Retirement Villages Bill

Second Reading

Adjourned debate on second reading.

(Continued from 14 April 2016.)

Dr McFETRIDGE (Morphett) (11:05): I indicate that I am the lead speaker on this bill and that the opposition will not be opposing it in this place. We think this legislation is long overdue. It is a big step forward, but we also think that it can be improved, so we will be reserving our right to move amendments in the other place once we have had the debate in this chamber.

A review of retirement villages and the legislation is well and truly overdue. The select committee on the review of the Retirement Villages Act 1987 reported to parliament almost three years ago, in November 2013. I had the pleasure of being on that committee, along with the member for Heysen. A number of members on this side will want to speak on this legislation as it is very important not only to them but, more importantly, to their constituents.

The number of people in South Australia who are living in retirement villages has increased significantly, and the number of people who are considering moving into retirement villages is ever increasing. This legislation must be a balancing act between the rights of residents and proprietors. We need to make sure that people who are looking to move to a retirement village know exactly what they are getting themselves into and that they go in with their eyes wide open. We also need to make sure that, if somebody is going to take the risk of investing in a retirement village, they are able to have some degree of security about that investment.

As with everything in business within South Australia, there is a risk involved. But, if there is a sudden change in circumstances, people who have invested millions of dollars in these businesses need to have some indication that their investment is not going to be wiped out in a single blow, or that the viability of their business is not going to be threatened because of some changes in legislation. There is a number of issues that we need to talk about. The one thing I did take away from the select committee was the strong view that I would do everything I could to stay out of a retirement village under the current legislation. It is very complex. A number of people who gave evidence to the committee expressed the opinion that the whole process, whether they were going into a retirement village or were a proprietor dealing with residents, was very complex.

I am obviously not going to read the whole of the report that was tabled in this place, but I will refresh the memory of members on its content. The presiding member at that stage was the Hon. John Hill, and in the presiding member's foreword he says:

…the Retirement Village model, both in terms of design and uptake [and] its development must be supported by a strong legislative base which gets the balance right between occupants and developers/operators.

That is just what I have been saying. He continues:

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.

I will go through some of the recommendations from the committee just to remind members in this place about some of the issues that were raised with us and the recommendations. Members will make their own contributions, and I understand there will be a number of contributions questioning whether the government has actually reflected the intent of the committee and those recommendations. The Hon. John Hill continued:

…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.

We need to bear in mind that millions and millions of dollars are being invested in retirement villages in South Australia today and that number is going to increase.

I will just give the parliament an overview of the current situation in South Australia as it was when the committee reported. Retirement villages may offer different types of schemes under which residents occupy a residence. The most common types of schemes are:

licence to occupy, where a resident purchases a lifetime right to occupy a residence;

leasehold, which is similar to a licence to occupy agreement, where a lease agreement will provide a resident with a lifetime lease (a 99-year lease normally) to reside in a residence; and

community title, where the purchaser as owner has the legal title to the unit, with restrictions on subsequent sale.

The licence to occupy model is the most widely used in South Australian retirement villages. There are currently over 500 registered retirement villages in South Australia, accommodating about 24,200 residents. Australia-wide, there are approximately 1,850 retirement villages providing accommodation for around 138,000 people. The number of villages and the demand for their services are expected to increase significantly, particularly with the baby boomer generation approaching retirement age. It is estimated that the number of people aged over 65 years in South Australia will reach 495,000 by 2036, making up almost 24 per cent of the state's population.

There are more than 17,638 residences in retirement villages in South Australia. In the local government areas within Adelaide and Greater Adelaide, there are 431 villages and 15,637 residences, and 88 villages and 2,262 residences in the regional local government areas. So, there are thousands of residents living in those residences we need to look after. This bill is designed to ensure that people who want to live in retirement villages and are looking at that for their future years are able to do so with confidence and clarity and, as John Hill said in his opening remarks, to also give owners and investors that same confidence and clarity in their investments.

