Local councils have called on the Victorian Government to lead with a statewide solution to the recycling crisis, with one council slamming a recent funding package allocated to fix the problem as "barely tokenistic".

Key points: The State Government allocated an $11.3 million package to help fix the ongoing recycling crisis

The State Government allocated an $11.3 million package to help fix the ongoing recycling crisis Environment Minister Lily D'Ambrosio also suggested a fourth bin which would carry only glass or only papers

Environment Minister Lily D'Ambrosio also suggested a fourth bin which would carry only glass or only papers One council has demanded the Government match its spending on the recycling crisis

The Government allocated $6.6 million to help councils cover the costs of diverting recycling or sending it to landfill after the state's biggest processor, SKM Recycling, stopped accepting waste last month.

That equates to a bit more than $200,000 per affected council.

A further $4.7 million in grants has also been provided for projects which improve the sorting and processing of recycling waste.

City of Greater Geelong Mayor Bruce Harwood called the combined $11.3 million package "barely tokenistic".

"We need more than a review or a consultant group to tell us the obvious," Mr Harwood said.

"Council can't deal with it on its own, it needs to work hand in hand with the State Government and importantly with the community."

Mixed recycling 'flawed idea'

Environment Minister Lily D'Ambrosio said "one option" was giving households additional recycling bins to separate materials, but she stopped short on stating whether the Government would back such an approach.

"It could be that the fourth bin carries just glass, or it could be that it carries just papers," she said.

"We are very much open to councils coming forward and industry coming forward to propose other options."

Large stockpiles of recyclable material has been left in warehouses across Melbourne after SKM Recycling was made insolvent. ( ABC News: James Oaten )

Putting recyclables into one bin is convenient for residents, but creates a huge challenge for recyclers, who have to separate broken glass from paper and cardboard in order to recycle it.

Port Phillip Mayor Dick Gross said the current recycling bin system had been a failure.

"There is no doubt that the yellow bin with all of the recyclables in one — the comingled recyclables — is a flawed idea," Cr Gross said.

"It's been known to be a flawed idea for some time because of the contamination between the commodities in the bin."

Cr Gross said he expected every council dollar spent as a result of the crisis to be refunded.

"It is unfair that our ratepayers have to bear this cost and we expect every dollar we spend to be covered by the compensation offered by the Government."

Expert calls for state-wide solution

Cheap, contaminated product is often sent overseas, but last year China stopped taking waste that was deemed too contaminated, and this year Indonesian customs announced it would send back 210 tonnes of waste.



"We have a problem of people not buying recycling because it's contaminated," Deakin University waste management expert Trevor Thornton said.

"Businesses aren't buying it, they're not using it, it's going to be stockpiled and sent to landfill."

Deakin University's Trevor Thornton believes a state-wide solution to recycling is the best way forward. ( ABC News: James Oaten )

Dr Thornton said a statewide solution was the best way forward.

"We don't want councils all doing different things," he said.

"One council might decide to do the fourth bin for glass, another might have it for paper and cardboard. Then we have confusion about where we're at.

"This is the time to sit back and do it properly."

Last week, the states and federal government agreed to phase out the export of recyclable materials.

On Tuesday, Prime Minister Scott Morrison announced $20 million to kickstart the proposition.

"Twelve per cent of our plastics are recycled in this country," he said.

"That's a figure that we have to change for the future."

Huge stockpiles of waste created

Thirty-one Victorian councils were plunged into a recycling crisis after SKM Recycling, which processes more than half the state's recycling needs, announced in July it would no longer be able to keep operating.

Some councils have found alternative recycling processors, but many have no alternative but to send recycling into landfill, with an estimated 780 rubbish trucks worth of recycling going to landfill within a week of SKM closing its doors.

Several warehouses in Melbourne's west have also been left with huge stockpiles of SKM waste.

Victorian Opposition Leader Michael O'Brien said the announcement would not stop recycling from being sent to landfill.

"[Premier] Daniel Andrews has known for two years that China is not accepting our recycling anymore — he's been sitting on his hands," he said.

The Greens party, which also expressed some support for an fourth bin solution, has introduced legislation to create a container deposit scheme.

The Government said a draft policy on creating a "circular economy" for recyclers and processers would be released in the next two months.