Permit Application No 297352 Application for Review No. 1998/34846

Permit Application No 98082 Application for Review No. 1998/38233

Permit Application No 98028 Application for Review No. 1998/38249

Lot 1 LP 146727Y and Lot 2 LP 146728W

Permit Application No 98075 Application for Review No. 1998/43152

CA's 57C and Part of CA 57B County of Buln Buln Parish of Neerim

Buln Buln Planning Scheme/Primary Agricultural Zone/Tarago Catchment Policy Area.

Mr Richard Nichol-Smith, Town Planner, appeared on behalf of the Responsible Authority Baw Baw Shire Council.

Mr Nichol-Smith called Mr Peter Marwood, Environment Protection Officer with the EPA at the Gippsland Region Office, and Mr Scott Beveridge, Unit Leader for Development Approval Services for Baw Baw Shire Council and formally an Environmental Health Officer in the area for over 10 years, as witnesses in support of his submissions.

Mr Robert Jamieson, Solicitor of Blake Dawson Waldron, Solicitors, appeared on behalf of Melbourne Water, the applicant for review and objector in each of these applications for review. Mr Jamieson called Dr Dasarath Jayasuriya, Manager for Planning at Melbourne Water, and Mr Shane Haydon, Manager for Water Quality at Melbourne Water, as witnesses in support of his submissions.

Ms Heather Cahill, Senior Land Use Planning Officer for the Department of Natural Resources and Environment appeared on behalf of the Department.

Mr Andrew Laird, Barrister instructed by Minter Ellison, Solicitors, appeared on behalf of Ms J Aldred, the respondent/permit applicant in application for review No 1998/34846. Mr Laird called Dr Robert van der Graaff, Soil Scientist as witness in support of his submissions.

Ms Sue Halsted-Lyons, Environmental Planner of A G C Woodward-Clyde Pty Ltd appeared on behalf of Mr and Mrs B M Somes, the respondent/permit applicants in application for review No 1998/38233.

Mr Ian D'Oliveyra, Town Planner of Network Planning Consultants, appeared on behalf of Flavin Pty Ltd, the respondent/permit applicant in application for review No 1998/43152.

M Steel and D Algie, the respondent/permit applicants in application for review No 1998/38249 did not appear at the hearing and were content to rely on the submissions from the Responsible Authority to support their application.

The parties and the witnesses in the appeal made both written and verbal submissions and a number of photographs, plans and other documents were tendered to the Tribunal.

Melbourne Water's grounds of appeal in each of these appeals are:

* Increasing levels of septic tanks within the catchment will raise levels of pathogenic organisms in Tarago Reservoir, which is a drinking water supply. Human contamination of a water supply has the highest risk of producing waterborne epidemics. Melbourne Water has severe restrictions on human access to a majority of its catchments, the water quality from these catchments has clearly demonstrated that this policy reduces public health risk as the level of microbial activity in waters from these catchments is low compared to open catchments.

* The Tarago Catchment is a Special Water Supply Catchment Area under the Catchment and Land Protection Act 1994 and has an accompanying Land Use Determination which designates the land for rural use. Permits such as the one applied for contravene the intention of this proclamation.

* Increasing levels of human activity reduces aesthetic aspects of stream water quality, often dramatically increasing turbidity and colour in water supplies. These impacts are both aesthetic, as the water becomes more unpalatable, and a health risk. Highly turbid and coloured water reduces disinfection efficacy and requires higher doses of chemicals. These chemicals may have heir own associated risks and Melbourne Water seeks to minimise their usage.

* The National Health and Medical Research Council recommend that "humans and domestic animals should, ideally, be excluded from catchments". (Australian Drinking Water Guidelines 1996 pg 2-8).

* In the past, the tendency has been for areas with septic tanks to reach a reasonable density before an area is sewered. Once this density has been reached septic overflows are relatively frequent producing poor water quality until the area is sewered. Septic tank overflows tends to occur in large rainfall events. Large rainfall events also raise the turbidity of the water making it difficult to disinfect hence raising the risk to public health.

* The proposed Baw Baw Municipal Strategic Statement contains references to the need to protect water quality and water supply catchments from inappropriate development and the need to protect high quality agricultural land. It is policy that subdivision that leads to a concentration of lots which would have the effect of changing the general use and development of an area will be discouraged. While this application does not involve a subdivision it does involve a concentration of dwellings which has the effect of `changing thd general use and development of the area'.

The Responsible Authority in its submissions provided the following material as a background to these applications for review, while the other parties in the appeal may not agree with the Responsible Authority's assessment in all respects, it nevertheless provides a useful summation of the circumstances leading to the applications:

The Tarago Reservoir was completed in 1968 and upgraded in 1972 to provide a water supply mainly for consumers in the Mornington Peninsula area. Unlike many water supply reservoirs in the region, the water supply catchment area includes a significant area of private land. The Tarago Reservoir Catchment has an area of approximately 114km2, of which approximately 28km2 is privately owned. The remaining area is State Forest.

Much of the privately owned land is cleared farmland, located to the east, north and south-west of the reservoir but there is also an area of privately owned bush on the western side of the reservoir. Most of the remaining area of land on the western side of the reservoir is State Forest. Timber harvesting has been ongoing in this area on both private land and in the State Forest since the reservoir was constructed. The farming area includes a mix of farm types, being mainly dairying and beef and including some cultivation.

