The Federal Government says its $1 billion industry plan will generate jobs and innovation and strengthen Australia's flagging manufacturing sector.
However, one mining group warns that it looks like an economic plan lifted from Soviet-era Russia.
Under the Government's buy-Australian push, projects worth $500 million or more will be required to consider involving local firms and labour.
It is called the Government's Industry and Innovation Statement, A Plan for Australian Jobs. Under the plan, major projects will have to give what is being called "fair consideration" to Australian manufacturers.
More support will be given to small and medium businesses to help them grow.
Union leaders such as Paul Howes have thrown their support behind the blueprint.
"We can't allow our economy to become a one-trick pony, reliant on one sector at the mercy of global commodity prices," he said.
"We need to rebuild our capacity in sectors like manufacturing and agriculture, because we are a country that makes things."
There will also be as many as 10 manufacturing and innovation precincts set up across the country.
Professor Roy Green is the dean of the Business School at the University of Technology in Sydney and a member of the Prime Minister's manufacturing taskforce.
"It's a plan whose time has come because this is where industry internationally is going - manufacturing industry in successful countries overseas are moving towards the idea of innovation precincts where they can concentrate their activities, develop their capabilities and expertise in conjunction with research and education institutions," he said.
When asked if he was confident this would indeed help Australia's flagging manufacturing industry, Professor Green replied: "Well we don't have much choice."
Damian Oliver, the lead analyst at the University of Sydney's Workplace Research Centre, also gives the plan qualified support.
"It puts local businesses in the frame. What we have today is that global businesses will often have preferred suppliers in their supply chain from overseas, so from the very beginning of the project, they're proceeding on the basis that work will be awarded to international affiliates or international subsidiaries," he said.
"What this does is in a modest but important way reset that expectation and put Australian firms at the beginning of that process.
"Now Australian firms still need to be competitive, and that means they need to be driving innovation and quality, especially in circumstances where they perhaps would struggle to compete on the cost of labour, but it puts Australian firms in the picture at the beginning."
Mr Oliver says the plan is likely to provide some boost to the amount of work won by local firms.
"I think it's a realistic plan that would probably make a positive impact over time," he said.
Greg Evans from the Australian Chamber of Commerce and Industry says he has misgivings about business being told what to do.
"We don't really like the notion of proscription in terms of mandating the purchase of Australian origin goods and services with respect to particular projects," he said.
The Queensland Resources Council says the mining sector is already supportive of local suppliers.
"The facts simply don't support the proposition that we need new regulation," said its chief executive Michael Roche.
He also compared parts of the plan to Soviet-era Russia.
"There's talk about embedding bureaucrats in company supply chain offices. I think the last time we had such sort of embedment was in Soviet Russia with the commissars," he said.
"I don't know what value add these bureaucrats will bring."
In order to fund the plan, research and development tax breaks will be taken away from big business. The budget bottom line does not change, but the accounting is being questioned by Mr Evans.
"You don't help one part of the economy by pulling down another, and clearly the R&D tax incentive has been an important part for large businesses," he said.
"So there's a concern about that, there's a concern about certainty, if you're chopping and changing taxation arrangements."
Professor Green is also disappointed the tax incentives for some of Australia's biggest companies will disappear.
"Ideally it would have been preferable to retain tax credits for the largest companies if they undertake the R&D just as well as smaller ones, but the Government goes into this statement in a constrained fiscal environment," he said.
Tonight Julia Gillard will address members of the AWU at the national conference on the Gold Coast.
It is expected the Prime Minister will emphasise the innovation part of the plan and defend the cuts to research and development, but clearly not everyone has been won over.