The review could even spur the creation of new jobs and firms, Industry Minister Arthur Sinodinos told SBS World News.
“It’s about creating new businesses, it’s about creating new jobs,” he said.
“Building on existing strengths, finding areas where we could be world-beating.”
Senator Sinodinos acknowledged the industry calls for a space agency.
“We’re having a close look at that.
“We’ll also look in that context what is the best way to bring policy together - is it through a space agency, a national space office, and what does that mean in practice?”
Australia is only one of two OECD nations without its own space agency.
The review will develop a long-term plan and look at where Australia can compete globally, develop capabilities for both users and providers of space technologies and ways to promote Australian firms in the civil space sector.
Senator Sinodinos said it was a good time for Australia to consider the review given the growth of the US$323 billion (A$420 billion) global industry.
Australia makes up a tiny proportion of the global space economy with a 0.8 per cent share, according to a recent report by the Space Industry Association of Australia (SIAA).
The domestic space industry produces $3-$4 billion in revenue annually and employs up to 11,500 people, the SIAA paper said.
South Australia to push ahead with own agency
But South Australia has criticised the federal government's inaction and vowed to go it alone on its own local industry node of a space agency, as soon as September, if nothing was done at the federal level.
State Minister for Defence Industries Martin Hamilton-Smith said if the Commonwealth failed to act, the state government would look at launching its own structure and organisation before Adelaide hosts the 68th International Astronautical Congress on September 25-29.
The federal government was moving too slowly to establish a national space agency, he said.
"The Coalition is moving at a snail’s pace. At this rate we’ll get to the moon one million years from now," he said in a statement.
"It’s not good enough for Canberra to navel-gaze while the eyes of the world are looking at Australia for leadership when we host the IAC in SA in the coming months."
An Australian NASA?
The SIAA has been championing the establishment of a domestic space agency which it believes could double the industry to $8 billion within five years.
But it’s not exactly a call for an Australian version of NASA, the association’s Peter Nikoloff told SBS World News.
Australia just needs strong leadership at the government level, he says.
“The Australian government should be taking a role – and that doesn’t mean producing a NASA with hundreds of millions of dollars,” Mr Nikoloff said.
“Because of the scale of our country, we’re not in effect going to develop a NASA-type organisation - that’s not really practical.
“What we need in Australia is a very strong and significant leadership team that can drive our policy and strategy.”
That could mean developing Australia’s national security and earth observation capacity, and security of its GPS and communications technologies.
But it could also lead to Australia partnering on space exploration programs, which could in turn help retain human resources.
“That is the stuff that excites the kids – we lose a lot of kids, university students overseas because we don’t have exciting programs.”
An Aussie astronaut's call
Retired Australian NASA astronaut Andy Thomas has also written to the federal government calling for such an agency and offering to meet with ministers.
In April, the South Australian-born astronaut wrote to Defence Industry Minister Christopher Pyne spruiking the benefits of a space agency, including thousands of high-tech blue collar and white collar jobs.
“We are missing out on a rich opportunity for innovation, employment and accessing potential export market,” the former astronaut said in his letter.
“It will change the future of the country in unimaginable ways, and all for the better. It is a winner for everyone, especially the Australian people and the Australian economy.”
Mr Thomas said space-related businesses were going through transformational change with the entry of commercial groups into the sector, such as SpaceX.
“These times create a real opportunity for Australia to make strategic investments in this transformative industry leading, potentially, to thousands of high-tech blue collar and white collar jobs,” he wrote.
“And I am unashamedly pro South Australia in this since it meshes and overlaps so well with existing local defense industries, especially undertakings such as the submarine build.”