For many years the reservoir has suffered water quality problems, particularly in respect of turbidity and colour but also in respect to algal blooms in the early 1990's. As a result of these problems, the water supply to the Mornington Peninsula was switched to Cardinia Reservoir. The Mornington Peninsula and District Water Board, which preceded Melbourne Water as the Tarago Reservoir management authority until 1991, was examining ways of improving water quality which included a proposal in 1991 for a water treatment plant. However, this did not proceed. Since taking over the management responsibility for the reservoir, Melbourne Water has been endeavouring to improve the quality of water entering the reservoir, particularly in respect to water flow from the privately owned land to the east of the reservoir.

Since the approval of the Buln Buln Planning Scheme in 1988, all applications for buildings and works within the Tarago Reservoir Catchment Area have been required to be referred to the Department of Natural Resources and Environment (and its predecessor) and to Melbourne Water ( and its predecessor, the Mornington Peninsula and District Board) for comment under the provisions of Clause 2 1. 1 of the Scheme. This has included a number of applications for permits for the construction of a dwelling. Whilst both the Mornington Peninsula and District Board and Melbourne Water in most of their referral responses highlighted their concerns regarding the potential increase in residential development within the catchment area, their approach was not to object to such proposals subject to appropriate on site waste disposal systems being installed. Melbourne Water had required the inclusion of relevant conditions for any permit issued for a dwelling in the catchment.

However, following the exhibition of the Baw Baw Planning Scheme on 3 July 1997, Melbourne Water has been taking a blanket approach to proposals for the construction of dwellings within the catchment area by objecting to all such applications. This change of approach has resulted from their concerns that the planning provisions relating to the construction of houses and for the excision of house lots under the Baw Baw Planning Scheme will greatly increase the potential for residential development in the catchment area. This is evidenced in Melbourne Water's submission in respect to the exhibited Baw Baw Planning Scheme in which they state:

"The rural lot tenement provisions within the Buln Buln Planning Scheme generally restrict the creation of dwellings within a tenement holding., Such a provision subsequently limits the number of residential septics being created within a water supply catchment area. This tenement provision has not been provided for in the exhibited planning scheme and there is a concern that rural residential development (facilitated through a combination of rural lot excisions or the development of existing lots) may lead to a greater number of septics within an area where potential impact on water quality should be reduced."

Under the Buln Buln Planning Scheme, the tenement provision restricts the number of houses that could be permitted in the whole catchment area. On some lots this control prohibits even one dwelling and on a large proportion of the lots this control prohibits a second dwelling. In addition, this control also prohibits the subdivision of any lot to create any additional lot less than 40 hectares. However, the provisions of the zone allow consideration of an application for a tourist establishment on any lot.

Under the Baw Baw Planning Scheme it will be possible to apply for a permit for more than one dwelling on any lot within the catchment area and to apply for the excision of any existing dwelling. In addition, tourist accommodation would be a Section 2 use on any lot.

The Baw Baw Planning Scheme will certainly increase the potential for planning applications for dwellings generally within the catchment. However, there are specified guidelines within the Scheme which must be considered by the responsible authority, including matters relating the potential impact upon water quality. In addition both Melbourne Water and the Department of Natural Resources and Environment will be referral authorities under Section 55 of the Planning and Environment Act 1987.

Melbourne Water, in its submission on the exhibited Baw Baw Planning Scheme appears to have accepted that the above provisions will be adequate.

The following table and extracts from the submissions of the Responsible Authority describe in some detail the various sites and the related proposals which are the subject of these Applications for Review.

(1) This proposal involves the resubdivision of two lots one of which is vacant and one of which contains a house.

(2) This proposal is based on a resubdivision not registered at the date of the hearing.

(3) This proposal seeks to locate the effluent disposal field over a ridgeline to increase the path to waters of the reservoir.

(4) The distances in this table are interpolated from the Responsible Authorities submissions, there is some variation in the estimates of various parties.

The subject land is a lot with an area of approximately 23 hectares located in a rural area approximately 4 kilometres to the west of Neerim Junction and approximately 6 kilometres north of the Tarago Reservoir. The surrounding area is a mix of traditional and hobby farm lots.

The subject land is predominantly bush. However, at the northern end of the property, where the proposed site for the holiday cabins is located, is an area of approximately 3 hectares, which is cleared pasture. At the southern end of the property lies an existing house.

The land slopes down from the north and down from the south to a gully, which runs through the middle of the lot where a creek runs approximately east-west before heading south-east towards the Tarago Reservoir. A dam is also located on the creek on the western side of the lot. The creek is located approximately 300 metres to the south of the proposed holiday cabin site. A buffer of native vegetation, approximately 60 metres wide, lies to the north of the creek, between the creek and the proposed cabins. This vegetation includes both trees and understorey plants.

This proposal involves the development of a tourist establishment comprising of 2 holiday cabins, located at the northern end of the site. It is proposed to construct one cabin initially and the second one at a later stage.

