Almost one in six people in NSW are living with a mental health condition, yet many aren't getting the help they need until they reach crisis point, a report has found.
The report, released on Monday by the Mental Health Coordinating Council, says NSW is underspending on community mental health services compared to the rest of Australia.
The state spends only 6.8 per cent of its mental health budget on community mental health services, compared to a national figure of 13.9 per cent, according to MHCC chief executive Carmel Tebbutt.
She says the difference has consequences.
"For people in the middle ... who could manage their mental health conditions with the right supports, those services are really missing," Ms Tebbutt told AAP.
"Time and time again we hear that people find the system hard to navigate and often don't get assistance until a crisis occurs."
What this means is more people with mental health issues presenting to emergency departments, with a 76 per cent increase recorded from 2004/5 to 2016/17, according to Ms Tebbutt.
"It's not the best place for people to get support and it's also a very expensive place to provide support," she said.
"What we have called for is investment in three key priorities that would address providing support to people earlier and help them live well in the community."
The priorities listed in the report include expanding supported living services and providing funding to address the physical health needs of people living with mental health conditions, providing 600 step up/step down places and establishing community health hubs.
The greater resources will shift the emphasis from hospital care to prevention and community support, the report claims.
But the move won't only make sense from a health perspective, with figures from accounting giant KPMG showing it's also a better economic alternative.
That research shows the return on investing funding in these areas would pay for itself in the short term and result in significant savings in the long term, Ms Tebbutt says.
"What we've been able to demonstrate is if there was a greater investment in accommodation services, if we could expand the number of people who could access those services the return would be 1.2," she said.
"It's an area of great need and we would call on the government to invest in these areas."
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