Ms Jaci Lowe of Urban Edge Consultants Pty Ltd, appeared on behalf of the permit applicant.

The Tribunal inspected the subject site and surrounds following the hearing.

1. This application for review is one brought by a surveying firm, acting on behalf of a client, in response to the decision by the Shire of Baw Baw to refuse planning permission for a four lot subdivision of land on the eastern side of Stocks Road, Drouin West. The Council's permit application number is 99573.

2. The land is formally known as Lot 1 on Lodged Plan 145149, Part Crown Allotment 73, Parish of Jindivick.

3. The subject property has frontage to the eastern side of Stocks Road and a sideage to the northern side of Beards Road. It has an area of approximately 26.39h. The site slopes gently from the east and is generally cleared. There are some small pockets of remnant vegetation. A creek crosses the south-eastern corner of the land. The land is currently developed with a timber dwelling and a number of outbuildings and there is a dam at the northern end of the property. The owner of the subject site also owns and resides at a 2h lot to the north of the subject site which contains a dwelling and a number of sheds.

4. The subject land is located approximately 5.5km to the north of Drouin West. Like the subject land, the properties surrounding the lot are zoned Rural, and are generally put to non-urban use. However, there are 11 lots of approximately 3h in size on the western side of Stocks Road, about seven of which have been developed with dwellings. Those properties are used for rural residential purposes and there is a dog kennel business and some grazing conducted.

5. The proposal is to subdivide the land into four rectangular shaped lots ranging from 6 to 7.7h in size. The lots would be arranged from north to south with all lots having frontage to Stocks Road. Lot 1 would accommodate the existing house and sheds. I was also advised that the applicant intends to develop one of the lots for the breeding of rare native birds.

6. The standard minimum lot size in the Rural Zone is 40h. However, the schedule to the Rural Zone makes an exception from this 40h minimum for the subject land. It provides that the minimum area into which the land may be subdivided is 6h. This special provision was introduced into the Scheme by the former Minister for Planning in December 1998, in response to a direct request by the applicant. This request followed an absence of support by a Ministerial Panel hearing submissions in response to the proposed new format Planning Scheme for the Municipality, to a proposal that the new Scheme accommodate a seven lot subdivision of the land proposed by him. No reason was given for the insertion of this provision into the schedule of the Rural Zone of the new Scheme..

7. An application for permit was then lodged in May 1999. That application was referred to the Minister for Planning for a decision under Section 97c of the Planning and Environment Act 1987, but was later withdrawn when the Government changed following election. In December 1999, the application now before the Tribunal was lodged with the Council.

8. Clause 35.01-5 of the Scheme imposes application requirements in relation to proposals to subdivide land in the Rural Zone. That clause requires that the application must be accompanied by a report which explains how the proposed subdivision:

* Responds to the decision guidelines for this zone.

* Responds to any additional objectives and performance requirements set out in any relevant local planning policy in this Scheme."

9. General guidance to the exercise of the discretion in relation to this application is provided by Clause 65 of the Scheme which directs attention to the orderly planning of the area, the effect of the proposal on the amenity of the neighbourhood, relevant local and State planning policies, and the purpose of the zone and other controls.

10. Clause 65.02 also sets out guidelines particularly relating to applications to subdivide land. The matters listed therein include:

* The existing use and possible future development of the land and nearby land.

* The availability of subdivided land in the locality, and the need for the creation of further lots.

11. Clause 65 in turn refers to the purposes of the Rural Zone at Clause 35.01. They include:

"To implement the State Planning Policy Framework and the Local Planning Policy Framework, including the Municipal Strategic Statement and local planning policies.

To provide for the sustainable use of land for extensive animal husbandry (including dairying and grazing) and crop raising (including horticulture and timber production).

* protection and creation of an effective rural infrastructure and land resource

* protection and enhancement of the bio-diversity of the area

* promotion of economic development compatible with rural activities

* development of new sustainable rural enterprises.

To ensure that subdivision promotes effective land management practices and infrastructure provision."

