The industry has been in free-fall since China changed its recycling standards earlier this year and councils, and ratepayers, have been paying the price.

Warrnambool, Moyne and Corangamite councils have all called for greater government leadership and dedicated funding to search for a solution.

One answer is the state government’s Sustainability Fund, which receives money from landfill levies collected from councils. The fund aims to support “businesses, local governments and communities through a range of waste management, recycling, resource efficiency and climate change programs”.

Warrnambool City Council chief executive officer Bruce Anson said more than $500 million was sitting in the fund.

“This stuff is still a mess, even though it’s not making daily news, it’s causing us still a lot of grief. We want the government to actually make some dollars available to let the businesses, entrepreneurs come forward and say ‘this is how it could work’,” he said.

“What needs to happen is a collection of ideas and some incentive, some opportunity funding from the government to see what’s possible and what’s available. There’s not going to be one solution to this problem. It will be a combination of different outcomes for different places.”

Mr Anson said developing a regional recycling plant could provide some of the answers.

“What we’re thinking about is whether the government should be looking at more localised recycling processing,” he said.

“Be it energy-to-waste, glass separation, be it a separate glass bin from the normal recycling bin. 

“There is a fair bit of cost tied up in the transfer of waste. We’re starting to question whether hauling it all into Melbourne to then go into either a landfill or into storage is environmentally good practice… and if it’s not being used it’s actually negative to the environment.”

Warrnambool City Council manager of city amenity Glenn Reddick said government could play a role in linking councils with industry to find out what products there were markets for. He said regional processing should also be looked at.

“What can we do at a regional level to stop trucking this stuff all over the place?

“Is there merit in councils joining forces, aggregate their waste streams to say Warrnambool’s got six tonnes, Corangamite’s got four, Portland’s got this, here’s what can happen at a regional level if those tonnages are combined.”

Corangamite Shire mayor Jo Beard said the recycling crisis was “a huge concern to all municipalities”.

“I’ve been quite vocal about the almost $600 million sitting in the Sustainability Fund at the state government level. When is that going to come back to us to help come up with some initiatives to help better deal with our recycling? This will be a classic case of when councils should have that access and be able to be helped out with initiatives to better set themselves up for the future,” she said.

Deputy mayor Neil Trotter said it was an opportunity for Australia to develop its own recycling industry. “In Australia there is virtually no one dealing in recyclables in a manufacturing sense or in converting recyclables to energy,” he said. “The technology is available but virtually non-existent in Australia.”

Moyne Shire director of sustainable development Oliver Moles said there needed to be “substantial effort” from the state government, councils and industry to work through possible solutions.

“Everyone acknowledges that this is bigger than just an arrangement with a council and their contractors,” he said. Mr Moles said there would be environmental and social impacts if recycling ended in landfill.

“The last thing any council will want, irrespective of cost, is to just dump everything into landfill,” he said.

“With landfill levies from state government another cost, building municipal tips... the cost of going to landfill is much higher, or is higher than sensible recycling – if we can achieve it.”

Environment Minister Lily D’Ambrosio’s office did not respond to questions.

RELATED: Where is our recycling ending up?