By 2038, the Department of Health, Disability and Ageing projects demand for psychological services will outstrip supply by a staggering 96.6 per cent.
The shortfall was 57.3 per cent in 2025, according to the department's Psychology Supply and Demand Study report released in April. The abysmal statistics prompted the training overhaul which many psychologists now fear will turn into a box-ticking exercise.
"The mental health workforce shortage tends to get framed as a pipeline issue, like we just need to train more people. But that's only part of the story," says Dr Leanne Hall, Director of Macquarie University's Master of Clinical Psychology.
To become a registered general psychologist, students currently complete a three-year undergraduate degree, an accredited fourth honours year, either a one-or-two-year master's program, and a paid one-year internship. They are then required to complete a period of supervised registrar training after approximately six years of full-time study.
The government has directed the Psychology Board of Australia to replace this with a single integrated five‑year program from 2026. 
The new training, which is under public consultation until June 10, will embed practical placements earlier, remove the national psychology exam for domestic graduates, and introduce a potential exit point after three years into a new "psychology assistant" role.
"On paper and in principle, the reforms look good," Dr Hall says. "The current pathway is very complex. It's confusing for students, for the public, and for services."
But she is urging the government to put money where its mouth is.
"I do think there's a distinct lack of detail in the plans we've seen so far. It's unclear exactly how practical placements are going to be embedded earlier in the training process without any additional funding allocated to the services who provide that supervision."
Practical placements present a significant bottleneck to workforce training, she says. Most mental health services are under acute pressure, which limits their ability to take on and support registrars.
"If we truly want to address Australia's mental health crisis, we cannot place that burden on the shoulders of our graduates alone," Dr Hall says.
"At present, there are limited employment opportunities for graduate psychologists within publicly funded services, where the need is greatest. As a result, many graduates move directly into private practice, leaving significant gaps elsewhere in the system.
"In short, this is not simply a supply problem, it's a system problem."
Australian Psychological Society President Dr Kelly Gough describes underinvestment in the profession as "chronic".
"The number of psychologists is growing, but average working hours are declining. Capacity isn't increasing at the same rate, even as demand grows," he said in response to the supply and demand report.
Gough said that increasing workforce numbers alone will not resolve the issue. "This is not just about how many psychologists we train. It's about whether psychologists can sustainably work where they are needed most."
The economic and social costs of not funding these services are already plain.
Two in five Australians aged 16–24 experienced a mental disorder in the last 12 months, according to the most recent National Study of Mental Health and Wellbeing.
"The Australian mental health system is funded for through-put," Dr Hall explains.
"It's designed for psychologists to see a maximum number of clients. Get them in, get them out. When someone presents with complex mental health needs, you can't see them for 10 Medicare sessions and assume they'll fine. That's not how mental health works."
The government continues to invest in early intervention services such as the free Medicare Mental Health Check‑In, headspace centres, and Family Mental Health Support Services, which Dr Hall likens to an 'ambulance at the bottom of a cliff.'
"Better Access (Medicare) was not designed to support people with complex or high‑acuity presentations, yet in practice, there is often nowhere else for these clients to go," she says.
Public mental health services tend to have narrow eligibility criteria and long waiting lists. Without access to these services, the alternative is private care. But seeing a psychologist without a Medicare referral is often prohibitively expensive.
"This is where significant equity issues emerge, with access to care increasingly determined by a person's financial capacity rather than their level of need," Dr Hall says.
Source: Australian Bureau of Statistics.
So where do the people who can't afford private therapy go?
"People are left cycling between short‑term supports, usually emergency departments, or systems that were never designed to provide ongoing mental health care... including the justice system."
She is calling for coordinated state‑based investment at both the lower and higher ends of the public psychology sector.
"If you want more clinical psychologists and psychiatrists to be supporting patients with complex mental health, then you need to create funding structures and community-led care models that can actually support that."
"Most of my students would prefer to work in the public sector," Dr Hall adds. "They got into psychology because they want to help people, and not just the ones who can afford it.
"The need for them is there. The numbers of psychology students are there, so the public roles must be there. If not, we'll have more graduates becoming private therapists and end up right back where we started. For me, it's the elephant in the room."