12. Reference was made by the parties to some relevant components of the State and Local Planning Policy Frameworks:

* The Municipal Strategic Statement at Clause 21 recognises that the Shire comprises some of Australia's most productive rural land. The Vision Statement at Clause 21.02 includes:

"Maintenance of the integrity of the land resource and its protection from unplanned urban and residential encroachment is vital for the long-term economic prosperity of the Shire and its people.

The Vision Statement also seeks to protect and further develop the Shire's resources, particularly relating to dairying, horticulture, grazing, timber production, tourism and the capacity to supply high water quality.

At Clause 21.03, in discussing economic development it is said that:

"The Baw Baw Shire's Planning Scheme places a strong emphasis on the protection of the Shire's agricultural base and the retention of high quality productive agricultural land. The protection of the productive capacity and the minimisation of land use conflicts with continued agricultural production is of strategic significance at the local and regional level."

It is noted at Clause 21.07 that the south-west area of Gippsland, within which the Shire is located, supports over 20% of Victoria's dairy production and a significant proportion of the State's vegetables. It notes that the highly productive agricultural areas of Gippsland in the Shire are also accessible to major markets.

Clause 21.08 deals with strategies and actions designed to achieve the Vision Statement. In relation to the economy, the local strategies include:

"Rural land subdivision and the construction of houses on high quality agricultural land should only be undertaken where the sustainability of the agricultural resource is not undermined. Development should be consistent with the protection of the primary use of the land for agricultural production. Use of agricultural land for intensive productive horticultural uses is encouraged. The standard 40h minimum subdivision size for rural areas will be used.

Agricultural land classified as Class 1 and 2 [in Swan and Volum 1984, Assessment of Agricultural Quality of Land in Gippsland at page 22] is one of the Shire's most valuable natural resources due to its being the most versatile land for agricultural activity. Such land is to be retained for agricultural use and protected from indiscriminate use and development unless alternative sites for the use or development cannot be identified.

Agricultural land classified as Class 3 [in Swan and Volum page 22] should be maintained for agricultural purposes as it contributes significantly to the agricultural outputs and agricultural production of the Shire. Development of the land for non-agricultural purposes can be considered where it is demonstrated that the land is required for the extension of an urban area for residential development. Class 4 land may perform important agricultural roles. Class 5 land is generally too steep for conventional farming."

At Clause 21.08, past unco-ordinated rural residential development is recognised with associated problems for the environment and adjoining farming properties. An abundant supply of land zoned for rural residential purposes is also recognised. Strategic justification for new Rural Living Zones is required.

Clause 22.01 establishes as economic objectives for the Shire:

"Retain the resource base of prime quality agricultural land in sustainable, economically viable units through managed planning and development processes and the consistent implementation of planning provisions."

Clause 22.04-1 relates to house lot excisions in rural areas. The policy basis is said to be:

"The subdivision of lots in the Shire's Rural Zones for an existing or proposed dwelling should not be detrimental to the continued role and function of rural land to support productive agricultural uses."

"* To ensure that the excisions of lots and dwellings in the Rural Zone and Rural Living Zone is consistent with the purposes of the zone.

* To limit the subdivision, use or development of land that will be incompatible with the utilisation of the land for sustainable resource use.

* To ensure that dwellings which are excised or constructed on an excised lot do not prejudice rural production activities."

"* An applicant who has made application under the provisions of Clause 35.01-4 or 35.03-4 should be requested to provide a report which explains how the proposed development:

. is consistent with the Municipal Strategic Statement and local planning policies.

. is consistent with the purposes of the Rural Zone or Rural Living Zone.

. has addressed all the decision guidelines at Clause 35.01-6 or 35.03-6.

* Subdivision which is not for the purposes of excising an existing dwelling that is excess to the requirements of a rural use following a consolidation of titles will be discouraged.

* 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.

* Lots created under the provisions of Clause 35.01-4 or 35.03-4 for residential use and development should:

. not be located so as to limit the productive use and development of rural land.

