National Archives of Australia director David Fricker told senators on Wednesday morning his institution was at risk of breaching dated legislation due to constraints on funding caused by the government's efficiency dividend.

The dividend was introduced more than three decades ago, and applies an annual reduction in budgets in order to encourage public departments and agencies to find efficiencies.

Mr Fricker said the institution was under pressure when it came to keeping up with public requests for documents and preserving documents and files in ageing formats.

"Where records are being accessed [for] research and they require our examination for release, we have, still, a lot of applications in the queue; we have about 20,000 round numbers waiting to be accessed, examined, declassified and released for public access," Mr Fricker said.

"That's one area where we find it very difficult to keep up with public demand."

The Assistant Minister to the Attorney-General, Senator Amanda Stoker, defended the government's cost-saving policy affecting the institution's ability to undertake its mandate.

"As time passes, we need to find ways to continually improve the way that we do things, and to his credit, and to the credit of his team, Mr Fricker has been doing that, I would suggest, very well," Senator Stoker said.

"Most agencies would like to have more, they would like to be able to access an ever-growing pie [of funding], but if we assess the great work that the National Archives is doing against its resources, I think it can hold its head very high."

A review by former Finance Department secretary David Tune, handed over to the government in January 2020, recommended increasing the agency's annual budget by $70 million to $205 million per year, and increase staff numbers from 334 to 931 public servants.

Senator Stoker said the government had been reluctant to follow those recommendations, given the magnitude of the proposed funding increase.

"If we were to implement the requirements of the Tune review in full, then we would be facing an enormous increase in the funding," Senator Stoker said.

"You can see the magnitude of what we're dealing with here, and part of the reason why we've taken the careful and methodical approach to consultation before we go too far with it."

Mr Fricker said the National Archives was doing the best it could with the resources available, but warned its failure to preserve important government documents could result in a reduction of transparency, accountability and integrity.

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"The principal risk is that we do permanently lose records contained in the archives," Mr Fricker said.

"The difference between the archive and other collecting institutions is an item is in the archives because it is unique, it's the one and only version - so if we lose records, that's permanently, irretrievably lost.

"The memory of a nation would be placed at risk.

"When you lose records of the government then you reduce the transparency and accountability of government, you reduce the integrity of government processes, the trust that people are able to place in government; and, of course, when records are lost, you also lose resources, which are called upon to uphold the rights and entitlements of Australians.

"We are making as much progress as we can with the resources we have."

Mr Fricker said one way in which the National Archives was attempting to meet the efficiency dividend was through voluntary redundancies, and 10 per cent of the archives' workforce, or 24 people, had already left the agency.

He said no plans had been put forward for further staffing cuts, but that they could not be ruled out given rising operating costs.

"I can't rule [further redundancies] out, of course," Mr Fricker said.

"We have properties across Australia, so we have 13 properties. Our property operating expenses represent a very high level, a high portion of our appropriation.

"As those costs continue to increase - they're non-discretionary costs - [then] to manage those non-discretionary costs, I may have to look at making savings measures elsewhere."