The nation's fast-growing private space industry is sparring with Defence and the federal government over the use of Australia's Woomera launch range testing site.

Australia's private space start-ups, which have ballooned to more than 60 in number over the past two years, would like to use the rocket launch site for anything from nano-satellites and spacecraft to cargo ships that could be sent to the International Space Station.

But Defence, according to several company and government sources, is pushing back. It says the site – a prime piece of Crown land in South Australia two-thirds the size of Germany – is locked up for the next four years. There are plans to use the site to test Australia's problem-plagued F-35 fighter jets.

The reason the private space industry wants Woomera so much as a launch site is because it has all the required approvals to launch things into space. These approvals, which require community consultation, including with Indigenous people, often take several years to obtain.

The resistance from Defence comes as the federal government announced at a space congress in late September that it would launch a national space agency, making Australia the second-last OECD country to have its own.

Few details have been revealed about the agency, such as what it will do, its funding, and who will lead it. A review, led by former CSIRO chief executive Dr Megan Clark AC and an Expert Reference Group, is under way. It is due to report back in March next year.

Meanwhile, state and local governments have been working to try to break the Woomera impasse, which is causing not only a brain drain of local talent to overseas markets, but prevention of Australia tapping into an industry that Canberra plans to invest $10 billion into over the next 10 years, with South Australia vying to become the 'Space State' over others.

But without a local launch site, Australian space start-ups are left with no option but to have an overseas space agency or private company launch their satellites. ASX-listed Sky & Space Global, for instance, utilised the Indian Space Research Organisation's launch facilities earlier this year to launch its first three nano-satellites, designed for telecommunications use in third-world countries. Sky & Space Global's larger constellation of 200 nano-satellites are set for launch within two years.

The issue of a local launch site came to a head, Fairfax Media has learned, at a closed-door meeting at the 68th International Astronautical Congress, held in Adelaide in late September.

Up to 40 industry players, Defence, and federal and South Australian government representatives discussed how and from where Australia's private industry could launch rockets in the short to medium term.

Elon Musk, and behind him a design for space transport, is seen during a presentation at the International Astronautical Congress in Adelaide. Photo: AAP

South Australia, which appointed a minister responsible for space less than a week before the conference, challenged Defence's claim that Woomera was completely locked up for four years.

We will be asking the federal government to sort Woomera out.

South Australian minister Martin Hamilton-Smith

"We will be asking the federal government to sort Woomera out," said Martin Hamilton-Smith, South Australia's minister for defence as well as space industries.

"It is a big resource, one of the best in the world. It is big enough to handle a lot of customers and I think the challenge for the federal government is to figure out how they are going to balance military and civilian use.

"It's historically been under control of Defence. There is now a question as to whether ... the [new Australian] space agency should play a leading role in the future of Woomera; because there needs to be a balance.

The University of Queensland's "HyShot", a hypersonic "scramjet", blasts off from its launch pad at Woomera. Photo: AAP

"Now, that might mean that some of Defence's other activities at Woomera need to find other homes so that they are not needing the Woomera precinct, so that we [as a nation] can concentrate on space. Alternatively, we need to find another location. Either way, it's a Commonwealth problem and I am sure it is being addressed by the review."

Asked whether he believed Defence when they claim Woomera is booked out and unable to be used privately, Hamilton-Smith said, "I think that [claim] needs to be challenged".

Hamilton-Smith also noted his state had launched the South Australian Space Industry Centre, or SASIC, a move designed to demonstrate to the federal government that South Australia wants the recently announced space agency to be based locally.

"The Commonwealth and the state of South Australia have [previously] reached an agreement on access to Woomera for mining; we have reached a formal agreement to allow miners access to the range. So, if we have agreed on that, surely, we can agree on civil access for space," he said.

Woomera was opened for mining in 2014, with the federal government hoping providing access to it would unearth up to $35 billion worth of gold, uranium and copper.

If Woomera cannot be opened for space, he said he was determined to find another site.

"I think a better outcome would be, personally, to see shared use of Woomera," he said. "I know it is a busy site. It was recently upgraded with a very big investment."

In the meantime, Hamilton-Smith said South Australia was talking to the governments of the Northern Territory, the Australian Capital Territory, and New South Wales about "alternative locations" as a plan B.

A Defence spokesperson said it supported co-operation with industry on use of the area.

"The Woomera Prohibited Area (WPA) provides Defence and its international partners with a unique capability for the testing and evaluation of new and emerging war materiel technology," a Defense spokesperson told Fairfax Media. "It is a critical element of Australia's national security infrastructure."

Concessions have previously been made for mining, tourism and Aboriginal title purposes, the spokesperson said, but they add that non-Defence users will be excluded "for safety and security" during periods of testing.

"A major program to upgrade much of the test range equipment and systems is also under way to support new capabilities," the spokesperson said.

Federal Defence Industry Minister Christopher Pyne said what Australia's space agency would do was yet to be decided.

Asked if Australia would be sending people to space, Pyne replied: "The government hasn't got a desire to focus on the headlines in space." He suggested responsibility was best left for NASA rather than Australia, which has never delved into space this way.

"We will be focusing on the practical applications of space and how it can assist us in our national security, in our economic growth, in creating jobs in investment, and in being good international citizens," Pyne said.

UNSW Canberra has signed a $9.96 million contract with the Royal Australian Air Force (RAAF) Photo: Images courtesy UNSW Canberra

The minister went on to say that Australia would focus on things such as "our capabilities in communications, in reconnaissance and surveillance ... in Defence Industry, and uses of space from an economic point of view, like agriculture and emergency services".

Already Pyne has announced one federal government project involving UNSW Canberra and the RAAF building several nano-satellites in collaboration with one another for maritime surveillance, with the first lifting off in early 2018.

But unless a launch site is found locally, it is likely they will be launched from overseas.

"We are giving that attention at the moment," South Australia's Hamilton-Smith told Fairfax of the unknown launch site of UNSW Canberra and the RAAF's nano-sats. "If Woomera isn't available, we would like to see another site in South Australia made available."

Meanwhile, Fairfax asked Pyne if he was pushing his colleague Arthur Sinodinos — the minister responsible for Industry, Innovation and Science who is currently on leave having cancer treatment — for South Australia, his home state, to be Australia's space capital.

"No, I'm not," Pyne responded.

"Arthur Sinodinos is the minister responsible. There is plenty of work to go around for everybody."

As for when we would find out the location of the agency?

"I think we are a long way from making decisions about the bricks and mortar and the geographic location of a space agency," Pyne said. "The space agency sits in Arthur Sinodinos' portfolio ... and obviously, he will be making those kinds of decisions."