ADVISORY COMMITTEE APPOINTED BY THE MINISTER FOR PLANNING PLANNING PANELS VICTORIA

IN THE MATTER OF THE KAUFLAND STORES IN VICTORIA ADVISORY COMMITTEE GROUP 2 SITES (COOLAROO, OAKLEIGH SOUTH AND MORNINGTON)

BETWEEN:

KAUFLAND AUSTRALIA PTY LTD Proponent and

HUME CITY COUNCIL, KINGSTON CITY COUNCIL, MORNINGTON PENINSULA SHIRE COUNCIL and others Submitters

SUBMISSIONS ON BEHALF OF KAUFLAND AUSTRALIA PTY LTD

PART C

Introduction

1. This Part C submission is made on behalf of Kaufland to reply to submissions made and issues raised at the public hearing in relation to the Second Tranche of proposals being considered by the Committee.

2. It supplements the Part A and B submissions and the material that Kaufland has tabled in accordance with the Committee Directions.

3. For convenience, this Part C submission adopts the same definitions and acronyms as were used in the Part A and B submissions.

Mornington

Shire of Mornington Peninsula (Submission M48)

Strategic planning

4. Council submits that the Activity Centre Strategy Review 2018 (ACS) does not identify a need for a new activity centre at [48] (document 122). However, its submission ignores the fact that the ACS says at p75 - 76: 2

In a strict policy context, enterprise areas are not formally considered to be activity centres, although their role and function should be recognised and defined in the activity centres policy.

…

Actions

6.1 Incorporate into the activity centre policy appropriate reference to large format and mixed business/commercial uses operating outside of the township activity centres. Indicate that these activities and locations are supported to the extent that they complement the activity centres and the broader objectives of the activity centre strategy.

5. Clearly the ACS does see a role for these “enterprise areas” and acknowledges that they are appropriate locations for certain retail uses, with the proviso that the precincts continue to play a “complementary” role, rather than “compete” with established activity centres.

6. It is clear from the economic evidence, discussed below, that the Kaufland proposal will not undermine the role, function or viability of the Mornington Activity Centre (or any other centre in the hierarchy) and hence its approval will not undermine the broader objectives of the activity centre strategy.

7. As discussed further below, whether the Mornington Parkland Industrial Area remains in the INZ3 or is rezoned to the C2Z, it has very different characteristics to the Mornington Activity Centre, and the Council will retain the ability to control the extent to which it can be developed for the broad range of uses found in the Mornington Activity Centre (in particular shop).

8. Kaufland invites the Advisory Committee to find that, notwithstanding the approval of a Kaufland, the Mornington Parkland Industrial Area will continue to “complement” the Mornington Activity Centre, by providing an area which can accommodate large format uses, which benefit from the highway frontage, and which are otherwise difficult to accommodate in the Mornington Activity Centre. 3

9. The Mornington Parkland Industrial Area is fundamentally different to the Mornington Activity Centre, and is likely to remain so due to multiple factors, including that the Mornington Activity Centre:

(a) has a distinct village feel;

(b) is generally fine grained;

(c) has a “main street” atmosphere, with good access to sunlight, a weekly market and good levels of public infrastructure such as the road paving, public seating and so on;

(d) has a wide range of small speciality shops, art galleries, boutiques, eateries, bars and so on;

(e) includes various sporting and civic functions;

(f) is located in close proximity to the beach – a significant draw card for tourists especially during the summer months;

(g) provides a significant amount of tourist accommodation, both within the Mornington Activity Centre and in its immediate surrounds (in part due to the proximity of the Centre to the beach); and

(h) is starting to be developed with modern mixed use developments, including higher density residential developments, within the constraints of the DDO that applies.

10. Mr Biles’ report fairly acknowledged the issues to be considered as follows:

There is clearly a degree of strategic policy tension at play in this matter between the clear directions on activity centres and out of centre development and factors mentioned in the Explanatory Report in support of the proposed Amendment which:

- Reference Plan Melbourne’s recognition of the challenges for new retail formats to obtain a foothold in existing centres;

- Highlight the challenges of sourcing a site of sufficient size (25,000sqm) in existing activity centres; 4

- Refer to the existing land use mix within this industrial precinct, which includes the Peninsula Homemaker Centre and other large format retail outlets; and

- Emphasise potential economic benefits including facilitating the entry of a new player into the highly contested supermarket market and the creation of employment opportunities.

These are all relevant considerations to take into account.

11. Mr Biles emphasised that he was seeking to identify the consequences of the proposal – much like Mr Biacsi – despite the policy context.

12. Mr Biles agreed that there is a strategic basis for rezoning the land to the south of the subject site to C2Z. He also said that if the area had already been rezoned to the C2Z, his opinion would be different – namely that the site would be an appropriate one for the Kaufland store.

13. Council’s submission at para [38] (document 122) that “the proposal effectively creates or is likely to create a new activity centre” is inconsistent with:

(a) the overwhelming weight of evidence, namely that the Kaufland proposal in and of itself does not constitute a new “activity centre” in the context of the Mornington Peninsula activity centres hierarchy; and

(b) the findings of the Tribunal in the Vicinity Centres case that the full line Coles on that site would not lead to the creation of a new activity centre.

14. Council’s submissions at para [68] (document 122) suggest that the proposal “effectively rezones the Land to a commercial zone”. This misunderstands the framework set up by the Incorporated Document, which specifically links the supermarket and bottle shop approvals to Kaufland as the operator. Without Kaufland, a supermarket larger than 1800m2 would remain a prohibited use.

5

Alternative sites

15. Both of Council’s witnesses who expressed a view on the issue of alternative sites – Mr Haratsis and Mr Biles - accepted it would be challenging to locate the Kaufland proposal in Main St Mornington.

16. When asked about whether Kaufland should adopt an alternative model to fit itself within the Mornington Activity Centre, Mr Biles said that while Coles and Woolworths have adopted a model in some inner suburban locations where they put nine storeys of apartments on top, that model “is obviously for inner suburban locations” and “Mornington is not such a location”. He also said, in response to a question about whether the Kaufland proposal could go on one of the car parks, that often the public car parks “are a consequence of levies on shop keepers” and “although owned by Council, sometimes agreements [between Council and shopkeepers] make that difficult”.

17. Council itself only identified potential alternative sites within the Mornington Activity Centre at the direction of the Committee part way through the hearing (document 74). Council was very careful to qualify the production of document 74 by noting that that land was not necessarily available for a Kaufland store. Indeed, Council never raised those sites as potential in-centre alternatives in its consultation with Kaufland: the tabling of document 74 was the first time Council had put those sites forward, albeit in a heavily qualified manner.

18. Further, as outlined in Kaufland’s Part B submissions, Council had clearly expressed the view in the Vicinity Centres case that it did not consider the availability of sites in centre to be relevant to the assessment of the Coles on the Mornington Tyabb Road site.

19. The Mornington Village expansion relies upon a land swap between Mornington Village and Council, so that the land shaded red below would be swapped with the Council-owned land shaded green: 6

20. Kaufland is not in a position to swap any land with Council, and would instead need to negotiate with Council to purchase or lease its land. As demonstrated through the lengthy Mornington Village expansion process involving a comparatively small parcel of land, Council does not readily swap or sell land for private purposes, and requires public benefits to be negotiated first (see documents 63 and 183). In the case of the Mornington Village expansion, despite its relative modesty (1243m2), the land swap required significant public works including creation of a pocket park, infrastructure upgrades and a monetary contribution in lieu of car parking provision.

21. The Committee simply cannot proceed on the basis that the purchase or lease of Council land would successfully be negotiated between Council and Kaufland. This is particularly the case given the existing use of that land for 7

free, publicly available, at-grade car parking, the occupancy of which is at or close to capacity on market days, Saturdays and during holiday periods.1

22. Page 48 of the Structure Plan makes the position clear (and this was re- affirmed by Council’s approach to the Mornington Village land swap):

Policy directions:-

 ensure the provision of additional parking spaces in parking stations is linked to any approval of additional development in the retail core (in other words: any major shopping extension cannot proceed until adequate additional public parking is available);

 ensure the provision of additional car spaces in the retail core is commensurate with the extent of additional commercial floor space;

 ensure the distribution of car spaces in the retail core is commensurate with the distribution of commercial floor spaces and linked to the location of major retail stores;

 instigate car parking restrictions (other than parking fees, as parking is to remain free of charge)…

23. The effect of this strategic approach is that – assuming it could successfully negotiate to purchase any of the Council owned land on mutually acceptable terms – Kaufland (or Council, presumably with a monetary contribution from Kaufland) would be required to replace any spaces available on the land purchased, in addition to the provision of car parking to service Kaufland’s development, and all within an 11m height limit.2 Mr Milner’s suggestion that Council might wish to set all of its strategic and urban design work to one side in order to negotiate with Kaufland to bring it within the Mornington Activity Centre is fanciful, and in any event not an outcome that is before this Committee. Furthermore, even if it could be done, it certainly would not be done in a timely manner.

1 Mornington Activity Centre Structure Plan, July 2007, document 71, p9. 2 Area DDO13-2. 8

24. In response to document 74, Kaufland prepared document 109, which sets out why none of the parcels of land identified by Council are appropriate for Kaufland’s requirements, based on size, configuration, access and interface constraints.

25. Strategically, only site four is identified for a major retail store and proposed new retail/mixed use in the Mornington Activity Centre Structure Plan (document 71): sites one, two, three and five are identified for new in-centre housing as depicted below, with sites two and three bisected by a new public square or plaza:

26. Site four is the site that Council intimates may be a potential site for a ‘hypermarket’ (at para 139 of document 122). Site four has multiple constraints, as set out in document 109 and put to Mr Bromhead in cross- examination (discussed in detail below). 9

Economic impacts

27. Mr Haratsis is of the view that the retail impacts of the Kaufland would not put any store out of business, and that the retail impacts of 5-6% spread throughout the municipality are modest.

28. Mr Haratsis did not give a satisfactory answer to questions about why there was not one reference in his expert witness report to his EIA. To say he did not put the ‘favourable to Kaufland’ parts of it in his report because he assumed that the EIA had been tabled was disingenuous. He included within his expert witness report large slabs of text duplicated from his EIA, but specifically omitted:

(a) His opinion that no alternative sites are available on commercially zoned land (page 38);

(b) His opinion as to the economic benefits of the proposal (page 44);

(c) His opinion that the development is not expected to impact on the primacy of the Mornington Activity Centre (page 46); and

(d) His opinion that the trading impacts are unlikely to have a substantial effect on the overall performance of the network of surrounding Activity Centres, and all centres will be able to continue to serve their role in serving the needs of the local community (compare EIA page 44 with expert witness report page 34).

