Australia’s mental health system is facing a growing challenge. Most support for psychological distress is delivered in clinical settings, such as therapy sessions funded through Medicare. However, many of the real causes of mental health challenges, like housing, employment, financial security, and social connection, are not addressed by clinical care alone. This creates a mismatch between what people need and what the system provides. As more clinical services become available, more people seek help, which reveals even more unmet need. This is known as the “non-satiation” problem: expanding access to therapy or crisis services does not always reduce pressure on the system. In fact, it can increase demand, especially when there aren’t enough mental health professionals or when services aren’t well integrated.
Recent efforts, such as increasing the number of Medicare-subsidised therapy sessions, have not solved the problem. Demand for care continues to outpace supply. Waitlists remain long, and many people still struggle to access the right support at the right time. Most care is still provided when people are already in crisis, rather than focusing on prevention or early intervention.
KPMG explores why simply expanding clinical services is not enough. Real change means rethinking how we design, fund, and deliver mental health care, so that everyone can access the support they need, when they need it.
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KPMG's report explores why challenging conventional assumptions about risk and accountability as well as introducing bold strategies could help to redesign Australia’s mental health system for the future.
Rethinking supply and demand in Australia’s mental health system
Access to more mental health services in Australia has not reduced the overall need. Find out why.
Redesigning Australia's mental health system
A fundamental redesign is needed to move away from short-term, crisis-driven interventions towards a coordinated, proactive, and outcomes-focused system. This shift requires rethinking how services are commissioned, integrated, and scaled, with more explicit choices about what is being delivered, who it is delivered to, where it is delivered and how it is delivered.
To make sustainable improvements in accessibility, effectiveness, and consumer experience, the following questions should be considered:
Transformation of Australia's mental health system design
Australia’s mental health system is caught in a structural contradiction where we are treating more yet resolving less.
We are facing a non-satiation problem, where increased access does not lead to reduced need. Without redesigning the way care is commissioned, integrated, and valued, we risk reinforcing the pressures we aim to alleviate.
Expanding services alone without structural reform will deepen workforce shortages, dilute quality, and entrench the reactive cycles that define crisis-driven care.
There is an opportunity now to to reimagine what mental health care is, who it serves, and how it helps, and to create a a cohesive, integrated, scalable model that:
- Shifts commissioning models away from activity-based funding and towards value-based care to incentivise long-term recovery, not just service provision.
- Leverages digital tools to enhance accessibility, triage demand, and support ongoing care, rather than simply creating new digital entry points without structural integration.
- Invests in long-term, adaptive, and sustainable system-wide reforms, rather than short-term pilot programs that fail to scale or embed within the broader service landscape.
To achieve true transformation in mental health services, Australia must move beyond reactive solutions and commit to a long-term vision for that is accessible, adaptive, and designed to meet the needs of future generations.
Satiation & mental health: Theoretical foundations
The economic principle of satiation
Satiation occurs when additional consumption no longer increases utility. Many areas of healthcare exhibit some degree of satiation:
- Acute conditions: Antibiotics cure infections, surgeries address physical injuries.
- Preventative medicine: Vaccinations offer long-term immunity, removing the need for repeated intervention.
Mental health care does not follow this model. Demand is rarely satiated, for several reasons:
- Mental health conditions often require long-term treatment, care and support.
- Psychological distress is shaped by social determinants that are dynamic and shifting.
- Therapeutic demand is not linear
- Common mental health interventions can encourage further engagement from consumers, families and carers.
The non-satiation problem in mental health
Mental health care does not conform to traditional supply and demand models because:
- demand is unlimited and expanding
- treatment effects are variable
- lowering barriers to access increases demand
- capacity constraints limit supply.
Australia’s mental health system is currently structured in a way that cannot adapt to this non-satiation dynamic, leaving individuals, service providers, and policymakers perpetually overwhelmed.
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