Abstract
On the basis of the experience of the Netherlands, this critical commentary will argue why activity-based funding (ABF) in mental health care is a disastrous path that Australia should not take. ABF leads to an exponential growth in health care spending as it encourages diagnostic inflation and overproductivity. It also leads to fraud and an increased bureaucracy that goes hand in hand with demoralisation among health workers. And finally, the increasing treatment claims leads to the reintroduction of productivity limitations, waiting lists and ultimately austerity measures in order to halt the untamed growth of spending.
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