House of Assembly Fifty-Third Parliament, First Session (53-1) 53 1 Parliament of South Australia House of Assembly published Parliamentary Committees Parliamentary Committees Select Committee on a Review of the Retirement Villages Act 1987 Select Committee on a Review of the Retirement Villages Act 1987 Dr McFETRIDGE House of Assembly Morphett Dr McFETRIDGE (Morphett) (11:32): I move: That the report of the select committee be noted. I rise to support the report that was handed down by the select committee that was established on 10 April 2013 into the review of the Retirement Villages Act. The members of that committee were: the former member for Giles, the Hon. Ms Breuer; the current Minister for Regional Development and Local Government, the Hon. Mr Brock; the former member for Kaurna, the Hon. John Hill; myself; the member for Heysen; and the former member for Mitchell, Mr Sibbons. As there are no members from the government (the Labor Party) able to speak about this who were on the committee then I think it is important—because this committee truly was a bipartisan committee, which met on 13 occasions, there was unanimity about the recommendations—that we recognise not only the work that was done but, more importantly, the recommendations of this committee. There were 11 terms of reference that were given to us by the parliament to investigate. There were a range of items, which members in this place can look at at their leisure. I will not take up the house's time with that today. The bottom line is that there has been a long history of angst, some legal argument and a lot of money spent by a lot of people on both sides of the argument in trying to work out the rights and wrongs of the retirement village industry in South Australia. I can say from a personal point of view, having listened to the evidence, that I would be very reluctant to go into a retirement village under the current circumstances, and this is what the recommendations of this committee are hoping to change. I would expect the government not only to look at these recommendations, which they have, from the minister's responses, but to go further than just responding by actually doing something about amending the legislation. The committee, as I said, met on 13 occasions, and we received a range of witnesses. There were 12 witnesses representing various entities and organisations, which ranged from Aged & Community Services SA & NT, the Council of the Ageing South Australia, Independent Living ECH Homes, Lifestyle SA, Masonic Homes, National Seniors Australia, the Office for the Ageing, the Property Council of Australia (SA Division), the Residential Tenancies Tribunal, the South Australian Retirement Villages Residents Association, Southern Cross Care, and the Valuer-General. We had six witnesses who were representing themselves as individuals, and I will not name them here. All the evidence that we received was very informative, well researched and well prepared. We were able to digest that evidence, and it was a great help in our coming to our final recommendations and the deliberations involved in that. The written submissions were varied; some of them were very lengthy, others were quite succinct. We received 95 written submissions: there were 10 from various entities and organisations; there were seven from residents committees; and then 78 individuals wrote to the committee with their views on life in retirement villages and also their opinion on changes that needed to be made. The committee was a very good committee to work on, certainly with the experience of some of the members in this area, particularly the member for Heysen. I was very pleased to be able to not only participate but absorb the information and also contribute in my small way to the final recommendations. I will just read some of the foreword in the committee's report for the information of the house, and I would hope that members do go back and look at the recommendations and the government's response to those recommendations. In the foreword, the presiding member, the former member for Kaurna, John Hill, wrote: One of the most compelling features of the next 30 years will be the ageing of our State's population. The greying of the Baby Boomer generation and the management of its demands and needs will require considerable finesse by society in general, and Government in particular. At the heart of this challenge will be the issue of funding. Who pays, how much and for what….It is clear, from the evidence provided to the Committee, that most residents enjoy and value life in their villages; most appreciate the companionship, the 'carefree' nature of village living and the security and safety that goes with it. However, there is considerable concern about the perceived lack of clarity about contractual and some administrative matters. On the other hand, the operators of villages, while they are supportive of greater transparency and clearer information being provided, are opposed to measures which might impact upon their flexibility and running costs. The Committee attempted to walk the line between these interests very carefully and our report makes a series of common-sense recommendations which will aid consumer understanding and confidence without unduly burdening the operators. On behalf of the Committee, which reached unanimity on all recommendations, [we]…thank all of the witnesses who made written and/or oral submissions, our parliamentary officers, Paul Collett; Serjeant-at-Arms, and Shannon Riggs; Parliamentary Assistant, and our Committee advisor, Cathy Pedler; Senior Retirement Villages Officer, Office of the Ageing. The committee officers are recognised and thanked in this place, but certainly the committee officers in this case did an exceptionally good job. The information provided by Cathy Pedler, the senior retirement villages officer for the Office for the Ageing, was very helpful indeed. In fact, Cathy came down to address the Independent Retirees group at Partridge House in the electorate of Morphett (my electorate), and she