Australia's emerging space start-up environment is providing opportunities for Australia's domestic space and defence industries (Source supplied)

With the announcement of the Australian Space Agency in the May budget, the nation is taking its first tentative steps into the final frontier. For Dr Jason Held of Saber Astronautics, the Australian start-up environment provides some unique opportunities for developing Australia’s sovereign space agency and supporting industry.

With the announcement of the Australian Space Agency in the May budget, the nation is taking its first tentative steps into the final frontier. For Dr Jason Held of Saber Astronautics, the Australian start-up environment provides some unique opportunities for developing Australia’s sovereign space agency and supporting industry.

In the latest issue of 'On Point', Dr Held discusses the Australian Space Agency, the role start-ups will play in developing Australia's space industry, the opportunities for the nation's defence industry and the exciting new potential for the economy and defence sectors.

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Phil Tarrant: I just wanted you back in the studio today Jason so we could talk about this space agency. I remember our last conversation I had a question, and I'm drawing ... a long bow maybe of my memory, but I asked you a question around the culture of collaboration in Australia around space and space industry, and whether or not we had the leadership and the drive and the leadership to actually be a key player on the international stage. Are we getting towards that now, do you think, with the announcement of a space agency?

Jason Held: Yeah, I think the announcement of the space agency is a first step. And the problems that we've had in the past have not gone away because, let's face it, we haven't really given the space agency enough time to do anything yet. In fact they have not officially set up, we just know that the money's on the table. They're definitely standing up and there's nothing to stop it now. Watch this space, it's not going away.

The lay of the land in Australia has always been, I guess the number $3 billion comes to mind. We spend $3 billion a year on space stuff, and a lot of that is satellites and data, and that number goes up a little bit sometimes if say NBN Co wants to buy a new product, a new satellite, or Optus, we tend to add that to it.

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Phil Tarrant: So what is this new landscape of space in Australia? Are we at the beginning of something which is going to be-

Jason Held: It's going to be superb. And you could say that conclusively from what's happening in the broader market. And you could say that what's happening at the ground level in Australia, right? So the market is superb. It's a market that's $420 billion Australian worldwide. That's the global space market including upstream and downstream and everything in the middle and launch and LEDs on your spacesuits and things like that. That number is expected to triple over the next decade, and part of the reason for the tripling has to do with population growth, but it also has to do with new technologies as well as new strategies that other nations, especially the United States and the UK, are taking to commercialise, and that commercial growth is starting to drive some new directions that we hadn't considered in a few years.

Phil Tarrant: I'm still on a learning curve myself around space. What does that entail? What is the space industry? Where does it start, where does it end?

Jason Held: Oh, boy. Little questions, right. Let's go right to the meat of the issue. You could take any space mission and thumb in the air it, rough approximate one-third of the dollars to launch, one-third is the operation, which includes customers and sales and things like that, and it also includes ground station and mission control. And then the other third is the actual manufacturing for the satellite. So if you take that [$420 billion] and divide it by that you're gonna see give or take a few billion here and there. What's a few billion between friends right?

Phil Tarrant: In Australia we love innovators, we love disruptors, we love people who champion a cause and I think we established the opportunity for a domestic, sovereign space sector is considerable. But I'm just trying to work out how big that's going to be and who's gonna be the big players?

Jason Held: Well, right now we don't know who the big players are gonna be. I think the current big players are very happy being where they are. They don't want change. And change is happening whether they want it to or not. But I think they're in sectors which are fairly stable. So Optus and NBN Co are gonna make money over the next 10 years and you're gonna see their revenue increasing because of nothing to do with space, it has to do with population and the amount of data we're using. And Australia is a country that has always been a bit data hungry, I mean if you look at NBN Co particularly and the politics around that.

A lot of that is driven by our need and our interests at the consumer level. But what you're gonna see and what you've actually started to see, I think last time we talked there were about 30 new space companies in Australia. That's now 90. So 90 new companies that are doing space.

Tripled in nine months. Well I think what happened is a few were stealth mode when we were talking last and they came out. But we're looking at roughly ... We are the per capita fastest growing new space market in the world. We're growing faster than Silicon Valley ... Again I say per capita because we're a country of 25 million people. But I like to compare Colorado with Australia sometimes, because Colorado's got about a $3 billion size for their market, they're one of the top three states in the United States for space. And they're also, up until the last year, a state which was very heavily on big companies like Lockheed and Northrup, Ball Aerospace and didn't have a lot of start-ups.

And when we opened a lab in Colorado they're like “Oh, cool. A start-up, how can we help?” Kind of thing. And we were novel to them as well, in a similar way as we were here in Australia. So when I look at these 90 new companies, the questions I ask myself are how many of them have their investment. Or customers. Either one's fine with me. I mean customers or investment, you've got money to do stuff. About a third of them. And that's been consistent over the last two years. About a third have received investment. From seed to series A, we just now have our very first series B company, raised about $15 million through main sequence ventures and CSIRO and an American company came in to help out and that's OK.

But it just shows that investors have an interest and that you're seeing some normal innovation cycles, I guess that's the best way to see it, in Australia right now.

Phil Tarrant: That's the culture of financing, investing, growing. Angel investors, seed investors, institutional money is gonna start flowing into the sector as soon as they see bigger upside return. How sophisticated are these 90 emerging space business to actually go out there and persuade someone to give them a hunk of money to help them do some cool stuff?

Jason Held: It's a mix ... Australia's always been a bit of a risk-averse kind of a country. So if you look at the types of businesses that are coming out in the US and comparing that with the Australian ones, the Australian investors are kind of pushing the Australian companies to be more consumer-focused at the get-go. And that's a double-edged sword. That means the types of businesses that have grown ... And that's a generalisation because there are a couple of companies, there is one company that is doing launch. Doing some really nice rockets at the moment out of Queensland.

