The Victorian government's plan to tax Australian businesses to help pay for the overhaul of the state's mental health system has been slammed by the federal government.
The Mental Health and Wellbeing Levy, unveiled by Treasurer Tim Pallas on Thursday, will hit businesses that pay more than $10 million in national wages with a 0.5 per cent surcharge.
Businesses with national payrolls above $100 million will pay one per cent.
The tax was a main mental health royal commission recommendation and will affect less than five per cent of employers, Mr Pallas said.
But Prime Minister Scott Morrison has described the impost as irresponsible.
"This is the worst time that you could increase taxes on the Australian economy," he said on Friday.
"This is self-defeating."
Federal Treasurer Josh Frydenberg called the tax a handbrake on the economy.
"Labor is whacking Victorian families and businesses with higher taxes," he said.
Spruiking the budget on Friday, the treasurer said the tax would ensure the mental health sector gets the funds it needs to commit to "decades worth of work".
"A levy is so vitally important. Without it, we know what the problem is, we know how to fund it but we're not interested in doing it because the political discomfort associated with the levy is something we're not prepared to bear," Mr Pallas told a Committee for Economic Development of Australia gathering.
"Any politician that squibs it on that basis is part of the problem, not the solution."
Mr Pallas said the state approached the Commonwealth to incorporate the costs into the Medicare levy, given mental health is a "national problem".
"They had very little inclination in that regard. So we were left, once again, to our own devices."
Acting Premier James Merlino said poor mental health costs the Victorian economy more than $14 billion each year, with a $1.9 billion impact directly to employers.
The state's mental health royal commission found a 15 per cent decrease in the level of need for mental health help would lead to a $1.1 billion increase in economic activity per year.
"These are very targeted, appropriate, well-thought-out revenue initiatives that impact less than five per cent of employers. Many of those are multinational companies," Mr Merlino told reporters.
"If we get this right, if we rebuild our mental health system, if we see a reduction in the level of need, it will mean billions to our economy."
The tax is opposed by the Liberal-Nationals opposition but is expected to get the support of enough upper house crossbenchers to pass parliament.
It will begin on January 1 and is anticipated to raise almost $3 billion in four years.
The mental health funding in the budget totals $4.8 billion, including $1.5 billion for 20 local mental health hubs and $954 million to replace 22 existing services.
Former Labor prime minister Julia Gillard, now chair of Beyond Blue, welcomed the investment.
"This is the start of transformational change and a once-in-a-generation opportunity to create a system for everyone," she said in a statement.
Victoria's big-spending budget also delivers $7.1 billion to hospitals and healthcare, $3.5 billion for education and $3.2 billion for public transport.
It forecasts an $11.6 billion deficit in 2021/22 - down from a projected $13.1 billion - although the treasurer predicts Victoria can achieve an operating cash surplus of $1.1 billion by 2022/23.
Net debt will hit $102.1 billion in the new financial year before growing to $156.3 billion in the 2024/25 financial year.
Australian Associated Press
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