The Digital Transformation Agency, best known for creating the app, will be stripped of 28 staff members over the next year, with its total budget being slashed by a fifth.

Budget documents show the agency will face a drop in funding from $425,000 to $336,000 over the 2021-22 financial year.

It comes as the government has committed $1.2 billion over six years to support its aspiration of becoming a leading digital economy and society.

The announcement will see major investments in artificial intelligence capability, drone technologies and digital infrastructure investments, along with a recommitment to ongoing services delivery.

Digital initiatives, including a MyGov rebuild and the MyHealth system, also received more than half a billion dollars in Tuesday's budget.

While the DTA was given an additional $10 million to support the government's digital transformation priorities, it represents less than 1 per cent of the total announcement.

Labor's spokesperson for cyber security, Tim Watts, said the agency had become a scapegoat for the government after the COVIDSafe app failed to live up to Prime Minister Scott Morrison's promises.

"What this shows is the DTA has taken the fall for the pup Scott Morrison sold Australia in the COVIDSafe app," Mr Watts said.

"Despite his continued technical failures and the COVIDSafe app costing taxpayers $100,000 per month, Scott Morrison's good mate Stuart Robert gets a promotion and, most insultingly, retains control over the DTA."

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Australia's peak technology body, the Australian Information Industry Association, said it supported the government's focus on growing the digital economy.

Its chief executive, Ron Gauci, said the body interpreted the cuts differently, instead looking at it as a redistribution of funding across a number of initiatives the DTA will play a role in.

"Given the investments made in the budget, we see that the role of the DTA has actually been strengthened and not diminished," Mr Gauci said in a statement.

"It was always reasonable to expect that the extra funding provided last year to address the pandemic response were not required again this year so a reduction is to be expected.

"What we have seen though is a significant investment in the budget for digital programs and initiatives that the DTA will play a significant role in their execution."

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