Warrnambool City Council currently collects waste from 165 bins on State Government land at a cost of around $200,000 a year - all without any compensation from the Allan Labor Government.
This arrangement continues despite the recently updated Good Practice Guidelines from the Minister for Local Government, which stipulates that councils should limit waste charges to cover the costs of their own waste, recycling, and resource recovery services.
Mrs McArthur said the Government's position was deeply hypocritical.
"While I support measures that constrain wasteful council spending, Labor is simultaneously forcing councils to fund rubbish and recycling collection services on State Government land.
"This blatant cost shifting comes as Victoria's net debt continues to balloon by $1.7 million every hour and is forecast to hit a staggering $192.6 billion by 2028-29.
"Minister Staikos owes ratepayers a clear explanation for his hypocritical actions."