Alexandra Bailey told the Royal Commission into Defence and Veteran Suicide her sister Teri Bailey was 18 when she joined the navy, but within months her peers had turned on her after she injured her knee on a ship, calling her a "seadodger".

"If the officer or commander wasn't watching, people would kick her knee from behind, or pull her hair or pinch her or things like that, very nasty bullying," Ms Bailey told the inquiry on Wednesday.

But it was Teri's attempts to report the bullying, she said, that left her so devastated she never recovered.

"The petty officer that she saw told her to 'shut the f*** up, get out of my office or I will break your other leg and throw you overboard'," Ms Bailey said.

"She believed that. She was terrified, she took it as a death threat ... she couldn't sleep after that."

Ms Bailey said her sister would later make repeated attempts on her life, dying on her 25th birthday in December 2020, five years after leaving the navy.

She said her sibling believed the navy had set out to punish her after the bullying report, including failing to get her proper care for her injury and forcing her instead to do daily marches on a dislocated knee.

By the time the ADF organised surgery, doctors told her the knee was so damaged she would never run or exercise again.

Compounding Teri's distress, she awoke from surgery to discover the ADF had transferred her to a psychiatric ward at a military base.

The commission was told Teri had also been sexually assaulted by another female military patient on the ward, but she felt too petrified to report it.

Ms Bailey told the commission her sister became so frightened of returning to work she went AWOL.

"For her it was like a matter of life and death if she returned to the ADF," Ms Bailey said. "She couldn't handle the bullying and abuse anymore."

Ms Bailey said instead of offering her sister support, the ADF threatened to court martial her and force her to repay her $200,000 training costs.

She said the ADF also threatened her father, Alan Bailey, that they would come to his home on the Gold Coast and kick down his door to get Teri, and charge him and her elderly grandparents with harbouring her.

Commissioners heard Teri's health had improved after leaving the navy in October 2015, but it wasn't until 2020 that she felt ready to seek psychological treatment for her PTSD. Nine months later she suicided.

Ms Bailey said she felt the ADF were targeting and "grooming" young women like her sister to meet their "diversity targets" without warning them of the terrible risks, including suicide rates three times higher among women veterans under 30.

"These are human beings ... they are not lambs being led to the slaughter they deserve respect before they sign their lives away," she said.

"Teri did not sign up to be ... neglected, bullied, ostracised threatened, physically assaulted, sexually assaulted or emotionally assaulted; she never saw combat and was never deployed yet she still suffered PTSD from the abuse and culture of the Defence Force."

Alexander 'Sandy' McFarlane, director of Adelaide University's Centre for Traumatic Stress Studies, told the commission he was "profoundly concerned about the adequacy of care" for the 46 per cent of veterans with psychiatric disorders who left the service with no follow up plan.

Renee Wilson, CEO of Australian War Widows NSW told the commission partners of injured veterans had a critical role to play in helping their spouses recover from serious traumatic injuries

But families were largely ignored by the ADF, and women who tried to advocate for their husbands were dismissed as "the whingeing wife".

Lifeline 13 11 14

Open Arms 1800 011 046

Australian Associated Press