Fisheries Victoria concluded the event was triggered by a drastic change in water temperature.
It is becoming increasingly common for warmer water species to be found further south along the east coast of Australia, extending their ranges into areas that may now be warm enough for them to survive. These leatherjackets were likely following the warmer water down the coast before disaster struck. The arrival of a strong upwelling event in the region caused a sudden drop in the water temperature that these warmer-water species cannot cope with, resulting in a mass mortality event. This is not the first time this kind of event has occurred in south-east Australia. A similar case of a mass die-off event of leatherjackets occurred in 2014, and was likely caused by the same mechanism.
You can read more about this event on the IMOS website.