The mental health system may be making us sicker

Meanwhile, people with severe conditions are being overlooked. According to the Productivity Commission, about half of all Medicare-subsidised mental health services go to people with mild or moderate symptoms, while those with severe, life-threatening psychiatric illnesses receive fragmented care or none at all. This is not an argument against helping people with mild distress. It’s an argument for triage when resources are limited. Currently, a person with schizophrenia and a stressed university student compete for resources from the same pool. This is compassion without proportion.

The recently announced Thriving Kids program, a multi-billion-dollar early-intervention initiative, represents a critical test. It could support children without diagnostic labelling, expect developmental catch-up, and measure success by how many children avoid long-term dependency. Or it could become another pipeline channelling children into permanent therapeutic identities. How we design it will reveal whether Australia is ready for genuine reform.

Real reform requires two fundamental shifts. First, eligibility should be based on functional assessment, what people can do in daily life, rather than on whether they meet diagnostic thresholds. Second, providers should be rewarded for recovery and helping people return to ordinary life, not for enrolling and retaining them in treatment.

Alongside these changes, Australia must rethink how care is sequenced and targeted, address social and institutional causes of distress before medicalising them, and measure success by recovery rather than activity and expenditure.

None of this means abandoning people who are suffering. Severe psychiatric conditions require intensive, often lifelong support, and those affected should receive it without question. But drawing millions into treatment pathways dilutes resources, creates dependency, and teaches people that normal distress is pathological.

A humane system sharpens compassion by distinguishing those who truly need lifelong care from those who need understanding, structure, and opportunity to recover. It celebrates discharge as achievement, not abandonment.

If the twentieth century was the age of diagnosis, the twenty-first must become the age of recovery—measured not by how many Australians we enrol in the mental health system, but by how many no longer need it.