As recyclables collected from south-west residents pile up and risk going into landfill within days, Ms D’Ambrosio said the matter was under discussion and she was not in a position to say more.

She said councils were responsible for recycling in their local areas, in part in response to the Warrnambool, Moyne and Corangamite mayors having called for state government assistance to resolve the crisis.

“There has been a significant market failure in this sector and local councils are responsible, ultimately, for the recycling that occurs through kerbside collections,” the minister said.

“There are significant issues at hand. They are widespread and not isolated to Victoria, and this is an issue that will affect the whole of the country.”

The crisis was sparked by a change in China’s policy which meant it would no longer accept certain recyclable materials from Australia.

Ms D’Ambrosio pointed to the role recycling processor Visy, which deals with contractors that collect recycling from kerbsides, played.

She said the crisis was sparked by Visy triggering a ‘force majeure’ on contracts.

“What is absolutely clear is that the current contracts councils have with kerbside collectors and their processes are not fit for a modern purpose, if you like,” she said. “That is what has led to this situation, and those are matters that certainly councils will continue to have responsibly to negotiate through.

“Our government understands the seriousness of this, and councils understand also their responsibility as the managers and the holders of these contracts and ultimately being responsible for recycling in their local areas.”

The minister said two-thirds of the recycling materials generated in Australia was put back into the domestic economy, but the state government would consider long-term solutions to make the industry sustainable.

South West Coast MP Roma Britnell said recycling collected on Warrnambool kerbs on Thursday night would be forced to sit on trucks due to a lack of storage space.

She said it meant there was a real possibility it would end up in landfill with ratepayers footing the bill.

“This is despite the Minister for Environment Lily D’Ambrosio promising no recyclables would go to landfill and residents would not pay any extra,” Mrs Britnell said.

“The minister and state government have sat idle, trying to shift the blame while still collecting millions in waste management levies from councils.”