Shane Jones has announced $40 million from the $3 billion Provincial Growth Fund (PGF) will be allocated to fund projects that "convert waste".
Jones, the Minister for Regional and Economic Development, said the investment comes at a time when waste going into landfills has increased by 20 percent since 2008.
"A high proportion of this waste, particularly recyclable plastic waste, has other uses and can be converted into new products," Jones said on Monday.
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"The funding will be used to invest in projects that convert waste, including plastic waste, into materials and products useful to businesses and consumers."
Jones made the announcement alongside Conservation Minister Eugenie Sage, who said for too long, New Zealand has relied on sending waste offshore.
She said China and other countries' refusing to take New Zealand's waste was a "wake-up call", pointing to China banning 24 types of foreign waste last year, forcing New Zealand and other countries to look elsewhere.
"If more materials are recovered and re-used here in New Zealand, we can help our economy shift from its current 'take, make and waste' approach to one that designs waste out of production," Sage said.
Jones said he wants to hear from those with "experience in the plastics recovery and recycling sector about potential projects and other actions the Government can take to improve management of plastics and other problem waste streams".
Applications should be made to the Provincial Development Unit by 30 September. Existing applications to the PGF and the Ministry for the Environment's Waste Minimisation Fund proposing investments in plastic waste reduction will be considered.
Jones said he's also "interested in possible commercial partnerships with Māori", and said officials have been asked to "seek out investment-ready proposals of significant scale in regional locations close to our main urban centres".
The announcement comes on the same day the Government's ban on single-use plastic bags comes into force, which Sage said was a step towards "healthier oceans and giving nature a hand".
"New Zealanders remembering to take their reusable bags is stopping tens of millions of single plastic bags becoming waste each year."