The order of the Tribunal is that the decision of the Responsible Authority is affirmed. The Tribunal directs that a permit must not be granted.

1 This is an application to review the decision of the Responsible Authority to refuse permission for 3 lot rural subdivision at Kibells Road, Beechworth. The responsible authority was primarily concerned that the subdivision relied on the minimum lot size provisions of the scheme in a mechanistic way and failed to demonstrate how the subdivisions would achieve the objectives of the Rural Zone

2 The Responsible Authority issued a Notice of Refusal to Grant a Permit for the reasons set out in attachment 2.

3 The parties and the witnesses at the hearing of the application for review relied on both written and oral submissions and a number of photographs, plans and other documents were tendered to the Tribunal. The Tribunal inspected the subject site and its locality.

4 The history of the subject land is of relevance from a planning perspective i.e.:

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Sometime prior to the year 2000 the Applicants acquired two adjoining crown allotments, one of 25 hectares and the other of 110 hectares.

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In May 2000, the Applicants applied for a four lot subdivision of their land holding comprising three small lots and a balance lot of 120 hectares. The Responsible Authority ultimately issued a Notice of Refusal to Grant a Permit in respect of this application.

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In May 2002 the Applicants applied for a two lot subdivision of the land holding (a boundary realignment) to create a lot of 7.69 hectares and a lot of 126.9 hectares. Condition 6 of the permit required that a section 173 agreement be entered into which:

i

provides notification to future land owners regarding the rural zoning of the land and expectations relating to normal rural practices which would be carried in vicinity of this land;

ii

ensures that each lot created is not able to be further subdivided so as to increase the number of lots.

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Subsequently a section 173 agreement was entered into between the Applicants and the Responsible Authority, the agreement purporting to give effect to this requirement of the permit.

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In May 2004 the Applicants applied for a 3 lot subdivision of the larger 126.9 hectare lot created by the earlier subdivision. The Applicant's also applied to end the section 173 Agreement referred to above.

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In August 2004 the Responsible Authority issued a Notice of Refusal to Grant a Permit in respect of this application for the reasons set out above and refused to end the agreement. The current application before the Tribunal relates refusal of permit, the is no application in respect of the agreement.

5 In this case there is an agreement arising from an earlier planning permit process which purports to fetter the further subdivision of the land. The question is what is the relevance of such an agreement to the ambit of the discretion available to the Tribunal.

6 The first observation that can be made is that the agreement exists, and unless the agreement is ended (or the agreement is found to be defective) the agreement will remain an obstacle to the subdivision of the land whatever the decision of the Tribunal. Indeed an enforcement order can be made if a use or development contravenes the provisions of a section 173 agreement.

7 Therefore a responsible authority or the Tribunal should not lightly issue a permit for a use of development inconsistent with a section 173 agreement. However planning schemes, permits issued under planning schemes, and section 173 agreements are all tools for achieving the objectives of Planning Victoria as they are set out in section 4 of the Planning and Environment Act 1987. There may be unusual circumstances in which it is appropriate to consider whether or not a permit should be granted notwithstanding that the implementation of the permit would result in a breach of an agreement. In such circumstances it would be prudent for the permit to provided that the permitted use or development could not commence until the agreement was amended or ended.

8 Ultimately, I have not had to decided whether or not it would be appropriate to issue a permit notwithstanding the agreement that exists in this case

9 The subject land is a fairly regular parcel primarily covered with regenerating bushland and falling within the Northern Inland Slopes Bioregion. DSE in their referral response indicated that native vegetation on the land included the following EVC's:

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Grassy dry forest;

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Granitic hills woodland;

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Valley grassy forest.

10 The subject land abuts Kibells Road to the south, while the dwelling presently under construction for the Applicants is located towards the north of the land. The proposal is to subdivide the land into three lots, as described on the plan forming attachment 2 to this decision. The existing house under construction will fall within lot 3 under the proposed plan of subdivision.