29. Council submitted at para [66] of document 122 that “Kaufland will not add significantly to competitive tension as Aldi (similarly offering retail food at discounted rates) has entered the market and we are now seeing a deflation in retail food prices”. This is contrary to the list of potential community benefits included in Mr Haratsis’s EIA at page 44, albeit omitted from his evidence. It is also contrary to the evidence of Mr Quick3 and Mr Shipp.4

3 Document 28b, para [21]. 4 Document 26c, paras [116]-[119]. 10

30. Ultimately, in response to the Committee’s questions, Mr Haratsis accepted that the site could be an appropriate site for a Kaufland store pending further investigation by Council.

31. Mr Hartsis said the key difference between him and “the other economists” is that he has undertaken a “serious assessment” of the current industrial land strategy.

32. Mr Haratsis’ EIA did not take any issue with the impact of the proposal on industrial land. When asked about that, he said he received narrow instructions only to consider:

(a) the need for a Kaufland supermarket at the subject site; and

(b) the potential impact it may have on the primacy of the Mornington Activity Centre and more broadly on other activity centres in the Mornington Peninsula.5

33. Document 133 contains Mr Haratsis’ instructions to prepare an EIA (dated 26 September 2018) and contains the following text:

Our client has not resolved a position on the application yet. However, it does have a preliminary concern with the proposed location of such a large supermarket-based retail store outside an activity centre and about the impact it might have a detrimental impact on the viability of existing activity centres on the Mornington Peninsula and on the primacy of the Mornington Activity Centre. To assist us in advising our client in this matter, we are instructed to brief you to provide a fee proposal to:

1) Prepare a preliminary opinion on:

1.1 Whether there is currently an unmet need for the proposed (Kaufland) retail offer in the Mornington Activity Centre;

1.2 If there is an unmet need for the Kaufland offer, whether there is capacity to meet such need within or directly adjacent to the Mornington Activity Centre;

5 See the Executive Summary of his EIA, which he referred to in oral evidence as summarising his instructions. 11

1.3 Whether the proposal is likely to detrimentally impact on the viability of any existing activity centres on the Mornington Peninsula;

1.4 Whether the proposal is likely to jeopardise the primacy of the Mornington Activity Centre;

1.5 The likely economic benefits/disbenefits of the proposal;

…

[emphasis added]

34. In other words, his written instructions do not bear out the evidence he gave about the confined scope of his initial instructions.

35. His further instructions then specifically asked him to consider:

1.1 whether there is a need for the Land to be retained in the Industrial 3 Zone having regard to the demand for and supply of industrial land on the Mornington Peninsula;

1.2 whether there is a sound strategic justification for locating the proposal on the Land including having regard to the strategic assessment guidelines in the Minister’s Direction No. 11;

1.3 from a strategic planning perspective, whether there is an alternative appropriate location(s) within the Mornington Activity Centre for a Kaufland store;

1.4 the comparative economic benefits if:

(a) the Land was developed for an industrial or other as-of-right use;

(b) the Kaufland proposal was located within the Mornington Activity Centre.

36. Mr Haratsis clearly undertook the further work on the industrial land issue, not because he identified it as a significant economic benefit or disbenefit of the proposal, but because he was asked to look at it (presumably having regard to the fact that his initial EIA found that he proposal was not problematic in economic impact terms).

37. Notably, Mr Haratsis was not briefed with document 81, which sets out the Council’s most recent position on the strategic merit of rezoning the Mornington Parkland Industrial Area to the C2Z. 12

38. Most tellingly, when asked by the Committee what sort of uses could be expected on the site within the INZ3, Mr Haratsis responded that small scale office uses, children’s play centres, small scale designers and health related uses might seek to locate on the site. These are hardly critical industrial uses for the municipality that cannot locate elsewhere.

39. In any event, the premise of Mr Haratsis’s evidence and responses to cross- examination was that the C2Z was more restrictive of industrial uses than the INZ3. To the contrary, the C2Z is flexible and, with reference to potential industrial uses, virtually identical to the Industrial 1 Zone and more permissive than the Industrial 2 and 3 Zones.6

40. Finally, the Committee will note that Mr Haratsis was expressly instructed to consider:

(a) from a strategic planning perspective, whether there is an alternative appropriate location(s) within the Mornington Activity Centre for a Kaufland store; and

(b) the comparative economic benefits if the Land was developed for an industrial or other as of right use.

41. If Mr Haratsis undertook that work, it is not contained in his expert witness report.

Landscape

42. Mr Papworth’s evidence ought to be given no weight. He clearly set about the task of demonstrating why the proposal should not be approved, in line with his client’s objection, rather than assessing the proposal independently. He told the Committee that he would have taken a different approach had he been acting for a proponent. Clearly, for a start, he would not have produced a model devoid of any vegetation.

43. In light of his criticism of the use of diamond bays, it is troubling that he failed to disclose that he had very recently prepared a landscape plan for a

6 For example, Industry and Warehouse (other than Note 1 and Note 2 uses) are as-of-right in the C2Z provided threshold requirements are met, whereas they are section 2 permit required uses in the INZ3. 13

shopping centre car park that included diamond bays. It was only when it was then put to him that he prepared the Blackburn North shopping centre car park landscape plan that he acknowledged he had used diamond bays. The plan was prepared recently, in 2018. It is depicted below:

44. Mr Papworth also conceded that:

(a) The site is not covered by an SLO or a VPO;

(b) The site is not part of a ‘significant landscape’ for the purposes of clause 12.05;

(c) When travelling through the GWZ from Mt Eliza to Mornington, the Kaufland building will not be visible to motorists until they are proximate to Oakbank Road, so the building will not be “experienced” while in the GWZ; and

(d) When proximate to Oakbank Road, the first thing motorists notice is the Bata sign, indicating an existing transition between the GWZ and the INZ3. 14

45. Mr Papworth suggested that the landscape experience would be different to the Bunnings because the Bunnings car park is sunk into the ground. However, he failed to acknowledge in his report that it comes to grade about a quarter of the way along the site, and in fact sits above the road level further south. When asked where the transition to grade occurred, he could not recall the transition point, but agreed the point of transition was barely perceptible.

46. The Advisory Committee will recall that Mr McWha produced a google image of the Bunnings (document 59), from the road near the bus stop. The car park has come to grade by that point. Here is a similar image, with the bus stop to the left of the image:

47. The bus stop is about 1/3rd of the way along the site, from the north, meaning that the majority of the Bunnings car park is either at grade or above the road: 15

48. Here is an image from the south, showing the elevated car park:

49. The Committee should reject the notion that because some part of the car park will be approximately 500mm above the road (over a distance of some 15m to 20m, behind the landscaped setback), the cars in the car park will be visually prominent. Further, as Mr Papworth conceded, this issue could easily be dealt with through planting a hedge at the point where the car park meets the landscaped area, as per the above image of the Bunnings car park.

50. Mr Biles’ main concern appears to be that the trees were not tall enough to create an avenue, and that the car park should be set into the ground, 16

possibly by up to 1m. He thought that the trees in the Bunnings car park were about 15-20m and that trees of that height ought to be planted at the Kaufland site.

51. Mr McWha gave evidence that the eucy viminalis and the smooth barked apple in the front and side setbacks respectively will readily grow to a height of 12-15m on this site. This evidence is well supported by the existing eucy viminalis of 18m (tree no. 1 in the arborist assessment).

52. The trees in the front setback will, therefore, grow taller than the trees in the Bunnings setback, which were estimated by Mr Papworth as perhaps only about 8-10m in height, but less than the 20m height for which Mr Biles advocates.

53. The Committee should find that the trees proposed by Mr McWha are appropriate, and that there is no need for taller trees, given the range of vegetation of different heights experienced along the eastern side of the Nepean Highway in the Industrial precinct. However, if the Committee thought taller trees ought to be planted, that could easily be accommodated.

54. There are fundamental concerns with lowering the car park, due to technical drainage issues. Low level plantings, combined with the 15-20m setback, will partially obscure cars and ensure that the car park is viewed as a recessive element. Kaufland would not oppose a condition that requires a hedge to be planted, if the Committee considered that would be desirable to obscure further the view to the car park.

Vicinity Centres and ISPT, and Blackbrook (Submissions M74 and M82)

Strategic planning and prematurity

55. Mr Rogers agreed that the Kaufland proposal, in and of itself, would not affect the role, function or viability of the Mornington Activity Centre. He agreed that it has a range of benefits associated with it. He said he was concerned, however, about the effect that it would have on the evolution of the Industrial Precinct, and that that precinct may evolve and compete with 17

the Mornington Activity Centre for tenants in the future. Mr Bromhead’s evidence was to similar effect.

56. Kaufland responds as follows:

(a) The “enterprise area” is an appropriate place for large format retail and other forms of commercial and business uses that either are ‘as of right’ or cannot be accommodated in the Mornington Activity Centre or are otherwise incompatible with locating in that Centre.

(b) Enterprise areas are identified as opportunities:

"to accommodate large format buildings and service areas that are difficult to establish in established town centre locations, and also avoid increasing congestion and parking demands in established centres which may already have limited capacity". 7

(c) Given that shop (except restricted retail) is a section 3 use in the INZ3 except in certain confined circumstances, the precinct simply will not be able to compete with the Mornington Activity Centre if it remains INZ3. If it is rezoned to the C2Z, then there are two options for the precinct:

(i) Either Council considers that it is an appropriate place for a more traditional activity centre, in which case there is no problem with the supermarket; or

(ii) The more likely scenario is that Council considers it an appropriate place to continue to see large format retail and services that do not readily fit in centre. The fact that shop (other than restricted retail) is a section 2 use allows Council to control the evolution of the precinct, and to ensure that it fulfils a role which remains complementary to the Mornington Activity Centre.

7 Document 4, p75, para 5. 18

57. Vicinity Centres and Blackbrook argue that Council will not be able to hold back the tide. That argument ought to be rejected. If it is an acceptable planning outcome to have a Kaufland hypermarket on this site, but unacceptable for the precinct to develop in the same way as the Mornington Activity Centre, the C2Z and the INZ3 both provide an appropriate suite of tools to allow those dual planning outcomes to be achieved. The Committee ought not to proceed on the basis that Council or the Tribunal or the Minister will make poor planning decisions in the future.