. where appropriate to the site conditions, be clustered so as to minimise the area used for residential purposes."

13. Clause 35.01-6 of the Rural Zone provisions has guidelines for applications made in that zone. Amongst the matters listed for consideration are:

"* How the use or development relates to rural land use, rural diversification and natural resource management.

* The maintenance of farm production and the impact on the local rural economy.

* Whether the site is suitable for the use or development and the compatibility of the proposal with adjoining and nearby land uses.

* The impact on the existing and proposed rural infrastructure."

14. A Rural Floodway Overlay also affects part of proposed Lot 1. The purpose of the overlay is to identify waterways, major flood paths etc. and to ensure that development maintains the free passage and temporary storage of floodwater etc. Under Clause 44.03-2 a planning permit is required to subdivide land covered by a Rural Floodway Overlay and particular guidelines are set out at Clause 44.03-5. Matters for consideration include any comments of the floodplain management authority. It is time to say that the flood liability of the land was not seen as a problem for the proposed development.

15. It is also relevant to the consideration of this application that the use of these individual lots for a single dwelling would require planning permission, as the as of right use afforded by Clause 35.01-1 is precluded by the lots not being at least 40h. The use of the land for a dwelling nevertheless must also meet the provisions of Clause 35.01-2 which requires that access via an all weather road is to be provided, as must satisfactory sewerage disposal, potable water, and energy supply. Permission would also be required for the construction of the dwelling under Clause 35.01-3.

16. Upon receipt of the application for permit in December 1999, the Responsible Authority did not require it to be publicly advertised but merely referred it to relevant servicing authorities.

17. Melbourne Water by letter of the 21st of December 1999 replied that they did not object to the proposal but requested that all future proposals for development of Lot 1 be referred to them for comment and/or approval, having regard to its partial flood liability. Gippsland Water by letter dated the 23rd of March 2000 also indicated that they did not object to the subdivision, but required standard conditions to be imposed relating to easements etc. Telstra by letter of 31st of March 2000 indicated conditional consent as did TXU Networks Pty Ltd.

18. The application was also referred to Council's Engineering Section and a written reply indicated that they had no major concerns except that access to Lots 2, 3 and 4 would need to be at a location satisfactory to the Responsible Authority and constructed in accordance with standard rural culvert requirements. The Council's Environmental Health Officer by memorandum dated the 17th of November 1999 indicated that she had no objections to the application.

19. The Responsible Authority subsequently determined to refuse the application for permit on the following grounds:

"1. The subdivision is contrary to the objectives and intent of the Rural Zone as it will create lots which have very limited viability for agricultural use.

2. The application does not provide any substantive basis to support the subdivision given the Rural zoning of the land. Subdividing in order to designate sections of land to be used for different rural purposes (as is suggested in this application) is not a viable reason to establish four separate land titles as the use can still be undertaken in the lot's present status. The sale of lots created by the subdivision to finance works on the land (as has previously been indicated by the applicant) even where associated with a laudable conservation ethic is not provided for in the scheme."

20. The applicant for permit then sought a review of that Council decision on the following grounds:

"1. The entitlement to subdivide the land into lots having a minimum lot size of 6 hectares is enshrined in the Baw Baw Planning Scheme.

2. The grounds of refusal are contrary to the approved planning scheme;

3. The Schedule to the Rural Zone specifically entitles the land to be subdivided into lots having a minimum size of 6 hectares;

4. The former Minister for Planning, Mr Robert Maclellan, in correspondence to the Applicant/Appellant, dated 17 December 1998, stated:

"I have approved that your land, at Certificate of Title Volume 7395 and Folio 992, Crown Allotment 762, Parish of Jindivick, County of Buln Buln, may be subdivided into a maximum of 5 lots with the issue of a planning permit from the Baw Baw Shire Council."

