Welfare cuts for criminally insane

Mental health groups are concerned about a new government measure that would strip welfare from the criminally insane.

Social Services Minister Scott Morrison has introduced draft laws to parliament that will ensure people in psychiatric confinement who have been charged with serious offences such as murder or rape won't get benefits.

The little-known budget measure will save just under $30 million for the government and if approved by parliament, will come into effect from July 1.

The government argues welfare is not needed because adequate care is provided in facilities, and in any case, those detained are the responsibility of the states and territories.

It's understood it will affect about 300 people, including those who have not been convicted or are unfit to stand trial - for example, because they cannot judge right from wrong.

It's for that reason that it has some in the community worried.

Mental Health Australia wants safeguards in the bill to ensure those who experience mental illness don't suffer unwarranted discrimination.

Chief executive Frank Quinlan is concerned some people who may be considered innocent, will be treated differently to others who can get welfare.

"It casts those people into the same category as people who will be found guilty of very serious and grievous crimes, and that's a very serious mistake," he told AAP.

There was still uncertainty about how it would affect the partially institutionalised who were sometimes released into the community, Mr Quinlan said.

Patrick McGee, a co-ordinator at the Aboriginal Disabilities Justice Campaign, said there was no legal provision to revoke welfare for people who had not been convicted of a crime.

He is concerned that some people who have finished their time in detention will be stuck there for a longer period because they can't afford to move out.