How Your Trash Could Become An Unlikely Treasure For Australia's Economy

As Malaysia prepares to send foreign waste back to sender, Australia is figuring out how it will cope with the added stress on an already in-crisis recycling industry.

For decades, the developed world has relied on China and neighbouring developing countries to take in and re-purpose huge amounts of its recyclable waste.

On Wednesday, Malaysia signalled it would be sending back 3000 tonnes of non-recyclable plastic waste to countries including Australia, because it was either contaminated, rotting, or had been falsely labelled and smuggled in.

“Malaysia will not be the dumping ground of the world,” the country's environment minister, Yeo Bee Yin said.

It comes after China threw Australian recycling into crisis last year with the introduction of its National Sword Policy -- a ban on the import of 24 categories of solid waste to protect the country's environmental and public health.

Before this, the country was the world's largest buyer of recyclable materials -- the biggest player in a massive global trading market, paying for waste to convert it into reusable raw materials.

An Australian flag protrudes from a mound of plastic waste at an imported plastic dumpsite in Mojokerto, East Java. PHOTO: AAP

According to the Institute for Sustainable Future, up to 87 percent of Australia's recycled plastic was sent to Malaysia, Indonesia, Thailand and Vietnam once China practically closed its doors.

READ MOREMalaysia Sending Plastics Back Is A 'Wake Up Call' For Australia

Meanwhile, large amounts of what wasn't sent overseas began to stack up in the warehouses of Aussie recycling companies, as the country lacked the infrastructure to reprocess the materials.

"Malaysia was only taking about 40-50,000 tonnes of Australian plastic," chief executive of the Waste Management and Resource Recovery Association of Australia , Gayle Sloan told 10 daily.

"So it's not a large amount in the scheme of things."

Nevertheless, ongoing changes to this international marketplace have put further pressure on Australia to rethink its relationship with recyclable trash and focus on a previously "alienated industry", Sloan said.

While some call it a crisis, the WMRR CEO prefers to use "opportunity".

"We've never fully developed our market to deal with all the Australian re-manufacturing of product for two reasons. One is overseas countries were buying it, and two is we didn't have the same demand for recycled content in Australia," she said.

As rubbish mounds continue to grow, there is a renewed push to establish a circular economy -- making products so they can be reused, recovered, recycled and repaired all on Australian soil.

The European Union and Japan have already begun implementing this arrangement.

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"Australia has been pretty complacent in terms of our recycling," Nick Florin, research director at the Institute for Sustainable Future told 10 daily.

"Specifically, the sorting of our recyclable materials into high-quality, uncontaminated streams suitable for sale in secondary markets. I think this is part of a growing trend and a catalyst for action to do a better job locally."

Aside from lacking infrastructure, a major challenge is a price war with cheap, non-recycled products made using 'virgin materials' -- previously unused raw material.

Northern Adelaide Waste Management Authority supervisor Thao Nguyen posing amongst items set for recycling at their site in Edinburgh, near Adelaide. Image: Getty

But for Australian workers, a stronger re-manufacturing sector could mean an big increase in jobs, Sloan said, creating 9.2 jobs for every 10,000 tonnes recycled, compared to just 2.8 for the same tonnage if it were exported.

In South Australia alone, an extra 25,000 jobs could be created over five years by recycling and reusing waste, rather than exporting or dumping it.

When it comes to waste policy, the states and territories have different regulations and standards that are legislated by their respective governments and managed by the local council.

WMRR is calling on the federal government to adopt a whole-of-government approach to a circular economy, including considering tax reform and import restrictions to support the waste sector.

"This policy cannot remain simply an environment policy and must encompass energy, agriculture, consumer protection, regional development and research," the association writes in its five-point action plan.