In what industry insiders admit is a “rort” that has been going on for at least three years, waste companies are using Queensland recycling facilities to obtain paperwork exempting them from NSW rules limiting the transport of metropolitan waste by road more than 150 kilometres from its source.

Developers are also requesting the same paperwork to show their waste has been handled in a sustainable way to qualify for “green” building certificates used to market housing, office and retail projects.

But only a tiny proportion of the material - typically plasterboard, treated timber, paper and plastic from building and demolition sites in Sydney and Newcastle - is actually being recycled.

Surveillance of Queensland recycling and dump sites by Fairfax Media over several weeks, including access inside one of the facilities on multiple occasions, showed that material tipped off by interstate trucks at the recycling facilities was immediately reloaded into local trucks and taken straight to landfill.

By contrast, local construction and demolition waste arriving at one of the facilities was sorted, filtered and processed.

The trade is putting pressure on landfill sites around Ipswich, where tensions are rising between local residents and waste companies looking for ways to expand their operations to accommodate a rising tide of construction and demolition waste, with plans for a giant new landfill announced this month.

It undermines claims by the NSW government the state has some of the highest recycling rates in the nation: the NSW Environmental Protection Agency told Fairfax Media it counted all the material sent across the border for recycling as having avoided landfill.

And it suggests NSW taxpayers are missing out on tens of millions of dollars in waste levies, which would be payable if the material was dumped in NSW landfill rather than being trucked 900 kilometres north and dumped in Queensland.

Construction and demolition waste accounts for 90 per cent of the growing interstate waste trade, which is flourishing despite an increasing public backlash, with the amount of material sent north more than doubling last year to more than 800,000 tonnes, according to NSW EPA figures recently revised upwards from earlier estimates.

Industry sources say waste companies typically save up to $3000 per truckload by sending material from Sydney to Queensland and avoiding the $138-per-tonne NSW waste levy and the much higher gate fees charged by NSW landfills.

Transport companies also commonly get paid twice over for the return run to NSW by carrying other loads, such as grain or other bulk commodities.

Tipping material at recycling facilities is slightly more expensive than at landfill but heavy discounts are available to consignors sending large volumes.

With no financial or regulatory incentive for waste processors to invest in recycling machinery in Queensland to handle the torrent of waste from NSW, insiders say everyone involved is quietly profiting from the trade at sites that are largely out of public view.

“Everyone knows it’s going on,” said Bernard Murphy, a former Queensland waste facility manager who represented the industry during its 2009 negotiations with the Bligh government over the short-lived introduction of a waste levy in the state.

“It shows the lunacy of the (NSW) policy (of high waste levies).

“They’ve prostituted the industry to such an extent that it’s fostered a huge cross-border business in which none of the material is being recycled … and it’s putting 30 trucks on the highway every night that don’t need to be there.

“They never have recycled it and New South Wales taxpayers think they're getting some sort of environmental outcome."

Another industry insider, who did not want to be named for fear of recriminations, said all the parties involved, including the NSW government, benefited from giving the appearance of recycling waste, without the expense or complication of cross-border monitoring and enforcement of environmental rules.

“It’s only a rort if you’re not in it,” he said.

Construction and demolition waste represents about a third of NSW waste, or just over six million tonnes in 2014-15, the most recent year for which figures are available. The NSW government claimed 75 per cent of this was recycled, 10 points higher than the national average.

The NSW Environmental Protection Agency told a state parliamentary inquiry last month almost half a million tonnes was sent across the border for recycling in the past two years, but that there was no missed levy because “no levy would be payable” on it in NSW.

But on the basis the waste should be dumped locally rather than in Queensland, the amount trafficked represents up to $70 million in missed waste levy to NSW taxpayers.

The environment ministers of Queensland and NSW both declined to answer detailed questions from Fairfax Media.

Fairfax monitored two recycling facilities, Cleanaway’s site at Willawong in south Brisbane and a larger facility at Swanbank in Ipswich run by local company BMI.

At Willawong, about 30 B-double loads, or 1000 tonnes, of unprocessed waste was seen being trans-shipped to Cleanaway’s huge New Chum landfill in Ipswich on a single day in December.

More than a dozen fully-laden interstate-registered B-double trucks were parked in local streets waiting to enter the recycling facility and 10 more inside, while a convoy of locally-registered trucks ran up and down the Ipswich Motorway taking loads of unprocessed waste to New Chum.

Confronted with this evidence, Cleanaway confirmed it recycled less than 5 per cent of the material it received at Willawong.

“We’re putting in some new recycling machines to try to get more material out,” a spokesman for the company said.