58. In response to a similar argument about prematurity that has been put forward by Blackbrook, the Tribunal in the Vicinity Centres case found that proposal would “not pre-empt future strategic planning for that wider industrial area and arterial road corridor having regard to the previous use of the land and the constraints associated with expansion.”8

59. To adopt the reasoning of the Tribunal in the Mitcham Towers case, while further work could be undertaken on the future of the INZ3 land, “such a process is unlikely to be a panacea that will avoid the need to make difficult, and sometimes controversial, choices in response to particular development applications. How often have decision makers awaited some new report or study, in the hope that it will provide guidance and certainty, to have those hopes dashed when the report or study is published? Procrastination can be pointless, as well as unfair to affected landowners.”9 As in that case, here the Committee has been provided with ample information to make an informed decision in this case. There is no impediment to doing so.

The criteria in the ACS

60. The Advisory Committee will recall that Mr Biacsi gave evidence that the proposal was consistent with the criteria for out-of-centre development contained at p 77 of the ACS, which is as follows:

8 Document 47, [73]. 9 Golden Ridge v Whitehorse CC (Mitcham Towers) [2004] VCAT 1706, [72].

19

61. There is a question as the whether these criteria apply directly to ‘enterprise areas’ given that those areas are dealt with in the previous section of the document. But assuming they do apply, the proposal is consistent with them. Mr Bromhead’s analysis against these criteria ought be rejected. He failed to turn his mind to the most pertinent questions that arise under each of the criteria.

62. The first criterion is:

Location – "why the proposed out-of-centre location is being considered for commercial development"

63. This question calls up consideration of:

(a) specific features of the site that may make it suitable for out-of-centre development;

(b) specific features of the proposal that may make it suitable for out-of- centre development; and

(c) potentially specific features of the activity centre such that it may be difficult to locate in-centre.

64. Factors relevant to the specific features of the site include: 20

(a) it is within an existing commercial area, notwithstanding its industrial zoning;

(b) it is a large available site;

(c) it is on a main road;

(d) it is within the Mornington township, the main township on the Peninsula;

(e) its residential interface issues can be managed due to a combination of setbacks and landscaping;

65. Factors relevant to the specific features of the proposal include:

(a) it requires a large floorplate;

(b) it requires significant parking; and

(c) it requires convenient access for large trucks to load and unload.

66. The specific features of the activity centre such that it may be difficult to locate in-centre include the lack of available commercially zoned land, and land of sufficient size to accommodate a Kaufland.

67. The second criterion is:

Accessibility – "ensure appropriate levels of access, including car parking and ability to use non-motorised transport"

68. Relevant factors include:

(a) the number of car parking spaces provided;

(b) access to the PPTN;

(c) whether vehicular access is appropriate;

(d) whether vehicular access is convenient; and

(e) access by walking and cycling.

69. This site has excellent access:

(a) it has plenty of car parking spaces being provided; 21

(b) customers and delivery vehicles will not need to travel past residential areas to access the site;

(c) there is direct access off the Nepean Highway if travelling from the north;

(d) if travelling from the south, access via Oakbank Road is safe and convenient;

(e) it has good access to the PPTN, given its location on the Peninsula; and

(f) it has excellent access for cycling.

70. Perhaps the only deficiency in relation to “accessibility” is that it is that it is not surrounded by a dense residential community.

71. The third criterion is:

Urban Design – Demonstrate high-quality urban design and an interface that is attractive.

72. The urban design aspects of the development are appropriate, as discussed in the Part B submissions.

73. The forth criterion is:

Economic – Justification for, and implications of, approval of the out-of-centre development.

74. The proposal achieves a high degree of compliance with this criterion given the limited economic impacts on other centres.

75. The final criterion is:

Net Community Benefit – The planning application must provide a full analysis of the development proposal’s contribution to Net Community Benefit, including the impact on existing activity centres.

76. This aspect of the proposal has been considered at length. 22

Alternative sites

77. Vicinity Centres and Blackbrook argue that Kaufland needs to demonstrate that there are no sites available in centre. Kaufland addressed this argument in its Part B submission. This section supplements that submission, having regard to the evidence called by Vicinity Centres and Blackbrook.

78. Kaufland has been criticised for its reliance on Tribunal cases to found the proposition that the Advisory Committee is not engaged in an assessment of alternative sites. That submission misunderstands the Part B submission put by Kaufland, which was worded as follows (document 105):

66. The role of the Advisory Committee, established by its Terms of Reference, is not to consider alternative locations for a proposal. That is not unusual. Planning Panels are established to consider submissions “about an amendment”, namely about the amendment that is proposed, not some alternative amendment which involves an alternative site. It is also well established in VCAT that the decision maker is there to consider the proposal before it, not some alternative proposition. Confining the inquiry to the issues set out in the relevant terms of reference, or as confined by section 21 of the Planning and Environment Act 1987, in the case of a panel, is a fundamental tenet of the Victorian planning system. Should the inquiry extend to consideration of alternative sites, the planning system would become even more costly than it presently is.

79. Paragraph 22(b) of the ToR requires the Committee to advise the Minister on whether the relevant site is an appropriate location for the proposed use. It does not require the Committee to carry out a comparative assessment of alternative (unidentified) sites that might also be appropriate. If the Minister has seen the task of the Committee as being to undertake an assessment of alternative sites, he quite clearly could have directed that that exercise occur.

80. Further, what Blackbrook and Vicinity Centres suggest ought to be done is a potentially impossible task.

81. The exercise of ‘demonstrating’ that there are no sites available in centre is straightforward if all one has to do is to demonstrate that there is no land that is appropriately sized and zoned that is either vacant or ready for 23

redevelopment. Clearly there are no sites in centre that fit that description. No witness called by any party challenges that assertion. In fact, part of Mr Haratsis’ brief was to identify such a site, which he could not do.

82. However, Vicinity Centres and Blackbrook suggest that the exercise that they say ought to have been undertaken, with the results produced to the Advisory Committee, is more complex than that. They suggest that Kaufland has not done the exercise they say needs to be done, but then they fail to articulate precisely the nature of the exercise that Kaufland should have undertaken.

83. Is Kaufland supposed to disprove the potential appropriateness of each and every site in centre, regardless of its zoning, size, state of development, availability, ownership, accessibility or level of development constraint (by way of residential interfaces, vegetation, flooding, heritage, height controls or contamination)?

84. Is Kaufland supposed to disprove the potential appropriateness of sites, not for its proposal, but for some other proposal that has insufficient store size for a hypermarket, that does not accommodate Kaufland’s back-of-house requirements, that does not feature wide aisles, limited columns, mall area, car parking space numbers and dimensions?

85. Clearly not. There is nothing in the planning scheme that requires that exercise to be undertaken. It would set the bar for out-of-centre retail developments too high by effectively requiring proponents to prove a negative.

86. Mr Biacsi gave evidence that:

(a) he inquired whether Kaufland was going to put forward an analysis of potential sites in centre;

(b) he was told that he could inform himself “in any way [he] saw fit”; and 24

(c) he was told that that work was not being put forward to the Advisory Committee by Kaufland on the basis that it was not critical to the assessment of the appropriateness of the site in question.

87. Blackbrook was critical that Kaufland had not provided an analysis of potential other sites to Mr Biacsi, despite the fact that he had inquired as to whether such analysis was available. In response, it must be emphasised that Kaufland did not constrain Mr Biacsi’s ability to inform himself as he saw fit. It is true that Kaufland did not produce a detailed analysis to underpin the proposition that there is no site with appropriate zoning and size in centre. But that proposition is borne out by looking at a zoning map and aerial photograph of the activity centre.

88. Further, Kaufland maintains that the most relevant inquiry is whether the proposed site is an acceptable one, not whether there is a potential alternative site that may be ‘more appropriate’.

89. In the Vicinity Centres case Mr McNamara gave evidence (at pp17-18 of document 143) that:

(a) “the lack of available retail-zoned land around Main Street is a relevant consideration”;

(b) “an examination of the Mornington Activity Centre Structure Plan 2007 does not identify any significant commercial zoned land area expansion opportunities”; and

(c) “the only substantial land parcels that would appear capable of accommodating major retail facilities would be the council car parks. This would require major works and alterations to access and parking, which might threaten the village ambience and may not be supported.”

90. It appears that his evidence was either accepted, or that the Tribunal considered it was of marginal relevance – noting that the issue is not even discussed in the Tribunal’s decision. 25

91. Even assuming that the availability of sites in centre is a relevant and important consideration, that factor supports the development of the Kaufland store in the enterprise area.

92. The self-evident proposition that there are no obvious sites in centre (even for a full line Coles, let alone a hypermarket) has been made good by the fact that no-one has been able to point to an appropriate site, even through this Advisory Committee process. Kaufland Australia’s property development team searched exhaustively for opportunities to establish a store in the Mornington Activity Centre, undertaking a detailed desktop and in-person canvas of all available development opportunities including amalgamation and consolidation options.

93. Mr Bromhead pointed to site four on the Council’s car park plan (document 74) as potentially being available. However, that site is clearly unable to support Kaufland’s proposal. It is only 5000m2 in area, and is constrained by, among other things:

(a) Its current zoning (PUZ6);

(b) Its ownership by Council, a body that would need to decide that it was of net benefit to the community before it would agree to sell the site (see document 183);

(c) Its current use for publicly available, free, at-grade car parking (which in the future will be even more highly utilised given it will be needed to provide the appropriate number of spaces for the Mornington Village expansion on the site next door);

(d) An 11m (max) height control (DDO13), meaning that the box could not be provided over the parking or loading area;

(e) A development at the north-west interface with the site (which relies on the car parking spaces on site four to service its needs) and hence would require the box to be set back from that interface; 26

(f) Residential interfaces to the south-west, on Waterloo Place, which would make loading along that interface inappropriate; and

(g) One-way access along Barrett Lane, which means that even if trucks could access the site through Barrett Lane, they would still need to cut through the site to exit via Waterloo Place further reducing the area available for the box.

94. While it may be said that car parking can be provided in a basement and in the proposed multi deck car park shown on the Structure Plan near the Mornington Village redevelopment, that proposed car park is only 2-3 storeys, and is shown on land that currently has a high coverage of high amenity trees. There has been no indication that Council has plans to build that car park.

95. Senior Counsel for Blackbrook suggested that the cross-examination of Mr Bromhead by Senior Counsel for Kaufland suggested a relatively sophisticated level of analysis of the site in question. Rather, the propositions put to Mr Bromhead regarding the constraints of that site were simply common sense, and demonstrated the lack of any rigour in his suggestion that it might be an appropriate alternative site.

96. Without having done any assessment himself as part of his expert evidence, and in response to a question put to him in chief, Mr Rogers suggested that sites 1-3 on Council’s car park plan could be used. This was apparently on the basis that the Structure Plan showed those sites as being for mixed use. However, when tested, he agreed that this assertion was not made out.

97. In addition to those sites being insufficient in size and configuration, and having other constraints, they are not identified on Council’s Structure Plan for retail expansion. Page 15 of the Structure Plan shows those sites are designated primarily for higher density housing, with pedestrian links, parks, public areas and some mixed use development.