Following the objection of Melbourne Water to the proposal, the applicant now proposes to install an advanced waste water disposal system including a sand filter system to dispose waste water from the cabins. It is understood that Melbourne Water suggested to the applicant that a composting toilet system may satisfy their concerns. However, advice from Council's Environmental Health Surveyor indicated that a septic tank system would be required. In addition, there would still be a requirement for the disposal of sullage from the cabins.

The land is located in a rural area near the northern end of Wagners Road, approximately 3 kilometres north-west of Neerim South.

The subject land is a cleared farm lot with an area of 9.892 hectares. It currently includes a two bedroom, two storey dwelling, which is setback approximately 90 metres north of the southern lot boundary, 200 metres from the eastern boundary, 120 metres from the western boundary and 180 metres from the northern boundary. The septic tank effluent disposal system used for disposal of waste water from the dwelling is located on the eastern side of the dwelling, approximately 185 metres from the eastern boundary and 80 metres north of the southern boundary.

The land is generally gently sloping from the north-west down to the south-east but slopes more significantly in the south-cast corner towards a gully on the adjoining property. An unfenced creek is located in this gully. This creek runs into the Tarago Reservoir, approximately 300 metres to the south of the southern boundary of the subject property. Wagner Road runs between the southern boundary of the subject lot and the Tarago Reservoir Reserve. On the southern side of Wagner Road is a buffer of native vegetation, comprising of both trees and understorey plants.

This proposal involves the development of a two storey building to provide additional accommodation in association with the existing two bedroom dwelling on the property. The existing dwelling was approved by Planning Permit 149/90issued by Buln Buln Shire Council on 18 December 1990. The proposed building will be separate from the existing dwelling but joined by a carport. The proposed accommodation would comprise of:

* A ground floor studio/recreation area with a sink;

* A loft area with two bedrooms, one bathroom with WC, shower and basin;

* A carport with WC, basin and lock up tool store.

* A ground floor including a living room, kitchen/dining room, bathroom, toilet and laundry;

It is proposed to connect all waste water plumbing to the existing septic tank system.

The subject land comprises of two rural lots with areas of 27.26 hectares and 41.97 hectares, located on the Main Neerim Road, approximately 4 kilometres north of Neerim South. The area comprises a mix of traditional and hobby farms.

The land comprises mainly cleared grazing land, which generally slopes down to the west, varying from gentle to moderate slopes. Part of the western boundary of the land abuts the northern extremity of the Tarago Reservoir Reserve.

A house is located on the existing 41 hectare lot whilst the 27 hectare lot is vacant. The area proposed for the 2 hectare lot, on which a house is proposed, is located at the eastern extremity of the subject land, abutting Main Neerim Road. The western boundary of this proposed lot would be approximately 750 metres from the reservoir waters. A buffer of native vegetation, comprising of both trees and understorey plants has been planted around the reservoir along this section. The nearest watercourse to this boundary is approximately 700 metres away. The ridgeline separating the Tarago and Latrobe River catchments at this location is located approximately along the alignment of Main Neerim Road.

This proposal involves the re-subdivision of two existing rural lots with areas of 27.26 hectares and 41.97 hectares to create two lots with areas of 2.002 hectares and 67.22 hectares.

The proposal also seeks approval for the erection of a house and associated outbuildings on the proposed 2.002 hectare lot. It is proposed to dispose of waste water from the dwelling into a septic tank system.

Following Melbourne Water's objection to this planning permit application, the applicants have also indicated that they are willing to construct a holding reservoir to further safeguard the water quality objectives of the reservoir and to plant trees to aid transpiration of the waste water from the septic tank effluent disposal field.

The subject land is a lot, which would have an area of approximately 32 hectares, located in a rural area near the northern end of Wagners Road, approximately 3.5 kilometres north-west of Neerim South.

The subject land is predominantly cleared pasture. It is bounded by Wagner Road to the east and Tarago Reservoir to the west. The land slopes moderately down towards the reservoir. A buffer of native vegetation, being both trees and understorey plants, has been planted around this section of the reservoir by the water authority.

The proposed dwelling site is located on a gently sloping part of the land, approximately 400 metres from the nearest waters of the reservoir. A dwelling is located on each of the existing lots, one to the north and one to the south of the proposed dwelling site, the closest one being approximately 100 metres away.

This proposal involves the construction and use of a second dwelling on a proposed lot.

Planning Permit 295541 was issued by Baw Baw Shire Council on 24 January 1996 for a two lot re-subdivision of a 10 hectare and 26.9 hectare lot to create a 32.22 hectare and 4.8 hectare lot. This subdivision has not yet been registered at the Titles Office.

The proposed dwelling would be located on the proposed 32,22 hectare lot, together with one of the existing dwellings. At present the proposed dwelling site would be located on part of the existing 10 hectare lot. The dwelling would only be permitted in this location following the approval of the plan of subdivision by the Titles Office.

The purpose of the proposed dwelling is to provide self-contained accommodation for the property owners' son. The owners have a property in Melbourne and are often absent from the subject property. It is intended that, by providing the son with a dwelling on the property, he will be able to manage the farm in their absence.

