Mental Health Coordinating Council (MHCC) has called for urgent reform in its NSW Pre-Budget Submission 2026–27, highlighting the growing unmet need for psychosocial support and the critical role of community-managed organisations in delivering cost-effective, person-centred care. With more than 200,000 people in NSW estimated to require psychosocial supports, MHCC is urging targeted investment to strengthen community-based services and reduce pressure on the mainstream health system.

What it’s about

Mental Health Coordinating Council’s Pre-Budget Submission is a formal document provided to the NSW Government ahead of the State Budget, outlining priority areas for investment, policy and systems reform. It is an opportunity for the sector to highlight urgent and emerging needs, present evidence, and influence how funding is allocated.

In this submission, MHCC sets out key asks to address gaps in mental health and psychosocial support across NSW, with a focus on strengthening the community-managed mental health sector.

It outlines a vision where people experiencing mental health challenges can access the supports they need to live well in their communities, rather than relying on crisis-driven care through hospitals and emergency departments.

Background

Demand for mental health and psychosocial support continues to grow, with an estimated 205,830 people in NSW requiring services in 2022–23. This includes people experiencing both moderate and severe mental health challenges.

At the same time, community-managed organisations are facing increasing pressure, now exacerbated by global economic pressures. Services report being stretched beyond their funded capacity, particularly following system-wide demand and multiple workforce challenges. Without adequate investment, this strain on the system risks further reducing service availability and pushing more people into acute care settings.

Why it matters

Community-managed mental health services play a critical role in supporting recovery, minimising distress, reducing hospitalisations and delivering more cost-effective care.

Investment in these services not only improves outcomes for individuals, families and carers, but also reduces pressure across the broader system, including health, housing, and justice.

Without reform, more people will continue to fall through the gaps, presenting later in crisis and increasing demand on already overburdened emergency departments.

Our key asks

MHCC is calling on the NSW Government to:

• Realign funding so that 30% of the mental health budget is allocated to community-managed organisations
• Address workforce challenges to build a stable, sustainable mental health workforce
• Double Community Living Supports (CLS) to reach around 2,000 additional people
• Expand the Pathways to Community Living Initiative (PCLI) to support more people to remain in the community
• Increase Step-Up Step-Down (PARC) services, adding capacity for approximately 2,000 more people each year
• Strengthen cross-government coordination and commit to shared responsibility for psychosocial supports

These recommendations are based on substantiated evidence demonstrating improved outcomes and long-term cost savings when people are supported in the community.

what happens next

MHCC will continue to engage with government and sector stakeholders in the lead-up to the NSW Budget, advocating for investment that reflects the scale of need and the value of community-managed mental health services.

The submission provides a roadmap for reform and will inform ongoing advocacy efforts to ensure people living with mental health challenges can access timely, appropriate support in the community.