was able again to give very comprehensive and informed answers to their questions, which did satisfy, I think, every question in the place—it was well answered—and people went home very happy. The 34 recommendations the committee has made are over a range of areas. Can I say that the vast majority of the recommendations, which, in many cases, have two or three sub-recommendations in them, have been either supported by the minister or supported with some further investigation that is required. I will not go through every recommendation but I will highlight for the house some of the issues that have been raised by the minister in response to the recommendations. Recommendation 2 part (c) is: That consideration be given to renaming the Act to more accurately reflect the current status of today's villages. The minister's response was that this is supported, and they need to change the name of the act, but that they just need to investigate it further. We did not make a suggestion as to the way the act should be named in the future. The minister's response was: There are many varying definitions of retirement and differing views of what a retirement village is. In line with the above recommendation, not all residents will be retired and the name of the Act will not necessarily reflect their lifestyle. Further investigation into a possible name that is representative of the lifestyle and could contemporise villages and the way they are viewed within the wider community [will be investigated]. Recommendation 4 is an issue that was raised with us on many occasions, that is, the fees involved in entering, staying in and then, if you want, exiting the village. Concerns were raised about the complexity of some contracts and the need for greater contract disclosure prior to entering a village. In light of these concerns, the committee has recommended in part (a): That the Act be amended to introduce a standard disclosure document, prescribed by Regulations, to assist residents in comparing villages and in understanding their rights and obligations. There are some other things in (b) that went on to another area, but I should mention recommendation 4 part (c) (and this was raised with us on many occasions by the village operators and also individuals and representative groups), which states: That the standard disclosure document includes information relating to: all fees and charges which residents will be responsible for: prior to entering a village while residing in a village upon leaving a village; examples of exit fee scenarios; definitions of fees, charges and funds; I cannot emphasise enough how many times that particular concern was raised with us, and the committee, obviously, in its recommendation has sought some action by this parliament to alleviate that constant concern. The government did support (a) to (c) and in part supported (d), that is, that residents have an extra 15 days to cool off. The government (and I mean the minister, speaking for the government) did not support part (e) of this recommendation: That a web-based calculator be developed so residents are able to enter exit scenarios and be provided with examples of how much their refund amount would be under various scenarios. And the minister did not support (f), which states: That the Property Council be encouraged to produce a set of pro forma contracts that are the recommended templates for operators. In relation to the web-based calculator, the minister thought that would be a very difficult thing to do, but I think the minister should do something like that and it should be investigated further. I would think the members of the committee need to watch what happens there, because I think there should be some way of potential residents being able to have a look at these scenarios and just see where they are going to go. The minister's response was that this was not supported and it states: The Office for the Ageing currently produces a pro forma contract that is reflective of the Act's requirements— we are hopefully going to change the act, so let's hope that the pro forma contracts reflect any changes— is free of charge and available for use by administering authorities. The construction of a document that attempts to encompass all forms and variations of retirement villages without limiting new schemes being developed in the future would potentially be both lengthy and costly to operators and residents. I think if the government can look at something like that and develop it, rather than passing on the costs to residents, that would be a good thing. I move on to recommendation 10(a): That a unique 'retirement village' CPI be developed. This was not supported by the government. In fact, recommendations 10(a) (b) and (c) were not supported. Part (b) states: Increases of recurrent charges above this percentage should be approved by residents. Part (c) states: If residents do not approve an increase in recurrent charges beyond this percentage, an administering authority can apply to the [Residential Tenancies Tribunal] for approval of the increase. Yes, it would be difficult to construct a retirement village CPI, just as it is with a local government CPI, a health CPI and a whole range of CPIs, but because it is difficult does not mean you do not attempt to do it and come up with something that is as comprehensive as possible. There will be some areas where the normal CPI, as we could call it (as applied to everyday living by governments), could be applied, but there will be other areas where utilities and fees do go up at an increased rate, so a mix-and-match of that combination, to blend it together to come up with a retirement village CPI, I do not think is impossible. The need to give residents an increased say in how much the fees and charges go up is something about which the committee had serious concerns. The need to continue to watch that and to make sure we are giving residents a fair go is very important, because that is all they want—they just want a fair go. Most of the people really enjoyed living in their retirement