Is a piecemeal approach enough to solve the mental health crisis?

Across the country, mental health services are feeling the strain. People are waiting longer to get support, the cost of care is rising, and organisations are working hard just to keep pace with demand. 

Last month we saw federal, state and territory health ministers meet in Melbourne to confront these challenges and reaffirm their commitment to national action on mental health and suicide prevention. It was a timely reminder that while progress has been made, there is still a long way to go.

Mental health funding overall has long struggled to match the scale of need. There was a short-lived boost during the pandemic, but since then funding has generally plateaued or returned to previous levels even as costs and demand rise. For example in NSW, community-based NGOs received just 9.3% of the state’s mental health budget in 2023–24 (down from 10.2% the previous year). 

This stagnation came at a time when more Australians are struggling than perhaps ever before. In 2025, one in five adults experienced a mental disorder. Among children and teens, it’s one in seven. The rate of adults reporting mental or behavioural conditions has more than doubled over two decades, and psychological distress has risen from 10.8% in 2011 to 14.4% in 2022.

Today, almost half a million people with moderate to severe mental health challenges are not getting the support they need. The National Mental Health Commission has warned prevalence is at a record high, yet the underlying causes show no signs of easing. 

The government’s response to mental health challenges

Despite a $1 billion investment promise in the lead up to the federal election, the 2025-26 Federal Budget shows funding for mental health initiatives will be delivered incrementally. This fragmented approach increases the risk that the reforms won’t achieve their intended impact.

The focus areas for this funding appear to include: 

• expanded access to free mental health care
• prevention and early intervention programs
• more digital mental health services
• better integration between mental health and other care services
• potential reforms in funding models, workforce development, and service delivery frameworks

While all of these make sense in theory, there are still many questions about how they will work in practice. The system remains fragmented across federal, state and territory lines, and many people – especially Indigenous Australians and those in rural areas – struggle to access timely and culturally appropriate care.

Staffing is a major challenge, as persistent shortages of trained mental health professionals place pressure on the system. Cost is also a significant and ongoing issue. A national survey by Mental Health Australia found that 20% of people see cost as a barrier to accessing mental health support.

Practical steps for mental health organisations

It is promising to see renewed attention on mental health, and the current pledge is a positive step. However, it is unlikely to be enough on its own.

For organisations operating in the mental health sector, the need for more deliberate strategic planning is perhaps greater now than ever before. Rising costs, capped pricing under the NDIS, and limited funding are all requiring providers to do more with less. 

Every dollar spent needs to deliver the highest possible return, both financially and in terms of community impact. For-profit and not-for-profit organisations all have a role to play. Planning must be grounded in what each organisation is set up to do best, and what will make the greatest difference to the people they serve.

Risk aversity from boards and executive teams can be a hindrance to this. There are (of course) significant threats in the landscape, from rising costs to cyber risks. But there are also opportunities such as:

• new delivery models
• partnerships
• emerging technologies 

All of these have potential if organisations are able to assess and address where it is needed. For example, predictive analytics can support forward planning and smarter investment. What services are likely to be in demand next year? How can we map that to workforce needs and digital capabilities? What resources will we need to meet that demand? How can we build in flexibility so staff can move between roles as needs change? 

These are the questions worth answering.

RSM’s specialist healthcare and community team is here to support you in answering these and any other questions. 

You can engage us to assist with:

• scenario planning
• SWOT analysis and market assessments
• risk and opportunities assessments
• cyber security
• business resilience
• data analytics
• benchmarking performance
• drawing on sector-wide lessons learned

All of these can help your organisation choose priorities wisely and build resilience in a strained sector. They will also empower you to be proactive and ensure your business stays financially sustainable, so you’re there to support mental health in the community while having a greater impact on the health of the sector at large. 

For a free and confidential discussion, contact Jaime Lam – Partner and Head of Healthcare and Community – on (03) 9286 8273.