The plastics and chemicals industry says it has fallen victim to "a broken natural gas market", with manufacturers unable to lock in long-term energy contracts despite Australia's gas export boom.
Ross Pilling, managing director of chemical company BASF's Australian operations, said federal and state governments needed urgently to keep the supply and price of gas steady or risk further job losses in the manufacturing sector.
"A sustainable future for Australian manufacture of plastics and chemicals is achievable," Mr Pilling told the Plastics and Chemicals Industries Association national conference in Melbourne on Thursday.
"But if governments and industry do not take care of a competitive domestic gas supply, ours will continue to be an industry in serious decline."
But in a divergence from the escalating protests from the manufacturing lobby, including Dow Chemical's Andrew Liveris and Manufacturing Australia's Sue Morphet, Mr Pilling said the PACIA did not call for a "reservation" of gas supply for the local market. Much of Australia's heavy industry relies on gas as its energy source.
"We have vast reserves of natural gas and there is more than enough to both support a vibrant and sustainable chemicals and plastics industry and meet export demand," Mr Pilling said.
But Paul Howes, the national secretary of the Australian Workers Union, did renew his call for a gas reservation policy and said prioritising the export of gas meant "prioritising the interests of oil and gas companies over the Australian economy and Australian workers".
"Australia's current position of 'extract as much gas as possible, and send it offshore as quickly as possible' is, frankly, a ridiculous policy to maintain in an increasingly energy-constrained world," he said at the conference.
Australia is set to overtake Qatar as the world's leading exporter of natural gas and Mr Howes said this nullified its advantage of having vast natural gas reserves - all while US manufacturing thrived on cheap energy from its shale gas boom.
"Australian manufacturing - and especially our chemical and plastics sector - requires all the advantages we can muster to compete in a global economy," Mr Howes said.
The peak body for the oil and gas industry, the Australian Petroleum Production and Exploration Association, has consistently argued against gas reservation, saying it impaired local gas supply and affordability, rather than improve it.
Resources Minister Gary Gray and his opposition counterpart, Ian Macfarlane, have rejected implementing gas reservation policies.