilities, including:
30 transitional accommodation places for people
with mental illness.
Programs targeted at preventing suicide in
high-risk groups and an
additional $175 000 funding to the Australian Institute for Suicide Research
and Prevention to conduct related research.
$43.6 million over four years to provide integrated
responses to people with dual diagnosis, and are homeless.
$6.9 million allocated to non-government
organisations and some research institutions for providing mental health
services to the community.
The Western Australian Government has allocated an
additional $173.4 million over the next three years to implement further
reform, as identified in the Mental Health Strategy 2004-2007.
Funding will be used to expand mental health services and facilities,
Additional specialist mental health
professionals across emergency departments.
The Psychiatric Emergency Team will be expanded
to increase coverage across the metropolitan area.
19 new mental health beds in four state
113 new adult inpatient beds and 420 supported
community beds for people with severe mental illness.
Additional psychiatric cover in rural areas to
ensure inpatient service is maintained.
‘Expansion of community mental health clinical
services, through a case management approach’.
Establishment of adult day therapy services,
delivering individual and group clinical programs.
Expansion of Post-Natal Depression services in
areas of projected community growth, as well as developing services specific to
the needs of Indigenous people and people from culturally or linguistically
diverse (CALD) backgrounds.
Expansion of child and adolescent mental health
Implementation of a range of programs for
attracting and retaining mental health professionals.
Funding to non-government organisations for mental
The Northern Territory Government has allocated $12.7
million additional funding to mental health services over the period 2003-04 to
2005-06, with the budget
estimated in 2005-06 to be $28.8 million.
This will deliver enhanced clinical services and support to consumers and
carers through a number of initiatives:
$1.8 million to establish 24 hour ‘sub-acute’
residential beds in Darwin and Alice Springs.
An additional nine mental health positions
created over the next three years to deliver further support to correctional
A significant increase in clinical and
rehabilitation services available to prisoners.
Expansion of mental health services to rural and
remote communities, including additional Aboriginal Mental Health Worker
positions and commencement of visiting psychiatric services.
Establishment of child and adolescent
psychiatric positions in regional centres and Consultation Liaison Nurse
positions for acute assessment and after-hours services.
Expansion of training and education programs to
enhance retention and the ongoing development of mental health professionals.
Funding to support the expansion of services
provided through non-government organisations.
The ACT Government continues to progress the implementation
of a number of other initiatives to enhance mental health care services,
Population-based modelling on current and future
mental health needs in the ACT community.
Early intervention programs for specific areas
of mental health treatment.
A new system to address the needs of people
experiencing a mental illness and are in contact with the criminal justice
A 20 bed psycho-geriatric inpatient unit for
$230 000 allocated to conduct a study on ‘acute
adult mental health, child and adolescent mental health services, crisis
assessment and treatment services’.
An additional $241 million has been allocated to mental
health care in NSW over the period 2004-05 to 2007-08. The NSW Government plans to
deliver further reform through a range of initiatives:
Nine psychiatric emergency care centres across
A further 300 beds are planned, in addition to
the 300 already delivered since 2001.
Expansion of the Housing and Accommodation
Support Initiative to provide further support to people residing in the
community or in public housing that have a mental illness.
A rural emergency health care service, including
a telephone help line and patient transportation service.
A three year pilot program of Integrated Services
Project for Clients with Challenging Behaviour.
Mental Health Unique Patient Identifier system
to increase information sharing between health care clinicians in an area.
The increased use of e-technology to better
manage mental health in rural and remote areas.
The South Australian Government has allocated $110
million to capital works spending in mental health, and the following projects
are planned for development by the end of the decade:
New 20 bed aged acute mental health facilities
at selected hospitals.
An early intervention mental health service
targeting children and young adults.
A 35 bed adult acute mental health facility at
the Noarlunga Hospital.
45 new adult acute beds at the Lyell McEwin
A 40 bed secure forensic mental health facility
to replace the existing facility, plus a new 30 bed secure rehabilitation
Expansion of the mental health facility at
Modbury Public Hospital to include 24 new beds.
An upgrade of Woodleigh House at Modbury Public
Hospital to provide better standards of care.
$300,000 to upgrade mental health facilities in
Port Pirie, Port Lincoln, Gawler and Berri.
With assistance from the Australian Government,
three 20-bed Community Rehabilitation Centres will be constructed in the
Northern, Central and Southern parts of Adelaide.
the government is implementing initiatives across health care services, such as
improving services for children and adolescents and adult aged care, and
forensic mental health. This is being achieved through injection of more
resources and legislative amendments, and very importantly, 'cultural and
social service reform'. Through the 'Bridging The Gap' program
launched by the Tasmanian Government in January 2005, $47 million over four
years has been allocated to improving mental health services.
These initiatives included, as set out in Chapter 2;
62 packages of care to support clients to live
in the community.
A 12 bed high support community facility in
12 bed cluster houses for supported
accommodation in the South and the North West Coast.
A total of 48 new clinical positions across a
range of mental health care settings.
$3.78m to drive quality and safety improvements,
assist with the application of the Mental Health
Act and develop a mother and baby service.
$4.52m to upgrade existing mental health and
non-government organisations' facilities and services.
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