A similar pattern was seen at BMI Group's site at Swanbank, with raw waste dumped by NSW trucks immediately reloaded into Queensland-registered vehicles owned by local transport companies that also took it to Cleanaway's New Chum landfill.

BMI provided a recycling report covering October 2017 that stated 75 per cent of material received by the company's facilities had been recycled, but the company declined to provide the recovery rate for interstate waste.

Recycling machines at its Swanbank site were seen to start up on only one occasion, the day after questions were emailed to the company.

Activists from local environmental group Ipswich Residents Against Toxic Environments said they had monitored the BMI site at least fortnightly over the last six months on varying days of the week and were surprised to hear the machines had been seen operating.

“We’ve never seen them working,” Jim Dodrill, IRATE president, said.

Bingo Recycling, the biggest processor of waste in NSW, told Fairfax Media it sent all of its cross-border shipments of waste to recycling stations in order not to breach the NSW rules on the long-distance road transport of waste to landfill.

This is despite the fact the rules, introduced under the so-called “proximity principle” intended to encourage recycling and the disposal of NSW waste near its source, have not been enforced since 2016 after a court challenge by the waste industry.

The NSW EPA was unable to provide a single example of a prosecution for flouting the waste transport rules.

“From Bingo’s perspective the waste is taken to a recycling station in Queensland first as that is a requirement in the interstate movement of waste,” a company spokesman said.

Bingo said it processed the waste before it left NSW to remove valuable content such as steel or concrete.

“Bingo is sending waste that has been recycled or separated but can’t be further recycled in New South Wales,” the spokesman said.

Bingo and Cleanaway made public statements criticising the interstate waste trade and “rogue operators” following an ABC Four Corners report in August. Both companies have repeatedly stressed their commitment to avoiding consigning material to landfill.

“It’s a tricky one for (Bingo),” the company spokesman said.

“But at the end of the day, they are a listed company and have to answer to shareholders.

“They can’t shoot themselves in the foot by sending it to landfill in NSW if there is a commercial benefit by sending it to Queensland.”

BMI Group said the “decision by some NSW based operators to move waste to Queensland for further processing and ultimate disposal” had enabled it to build a second recycling facility and increase its workforce by a third.

The company said developers in NSW were using paperwork issued by Queensland recycling facilities to get accreditation for environmental building schemes.

“There is a green star building accreditation which many builders seek waste credits for from time to time, however not through us directly,” BMI said.

Max Spedding, convenor of the National Waste and Recycling Industry Council, said some developers had to show waste material associated with their projects was recycled in order to fulfil agreements with homebuyers.

“It’s a contractual situation,” he said. “You tick the box and move it on to landfill.”

The Green Building Council of Australia, which runs the green star scheme, said it was “working with stakeholders to increase the rigour of reporting and auditing of recovery rates for all waste, not just construction waste”.

According to the GBCA, 42,000 people live in green star-rated apartments, 37 per cent of office space is green star-rated and 420,000 people are moving into “green star communities”.

Rail transport is exempt from the “proximity principle” rules, leading to a growing interstate traffic in containerised waste transported by train to a railhead at Acacia Ridge in south Brisbane and then trucked straight to Queensland landfills.

A senior Queensland waste industry executive estimated that rail accounted for about a quarter of all interstate shipments and that it had already filled the rail network's capacity for this type of freight.

Gold Coast-based transport operator Sean Richardson said his firm had four trucks moving mostly construction and demolition waste from Sydney to a range of recycling facilities in south-east Queensland and had been doing so for the last 3½ years, coinciding with the attempt to clamp down on waste transport by road within NSW.

“Whether we should be doing it or not, it’s legal,” he said.

“Once we unload at the facilities, it’s all out of our hands.”

The freshly re-elected Queensland Labor government is mulling the re-introduction of a waste levy, dropped by the Newman Liberal National Party government in 2012. It has yet to reveal the findings of an inquiry launched last year into the interstate waste trade and has declined to publish the 27 submissions it received by the September 2017 deadline.

New Queensland Environment Minister Leeanne Enoch declined to answer questions about the trade, saying only that the inquiry’s report had been submitted to government and she had “directed the department to review and prepare a whole-of-government response for consideration by cabinet”.

NSW Environment Minister Gabrielle Upton similarly declined to address detailed questions from Fairfax Media.

“The NSW government has the strongest waste regulations in the country as well as one of the highest recycling rates compared to other states,” a spokeswoman for the minister said.

“The NSW government supports the local management of waste in order to minimise the costs associated with the long-distance transport of waste.

“The Queensland Labor government can end the interstate movement of waste from NSW by reintroducing a waste levy.”

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