The decision of the responsible authority is affirmed. A permit must not be granted.

Mr C. Fadgyas, Town Planner of Fadgyas Planning Associates Pty Ltd, appeared on behalf of the Responsible Authority.

Mr J. Glossop, Town Planner of Glossop Town Planning Pty Ltd, appeared on behalf of the Central Highlands Water Authority.

1. This is an Application under Section 77 of the Planning and Environment Act 1987 ("the Act") brought by D and H Barton to review a decision by the Moorabool Shire Council ("the Council") to refuse a permit .

2. It is proposed to construct a second dwelling on a site having an area of 11.08 hectares which was created out of a consolidation of titles in the early 1970's. A dwelling which was constructed at about the same time as the title consolidation exists on the land it is located towards the northern end of the site.

3. A pottery has also been constructed on the site many years ago and I was advised that the new lessee of the pottery wishes to upgrade and renovate that building and for security reasons the lessee wishes to reside on the property.

4. Mr Fadgyas described the proposal in the following terms:

"The proposed dwelling will be a 16.2 square, three bedroomed "Maldon" style house, clad in cedar with colourbond roof. It is to be setback 10 metres from Forbes Road and 48 metres from the southern boundary."

5. The review site is located approximately 15 kilometres east of Central Ballarat and is located within a predominantly broad acre rural area generally acknowledged as being a productive potato growing area. There is a small collection (or a smattering as Mr Fadgyas described it) of rural residential properties located around the Western Highway intersection.

6. The property is located within the Pincott Reserve Water Supply Catchment.

7. As I have indicated above the review site has an area of 11.08 hectares and is currently being grazed. A dwelling has been located at the north western end of the property and a pottery at the south western end.

8. Mr Fadgyas appropriately described the surrounding area in the following terms:

"The area is generally flat, falling in a northerly and north easterly direction towards Pincott Reservoir. It is generally improved pasture use for grazing. The site proper has a north easterly cross fall of about 2.5% towards the primary drainage gully at the head of the Pincott Reservoir Catchment.

The area around the Western Freeway/Forbes Road intersection has a number of dwellings on rural residential size properties, but in general the wider area is still a predominantly farming area.

Kryall Castle is located to the south, and a number of tourist type uses have evolved (such as the pottery on this site) in the Leigh Creek area."

9. The review site is zoned Rural, the relevant purpose of which, in addition to implementing the State and Local Planning Policy Frameworks, is to provide for the sustainable use of land for extensive animal husbandry (including dairying and grazing) and crop razing (including horticulture and timber production), and to encourage:

* Protection and creation of an effective rural infrastructure and land resource.

* Improvement of existing agricultural techniques.

* Protection and enhancement of the bio diversity of the area.

* Value adding to agricultural products at source.

* Promotion of economic development compatible with rural activities.

* Development of new sustainable rural enterprises.

10. A dwelling is a Section 1 Permit Not Required Use in the zone however the conditions in the Table of Uses at Clause 35.01-1 specify that a lot must be at least 40 hectares and there must only be one dwelling on the lot. A permit is therefore required to use land for the purpose of a dwelling on a lot less than 40 hectares and if there is more than one dwelling on the lot.

11. Pursuant to clause 35.01-2, a lot may be used for one or more dwellings provided for the following requirements are met:

* Access to a dwelling must be provided via an all weather road with dimensions adequate to accommodate emergency vehicles to the satisfaction of the Responsible Authority.

* The dwelling must be connected to a reticulated sewerage system or if not available the waste water must be treated and retained on site in accordance with the State Environment Protection Policy (Waters of Victoria) under the Environment Protection Act 1970.

* The dwelling must be connected to a reticulated potable water supply or have an alternative potable water supply with adequate storage for domestic use as well as for fire fighting purposes to the satisfaction of the Responsible Authority.

* The dwelling must be connected to a reticulated electricity supply or have an alternative energy source to the satisfaction of the Responsible Authority.

12. A permit is required to construct buildings or works pursuant to Clause 35.01-2.

13. Before deciding on an application to use or develop land, consideration must be given, in addition to the decision guidelines at clause 65, to the decision guidelines at clause 35.01-6. These decision guidelines are characterised under the headings "General Issues", "Rural Issues", "Environmental Issues" and "Design and Siting Issues".

14. The review site is also affected by an Environmental Significance Overlay (ESO1) the purpose of which is to identify areas where the development of land may be affected by environmental constraints, and to ensure that development is compatible with identified environmental values. A permit is required to construct a building or to construct or carry out works. Schedule 1 to the Overlay describes the affected area as a "Proclaimed Water Catchment Area" and the statement of environmental significance is:

"The Shire of Moorabool contains several proclaimed water catchments, which provide water to urban and rural development throughout the Shire. The protection of water catchment is essential to the health of all communities that rely on water for domestic and stock supply.

