The panel's report approved the "big picture" vision in Moyne Shire's C69 planning scheme amendment but said many details needed revising, including the crucial question of flood planning.

In its submission to the panel the council said development should assume sea level rise (SLR) in Port Fairy would hit 1.2 metres by 2100 but in a win for local developers the panel disagreed. The panel said a projected rise of 0.8m by the end of the century would be more appropriate.

The flooding argument was one of the key issues discussed over two weeks of hearings during September and October, with the council and Glenelg Hopkins Catchment Management Authority (GHCMA) calling expert witnesses to argue their case, and various developers calling their own experts arguing for the lower level.

The council and GHCMA said the 1.2m figure was based on sea level rise scenarios for the south-west coast by 2100, and since Port Fairy was particularly exposed to flooding it was best to take a cautious planning approach.

"This council is in the position of having carefully planned for growth of the township and can afford to put in place policy that ensures that the societal risks associated with flood impacts are unlikely to occur. This constitutes good planning. It constitutes orderly planning," the council said in its submission.

The experts for local developers said 1.2m was an "extreme" scenario that was "unlikely" to occur by 2100. Water Technology consultant Warwick Bishop said it wasn't an effective approach to town planning.

"Planning for the extreme is an inefficient approach. Risk is the product of likelihood (multiplied by) consequence. When likelihood is low, high consequences still result in relatively low risk," he said. Mr Bishop said 0.8m was still a "prudent" level to plan for, and was in line with the benchmark adopted by other councils in Victoria.

The panel agreed Port Fairy was especially exposed to floods from both the sea and Moyne River, or a combination of the two, and that there was a possibility of 1.2m rise by 2100, but decided 0.8m was a better benchmark.

In opting for 0.8m, the panel said choosing the more restrictive benchmark for a time 80 years in the future had risks of its own.

"The issue is about making judgements on the time frame over which land can be used before the benefits of use and development are outweighed by the risks associated with flooding," the report said. "The issue for the panel is to consider the probability of a rise in sea level of 1.2m when the time frame is distant and the impact this may have on orderly planning in the meantime."

The decision is a setback for the council, which commissioned the flood modelling recommending the 1.2m benchmark in 2020 after the GHCMA raised concerns about the data underpinning it, setting the C69 amendment back nearly two years.

The panel said the council would now have to redraw its flood maps once again.

While the result looks like a win for developers, the ramifications aren't clear, especially for the major proposed Rivers Run development near the Sun Pharma factory.

The project depends on the outcome of a separate planning amendment - C75 - which proposes to rezone the development site from farm land to residential, but its flood-prone location means it's directly affected by any decision on C69.

The two amendments were going through the approvals process concurrently, but in early 2022 the council decided to push C69 through first. The planning panel questioned the decision to separate the process, saying it had "complicated" the C69 process and forced Rivers Run to "make its case twice".

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