98. Mr Rogers also suggested that the current car park for Mornington Central could be considered an appropriate available site. That site is shown in the 27

Structure Plan at page 15 as future retail/mixed use with parking, but it does not have an asterisk identifying it as a site for a major retail store. Further, it is an irregular shape, is too small and any building would need to continue to provide access to Mornington Central.

99. Finally, the C2Z land on the corner of Barkly and Gordon Streets, to the north east of Gordon St, is far too small for a full line supermarket, let alone a Kaufland hypermarket.

100. Vicinity Centres asserts that Kaufland can change its model to fit in-centre, posing the question: if Aldi did it, why can’t Kaufland? Clearly Aldi could not find available sites, and hence the rules were changed to accommodate it. But more importantly, Aldi’s store format is significantly smaller than that of a full line supermarket, and it entered the market providing a point of difference to Coles and Woolworths.

101. Kaufland is also of the opinion that it needs to enter the market with a point of difference to Coles and Woolworths.

102. Further, Vicinity Centre’s argument that Kaufland should change its model acknowledges that the current planning framework stifles the entry of Kaufland, given the lack of available sites in established centres for the model that it seeks to roll out in Victoria.

103. The Productivity Commission report found that the community will suffer from a planning system that limits and restricts new retail formats by a blanket application of activity centre policy.

104. Vicinity Centres in its written submissions describes the Tribunal’s decision in Wittner Pty Ltd v Kingston CC [2014] VCAT 789 as “irrelevant” (document 182, para [16]). As the Committee will note, para [44] of Kaufland’s Part B submissions (document 105) quoted that decision in relation to the transformative effects of VC100, and not on the basis of some parallel with the facts of the proposals before the Committee. There is no suggestion that the facts of that case are similar to the facts of any of these proposals. 28

But the Committee is clearly assisted by understanding how the Tribunal has interpreted the effect of VC100 on State retail planning policy.

Economic impacts

105. Mr Quick agreed that the Coles at Mornington Central has had the benefit of the Coles at the Masters site being delayed, which in turn has allowed to it keep trading at very high levels for an additional year or two. He agreed that, in turn, that makes it more resilient to the cumulative impact that he forecasts from the new Coles and Kaufland. He stated that he was not suggesting that the Coles would go out of business. His concern was for the reduced spend on speciality shops arising from reduced spend at the Coles.

106. However, he agreed that even if there was a reduced spend, and that tipped a small business over the edge, the vacancy would likely be filled, but potentially with a different type of store. He noted that over time convenience-based shops have been replaced with bars and restaurants, and that the mix has changed.

107. That is a broad trend not confined to Mornington, and it does not necessarily have a negative impact on activity centres. To the contrary, thriving bars and cafes and mixed use residential developments are now hallmarks of successful activity centres.

108. Mr Quick’s evidence is consistent with Mr McNamara’s evidence in the Vicinity Centres case about the changing role of retail in the activity centres mix, which is excerpted below (from page 25 of document 143): 29

109. The Tribunal in the Vicinity Centres case accepted Mr McNamara’s evidence, concluding that “although the subject land is proximate to recreation and some cultural facilities, it is not in a location where it is likely that the wide range of other uses encouraged to locate in an activity centre would occur in the current planning regime so as to create a new activity centre” such as residential development, hospitality/entertainment services and community facilities.10

110. Interestingly, while Mr Milner held concerns in the Vicinity Centres case that the Coles at Masters would lead to the creation of a new unplanned activity centre, this was not a concern he held in relation to the Kaufland proposal

10 Vicinity Centres Pty Ltd v Mornington Peninsula SC [2017] VCAT 1802, [74]. 30

on the subject land, at least not in his written evidence. He conceded that any future retail proposals not in accordance with the INZ3 would require either a rezoning or an amendment to this proposed amendment in order to secure approval. Much of his evidence was, in truth, a lament about the consequences of VC100.

111. All economists and town planners agree that the Mornington Activity Centre is thriving and Mornington Central is trading very well. The approval for expansion of Mornington Village demonstrates investor confidence in this centre. One can assume that Coles would not put forward a proposal for a second Coles on the Mornington Tyabb Road if it was concerned about the viability of the Coles in Mornington Central.

112. Mr Quick considered that the introduction of Kaufland would result in an overall economic benefit, but that the benefit would be even bigger if Kaufland had located in centre or on the edge of centre. This may or may not be the case, but planning is about acceptable rather than ideal outcomes, and this proposal is clearly acceptable in economic terms.

113. Despite Blackbrook saying at the directions hearing that it would call economic evidence, none was produced. It did not pursue an argument that there would be an unacceptable economic impact, presumably because it was unable to find an economist to support such a proposition.

The Kaufland model

114. Mr Quick agreed that he did not know whether it was feasible to enter the supermarket sector held by Coles and Woolworths with a model different to the model currently being put forward by Kaufland.

115. Mr Quick agreed that:

(a) Kaufland's assessment of feasibility is highly confidential;

(b) the research Kaufland has conducted to inform itself of the model that it thinks will work in the Victorian context is also highly confidential (ie valuable business information); and 31

(c) an economic analysis underpinning Kaufland’s model would involve disclosure of Kaufland's confidential information.

116. Kaufland expressly rejects Vicinity Centres’ assertion that it has “set up a system to engineer buying cheap land” by “coming up with a construct” to that end.11 That assertion has no basis in the evidence and is based on pure speculation. Indeed, the fact that Kaufland has proposed hypermarkets in centre in the ACZ (Epping), the C1Z (Chirnside Park) and the C2Z (Coolaroo) disproves Vicinity Centre’s thesis.

117. Kaufland’s investigations into whether Australia represented a suitable expansion opportunity concluded that the existing operators within the Australian retail environment benefit from a duopolistic market dominated by two major players (with a third operator gaining market share) and experience comparably high profit margins. Kaufland concluded that there was scope to enter the market, by providing a point of difference.

118. In entering a new country – particularly one that is well served by entrenched operators with a loyal customer base - Kaufland Australia is cognisant of the fact that first impressions are crucial to its success. It must convince the Australian consumer that it is more than just ‘another operator’ but that it presents a true point of difference and provides for the very best supermarket retailing experience possible at the cheapest price. To achieve this means taking an uncompromising approach to customer comfort and store efficiency.

119. In order to deliver on that customer experience and in acknowledgement of the shortcomings of the established operators identified above, Kaufland Australia seeks to deliver the best of both worlds - a full service supermarket stocked with local, regional and international products at discount pricing, in a comfortable and convenient environment. To that end, its stores are designed with:

(a) Generously sized parking spaces to allow easy access;

11 Counsel for Vicinity Centres in oral submissions on day 13 of the hearing. 32

(b) Wide vehicle aisles to remove conflict points;

(c) Car park occupation and guidance systems in elevated stores;

(d) Provision of a large amount of car parking;

(e) Electric car charging points;

(f) Undercover visitor bicycle parking;

(g) Maximum car park grade fall of 2% to prevent trolleys rolling away; and

(h) Conveniently located trolley bays.

120. Kaufland seeks the same retail floor layout and relationship to the back of house at each of its Australian stores for the following reasons:

(a) Customer familiarity and legibility;

(b) Construction efficiency;

(c) Procurement and purchasing efficiencies; and

(d) Store operational and procedures familiarity and efficiencies.

121. This has informed the almost uniform dimensions of the Kaufland ‘box’: 94.8m x 71.7m (with additional area in Mornington to accommodate the loading dock).

122. Kaufland has also modified its design parameters to accommodate its proposal on the Mornington site, by creating a raised box over an undercroft car park.

123. Kaufland has repeatedly explained the basis for its design parameters, to the extent it is able without revealing confidential business information. It is entitled to put forward its proposals and to have them assessed on their merits.

124. Vicinity Centres is seeking to have Kaufland demonstrate why it cannot have a different store format – asking the Committee to be sceptical of Kaufland’s Australian store model - but of course Vicinity Centres knows 33

that Kaufland will not put that information into the public domain given its highly confidential nature.

125. It is not to the point that Kaufland has other models in other markets around the world. In those markets, Kaufland is not the new entrant coming into a sector dominated by two well-established operators, with significant brand loyalty on the best available sites.

Net community benefit

126. There is a circularity to the submissions and evidence called by Vicinity Centres and Blackbrook in relation to the test or assessment of net community benefit for out-of-centre retail proposals. The argument put is that all out-of-centre proposals are contrary to activity centre policy, which seeks to locate major retail proposals in centre, and therefore they should be refused. But non-compliance with the preference for in-centre development is a given. This is why there is an additional hurdle imposed on out-of- centre proposals: because they are not in centre.

127. If the test of net community benefit is always applied so as to demand that an out-of-centre location has all or even most of the attributes of an activity centre (as suggested by, for example, Mr Milner and Mr Rogers), then out- of-centre retail proposals will never succeed.

128. Blackbrook submitted that the assertion about the desirability of Kaufland entering the Australian market as a competitor in the retail grocery sector “amount to little more than untested fanfare and puffery” (document 132, para [16]). Yet Mr Rogers, Mr Milner, Mr Quick and Mr Haratsis12 all accept

12 Mr Haratsis did qualify his opinion on the benefits of introducing more competition, relying upon his interpretation of various Reserve Bank publications. However a critical examination of those documents reveals that they do not support the conclusions that Mr Haratsis draws from them. In particular, Mr Haratsis argues, in relation to document 180, that the authors of the document “argue there is enough competition already at work in the retail industry.” The authors say no such thing. They do say that the retail trade sector has become more competitive, but certainly not that it is competitive enough. To the contrary, the underlying assumption of the article is that competition is a good thing. It makes the point that “parts of the retail trade sector that are most concentrated include department stores and supermarkets” (at p 6), a proposition that is demonstrated by graph 4 on p 7 of that article. It notes that the combined market share of Wesfamers (including Coles) and Woolworths increased from about 30 per cent of total retail trade in 2001 to peak at about 40 per cent in 2013. The graph on p 10 shows the 34

this as an obvious benefit of the proposal, as does the Master Grocers Association (document 61, para [32]).

129. Blackbrook goes on to say that the assertion is irrelevant (document 132, para [19]). Kaufland asks rhetorically how it could possibly be suggested that the desirability of a new entrant in what is really a tightly held duopoly within the most significant element of the retail sector could be said to be irrelevant? That has not been the approach of any of the retail economists, or of any planning witness other than Mr Bromhead (although he readily acknowledged that the introduction of Aldi had resulted in economic benefits to millions of Victorians).

