Federal Treasurer Wayne Swan says he does not agree that Australian companies should be given preferential treatment when tendering for government contracts.
Unions say a Buy Australia campaign is needed to help local companies hit by the global recession.
They are set to raise the issue at next week's ALP national conference.
But Mr Swan says a Buy Australia campaign would be counterproductive.
"The Government has a very clear view we are not going to go down the road of protectionist measures," he said.
"They have the capacity to cause substantial damage to the economy and to employment and the government is very much on the record as having said that's our position."