‘Avoidable failures’: Government defies watchdog on compensation for flood victims

Colin Waters was awoken on a Friday morning in October 2022 to brown water pouring into the Avondale Heights retirement home that he and his wife Rae had bought for $825,000.

Their property is part of the Rivervue Retirement Village, which was badly flooded when heavy rains caused the Maribyrnong River to rise to levels not seen in almost 50 years. The floods left 45 retirement villas – including Colin and Rae’s – uninhabitable for at least six months.

“We now hold negative equity,” says Waters, estimating the disaster erased hundreds of thousands of dollars from the home’s value. “It’s a very, very severe situation.”

Since 2022, the pair have argued that, despite doing nothing wrong, they have been hit hard financially by the planning failures of the state government and Melbourne Water.

Now, they have a powerful ally: state Ombudsman Marlo Baragwanath.

On Wednesday, she tabled in parliament When the Water Rises, a report on the impact of the 2022 Maribyrnong flood at Rivervue, and on changes to flood planning rules affecting residents nine kilometres downstream at Kensington Banks.

The flooding of Rivervue, her investigation found, was the result of flawed flood modelling and government failures.

The ombudsman’s report follows an investigation by The Age that exposed how construction was begun on scores of Rivervue retirement villas in a floodplain immediately after strict flood rules were removed by the state, in conjunction with its Melbourne Water authority.

Baragwanath said the Victorian government should compensate residents at Rivervue directly affected by the flooding, many of whom lost their sense of security when the Maribyrnong breached its banks.

“The flooding of Rivervue homes stems from failures by the state,” Baragwanath said. “Residents, through no fault of their own, are now left significantly out of pocket and forced to spend their retirement in a flood-prone area.”

The report found that poor modelling by Melbourne Water in the early 2000s ultimately allowed the retirement village to proceed on land that was never suitable. When coupled with mistakes in building plans, it led to vulnerable retirees living in a flood hazard area. Baragwanath said these mistakes were “recognisable and avoidable”.

“Melbourne Water’s rushed and flawed flood modelling used during early site development under-predicted flooding. This meant homes were set too low from the start. Mistakes in approved building plans saw some homes built lower still, without a full safety buffer,” the report found.

Downstream at Kensington Banks, which was spared in 2022, residents are now also considered at flood risk. The Age revealed in 2024 that home owners in Kensington Banks had been left devastated after Melbourne Water suddenly designated about 900 properties there as at risk of flooding.

The ombudsman found Kensington Banks’ original flood protection works were sound when built in the 1990s. But she said climate change combined with far more homes being built along the Maribyrnong River catchment, and a sinking levee around Kensington Banks, had created new flood risks there.

Her report urged broader reforms including better information for residents, planning that accounts for climate change and programs to support residents facing flooding.

While the ombudsman found residents at the Kensington Banks estate were victims of climate change and lagging updates to modelling, the situation for residents at Rivervue was distinctly man-made.

Baragwanath argued that while she does not recommend compensation lightly, at Rivervue “it is the fair thing to do” because of the planning errors made by the government and its authority.

The government accepted most of the report’s recommendations regarding better planning and community information, but a spokesman for Water Minister Gayle Tierney said the state was still considering compensation for flood-affected Rivervue residents.

In an interview with The Age on Wednesday, Baragwanath said she hoped the government would ultimately consider aid to those affected. “I think it’s the fair outcome,” she said. “There were avoidable and recognisable errors made in relation to the planning decisions at Rivervue.”

Melbourne Water said it accepted the ombudsman’s findings and recommendations and is committed to providing high-quality flood risk information to the public.

Rivervue resident Colin Waters said he was pleased by the ombudsman’s findings, and that he was unsurprised the state government had not yet agreed to compensation.

“They might say they’re considering compensating us, but most of the people here are well into their 70s or their 80s and this is a government that’s bankrupt, so they’re probably hoping like hell that we just fall off the perch.”

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