TONY JONES, PRESENTER: Telstra says it's working on plans to remove asbestos from all of its pits and pipes after some workers exposed the dangerous material during the rollout of the National Broadband Network.

However, experts warn there's an even bigger problem looming. The widespread illegal dumping of asbestos waste around Australia. It's costing tens of millions of dollars each year and exposing thousands of Australians to deadly health risks.

Margot O'Neill reports and the producer is Sashka Koloff.

MARGOT O'NEILL, REPORTER: When this North Queensland home burnt down in April, CQ Building company was contacted about rebuilding it. But like many older Australian homes, asbestos littered the wreckage, meaning there's a legal obligation for its licensed removal to a registered dump site.

But according to this email, a CQ Building claims manager asked subcontractors to "please consider" the option of whether, "... the asbestos and debris can be buried ...," on the property, "... as it will make the process a lot faster and cheaper ...".

When we contacted CQ Building today, their lawyers told us the claims manager had made an "administrative error" and that the building company had "checks and balances to ensure" there is no unauthorised disposal of the asbestos.

They also emailed us the quote for the licensed removal: $21,450.

While CQ Building is contracting a licensed asbestos removalist, the Queensland Ombudsman reported recently that widespread confusion about the legal obligations for the safe removal of asbestos as well as the heavy expense involved is driving illegal dumping in Queensland's parklands, public areas and even suburban wheelie bins.

Out in Western Sydney, local councils have created a team of waste dump investigators called The Rid Squad. The Rid Squad sees illegally dumped asbestos three or four times every week.

BARRY RYAN, THE RID SQUAD: I've come across asbestos in luggage that has been dumped. Open up the luggage, the suitcase and here we are, sheets of asbestos. Extremely dangerous for the person off the street thinking, "What's in there?"

MARGOT O'NEILL: Today, at least, it's not asbestos, but gyprock.

BARRY RYAN: I hope that the public report more illegal dumping, as this great person did.

MARGOT O'NEILL: Illegally dumping asbestos is now a major national problem, according to the chairman of the Federal Government's National Asbestos Review.

GEOFF FARY, NATIONAL ASBESTOS MGMT REVIEW: It is huge problem that needs to be dealt with. There are problems with asbestos waste being dumped in bushland, in parkland and in some instances - in one particular instance I was told of where there was basically an industrial-sized load of it dumped in a schoolyard.

MARGOT O'NEILL: That was in Western Australia. In Sydney in December, a man was caught dumping a truckload of asbestos outside a childcare centre.

Media reports over the past six months show numerous stories about illegal asbestos dumping around Australia, but right now there's no official audit of the problem, even though random exposure to degrading asbestos is now one of the chief causes of asbestos-related cancer.

GEOFF FARY: Either through home renovations or by some incidental exposure to airborne asbestos fibres such as that they might encounter from illegally dumped product.

MARGOT O'NEILL: Some councils are calling for an amnesty to have asbestos waste removed free of charge to approved landfills. In suburban Holroyd in Western Sydney 90 per cent of properties contain asbestos.

ROSS GROVE, HOLROYD MAYOR: The costs of removing asbestos are very high. The first thing state governments should look at doing is reducing - or removing the waste levy. The waste levy is a levy designed to promote recycling. Asbestos is clearly the sort of material that you shouldn't be recycling.

MARGOT O'NEILL: There should also be much harsher penalties for those deliberately flouting the law.

BARRY RYAN: If you're thinking about dumping asbestos waste, don't worry, we'll find you.

GEOFF FARY: It is to my way of thinking grossly irresponsible, almost criminally irresponsible, for people to be dumping material that exposure to airborne fibres of it can be lethal.

MARGOT O'NEILL: New legislation before Federal Parliament will establish a national asbestos safety and eradication agency that will try for the first time to map out the extent of illegal dumping and better support local councils and state governments to clean it up.

Margot O'Neill, Lateline.