Beyond diagnosis: building a mental health system that works

A landmark disability scheme was built on compassion, but captured by a “cash for diagnosis” culture. This is not just a budget problem. It is a human one.

Twelve years ago, the Australian government established the National Disability Insurance Scheme (NDIS). This federally funded entitlement program covers the costs of disability support—a service that was once left to a patchwork of insurance, charities, and underfunded state schemes. The NDIS was an act of compassion, and it has allowed many Australians to flourish despite enormous challenges.

At the time the NDIS was founded, the typical recipient was expected to be someone with a chronic physical disability—cerebral palsy, muscular dystrophy, or the victim of a devastating accident or illness. But this is not what happened. Today, the majority of NDIS recipients suffer from psychological conditions. More than one in three participants in the scheme has an autism diagnosis, and last year nearly three-quarters of new entrants to the NDI were called autistic. Expenditure on autism-related supports alone now exceeds $7 billion annually.

In response, the Australian government has announced a plan to divert children with mild developmental delays out of the NDIS. This marks the most significant reform since the scheme’s birth. It also confirms what critics have long warned: tying support to medical diagnoses has created a system in which labels, not needs, determine access to help.

As Professor Frank Oberklaid of the Murdoch Children’s Research Institute observed, the present system has “not worked for children.” Some with mild difficulties receive “buckets of money,” while others with genuine needs are overlooked.

Families desperate to do the best for their children are nudged toward a diagnosis—autism, Attention Deficit Hyperactivity Disorder (ADHD), or something else—because only then do services flow. This “cash for diagnosis” culture is not just a budget problem. It is a human one. Labels can alter children’s identities, sometimes for the rest of their lives. Children told they are “autistic” or “disordered” may come to inhabit that category, lowering their aspirations and shifting responsibility for progress from themselves to the system.

Unlike a broken leg, which heals and is forgotten, psychiatric labels rarely vanish. Instead of fostering resilience and growth, the label can become a lifelong passport to dependency. That is why the government’s reforms must be understood not merely as cost-cutting but as child-saving: an attempt to free young people from the weight of unnecessary psychiatric branding.

Autism shows how diagnostic categories, once expanded, rarely contract. In the 1960s, autism was considered extremely rare—fewer than one in 2,000 children—and usually involved profound impairment: children who could not speak, who rocked for hours, or who harmed themselves.

In 1980, the psychiatric profession’s diagnostic manual introduced Asperger’s syndrome, a milder form. By 2013, Asperger’s and related conditions were merged into a single Autism Spectrum Disorder (ASD). Suddenly, children with profound disabilities who cannot speak or care for themselves shared a label with bright but socially awkward teenagers.

The result was an extraordinary surge in diagnoses. Between 2018 and 2022 alone, the number of Australians diagnosed with autism rose by 41.8 per cent. Around 30 in every 1,000 Australian children now carry an ASD diagnosis—sixty times higher than in the 1960s.

Entire ecosystems of advocacy groups, specialist schools, and therapy providers have arisen. Many do good work. Yet the broadening of criteria means those most severely affected must compete for the same pool of resources as those with milder difficulties.

Even Allen Frances, the psychiatrist who chaired the DSM task force that expanded autism into ASD, now regrets his role. What was once seen as endearing bashfulness, he says, has been turned into pathology. The ballooning of diagnoses has also fuelled conspiracy theories—about vaccines, food additives, or environmental toxins—that exploit public confusion.

Autism is not unique. ADHD, too, has undergone diagnostic inflation. Once reserved for children who could barely sit still long enough to complete a classroom task, it is now applied to inattentive daydreamers, restless teenagers, and adults who misplace their keys. Prescription rates for stimulant medication have soared. In some countries, stimulant misuse has become a feature of university campuses and high-pressure workplaces. In both autism and ADHD, the consequence is the same: the label unlocks resources, and the line between illness and ordinary difference becomes blurred.

Against this background, the government’s new Thriving Kids proposal is more than a budget repair job. It is an attempt to replace diagnosis-driven rationing with function-based support. Funds would be directed toward needs, not labels. That shift should be welcomed—but only if it avoids the mistakes of the past.

Merely rebadging services without changing incentives will not work. If providers are still paid per therapy session, the treadmill of overservicing will continue. If families still perceive diagnosis as the golden ticket, demand for labels will persist.

What’s needed is a true functional model: support tied to what a child can or cannot do, not to what label a psychiatrist or paediatrician writes on a form. Schools, health clinics, and community services should provide foundational help without requiring a psychiatric certificate. When children improve, supports should taper. When they fall behind, help should flow quickly—without the Kafkaesque wait for a diagnosis.

And this is not just an Australian issue. From the United States to Scandinavia, diagnosis-based systems face the same trap: categories expand without limit, costs spiral, and incentives reward the appearance of illness rather than the pursuit of recovery.

The NDIS was born out of compassion. Its survival depends on hard-headed realism: diagnosis should not be the price of care, nor should labels become lifelong shackles. If a new program can break that cycle, it will not only save the scheme, it will save our children.

An earlier version of this article appeared in The Australian newspaper.