My understanding is that we have not changed the definition of a retired person. The act defines a retired person as a person aged over 55 and retired from full-time employment. I think nowadays 55 is a very young age for people to retire. I was at Flinders University a number of years ago, talking to them about aged care and the ageing population. They considered that, nowadays, you are not old until you have reached 80. Perhaps people are taking early retirement and retiring at 55, but I think a lot of experience and wisdom will be overlooked if people do not continue to stay involved somehow in the workforce, but that is their individual choice. The average age of a resident in a retirement village is 79 years in South Australia.

Regarding the village operators, retirement villages were originally developed by the church-based and other not-for-profit sectors for the purpose of providing independent living accommodation to lower income older people. By the early 1980s, private sector organisations had entered the market for resident-funded retirement accommodation. The retirement village industry has since evolved into a more diversified and competitive industry which now incorporates accommodation options ranging from basic affordable options to luxury resort-style options.

I know the member for Heysen visited some of these more luxury-style retirement villages in her travels overseas, and I am sure she will mention that in her speech. The latest apartments that have been built at Somerton Park in what used to be a Masonic Homes village—I think Stockland own it now—are, from my inspection of them, really luxury apartments and a lovely place to live.

Aged and Community Services SA & NT (ACS) is the peak body representing not-for-profit aged and community care organisations in South Australia. ACS currently represents 58 organisations operating 310 retirement village locations providing 6,486 dwellings. The commercial sector currently operates more than 200 village locations that provide more than 11,000 residences. This equates to about 40 per cent of village operations and 60 per cent of residences.

There is a change now to smaller groups or clusters of residences in not-for-profit villages compared with the larger resort-style villages being run by commercial operators. We are seeing that range of accommodation types in South Australia. My mother lives in a village that was established a number of years ago. It is still very neat and tidy and very comfortable. She actually rents it: it is not a licence to occupy. She pays a weekly—or it might be monthly—rental on her unit, and she told me just the other day that she is more than happy there.

There are many new types of village residences being built and I look forward to seeing what happens in South Australia. There is an opportunity for us to become more and more involved not just in the aged-care industry but in the industry of ageing and providing for people like myself—and, I would imagine, others in here—whose expectations are for really high-quality almost hotel-style or resort-style retirement residences to go and live in. It will be interesting to watch. I hope the government is able to assist people in doing what they want to do to improve the range of opportunities for people who are retiring.

The big issue that really came out to members of the committee—and I will let others who were on the committee at the time who are still in this place speak for themselves—was what happens when you enter into a contract with the owners or operators of a retirement village. It is very complex, and most of the people we spoke to were really going in with their eyes wide shut rather than wide open.

The contracts were very convoluted and very complex. While they were all encouraged to seek legal advice, and many did, some did not. Some felt that, when circumstances changed and they particularly wanted to leave the village, they were trapped in there. I will give an example of the fees currently being charged by operators. I am sure the operators can justify these fees, but people need to know that these fees can be very significant when you compare them with what people have paid for their licence to occupy.

The need to establish committees in this place is something we all recognise, as is the need to then study the committees' reports and recommendations. Most of these committees are operating in a multipartisan way. They are trying to get the best possible result for the people of South Australia on the particular issue they are investigating. In this case, it was the review of the Retirement Villages Act. The committee came up with a number of findings which were separated into four areas: moving into a village and concerns people have about that; living in a village and concerns people have about that; leaving the village; and some other matters that we also examined.

To try to formulate a standard contract for residents to sign when they are entering a retirement village is just about impossible. There are permutations and combinations of contracts out there at the moment. I think just about every individual village or village owner has their own particular type of contract. It is interesting to note that there is no mandatory accreditation of retirement villages in any state in Australia, so I cannot emphasise enough that, when people are entering into these contracts, they really do need to make sure they understand what they are getting themselves into.

