Successive NSW governments have failed to address a retention crisis being fuelled by better pay and conditions interstate, the union representing psychiatrists says.
But the state government has baulked at a one-off 25 per cent pay rise pointing to the specialists' high salaries compared to other health workers and the cost to the budget.
The stand-off is being arbitrated over five days at the Industrial Relations Commission in hearings that began on Monday after public hospital psychiatrists resigned en-masse earlier in the year.
Thomas Dixon, a barrister representing the Australian Salaried Medical Officers Federation, outlined a litany of problems besieging the state's psychiatric workforce.
Most notably, the public health system was effectively sub-contracting psychiatric care to short-term consultancies through an increasing reliance on locums and visiting medical officers.
"The system is overwhelmed and driven by crisis," he said in his opening statement to the commission.
"Fatigue (of psychiatrists) has compounded ... the system itself is causing harm."
Psychiatrists were among the lowest-paid medical specialists in NSW with among the highest vacancy rates for full-time staff, Mr Dixon said.
More than 200 of the cohort threatened to resign beginning from January and at least 62 have done so.
Another 72 have shifted from staff jobs onto potentially more lucrative visiting roles.
Public hospital doctors were stretched thin before the mass resignation, with more than 140 of 433 psychiatrist positions vacant in the state.
Mr Dixon said the system was terminally under strain with tens of thousands of patients presenting with mental health conditions to emergency departments each year.
Chris Ryan, a practising psychiatrist with 30 years of experience, said the gradual gutting of mental health services had been the worst he had seen in two decades.
"If you're poor or not rich enough to have private health insurance and you got serious depression, then it's very difficult for you to access timely care," he told AAP.
"What I really want is the government ... to put actual money to improve the system so people who are not wealthy can get actual, good, timely services like they used to."
Mental Health Minister Rose Jackson, who has conceded the state's mental health system is underfunded, said the government made several offers to improve psychiatrists' pay and conditions.
"We have comprehensive contingency plans in place to ensure people seeking mental health support continue to receive the care they need," she said.
Premier Chris Minns said psychiatrists' pay demands were unaffordable.
"It'd be unprecedented in NSW and around Australia to have a particular group of public servants be given a 25 per cent pay increase for one year," he said, adding the government's blanket offer of 10.5 per cent over three years was generous.
A staff specialist psychiatrist's base salary starts at $186,241, topping out at $250,000 for experienced doctors.
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