Mental health costs Australia $255-280 billion yearly
Mental health challenges cost Australia about $255-280 billion a year, according to new research on psychosocial support.
On 4th August 2026, researchers from the Centre for Social Impact at the University of Western Australia will present the report to South Australia’s Minister for Health and Wellbeing, Hon Blair Boyer.
The study makes an economic case for non-clinical, community-based programmes for people experiencing mental distress.
Psychosocial supports help people build housing, employment, relationships and daily living skills.
Evaluations cited in the report found significant reductions in hospital and emergency presentations.
Researchers also linked these programmes to lower demand for crisis support and cost offsets when people avoid expensive clinical care.
Across mental health outcomes, quality of life and employment, the report found strong results when people can access psychosocial support.
Geoff Harris backs investment
Community-based support can return people to the workforce while improving quality of life and reducing pressure on hospitals.
Australia has barely scratched the surface in measuring the full economic worth of psychosocial support, the report found.
However, available evaluations already show these services deliver value and significant savings.
When peer workers and other community providers deliver support, the approach often costs less than specialist clinical interventions.
Because people stay well across more parts of life, they are less likely to need acute care or crisis responses.
The Productivity Commission valued quality-of-life gains from better mental health at up to $18 billion a year, or $23 billion in March 2026 dollars.
Economists have joined calls questioning the dominance of clinical interventions in the mental health system.
It also argues for a bigger role for psychosocial supports within that system.
Geoff Harris, Executive Director of the Mental Health Coalition of SA, said: “We have known for a long time that psychosocial support is good value, and worth backing. Now we have economic evaluations which also show the results are strong.”
Harris said the programmes improve quality of life, return people to work and divert some people away from hospital and clinical care.
The same release said spending on these services remains a small share of overall mental health expenditure.
Meanwhile, the research argues that stronger investment in community support could ease pressure on emergency departments and help people keep work, housing and daily routines.
