The Victorian government is facing renewed criticism after refusing a key recommendation from the state’s Ombudsman to compensate residents of a retirement village inundated during the 2022 Maribyrnong River floods - an event now linked to preventable planning and modelling errors.
The Ombudsman’s latest report, When the Water Rises, tabled in parliament on Wednesday, details a chain of decisions stretching back two decades that paved the way for 47 homes at the Rivervue Retirement Village in Avondale Heights to be constructed on vulnerable land. The investigation follows earlier reporting by The Age that questioned why the village was approved on a known floodplain.
Ombudsman Marlo Baragwanath found that flawed hydrological modelling conducted by Melbourne Water in the early 2000s, compounded by errors in approved building plans, substantially underestimated the hazards facing the site. As a result, dozens of older residents were living in dwellings “set too low from the start”, with some built even lower due to additional missteps.
“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.”
Forty-seven villas were inundated when brown water surged through the estate in October 2022, forcing about 70 people to evacuate. Many residents have never returned permanently.
Baragwanath’s report characterises the underlying problems as “recognisable and avoidable”. The removal of a flood overlay in 2015 - approved by the state and Melbourne Water - cleared the way for Tigcorp, Rivervue’s owner, to construct the villas that later flooded. The Ombudsman draws a clear distinction between Rivervue and nearby Kensington Banks, another area examined in the investigation. While Kensington’s emerging flood issues were attributed to climate-driven changes and delayed modelling updates, Rivervue’s fate was “distinctly man-made”.
Colin Waters, one of the displaced residents, said the lack of compensation added to the distress. “We’re pleased to be vindicated in what we said all along, but we’re bitterly disappointed that, being part of the western suburbs, we are just being ignored by the government,” he said.
Although the government accepted most of the Ombudsman’s 13 recommendations - including reforms to improve public access to credible flood information - it has not agreed to the proposal to compensate Rivervue residents.
A spokesman for Water Minister Gayle Tierney said recent reforms would ensure updated flood mapping was more effectively incorporated into planning systems, helping communities “manage risk and build homes that are safe from flooding”. The government is still “considering” the compensation recommendation.
Melbourne Water said it accepted the Ombudsman’s findings and pledged to continue improving the quality of flood data it provides to the public. “We remain committed to taking timely action to raise awareness of flood risk and to mitigate future risks. This includes providing flood information to the public, increasing community awareness, and supporting better planning decisions,” it said.
Alongside planning failures, the Rivervue disaster exposed significant gaps in the village’s insurance program — a development that has become increasingly relevant for advisers and risk specialists across the property and ageing-care sectors.
Residents later discovered that Rivervue held only $5 million in flood insurance despite village assets being valued between $84 million and $86 million. Policy documents obtained by ABC in 2023, and further disclosures to a Victorian parliamentary inquiry, confirmed the extent of the underinsurance. The Residents’ Committee was a named co-insured and residents effectively funded the flood premium via service charges, yet they were not provided access to full policy details despite years of requests.
The Ombudsman’s report does not name the insurer, and inquiry submissions show the identity was consistently withheld or redacted. Residents told the inquiry that 13 of 15 insurers had declined to provide cover, leaving the village with limited options.
Tigcorp has previously acknowledged the inadequacy of the $5 million limit and committed to funding the substantial shortfall in reinstatement costs.
For residents, the insurance issues triggered long-running stress over accommodation and financial stability. Immediately after the floods, Rivervue covered temporary housing costs, but later warned these may no longer be reimbursed by insurers - leaving many older residents drawing on personal savings to secure rentals.
Former residents’ committee treasurer Joanne Heaver said the funding gap came as a shock.
“We thought we would be adequately covered, but the $5 million limit is insufficient given the scale of the damages,” she said. She also warned of the broader economic consequences: “This has not only affected our wealth but also the financial security of our children and grandchildren.”
For risk professionals, the Rivervue case highlights compounding failures: planning decisions unsupported by accurate hazard modelling; governance arrangements that left residents with limited visibility into insurance adequacy; and a vulnerability to extreme weather that is becoming more frequent.
The Insurance Council of Australia, responding to broader concerns raised through the Rivervue inquiries, has stressed the need for stronger land-use planning and more resilient construction as flooding and storm events intensify.
Residents have urged the state to introduce mandatory disclosure of insurance arrangements as part of the ongoing review of the Retirement Villages Act - a proposal aimed at avoiding future situations where older residents unknowingly bear significant uninsured risk.
For now, the Ombudsman’s compensation recommendation remains unresolved, leaving many Rivervue residents in financial limbo more than three years after the flood.