130. This Committee, in recommending the approval of the Tranche 1 sites, found that “all sites provide significant opportunities to diversify the supermarket offer to enhance competition and price; and improve choice and convenience to local and wider catchments.”13 In relation to the only out-of-centre proposal in Tranche 1 (Dandenong), it accepted that “the community will derive significant choice, competition, employment and commercial outcomes from the proposed development specifically, and Kaufland’s entry into the Victorian retail market more generally”.14

131. Mr Bromhead had assessed the proposal as a generic full-line supermarket and had not given weight to the broader benefits arising from Kaufland entering the market.

132. That is quite extraordinary. The fact of Kaufland entering the market is a significant state-wide benefit – a benefit to millions of Victorians, including the lower socio-economic demographic. The benefits of a new entrant to shake up the existing duopoly is a weighty matter – a matter that cannot simply be dismissed with the assertion that “foreign countries coming to our

combined market share is still in the order of 37 per cent. It also stands for the propositions that (at pp12-13): (a) the number and size of firms in an industry does appear to be important in determining the level of competition; and (b) barriers to entry and exit are important determinants of retail competition. 13 Document 96, executive summary. 14 Document 96, p59. 35

land” have to “do it our way” or go home.15 As is contemplated by the planning scheme, it is important that the Committee examines whether activity centre policy has the potential to stifle the possibility of a new entrant, and assess the proposal based upon net community benefit.

133. Vicinity Centres tabled and sought to rely upon ‘Retailing Victoria,’ the report of the Retail Development Policy Review Panel in May 1996. That document is more than two decades old. It pre-dates the advent of internet shopping and even deals in some level of detail with video stores, a now redundant retail format relating to a long-surpassed piece of technology.16 Perhaps more importantly, it was written when the population of metropolitan Melbourne was closer to 3 million than the current 5 million people (and growing).17

134. What Kaufland has attempted to do, through its submissions, evidence and documents tabled,18 is to put before the Committee the current and relevant approach to planning for retail uses in Victoria. The 1996 report is of historical interest at best, but should not be given weight in the Committee’s analysis. The Productivity Commission report (document 89) and the government response are far more relevant documents.

135. As noted in the Reformed Zones Ministerial Advisory Committee report, Commercial & Industrial Zones Report 28 February 2013 (C&IZ MAC report) at p10 in discussing the context for the reformed zones:

15 Counsel for Vicinity Centres in oral submissions on day 13 of the hearing. 16 Document 136, pp50-51. 17 Interestingly, it seems to anticipate some of the reforms introduced by VC100 in the following way: (a) It notes the upsurge of interest by developers in small ‘supermarket plus’ centres but their caution in the face of a policy vacuum denies the country the benefits of increased competition. For that reason, the Panel recommended that policy “should not include references to any priority among centres, or nominate specific preferred locations for retail development” (Recommendation 10, p31). (b) It recommends against using the retail hierarchy as anything other than a convenient method of describing, in a common language, the retail system “as it presently exists in Victoria”. It advises that “a particular development or type of development should not be rejected simply because it is not mentioned in or does not ‘fit’ the retail hierarchy” (p33). 18 For example, document 89. 36

136. The C&IZ MAC report goes on to state:

“The Committee notes the Government’s response is to seek to increase opportunities, open up competition, drive efficiency, provide greater planning certainty and maintain competitive advantages in a globally interconnected and changing world.”

137. Kaufland maintains that a weighty matter in any net community benefit assessment of a new supermarket in an out-of-centre location is the extent to which it impacts on nearby activity centres. Of course this does not preclude consideration of factors other than economic impacts, and Mr Biacsi did not confine his net community benefit assessment to economic factors.

138. If a proposal can be said not to impact the role, function or viability of an activity centre, and that it will deliver choice, diversity, employment and downward pressure on price, then it will clearly result in a net economic benefit.

139. Net community benefit does not demand a single proposal to “execute on” the State’s plan to improve Activity Centres, as was submitted by Vicinity Centres in para 21 of document 135. That submission misquotes the Court in Spurling v Development Underwriting (Vic) Pty Ltd, which concluded that it is a proper planning consideration to inquire “whether or not the establishment of some competing regional shopping centre will adversely affect existing 37

shopping facilities or will render unlikely of execution some existing plan to improve existing shopping facilities for local residents of the area”.19

140. There is no evidence before this Committee that approval of the Kaufland proposal will “render unlikely of execution” an existing plan to improve existing shopping facilities in Mornington. For example, the Mornington Activity Centre Structure Plan is just as capable of implementation in the event that the Kaufland proposal is approved.

141. There is only one site that is nominated in the plan for a major retail expansion, namely site four. The Mornington Village expansion is a major retail expansion (with 2740m2 of retail floorspace). The plans (document 66) show this expansion will occur on land to the immediate south of site four (on land that was shown in the structure plan as a park) with an upgrade to part of the car park on site four being part of package of ‘benefits’ to be delivered to the Council to facilitate the proposal. It would appear, therefore, that the Council’s intention to see a major retail expansion in that part of the Mornington Activity Centre will be delivered with the Mornington Village expansion. Further the Kaufland proposal does not preclude, or even make less likely, additional retail development on the remainder of site four at some time in the future. It could be used for a further expansion of Mornington Village, a small discount department store or more speciality shops in the future, subject to achieving an appropriate interface with its residential neighbours. At the moment, it serves a function which benefits the Mornington Activity Centre as a whole - namely free, available, at grade car parking,

142. Despite its insistence that net community benefit includes considerations other than economic impacts (a proposition Kaufland does not dispute), Vicinity Centres has not adduced evidence of significant adverse social, environmental, cultural or other effects of the proposal.

19 [1973] VR 1. 38

143. Finally, Blackbrook asserts that “it has been suggested that the absence of Coles or Woolworths from these proceedings generates the basis of an inference that in some way supports Kaufland’s proposal” (document 132, paras 15(c) and 34). Kaufland has not made this suggestion or invited such an inference, and does not understand this aspect of Blackbrook’s submissions.

Aventus (Submission M75)

144. Aventus is supportive of the proposal, qualified by the suggestion that there should be a rezoning of the INZ3 land in the Mornington Parkland Industrial Precinct to C2Z, consistent with the Mornington Peninsula Industrial Areas Strategy 2018 (document 5). In response to questions from the Committee, this was broadened to suggest an investigation of the potential rezoning generally, and which would be the best planning tool to manage the land into the future.

145. In effect, the Aventus submission is critical of the process chosen, a matter that Kaufland has addressed in its Part B submission. Kaufland agrees with Aventus that the rezoning of the land to C2Z would better reflect the mixed commercial, office and retail uses already in existence in this precinct. But given Council’s attitude to the proposal, it is unlikely at this stage to prepare an amendment to implement Direction 7 of the IAS, namely to rezone the precinct to the C2Z. Council’s dealings with Bata indicate that it was willing to frustrate Bata’s legitimate expansion plans in order to progress its agenda against the Kaufland proposal. Presumably it is for that same reason that it has not brought forward a planning scheme amendment to implement the ACS and IAS, namely due to a concern that such an amendment may provide strategic support for the Kaufland proposal.

146. Accordingly, a recommendation along the lines of Aventus’s submission would result in a delay to the processing of Kaufland’s proposal, without the reasonable prospect of Council agreeing to put such a rezoning forward by way of scheme amendment. Even if the Minister was willing to prepare the amendment, it would take some time for that process to eventuate. Given 39

Kaufland’s imperative to roll out its stores quickly to provide a critical mass to support the distribution centre, it does not support Aventus’ submission in that regard.

Individual submitters

147. It is unfortunate that some members of the community have reacted to the entrant of a foreign company into the Australian retail market with not only fear but open hostility. Submissions like those of the Mount Eliza Community Alliance illustrate one of the greatest difficulties that Kaufland will have in entering the market – the parochial views of many Australians. It demonstrates how important that it will be for Kaufland to provide a point of difference to Woolworths and Coles and to work hard to win over the hearts & minds of Australian shoppers.

148. The Council’s “issues paper” (document 24) was inflammatory and seems to have gained traction. It says:

149. The Advisory Committee will be aware of the effect that such a notice can have on a local community, especially when produced with Council letterhead, and handed out at customer service centres.

150. There seems to be a view in the community that Kaufland will not benefit the Australian community. Nothing could be further from the truth. Mr Dimasi’s evidence was to the effect that “Kaufland operating a business in 40

Australia will be of benefit to Australians. The profits repatriated will be a very small part. There is unlikely to be profit repatriated for many years.”

151. Kaufland Australia already employs Australian people. It will employ Australian people to construct its distribution centre, national headquarters and individual stores. It will employ Australian people to operate them. It will purchase food from Australian suppliers. It will manufacture in Australia. It will provide choice, competition and downward pressure on prices for Australian consumers. Just like Aldi. Kaufland Australia will also have its own consumer loyalty programs and philanthropic initiatives. If some consumers do not wish to shop at Kaufland, that is a matter for them.

152. A number of submitters raised concern with existing and future traffic congestion around the Mornington site. On the evidence, the level of congestion around the site is really no different to congestion in most parts of Melbourne, with similar peaks and troughs throughout the day and week.

153. The traffic evidence is that the proposed mitigation works will improve the situation for people wanting to access Oakbank Road.

154. The submissions about how busy this area is, and how much foot and vehicle traffic occurs, go both ways. On the one hand, it is said that the site is isolated and that people will do sole-purpose trips. But on the other hand, it is said that there is significant foot and car traffic which has its destination in the immediate vicinity of the site, including highway commuters and more than 4000 school students.

155. If rat-running through the Padua Estate is or becomes a significant issue, that is a matter for the local road authority to manage.

Oakleigh South

Kingston City Council (Submission OS08)

156. Kingston City Council confirmed its broad support for the amendment, noting at [59]-[60]: 41

The site is located in an Industrial 1 Zone and forms part of a broader industrial precinct. It is located and benefits from being located on the edge of the broader industrial precinct bounded by two main roads (Clarinda Road and Centre Road). The industrial area consists of a range of industrial uses including large format office and warehouse and distribution buildings and some smaller manufacturing uses. Until recently the site has been used as a large format restricted retail use (Bunnings Warehouse). The existing building is a large format warehouse building surrounded by at grade car parking. The proposal is for a large format building and operation not dissimilar to that that which has occurred on the site through the existing Bunnings Warehouse.

It is Council’s view that the site is an appropriate location for the proposed use on the basis that it broadly replicates the scale and intensity of the existing large format retail use on site (Bunnings Warehouse) and will not compromise the evolving commercial and industrial function of the surrounding precinct.

