Money originally earmarked for frontline mental health services, including addressing severe workforce shortages, was redirected to fund the government’s contentious $10 million Mental Health Innovation Fund. The fund, established last year, has drawn criticism for its approach and perceived misallocation of resources.
In April 2024, Mental Health Minister Matt Doocey allocated funds to the innovation project after his initial budget request for $20 million to create the fund was rejected by Finance Minister Nicola Willis. The initiative, a campaign promise from the National Party, aimed to support time-limited, grassroots-driven projects within the mental health sector.
However, the Royal Australian and New Zealand College of Psychiatrists (RANZCP) has expressed discontent, suggesting the funds would have been better spent fulfilling National’s pre-election commitment to train more psychiatrists. According to Hiran Thabrew, national chairperson of RANZCP, the sector currently faces 650 unfilled mental health positions, including 130 for psychiatrists. Some regions are experiencing vacancy rates as high as 30 percent. Thabrew emphasized the urgent need for investment in training programs, particularly for psychiatry registrars.
“The government’s decision not to fund the additional 13 psychiatry training positions as promised in Budget 2024 is deeply disappointing,” Thabrew said. “We were told there wasn’t enough money, but clearly, that’s not the case.”
The Mental Health Innovation Fund, launched in July, aims to provide temporary financial support to mental health initiatives that address local needs. Despite its intentions, the fund has faced backlash for what critics describe as “unfair criteria” that prevent many small organizations from accessing the funds.
The controversy arises amid a broader mental health crisis in New Zealand, with public services struggling to meet increasing demand, rising patient wait times, and a shortage of mental health professionals.
Minister Doocey defended the fund, asserting that it was designed to leverage existing community-based mental health workers to alleviate pressure on the overstretched public sector. He rejected criticisms of the fund’s impact, emphasizing that the approach had been shaped by feedback from sector representatives. “When I was in opposition, several community mental health groups advocated for a matched funding model. I believe the innovation fund is well-received and is already making a difference,” Doocey stated.
Repurposed Budget and Workforce Shortages
Documents obtained by RNZ under the Official Information Act reveal that the fund nearly failed to make it into the 2024 Budget. Following the rejection of his proposal, Doocey requested Ministry of Health officials to find a way to repurpose existing budgeted funds for a scaled-back version of the fund. Officials identified $9.72 million in anticipated underspends from Health New Zealand’s (HNZ) mental health and addiction budget for 2023/24.
These funds, originally allocated in previous Labour budgets for acute services, workforce development, and specialized mental health initiatives, were reappropriated to the Innovation Fund. The funds included allocations for forensic mental health services, improving addiction services, and expanding the Access and Choice program, which provides free mental health support for individuals with mild to moderate conditions. The reallocation also included uncommitted funds slated for 2025/26, which had not yet been contracted.
Doocey could not provide a clear explanation as to why the funds had not been spent as originally intended. He initially blamed the previous government for poor planning but later acknowledged that the last part of the 2023/24 financial year was under his oversight.
Health New Zealand officials, caught off guard by the fund’s reallocation, expressed confusion in internal emails. The funds had been expected to be returned to the government’s general budget due to strict regulations governing unspent government funds. However, Cabinet had approved the transfer just a day before the decision was communicated to HNZ staff.
Concerns Over Workforce Development
Thabrew questioned why the funds were not redirected to address the chronic workforce shortages that are contributing to New Zealand’s mental health crisis. He argued that the $10 million could have been used to train up to 20 new psychiatrists or help retain existing staff who are leaving the profession due to burnout and poor working conditions.
While Thabrew supports the fund’s focus on prevention and early intervention, he raised doubts about the effectiveness of the short-term initiatives it finances. “The fund is only available for two years, which doesn’t provide sufficient time for organizations to develop meaningful services or assess their impact. Long-term, stable funding is needed,” he said. “Shifting funds away from workforce and hospital services only exacerbates existing problems.”
Doocey, however, insisted that the fund did not break pre-election promises regarding psychiatry training. He pointed to the Mental Health Workforce Plan, which is expected to deliver 17 additional psychiatry trainees annually starting in 2025. However, RANZCP has challenged these figures, suggesting that the increase will likely be closer to five additional trainees per year.
Lack of Transparency and Uncertainty
Emails released to RNZ also revealed concerns from HNZ officials, who were surprised by the reallocation of funds. Senior staff had assumed the project had been abandoned after Willis rejected the original proposal and expressed frustrations at the lack of transparency and the rushed nature of the decision-making process.
“There is a risk that we will receive limited responses to the first request for proposals,” one staff member wrote, referring to the fund’s criteria, which required applicants to contribute at least $250,000 in matching funds. “We’re unlikely to spend the entire $5 million allocation in the first year.”
In response, Doocey said the government was committed to using the innovation fund to ease pressure on the public mental health system. He highlighted initiatives like Gumboot Friday, which provides online access to counselors for young people facing mental health challenges.
Political Reactions and Criticism
The decision to reallocate mental health funds has sparked a political backlash. Labour’s mental health spokesperson Ingrid Leary accused Doocey of prioritizing “a rushed vanity project” over the needs of smaller, frontline community organizations. She criticized the fund’s last-minute eligibility requirements, which, she argued, excluded smaller groups that could have benefited from the support.
“The Mental Health Innovation Fund has locked out small providers and caused some to close their doors. This is a desperate move by Doocey, who is ignoring the workforce crisis and failing to deliver on promises to train more psychiatrists,” Leary said.
As the debate continues, the question remains whether the fund’s focus on innovation can deliver lasting improvements in mental health care, or if it is merely a temporary measure that fails to address the root causes of New Zealand’s mental health crisis.
