1. On 25 May 2006, Roger McGill lodged a planning permit application with the Bass Coast Shire Council seeking permission to subdivide land known as 470 Inverlock - Outtrim Road [the site] into 2 lots. The subdivision involves the excision of a dwelling from farmland. The council advertised the application and no objections were received. The council subsequently decided to refuse the application on grounds that say that the proposal is contrary to policies within both the state and local sections of the planning scheme as well as the purpose of the Farming Zone. Mr McGill is asking that I set aside the council's decision and grant a permit for the subdivision.

1. The site is located on the west side of Inverloch-Outtrim Road, between Estate Road and Axford's Road. The site is an irregular 'L' shape with a frontage of about 800 metres to Inverloch-Outtrim Road and a depth of 1019 metres along its southern boundary. The site has an overall area of about 69.51 hectares.
2. The site is occupied by a single storey dwelling together with various farm buildings and structures. The dwelling is located near the site's frontage. The balance of the site comprises land that has been largely cleared of vegetation and used for agricultural purposes; that is, beef cattle grazing.
3. The site, which is owned by Mr and Mrs McGill, forms part of a larger beef cattle production farming operation which they run with their daughter and son-in-law. The McGill "farm" currently comprises 8 parcels of land in the area, 6 of which are owned by the McGills with the other 2 leased. When combined the McGill "farm" covers 594 hectares of which 104 hectares comprises the leased component. Four of the 8 properties have dwellings. Mr and Mrs McGill occupy one of these, while Mr McGill's daughter and son-in-law occupy another. The other 2 dwellings, one of which is on the site, have been rented or remain vacant.
4. Contextually the site is located within a rural area, located about 8 km from the township of Inverloch. Surrounding properties generally comprise parcels of undulating to flat land that are about the same size as the site, largely cleared of vegetation, and used for broad acre farming including beef and dairy production. Inverloch - Outtrim Road is constructed to a rural standard, with a gravel surface and grassed verges supporting stands of native vegetation along the road side.

1. The proposal is for a 2 lot subdivision that basically involves the excision of the existing dwelling from the rural land.
2. The dwelling is to be "excised" onto a square shaped lot with a frontage of 95 metres and an overall area of 9000 square metres[1]. The second lot, with an area of about 68.6 hectares, would comprise the grazing land. Access to both lots is available from existing access points off the Inverloch - Outtrim Road.
3. The applicant has indicated that he is willing to enter into an agreement under Section 173 of the Planning and Environment Act 1987 that would not allow a dwelling on the larger lot.

1. Under the Bass Coast Planning Scheme, the site is within the Farming Zone. There are no overlay controls applicable. A permit is required to subdivide land in the Farming Zone[2]. Lots created in a subdivision must have an area of at least 40 hectares. However, a permit may be granted to create smaller lots if, amongst other things:

The subdivision is to create a lot for an existing dwelling. The subdivision must be a two lot subdivision. An agreement under Section 173 of the Act must be entered into with the owner of each lot created which ensures that the land may not be further subdivided so as to create a smaller lot for an existing dwelling. The agreement must be registered on title.

1. Before deciding on an application to subdivide land, the decision guidelines in the zone require that consideration be given to, as appropriate, a range of general; agricultural; dwelling, environmental, and design and siting issues.
2. General decision guidelines are at clause 65. The guidelines at clause 65.01 require consideration to be given to matters such as the planning scheme's policies, the purpose of the zone and orderly planning. The provisions at clause 65.02 relate specifically to subdivision and require consideration to be given to matters such as the suitability of the land for subdivision; the availability of subdivided land and the need to create more lots; the subdivision pattern in the area as well as the area and dimensions of each lot.
3. In relation to planning policy, Ms Sutherland and Mr O'Toole identified the policies that are applicable in both the State and Local Planning Policy Frameworks. In particular I was referred to the policies at clauses 17.05 and 19.01 of the SPPF for Agriculture and Subdivision respectively. In relation to the LPPF it seems to me that provisions at clauses 21.03-4, 21.05-3 and 21.05-4 of the MSS and the local policy at clause 22.03 are the most relevant. In general terms, the relevant clauses within the MSS identify agriculture as a significant land use that underpinning the local economy; seek to maintain the viability of rural land holdings and discourages subdivision of high quality agricultural land particularly into small rural lots.
4. I will discuss the application of the relevant policies later in these reasons.

