Under the “National Sword” policy aimed at reducing its pollution problem, China greatly ­reduced the amount of foreign garbage it would accept from January 24.

Municipal Association of Victoria chief executive Rob Spence said all Victorians could see rate bills rise by more than the 2.25 per cent regulated cap, as councils introduced new levies and other fees to cover the cost of dealing with the waste.

Australia has relied heavily on China handling much of its waste over the past 15 years, exporting more than 600,000 tonnes of recyclable trash to China last year.

Under the new policy, China has banned accepting 24 types of solid waste and will take only high-quality recyclable garbage that is almost “uncontaminated”.

China’s changes mean many waste contractors employed by Australian councils can no longer sell recycled rubbish to China, and instead are being forced to stockpile them. Victorian councils are drawing up plans to dump their stockpiles in landfill. Doing so is not only costly — councils pay large amounts for recycled rubbish to be dumped in landfill, instead of China paying them for the waste — but risks derailing the nation’s recycling system, along with the public’s support for it.

Much of the recyclable waste taken from Australian household recycling bins and sold cheaply to China is low quality because many items are of limited use for recycling and because of improper sorting. One pizza box in a bin would render all recyclable garbage it contained contaminated, said Linda Scott, president of Local Government NSW.

Mr Spence said council-­employed recyclers were talking about new costs of “between 1.1 per cent and 2.5 per cent on top of the 2.25 per cent rate cap”, with both regional and metropolitan councils to be hit. “While rural councils have been the most ­directly affected to date, it has become clear that the impacts will be statewide, with significant cost implications likely for all councils and ratepayers,” he said.

Council waste charges are ­excluded from the state rate cap.

Waste Contractors and Recyclers Association NSW executive director Tony Khoury declared the lack of leadership over the issue ridiculous.

He called on the NSW government to “show some urgency in developing guidelines to ensure this $47m is spent in a prompt and proper manner”.

Mr Spence said he had been meeting councils, recyclers, collectors, Environment Minister Lily D’Ambrosio, the Treasurer’s office and the Department of ­Environment, Land, Water and Planning in an effort to help broker a resolution.

NSW ratepayers are expected to be similarly slugged. Ms Scott said councils in regional areas would be hit harder than city counterparts, where there was more developed infrastructure for processing recycled waste. “We have sought support from the NSW government in the ­interim to help councils stockpile the waste,” Ms Scott said.

In response to China’s ban, Victorian-based recycling company SKM Recycling, one of the state’s largest recycling providers, has threatened to close its gates to councils delivering it waste. A memo circulated by the Municipal Association of Victoria last Wednesday urged councils to develop a “contingency plan” for their yellow bin waste if SKM followed through with the planned closure. “If councils are unable to find landfills which will accept their recycling material, collection services may have to be stopped,” the memo said.

SKM did not respond to a ­request for comment.

The Victorian government has announced a $13 million funding package to help councils, and the NSW government has earmarked $47m. However, Ms Scott said money had been “simply diverted from funds already aimed at better managing waste throughout the state”.

Greens senator Peter Whish-Wilson accused the federal government of becoming too reliant on offshore markets to take care of Australia’s waste and failing to develop a sustainable domestic recycling market.

Environment Minister Josh Frydenberg said that while state governments had primary responsibility for waste management, he would discuss the issue at a national meeting of environment ministers next month.

“We’re talking to China and other countries, trying to explore other markets where we could export our waste,” Mr Frydenberg told ABC last month.

In South Australia, councils were briefed this week on the ­expected fallout from China’s ban and discussed the possibility of increasing household rates to cover additional processing costs.

West Australian Environment Minister Stephen Dawson launched a “waste taskforce” last Thursday to advise on appropriate measures to “weather the storm of the China decision”.