Village operators say that the cost of accreditation would be prohibitive. Our hospitals do it all the time. A number of organisations and NGOs applying for government grants have to have levels of accreditation, and I think that is something that we definitely need to look at. Looking at some of the recommendations of the committee as they apply to the legislation before us, I will talk particularly about clause 26 later on, but recommendation 1 is:

restrict the term 'retirement village' to those residential complexes which fall under the Act—

so that we can then start applying all the other checks and balances that we need to. We need to get people in the tent, in the legislation, in the regulations, so that we can make sure that not only are they obliged to follow the legislation, and the regulations, but they also are protected by it. Recommendation 2 is:

That the age limit for residents of retirement villages remains at 55 years.

That the requirement for a resident of a retirement village to be retired be removed from the Act.

That consideration be given to renaming the Act to more accurately reflect the current status of today's villages.

I do not think that has been done, but it could have been done. Again, my dear mum is in a complex and some of those units are now being rented out to people on lower incomes and to younger people, It is giving it a bit of a mix-and-match, and I think it adds to the vibrancy and the diversity in the complex. So, allowing residents who are over 55 still to work is something that the committee recommended, but it has not happened.

Going into a retirement village is complex enough, but leaving it was another area the committee looked at. We tried to work our way around a standard disclosure document so that residents could understand their rights and obligations. Recommendation 4 states:

…the standard disclosure document includes information relating to:

all fees and charges which residents would be responsible for:

prior to entering a village

while residing in a village

upon leaving a village;

examples of exit fees scenarios;

I will give the parliament a brief glimpse of what can actually happen. This is an example that was brought to me of a person who was not happy living in a particular complex and who wanted to get out. In 2009, when they bought into their complex, they paid $220,000. When they went to leave in 2015, the estimated resale value was $235,000, so in six years that was an increase of only $15,000 in the capital value. In this case, the resident's share of the capital gain was 100 per cent, and this is where there are other issues about who gets what when it comes to the capital gain of units. The committee looked at this, but I am not sure whether this legislation covers it at this stage, but certainly we will ask those questions in committee.

A remarketing fee of 3 per cent was being charged in this case, and we found that this was very common. The big issue with retirement villages in South Australia is that the owner-operators of the villages take over the initial remarketing of the units, and I suppose that is understandable. But then there is a need to make sure that they are experienced because they do not have to be licensed real estate agents to do this; in fact, I do not think any of them are or, if they are, it would be very rare. Some of the bigger real estate agents are charging 3 per cent to remarket a unit; in fact, some of the bigger agents are charging less than that.

I know that when we sold a property not too long ago our agent charged us 1½ per cent, but I understand that 2 to 2½ per cent is very common nowadays, so 3 per cent is at the top end. We are hearing stories about how long it takes to remarket those units, and this legislation talks about allowing the people who have the licence to occupy those units to take over the marketing of them after six months. I think that is a reasonable thing to do, perhaps in conjunction with the owner-operators.

That said, any owner-operated retirement village that has any business sense does not want an empty unit for any longer than possible. They are running a really good complex, they have a complex where people actually want to stay in the first place, but if there are vacancies, because of a death or family circumstances change and a vacancy is coming up, they will be able to remarket that unit. A lot of these places normally have waiting lists, but there are cases, and we heard evidence of these cases, where people would come in and then for some reason want to leave and their unit was on the market for a long time.

In fact, one of my volunteers, the late Shirley Whoston, was an absolute angel who volunteered in my office for over 30 years, and she was living in a retirement village. Circumstances changed for her, and within the village, and she wanted to get out. It was very difficult for her to actually leave that village because there were big hold-ups in the remarketing of the particular unit she was in. Having been there on a number of occasions to visit Shirley, and for morning tea with other residents of the village, I thought that it was quite a pleasant place to be, but it did not suit Shirley and so she wanted to move on.

