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His criticism came as the landfill's existing consent approached expiration in 2023, about the same time it was expected to reach capacity.
The council's preferred replacement, a Smooth Hill site between Brighton and Dunedin airport, would take up to a decade to become operational.
The council's Waste Futures project included a detailed business case for changes to rubbish collection in the city, including a new landfill at Smooth Hill.
However, a report going to councillors next week warned the new facility was "unlikely" to be ready before the existing landfill's consents expired.
That meant the council had to plan to extend the Green Island landfill's consents beyond 2023, possibly by up to five years.
The council also had to "develop contingency plans for exporting waste out of the district if required", the report said.
Council waste and environmental solutions group manager Chris Henderson said back-up plans were needed "so that we don't end up with our backs against the wall".
However, trucking material out of Dunedin was "not a very palatable option", he said.
"I would like to avoid it at all costs ... there's the transport costs, there's the carbon impacts, and we'd also possibly be at the mercy of wherever it was going."
Cr O'Malley raised the issue at last week's annual plan meeting, questioning why no significant funding for Smooth Hill was in the council's long-term budget.
An earlier report had suggested development costs could hit $30million, but Cr O'Malley believed the bill could top $100million.
The issue had to be at the top of council's waste agenda, but councillors also needed more input into draft council work programmes before budget hearings, he believed.
Even if the Otago Regional Council agreed to extend Green Island's consent, it was unlikely to go beyond 2025, making the timeframe for Smooth Hill "very tight", he said.
"That gives us six years," he said.
A report in October last year, outlining the Waste Futures project, said the situation was "urgent".
Although Green Island's existing consents expire in 2023, demolition projects such as removing the former Cadbury factory and old Dunedin Hospital complex could fill the landfill before then.
The council had been investigating a new landfill for 30 years, but "a lack of progress ... means there is now an urgency to accelerate and prioritise this project".
Cr O'Malley agreed, saying the work "could have been done better".
Mr Henderson said there was "no getting round the fact" the project was behind schedule, but that was being addressed.
"That's part of the reason for me being in the role that I am now, to make sure it actually gets the attention it deserves."
Changes to the city's kerbside collection system, the move to a "circular economy" for rubbish and new product stewardship rules all needed to be planned, as they would influence the design of a new landfill.
"Until those decisions are made, and until we actually have some good, robust financial analysis, we can't just put a guess in [the budget]."