But in this case, the venture involves one of Australia's most important cultural institutions, and the cause is relentless government cutbacks, rather than a failed commercial enterprise.

The National Gallery of Australia is set to close its contemporary art space on the shores of Lake Burley Griffin less than two years after it opened.

NGA Contemporary, which was officially opened by outgoing director Ron Radford in September 2014, will close permanently after its current exhibition ends this weekend.

The space, which formerly housed the Gallery of Australian Design and was empty until the NGA took it over, was intended to display a variety of contemporary Australian artworks, as part of the NGA's campaign towards building a new wing devoted entirely to Australian art.

At the time, Dr Radford said the space, which is owned by the National Capital Authority, would host about four new exhibitions a year.

To date, there have been just three.

Current director Gerard Vaughan confirmed on Thursday that the space would close as a cost-saving measure made necessary by the federal government's continued efficiency dividend imposed on several cultural institutions.

"When the additional 3 per cent efficiency dividend was announced in December 2015, we were obliged to look at every savings measure in tandem with a strategy to reduce staff numbers," he said.

"This is an inevitable consequence of the effects of efficiency dividends which have been imposed on federally funded arts agencies for many years."

But the gallery's vast collection of contemporary art would not suffer as a consequence.

"We always have contemporary art installed throughout the main building, and the recent reorganisation of spaces does in fact offer us new options for the installation of contemporary art in all its forms," he said.

ACT senator Katy Gallagher said the closure of NGA Contemporary was the sad reality of budget cuts imposed by the federal government.

"I spoke at the opening of this space just two years ago when the hope of the NGA was that the new space, located right on the shore of the lake, would encourage more people to see and enjoy the art on exhibition," she said.

"Because of these cuts and the speed by which the NGA has had to find money to return to the government we will lose a fantastic exhibition venue and the NCA will be left to deal with the vacant space this closure leaves."

A spokeswoman for the National Capital Authority said the site would be empty from May onwards, but that it was possible it wouldn't be vacant for long.

"The NCA has received great interest in the space for short-term occupancy from various organisations and will continue to explore ways to activate the ceremonial precinct," she said.

The government's efficiency dividend has been trimming the operating costs of Canberra-based institutions for nearly 30 years, despite bipartisan opposition from ACT politicians and taxpayers.

It has forced national cultural institutions to find nearly $40 million of savings within four years. The NGA alone needs to find another $3.9 million of savings by 2018-19.

In February, the NGA deputy director Kirsten Paisley told staff a number of vacant positions would not be publicly advertised with management considering further saving measures.

ACT Liberal senator Zed Seselja has routinely called for the efficiency dividend to be abandoned, breaking ranks with his federal colleagues.

Opposition leader Jeremy Hanson has also said he does not support any cuts to Canberra's cultural institutions or other areas of the public service.

Greens senate candidate Christina Hobbs said the NGA may have no alternative but to cut jobs.

"The National Gallery - as well as the National Portrait Gallery and the National Film and the Sound Archive - has already flagged that they'll be slashing jobs as a result of these cuts. We still don't have details of how many jobs will go," she said.

"This uncertainty must be difficult for staff, who are being forced to watch all of this play out in the media."