The Queensland Government says Gympie's council in the state's south-east needs to take responsibility for any inaccurate flood mapping in its new town plan.
The council released the plan earlier this year and Mayor Ron Dyne says flood mapping was based on State Government requirements of a one-in-100-year flood line.
Last week, he announced he would lobby the State Government to review zoning requirements, because many residents were being unfairly slugged with higher insurance premiums.
However, Gympie MP David Gibson says council has the power to amend the town plan.
"The guidelines don't specify for a one-in-100-year flood, they highlight that you must take to account the flooding events," he said.
"I think the Gympie Regional Council was probably being prudent and decided to do it to a one-in-100-year flood level.
"Otherwise council may find itself legally liable if property were to flood at a level that was in the one-in-100-year flood but they only reflected it in their town plan at a one-in-50-year flood."
Mr Gibson says although councils have to consider "flood risk" in their town plans, there is no specified level.
"There's a trade-off - it will impact on properties but will we get developments in areas prone to these major flood events?" he said.
"It's a very fine line to walk and councils make that on a case-by-case basis.
"The State Government simply says you have to consider the impact of floods."
© ABC 2013
14:47 EDT It has been a dry end to the summer and start of autumn in New South Wales, with many parts of the state still parched, having had little or no rain from January to March.