Queensland's state forensic lab failed to get police to agree to limit their testing demands when they were putting pressure on capacity, an inquiry has heard.
The state's former manager of scientific services, Michael Lok, says the lab was between $8 million and $10 million in the red in 2017/18.
Forensic and Scientific Services (FSS) executives pushed for the budget to be balanced and it was agreed that all non-essential spending would be capped, an inquiry into the lab heard on Wednesday.
Managers tried to get police to agree to cap the amount of tests as the force's numerous requests were increasing the lab's workload without increasing revenue.
But Mr Lok said there was also a fear Queensland police would be tempted to switch to a NSW state-run lab.
"FSS was a significant science lab and if the police went to an alternative lab for the bulk of its services, it would leave the government with a significant problem with 60 or 70 scientists not having a job," he said.
"But I think we needed to acknowledge that there was a potential there. Police could and have the power under legislation to seek testing from other labs."
The probe, led by former judge Walter Sofronoff, is examining the Queensland lab's 2018 decision not to test samples with tiny amounts of DNA as thoroughly as possible.
The inquiry on Wednesday heard internal discussions about a memorandum of understanding with police had gone on for years before coming to the fore in Mr Lok's first year at the lab in 2017.
The agreement was an attempt to make police limit testing requests without changing to a fee-for-service model.
Mr Sofronoff said it appeared the memorandum was needed to curb "potentially unlimited demand by police".
"So one has to reach a position, either through a financial model or by bargaining through an MOU, to temper the demands of beliefs to reflect the capacity of the laboratory," he said.
Mr Lok said a draft memorandum had been prepared prior to a Queensland Audit Office investigation into the coronial and forensic system in 2018.
But he said the talks became deadlocked over possible funding before the pandemic hit in 2020, which then diverted police priorities.
The inquiry continues, with a final report due in December.
