Officials have been warned of potentially serious environmental, political and economic fallout from the Chinese move because only months remain before stockpiling limits are reached at recycling stations and no viable alternatives have been proposed for Australia’s heavy reliance on the Chinese market for its waste.

At a closed-door session organised by the NSW Environmental Protection Agency in Sydney last month, NSW Fire and Rescue told representatives of the NSW and Victorian governments and the Commonwealth environment and foreign affairs departments it was planning for an increase in dangerous waste fires because of the growing mountains of plastic and other recyclables at recycling stations.

Waste industry chiefs told officials the need to send now-unsaleable material to landfill was likely to drive even more interstate transport of waste to south-east Queensland and new domestic markets and legislation had to be developed urgently to handle the crisis.

According to minutes of the meeting, obtained by Fairfax Media, Local Government NSW, which represents the state’s 128 councils, told delegates China’s move to exclude all but the least contaminated waste, which came into force on January 1, “threatens the viability of the kerbside system”.

“No council wants to see the recycling scheme collapse,” the body’s Susy Cenedese warned.

“Suggestions are being made to tell people to stop recycling and this is not at all viable.”

Melissa Gibbs of the NSW Office of Local Government told the meeting there would be a “huge impact” on local councils if recycling contracts were cancelled, with “the increase in landfill costs being passed on to ratepayers not just a council problem but also a political problem”.

Victoria last week announced a $13 million rescue package for the recycling industry and councils to cover the increased costs of dealing with the waste until June 30, the earliest date councils can put up rates.

Victorian council rates are expected to rise by almost 5 per cent because of the state's waste crisis, triggered when recycling giant Visy invoked emergency "force majeure" clauses in contracts with councils and collection companies because of the China ban and instead of paying them for the waste, started charging $70 a tonne.

Ms Cenedese said there were already examples of NSW councils having loads of recyclables rejected by recycling facilities.

“Facilities are not set up to clean the material to the standards now required by China.”

Waste industry representatives warned of dire consequences unless there was financial and legislative support from governments.

“Within months, stockpiling limits will be reached,” the National Waste Recycling Industry Council’s Max Spedding told the meeting.

“Landfill will then be the only option.

“If we do not plan appropriately, we will have environmental issues and companies will collapse.”

Tony Khoury, head of the Waste Contractors and Recyclers Association of NSW, warned the meeting that more waste was destined for Queensland because “waste will always gravitate to the lowest-cost solution”.

“The current lowest-cost solution is not landfill in NSW but landfill in south-east Queensland.

“(We are) likely to see more interstate transport of waste. That’s a massive safety risk.”

Fairfax Media revealed last month that waste processors are sending thousands of tonnes of waste sent to Queensland each week for recycling to show compliance with NSW environmental legislation but almost all of it is trucked on to landfill.

No one from Queensland attended the meeting.

Fire and Rescue NSW told the meeting waste fires already took up 10 per cent of its firefighting time, or about one a week.

Mark Reilly, fire safety branch acting assistant director, told delegates all Australian states were dealing with an increase in fires at waste facilities, which were “very complex, resource demanding, involved extended operations and resulted in … enormous environmental damage”.

The meeting heard that consumer behaviour needed to change to improve the quality of recyclable material and in the longer term, Australia must stimulate demand for recycled products and introduce new rules for packaging and manufacturing.

“We’ve spent millions of dollars getting people to recycle over the past 25 years but haven’t spent enough time developing the end markets for the output streams,” a representative of environmental NGO Planet Ark told the meeting.

“We are already behind other countries in responding to the China policy change. We have left finding an immediate solution to the last minute, too late.”

“China has made us lazy,” one attendee, who did not want to be identified, told Fairfax Media.

“The whole thing will fall over if governments don’t fix it.”

NSW Environment Minister Gabrielle Upton is due to address a second meeting of the group, due to take place today.