SKM has contracts with dozens of councils accounting for about half of Victoria’s total kerbside material, according to the Environment Department.
The state government is demanding councils overhaul their recycling contracts and find better services.
But the council association has hit back, saying they have been lumped with «unpalatable» recycling options and accusing the government of failing to stabilise the recycling industry while generating money from the landfill levy.
Environment Minister Lily D’Ambrosio said councils had an opportunity to overhaul their recycling contracts to include “contingency plans” and help increase competition between processing businesses.
“Recycling contracts need to provide greater certainty and consistent services to our communities, not getting the best commodity prices for the recycled material,” she said.
Ms D’Ambrosio said the government invested $37 million last year to develop a “more efficient and resilient recycling system”.
The funding commitment came after China stopped accepting low-grade waste from foreign countries, sending shockwaves through Victoria’s recycling networks.
Municipal Association of Victoria president Mary Lalios said councils were distraught at having to choose from «unpalatable options».
«This crisis runs much deeper than the contractual arrangements that individual councils have with recyclers,» she said.
«Urgent state leadership and investment is needed to help stabilise the recycling industry in the short term.»
She said councils had been encouraged to check whether they could pursue reimbursement from SKM for costs arising from failure to meet contractual arrangements.
Several councils also reported another SKM site in Hallam had also been temporarily closed.
SKM did not return phone calls.
At least two fires have broken out in SKM sites in the past two years, including a Coolaroo blaze in 2017 that sent acrid smoke over the city and forced residents from their homes.
City of Port Phillip was first to say last week it had to send recycling material from kerbside collections to landfill.
The council’s mayor Dick Gross said the council would plant an extra 30 trees to offset the carbon emissions from sending recycling waste to landfill over two days.
Mornington Peninsula Shire mayor David Gill said recycled material would be stored temporarily at council facilities until a resolution could be found.
“This material will be stored separate to general waste, ensuring items are not sent to landfill and can be correctly processed once a state-wide solution is reached,” he said.
EPA chief executive Cathy Wilkinson said SKM would be able to receive materials again when it complied with the state’s waste management policy.
«EPA officers are reviewing both sites daily to ensure operators are not taking further waste materials at either site as per the requirements of the statutory notices,» she said.
The authority has launched an investigation into SKM’s practices and flagged the possibility of further penalties.
The Cardinia Shire Council also released a statement on Monday saying it would divert recyclable material to landfill in the short-term.
«No-one wants recyclable material to go to landfill, but our priority must be to protect the health and safety of the community,» it said.
A federal parliamentary inquiry into recycling recommended the Australian government establish a “circular economy” in which materials can be “used, collected, recovered and re-used” in Australia.
Benjamin is a state political reporter