All of the sites in these Applications for Review are within the Primary Agricultural Zone under the provisions of the Buln Buln Planning Scheme, as is most freehold land within the Tarago Reservoir Catchment.. The zone purposes are:

* To provide for farming and related uses within the zone;

* To prevent subdivision and residential or other development likely to be incompatible with the use of land for farming and related uses;

* To regulate uses, developments and subdivisions which may limit the range of practicable future uses of land within the zone; and

* To control uses, developments and subdivisions which may be detrimental to the water quality and the environs of watercourses.

The sites are also with the Tarago Reservoir Catchment Policy Area.

Planning Scheme provisions particularly relevant to these proposals include:

* Clause 21 Tarago Reservoir Catchment Policy Area

In the context of these permit applications a permit is required under the Planning Scheme (where relevant) to:

* Use of the land for tourist establishment, house and second house - Clause 9;

* Develop the land for building and works - clause 21.

Under the provisions of Clause 9 the guidelines for permit are:

In deciding on an application, the Responsible Authority must consider the need to:

* prevent or reduce erosion and the possibility of landslip including the carrying out of works to alleviate existing problems of a similar nature;

* prevent or reduce the pollution of any watercourse and runoff water from clear-felled trees;

* retain vegetation cover on elevated slopes and ridges and to reduce by screening and the use of suitable materials including non-reflective surfaces, the visual prominence of the proposed use or development of the land; and

* provide for the safety and welfare of persons and property in the area.

Attachment 1 - Extracts from Buln Buln Planning Scheme.

The Baw Baw Planning Scheme is a Victorian Planning Provisions based scheme which has been exhibited and has been the subject of a Panel hearing. Under the scheme the sites will fall within a Rural Zone and be affected by Environmental Significance Overlays relating to "High Quality Agricultural Land" and to "Water Catchment Areas".

The objectives and decisions guidelines relating to "Water Catchment Areas" are:

"To ensure the protection and maintenance of water quality and water yield within the following Water Supply Catchment Areas:

Before deciding on an application, the responsible authority must consider:

* The effect on water quality, watercourse capacity and erosion.

* The preservation of and impact on the environment.

* The protection of sites of scientific significance, particularly sites identified as having botanical, zoological, geological, geomorphological, archaeological or landscape significance have been considered.

* The Planning Guide for Land Liable to Flooding in Victoria 1997.

* Any water management plan prepared by the relevant water management authority."

The objectives and decisions guidelines relating to "High Quality Agricultural Land" are:

* To recognise the finite nature of high quality agricultural land.

* To protect high quality agricultural land because of its versatility, productivity and ability to sustain a wide range of agricultural uses without degradation.

* To protect the potential production from high quality agricultural land.

* To discourage development which results in the conversion of high quality agricultural land to a non-soil based use or a use which does not utilise the productive potential of the land.

Before deciding on an application, the responsible authority must consider:

* Whether the proposal will maintain the productive potential of the high quality agricultural land.

* Whether the buildings or works are needed for agricultural production.

* Whether the buildings or works will be sited so as to avoid or minimise loss of good quality agricultural land.

It was submitted on behalf of Melbourne Water that policies relevant to these Applications for Review are:

* State Environment Protection Policy (Waters of Victoria)

Melbourne Water has also developed a "Water Supply Management Policy" and to implement this policy in the Tarago Catchment has prepared the "Tarago Catchment - Catchment Management Standard".

Attachment 2 - Tarago Catchment - Catchment Management Standard

The four applications which are the subject of these applications for review were submitted to the Responsible Authority over a period extending from September 1997 to March 1998. The applications were informally referred to Melbourne Water, the Department of Natural Resources and Environment, and the Environment Protection Authority. None of these authorities are formally referral authorities under the provisions of the Planning Scheme, although the Responsible Authority must consider the comments of the Department of Conservation & Natural Resources and Melbourne Water as a consequence of the provisions of Clause 21 of the Buln Buln Planning Scheme. Melbourne Water objected to each of these permit applications, their letters of objection are not all identical, but the following extracts from the letter in relation to the Aldred proposal is typical of Melbourne Water's response:

"Melbourne Water objects to the above application on the following grounds:

The proposed tourist development is in the Tarago Reservoir Catchment To protect the quality of water within the Tarago Reservoir the potential increase in septics in the catchment must be controlled. Melbourne Water objects to secondary dwellings with septics on lots within the Tarago Reservoir Catchment to limit the number of septics and thus limit the risk of increasing contamination of surface and ground water."

This decision is primarily dealing with the question of whether or not these Applications for Review should be referred to the Governor in Council for determination, nevertheless it is appropriate the summarise the main arguments presented to the Tribunal on the merits of the applications.

Melbourne Water's arguments in this appeal can be summarised as follows:

* Additional dwellings within the catchment of the Tarago Reservoir increased the potential for its pollution, the relevant policy framework is directed towards protecting water quality and demand the exercise of caution in the further development of catchments. Relevant policies include Planning Scheme policies (existing and proposed) and more general policies such as "SEPP - Waters of Victoria" the "Australian Drinking Water Guidelines 1996" etc.

* Various studies have demonstrated that 50% of septic systems fail within five years of installation, and that the contamination of streams by human waste is common in areas relying on septic systems. (Note these studies were not undertaken in the Tarago Catchment).

