State and federal ministers have set a deadline of 2025 for all Australian packaging to be recyclable, reusable or combustible following China’s import ban.

Federal Energy Minister Josh Frydenberg said the decision, one of several deals struck at a meeting of the ministers in Melbourne on Friday, was an important step forward.

“It will have a real positive impact on our environment,” Mr Frydenberg said of the packaging agreement.

“What we need to do is turn this into an opportunity for Australia by building our long-term, sustainable recycling industry. That’s the positive. That was the focus of the discussion today.”

“That’s where our energy is going to be turned,” he said.

Amid a Chinese ban on imported waste, the ministers also agreed on all governments to source more recycled products, such as construction material and paper, and improve Australia’s local recycling industry.

Australia produces 64 million tonnes of waste a year and recycles 35 million tonnes, with four million tonnes exported overseas. Of that, 1.3 million tonnes goes to China.

With the ban now in place, low-quality recyclables are piling up around Australia and some local councils are considering sending all recyclable waste to landfill.

A recycling industry stocktake will be conducted and the current waste strategy updated to reduce the amount of food and packaging waste.

Mr Frydenberg said the ban had a “significant impact” on local governments and required a cooperative approach to address it.

Prime Minister Malcolm Turnbull discussed waste-to-energy projects while in Germany this week, and has pledged to do more in the sector.

“Australians are very good recyclers … but we are going to have to do more,” Mr Turnbull told reporters in Perth on Friday.

The Australian Greens want the federal and state governments to fund a five-year program, including a national container deposit scheme and waste streams for tyres, mattresses and e-waste.

Greens waste and recycling spokesman Peter Whish-Wilson said households had been doing the right thing for years, but the system was failing.

“This problem has been a long time coming and the Chinese restriction on importing waste has tipped it over the edge,” he said.

Senator Whish-Wilson said it was an opportunity to reboot the recycling industry.

As well, community groups would be offered grants to run reuse, repurpose and recycle ventures, education and awareness programs, with research funded into plastic waste reduction.

-with AAP