11 In the Indigo Planning Scheme clause 22.02-2 Land Use, Development and Subdivision in Rural Areas sets out particularly relevant policy . The entire clause is relevant, the policy in relation to the exercise of discretion and relevant performance measures is extracted (in part) below:

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discourage the conversion of land to uses incompatible with productive agriculture.

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encourage the sustainable use of land for intensive agricultural production.

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discourage the subdivision of rural land into lots of less than 40 hectares, unless it can be demonstrated to the satisfaction of Council that:

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the lot sizes are necessary for genuine intensive agriculture and/or rural production;

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the lot sizes are compatible with the existing average lot size in the locality;

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the proposal facilitates agricultural use of the land;

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...

It is policy that proposals are assessed against the following criteria:

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any subdivision of land should be compatible with:

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existing and surrounding agricultural land uses;

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sustainable management of natural resources; and

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the rural character of the locality;

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...

12 Mr O'Dwyer submitted on behalf of the council that the proposal for subdivision has failed to demonstrate a satisfactory outcome when assessed against the performance based approach implicit in clause 22.02-2 Land Use, Development and Subdivision in Rural Areas. It was submitted that the subdivision is based upon an approach which regards the minimum lot size set out in the schedule to the zone as being in effect an as of right basis for the subdivision of land in the rural zone. Mr O'Dwyer submitted that such a mathematical approach was inconsistent with the performance based criteria established by the Planning Policy Framework.

13 Mr O'Dwyer in his conclusions argued that the proposed subdivision was inconsistent with the planning scheme because:

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No suitable rural activity has been identified that requires the support of a dwelling on any of the proposed lots despite the fact that it would be an as of right use due to the default lot size in the Rural Zone. The proposed the potential for specialist, boutique agricultural or horticultural enterprises are no better than 'kite flying' exercises to help justify the proposal and bear no real credibility in respect of this application;

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The proposal has not been initiated by the desire to conduct any form of agriculture on the land or to improve the manageability of the property. Rather it stems from an intention to create two additional lots for disposal that would have an 'as of right' use for a dwelling where there currently exists only one.

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The proposal, if approved, would enable significant amounts of vegetation to be cleared under the guise of exemptions intended to be associated with existing uses under Clause 52.17. Such an outcome is contrary to the objectives of Clauses 11.03-2, 15.09, 22.03, 35.01, and 52.17 of the Indigo Planning Scheme.

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The proposal would create the right to use and develop the subject land for the purposes of an additional 2 dwellings thereby increasing the risk to life, property, the natural environment and community infrastructure from wildfire due to the relatively isolated nature of the lots, vegetation cover and poor access conditions.

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The outcome which would result from the granting of a permit for the subdivision is that the subdivision and land ownership pattern of rural land in this locality will be further fragmented in direct conflict with the outcomes sought to be achieved by the applicable policy framework and zone provisions.

14 Mr O'Dwyer's concern about the mathematical approach to subdivision, that is the reliance on the minimum lot size in the schedule to the zone, is that the approach avoids the performance assessment of rural subdivision fundamental to the Indigo Planning Scheme. However this concern raises important issues. The first is that the local planning policy framework is focussed on small lot subdivision, the objectives and performance measures available are less useful for the assessment of subdivisions with lots equal to or greater that the minimum lot size. The second issue is more philosophical, is there a lot size at which the queries which can arise in relation to rural subdivision cease to be of sufficient concern to justify refusing the subdivision of land. This issue is explored below:

15 Whether or not the size of the lot and its proportions are compatible with its continued use for productive agriculture.

If one assumes that issues such as soil type and quality, topography, access and the proportions of the land are satisfactory a lot with an area of 40 hectares or larger is unlikely to be incompatible with productive agriculture, simply as a consequence of its size.

16 Whether or not the construction of a dwelling on the land will lead to a loss of agricultural production.

On a rural lot with an area of 40 hectares or more, the development and use of a dwelling will result in a loss of some land for agricultural production, but the area of land lost is unlikely to be significant.

17 Whether or not the construction of a dwelling on the land adversely affects the cost of land as an input to productive agriculture.

