A space agency could be on the cards for Australia, with the ACT and South Australian Governments joining forces to spearhead the nation's developing space industry.

ACT Chief Minister Andrew Barr and South Australian Premier Jay Weatherill have committed to working together, signing a Memorandum of Understanding (MOU) they hope will lead to the creation of an Australian space agency.

The Federal Government is already considering the idea, having announced a review into Australia's space capabilities in July.

Mr Barr said the territory had the required expertise and South Australia was more spacious with a history of manufacturing.

"Underpinning the MOU is a commitment to collaborate on building the national space industry and delivering impact nationally," he said.

Mr Weatherill urged the Federal Government to move more quickly and said Australia was one of only two OECD countries without a space agency.

"We wanted to exercise a leadership role in trying to encourage the Commonwealth to overcome decades of inertia in our investment and our policy imperatives in relation to space," he said.

The Northern Territory and Western Australia have also expressed interest in signing up.

What practical impact will this have on the space industry?

An expert says the agreement could have larger implications for Australia's space industry. ( Kenny Allen: NASA )

Astronomer Brad Tucker from the Australian National University said a national space industry would be a significant breakthrough for the country.

"When you look at all the other models, take the NASA model, they work well because you have a whole bunch of different groups doing similar things, but collaboratively," he said.

And Dr Tucker said a national space program could make Australia more attractive to the likes of space powerhouse NASA.

"One of the problems is if I want to go and contact someone from NASA, they say 'who am I going to do this with?'" he said.

"But at the very least if I say 'here in the ACT we already have this agreement between the two states you can work with us freely, you can sign on to this agreement right now'."

Reaching the final frontier without barriers

Dr Tucker said experts could be more creative, if layers of red tape were removed.

"You have barriers of politics, you have barriers of funding, you have barriers of distances and all those require their own paperwork. So that requires extra work, extra signings, extra people," he said.

"It limits what we do best and that is being creative and advancing space technology."

The sector employs 11,000 people in Australia but it is hoped the deal could triple that number.

A key Federal Government announcement about the future of the Australian space industry is expected at the start of the International Astronautical Congress conference in SA next month.