John Howard has added $1.8 billion to federal mental healthcare spending, but left the states to deal with the mentally ill who roam the streets because of the shutdown of psychiatric hospitals over the past two decades.
The package, which was designed to ease the crisis in mental health, still leaves it up to the states to solve the problem of people roaming the streets or those whose elderly parents can no longer care for them.
And the state governments failed yesterday to commit to building accommodation facilities, instead promising more discussion on the topic.
John Howard yesterday announced 650 extra places to help up to 15,000 families per year.
This service would allow families caring for someone with chronic mental problems to place their relative in a facility overnight to give them a break.
But the package does not fund new accommodation services to provide 24-hour care for the people most in need. As revealed by The Australian two weeks ago, the biggest chunk - around one-third - of the Government's cash injection is earmarked to pay for a massive expansion of services by psychologists.
It will allow GPs and psychiatrists to refer patients to them and for the psychologists' services to be subsidised under Medicare.
"These initiatives will need to be complemented by an investment from states and territories in the areas of supported accommodation, improvements to hospital and emergency and crisis services and the care of young people in prisons with mental illness," the Prime Minister said.
Mental Health Council chief executive John Mendoza said yesterday the government package was a "first step" but the federal Government still had a role in establishing accommodation in conjunction with the states.
"I don't think the states can do it on their own," he said.
"We need to build a whole suite of accommodation that does not exist at the moment, accommodation that will relieve pressure on our acute care hospital beds.
"It has been the missing link in the systems and services that we have had available since deinstitutionalisation."
Just last week a 600-page Senate select committee report provided another damning account of the system's failings and called for additional funding of up to $3billion a year.
Most mental health experts and agencies have welcomed the Government's announcement as a good start, although still short of the funding increase needed, and backed the call for state premiers to match its $1.8billion investment.
But the architect of the mental health policy of deinstitutionalisation, David Richmond - whose seminal Richmond Report has guided decisions on the mentally ill for more than two decades - said the federal Government's announcement was flawed and could be counter-productive.
He said the decision to leave supported accommodation funding to the states would "only get us back into more difficulty" and federal funds were required to bolster the amount of accommodation available.
The reaction from the states was generally cool, with some saying they had already increased spending on mental health or would consider their response as part of discussions already under way through the Council of Australian Governments, which is due to produce proposals in June.
NSW Premier Morris Iemma - one of the most outspoken advocates of the need for extra funding - said yesterday the commonwealth's move went "some way to making amends" to people with a mental illness and their families. "However, it must be acknowledged that the COAG process has not yet been completed, and there are issues this package does not address entirely, such as the need for more psychiatrists," Mr Iemma said.
"It represents a springboard from which all governments, state and commonwealth, can work to provide a national action plan for mental health."
But Queensland Premier Peter Beattie said his state had already pre-empted Mr Howard by committing $201 million over the next five years for mental health services.
While Queensland had "underfunded mental health in the past", he said, the state had "already started to address that" and the extra $201 million announced in the mini-budget last year would be followed by more increases.
Victorian Health Minister Bronwyn Pike said Mr Howard had "identified some areas we need to focus on", and states "recognise we need to put more resources into treatment".