157. Council also noted at [5]:

5. Council does wish to note from the outset that the amended plans have addressed Council’s concerns raised in its written submission in relation to improved pedestrian connectivity and amenity of the outdoor plaza through:

• The relocation of the outdoor plaza further east to align with store entry and footpath from Centre Road.

• Provision of a new footpath extending from Clarinda Road to the store entry.

158. Council requested a number of changes to the Incorporated document, many of which had already been picked up by the Part B document, or have now been picked up by the Part C document.

Vicinity Centres (Submission OS04)

Alternative sites

159. Kaufland refers to and repeats its submissions in relation to alternative sites above. 42

160. In contrast to Mornington, in the case of Oakleigh South no alternative sites have been put forward by Vicinity Centres or Mr Rogers, beyond the assertion that there would be alternative sites in centres, such as the nine centres shown on Figure 2 p 5 of the Monash National Employment and Innovation Cluster Draft Framework Plan March 2017 (Draft Framework Plan, contained in the Policy Book).

161. Mr Rogers was of the view that the proposal should be located within the NEIC. In particular, Mr Rogers suggested that the Kaufland store could go in one of the two identified business centres, shown with a red asterisk below.

162. Under cross examination, Mr Rogers acknowledged that the plan had a lead time of 10-20 years, albeit that the “government would like to start sooner”. He also agreed that the proposed Kaufland store at Oakleigh South would not prejudice a Kaufland locating in the NEIC in the future, albeit that “there may be timing issues”.

163. Whether or not the subject land is within the NEIC is indeterminate, given that: 43

(a) The NEIC is a cluster of various activity centres and land uses, without a defined boundary;

(b) The subject land is within the land identified in the Draft Framework Plan in respect of the NEIC; but

(c) The subject land is not within one of the activity centres identified within the NEIC.

164. This case is to be distinguished from Mornington, where it was relatively straightforward to identify the Mornington Activity Centre as the relevant local centre where a use such as a Kaufland hypermarket might logically try to locate. Here, there are some nine activity centres spread out across the NEIC that could, arguably, be an appropriate alternative location were suitably sized and zoned land to be available. However, there is no evidence before the Committee to identify any such sites in any of those centres. An assertion that the Kaufland could go in one of those centres is not helpful to the task that the Committee has to perform. It cannot possibly make a recommendation that one of those sites is a preferable site (even if that was the test, which is denied) without having information before it that makes that point good.

165. Figure 2 on page 5 of the Draft Framework Plan identifies two ‘Future Business Town Centres (Indicative preferred location)’, namely:

(a) Wellington Road between Westall Road and Springvale Road (Wellington Road location); and

(b) Ferntree Gully Road between Clayton Road and Blackburn Road, near the Ferntree Business Park and Monash Business Park (Ferntree Gully Road location).

166. Both the Wellington Road and Ferntree Gully Road locations are included within the Special Use Zone - Schedule 6 under the Monash Planning Scheme.

167. The purposes of the Special Use Zone are: 44

To implement the Municipal Planning Strategy and the Planning Policy Framework.

To recognise or provide for the use and development of land for specific purposes as identified in a schedule this zone.

168. The purposes set out in Schedule 6 to the SUZ (SUZ6) are:

To encourage the integrated development of offices and manufacturing industries and associated commercial and industrial uses.

To facilitate the provision of short term accommodation and complementary business services.

169. Under SUZ6, use of the land for ‘Retail Premises (other than Postal agency and Shop) is a Section 2 - permit required use.

170. The use of the land for a ‘Shop’ (which includes a Supermarket) is a Section 3 - Prohibited use under SUZ6.

171. The nature of the current controls affecting both the Wellington Road and Ferntree Gully Road locations within the Monash NEIC is such that a Kaufland store would be prohibited and therefore necessitate a planning scheme amendment.

172. The Draft Framework Plan notes the following at Action Item 2.2 (page 10):

Plan for at least two new business town centres in the Monash Technology Precinct and implement with a planning scheme amendment to:

Ensure the majority of employment area is within 500m walkable distance;

Include a mix of retail (including small supermarkets), hospitality and open space to suit business and worker needs;

Have convenient access to or include visitor accommodation, conference facilities; and

Be accessible by public transport.

173. In the event that Action Item 2.2 was implemented through a planning scheme amendment process, a Kaufland store would not be permitted 45

because, at the floor space proposed, Kaufland would not be consistent with a ‘small’ supermarket (typically in the range of 1,500 – 1,800m²).

174. Either way, the Committee cannot proceed on the basis that a Kaufland store could or even might be accommodated in either of these Future Business Town Centres.

National headquarters

175. The exhibition plans show both the national headquarters and its associated car park as being “subject to further detail and later/future approval”.

176. Kaufland's Part B submissions states:

“174. Mr Blades’ evidence is that the Oakleigh South Kaufland store is contextually responsive. He and Kingston City Council shared a concern about the layout of the National Headquarters as shown on the exhibition plan, at the rear of the site, with the car park at the front on Clarinda Road. Kaufland has taken on board that concern. For this reason, the National Headquarters is now subject to future master planning.”

177. Vicinity Centres made a submission at para [57] of document 181 that:

“This submission does not withstand even the most basic level of scrutiny. Mr Blades wasn’t engaged until January 2019. As long ago as June 2018, Kaufland were no longer proceeding with the Headquarters through this Advisory Committee process.”

178. Vicinity Centres drew the Committee’s attention to the PPP report, which also went on exhibition, which notes:

“3.2.2 Proposed future Kaufland Australia national headquarters

Indicative details of the future Kaufland office development are notated on the architectural plans for information. The office development will be subject to a later / future approval.”

179. That submission should be rejected. The Part B submission was entirely correct and is not inconsistent with section 3.2.2 of the PPP exhibition report. Kaufland has proposed a master planning process for the site due to the concerns expressed by Council and Mr Blades about the location of the headquarters at the back of the site, with the car park at the front of the site. 46

180. That master planning process will determine whether or not the national headquarters should be brought to the front of the site, or whether it is appropriately located to the rear of the supermarket. Up until Mr Blades was engaged it was Kaufland’s intention to locate the office to the rear of the site. This changed once Mr Blades provided his advice. Kaufland needs to consider his advice carefully. It is for that reason that the notes as to the location of the national headquarters and the car park were taken off the ACP version of the plans. Access to the site was also reconsidered having regard to a number of factors, including the flexibility needed to allow the national headquarters to be built on Clarinda Road.

181. The exhibition plans and the June 2018 PPP report always envisaged that there would be a future approval process for the national headquarters. The PPP report did not say what that process would be – whether through the SCO or through a planning permit, or otherwise. Prior to Mr Blades’ advice, Kaufland had not made a definitive decision whether or not to make a request to the Minister that the national headquarters be considered through another round of Committee hearings, or to leave that approval to the Council planning permit process. Post Mr Blades’ advice, it made the decision to pursue a Council planning permit process.

182. The Advisory Committee has asked “how can you properly plan for the site if you don’t know what will be in those two corners of the site?” In response, Council has confirmed that they could address the integration of the building, including site access, through the planning permit process. That was also the evidence of Mr Blades.

183. Ms Partenio asked what would happen if the national headquarters did not go ahead. It is unfortunate that Kaufland was not able to bring forward the approval for the national headquarters through this process, as Kaufland could then have relied upon the full range of economic benefits which would be provided by that proposal. However, time has simply not allowed that process to occur. Kaufland has publicly stated, and re-states, that its intention is for its national headquarters to be built on the site at Oakleigh 47

South. It has purchased the whole of the site – its actions therefore strongly support this publicly stated intention. Kaufland’s national headquarters will be of a very high quality, reflective of the image it wishes to portray to the community about the quality of its offer. It has engaged very experienced and well regarded architects and intends to progress the planning for that site, in consultation with the Council, as soon as it is able (but recognising that its current priority is the roll out of its initial stores).

184. Even if – for whatever reason – the national headquarters did not proceed on the Oakleigh South site, that is not a fundamental failing. The remaining land is not landlocked. There are any number of industrial and commercial developments that could be accommodated on that land.

Economic impacts

185. Mr Quick’s evidence was that, even taking into account cumulative impacts, following the Kaufland approval Oakleigh Central would have a 5% reduction in turnover by 2022, which would not impact on the role, function or viability of the Oakleigh Activity Centre.20

186. This evidence does not support Vicinity Centre’s submission that the proposal will have a deleterious economic impact on the retail hierarchy.

Net community benefit

187. Mr Rogers agreed with the following propositions in relation to the Oakleigh South store:

(a) if you have no significant off site amenity consequences, then that is a benefit;

(b) if there are no traffic or safety issues, that is a plus;

(c) if you can establish that the parcel is not needed for industrial use and is not available, then that is a neutral factor;

(d) the fact that the land has access to the PPTN is a small benefit;

20 Document 29b, section 4.1.3. 48

(e) the creation of significant employment is a positive; and

(f) greater choice, convenience, competition, price competitiveness, are a positive.

188. Mr Rogers also agreed that if the economic evidence is that the impact is below a level of concern, then the impact (whatever it is) should simply be taken as an acceptable consequence of the entrance of a new player, rather an economic disbenefit.

189. That is clearly the case for the Oakleigh South store.

Coolaroo

Hume City Council (Submission C03)

190. Kaufland notes Council’s submission that the proposed development “introduces a supermarket based development to an area identified as part of the broader Roxburgh Park Major Activity Centre pursuant to Clause 21.05-3” (document 101, para [11]; document 205, para [6]).

191. Kaufland agrees with Council, and notes that Council, as the planning authority for the City of Hume, ought to be expected to understand the boundaries of the activity centres within its municipality, and is unlikely to “cook up”21 an activity centre boundary to suit a proponent.

192. It is also significant that Council took action (unsuccessfully) to try to prevent the application of the C2Z from undermining activity centre planning through out of centre development, by rezoning various parcels of land from C2Z to INZ3 following VC100, in the form of Amendment C218. The subject land was not included within land to be rezoned under Amendment C218. In Council’s words, this acknowledges that the expanded uses available in the C2Z (including supermarket development) “were reasonably expected to be provided for or be considered as part of permit applications for land south of Somerton Road” (document 101, para [20]).

21 To paraphrase oral submissions of counsel for Vicinity Centres. 49

193. Kaufland also notes Council’s submission that the spatial allocation of the Roxburgh Park Major Activity Centre within the Hume Planning Scheme has not altered since 2010 (document 205, paras [9]-[10]).

Vicinity Centres (Submission C04)

In or out of centre?

194. Kaufland’s case is that the subject land is within the Roxburgh Park Activity Centre. It refers to and repeats its Part B submissions at paras [186]-[201] (Document 105).

