Victoria has launched a $37 million plan to create new products by diverting landfill waste.
But as it considers radical means to combat its recycling headache, the state's government remains unsure of the benefits of a container deposit scheme.
NSW has rolled out one, South Australia's has been operating a recycling scheme for more than 40 years and Queensland and WA will introduce theirs in coming months.
Victoria's Environment Minister Lily D'Ambrosio says the government is "carefully" monitoring the situation in NSW which has executed its scheme "poorly".
"They rushed into it without understanding the infrastructure needs to provide for consumers to be able to go to a recycling facility close to where they live," she said.
"It created a massive confusion across the state. They're still working on undoing it and getting it right."
Victoria's $37 million package, announced Tuesday, aims to cut the amount of recycling going to landfill and create new markets for recycled products.
Ms D'Ambrosio said the government would help drive demand for products containing recycled materials through procurement and called on the federal government to do the same.
The announcement comes after China's decision earlier this year to restrict the import of recyclable materials.
Ms D'Ambrosio said using recycled waste to create higher quality products could replace virgin resources, causing less harm to the environment.
Under the plan, the quality of up to 100,000 tonnes of recycled material would be improved, offering a chance for businesses to "add value" to recyclable material, so it can meet China's new requirements for higher quality recyclable material.
Consumers would also be educated about what products can be recycled, potentially cutting contaminated recycling going to landfill by about 40,000 tonnes a year.
"We're delivering a new plan for the future of recycling in Victoria - to reduce waste and costs to households, and build a more resilient recycling sector in Victoria," Ms D'Ambrosio said.
Lightweight plastic bags will be banned in Victoria by the end of 2019 and other measures to curb plastic pollution such as banning drinking straws will be considered by a newly-formed working group, she added.
Opposition Leader Matthew Guy conceded the problem needed solving but was unsure "throwing $30 million and hoping it will go away is a solution".
"I would be interested to see whether or not there is a cost being passed on to ... home owners," he said.
The Victorian Greens said the announcement was a step in the right direction but there were "glaring omissions" such as the failure to include a container deposit scheme.
