Mr Smith says the Government’s focus has largely been on providing humanitarian assistance.
He told ABC1’s Insiders program that it is time to become more involved in dealing with the country’s issues including offering political help to the country’s Prime Minister, Morgan Tsvangirai.
"I’m now giving very serious consideration to whether we can do more, whether we can start to try and help rebuild Zimbabwe – particulary in the health area, on the agricultural area, in the education area," he said.
"There are some risks of course associated with that given Mr Mugabe’s ongoing presence."
Mr Smith also said Australia has offered its condolences to Mr Tsvangirai after a car crash in which his wife was killed on Friday (local time).
Mr Tsvangirai was also in the car and suffered minor neck and head injuries.
He has been flown to neighbouring Botswana for a thorough medical check-up.
Mr Smith has told ABC1’s Insiders he hopes there will now be a transparent inquiry into what caused the crash.
"I yesterday asked our High Commissioner to Zimbabwe to personally relay to Mr Tsvangirai’s key personal staff our condolences at the terrible accident that saw the death of his wife," he said.