* In the past Melbourne Water has been primarily concerned with factors contributing to turbidity and nutrient load of waters entering the reservoir, and its policies and practices have responded to these concerns. However, within the Water Industry generally concern had moved onto the impact of pathogens on water supply in particular E.coli, giardia and cryptosporidium, there being increasing evidence that bacteria and parasites of these types can be relatively long lived within water systems. This has particular implications in relation to the impact of human waste on water quality.

* New "second dwellings" on land within the catchment are not really consistent with the municipal strategic statement, and the environmental significance overlays proposed by the Responsible Authority.

* The approval of a second dwelling on a rural lot when the dwelling has no clear relationship to the continued agricultural use of the land establishes an undesirable precedent.

* A tourist establishment is also inconsistent with the proposed environmental significance overlays affecting this land, and the existing overlay control.

The Responsible Authority and permit applicants arguments can be summarised as follows:

* Other activities within the catchment such as logging, grazing etc were far greater contributors to the increases in turbidity and the flow of nutrients affecting the reservoir.

* While it is true that the new Baw Baw Planning Scheme, will allow the construction of a greater number of dwellings within the catchment, it is unlikely that there will be a significant rise in the number of dwellings.

* Compliance with the septic tank code of practice should be sufficient to prevent pathogenic organisms reaching the reservoir, there should be an assumption that the code provides appropriate protection within the catchment.

* The report "Catchment Land Capability - Tarago Catchment 1998", Goss, Reimers and van der Graaff demonstrates that all the proposed development sites are category 5, that is good, from the perspective of their capability for use for septic tank purposes. The evidence accepted generally by all the parties is that a well constructed septic tank system will in all applications function appropriately.

* Melbourne Water does not present any scientific evidence, relevant to the Tarago Catchment, demonstrating that the addition of a small number of additional septic tanks within the catchment will significantly increase the risk of pollution of the reservoir.

* Melbourne Water is in effect seeking to establish a closed catchment, without compensation to affected land owners.

* Melbourne Water is seeking to manage this catchment as if it is a closed catchment, it should instead be adopting the approach of other catchment management authorities, the issue should not be so much as one of restriction, but rather one of management with septic tanks operating in accordance with the code providing a significant sufficient level of protection to the reservoir.

* If an open catchment ultimately proves to provide inadequate protection from a public health perspective then Melbourne Water should be acting to acquire the land within the catchment.

The Somes proposal is an extension to an existing house rather than a proposal for a new house or for a tourist establishment, and it was also argued that therefore it should be considered quite differently to the other proposals.

The Tribunal has formed no conclusive view in relation to any of the proposals other than the Somes' proposal, but it is nevertheless useful to make some general observations in relation to each of these proposals on an individual basis.

This proposal is for a small tourist establishment which is generally consistent with the municipality's desire to encourage tourist activities within rural environments to diversify and enhance the economic bases of the affected rural communities. Nevertheless, the proposal does involve the creation of additional human habitation within the water supply catchment in association with the use which while it could be readily established in the land, is not essential for its continued use for rural purposes.

The Tribunal has formed the view that this proposal is indeed different in character to the others under consideration. The proposal is for a fairly significant extension to the existing house, and while it is true that a larger house can result in significant increases in the production of effluent, in the Tribunal's mind it is not the amount of effluent flowing into the septic system which is critical, provided of course that the septic system is of a sufficient size, rather it is the question of how effective the maintenance and operation of septic systems are generally within the context of a catchment. For this reason the Tribunal believes that it is quite appropriate to direct the grant of a permit in accordance with the Responsible Authority's decision in this case, given that this application relates to an existing septic system.

This proposal involves the construction of an additional dwelling, on a small lot which does not directly enhance the continued rural use of the land. However, the re-subdivisions proposed consolidate much of the land into a single larger lot which is to be used for farming purposes. In a sense it could be argued that the re-subdivision creating the smaller lot and the associated proposal for a house on that lot are desired to achieve a purpose consistent with the zone generally because in effect one owner is prepared to allow his or her land to be amalgamated with another lot provided that he or she can retain a small lot for the purposes of a dwelling. Nevertheless, the dwelling is not essential for the continued rural use of the land and is a new dwelling within a water catchment.

In relation to the issue raised in relation to this re-subdivision in respect of the effect of Clause 21-3, the Tribunal has not formed a concluded view, but is tentatively of the opinion that the subdivision is permissible.

This proposal involves the construction of a second dwelling on a lot which while not directly compromising the continued use of the land for rural purpose, it is not really consistent with that aim, particularly where in the context that under the proposed planning provisions small lots could be excised off the larger lot to accommodate one or more of these dwellings. Again this is an additional dwelling within a water supply catchment not directly related to the continued use of rural land.

REFERRAL OF THE APPLICATIONS FOR REVIEW TO THE GOVERNOR IN COUNCIL

At the commencement of the hearing of these applications for review the Tribunal raised the question of whether or not these applications are of a type that should be referred to the Governor in Council for decision either because they raise major policy issues or have a substantial effect on the achievement or development of planning objectives. The hearing continued on the basis that this issue would be considered after hearing the submissions of the parties on the merits of the applications.

