Legislation tabled in parliament also clarifies the commission’s monitoring and reporting functions.

Its ability to oversee the quality and safety of the system will be limited to responding to complaints. The commission will also lose its responsibility to oversee outcomes for the community, to instead focus on system outcomes.

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The minister will now set the commission’s objectives each year, and it will only be able to access data from health services, though the government rejects any of the proposed changes will limit its oversight powers.

The commission’s most recent annual report, published on Tuesday, tracked progress the government had made but was largely reliant on publicly available data. The Department of Health “very recently” provided additional information, the report said, which the commission said it included “despite having insufficient time to consider the information fully”.

Pru Howell-Jay, chair of the Victorian Mental Illness Awareness Council (VMIAC), said the government’s proposed changes would clearly limit the commission’s capacity to oversee progress.

“This decision reverses the royal commission recommendation. It takes us back to pre-royal commission, which is really disappointing,” Howell-Jay told The Age.

Howell-Jay submitted her own mental health story to the royal commission.

“It took a lot of courage,” she said. “It came with a lot of hope for change, for a better system.

“We were promised that all the recommendations would be implemented … So many people put their heart on the line, reliving their trauma for change. And now we’re feeling like, what was it for?”

Vrinda Edan, chief executive of VMIAC, said there had been “no collaboration, no consultation, no partnering with us and no seeking our view” on the overhaul.

She said the council understood the government’s budget constraints but that there were better ways of finding savings.

VMIAC was questioning whether the government had an ongoing commitment to implementing the royal commission, Edan said. “We haven’t formed a full view yet.”

Tandem Carers acting chief executive Jane Dunne said the advocacy group for carers and support people was deeply concerned.

“We are seeking urgent clarity on how a strong carer perspective will remain embedded in Victoria’s mental health reforms, and whether these changes reflect a shift away from a government commitment to the royal commission’s vision to centre lived experience in system transformation.”

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Mental Health Victoria chief executive Phillipa Thomas said it was still unclear whether funding to implement the recommendations was having the intended impact and whether progress against the royal commission was being adequately tracked.

A Victorian government spokesman said the state was leading the nation in mental health reform.

“We’re not wasting a minute building a system that works for every Victorian, no matter where they live,” he said.

“The proposed changes are about strengthening leadership and accountability in the mental health system.

“The commission will remain a critical part of our oversight framework, and these changes will focus the commission on the areas where it can have the greatest impact – safeguarding rights, resolving complaints and helping improve the mental health system.”

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