Australia's biggest research organization has faced tough questioning in the national parliament over its financial management after it had to reduce its estimates of future external earnings. But the organization says the fall is just a blip caused by legal tussles over its intellectual property and the fact that much of its income is now in the form of people and equipment rather than cash.

The Commonwealth Scientific and Industrial Research Organisation (CSIRO) has a turnover of nearly Aus$1billion (US$750 million), two-thirds of which comes from the government. Earnings from non-governmental sources, such as industry, are estimated to fall by nearly Aus$184 million over the next four years — a humbling blow, critics say, to chief executive Geoff Garrett, who had pledged to boost such external revenue.

The opposition Labor party also attacked the agency, at a parliamentary hearing on 31 May, for frittering away funds on entertainment and the chief executive's home renovations. “The Australian community is rightly asking: what's going on with CSIRO?” says Jenny Macklin, Labor's shadow minister for science. “It's time we got an answer.”

This bad publicity for the agency follows earlier criticism of its controversial diet book and accusations that its climate scientists were prevented from speaking out about climate change (see Nature 439, 896–897; 200610.1038/439896b).

But CSIRO management has hit back, arguing that there are sound reasons for the revised forecasts. About Aus$121 million of the shortfall is due to delays in earning money from the agency's patents, it says. Legal cases over patent infringement, including a battle with information-technology giants Microsoft, Dell and Hewlett-Packard over a patent on wireless technology, are partly to blame. “Until we know the outcomes of those legal cases, we have recalibrated so as not to take into account revenue from those sources,” says CSIRO's chief finance officer, Mike Whelan. “When we know the outcomes, we will revise the estimates.”

Officials say the rest of the shortfall results from industry giving people or lab equipment, rather than cash, to collaborative research programmes. Whelan says this practice is increasing and isn't counted as revenue.

Of the Aus$750,000 spent on renovating the chief executive's abode in Canberra, CSIRO officials say it was entirely reasonable to renovate the “run-down” building, which is heritage-listed, and to transform it from offices into a liveable residence.

Hospitality' is not about executives going off to restaurants and drinking top-shelf wine.

They also took umbrage at accusations of corporate excess after it was revealed that the organization racked up a Aus$1.4-million ‘hospitality’ bill in the past financial year. According to Whelan, most of the money was spent on scientific conferences and meetings to plan research. “It's not about executives going off to restaurants and drinking top-shelf wine,” says Whelan. “It involves bringing scientific collaborators together — and, yes, sometimes we give them a cup of tea.”

Staff morale, already low according to annual staff surveys, may dip further with these recent developments, says Michael Borgas, president of CSIRO's staff association. CSIRO has undergone significant changes since Garrett took the helm in January 2001, with more priority-driven research and pressure for commercial outcomes. The biggest concern, according to Borgas, is that the organization may be pushing ahead too quickly before having successfully persuaded staff of the need for change. Notably, no staff survey is being conducted this year.

Perhaps most galling for staff — who face more job cuts over the next few years — is the revelation that Garrett earns Aus$478,980 a year, whereas senior researchers' wages typically fall below Aus$100,000. And, according to Labor, more CSIROsenior executives than ever are earning over Aus$300,000.