We test estimators of the galaxy power spectrum P(k) against simulated galaxy catalogues constructed from N-body simulations, and we derive formulae to correct for biases. These estimators are then applied to compute the power spectrum of galaxies in the Stromlo-APM redshift survey. We test whether the amplitude of P(k) depends on galaxy luminosity, but find no significant luminosity dependence except at absolute magnitudes brighter than M(bJ) = -20.3 (H-0 = 100 km s(-1)), where there is some evidence of a rise in the amplitude of P(k). By comparing the redshift-space power spectrum of the Stromlo-APM survey with the real-space power spectrum determined from the parent APM Galaxy Survey, we attempt to measure the distortion in the shape of P(k) caused by galaxy peculiar motions. We find some evidence of an effect, but the errors are large and do not exclude a value of beta = Omega(0.6)/b = 1, where Omega is the cosmological density parameter and b is the linear biasing parameter relating galaxy fluctuations to those in the mass, (delta rho/rho)(gal) = b(delta rho/rho)(m). The shape of the Stromlo-APM power spectrum is consistent with that determined from the CfA-2 survey, but has a slightly higher amplitude (by a factor of about 1.4) than the power spectrum of IRAS galaxies.