Mental health and the Australian economy

Mental health and the Australian economy

It is no secret that mental illness has become a serious problem in Australia.  In fact, most people experience some form of mental illness at some stage throughout their lives.  The Australian Bureau of Statistics reported that during the 2017-18 financial year, 20% of all Australians had a mental or behavioural condition, an increase from 18% in the 2014-15 financial year.  Additionally, 13% of the population experienced anxiety-related issues and 10% experienced depression or feelings of depression in 2017-18 [1]. 

Most alarming is the fact that young people aged 15-24 had the highest proportion of mental or behavioural conditions compared to any other age group [1].  A report by the World Health Organisation has shown that adolescents experiencing mental illness are more likely to have poor relationships, drop out of school, become pregnant, and have higher substance use [5].

Furthermore, the COVID-19 global outbreak has unambiguously exacerbated the mental health issue, negatively impacting upon many through lengthy lockdowns and social restrictions.  Notably, in June 2021 30% of Australians aged 18 to 34 years, 18% of Australians aged 35 to 64 years, and 10% of Australians aged 65 years and over experienced high or very high levels of psychological distress [2].  These statistics again lend to the fact that mental illness amongst the youth is disproportionately higher compared to other age brackets.

A mental illness reduces a person’s overall happiness and wellbeing, often (but not always) entailing a decrease in social and community participation.  From an economic perspective, a person experiencing a mental illness may feel less motivated to be productive at work and may even be more inclined to take days off of work or not work at all.  Therefore, with mental illness increasing throughout the Australian population likely comes a decline in labour force productivity and participation, as well as overall social welfare.  The ensuing economic and policy implications are thus of great importance for the future of the Australian economy.  

A recent inquiry report published in June 2020 by the Productivity Commission outlines relevant policy recommendations to improve the overall mental health of the Australian population so as to increase social and economic participation.  The report marks a significant step in the right direction regarding how we can improve the way we deal with mental health.  A key finding of the report is the improvement in the quality of people’s livelihood, which was found to be valued at $18 billion per year.  The forecasted drop in absenteeism and rise in labour force productivity was also found to bring an additional benefit of $1.3 billion [4].  Many other government and non-government organisations such as Mission Australia and the National Mental Health Commission have also advocated for changes to the way we deliver mental health related services in Australia.  

So, what is currently being done by the Australian federal government to answer these calls for change?  In direct response to the Productivity Commission’s report as well as recommendations from the National Suicide Prevention Advisor, the Morrison Government has announced a $2.3 billion investment into the National Mental Health and Suicide Prevention Plan as part of the 2021-22 federal budget [3].  The investment plan is based on prevention and early intervention, suicide prevention, treatment, supporting the vulnerable, and workforce and governance, forming a central component of the government’s Long-Term National Health Plan for Australia. 

The federal government’s bulk investment in mental health is certainly good news for all Australians.  While there is still more work to be done, it is encouraging to see such large public spending towards improving how mental illness is treated.  Looking toward the future, a mentally healthier Australia will entail a more productive labour force, thus bringing enormous economic benefits in the long run.  Whether this will actually be realised at some point depends upon various other non-economic factors such as addressing the stigma associated with mental health and addressing other related problems such as disabilities, drug-abuse, and domestic violence.  Another important aspect of this issue is the continuing development of the internet and social media, both of which have proven to be significant contributing factors to mental health issues amongst youths.  Certainly, the issue of mental health is not an economic one alone.    Addressing this multi-faceted problem will be absolutely critical in securing the long-term prosperity of the country.


[1] Australian Bureau of Statistics (2018, December).  Mental health (Catalogue no. 4364.0.55.001).

[2] Australian Bureau of Statistics (2021, June).  Household impacts of COVID-19 survey (Catalogue no.  4940.0).

[3] Greg Hunt (2021, May).  Historic $2.3 billion National Mental Health and Suicide Prevention Plan.  Retrieved July 20, 2021 from

[4] Productivity Commission (2020).  Mental health (Inquiry Report Volume 1).  Australian Government.

[5] World Health Organisation (2020, September).  Adolescent mental health.  Retrieved July 20, 2021 from