* To protect the quality and quantity of water produced within proclaimed waster catchments.

* To provide for appropriate development of land within proclaimed water catchments."

15. Application requirements under the schedule relate to the need for an Applicant to demonstrate that the land is capable of absorbing sewerage and sullage effluent and that waste will not enter a water way. Relevant decision guidelines in the schedule require the Responsible Authority to consider the comments of the relevant water authority on the:

"* effect on the quality and quantity of water within the proclaimed catchment from the proposed method of waste disposal.

* requirements and provisions of the State Environment Protection Policy (Waters of Victoria) and the provisions of the Septic Tanks Code of Practice."

16. Further decision guidelines relate specifically to circumstances where the land is not connected to reticulated sewerage and facilities are to be provided for the on site disposal and treatment of waste water.

17. Pursuant to clause 66.02 an application to use or develop land that is within a Special Water Supply Catchment Area listed in Schedule 5 of the Catchment and Land Protection Act 1994 and which provides water to a domestic supply, must be referred to the relevant water board or water supply authority. The Central Highlands Water Authority is the relevant referral authority with respect to this application.

18. The review site is also partly affected by Design and Development Overlay Schedules 2 and 4 however these controls do not extend to that part of the site upon which the proposed dwelling is to be located.

19. With respect to the applicable policy framework, the following clauses are relevant:

* Clause 13 Principles of Land Use and Development Planning

* Clause 15.01-2 General Implementation Catchment Planning and Management

* Clause 18.09 Water Supply, Sewerage and Drainage

* Clause 21.07 Management of Urban Growth and Development

* Clause 21.08 Protection of the Environment and Landscape

* Clause 21.09 Facilitation of Agricultural Productivity

* Clause 22.01 Townships, Settlements and Streetscapes

* Clause 22.06 Proclaimed Catchments in Rural Areas

Council Consideration and the Application for Review

21. The application was received by the Council in February 2002. Notification of the application was required to be given and one objection to the application was received. The principal concern of the objectors was that the proximity of the proposed dwelling to farming operations conducted by them on adjoining land, and in particular to a water bore will generate complaints about noise.

22. The application was referred to Central Highlands Water Authority which responded that it objected to the issue of a permit for the following reasons:

1. The proposal isn't consistent with the purpose of the rural zone.

2. The proposal is inconsistent with the State Planning Policy Framework and the Local Planning Policy Framework for agricultural land.

3. The proposal does not comply with the Minister for Planning's Interim Guidelines for Domestic Water Supply Catchment Areas.

4. The proposal will contribute to the incremental development in this area which already exceeds the water authority's guidelines.

5. The proposal will set a precedent for further development in this sensitive area.

23. The application was subsequently considered by the Council and was refused on the following grounds:

1. The proposal is inconsistent with the State Planning Policy Framework and the Local Planning Policy Framework of the Moorabool Planning Scheme.

2. The proposal is contrary to the objectives of the Rural Zone.

3. The construction of a dwelling on the subject lot would result in land being used for rural residential purposes which is inappropriate in this location, as there is an adequate supply of rural residential lots in more suitable locations within the shire.

4. The dwelling is not required for the continued use of the subject land for agriculture.

5. Central Highlands Water objects to the proposal for the following reasons:

5.1 The proposal is inconsistent with the purpose of the rural zone.

5.2 The proposal is inconsistent with the State Planning Policy Framework and the Local Planning Policy Framework for agricultural land.

5.3 The proposal does not comply with the Minister for Planning's Interim Guidelines for domestic water supply catchment areas.

5.4 The proposal will contribute to the incremental development in this area which already exceeds the Water Authorities guidelines.

5.5 The proposal will set a precedent for further development in this sensitive area.

24. An application for review was subsequently commenced by the permit applicants on the following grounds:

1. The proposal is in accordance with the State Planning Policy Framework and the Local Planning Policy Framework of the Moorabool Planning Scheme.

2. The proposal is consistent with the objectives of the rural zone.

3. The proposal will compliment the existing tourist pottery operation on site and also add to the tourist precinct of Kryal Castle.

4. The mentioned land is currently being used for grazing. It is land that has no irrigation or the capacity to do so. Therefore, agricultural use of this land will not be diminished.

5. The subject land is capable of absorbing effluent on site and does comply with Interim Guidelines of Domestic Portable Water Supply Catchments.

