The National Mental Health Commission says inadequate support is condemning mentally ill Australians to prison, because they cannot be cared for in the community.

The leading health authority says the criminal justice system is full of victims of mental illness, who are further disadvantaged by unemployment, homelessness and discrimination.

Over a third of people entering the prison system have a mental illness – that figure goes up to more than 80 per cent in the juvenile system.

“Many people have moved from asylums as their accommodation... into prisons - the new asylums,” National Mental Health Commission chairman Professor Alan Fels says.

There is a systemic failure to approach many facets of health, with the report saying a mere 7 per cent of people with both a mental illness and substance-abuse problem are treated for the two issues concurrently.

“[The mentally ill] often have their lives cut short by 20 years, they are twice as likely to smoke than the general population,” Professor Fels said.

The National Mental Health Commission’s second national report card on mental health suicide prevention makes several recommendations for improvement.

It has pushed for more national early intervention approaches (with adequate funding), the creation of a national mental health workforce development framework, as well as the creation of a practical guide for families and support services.

The government should also be proactively trying to reduce the rate of suicide and suicide attempts, the report found.

“In Australia the total mental health budget is 6.5 per cent of the health budget when the total burden of disease due to mental illness suggest this could be closer to 14 per cent,” Professor Fels wrote in a letter to the Prime Minister following the release of the report.

“Our current system is not designed with the needs of people and families at its core,” he wrote.

“These needs are wider than health services, they are about supporting recovery and leading a contributing life.”

The commission has now been tasked with reviewing mental health services nationwide.