1. State Planning policy provides strong support for the protection of productive agricultural land. In this regard, the objective at clause 17.05-1 of the scheme is:

To ensure that the State's agricultural base is protected from the unplanned loss of productive agricultural land due to permanent changes of land use and to enable protection of productive farmland which is of strategic significance in the local or regional context.

1. To achieve this objective, clause 17.05-2 goes on to say:

Subdivision of productive agricultural land should not detract from the long-term productive capacity of the land.

In considering a proposal to subdivide or develop agricultural land, the following factors must be considered:

• The desirability and impacts of removing the land from primary production, given its agricultural productivity.
• The impacts of the proposed subdivision or development on the continuation of primary production on adjacent land, with particular regard to land values and to the viability of infrastructure for such production.
• The compatibility between the proposed or likely development and the existing uses of the surrounding land.
• Assessment of the land capability.

1. At the local level agriculture is recognised in the LPPF as being the main land use undertaken in the shire's hinterland. It is important to the local economy. The quality of the land for grazing and dairy purposes is relatively high. The MSS seeks to protect and maintain valuable agricultural land for primary production. Objectives in the MSS include:

To establish a strong and vibrant rural agricultural community comprising of new crops and animals, use of energy efficient technology, and ecologically sustainable farming techniques.

1. It is clear from the MSS and local policies that small lots in rural zones, including those created through the excision of dwellings; are a threat to the viability the shire's agricultural base. There are many objectives and strategies in the LPPF that send out a clear and unequivocal message that viable agricultural land holdings are to be maintained by, amongst other things, strongly discouraging the creation of small rural lots in areas of high agricultural productivity. These general sentiments are clearly expressed in the objectives and strategies found at clauses 21.05-3, 21.05-4 and 22.03 of the LPPF.
2. Essentially the concern is that the creation of small rural lots would result in the fragmentation of valuable agricultural land. The adverse consequences of allowing the unfettered creation of small lots in rural areas go beyond the simple creation of the lots themselves. Most rural areas, particularly those close to major urban centres, could already be considered as "fragmented" given the unlikelihood that lots are large enough in their own right to sustain a viable farm. However, such parcels of land can still be regarded as valuable for agricultural purposes. In this regard I refer to the tribunal's comments in Parkworth Pty Ltd and Keska Management Pty Ltd v Casey CC[3] when Senior Member Byard commented:

As I have said, the issues of proliferation of rural houses and rural subdivision have been very live policy issues in relation to rural planning for decades. There are some old and fallacious "chestnuts" frequently trotted out in relation to the discussion of such issues. One of the oldest of such fallacies is to say that a piece of farming land has to be a sustainable and viable farming unit, standing on its own and alone from other land, before it can be considered as useful farming land worth preserving from the harmful effects of the proliferation of rural houses and the fragmentation of farming land into small pieces. The size for a viable farming enterprise varies greatly throughout Victoria and is dependent on many factors such as soil, topography, water supply, rainfall, suitability for various particular forms of farming and so on. The size for viability in this sense is tended to increase over the second half of the 20th century. Fifty years ago a dairy farm of 15 to 20 hectares on fertile soil with favourable topography and good rainfall might well support a family dairy farm. I doubt that this would be so today. However, the sleight of hand involved is to suggest that all of the viable farm undertakings has to be in one piece. Many viable farming undertakings involve more than one piece of farmland, not necessarily contiguous one with another. If this allotment is not a viable farm standing alone, it does not follow that it is not a useful and valuable piece of farming land capable of being a useful and valuable adjunct to a farming undertaking on other land.