195. Vicinity Centres’ case in opposition to this proposal hangs on the premise that the subject land is out-of-centre. In turn, that premise hangs on the premise that the planning scheme has changed since the Oxygen Advisory Committee concluded in 2010 that the subject land was in centre.

196. At the outset, one would assume that a planning scheme would require a fairly express amendment in order to remove land out of an activity centre, given the potential consequences of such a change. No such amendment has been tabled or referenced, by Vicinity Centres or its witness Ms Peterson.

197. It remains quite confounding to think that Ms Peterson could have informed Mr O’Farrell back on or before 8 March 2019 (the day on which he was cross examining Mr Biacsi) that she would give evidence that the scheme had changed in such a way that the findings of the Oxygen Advisory Committee no longer applied, and yet on the morning that she gave her evidence she was still having trouble finding the provisions of the scheme as they existed at that time.

198. Even on the day she gave her evidence, on 26 March 2019, Ms Peterson did not have access to the version of the planning scheme that was before the Oxygen Advisory Committee, instead proceeding on the assumption that the 2013 version of clause 21.07 (document 170) would have been the same in 2010. One only needs to compare document 170 with document 115 to see that this is not the case. 50

199. In any event, document 115 reveals that, at the time the Oxygen Advisory Committee concluded the subject site was in centre, the “Major Activity Centre” was referred to as “Roxburgh Park Shopping Centre” in clause 21.07 (as it is today), and document 114 reveals that the “Roxburgh Park Activity Centre” was identified as a circle to the north of Somerton Road in clause 21.06 (as it is today).

200. Further, the wording of the objectives and strategies of clause 21.07, which provide for an integrated centre north and south of Somerton Road, are relevantly identical today as they were in 2010, albeit that some of the wording of the objective was moved to a strategy. Of course, clause 22.12 is in identical terms.

201. In so far as some weight is put on the emergence of the orange/brown “bulky goods” node in the Strategic Framework Plan, that “node” was shown in the 2009 Hume City Retail Strategy Final Report (tab 13 of the Policy Book at p 122).

202. Ms Peterson’s evidence that the planning scheme had relevantly changed since the Oxygen Advisory Committee hearing, so as to remove the subject land from the activity centre, was unconvincing.

203. The Committee should view in a dim light the fact that she did not produce the 2010 version of clause 21.06, which shows the general location of the activity centre as being to the north of Somerton Road (as per the current scheme), despite apparently coming across it the day before she gave her evidence. It clearly did not support her proposition that there has been a substantive change to the planning scheme since the Oxygen Advisory Committee report in 2010.

204. The planning scheme was, and still is, slightly confusing due to referring in some places to the Roxburgh Park Shopping Centre, and in other places to the broader activity centre, north and south of Somerton Road. However, that confusion has been extant since at least 2010. What the planning scheme is clear about is that the Roxburgh Park Activity Centre is to be 51

developed as an integrated centre, both north and south of Somerton Road. That accords with ordinary notions of what a higher order activity centre represents – a broad based centre with a variety of uses, including core retail, peripheral sales, office, higher density residential development and so on.

205. Counsel for Vicinity Centres submitted that the planning scheme is “crystal clear”22 and that there is “no way you can cook it”23 to include the subject land within the Roxburgh Park Activity Centre. Yet neither Vicinity Centres nor Ms Peterson were clear on whether the “bulky goods precinct” south of Somerton Road (various described as the orange dot on the Strategic Framework Plan and the old reservoir site) formed part of the Roxburgh Park Activity Centre or was a separate bulky goods activity centre to be distinguished from the Roxburgh Park Shopping Centre or the Roxburgh Park Major Activity Centre. Ms Peterson’s written evidence sought to define the entire Centre by reference to the C1Z only. In her oral evidence, she described the land to the south of Somerton Road as comprising a separate activity centre.

206. Having sought to distinguish the land south of Somerton Road from the land to the north as a separate activity centre, Ms Peterson tabled document 173, Council’s Strategic Analysis Report of September 2003, which forms the background to clause 22.12. That document demonstrates that Council clearly considered both the Roxburgh Park Shopping Centre and the former reservoir land as being part of the Roxburgh Park Activity Centre, as follows:

(a) “The shopping centre forms part of a designated activity centre” (page 38);

(b) “The subject site [the former reservoir land] is of strategic significance in contemplating any expanding roles and function for the activity centre. While there are alternative areas of residential and industrial use, the subject site is the only realistic option for the siting of activity

22 Document 182, para [63]. 23 Oral submissions by counsel for Vicinity Centres, day 15. 52

that may have a synergy with the subregional shopping centre.” (Page 38)

(c) “If a Design and Development Overlay was to be placed over the site, its objectives would be to… establish the land’s role as a component of the Roxburgh Park Activity Centre” (page 52)

(d) “… the Roxburgh Park Activity Centre now straddles Somerton Road” (page 60)

(e) “The site is adjacent to the Roxburgh Park sub-regional centre but part of the activity centre” (Attachment 4 page 11)

207. So the Committee does not need to go about finding new language to describe two activity centres within a larger conglomeration of activity, as Ms Peterson suggested: there is already a word for such a beast – it is called a “major activity centre”.

208. Roxburgh Park Activity Centre clearly straddles Somerton Road, and encompasses at the very least the reservoir land. This means that the subject land is at the very least adjacent to that Centre.

209. But Kaufland goes further and, consistently with Council, maintains that the subject land is within the Centre. The Oxygen Advisory Committee was right to conclude that the subject land was part of the Roxburgh Park Activity Centre, and nothing in the planning scheme has changed since 2010 so as to remove it from that Centre.

210. It is right to say that the planning scheme does not establish the precise boundary of the Centre. From the application of first principles, the subject land is clearly within or on the edge of the Centre, for the following reasons:

(a) In a zoning sense, it is indistinguishable from the former reservoir land, as depicted below: 53

(b) It is developed with, and has been used for, bulky goods retailing in the form of a Masters, consistent with the land to the north;

(c) Planning Practice Note 58 includes in its activity centre boundary criteria the location of existing commercial areas and land uses (document 116);

(d) The land immediately south of the subject land has been approved for a mix of uses including office and medical centre (document 50), consistent with the types of uses ordinarily found within activity centres; and

(e) It is on the Principal Public Transport Network, with direct access to a Smartbus bus route and within 1.2km walking distance of Roxburgh Park Railway Station and bus interchange.24

211. Both counsel for Vicinity Centres and Ms Peterson suggested that VC100 was introduced to enable small scale supermarket opportunities and to prevent large supermarkets from establishing out of centres. This ignores the most radical relevant change introduced by VC100, namely, to allow supermarkets (as of right to 1800m2 and subject to discretion above) within the C2Z as a replacement to the blanket prohibition previously contained in the B4Z. There is no condition in the C2Z that requires a supermarket – of any size – to locate within a “core retail” area.

24 Document 18a, pp14-15. 54

212. Ms Peterson also suggested that activity centres are not bifurcated by arterial roads, and do not include bulky goods components. Chirnside Park Activity Centre and Epping Activity Centre, which were considered by the Committee as part of the Tranche 1 hearings, are examples of activity centres bifurcated by arterial roads, with bulky goods/business park uses separated from the “core retail” shopping centre component. Fountain Gate Activity Centre is an example of an activity centre that includes a bulky goods component (document 171). Cranbourne Activity Centre is an example of an activity centre bifurcated by the South Gippsland Highway, with restricted retail/showroom uses separated from the “core retail” shopping centre component.25

213. It was Mr Stephens’ evidence that the subject land is “well-located to complement the operation of other nearby land uses in the wider Roxburgh Park activity centre,” with Pascoe Vale Road/David Munroe Drive providing a “strong connection to the balance of the centre to the north” allowing “shoppers to combine visits to the proposed Kaufland with the nearby Roxburgh Village (primarily using a motor vehicle)”.26

214. From a strategic land use perspective, the Committee should conclude that the subject land is in centre and the proposal therefore has strategic support. A clause 17.02-2S net community benefit analysis is not required to be undertaken, and there can be no legitimate argument that the proposal will affect the role, function and viability of the Roxburgh Park Activity Centre, of which it forms a part.

Economic impacts

215. Mr Haratsis’ evidence was not of much assistance to the Committee. His original assumption that the subject land is out-of-centre was apparently strengthened through listening to Ms Peterson’s evidence, despite her concessions that the planning scheme used inconsistent terminology and was not “clear cut”, and her evidence that the land to the south of Somerton

25 See ACZ1 in the Casey Planning Scheme. 26 Document 26b, para 5.5. 55

Road was itself an activity centre. His report presented in great detail his interpretation of the Reserve Bank’s views on the state of the retail market in Australia, although to what end remains unclear. As per the example given earlier in a footnote to these submissions, a critical examination of those reports reveal that Mr Haratsis’ language was loose, and that they do not stand for the proposition that there is already enough competition in the supermarket sector.

216. Mr Haratsis claimed that the proposal would impact on the Roxburgh Park Shopping Centre in the order of 11.9%. Both Mr Dimasi and Mr Stephens said that was unlikely. They both challenged Mr Haratsis’ assumption that 43% of the impact would be from Roxburgh Village. Mr Dimasi said it was more likely that about 35% would be drawn from Roxburgh Village, which would make the impact in the order of 7 to 8%. Mr Stephens was also critical of the 43% assumption, noting that Kaufland will serve an extensive trade area. He thought the impact on Roxburgh Village was in the order of about 10%. In any event, none of the economists thought that the proposal would cause the supermarkets to close.

217. Mr Haratsis accepted that the vacancy levels in Roxburgh Village are very low and the health of the shopping centre is good. He also said that, whether a Kaufland is established or not, the centre would continue to perform its role and function and that there would be no impact on the hierarchy of centres

218. His ultimate conclusion was somewhat baffling: that locating a Kaufland to the south of Somerton Road would divert “millions” in foot traffic away from the Roxburgh Village Shopping Centre, yet locating it a few hundred metres to the north within that shopping centre would attract “ten million” new people to Roxburgh Village. He concluded that the 10-15% negative impact of the proposal would thereby be converted into a net benefit (ie totally eclipsing the 43% impact he had otherwise assessed!), although had not done an assessment in order to be able to quantify that benefit. This is a 56

fairly extraordinary statement to make in the absence of any analysis to support it..

219. The evidence of Mr Dimasi and the peer review evidence of Mr Stephens should be preferred to the evidence of Mr Haratsis. Mr Stephens’ evidence was that, while the proposed Kaufland Coolaroo store will generate some moderate trading impacts on some existing supermarket operators, “these are well within then normal bounds of a competitive retail sector. Ongoing population and spending growth in the trade area ensures that any initial trading impacts are temporary, and that supermarkets and other competing traders will soon return to overall sales growth.”27 That evidence should be accepted.