6. This proposal will not set as precedent for further development in this sensitive areas, as this proposal is a unique case.

25. At the review hearing all parties tabled and read from written submissions and supplemented these with oral submissions.

26. Various plans, photographs and other documents were tendered, either as attachments to written submissions and reports, or as separate items. The material submitted in documentary form, together with the written submissions, have been retained on the Tribunal's file.

27. As I have indicated above there is an extensive policy framework applying to the use and development of land within this locality. The principal issues which the policy framework seeks to address can broadly be characterised under the following headings:

* The protection of rural land from the encroachment of incompatible land uses which have the potential to compromise the viability of agricultural activities.

* The need for proper management of water catchment areas and the protection of water quality through the control of the use and development of privately owned land within these catchment areas.

28. The proposal to construct a second dwelling on a lot of 11.08 hectares is not consistent with either of the two principal policy outcomes identified above. With respect to the first of these policy outcomes, clause 22.07 of the Moorabool Planning Scheme provides what is in my view, a sound and unambiguous direction for the consideration of applications for the construction of dwellings or for house lot excisions in rural areas. The policy basis states that:

"Viable and sustainable agriculture is recognised in the MSS as being a significant component of the economy of the Shire and fundamental to the existing and future well being of the Shire and its residents. The Shire contains some areas of agricultural land that is considered valuable and of high quality as a state level. Inappropriate fragmentation and housing development could compromise the ongoing agricultural viability of rural areas of the Shire."

"To ensure that small lot subdivision and new housing developments in rural areas will not compromise agricultural activity on adjoining lots."

30. The relevant aspects of the policy as they apply to applications for the construction of dwellings:

"All applications for dwellings or house lot excisions on land within the rural zone will be assessed according to the following criteria:

* The need to discourage non agricultural use and development in all rural areas.

* The need to avoid a cluster of dwellings that are not directly related to the agricultural use of land.

* The rights of existing farmers to continue their operations and not be adversely affected or constrained by residential concerns.

* The extent to which the amenity of the residents of the dwelling may be adversely affected by agricultural practices on surrounding land.

* The extent to which the proposal promotes or supports the continued agricultural use of the land, and'

31. The proposal to construct a second dwelling on a lot of 11.08 ha to be used in conjunction with a pottery does not in my view make any contribution towards the achievement of these policy outcomes.

32. I acknowledge the Applicant's submission that the proposed second dwelling, when considered in isolation would have a minimal impact in terms of alienating productive agricultural land and nor would it be likely to have a significant impact on the viability of the agricultural use of the balance of the lot or for that matter of adjacent uses. Notwithstanding this, the adverse impact the construction of dwellings on small lots primarily for residential purposes or the construction of dwellings unrelated to agricultural purposes, is incremental in nature and care must be exercised not to lose sight of the cumulative effect of such developments when considering applications for individual proposals.

33. The principle justification offered by the Applicant in this matter for the construction of the second dwelling is that it is required to ensure a level of security for the existing pottery. This does not constitute sufficient justification to outweigh the very clear policy framework which the Council, to its credit, has adopted to protect agricultural land from the adverse affect of incremental residential developments.

34. With respect to the water catchment issue the applicable policy framework and the application of the Environmental Significance Overlay places a further constraint on the development of the land. Mr Glossop referred me to the Interim Catchment Guidelines prepared by the Department of Infrastructure in the year 2000 (the August 2000 Guidelines) which apply to open potable water storage catchments listed in schedule 5 of the Catchment and Land Protection Act 1994. The guidelines state that:

"Water authorities do not have direct control over land use and developments in open, potable water supply catchments. However, because of the risks to public health, all use and development should be cited and managed to protect the quality of water collected from the catchment.

Most water supply catchment areas have a long history of regulation aimed at protecting public health by maintaining acceptable levels of water quality flowing into and stored in the water storage. This has protected communities from water borne diseases or the need for excessive chemical treatment."

"All land users within catchments need to be aware of the potential effect of their activities on water quality. Residential development and agriculture particularly have the potential to impact adversely on water quality through the discharge of contaminated run off and wastes, nutrient contributions or sediment to waterways. Three key sources of these pollutants; septic tank systems, agricultural practices and buildings and works are the focus of this interim guideline."

36. The guidelines make the following recommendations for the regulation of land use and development in open potable water catchment:

* Dwelling density should generally be no greater than one in forty hectares. In some circumstances, this density may be increased. Septic tanks must meet the Code of Practice - Septic Tanks on site domestic waste water management, Environmental Protection Authority March 1996.