The Tribunal made reference to Clause 60 of schedule 1 of the Victorian Civil and Administrative Tribunal Act 1998. Mr Laird, submitted that as a consequence of the transitional provisions relating to the introduction of VCAT, the power for this referral applicable in these Applications for Review is found in Section 41(4) of the Planning Appeals Act 1980. The Tribunal agrees with this submission. Section 41(4) states:

"(4) If, after the hearing of an appeal has commenced, it appears to the Tribunal that the appeal raises a major issue of policy and, in the case of an appeal brought under the Planning and Environment Act 1987, that the determination of the appeal may have a substantial effect on the achievement or development of planning objectives, the Tribunal -

(a) may invite the Minister administering the Planning and Environment Act 1987 to make submissions to the Tribunal; and

(b) may continue to hear the appeal but, without determining it, refer it with recommendations to the Governor in Council for determination."

At the conclusion of the hearing the Tribunal gave directions inviting the parties to make further written submissions to the Tribunal in relation to the question of whether or not the applications for review should be referred to the Governor in Council, and on the question of costs.

All the parties represented at the hearing made submissions in relation to the question of whether or not these applications should be referred to the Governor in Council, the last of these submissions being received on the 5th of August 1998.

In brief summary Melbourne Water submitted that these applications should be referred to the Governor in Council for determination because:

* The Tarago Reservoir already supplies a number of local townships, and will in the future be required to supply water to the developing Mornington Peninsula. A recently released document prepared by the Department of Infrastructure and the Department of Natural Resources and Environment entitled "Working together in Catchment Management: Local Government and Catchment Management Authorities", October 1997, promoted a co-operative approach between Catchment Management Authorities and Local Government, in Melbourne Waters' view this had failed in this instance. The quality of water in the Tarago Catchment transcends local issues.

* There are a variety of planning objectives and policies both in the Act and within the Scheme which are affected by these proposals.

The Responsible Authority and the permit applicants on the other hand submitted:

* None of the individual proposals raised major issues of policy.

* There have been no significant change of circumstances since the catchment was established in 1968 which warrants this change in approach by Melbourne Water.

* No new evidence has been given of the potential impacts of development within the catchment on water quality.

* The proposals are permissible under the planning controls, Melbourne Water should have effected significant changes to the proposed Baw Baw Planning Scheme if they were genuine about controlling new development within the catchment.

* Numerous water authorities elsewhere do not adopt the Melbourne Water approach to development within their catchments, the existing planning framework for controlled development in those cases seems to be accepted as being adequate.

The Tribunal having considered the submissions has formed the view that with the exception of the Somes' proposal these applications for review should be referred to the Governor in Council for the following reasons:

* On an individual basis each of these particular proposals are quite minor in character, but the reality is that over time a succession of such minor developments can have a significant impact, and it is a role of planning policy to manage the impact of incremental change.

* Decisions within this catchment, particularly in the context of the VPP approach to planning schemes, do not only affect this catchment. The policy framework within which such decisions must be made, particularly under the new planning scheme, is quite complex and does include policies and objectives dealing explicitly with water catchment and water quality related issues. Nevertheless, in the Tribunal's view these applications demonstrate that a more explicit policy and regulatory framework may be required.

* Under the new Baw Baw Planning Scheme provisions Melbourne Water will become a referral authority (as will other water authorities) in respect of proposals on land affected by the "Water Catchment Areas Environmental Significance Overlay" but only in relation to small lot subdivision and intensive animal husbandry. This will place Melbourne Water in a more powerful position vis-à-vis the initial decision in respect of the permit application for these applications, but at the same time Melbourne Water appears to have lost its consultative role in relation to others classes of application. In any event even if Melbourne Water is a Referral Authority or a consultative body, this is not necessarily a resolution of the potential problems.

In the early 1990s there were a large number of appeals involving the West Moorabool Water Board as a consequence of that Board's decision to try and manage the level of development taking place within the catchment of the Lal Lal Reservoir. A quick examination of the Tribunal's records indicate that there were at least 53 appeals of this type. These appeals took place in a context of a very unsatisfactory policy and regulatory framework, and in an environment of conflict between the Water Board and the Municipality. It is not at all clear that a consistent or satisfactory approach to the development of the catchment arose from this scenario. It seems to the Tribunal that this is a very unsatisfactory approach to what is an important public issue both from the perspective of health, and from the perspective of economic impacts.

* It seems to the Tribunal that a factor heavily influencing Melbourne Water in its change of approach to the prospect of further development within the catchment is a grave concern with the impact of pathogenic organisms on water quality and the risks that this entails. It is true that Melbourne Water has undertaken insufficient research to identify the extent and likelihood of this problem within the Tarago catchment, but the research they did refer to in their evidence, and the more recent experiences with Sydney's water supply is sufficient to raise questions about the management of development within catchments.

* The Tribunal accepts the evidence of Dr van der Graaff indeed, this was evidence not seriously challenged by any parties, that a well designed and properly installed septic tank system is capable of operating satisfactorily in these soils and would in normal circumstances provide sufficient protection to the reservoir. However, as acknowledged by Dr van der Graaff under cross examination, the issue is not solely one of design and satisfactory installation, issues relating to the operation and maintenance of the system is perhaps of even greater importance. For example if the function of a septic system was compromised, and if this coincided with wet conditions it is perhaps possible that pollution could occur. While it is common to talk about annual inspection regimes in situations such as this the question must be asked is this a sufficient safeguard against the risk of random damage to the functioning of the systems.