1. The McGill farm is a classic example of what my colleague was commenting on. The McGill farm does not comprise one large lot. Like many farms it comprises several parcels of land. I doubt that in isolation any of the individual parcels would provide Mr McGill with enough farmland to enable him to undertake a viable beef grazing venture. However, even if this is so, that does not mean that parcels of land that are not of a size that makes them viable in their own right are not valuable. There is no doubt that the site should be regarded as valuable agricultural land. I would expect that this is why Mr McGill purchased it.
2. The adverse impact associated with small lots in rural areas essentially arises because of the incompatibility of the purposes to which small lots of the type proposed in this case are used compared to those of genuine farmers. In Parkworth, Senior Member Byard went on to describe the problems that can occur in the following terms:

Hobby farmers are not genuine farmers and contribute little or nothing in terms of primary production. Genuine farmers complain that the introduction of these amateurs is detrimental to genuine farming. The amateurs frequently have little skill, aptitude and desire to farm properly. They don't have the same incentives of genuine farmers to keep down vermin and noxious weeds and dogs, other than genuine farm working dogs, often present a danger to stock and wildlife. Furthermore, rural residents frequently start demanding town services which are uneconomic to provide to scattered houses or scattered hamlets in what is supposed to be farming land. These demands involve seeking to have other ratepayers, whether real farmers or urban dwellers, subsidise rural residential lifestyles. The inefficiency of trying to provide urban services in such areas is obvious enough.

1. The above sentiments are reasonably consistent with the views of another division of the tribunal in Douglas v Gannawarra SC_[4]__,_ which was another case involving small lot subdivision. In Douglas, Member Hewet made the following observations about the potential conflicts between agricultural and residential uses:

I also think it is significant to have regard to the changing nature of agricultural practices which, because of its increasing diversification and intensification, is an activity which has the potential to gives rise to off site amenity impacts and therefore generate conflicts with residential uses. The proliferation of piggeries in this locality to which I was referred by Mr McCurdy, is reflective of these changes and is consistent with the outcomes sought by the planning scheme. Given this situation, it is necessary for councils to put in place through the planning scheme, policies which seek to ensure that the ability of farm operations to function effectively and to implement new practices is not prejudiced by the incremental intrusion of residential uses resulting from the creation of small lots.

1. As suggested by my colleagues, the difficulty with the creation of small lots in areas of broad acre farming is that the lots are essentially more suited to rural residential lifestyle use rather than farming. This raises the potential for conflict between genuine farmers who are going about their usual business and neighbours who are typically seeking a rural retreat for lifestyle purposes.
2. In this case, Mr O'Toole submitted that the proposed lot would be put to productive agricultural use. It seems that Mr McGill intends to sell the small lot with the excised dwelling to some friends who intend to operate a rural enterprise that requires a small land area. I have no doubt that the McGill's and their friends are genuine in their endeavours. However, circumstances change. I have not been persuaded that the personal circumstances and intended use by the proposed occupants can be regarded as significant factors weighing in favour of the grant of a permit. In this regard I refer to and cite my agreement with the comments of Member Hewet in Douglas when he said:

As I have alluded to above, part of the Applicant for Review's justification for the grant of a permit is based on the Applicant's intention to sell the lot created by the proposed subdivision to a member of the family, and that therefore many of the concerns raised by the council will not arise. It is clear however that the lot which would be created is capable of being sold at any time after the creation of a separate title, and there is no mechanism available to prevent the lot from being sold outside the Applicant's family. The identity of the intended owner is not therefore a matter which ought to influence me in deciding whether or not this subdivision achieves acceptable planning outcomes under the provisions of the planning scheme.

