Addressing a query to the environment minister Lily D'Ambrosio at state parliament Question Time, the opposition leader Michael O'Brien asked how much of the funding announced for the 33 councils affected by the closure of SKM Recycling would be going to Ballarat.

"The City of Ballarat has confirmed that the government recycling crisis will cost Ballarat ratepayers an extra $2m for its recycling program," he said.

"Minister how much of the $6.6 million you announced yesterday will be allocated to the Ballarat City Council?"

Ms D'Ambrosio said that councils had incurred additional costs as a result of having to renegotiate the contracts they had with SKM following the collapse of the export market to China at the beginning of last year. Again she accused SKM of undercutting "the real costs of managing waste".

Mr O'Brien said the council had "done nothing wrong" and residents had done nothing wrong but said that every household could "be paying an extra $41 through their recycling."

The City of Ballarat Mayor Samantha McIntosh later clarified in a press release that the trial in its current form would cost from $2.5 to $3 million annually to keep recyclables out of landfill.

"However, this additional cost for the trial will not be passed on to ratepayers," she said. "No decision has been made to adopt this course of action long-term."

The contingency plan, which began this week, kicked into action as stockpiles of recycling materials that would previously have been taken by SKM reached capacity. Cr McIntosh added that the goal of the trial was to keep recyclables out of landfill, and that there would not be any increase in the waste levy paid by residents due to the trial.

At Question Time, Ms D'Ambrosio was also asked if there would be a lifting of the Sustainability Fund - otherwise known as the "bin tax" as it is funded by fees for using landfill - until the recycling crisis was solved.

She responded the funds go to providing important services that are enjoyed by the community right across the state, including bolstering the resourcing of the Environmental Protection Authority. Councils have been urging state government to spend more of the Sustainability Fund on developing markets for recycled goods.

The fund is officially designated to "foster environmentally sustainable uses of resources and best practices in waste management" and encourage innovation to reduce greenhouse gas emissions.

Last year, the Victorian Auditor-General's Office said there was a risk that the levy and the Sustainability Fund are "not always used for their intended purposes." Ms D'Ambrosio recently told parliament there was $397 million in the Sustainability Fund in June this year.

Cr McIntosh said that attempts to gain secure state funding to date - including access to the Sustainability Fund - had been unsuccessful, adding that council had been "equally frustrated" by a lack of waste and recycling policy.

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