There's a company doing defence radars and things like that. And I'm keeping an eye on them, I've seen some really good potential there for Australian tech. But the majority of the companies, their investors will give them their seed funding and say “You know, don't try and put a satellite out just put a sensor and put it on a UAV, we'll do a satellite later.” And I'm a little worried about them. Because I think they'll get caned by the Americans who are just gonna put a bird up there and do some really exotic stuff that's high risk that has really high reward. And a lot of these companies are getting American competitors as well.

And that's another thing, I have to kind of push hard against the Australian government and say look, ... it doesn't make you look better when you invite a US start-up into Australia saying "Hey look, here's our new start-up company. It doesn't work."

Phil Tarrant: It's gotta be homegrown. Where's a natural home do you think for Australian space businesses? Should we get involved in the launch game, which very much is very commoditised. That's getting stuff up there. As many as possible for as many customers as possible. Or do you think our talent as a nature is better directed elsewhere?

Jason Held: I'm gonna change the question a little bit on you, because I think a lot of people are thinking in this way, and I think it's gonna hurt us in the long run if we say... Like NSW might be tempted to say, “Hey, we're New South Wales, we've got great robotics. We're gonna be the robotics state for the space agency.” South Australia's gonna say, “We're gonna make satellites.” Victoria has said, “We're just gonna do the data. That's what we do, that's what we're good at.”

The mistake is the innovators get constrained. You get these really narrow innovation paths. So, if I'm a launch company making really good rockets out of Melbourne, I'm not gonna get state support, the investor is gonna say but we're only here to do data, it's Melbourne. And then my innovation, my technology, my brainpower is gonna go away. Or I'm gonna leave. And that's not good for the long term prospects. So my vote, for what it's worth, is I like the idea of Canberra being the bureaucratic headquarters for the space agency. It makes sense. The government's there, it should be there. I think each state should have an innovation hub. An innovation hub, not a manufacturing hub. The company's that join this innovation hub do their own manufacturing.

Because these days you don't need a major facility to make a satellite. I know companies that have built their satellite out of a garage for less than half the cost of a boost juice franchise. You don't need a clean room, you need a clean bench. These things are much cheaper. So anybody who's saying we're gonna do a specific type of innovation because I think that we wanna focus there, they're gonna have a really hard time competing against the Americans and the Europeans when they try and get those products out on the market.

They're some good parallels, and the reason why I step back a little bit from these good parallels is because the reasons why NASA was formed in the first place are not the reason why NASA exists today, so we're thinking along the lines like Australian Space Agency like a mini-NASA kind of thing. Alright we've got small amounts of money distributed out, then there's another argument, "Hey, we don't want to distribute 'cause we don't have enough money to distribute." And that's tactically sensible. If you're thinking of yourselves like a mini-NASA.

NASA does work in this way because they pump a lot of money, they pump billions of dollars into their space program and ... Let me step back. A space agency, let's define this. A space agency is the national implementation arm of that nation's space policy. So if you think of it that way, the US Space Agency's goal is not to go to the moon. It isn't. It is to have jobs in the regions which these space programs are. Which is why the major rocket program, which is about to get cancelled, SLS, has gone on even though SpaceX is undercutting them by a significant amount of money. So you got a commercial company that's undercutting in price this nationally funded program that they could not cancel because that region of Florida would lose a whole bunch of jobs.

And they're sitting there thinking what do we do with all these jobs? This jobs program is about to get a punch in the face. So NASA's trying to retool to be a commercially run space agency, while Australia is starting from ground zero. Blank piece of a paper. We are a start-up space agency. So we could do it any way we want, any way that makes sense to grow our infrastructure the way we want. We're not constrained.

Phil Tarrant: The market will grow the market. The government, federal and state, have a role to play to make sure that they create their environment for innovation and actually set the direction, set the agenda. And then corral this disparate space community, I'm gonna call it that rather than an industry at the moment, to go ahead. So what do you think the government's got to get right. What does the government need to do to help Australia embark on this path of space growth? When are we gonna see a dedicated space industry minister?

Jason Held: Well the most important thing is acquisition from local content. Most important thing is ... And actually defence innovation hub, the Australian defence is in general ahead of the game with the rest of the Australian industries. But anytime you have a space product there needs to be request for tenders that tiered suppliers can enter the game. And that's the missing bit, because right now, and you think about the latest [budget] ... We had like $300 million for space, $46 million for the space agency, the rest of it was for projects under geo-sciences Australia for what we deem to be critical infrastructure to have. Like augmentation to GPS, which from a defence standpoint is critical for sure. When you ask them, the habit is we'll just buy from the Americans.

I said, "Whoa, whoa, slow down. There's all this technology you're missing out on if you do that." "Yeah, but we trust the Americans." That sort of thing, like the US, we gotta take something from the US. Small business innovative research contracts, small contracts that small business can apply for, compete for, that they can get in on the game. Everything else I think that the government can do is secondary. It's not about the amount of money you put on. It's about how you spend the money you're currently spending.

I think there are a few ministers who would wanna take that one up. And in fact several states have state ministers who said, "I will manage it for the state." Which I think is very positive. I don't see an immediate benefit from it, but I think from a long-term I think having government engaged can only help bring together the things that government is saying we wanna buy versus that local content and starting to add pressure to the procurement managers to make sure that happens.

Listen to the full Defence Connect podcast with Dr Jason Held of Saber Astronautics here.