* The development within water catchments can have very significant financial implications, either in terms of the facilities required to ensure a portable water supply or through the loss of investment which will occur if the water is rendered unfit for human use without extensive treatment. Recent events in Sydney raise the additional concern that when treatment systems fail, there can be broader economic costs as a consequence of the perception created in the mind of tourists, investors and the like.

It is the Tribunal's conclusion that these appeals (other than the Somes appeal) raise a number of issues which are more properly the province of Government rather than of the Tribunal. These issues include, the balance of interest to be struck between the persons who depend upon a reservoir for water supply, and the persons who are in rural land within the water supply catchment, the level of risk associated with development within water supply catchments in relation to public health, and the broader economic issues which arise from the possible responses to these issues. The solution to the development created by these applications for review might be:

* To do nothing, to rely on the existing policy framework, and permit application processes to produce a workable and acceptable result;

* Solutions which are essentially outside the existing planning system, such as yet an unthought of technical fix, or some form of inspection/maintenance regime in relation to septic systems or a combination of both;

* A planning system based approach which could include more restrictive controls, or more highly developed policy framework like that which for example exists between the Good Design Guide and medium density housing in the metropolitan area, or a combination of both these approaches.

The Tribunal acknowledges that the implementation of a satisfactory response to the policy issue raised by these appeals may be such that an interim solution is required in relation to these individual applications.

Therefore these Applications for Review (other than the Somes proposal) should be referred to the Governor in Council under the provisions of Section 41(4) of the Planning and Environment Act 1987. The Minister administering the Planning and Environment Act 1987 should first be invited to make a submission under the provisions of Section 41(4)(a) of the Planning and Environment Act 1987, and given the nature of these appeal it is considered appropriate to extend a similar invitation to the Minister administering the Catchment and Land Protection Act 1994

In relation to applications for review numbered 1998/34846, 1998/38249 and 1998/43152 the Registrar is directed to:

* provide a copy of this decision to the Minister administering the Planning and Environment Act 1987, and to invite the Minister to make a submission to the Tribunal in accordance with Section 41(4)(a) of the Planning Appeals Act 1980.

* provide a copy of this decision to the Minister administering the Catchment and Land Protection Act 1994, and to invite that Minister to make a submission to the Tribunal, in relation to the matters raised by these applications.

In the event that further submissions being received the Tribunal will make such further directions as are appropriate to give other parties to the applications an opportunity to respond.

The order of the Tribunal in Appeal No 1998/38233 is that the decision of the Responsible Authority is upheld. A permit is granted for an extension to the existing dwelling at 420 Wagners Road Neerim South generally in accordance with the plans which accompanied the application (the endorsed plans) and subject to the conditions contained in the notice of decision to grant a permit numbered 98082 issued by the Responsible Authority on the 27th of April 1998.

The Responsible Authority is directed to issue a permit in accordance with this order pursuant to Section 85(1)(b) of the Planning and Environment Act 1987.

7A.1 Subdivisions which do not require a permit

* A subdivision by an acquiring authority which does not create an additional lot.

* A subdivision which realigns the common boundary between two lots is exempt if all the land is in one urban zone and any of the following apply:

* Any lot that is reduced in area meets the minimum lot area and minimum dimensions (if any) specified for the zone.

· a minimum lot area is not specified for the zone.

· the area of the smaller lot is limited by a provision of the planning scheme, or by a condition of a planning permit.

* There is no minimum lot area specified for the zone, the area of the smaller lot is more than 230 square metres, and the area of either lot is reduced by less than 30 square metres.

* There is no minimum lot area specified for the zone, the area of the smaller lot is 230 square metres or less, and the area of either lot is reduced by less than 5 percent, or by less than 30 square metres, which ever is lesser.

* The new boundary coincides with a boundary fence that is more than five years old. This does not apply if all the land is in one ownership.

A subdivision which realigns the common boundary between two lots is exempt if all the land is on one non-urban zone, the re-subdivision does not allow the number of detached houses the whole of the land could be used for under the planning scheme to increase, and any of the following apply:

· meets the minimum lot area specified below for each non-urban zone:

(Note that implied easements under Section 12(2) of the Subdivision Act 1988 may be required; and that if any underground electric supply cables cross the new boundary the location of the new boundary must be agreed to by the electric supply authority.)

* A permit may be granted to create smaller lots if any of the following apply:

· The lot is required for public use by the Crown, a public authority or a municipality.

· The lot is reduced below the minimum area permitted by the planning scheme as a consequence of land acquired by the Crown, a public authority or a municipality.

· The purpose of the subdivision is to realign the boundary between lots and no additional lots are created. In the case of the following zones:

The potential number of lots which may be created from the land must not be increased.

* If a reserve, road or lot of not more than 40 square metres is required by a referral authority, this can be disregarded in calculating the area of the lot from which it is subdivided.

* To provide for farming and related uses within the zone;

* To prevent subdivision and residential or other development likely to be incompatible with the use of land for farming and related uses;

* To regulate uses, developments and subdivisions which may limit the range of practicable future uses of land within the zone; and

* To control uses, developments and subdivisions which may be detrimental to the water quality and the environs of watercourses.

