Australian space industry hurting post government spending cut

The Australian private space sector is facing uncertainty after the government cut a program worth $1.5 billion, and the current government is seeking to reduce spending to address a deficit.

Australian space sector concern about future funding

In June, Australia canceled the National Space Mission for Earth Observation program, which would have cost over a billion dollars. This ambitious program aimed to incentivize the private sector to build satellites for various purposes, including weather monitoring and GPS services. Additionally, it would have created numerous high-skilled technical jobs within the country through lucrative contracts for private companies.

As a result of the program’s termination, the private sector must now seek alternative sources of funding. However, the private sector has been relatively quiet recently. Historically, government contracts have played a pivotal role in funding and supporting companies in the space industry since the inception of the space age in the 1950s.

With the Australian government signaling its reduced interest in funding the space sector, private investors are hesitant about investing in the industry. As a result, Australian-based companies may consider relocating overseas to attract better investors and potentially compete for contracts from other nations.

Is government led funding the future or the past?

Experts interviewed by the Australia Broadcasting Corporation shared their insights on the program’s termination and its implications for the sector. One Australian company named Fleet, however, remains optimistic as it has a different idea of how the sector works.

“The Australian space industry is really commercially-led,” Matt Pearson, Fleet Chief Exploration Officer and cofounder said. “The [space] agency has been set up to fuel a commercial space industry, which is very different from how other agencies have done things in the past.”

Traditionally, governments in the US, Europe, and elsewhere significantly influence the success or failure of space initiatives through contracts. The theory is that space is expensive to get started and to keep moving forward and the government can afford to be bold and fund unprofitable programs. To make those plans a reality, the government partners with the private industry to help develop the technology and then pays them for its services. Private companies are then allowed to commercialize the tech.

Examples include SpaceX’s Crew Dragon spacecraft and eventually future space station technology and Moon access.

However, Pearson raises the point that the space industry has matured to a level where it may no longer need extensive government subsidies and contracts to establish itself. Similar to the tech industry, investors are now willing to support companies with substantial potential and groundbreaking ideas.

Numerous investors recognize space as the next major lucrative sector and invest in companies such as SpaceX, Rocket Lab, and Planet. However, even in the US, where private capital is abundant and space startups are numerous, government contracts remain a decisive factor in their success.

The ongoing developments in Australia present an intriguing experiment: Can a space sector thrive in a country that does not prioritize space, or will Australia miss out on the opportunities in the new commercial space race?