Australia uses more than six million tonnes of packaging every year at a rough cost of $15 billion, mostly paid for by consumers and with almost half ending up in landfill.
The nation's environment ministers agreed to an overhaul by 2025 after an independent review found more should be done both to recycle plastic packaging and increase its recycled content.
Used milk cartons could become pallets to carry the next batch, for example, if they were designed for re-use from the get-go.
Consumers are also concerned about the impact of recycled materials on food safety but paper fibre could also be turned into construction materials or toilet paper.
"The system we have today is reaching the limits," according to Tetra Pak managing director for Australia and New Zealand Boris Munster.
"Recycling rates are stagnating."
But a lack of infrastructure after years of shipping waste to Asia means Australia needs to strike a balance that suits local sustainability and recycling requirements, the global packaging and processing company believes.
Boris Munster: as recycling rates stagnate there needs to be a shift towards less emissions. (HANDOUT/FTI CONSULTING)
An approach known as extended producer responsibility (EPR) makes companies responsible for how they make products - for a circular and low-emission economy - but also what happens after the consumer has used them.
"What we've seen from other countries where they launch an EPR scheme is that producers look for alternatives and look for lightweight packaging material or more renewable packaging material," Mr Munster said.
When they are also required to report their greenhouse gas emissions, they start moving towards more sustainable options and rejuvenate their industrial base, he said.
A "life-cycle assessment" of packaging would measure emissions along the value chain from raw materials to the recycling stream and force the industry to look for more sustainable methods.
"We need to incorporate that into the eco-modelling or how EPR schemes could look," Mr Munster said.
"If you're going to apply it on the existing infrastructure, you're not going to create that innovation towards a more sustainable and less emissions-driven industry."
RMIT sustainability and industrial design expert Simon Lockrey said the ultimate goal of no packaging and no food waste would require a switch to micro-farms around suburbia and daily shopping.
People see packaging as an "unnecessary evil" but removing it would drive a worse environmental issue - greater food waste, he said.
"There's a role for packaging as it gets food to consumers in a good condition and extends shelf life," Dr Lockrey said.
"There's still a lot more to be done to get the best out of the incumbent system ... it is actually designed most of the time to help people in the home," he said.
A national packaging scheme should encourage the use of more lightweight and renewable materials. (AAP PHOTOS)
But packaging reform won't be wrapped up before the federal election, which must be held by May.
The department of Climate Change, Energy, Environment and Water is analysing submissions on options, including legislating mandatory requirements and an extended producer responsibility scheme.
Producers will also be required to do more to eliminate harmful chemicals such as PFAS from food packaging.
Dubbed "forever chemicals" because of their long life, the PFAS group accumulate in water, soil and living organisms and have been linked to cancer, immune suppression and developmental issues.
"The consultation will support government consideration in 2025 of a preferred regulatory option and potential obligations under a reformed scheme based on international best practice," a department spokesperson said.
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