Must comply with Section 9-1 of the State Section

* a tenement landholding of at least 40 hectares; or

No dwelling exists on the land and the proposed house would be the only dwelling that could be lawfully constructed on the land.

Proper and safe vehicular access must be provided to and within the land.

9.1.2 Permit required - Section 2

House if a section 1 condition is not met

Any use not in section 1 or 3

* a lot created by a subdivision for which a permit was granted since 14 October 1975.

If the land is less than 20 hectares must be the only dwellng on the land.

If the land is at least 20 hectares but less than 40 hectares, must not create more than 2 dwellings on the land.

If the land is 40 hectares or more, must not create more than:

* 1 dwelling on any lot of less than 20 hectares that could be created by a subdivision of the land under 9.3;

* 2 dwellings on each lot of 20 hectares or more than could be created by a subdivision of the land under 9.3.

Proper and safe vehicular access must be provided to and within the land.

Land at Lot 2 PS 110387 being part Crown Allotment 27, Parish of Drouin West.

9.1.3 Prohibited - Section 3

In deciding on an application, the Responsible Authority must consider the need to:

* prevent or reduce erosion and the possibility of landslip including the carrying out of works to alleviate existing problems of a similar nature;

* prevent or reduce the pollution of any watercourse and runoff water from clear-felled trees;

* retain vegetation cover on elevated slopes and ridges and to reduce by screening and the use of suitable materials including non-reflective surfaces, the visual prominence of the proposed use or development of the land; and

* provide for the safety and welfare of persons and property in the area.

Subject to 7A.1,a permit is required to subdivide land.

An application to subdivide must be referred to a referral authority listed in 7A.3.

Except as provided in 7A.2, a permit can be granted only if requirement (1) or (2) is met in addition to requirement (3).

(1) Each proposed lot must be at least 40 hectares.

(2) Only one proposed lot can be less than 40 hectares and:-

* It must be intended to provide a site of at least 0.5 hectare for an existing or proposed house; and

* No other such lot must exist or be permitted within the tenement landholding; and

* The land to be subdivided must not be a lot created under requirement (1).

· 75% of these dimensions if the lot is irregularly shaped; and

* if less than 5 hectares, must be capable of containing a rectangle that covers at least 60% of the area of the lot.

A permit is required to develop land for a house if:

* The house or any outbuildings or works are sited on land with a slope of more than 20%.

* The house has been erected and occupied on a different site.

A permit is required to develop land for an outbuilding if:

* The outbuilding is sited on land with a slope of more than 20%.

A habitable building must not be higher than two storeys, ground storey included.

A permit is required to develop land for any building or work setback less than:

This does not apply to a fence, stock loading race or clearance of natural vegetation.

A permit is required to develop land for a stock loading race setback less than:

A permit is required to remove, destroy or lop natural vegetation if the works:

* Are less than 25 metres from the top of any watercourse embankment.

* Do not allow the retention of natural vegetation over 20% of the area of the lot.

This does not apply if the works are exempted under 7.1. A permit can only be granted if the Responsible Authority has sought and considered the comments of the Department of Conservation, Forests and Lands.

Tree ferns are protected by the requirements of 36.

See 21 to 27 for policy area controls that may affect the land.

Despite the provisions of Clause 9.1.1. and 9.1.2 above, a permit may be granted by the responsible authority to use Crown Allotment 14, Parish of Jindivick for one only house

In deciding on an application the responsible authority must consider the comments of the:

* Department of Conservation and Natural Resources; and

Despite the controls of 9.3, subdivision of land in the Primary Agricultural zone must not create a lot of less than 40 hectares.

A permit is required to develop land for buildings or works.

This does not apply to fences or buildings and works exempted under 7.1.

Tarago Catchment - Catchment Management Standard

To implement the requirements of the water supply catchment management policy in the Tarago catchment.

Tarago catchment is a Special Water Supply Catchment Area under the Catchment and Land Protection Act 1994 and it supplies water to Tarago Reservoir. This catchment is inhabited and has agricultural and forestry activity within the catchment area. These activities and human habitation lower the quality of water entering the reservoir by both degrading the physical and chemical characteristics of the water and increasing the microbiological activity of the water. Habitation within the catchment increases the risk of human contamination and therefore increases the health risk to the water supply.

The Co-operative Research Centre for Catchment Hydrology have co-operated with MWC in undertaking research work on sediment and nutrient movement in the catchment.

To limit the potential for future water quality deterioration, it is highly desirable that habitation and agricultural developments should be restricted and logging minimised or ceased. Practices such as grazing and spraying of agricultural chemicals and any further clearing of land should also be minimised. Ideally spraying of chemicals and installation of septics should be eliminated within the catchment

Consistent with this objective Melbourne Water has undertaken a significant catchment improvement program in conjunction with the local landholders to improve the quality of the runoff from the catchment.

Where habitation does occur within the catchment, Melbourne Water will expect the appropriate authorities to implement and monitor the Code of Practice - Septic Tanks (EPA 1996). Any septic system installed must be at least 300m from any water course.

Melbourne Water will aim to minimise the impact of logging and the subsequent regeneration on future water yields.