The Royal National Park is being used as a "free tip" by building companies, Greens candidate for Heathcote Natasha Watson says.
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Construction materials including asbestos, insulation, roofing tiles and electrical wiring are among the items found illegally dumped in bushland.
"Rubbish attracts even more rubbish and it's just an ongoing cost to residents," Ms Watson said.
"When it's asbestos it's also a health hazard, too, and kids end up walking through it and playing in it.
"I don't see why the community has to continually cop it."
The state election hopeful said despite subcontractors being required, and usually paid, to take building waste to the tip, too many unscrupulous operators dumped it in bushland or beside the road and pocketed the money.
"This problem could be easily resolved by requiring builders to lodge tip receipts to council as part of their DA [development application] permission," she said.
"Owner-builders and commercial companies are already required to have a waste management plan, but are not required to prove it had been followed."
Ms Watson said by making builders submit tip receipts to council, illegal dumping could be significantly reduced.
"Illegal dumping of building waste is a major problem in our bushland and roadsides in the Illawarra and Sutherland shire and ends up costing taxpayers and ratepayers for its removal," she said.
The Old Princes Highway north of Wollongong has been plagued by illegal dumping for years.
On Friday, Ms Watson discovered a pile of tiles dumped beside the road at Helensburgh, despite a nearby sign warning people of the area's proximity to the water catchment.
Ms Watson said the Greens had photographic evidence of illegal commercial dumping in the area.