CANBERRA: The government will not adopt a "Buy Australian" policy of giving preference to local firms when allocating multibillion dollar contracts because that would repeat the mistakes of the Great Depression, the prime minister said Sunday.

Manufacturing union delegates are expected to seek a policy change aimed at saving jobs in the global recession when they attend the ruling Labour Party's annual national conference in Sydney this week.

Prime Minister Kevin Rudd said Australia's wealth depended on its access to export markets, which would be compromised by protectionism.

"We need to avoid any form of protectionist measure, which invites retaliatory protectionist measures from economies around the world, and that's what would happen," Rudd told reporters.

"The mistake of the Great Depression in the early 1930s was this: economies believed that the way to get themselves through was to shut their economies down and close their borders to imports from abroad," he said. "The entire global economy shrinks." "That depression resulted in negligible economic growth throughout the 1930s. We're not about to repeat those mistakes here," he added.

Rudd has condemned similar protectionist policies in other countries as damaging to Australian exports and to international trade.

Australian Manufacturing Workers Union national secretary Dave Oliver said a public survey commissioned by his union had found that most Australians want the government to adopt a "Buy Australian" policy to bolster employment.

He blamed a lack of government action for the loss of 76,000 manufacturing jobs in the past year.

"It's no different to what governments around the world have been doing for many years," he added.

Jeff Lawrence, secretary of the Australian Council of Trade Unions, said he expected the unions and the government to reach a compromise on how contracts are allocated.

"Our fundamental position is that if the government is spending ... public money, as it clearly has through the stimulus package, that should be on the basis of conditions," Lawrence told Nine Network television.

"I'm very hopeful that in the next week, there'll be a measure of agreement between unions and the government about means by which the government spends its money," he added.

The government predicts that Australian unemployment will rise to 8.5 percent next year from the current 5.8 percent because of the global downturn.

The Labour government of News South Wales, Australia's most populous state, last month announced measures that give preference to local businesses bidding against foreign competitors for state government contracts to provide 4 billion Australian dollars ($3.3 billion) in goods and services in the fiscal year ending June 30, 2010.