Australian companies will be offered cash to test and validate space equipment Down Under, to save the need for them to send such work overseas.
Small and medium enterprises will have access to a $2.5 million federal government fund to improve what Australia can do in space in its own right.
"The Morrison government wants to improve our sovereign capabilities in all things to do with space," Science Minister Karen Andrews said on Monday.
The government is also eager to ensure the nation is ready to launch vessels into space.
It will spend $900,000 to investigate policy issues posed by launches, legislation guiding them and Australia's compliance with international obligations.
The efforts will build upon work already under way in the states and territories.
The $3.4 million worth of commitments are being made through the $19.5 million space infrastructure fund outlined in the budget.
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