Concerns are being raised about a proposed 304-lot subdivision for the small West Gippsland Village of Yarragon, which will result in it growing substantially.

Yarragon Business Association president Michael Fozard said he was concerned the development was being built on 45 hectares of prime agricultural land.

"There is a finite resource, once you build on it, it's no longer there … it's not been replaced," he said.

He did not believe the development would create a significant increase in business in Yarragon given the village's tourism focus, but he said there will be a greater need for services such as banks and doctors.

"Never, ever would I like to see us replicating what is happening in Pakenham and Cranbourne," he said.

Yarragon resident and member of the Baw Baw Planning Alliance Inge Mitchell agreed with the need for more services and also raised concerns with the lack of a sustainable design framework for the subdivision and development.

She said this could be done by creating bigger nature strips to accommodate larger trees to shade roads and more energy-efficient houses.

"We accept that Yarragon will grow, we're happy that more people will be living in the town … we need to grow to a stage where we can become self-sufficient," Ms Mitchell said.

A three-hectare block has been set aside by developers for future community services such as an aged care home.

But Ms Mitchell said she was concerned that without a specific plan it could be developed into further lots after a similar situation happened with a Trafalgar development.

A spokesperson from the developer Millar Merrigan said non-commercial facilities would be built on site and would be informed by "community needs".

The developer said they were guided by best practice environmental guidelines.

"The same guidelines have ensured new homes are built to reduce the impact of heat and adverse weather," the spokesperson said.

Millar Merrigan director Christopher Constantine said the development would do a lot to fix existing drainage problems in Yarragon.

Lack of council communication

Ms Mitchell said she was concerned about the lack of communication between the local government and community groups prior to submissions on the proposal opening.

The Yarragon and District Community Association that Ms Mitchell is a part of had scheduled meetings with Baw Baw Shire's east ward councillors and council's planner in May 2021 nu the meetings were later cancelled.

"Local knowledge is really important … yet there is a barrier put up to our community, to actually being able to have that communication with those who decide for us," Ms Mitchell said.

Baw Baw Shire has been asked for comment regarding this meeting. 

Baw Baw Mayor Michael Leaney said the developer has been cognisant of the town's needs.

"Of course, in a growing population, we do need to provide land that is available for residential development and this particular parcel of land was identified in Yarragon just over a decade ago," Mr Leaney said.

More community spirit

Despite its small size, Yarragon has 29 volunteer community groups and local newsletter editor Judith Conway said there could be benefits to the community expanding.

"It's going to create a greater pool of people who can be involved in the community," Ms Conway said.

She said she was surprised to discover that residents of another recently constructed development had created their own mothers' group.

"I think the people who make pronouncements … [that] nobody will talk to anybody anymore, just because they're not talking to them, doesn't mean conversations aren't happening," Ms Conway said.

She said she thought it was inevitable that Yarragon would change but was not necessarily a bad thing.

"Most people [in Yarragon], I would say are fatalistic so even though they're a bit sad that the town is going to change, they recognise that people have to live somewhere," she said.

Submissions on the proposal can be made on the Baw Baw Shire Council website.