1. In my view, the subdivision of the land is not essential to facilitating the outcome sought by Mr McGill and his friends. I see no reason why the dwelling and part of the site could not be leased to other people, that is, Mr McGill's friends. They would be able to live in the house and undertake their rural venture. Like many rural ventures, including part of Mr McGill's farm, the proposed venture could occur on land that is leased rather than owned. This would result in an outcome whereby the dwelling is put to use, Mr McGill's friends have the opportunity to undertake their venture and Mr McGill would be in a position to ensure that the use of the dwelling would not conflict with broad acre farming interests. All this could happen without the potential adverse consequences that could arise if the land is subdivided enabling it to be sold as a separate lot.
2. Mr O'Toole submitted that the sale of the excised lot would also off set the inflated cost associated with the purchase of the site. It would also allow Mr McGill to focus his attention on farming by removing the added pressure of having to act as a landlord dealing with tenants. Mr O'Toole submitted that while the site has an area of about 69 hectares, it is still of a size that is attractive to persons seeking a rural lifestyle on land that is in reasonably close proximity to Melbourne. Accordingly it was submitted that this demand has been inflating the price of rural land making it more difficult for farmers to increase the size of farms.
3. I think there is some validity to this submission given some of the material presented by Mr O'Toole, particularly wit respect to land sales. Further, it is an issue that has been recognised in at least one Victorian planning scheme. In the Campaspe Planning Scheme, agriculture is discussed at clause 21.05 and the following observations are made in the MSS:

The process of farm consolidation is considered fundamental to the long term viability of the agricultural base of the Shire. The fragmentation of existing farms is not encouraged as it is inconsistent with the trend towards the consolidation of larger and more viable agricultural parcels. Fragmentation also leads to rural living opportunities where the expectations of the rural living dweller are quite different to the expectations of the farmer. One way to encourage farm consolidation is to allow for the excision of existing houses from farms. While this needs to be carefully monitored to ensure that it does not create "rural living" enclaves which may jeopardise a right to farm, it is one way of ensuring that the price of rural land is not distorted by the presence of an unwanted dwelling. So as to safeguard the intention of making farm consolidation more attractive and more affordable, it is proposed that any approved excision is contingent on a legal agreement being entered into prohibiting a house and further subdivision on any lot which has been subdivided for the purposes of farm consolidation.

1. In this case, Mr O'Toole said that Mr McGill would accept a condition requiring an agreement under Section 173 of the Planning and Environment Act 1987 that would prohibit the development of a dwelling on the larger balance lot.
2. This is a proposition that I have carefully considered; however, on balance I am not satisfied that it is appropriate in this case for 2 reasons. First, while the potential to excise dwellings may seem an attractive proposition to offset the cost associated with purchasing land, I am concerned that the endorsement of such an approach would simply add more pressure to increasing land values. Second, while such an approach is canvassed in another planning scheme, it is not part of the scheme that applies to this land.
3. The strategic direction set out in Bass Coast Scheme is very clear. The LPPF recognises that there is a place for some small rural lot development in the shire. In response to this, clause 21.05-3 sets out strategic parameters as to where small lot development is to occur. Essentially such development is directed to locate in areas close to existing social and physical infrastructure, particularly within a number of identified rural hamlets. However, it also clearly discourages small lot subdivision in broad acre farming areas. In this way, the scheme seeks to manage rural land as a valuable resource. Discouragement does not and cannot mean prohibit, but in my view, very good reasons are required to depart from the clear direction set out in the planning scheme. Those reasons have not been provided in this case.
4. Unlike the conclusion reached by the tribunal in Great Southern Plantations Ltd v Colac-Otway SC[5] I do not accept that the proposal meets the objectives of the planning scheme's policies nor am I satisfied that the only option for the dwelling on this site is for rural residential use.

1. I have reached the conclusion that the proposal does not present an outcome that is in line with planning policy, nor is it in line with the main purposes of the Farming Zone. I will therefore affirm the council's decision and direct that a permit must not be issued.

[1] This is shown as Lot 1 on the plan of subdivision.

[3] [2002] VCAT 1594

[5] [2006] VCAT 468