You will need transportation to get around to see the sights outside of Mt Gambier. You can hire cars from the Mt Gambier airport.
If you wish just to stay in town, you will not need a car. The motel strip on Commerical street East is a 15 minute walk from the Town Centre. If you are just in Mt Gambier overnight for a party or a night out, it would pay to stay at one of the local pubs, you won't have to go very far to get back to your accomodation.
Sights such as the Blue Lake can be driven or walked around.
There are limited bus services around Mt Gambier. There are also two taxi companies, Blue Lake Taxis and Vears Taxis. Both are in the same price range. There is a taxi rank outside the Old Post Office/opposte the Cave Gardens on Bay road and another outside the Lakes Village on Helen street. Friday and Saturday nights it is reasonably easy to catch a taxi.