There has been no material change in circumstance in planning terms that would warrant any change in this position;

5. The requirements of the Schedule to the Rural Zone override the standard requirements for the zone. Therefore, it is appropriate for the subject land to be subdivided into lots having a minimum size of 6 hectares instead of a minimum size of 40 hectares;

6. The grounds upon which Council seeks to rely upon in refusing the application are unfounded from a planning perspective;

7. The proposal is in accordance with the orderly and proper planning of the area."

21. When the application for review was received by the Tribunal, given that it had not been publicly advertised, advertising was directed. There were no objections received in response.

22. At the hearing of the application for review, I was presented with oral and written submissions on behalf of both the permit applicant and Responsible Authority. Following the hearing, I inspected the subject site and general locality to better understand the issues raised by the parties.

23. I have considered the submissions made and have determined to uphold the Responsible Authority's refusal and direct that no permit be granted. My reasons for that view are as follows.

* The insertion of a site specific provision for the subject land into the Baw Baw Planning Scheme December 1998, has afforded the opportunity for an application to be made for subdivision of the land into smaller lots than are generally permitted in the Rural Zone in the Shire. As the Council's submission correctly points out, the amendment has been made in such a way that consideration can be given to an application for permit, but the Scheme provisions do not explicitly "entitle" the land to be subdivided into lots of the stipulated minimum size.. The amendment made to the Scheme was not one which directly gave permission for subdivision of this land (that is, no further permit was required).

The question which arises is whether the site specific Scheme provision albeit it does not explicitly set aside the matters required to be considered under the Planning Scheme, nevertheless by allowing consideration to be given to small lot subdivision of this part of the Rural Zone, in contrast to the 40h minimum that applies elsewhere, implicitly sets aside the policies of the Scheme which give rise to the 40h minimum, or indeed any other standard matters for consideration.

This issue arose before the Tribunal in Appeal 1995/34728 Nascon Australia Pty Ltd v City of Maroondah and Canterbury Gardens Shopping Centre and Others, 18 AATR 50. That appeal concerned a proposal for a shopping centre with associated signs and car parking in Bayswater. The land was zoned Croydon Neighbourhood Residential. In that zone, a shop, other than a convenience shop of not more than 80sq m was prohibited. The appeal site and surrounding land was subject to a site specific clause introduced by Ministerial amendment which provided that:

"A permit may be granted to use and develop ... [the subject land] ... for the purpose of a shopping centre (supermarket, discount department store and speciality shops)."

Again, the form of Planning Scheme amendment which had been made by the Minister merely allowed an application for a permit to be made, rather than finally authorising the proposal. The then Clause 16-2 of the Scheme was the equivalent of Clause 65 under the present Scheme. It required that in considering the application for permit, the relationship of the proposal to the activity centre and retailing policies included at Clause 14 of the Scheme be taken into account.

The Tribunal raised the question of the extent of the matters to be considered in its decision:

"The somewhat unusual situation arises in this appeal whereby the words of the Planning Scheme describing the discretion to be exercised are clear, but the circumstances by which those words were incorporated into the Scheme, have led to some debate about the matters to be taken into account in exercising that discretion, and, in particular, the role that "policy" is to play in the determination."

The Tribunal recognised a lack of clarity in the exercise of its discretion brought about by the fact that a shopping centre was prima facie contrary to the purposes of the zone. The Tribunal also saw the site specific Scheme provision as apparently being in conflict with a policy of the Scheme which discouraged the establishment of new free-standing shopping centres except in limited specified circumstances.

Submissions were made to the Tribunal in that case on behalf of the permit applicant that the Scheme policies had been "penetrated" or "somewhat muted" by the amendment which permitted consideration to be given to a shopping centre in circumstances which did not accord with aspects of the policy. It was argued for the permit applicant that the effect of the amendment was that the Tribunal, in exercising discretion, should ignore the purposes of the zone and consider only those aspects of policy not set aside or consider policy only in a limited fashion.

Having unsuccessfully sought a clarifying Ministerial input on this matter pursuant to Section 40(1) of the Planning Appeals Act 1980, the Tribunal held:

"Policy has and does not act as a bar to the proposal being considered, but is to be taken into account in the exercise of our discretion."