villages, and those who did not wanted to get out. There they had the problem with exit fees, but that is something we will try to work through. Recommendation 17 states: That criteria be developed for the valuation of retirement village properties which accurately reflect the purchase of a licence to occupy under a retirement village scheme. This was a real concern, because when people were leaving retirement villages in many cases it would be a person associated with the retirement village or the company running the retirement village that was going to sell their property for them, and there were concerns about the way the valuations were being done. The government supported this in principle, but the note was: It is noted that the implementation of such changes would require significant reviews to existing legislation and the manner in which rating and taxing responsibilities are distributed in the community. Just because it will take significant changes does not mean that we should not undertake those significant changes. The need to look at the recommendations, as we have put them together—all 34 of them—and look at the minister's response, is something the whole parliament should do, with the ageing population in South Australia, including ourselves as we look to our future (if you want to go to a retirement village or something like that). These villages are changing to resort-like places in which to reside now, not just what we used to think of, that is, a whole lot of flats or units put together. It is a different position altogether, and we should look at the recommendations from this report very carefully, and I recommend the report to the house. The Speaker House of Assembly The SPEAKER: The member for Heysen. Ms REDMOND House of Assembly Heysen Ms REDMOND (Heysen) (11:47): I thought we would normally go to the other side of the house—I was quite prepared for the member for Ashford to speak. She was the relevant minister when I first came into this place and very graciously allowed me to participate with the very good work she did in reviewing the retirement villages legislation way back in 2002-03, I think it was. There was then another tranche of amendments to the Retirement Villages Act before this committee was set up. The reason for that was that the Retirement Villages Act, when initially promulgated, was to deal with what was effectively a very small number of retirement villages in this state, and that small number of retirement villages was largely created by church and charitable organisations and run on a not-for-profit basis. Now we are in a situation where there are some 500 villages in this state, accommodating over 24,000 people. If we look at the information in the report (and I will not detail the report, as the member for Morphett has done a more than adequate job of going through the detail), in general terms it is clear that two things have happened: first, in South Australia our villages still generally have fewer residents on average than the number who are generally in retirement villages in other states; but, more importantly, over the last few years particularly, an increasing number of people have become involved in the retirement village industry on a commercial basis, and that has dramatically affected the way matters are dealt with and the need for continuing reform of this legislation. I have no doubt that even if the government were to agree to every one of these recommendations, it still would not permanently fix the issue because, under our Retirement Villages Act effectively at the moment, we have a situation where people buy either a licence to occupy or make a loan to the organisation, but they are fundamentally changing the way they own the right to live in their premises. Most of us in this place probably either own outright or own with the bank our home that we live in, and we own what is called the fee simple. When people go into a retirement village they give up that right, by and large. There are a few exceptions, but by and large they give up that right and the fundamental issues that have arisen in relation to retirement villages largely relate to the fact that people do not have a sufficient understanding when they are transferring from the rights of absolute ownership that they have always had to this new system under a retirement village that says, 'No, you have a right to live here, but you no longer control everything about these premises. You do not own these premises.' Indeed the operator of the village will control a whole range of things including how you will go about departing, what the cost will be, and so on. When the committee looked at this issue what we did was we divided the report—for those who have not read it—into three sections. They were before you go into a village, when you are in a village and when you are leaving a village. In general terms it could be said that the operators, by and large, and very much largely represented these days by the Property Council in a new role for them, said, 'Look, there is nothing much wrong with the legislation.' However, the people who came before the committee, and that included quite a good range of individuals as detailed by the member for Morphett and quite a range of retirement village representatives en masse, really had difficulties with the interpretation of the documentation that had led them into the village. My view is, on a personal basis, and as the member for Morphett said, 'None of us on the committee, having heard all the evidence, would in our wildest dreams contemplate going into a retirement village, particularly under the current legislation.' However, that said, as our population ages there is no doubt that not only is there often a need for people to downsize from the premises that they are in—I for one am now living in a house where I raised a family, but I have a lot more room than I really need and at some stage I may well downsize—but there is then the added issue of the government wanting to encourage that to occur to free up some of that larger