In most cases, the existence of a dwelling on the land will significantly add to the cost of the land, and this would be an obstacle to a person seeking to accumulate a larger parcel of land for the establishment of a larger agricultural enterprise. However, this is a complex social and economic issue i.e.:

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not all agricultural enterprises require large land areas for efficient production. Small farming enterprises supported by off farm income will not necessarily use the land less productively than a larger enterprise;

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share farming and other such mechanisms allow for the productive use of rural land without the need to acquire land encumbered by dwellings.

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a smaller farming enterprise (about 40 hectares) supported by off farm income may have fewer economic pressures leading to the unsustainable use of the land;

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a larger number of smaller farming enterprises (about 40 hectares) may have social and economic benefits at the local level, with a larger population to support local infrastructure including schools and townships;

However, even if smaller farming enterprises (about 40 hectares) can be effective rural producers, how does one mediate between the interests of a person prepared to operate a rural enterprise, without it being the sole source of income, with interests of a person who wishes to farm, on a larger scale, in order to make a living.

18 Whether or not the construction of a dwelling on the land will lead to conflict between farming practices, and expectations in relation to residential amenity.

A rural lot with an area of 40 hectares or more is likely to be farmed, and the resident of a dwelling on that lot is likely to have an economic interest in the farming enterprise, even if it is by way of an arrangement such as share farming. Even at one dwelling for every 40 hectares, dwellings should be well spaced within the rural landscape. In this context, the conflicts which can arise between farming, and rural residential style of uses is less likely to occur.

19 Whether or not the construction of a dwelling on the rural lot will ultimately lead to the excision of the dwelling on its own small rural lot.

A rural lot with an area of 40 hectares or more can be developed with a dwelling as of right. This brings with it a risk that the dwelling will ultimately be excised from the rural lot creating a dwelling with no association with the agricultural use of the remaining land, and potentially leading to the proliferation of dwellings within the rural landscape, because of the expectations held by future owners of the remaining land for the development of a new dwelling on that land. These risks may be avoidable, if an effective section 173 agreement is entered into at the time of subdivision preventing the further subdivision of lots less than 80 hectares in area (that is lots less than twice the minimum area).

20 We can be confident that the creation of rural lots with areas significantly less than the minimum lot size, particularly if they are to include a dwelling, are inconsistent with the encouragement of productive agriculture within rural zones.

21 I think that the adverse consequences of the creation of rural lots with areas of 40 hectares or more, together with their as of right dwellings, is less clear cut and in my view there needs to be a greater understanding of how rural land is used and the social and economic effects of its use. Mr O'Dwyer may be correctly concerned about a mathematical approach to subdivision within Indigo Shire. The debate which arises from this concern would be assisted if the Shire could undertake some research into how rural lots within the municipality, with areas in the order of 40 hectares, are used and the social and economic consequences of that use.

22 I think it useful to consider the questions which arise from the most relevant of the performance measures set out in the Local Planning Policy Framework.

Is the proposed subdivision compatible with the existing and surrounding agricultural land uses.

23 The aerial photograph tabled at the hearing seems to indicate that surrounding land is either open grazing land, or timbered bushland, both in public and private ownership. Allotments vary in size and it is likely landholdings are similarly varied in size The use and area of the proposed lots are compatible with this pattern.

24 While it was submitted that some form of boutique rural enterprise could be established on the lots created by this subdivision, there were no developed proposals for the future use of the proposed lots and certainly there was no attempt to demonstrate how the subdivision itself would promote the use of the land in accordance with the zone provisions. On the other hand however it must be observed that DSE's response as a referral authority, and their proposed permit conditions, in effect seek to prevent the use of the land for agricultural purposes and instead seek to preserve it as natural bushland.

25 If DSE's approach to the future use of this parcel of land is correct, that is the regenerating bushland which comprises most of the land should be as far as is practicable preserved, then it is perhaps unreasonable to criticise the subdivision on the basis that it fails to facilitate the more productive use of the land for agricultural purposes.

Is the proposed subdivision compatible with the sustainable management of natural resources

26 At the hearing the Applicants argued that the management of the land, as bushland, would be considerably enhanced if there were three land owners rather than a single landowner responsible for the care and maintenance of the land. Again if DSE's position is correct and notwithstanding the rural zone the regenerating bushland should as far as practicable be preserved, then there may be some merit in this submission.

