Despite recording one of the highest male suicide rates in the state and with the rate of mental health issues higher than the state average, Ballarat has just 16.7 public mental health beds per 100,000 population - the fifth lowest in the state and well below the stage average of 18.6.

And with population growth the rate is forecast to drop to 14.9 beds per 100,000 by 2031-32.

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"The Commission agrees there is a crisis in the supply of acute mental health beds in Victoria. However ... the demand for acute inpatient beds is and will continue to be unsustainable if there is not a much stronger investment in early intervention and community-based mental health services to support people before they become critically unwell," commissioners Penny Armytage, Professor Allan Fels, Dr Alex Cockram and Professor Bernadette McSherry wrote in the interim report.

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The interim report found Victoria's mental health system had "catastrophically failed to live up to expectations" and called for immediate action to prevent further harm.

As a result, Victorians will soon pay a new tax to fund investment in the mental health system after decades of chronic underinvestment.

Commission chief Penny Armytage said the report recommended the introduction of a whole new approach to investment to ensure a substantial and sustainable increase in mental health funding for future generations.

"The time has come to get the funding of mental health services right. This is essential to ensure we can deliver the reforms required to establish a contemporary and enduring mental health system."

"Transformational change is required if we are to redesign the mental health system to meet the needs and expectations of people living with mental illness and their families and carers."

Among the nine recommendations is a statewide rollout of follow-up care for people after a suicide attempt, by funding all Victorian mental health services to offer the Hospital Outreach Post-suicidal after Engagement (HOPE) program. Ballarat Health Services is among 12 hospitals or health services to already offer the service, which provides practical support and follow up for people leaving hospital after a suicide attempt, and works with families, friends and carers so they can better support their loved one during difficult times.

In their submission to the Royal Commission in to Victoria's Mental Health System, Ballarat Health Services outlined high levels of psychological distress and self harm in the region and mental health services struggling to provide for patients living in more remote areas.

According to figures in the submission, the rate of intentional injury treated in hospital per 1000 population in Ballarat was 6.5, more than twice the state average of 3.1.

The Royal Commission's interim report, released after four months of hearings, consultations and receipt of more than 8200 contributions, found one in five Victorians would experience mental illness each year, and almost half of the state's population would experience mental illness over the course of their lifetime.

In 2018 there were 720 suicide deaths in Victoria-more than three times the road toll, and more than 7000 were admitted to hospital because of self harm.

Ms Armytage said this was the first of two major reports by the commission.

"One thing we have heard very clearly is that we are in the midst of a mental health crisis, that the system is failing and not meeting the needs of those who need it most. This must change," Ms Armytage said.

Other recommendations in the 680-page report include:

"There was a period when Victoria was considered a leader in mental health services. That time has passed," Ms Armytage and fellow commissioners wrote in the report.

"We need to redesign our mental health system into one that is compassionate and fair, that values people's wellbeing and puts those living with mental illness at the centre," Ms Armytage said.

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Premier Daniel Andrews promised the government would adopt every recommendation.

"For far too long, mental health hasn't received the attention it deserves. But as a government and as a state, we're going to get serious about this issue - and it's going to save lives," he said.

"Building a quality mental health system from the ground-up won't be easy and it won't be quick. But when the cost of not acting is measured in lives, we can't afford to fail."

Beyond Blue chair Julie Gillard said the report was a step toward significant change. "In Victoria and around the country, there is an unprecedented appetite for change to the way we support people and families affected by poor mental health. The time for change is now and to achieve it, the sector and governments must work together with people with lived experience," she said.

Beyond Blue CEO Georgie Harman said the report acknowledged the necessary reforms would require new funding approaches.

"These vital changes will take time and money, but we must invest in mental health. Modelling consistently shows that for every dollar we invest in mental health, there is a significant return, so it really is down payment for our future," Ms Harman said.

She said the interim report had recognised the importance of universal aftercare for people at risk of suicide, the power of peer support workforces and the need for more support for the social and emotional wellbeing of Aboriginal and Torres Strait Islander people.

She urged state and Commonwealth governments to work together to make prevention and early intervention key parts of any systemic change.

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