Clothing manufacturers say they are being ripped off by Federal Government policies that favour cheap imports, warning it could one day mean Diggers wearing foreign-made uniforms.
The Council of Textile and Fashion Industries of Australia's complaint emerged as part of a Senate inquiry into Commonwealth procurement practices, with other groups and unions also demanding a fairer go for local businesses bidding for work.
Australian paper manufacturers told the inquiry bureaucratic penny pinching had led to Federal departments sourcing 55 per cent of their copying paper from Asia and Europe.
Australian Paper, which makes the Reflex brand, said it generated revenue for all levels of government equivalent to $1.81 for each ream of A4 paper it sold but procurement rules ignored this.
The Australian Industry Group said slowing economic growth should spur the Government to support local businesses instead of hunting for short-term savings.
The Australian Council of Trade Unions said contracts should only be awarded for goods to be sourced from overseas when there was evidence they were unavailable domestically.
The textile council said supply channels must be recognised as a matter of national security, pointing out that the US military must use local providers irrespective of perceived cost.
Its submission said though the Australian Defence Force had decided clothing manufacturing was a priority industry to remain in Australia, business investments could be easily undermined by a decision to choose a cheaper import. "There is a risk that we spend a lot of money developing capability in Australia and then it loses out to a price and quality inferior item from overseas," the submission said.
The council also criticised a requirement for companies to be audited by the textile workers union to show they were an "ethical manufacturer" to be eligible for Federal contracts. Overseas suppliers were exempt.
Four local companies have ADF contracts expiring in 2017, requiring them to weave and stitch fabric to produce standard combat uniforms in Australia. In 2010, Defence rejected an Australian clothing manufacturer's proposal to source material from China to make extra uniforms.
The Finance Department, which oversees public service procurement, defended the policy of not preferencing Australian goods, saying the core aim was achieving value for taxpayers.
Its submission said the Government had bought about 93 per cent of services from Australian suppliers totalling $60.2 billion over the past three financial years. About 60 per cent of goods were bought from Australian suppliers totalling $28.7 billion.