SKM, the company at the heart of the shutdown in the system in February, takes recycling from more than 30 councils across the state, including Darebin, Geelong and Port Phillip. Loading The Environment Protection Authority shut down SKM’s Laverton North recycling storage facility last week – the second shutdown in five months – because of public safety concerns, only allowing the company to begin operating again at the site on Saturday. Councils were reluctant to talk publicly on Sunday morning, with the state government saying it had helped local authorities develop alternative plans to cope with a possible collapse of SKM. But one council told The Age it would have no choice but to send its recycling to landfill if SKM stopped operating.

With just three recycling operators in the Victorian market, many councils are forced to go with the cheapest offer, which is often SKM. The troubled processor currently has about 50 per cent of the market in the state, according to Coral Ross, president of the Municipal Association of Victoria. "Councils have got an obligation, under the Local Government Act, to achieve best value for the community," Cr Ross said. "So it's not that the councils are not doing the due diligence at all." On Sunday, Environment Minister Lily D’Ambrosio was encouraging councils to try to strike deals with other recyclers when their contracts with SKM expired. “They’re a rogue operator,” Ms D’Ambrosio said. “They have been unreliable in managing kerbside waste and the EPA did the right thing ... to step in and put a notice on them.

“Their non-compliance, their breaking of the rules, will not be tolerated.” Loading Ms D’Ambrosio said February’s shutdown, when more than 22,000 tonnes of recyclables went to landfill, had prompted the state government to work with councils on alternative arrangements. “We’re working towards diversifying the sector with new plant and equipment, getting new facilities in place,” the minister said. “When we first had these matters that came up earlier this year, a lot of work was put in place, identified with local councils, to put contingency measures in place.

“Those contingency measures are available right now, if things don’t go according to what the contracts require SKM to do.” The minister would not provide details on the contingency measures and what they might mean for households. Liberal environment spokesman David Morris said the latest recycling scare showed the Andrews Labor government had been “asleep at the wheel” on the issue of waste, since it took office in 2014. “In the past 4½ years, we’ve had a complete policy vacuum and we’re really starting to see the impact now,” Mr Morris said. “Unless we get some immediate action, we’re going to be in real trouble. “There’s no plan B at this stage and if they do nothing else this week, for goodness sake get a plan B in place."