The state government has wiped its hands of responsibility as Victorian councils scramble to prevent recyclable waste being dumped in landfill.
Plants operated by one of the state's largest recycling firms have been temporarily shut down by the environmental watchdog, leaving councils with no option but to dump the material.
Two SKM recycling facilities at Coolaroo and Laverton North were ordered to stop accepting waste last week, with the EPA citing dangerous stockpiling posing a fire hazard.
SKM takes about 50 per cent of Victoria's kerbside recycling across three facilities, but the materials have been piling up since China stopped accepting foreign waste.
Mary Lalios from the Municipal Association of Victoria told AAP the state government has been collecting ratepayers cash through the landfill levy for the past decade and has not done enough.
"It's frustrating because this isn't a problem that occurred overnight," Ms Lalios said.
She said the federal and state governments needed to oversee the industry better, make better use of recycled materials and push for restrictions on materials such as some food packaging from being created in the first place.
Victoria's Environment Minister Lily D'Ambrosio said the situation was an opportunity for councils to overhaul their recycling contracts so there are contingencies in place, which in turn would boost competition between processing businesses.
"This is why we invested $37 million to move a more efficient and resilient recycling system," she said, citing an assistance payment when China's recyclables refusal started to pinch.
"We want competition in the market to encourage new operators to set up in Victoria and invest in equipment/infrastructure upgrades."
In meetings with the Metropolitan Waste and Resource Group on Monday, Ms D'Ambrosio urged councils to strengthen their contracts and agreements with SKM to stop it happening again.
She said the contracts needed to provide consistent services, not focus on getting the best commodity prices for recycled materials.
Recycling bins in Brimbank, Cardinia, Port Phillip and Casey will be collected as normal, but will be sent to landfill, councils confirmed.
Mornington Peninsula says their collections will continue as normal and won't be sent to landfill as they have the capacity to temporarily store recyclable material.
Fire engulfed the SKM facility at Coolaroo on July 13, 2017, and 600 firefighters spent three weeks battling the blaze. It caused the evacuation of hundreds of nearby residents and sent a number of people to hospital.
The blaze prompted a statewide audit of waste facilities, with 466 inspections at 155 sites, which led to 144 remedial notices and 23 sanctions issued.
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