Outraged politicians want new laws mandating that only Australian-made national flags can be used by the Federal Government for everything from flying on buildings to draping the coffins of war dead.
But bureaucrats are resisting the push by crossbench senators Nick Xenophon and John Madigan to change the 1953 Flags Act, arguing it could breach Australia's obligations under international trade deals.
As the nation prepares to commemorate Anzac Day, Melbourne flag manufacturer Carroll & Richardson Flagworld has told a Senate inquiry the Defence Department uses European-made Australian flags on navy ships.
Managing director Wayne Gregory said it was in the national interest for the Australian Government to follow the example of foreign governments and use flags made in their home country.
"The idea that members of Parliament could sit in Parliament House while the flag flying overhead comes from overseas is an insult to every Australian," he said in his submission.
"The worse insult is that flags that are used at the funeral services of returned service men and women could now come from overseas."
Senator Xenophon told _The West Australian _the private member's Bill was prompted by "vague" answers officials gave him and Senator Madigan to questions about whether the double-decker bus-size flag that flies over Parliament House was Australian-made.