27 However, each new lot involves the loss of additional vegetation to provide space for dwellings, outbuildings and access roads. It would be necessary to demonstrate that the benefits arising from land management from additional landowners would outweigh the costs and the risks. For such an assessment to be made there needs to be more than the mere assertion that three landowners would be better than one for this purpose. There would need to be an understanding of the management regime which should be in place, the extent and cost of the works involved, and the resources required to achieve these outcomes. None of this exists in this case.

Is the proposed subdivision compatible with the rural character of the locality.

28 As I have already observed, the aerial photograph suggests that surrounding rural land is a mixture of clear grazing land, and quite extensive areas of bush. Moreover, the cadastral plan suggests that lot sizes within the locality are very varied. While the evidence before the Tribunal on this point is hardly conclusive, I think it is at least arguable that the proposed subdivision is consistent with the rural character of the locality.

29 My analysis of the proposed subdivision against the most relevant of the performance measures is set out above. I think it clearly leads me to the conclusion that there is nothing in the material supporting the application to demonstrate that either the subdivision will lead to the land being used for a more productive agricultural purpose, or that it would lead to the more sustainable management of the land as a natural resource. Therefore on this basis no permit should be granted.

30 However, this conclusion is a decision based on the absence of a demonstrable outcome, rather than a conclusion that a satisfactory outcome could not be achieved. A particular difficulty for the Applicant in this context is the fact that there is a tension between the outcomes sought in relation to agricultural production on one hand and sustainable management of the natural resource on the other hand.

31 It is DSE's position that the best outcome for the sustainable management of the natural resources of the land is that there be very little loss of native vegetation, essentially there position is that the land not be used for any productive agricultural purpose. I think it arguable that some clearing should be allowed to permit the use of the land in accordance with its rural zoning. Nevertheless in this case that it would not be an unreasonable proposition to say that the land is to be preserved as bushland, and not used for productive agricultural. In this context, subdivision might be justifiable, if it could be demonstrated that it would in some form or other promote the sustainability management of the natural resource.

32 It follows from the above reasons that it is my conclusion that the decision of the responsible authority should be affirmed and no permit issued.

1. The application is contrary to the provisions of the Rural Zone, the State Planning Policy Framework and the Local Planning Policy Framework, and in particular:

* the development and use is not associated with any genuine intensive agriculture and/or rural production;

* development of the subject land as three separate holdings is not compatible with the purposes of the Rural Zone and will contribute to an increase in the concentration of dwellings in this locality;

* the proposal is not consistent with the intent of clause 22.02-2 (Land Use, Development and Subdivision in Rural Areas);

* the proposal will not necessarily facilitate agricultural use of land;

* the proposal will not necessarily improve the environmental manageability of the land;

* the proposal will increase the risk to life, property, the natural environment and community infrastructure from wildfire;

* the proposal will enable significant amounts of vegetation to be cleared under the guise of exemptions intended to be associated with existing uses under Clause 52.17, and;

2. Having regard to the provisions of clause 65.02 of the Indigo Planning Scheme and in particular:

* the existing use of the land and possible future development of the land and nearby land;

3. The application is contrary to the provisions of the Rural Zone in that the intention of the application is simply to create disposable lots so as to improve financial returns from the sale of one or more of the titles to the land.

4. The application is contrary to a Section 173 Agreement entered into between the landowner and Council which seeks to prevent further subdivision of the subject land.

5. The proposal, if approved, will result in significant amounts of vegetation to be cleared as a result of access construction and dwelling development and use. This will lead to a net loss of existing high quality condition native vegetation across the subject land contrary to State Policy as set out in Victoria's Native Vegetation Framework.

6. The proposal would create the right to use and develop the subject land for the purposes of an additional 2 dwellings thereby increasing the risk to life, property, the natural environment and community infrastructure from wildfire due to the relatively isolated nature of the lots, vegetative cover and poor access conditions.