The NSW government has set aside $47 million to help consumers, local councils and the waste industry cope with the crisis caused by China’s clampdown on imported recyclables.

China has been the biggest destination for recycled materials exported by Australia, accounting for more than a third of all plastics collected and significant amounts of paper and metals. But this year it effectively imposed a trade ban by imposing draconian limits on the contamination of material.

The move, under the so-called “China National Sword” policy, has thrown recycling systems around the world into disarray, with most western nations relying heavily on the Chinese market.

NSW Environment Minister Gabrielle Upton on Tuesday announced a rescue package to allow councils to offset the cost of kerbside recycling, improve tendering processes and fund community education to reduce contamination of recycled materials put in “yellow-lid” bins.

It comes after crisis meetings with councils and the waste industry, in which fears were raised that decades of pro-recycling public education could be lost and never recovered if the public lost faith in the system.