Veterans advocates have backed the spending measures detailed in Tuesday's budget as progress in fixing a compensation claims system that has drawn bitter criticism from ex-services personnel.

The Department of Veterans' Affairs will spend $166 million over four years upgrading its IT, improving cyber security and speeding its decision making for claims.

RSL national president Robert Dick said the funding wouldn't solve the department's problems overnight, but was a step to improving its services.

"It's going to be money well spent. The information they have is confidential and quite sensitive and it needs to be protected," he said.

The funding comes after the government allocated $24.8 million over two years from 2015‑16 to develop a business case to simplify the DVA's business processes and replace legacy IT systems.

Growth in Australian ex-services personnel numbers had increased the DVA's workload and put pressure on its system, Mr Dick said.

The government has given the department $13.5 million in 2017-18 to reduce its backlog of claims and speed processing times for veterans seeking compensation and rehabilitation for injuries and conditions acquired during service.

Its new ICT systems will leverage the Department of Human Services' IT capabilities.

The changes will come as the DVA cuts 43 staff members and its funding rises by $58 million to $438 million in 2017-18.

A Senate inquiry into suicide by ex-services personnel is investigating the progress of agency reforms, and how it assesses claims.

Reforms preparing the department for digital changes passed the Senate in March after it voted to strike out provisions letting the agency release personal information when "in the public interest".

Claims decisions against veterans must be referred to a person authorised to consider and make a determination on a claim under the legislation.