Today, the government announced its "solution" to this: a partial re-merger of the CRIs, into four new "public research organisations". Which means years of restructuring, layoffs, and chaos, all of which will affect the ability of these organisations to actually do science. Not mentioned in the announcement: any change to funding, either the amount or the model. Which means it only (partially) fixes part of the problem. Because if funding remains fixed and on a commercial model, then the new PROs will simply engage in the same inefficient, pathological behaviours as the old CRIs, because that's what the funding system incentivises.
Interestingly, the Science System Advisory Group report which underlies all of this recommended going much further, with a complete re-merger of all CRIs into effectively a new DSIR, plus a lot of changes further up the chain to reduce duplication and ensure coordination across government and with universities. Its unclear how much of that is happening, though the government has seized on the recommendation for a new agency to try and attract venture capital and multinational research efforts.
Whether this ends up as yet another expensive, failed, pointless restructuring done just to give the impression of Doing Something remains to be seen. Funding decisions are the key, and there's meant to be another SSAG report on them due out sometime. But if they do this restructuring without changing funding, then I think its really just a wasted effort.