Master Grocers Association and independent operators (Submissions Ge01, M76, OS05, OS06, OS07, C05)

220. The MGA submission demands certainty and confidence for investors through the planning system. The reality is that planning is rarely certain: even within the INZ3, a small supermarket could commence operating – in direct competition with the small supermarkets represented by the MGA - without requiring any planning permission for that use. Where a permit is required for development, or for a larger supermarket use in the C2Z, it would not be standard practice to notify competing businesses unless they were located adjacent or in close proximity to the land the subject of the application. It would not be standard to advertise the application in newspapers, as occurred here.

221. A number of operators were concerned about the impact on their individual supermarkets.

222. Kaufland refers to and repeats the economic evidence that the impacts will not be felt as ‘community’ impacts, albeit that there may be an impact on individual businesses, resulting in decreased profitability for individual operators. Kaufland has made a submission that the correct approach to

27 Ibid, para 5.50. 57

take is to assess community impact, not individual impact (Part B submission, document 105 at paragraph [37]). Further, while there may be an individual impact on the existing retailers, the Kaufland offer will introduce additional employment, with a correspondingly positive impact on those future individual employees and their families.

223. The MGA also criticised the Kaufland model for being “car dependent” (see document 61, para 4(e)). While there can be no argument that the planning schemes encourage alternative forms of transport, the reality remains that people generally use their cars to do their weekly shopping for the very obvious reason that it is difficult to carry weekly shopping on alternative forms of transport (especially for larger households). For those who do choose to use public transport, the three sites are all served by various modes of public transport.

Signage

224. The Committee in the Tranche 1 report (document 96) found that the pylon type 2 signage in all three locations was not acceptable at any height (page 32). It did so on three bases:

(a) lack of need;

(b) visual dominance; and

(c) the potential to set a precedent (page 31).

225. At the Tranche 1 hearings, Kaufland largely confined its submissions on signage to the issue of “how high” rather than whether a pylon sign should be permitted at all. Kaufland has taken the view (perhaps wrongly) that the issue that was being agitated by submitters opposing the pylon signs was how high they were, rather than whether such a sign should be allowed at all.

226. Kaufland had taken the same approach in these hearings, given that it was not privy to the Tranche 1 report until immediately prior to delivering its Part B submissions. Kaufland recognises the need to address the Advisory 58

Committee more comprehensively on the framework for decision-making in relation to signage.

227. It is well established that a sign may fall within more than one classification under clause 73.02 and that, if a sign can be interpreted in more than one way, the most restrictive requirement must be met (by operation of clause 52.05-2).28

228. The type 2 pylon signs are properly characterised under clause 73.02 as business identification signs and sky signs, the definitions of which are set out below:

Business identification sign

A sign that provides business identification information about a business or industry on the land where it is displayed. The information may include the name of the business or building, the street number of the business premises, the nature of the business, a business logo or other business identification information.

Sky sign

A sign:

a) on or above the roof of a building, but not a verandah;

b) fixed to the wall of a building and which projects above the wall; or

c) fixed to a structure (not a building) so that part of it is more than 7 metres above the ground.

229. They are not properly characterised as promotion signs or major promotion signs, the relevant definitions of which are set out below:

Promotion sign

A sign of less than 18 square metres that promotes goods, services, an event or any other matter, whether or not provided, undertaken or sold or for hire on the land or in the building on which the sign is sited.

28 Fivex Pty Ltd v Melbourne CC [2019] VCAT 138, [33]. 59

Major promotion sign

A sign which is 18 square metres or greater that promotes goods, services, an event or any other matter, whether or not provided, undertaken or sold or for hire on the land or in the building on which the sign is sited.

230. This is because the type 2 pylon signs do not promote goods, services or events unrelated to anything that is occurring on the land, but rather they identify the land and its proposed improvements as being used for the purpose of a Kaufland store: the branding associated with the signs is for the building itself and identify it as a building owned and operated by Kaufland. The signs therefore fall squarely within the definition of business identification sign.29

231. Proper characterisation is significant because the more onerous considerations set out in the decision guidelines relating to major promotional signs under clause 52.05-8 do not apply.

232. In view of the Committee’s view of the potential visual dominance of the type 2 pylon signs in their original form, Kaufland agrees to scale back the proposed heights.

233. Kaufland is prepared to lower the height of the type 2 pylon signs in relation to the Mornington proposal (to 10m), the Oakleigh South proposal (to 12m) and the Coolaroo proposal (to 15m).

234. Having regard to that concession, the dimensions and relevant categorisation and purpose in respect of each sign are set out below:

29 Fivex Pty Ltd v Melbourne CC [2019] VCAT 138, [45]-[46]. 60

Site Sign dimensions Cl 52.05 Purpose categorisation Mornington 8m pole plus a 2m x Category 2 – To provide for 2m signage box low limitation adequate (12m2 sign area and a identification signs total height of 10m) and signs that are appropriate to office and industrial areas Oakleigh 9m pole plus a 3m x Category 2 – To provide for South 3m signage box low limitation adequate (27m2 sign area and a identification signs total height of 12m) and signs that are appropriate to office and industrial areas Coolaroo 12m pole plus a 3m Category 1 – To provide for x 3m signage box minimum identification and (27m2 sign area and a limitation promotion signs and total height of 15m) signs that add vitality and colour to commercial areas 235. In respect of each of the type 2 pylon signs, permission is required because the total display area of all signs exceeds 8m2.

236. Principles that ought to inform the Committee’s consideration of the proposed signs include:

(a) significant business identification signage in the form proposed is important to Kaufland, and is the type of advertising that has been accepted across Victoria for major retailers such as McDonalds;

(b) there is a particular benefit to facilitating the ready identification of businesses on a highway location so that motorists can make a decision in advance to exit the highway in a timely and safe manner; and

(c) notions of precedent ought to be applied with a great degree of caution, given that all future permit applications for signage on other land will fall to be determined on their own merits.

237. It is a purpose of clause 52.05 to “ensure signs do not contribute to excessive visual clutter or visual disorder”. 61

238. The Tribunal in AA Holdings Pty Ltd v Boroondara CC [2013] VCAT 437 considered that “clutter” in the outdoor advertising context “might mean signs that amount to a disorderly and discordant profusion of signs that are an eyesore and that may have such an overall effect as to prevent the discerning of any of them as to their individual advertisements” (at para [105]). None of the sites currently exhibit clutter, and nor would the proposed signage create clutter, in the sense understood by the Tribunal.

239. Relevant decision guidelines under clause 52.05 relate to:

(a) The compatibility of the sign with the character of the area, and the cumulative impact of signs on that character;

(b) Impacts on views and vistas;

(c) The relationship to the streetscape, setting or landscape;

(d) The relationship to the site and building;

(e) The impact of structures associated with the sign; and

(f) The need for identification and the opportunities for adequate identification on the site or locality.

240. Mr Blades’ and Mr Biacsi’s evidence supported the pylon signs at much greater heights than is now proposed, with material tabled to give the Committee an indication of how the signs would have appeared in the streetscape at those heights (document 26l).

241. There is no evidence before the Committee to suggest that the type 2 pylon signs (at any height) are unacceptable at Oakleigh South or Coolaroo.

242. Kaufland notes that the City of Kingston has sought a reduction of the sign to a maximum height of 10 metres “which is comparable to signage of other large format retailers within Industrial and Commercial precincts across Kingston.” (Document 104.) In that regard, Kaufland notes that there are already signs at the intersection of Warrigal and Centre Roads of up to 15m in height. Kaufland has responded by seeking a sign of 12m, which is lower 62

than the McDonalds and La Porchetta signs, but still slightly higher than Council’s proposed 10m sign.

243. The sign at Coolaroo is significantly mitigated by its in-board location (including the five-storey approval to the south), which all but eliminates the potential for it to be considered to create visual clutter, to be dominant or to create a precedent.

244. Kaufland acknowledges that the Mornington sign is the most controversial in respect of opposing evidence. Mr Biles and Mr Milner did not support the type 2 pylon sign as originally proposed, while Mr Rogers and Mr Haratsis were silent on this topic. Mr Milner’s evidence did not include any analysis of the proposed sign in its policy context, and is unhelpful to the Committee.

245. The Mornington site is at the interface of the GWZ with the INZ3. It is appropriate that this interface be marked, as it is already, by business identification signage. The impact of both existing and future vegetation will mitigate the impact of the type 2 pylon sign. Further, the fact that this site is one site in from the start of the industrial/commercial precinct will significantly assist in wayfinding.

246. Kaufland requests the Committee’s fresh consideration of each type 2 pylon sign in the Second Tranche of sites on their own merits, and welcomes advice as to what height the Committee would consider to be appropriate in respect of each site.

The higher bar

247. The Advisory Committee has suggested on a number of occasions that the bar is set higher for Mornington and Oakleigh, given the zoning of the land.

248. Kaufland chose the Mornington and Oakleigh South sites for good reason, despite recognising the potential hurdles in obtaining approval on land which is zoned for industrial purposes. 63

249. In both cases, the land has characteristics that set it apart from other areas of industrial land.

250. At Mornington, the Mornington Parkland Industrial Precinct is a mixed precinct with few uses having an industrial flavour. A large format retail store will sit comfortably in the context of Bunnings, Officeworks, Rebel Sport and the like. Bata's continued presence and expansion will be facilitated by the sale of a portion of its land to Kaufland.

251. Kaufland repeats its submissions in relation to the minimal loss of industrial land, and Council's strategic work acknowledging the merits of rezoning the precinct to C2Z.

252. At Oakleigh South, the land has for many years been used for a Bunnings Warehouse, a prominent big box retailer. This use has not led to any adverse impact on the role and function of the industrial estate to the west. There has been no suggestion that the loss of industrial land for a Bunnings store led to any industrial land availability issues. The reality is that the south-east sector of Melbourne is particularly well served with industrial land options.

253. These matters, together with the evidence in relation to net community benefit, provide a sound basis for supporting the Kaufland proposals. As noted earlier, the proposals must be analysed in terms of an acceptable planning outcome, not an ideal or a perfect outcome. With respect, there is no warrant for imposing the notion of a higher bar, if that is suggesting a heavier onus, or something more than acceptability.

Conclusion

254. Kaufland seeks the Committee’s recommendation that each of the Second Tranche of proposals be given planning approval in the form of the proposed scheme amendments, subject to the recommendations of experts that Kaufland has accepted, and to the Final Day version of the Incorporated Documents.

64

JEREMY GOBBO JULIET FORSYTH EMILY PORTER

Counsel for Kaufland Australia Pty Ltd Instructed by Planning & Property Partners Pty Ltd

2 April 2019