The decision to knock back the proposed $140 million Cambria Green development is testament to the Tasmanian Planning Scheme, Tourism Industry Council chief executive Luke Martin says.
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The planning scheme amendment was rejected due to major concerns over landowner consent, the TPC said when it handed down its decision on Friday.
Hundreds of units and villas, a health retreat, golf course and entertainment facilities formed part of the site's master plan.
Mr Martin said at the end of the day, the planning scheme usually sorted itself out.
"It's a bit of a testament to due process and letting it run its course," he said.
"Whether you like the project or not, any proponent that puts up a new project deserves the right to be able to test it, but at the same time you need to have robust systems in place to make sure the appropriate projects meet the standards of the community."
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A spokesman for the proposal said Cambria Green is reviewing the planning commission's decision and would consider the project's options after that.
However, Mr Martin believes there will still be some sort of activity on the site.
"It was always called a tourism development but when you look at the whole thing you see it's actually a very large recreational development with a tourism component," he said.
"Obviously the site's beauty has motivated the investor create something. So hopefully there is some sort of tourism activity on the site as that part of the state needs it."
Although, he said tourism in the area must add to the brand and are in-keeping with the state's uniqueness.
"As a destination we've got a pretty unique and special brand, because we're not like everywhere else in the world," he said.
"We want to see more Pumphouse Points, more Saphires and Freycinet and Cradle Mountain lodges because it's what we're renowned for and what people love."
Mr Martin said having community support was also important, and had been a missed opportunity with the development proposal.
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