The Tribunal went on to say that it was appropriate to only give little weight to the "muted" aspects of the policy, including that which recommended against "a new or free-standing site" for shopping facilities. It was said that "the door had been opened" to consideration of a shopping centre on the site by the Ministerial amendment. The Tribunal thus "set aside" this locational element of the policy. The Tribunal, however, found that other aspects of policy remained important considerations including that a net community benefit be achieved by the development of the shopping centre. These issues were ultimately fatal to the permit application.

The current application before me has many of the same characteristics as the Nascon case: the proposal is arguably contrary to the zone purposes and it can be said that the locational policies which recommend against isolated small lot subdivision in farming areas have been "muted" by the introduction of a provision which enables lots of 6ha in area to be contemplated in this locality rather than the 40ha size generally applying.

However, I do not believe that it is appropriate to precisely follow the approach adopted by the Tribunal in the Nascon case. In that case, the Tribunal believed that its hands were tied in relation to the locational issue, but other policy considerations remained relevant which provided a framework for the discretion in relation to the application to be exercised in a holistic manner. In the present case, if the locational strategic issues are set aside, the entire framework for decision-making on this application disappears, as all of the relevant matters are strategic or locational in nature.

Decision making in the absence of a policy framework under a new format planning scheme is an unsatisfactory situation. It is commonly understood that the "Planning Reform Program" pursued by the State Department of Infrastructure in recent years adopted as a major plank of the new planning scheme system, the guidance of decision making on permit applications by policy. Importantly also, the new format schemes' decision making structure contains no inherent presumption in favour of approving applications. For example, the provisions of Clause 31 indicate in relation to discretionary uses that just because discretion is available "does not imply that a permit should or will be granted". That clause goes on to say:

"The responsible authority must decide whether the proposal will produce acceptable outcomes in terms of the State Planning Policy Framework, the Local Planning Policy Framework, the purpose and decision guidelines of the zone and any other of the decision guidelines in Clause 65."

Thus if there were no policy context and no presumption in favour of approval, decision making on the application would be without proper guidance.

It is simply unacceptable to set aside the entire policy framework for decision making on the present application.

* The policy framework of the Planning Scheme clearly recommends against approval of this application for permit.

In particular, the small lot subdivision of this rural holding would run counter to the Vision Statement at Clause 21.02 in that it would not maintain the integrity of the land resource (by reducing the size of lots and increasing relative land values and thus undermining their utility for genuine farming purposes), and would represent "unplanned urban and residential encroachment" into a rural locality. The introduction of persons with rural residential lifestyles into broad acre farming areas can lead to conflict with operations on full-time farms as recognised by various provisions of the Scheme including those at Clause 21.03.

I agree with the Responsible Authority's submission that contrary to policy, the proposed subdivision would create a lot configuration that would prevent the land from being put to a sustainable agricultural use, noting the advice that the Swan and Volum Report indicates that the land's agricultural quality is at least Class 3 or 4. The Scheme generally discourages use of Class 3 or 4 land for residential purposes as they both play important agricultural roles (Clause 21.08). Further, as the Council points out residential uses are not precluded on Class 3 or 4 land, but it is appropriate that any extension to an urban area, such as is envisaged, be the result of a proper strategic planning process. I also accept their submissions that the land would effectively be used for hobby farming, for which there is already sufficient land set aside in the municipality.

* The policies of the Planning Scheme are of course not controls but are merely advisory in terms of the correct planning outcome in relation to any application. There may sometimes be reasons to determine applications in a manner which runs counter to policy: one needs to look to the objectives sought to be achieved by the policies, and consider positive arguments relating to other issues which might be put in favour of a desirable planning outcome.

In the present case, the only positive planning argument advanced was the fact that the subdivision was designed to facilitate the establishment of an aviary for rare and endangered native birds and to fund regeneration of bushland around the creek. These are laudable conservation objectives, but I believe that they do not outweigh the rural policies which overwhelmingly recommend against unplanned small lot subdivision.

24. I propose to uphold the Council's decision to refuse this application.