Australia's waste industry is being undermined by unscrupulous middle-men contracted to shift rubbish interstate to avoid paying landfill levies.

Key points: Organised waste trade avoiding NSW tariffs by dumping in Qld

Organised waste trade avoiding NSW tariffs by dumping in Qld Qld residents "worried for their health" amid concerns asbestos dumped on vacant sites

Qld residents "worried for their health" amid concerns asbestos dumped on vacant sites Waste illegally dumped on private properties in NSW, Vic

Regulators and governments know about this practice but have repeatedly failed to act.

The Four Corners investigation has exposed an organised network of waste transporting and freighting companies sending waste by road and by rail to Queensland to avoid paying the high New South Wales landfill levy of $138 per tonne.

The trade is so lucrative that the industry estimates the amount of construction and demolition waste now being transported to Queensland has reached about 1 million tonnes a year, almost double official government figures from the past financial year.

It represents around $100 million in revenue lost to NSW Treasury.

The Queensland Newman government abolished Queensland's landfill levy in 2014. Since then, the interstate waste trade has flourished.

It is now cheaper to truck waste to Queensland than it is to dispose of it and pay the levy in the state where it is generated.

Queensland has become known as "the dumping capital of Australia".

Residents 'worried for their health'

Residents in south-east Queensland, where multiple dumps are located, have told Four Corners they are increasingly concerned about what is being tipped down the old mine sites surrounding them.

"We are worried for our health," a group of concerned Queensland residents said.

"We know that there's lots of asbestos that goes in, and when the dumps are closed for the day, people are dumping it on vacant sites when they can't get in [to the landfill]," one Ipswich resident said.

The head of the Australian Council of Recycling, Grant Musgrove, said Queensland residents had a right to be worried about possible impacts on their health.

"They have a right to know, to have transparent process conducted by independent environmental toxicologists to see what impacts there may be," he said.

Illegal dumping to avoid the levy

In NSW and Victoria, another way the landfill levy is being flouted is through illegal dumping operations, where tens of thousands of tonnes of building and demolition waste are being dumped on private properties instead of at licenced landfills.

Four Corners highlighted the case of a large illegal dump right on the banks of the Hawkesbury River in NSW.

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An estimated 20,000 tonnes of construction and demolition waste, including asbestos, was dumped on the privately owned land.

The dumpers avoided an estimated $2.6 million in levy fees.

Just as disturbing are allegations aired during an Independent Commission Against Corruption (ICAC) inquiry into corruption in the waste industry that the local council, Gosford, was complicit in illegal dumping at the site.

Gosford Council declined to comment on the allegation due to the investigation.

One document reveals the NSW EPA was aware of a massive illegal dumping operation from January 2015 but failed to intervene and stop it for almost 16 months despite calls for help from residents.

The EPA says it is preparing to prosecute.

Regulators called to account

Industry insiders told Four Corners multiple state regulators were aware of the burgeoning interstate waste trade and illegal dumping but had failed to rein it in, despite calls from within industry to tackle the problem.

The NSW EPA introduced a law in 2014 designed to stop the interstate waste trade, known as the proximity principle.

It was designed to stop waste being moved more than 150 kilometres from where it was generated, but the law was riddled with holes and easily challenged by industry operators seeking to undermine it.

The head of the Waste Contractor and Recyclers Association of NSW, Tony Khoury, told Four Corners the good operators were now going out of business as they were being undercut by companies transporting waste to Queensland.

Even large landfill operators admit they have been forced by the economics to export waste to landfills in Queensland, rather than pay the NSW levy.

"The NSW EPA is aware of this problem, yet they've failed to do anything about it," he said.

"As we sit here today, there is more than 60,000 tonnes a month that's transported north.

"We were promised that a corporation who transported their waste in defiance of the proximity principle would be fined.

"Nobody's been fined. There's been no fines, no prosecutions whatsoever."

Tony Khoury, head of Waste Contractor and Recyclers Association of NSW. ( Four Corners )

In an interview with Four Corners, NSW EPA's head of waste strategy Steve Beaman said there was a national strategy being developed.

The chief executive of the peak body representing recycling in Australia, Grant Musgrove, went one step further, warning of damage to the recycling industry if the interstate waste trade was not reined in.

"The New South Wales industry is being hollowed out, as recyclable materials are not reaching facilities which are built for that purpose," he said.

"We need ministers to bang their heads together and come up with a national strategy, a national coordinated response," he said.

Victoria accused of hoarding landfill levy revenue

Mr Musgrove said the Victorian Government was currently sitting on approximately $500 million in landfill levy revenue, known as the Sustainability Fund.

"Instead, it's just been propping up the state budget," he said.

Grant Musgrove says Queensland residents have a right to be worried about possible impacts on their health. ( Four Corners )

Meanwhile, a glut of close-to-worthless recyclables are piling up around Victoria, with the recycling industry now in "survival mode" due to a commodity price slump.

The recent fire at Coolaroo is an indication of the problem.

A large stockpile of plastics and paper caught fire and burned for several days, forcing the evacuation of hundreds of homes.

There are now growing calls for a special commission of inquiry to be set up into the waste industry, to clean out the rogue elements, improve regulation, and dismantle the organised waste trade.

Those calls are coming from both industry and environmental groups.

Watch the Four Corners episode Trashed: The Dirty Truth About Your Rubbish.