There's another caravan park in Port Fairy which is owned and operated by the council that also closes after Easter and reopens in November. Like the park in Warrnambool, a section of this park would make a prime low cost camp during those months.
Why councils like this prefer to watch their assets just rusting away when they could be earning valuable income is hard to understand. I'm sure there would be plenty of people who would be happy to act as camp hosts for a small fee.
Councils should radically increase the fines for illegal parking but provide a reasonably priced alternative to parking in beach car parks etc and the problem of backpackers doing the wrong thing would be all but eliminated overnight.
They used to allow camping at the Showgrounds at a reasonable price in 2013 with showers/toilets/dump point but it was CLOSED down after April 2013 as far as I know. There was or still is a Dump Point in town then but it was situated in a car park and needed to obtain a key for use and it was a bit confined when the car park was full. It didn't look as though anyone had used ti for a while.