You were advised incorrectly by the ATO.
AMC1 FCL.740(b)(1) Validity and renewal of class and type ratings reads:
a 3 (iv) expiry longer than 3 years: the applicant should again undergo the training required for the initial issue of the rating
The word 'should' does not mean mandatory, it is only advisory. If you have held an MEP in the past you should not need 6 hours flying and 7 hours ground school. However you will need some training. If it has been that long since a person held an MEP rating we do an abbreviated course (ground and flying) but for duty of care we ensure that all the items are covered during that training.
The currency of the MEP rating does not affect the ATPL ground credits in any way. The only reason to renew it is if you want to fly an MEP aircraft.
An SEIR will keep the ATPL ground credits current (although if you are applying for a flight crew position or want to start a type rating you will need an MEIR.
You can always upgrade it later by doing an MEIR test.