Australia was one of the first countries to develop and implement a national mental health plan, 30 years ago. This national approach belied the countrys federal structure, in which the federal government takes responsibility for primary care while state and territory governments manage acute and hospital mental health care. This arrangement has led to significant variations across jurisdictions. It has also left secondary care, often provided in the community, outside of this governance arrangement. This article explores this dilemma and its implications for community mental health, and suggests key steps towards more effective reform of this vital element of mental health care.