MELBOURNE'S water catchments should be protected from the spread of new housing if the city and nearby towns are to keep their excellent drinking supply, the state's planning tribunal says.
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In what is expected to be a guiding decision for new housing on Melbourne's fringes, the Victorian Civil and Administrative Tribunal refused to allow two Woodend landowners to build four new homes on four existing lots covering 72 hectares, instead allowing only one dwelling on the site.
The decision has been praised for taking into account the potential impact of allowing more homes and septic tanks in the catchment area.
But the Urban Development Institute of Australia says failing to open up catchment zones to modest development will increase pressure on housing stock and push up prices.
''Anything within an hour or two's drive of the centre of Melbourne, I think we should be looking at as where we can develop in the future,'' the institute's Victorian executive director Tony De Domenico said.
''We're talking about 2010 for heaven's sake. Let's be honest, there have been buildings in catchment areas for centuries,''
New buildings should be allowed in the catchments, ''as long as they're well managed and with our engineering capabilities these days I think they can be well managed,'' Mr De Domenico said.
RMIT University Associate Professor Michael Buxton applauded the tribunal's approach, saying catchments must be protected.
In the ring outside Melbourne, there were 50,000 subdivided lots ready for new homes, many of which could encroach on local catchments, he said.
''Quite a lot of those areas are in proclaimed water catchments and in the past there's been very little effective control over building,'' Professor Buxton said.
The site in Woodend, mainly cleared grazing land with some remnant vegetation, partially fronts the Campaspe River and falls within the Eppalock Water Supply Catchment.
Mr De Domenico questioned why the tribunal did not allow the Woodend development when there were already dwellings in the area.
The tribunal said: ''We do not consider that past poor decisions should justify another round of poor decisions that will undermine the integrity of the catchment.''
The decision comes in the wake of new planning principles that recommend one home per 40 hectares in open water supply catchment areas.
The ruling says there is a risk associated with waste water systems and the ''increased presence of people generally within the catchment''.
''Ideally, potable water supply catchments would all be closed,'' the tribunal said. ''The quality of Melbourne's drinking water is a product of its closed catchments. But it is not an ideal world and there are many open potable water supply catchments that must be managed.''
Melbourne is one of just five cities in the world with protected water catchments. About 80 per cent of the city's drinking water comes from closed water catchments located in the Yarra Ranges, according to Melbourne Water.