* Septic tanks must be located at least 100 metres from any surface waters and at least 300 metres from a domestic water supply reservoir.

* Development should not occur within 30 metres of waterways.

* Septic tank systems should be correctly maintained and inspected periodically by the Council, or some other qualified person and maintained to their satisfaction.

* Vegetation should be maintained. Suitable vegetation should also be planted along waterways and near effluent lines to assist transforation rates.

* Stocking rates (for grazing land) should be kept at a reasonable level. In environmental rural zones where grazing may require a planning permit, a permit condition can be considered to limit the amount of stock on a lot.

37. Mr Glossop also referred me to Central Highlands Water's policy for development within its catchment which emphasises the need to limit dwelling density to a maximum of one dwelling per 40 hectares across the entire catchment, with the flexibility to require a higher density of one dwelling per 60 hectares closer to the reservoir down to a density of one dwelling per 30 hectares in more remote locations.

38. To determine dwelling density, Central Highland Water measures the number of dwellings within a 1 kilometre radius of a proposed dwelling site. This equates to an area of approximately 314 hectares. Approximately ten dwellings within a 1 kilometre radius are seen to be the threshold level. Densities above this threshold oppose an unacceptable risk to water quality. In this locality there are currently 20 dwellings within a 1 kilometre radius, yielding a dwelling density of one dwelling per 15.7 hectares. The construction of the proposed dwelling, if approved would result in a density of one dwelling per 14.95 hectares.

39. I note that Central Highlands Water's policy broadly equates to the planning scheme provision which permits land to be used for the purpose of a dwelling without a permit provided that it has a lot area of 40 hectares and that a second dwelling on any lot is subject to the grant of a permit.

40. The policy to which Mr Glossop referred me does not form part of the planning scheme and Mr Glossop acknowledged that it was a matter to which I ought to have regard but it is not a provision which either seeks to or can be used to prohibit the construction of dwellings which do not comply with it. Mr Glossop further acknowledged that like most policies, whether they form part of the planning scheme or not, it can only be regarded as a guideline and it is appropriate that a degree of flexibility and discretion is exercised in the application of the policy.

41. In the circumstances of the present case however, it would require a very high degree of flexibility and discretion in the application of the policy framework to enable the view to be formed that the construction of a second dwelling on a lot having an area of 11.08 hectares represents an acceptable planning outcome.

42. In response to Mr Glossop's submission, the Applicants advised that the calculation of dwelling densities within this locality ought to be revisited having regard to the fact that many of the dwellings which would have been included in Central Highlands Water's calculation have been acquired by Vic Roads and are intended to be demolished to make way for the realignment of the Western Highway. In response to this submission I provided Central Highlands Water with the opportunity to make appropriate investigations on this matter and directed that this information be forwarded to the Tribunal and the other parties. This material was circulated in accordance with my directions on 9 April 2003. The material reveals that within a 1 kilometre radius of the site there are three houses, a shop and the former council chambers that will be aquired and removed and a further two houses may be removed dependent upon final detailed design. I note that based on Vic Roads advice, no funds have been allocated for these works and construction is unlikely to commence within the next ten years. The affect of this action by Vic Roads on the dwelling density calculations were summarised in the 9 April letter as follows:

"At present there are 19 houses within a 1 kilometre radius of the Applicant's property. Neglecting other buildings this is a density of one house per 16 hectares. Even if five houses are removed this would only reduce the density to one house per 22.5 hectares which is still well in excess of the desired limits set out in the Minister's interim guidelines."

43. I accept this material as the appropriate basis upon which to carry out the calculations for the purpose of determining whether or not the proposal complies with Central Highland Water's policy.

44. I also agree with Mr Glossop's submission that it is difficult to measure exactly when the level of human activity and or development in a catchment area would result in an unacceptable risk to water quality and that a cautious approach as advocated by the August 2000 guideline ought to be adopted. In this context whilst Central Highland Water's policy for the calculation of development density in a catchment area may appear to be a relatively blunt tool, I think it is nevertheless consistent with the application of a cautious approach. In the circumstances of this case, the density of development which would result from the grant of a permit is so at odds with the policy that there is in my view very limited scope for exercising a discretion to grant a permit.

45. Mr Glossop referred me to a number of decisions of this Tribunal which over a number of years accepted the need for careful and prudent management of land use and development within water supply catchments. I have not been presented with any submissions which would persuade me that I ought to depart from the principles established by a long line of Tribunal decisions or from the very clear policy framework which is intended to guide the future development of this locality.

46. It follows from the above that the decision of the Responsible Authority is affirmed and it is directed that no permit issue.