housing and get more people living in higher density places closer to the city for issues of transport and all sorts of other things. If we want to encourage that I think we are going to have to find new models, particularly as the baby boomers come through. The baby boomer generation has now reached the unofficial or official retirement age of 65; the first of the baby boomers are already passed that. People are heading into retirement and they are going to have to make these decisions about where they are going to live. I think increasingly we will see a need for the development of retirement villages which are actually based on an ownership concept, rather than simply a licence to occupy. At the end of the day, the point of moving into a retirement village is often that of having smaller premises to look after, having less of the looking after to do, having security and having lifestyle. Members may be aware that on one of my two overseas trips that I have undertaken since I have been in this place I was looking specifically at ageing and, while I was in the US lecturing at a university about the issue of ageing in Australia, the retirement village I visited was just extraordinary because it was like a five-star resort. It cost quite a lot of money, but people were prepared to pay that money to get certain facilities. I expect that what is going to happen is that retirement villages will become increasingly about providing a lifestyle, and that might be similar to one I visited in Gawler where there is a bowling green attached to the premises, where there are swimming pools, happy hours and all sorts of facilities where people are prepared to forgo some of the benefits they might have from owning their own home or having complete control of everything in order to have a lifestyle in return which is something they feel they can enjoy. Increasingly, of course, with our grey nomad generation, it is something they can simply lock up and leave to make life somewhat easier for them. However, as I said, the main issue with people in retirement villages at the moment is that the fundamental financial shift from ownership of their home into this situation of a retirement village is not fully understood and appreciated by people before they go into the village. I think overall it would be fair to say that the committee reached the view that, most importantly, if we could address that—and that is why within the 34 recommendations there are some suggestions about how we might have better disclosure and better comparison and so on, because people do not realise when they are going into a retirement village that when they leave they may well not get back anything like the amount of money that they have paid to go in. We are used to a situation where people buy a home and, over a period of years, if they are in occupation of their home, when they sell, they will in fact come out financially better off with some level of capital investment for them which secures their future. Most of the baby boomer generation, I would suggest, expect to be able to pass that benefit on to their children and grandchildren, but they often do not realise when they go into a retirement village that in doing so they may severely affect the financial outcome from when they actually leave to go into a nursing home or leave for other reasons or pass away. That is the fundamental problem that the committee sought to address. We made a number of other recommendations. Over the period of time that I was involved in legal practice—and I have mentioned it in this house before—we had a particularly problematic retirement village in Stirling where under the Retirement Villages Act matters went to the Residential Tenancies Tribunal and, in a period of six months around the state, there were only 19 matters that went to that tribunal under the Retirement Villages Act and, of those 19 matters, 13 of them came out of one village in Stirling. I think I was probably involved in acting for the residents in each one of those, and we had some very significant wins but there were problems. For instance, in relation to the incredible legal costs incurred by the village in fighting some of those cases, the village would then pay the legal costs but turn around and add those to the costs that they were then going to charge the remaining residents of the village. Those sorts of things were simply inequitable and not just. With those few comments, I support the member's motion. The Hon. S.W. KEY House of Assembly Ashford The Hon. S.W. KEY (Ashford) (11:57): It might sound unusual in this place but I have to say I support everything the members for Morphett and Heysen have said on this topic. I understand their views are very much along the lines of my own in that the former member for Mitchell and I had lots of discussions behind the scenes with members both on this side and the other side about the ongoing issue with regard to retirement villages. I would also like to compliment Cathy Pedler in particular, of the Office for the Ageing. As the member for Morphett said, with the former minister (member for Kaurna, John Hill), she made sure that the information was accessible to all of us wherever we called for meetings, and I am very pleased to say that there were a number of meetings both in Mitchell and Ashford with relevant members. I think, Deputy Speaker, you had seminars in Florey as well looking at the issue of retirement villages. I think the select committee, which the former member for Mitchell Alan Sibbons and I lobbied for successfully, really did bring the issue back onto the agenda. Members had very strong views about retirement villages because of constituents presenting before them with issues, particularly contracts that they in many cases had not really looked at properly. I also acknowledge the support from the South Australian Retirement Villages Residents Association; that is a fabulous organisation and I would really like to commend the people in that organisation. I seek leave to continue my remarks. Leave granted; debate adjourned.