The 22 year old appeared via video link in the ACT Magistrates Court on Friday charged with possessing an offensive weapon with intent and reckless threat to kill a person.

The accused, of Riverwood in Sydney's southwest, has not pleaded to the charges.

Police documents tendered to the court accuse him of using a 12-15cm long knife in his kill threats towards the Parliament House worker about 6pm on June 21.

The worker was sitting in his car when the accused approached the passenger side before getting in, saying he was going to make himself comfortable.

The accused then allegedly started asking the worker "how much do you value your life" and "what's your life worth?" repeatedly.

He also said "I'm a psychopath and I'm off my meds" before allegedly asking "where do you want to die?" and saying "I'm here to stab someone - if it isn't you, it will be someone else".

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The worker told the accused to hop out without success before he drove around Parliament House as he knew the Australian Federal Police Protective Services' officers (AFP PSOs) would be at the back of the building.

The worker feared he was going to be stabbed as the accused was allegedly holding the knife in a reverse grip, pointing towards him.

It was only when the driver flashed his car's high beams at the officers and pulled up next to them that the accused gave them the knife.

When the officers spoke to the accused, he said he wanted talk with Prime Minister Scott Morrison but did not elaborate on it.

"(He) only stated that the matter was classified and above the AFP PSOs pay grade," police documents state.

The officers then took him into custody before handing him over to ACT Policing.

The Canberra Times has chosen not to name the accused until more information about his mental health is provided to the court as he is currently on a treatment order and is being assessed.

In court during his second bail application, defence lawyer Mohamed Bejjaoui said his client's mental health has improved, he had no prior convictions for violence and that he was still a young man.

Mr Bejjaoui also proposed for his client to stay in house arrest with a close family friend in the ACT.

"She also qualifies as a support person and has the skills to ensure he has the right mindset," he said.

Prosecutor Lauren Knobel opposed bail on the grounds of the accused's likelihood of reoffending and risks to community safety.

Ms Knobel said the alleged attack was "unprovoked, brazen and a random".

"From the outset, no bail conditions could ameliorate risks," she said.

"The behaviour of the defendant is erratic, unstable and inexplicable."

The prosecutor said the accused was already on mental health treatment order but refused to adhere.

She said that "can be seen as indicative of his intention to comply with a psychiatric treatment order in the ACT as well".

Chief Magistrate Lorraine Walker refused bail because of the uncertainty about whether he is stable from his existing mental health conditions.

"There is no evidence before me as to his current mental state ... that's a great concern because as the prosecutor points out, the offending that is alleged is inexplicable and unpredictable," she said.

"It may be that (he) is now stable but I don't have that information at hand."

In relation to residing with a close family friend, Chief Magistrate Walker said the friend was not a mental health professional and that the location was not a secure facility.

"While the situation is so uncertain, I'm not prepared to grant bail because of the likelihood of further offending and the severe risks that potentially poses to the community," she said.

"I accept that prison is not an appropriate place for him but neither is the community at this point in time."

The accused is set to face court again on July 28.

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