Federal Budget promotes fairness, but mental health gaps remain

National mental health peak body Mental Health Australia has recognised the Albanese Government’s intent in this year’s Federal Budget to improve intergenerational fairness and respond to cost-of-living pressures but said it fails to deliver a much-needed expansion of mental health services against a backdrop of rising community distress. 

“Despite evidence of increased community need, this Budget continues the status quo on mental health, holding us in place while bigger decisions are yet to be made,” said CEO Carolyn Nikoloski.

Mental Health Australia acknowledged the Budget contained some important investments in areas such as housing, tax reform, and cost of living relief, which all influence mental health outcomes. It also noted the challenging fiscal environment facing the Government, including global uncertainty and rising cost of living pressures. 

“However, mental health remains a critical national priority that cannot be deferred – it is an important part of building our national resilience. Delaying investment now will come at a greater social and economic cost over time,” said Ms Nikoloski.

Mental Health Australia said the Budget provided a 12-month extension to services funded through the current National Mental Health and Suicide Prevention Agreement, which is necessary for maintaining services in the short-term.

“The efforts made to bring the National Budget into a strong and robust position is admirable, but fundamentally a Budget is a tool for responding to the community’s needs,” said Ms Nikoloski. 

“We must now deliver an ambitious and responsive next National Mental Health and Suicide Prevention Agreement, due to be negotiated over the coming 12 months.”

“All Governments now need to come to the table and get serious about mental health reform. The new Agreement should include measures to strengthen the foundations of our mental health system, provide sustainable funding to boost psychosocial supports, and invest in prevention and early intervention.” 

Mental Health Australia also welcomed the provision of an additional $3 billion towards Foundational Supports outside the NDIS. 

“It is vital that this funding boosts supports outside the NDIS, to respond to the nearly 500 000 Australians living with psychosocial disability, or severe mental health challenges, who currently don’t have adequate support,” said Ms Nikoloski.

“People with unmet psychosocial need have been waiting for years to see the investment they deserve. Tonight’s budget has declared that these funds are ready to go – what we need is leadership by all governments to prioritise this cohort for the next round of Foundational Support funding.” 

“This is especially important given the recently announced changes to NDIS eligibility and access. As these reforms progress, the uncertainty and anxiety it is causing the disability community cannot be overstated.” 

Mental Health Australia welcomed Minister Butler’s recent confirmation that people with psychosocial needs outside the NDIS will be among the next cohort in line for negotiations with States and Territories. “It’s time for all State and Territory Governments to step up to the plate and commit to this too,” said Ms Nikoloski. 

It also called for mental health reform to be underpinned by an independent National Mental Health Commission, to ensure progress is tracked and strong accountability mechanisms are in place.

Mental Health Australia said the priorities outlined in its 2026–27 Pre-Budget Submission provided a clear roadmap for reform, calling for greater investment in prevention and early intervention, stronger support for children and families, and expanded psychosocial supports. It also highlighted the need to address disadvantage through more inclusive services and improved housing and income supports, alongside strengthening system foundations through workforce investment, lived experience leadership and more sustainable funding.

Mental Health Australia said it will continue to work closely with its members and governments to understand the full implications of the Budget and where to go to from here.

“We’ll work through the detail and ensure the voices of people with lived experience, along with families, carers and kin, remain central to the decisions ahead,” said Ms Nikoloski. “Our focus is on making sure investments translate into real improvements in people’s lives.”

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Media contact:
Caroline Illingworth, Mental Health Australia Senior Communications Manager – 0417037595.
Emma Greeney, Mental Health Australia Director of Policy and Advocacy – 0437891671.