Minister for Mental Health Matt Doocey did not make a Budget bid in 2024 for more psychiatric beds, despite them being at or over capacity.
The opposition said this was a massive oversight, although health officials said they were concentrating on improving staff levels.
Workers on the front line of New Zealand's mental health wards said surging demands were leading to people getting turned away or discharged early.
So Labour's mental health spokesperson Ingrid Leary said she was surprised to receive an Official Information Act response from health officials saying they did not hold any information about a Budget bid for more psychiatry beds this year, because no bid was made.
"It's such a basic, mental health 101, requirement to at least look at how many beds there are across the motu, how many are needed and what the occupancy rate is, and what money might be available should there be a high need for beds, which there is," she said.
New Zealand has more than 1300 funded mental health and addiction hospital beds, including more than 900 acute mental health beds.
Hospital beds at full capacity in NZ
Earlier this year Checkpoint revealed that in Health NZ's northern region operate mostly at 100 percent capacity.
Although Health NZ could not provide figures for other regions, sector workers said they were at similar levels, which Leary said had serious consequences.
"People have approached me in my spokesperson for mental health capacity to say that they are having mental health crises.
"They have not been able to get mental health accommodation or mental health support. The waiting lists for accommodation, in particular, are too big," she said.
"One of them went into psychosis and ended up in prison."
At recent select committee hearings health officials said they were focusing on reducing staff shortages, and this year a mental health workforce plan was released.
A statement from Matt Doocey said the process for next year's Budget had begun and potential funding requests were under consideration.
"I've been clear that increasing access is one of my top priorities and inpatient beds are an important part of this work across the continuum of primary, community, NGO and specialist services care."
Executive director of the Association of Salaried Medical Specialists Sarah Dalton said conditions in mental health facilities had worsened this year.
"The reasons for that are that we are wildly understaffed for mental health staffing, which includes our member psychiatrists, but also psychologists, healthcare assistants and psychiatric nurses.
"Many of the facilities that mental health services are operating out of are insufficient for the load."
She was disappointed but not surprised to learn no Budget bid was made this year for more psychiatric beds - while at the same time money was allocated for the likes of Mike King's Gumboot Friday programme, something Doocey had defended.
"It's kind of mucking around the edge of mental health need. What we need is more prolonged investment across all areas of mental health prevention, early intervention.
"There's a lot more needed for people with serious mental health issues who may need to spend time as inpatients."
Royal Australian and New Zealand College of Psychiatrists national committee chairman doctor Hiran Thabrew said an evaluation of inpatient services and staffing levels was urgently required.
"The situation with access to care for people with moderate to severe mental health issues or significant mental health distress hasn't changed at all in the last few months.
"We know we have a chronic low number of beds per capital compared to other countries in the OECD, and we've had bed shortages that have led to cycles of crisis-driven care."
That meant people admitted to mental health facilities were more unwell.
While many of the stretched workforce of psychiatrists were leaving permanent employment, the post-Covid-19 demand for mental healthcare continued to grow, he said.
"[The government's] focus may have been more on workforce issues, although that hasn't actually yielded any dividends yet, but that doesn't mean that making sure there's enough services for people who need them can wait.
"I think that does need to be actively monitored."