‘The levy will remain’: Opposition in mental health tax U-turn

The State Opposition is promising to retain Labor’s mental health levy in a new policy U-turn in the lead-up to the November 26 election.

Labor announced the mental-health levy in last year’s state budget, under which businesses with more than $10 million in wages pay a payroll tax “surcharge”. That tax, which began on January 1 this year, is expected to net an average of $843 million a year, or about $3.7 billion by June 30, 2026.

Victorian Opposition Leader Matthew Guy.Credit:Luis Ascui

The state opposition had previously indicated it remained opposed to the tax and would scrap it if it won the election.

In an interview with Channel Nine on November 29 last year, Opposition Leader Matthew Guy said he believed the recommendations of the royal commission into mental health should be paid for directly from the budget, not using a tax imposed on businesses.

“Don’t tax businesses who need to get back on their feet,” he said.

Asked directly if that meant the Opposition would not continue with the levy if it wins the election Mr Guy laughed and said: “We’re certainly not interested in that.”

At a February 15 press conference in Ballarat, Mr Guy was asked if he could categorically say the mental health levy would be gone if he was elected, to which he replied, “Yes, we’ve said that we don’t want to increase taxes or put on new taxes.”

But on Monday, both Shadow Treasurer David Davis and Opposition mental health spokeswoman Emma Kealy denied the Coalition had ever said it would dump the levy if elected.

“The mental health levy will remain,” Mr Davis said.

Ms Kealy said it had always been the Coalition’s position that the tax would be retained if Labor was defeated.

“We said initially that we didn’t support the tax,” Ms Kealy said. “The tax is now in place, it has been in place since January of this year. We’ve always said we’d support the royal commission’s vision of what they want to achieve for Victoria.”

The move comes days after the Liberals shifted their stance on climate change, saying they now supported a net-zero emissions target by 2050, in a stark about-turn from his 2018 election policy.

The opposition’s new environment and climate change spokesman, James Newbury, said on March 8 the Liberals now supported a net-zero emissions target by 2050.

“We are not the party of 2018,” Mr Newbury told The Age, referring to the opposition’s election loss when it ran a campaign that included opposition to the government’s net-zero target.

The fresh stance was ridiculed by Energy, Environment and Climate Change Minister Lily D’Ambrosio, who said the “policy backflip is so transparent it is laughable”.

The mental health levy backdown frees up billions of dollars for the Coalition to make campaign promises. Next financial year the levy is expected to raise $788 million, rising to $909 million by 2025-26.

Deputy Premier James Merlino recently said the Opposition was committed to scrapping that levy. “That is a $3.7 billion black hole,” he said.

Mental health remains an important political issue and will form a central part of Labor’s campaign pitch.

The Age reported on Monday that one in four young Australians have thought about suicide over the past two years and 15 per cent had attempted self-harm, according to a poll of 16 to 24-year-olds, with experts calling for urgent action to tackle a growing youth mental health crisis.

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