Unfortunately, Shirley has moved on now: she died not long ago, and that was really sad. Then the beneficiaries of Shirley's estate had to do battle—and I say 'battle' because it did become more intense—with the owners of the retirement village to try to get the benefit of the estate that Shirley had left. The need to protect both the owner-operators and the beneficiaries, or the residents, is again going to be a bit of a balancing act, but if somebody dies while living in their own home the beneficiaries or executors of that estate are not compelled to sell that home within a particular period of time, are they?

I think there are questions to be asked about whether we go ahead and be as restrictive as some would want us to be on the need to pay out residents when they leave. Certainly, some of the evidence we received in the committee was that the owner-operator should just be able to hand over the cheque as the residents walked out the door. I do not think that is practical or feasible, not only for the retirement village but for any executor settling real estate issues with any estate.

I remind the house that this was a $220,000 ingoing contribution in 2009. The capital gain was $15,000, the remarketing fee was 3 per cent and the exit fee was $82,250, but add onto that the remarketing fee of $7,050 and add onto that the reinstatement charges of $7,810. There was also a recurrent charge which was to be advised (TBA) and a 'settlement fee' of $330, whatever that is. So this is an exit fee, a remarketing fee of $7,050, a reinstatement cost (I assume that is new carpets and a bit of a paint), and again there are some issues about who does that.

Does the resident or former resident employ somebody of their choice or is it forced upon them by the owner-operator? We have heard evidence that, in the opinion of some people, there are premiums being charged. This totalled $97,440. This chap went in paying $220,000 and the estimate of exit entitlement payment on settlement was $137,560. Even including the capital gains of $15,000, the outgoing resident's settlement was going to be $137,560.

If you go in and you understand that, that is fine. It is not a problem at all if you go in and you understand that there are going to be fees and charges. If you have lived in the place for a while, you need to have paid a rent of some sort there, and that is where the exit fees come in, but this came as a complete surprise to this particular person, and he was extremely disappointed that he was basically going to be without a home because he could not afford to leave.

He could not afford to leave, but he did not want to stay. At this stage, he has stayed in this particular complex, and I think his mindset has changed to help him accommodate that. Recommendation 4 is 'That the Act be amended to introduce a standard disclosure document,' and we all look forward to seeing how it actually works.

Another issue that came up was when you paid your money into the accounts of the owners or operators of a retirement village. There was an issue there because some of that money was not being held in trusts. I would have thought it was a fairly standard thing nowadays in any real estate contract of any sort that any money that is paid before the contract is settled is held in trust, but that apparently was not the case, and it should be the case. There are a number of recommendations about the way the act should be changed. Many of those have been incorporated into this act, and I look forward to the minister's explanations of how the recommendations have been incorporated.

Recommendation 10 is that a unique retirement village CPI be developed because, in some cases, residents are responsible for all the outgoings—their rates, the water, insurance, and management fees—so we need to know what a standard increase is in those rates. Certainly, we know that standard CPI is about 1.5 or 2 per cent, but if you look at local government CPI, you will find that is much higher at about 6 or 7 per cent. If you then look at the health sector, the CPI there is anything between 8 and 12 per cent, depending on the particular sector you look at, so we really need to develop a unique CPI for retirement villages.

I think that would be something that would take a fair bit of work. In fact, I know there was some talk about referring the whole cost-benefit analysis of this legislation to the Economic and Finance Committee. Whether the government is willing to do that or whether we need to do that, I am sure the minister will be able to tell us about the government's attitude to that.

We do see fees and charges going up at an extraordinary rate in some villages—that was some of the evidence we received in the committee. Most operators are fair about this. They want to stay in business. They do not want to put disincentives in the way of people coming into their villages and into their properties, so I think they are trying to be as fair as possible. Recommendation 12 continues along that same line:

That the Act be amended to provide greater transparency in relation to management fees or head office costs charged to a village.

There was some concern put to the committee about fees that were being paid then being used to prop up other villages owned by the same operator. Recommendation 13 is:

That the Act be amended to make administering authorities responsible for the payment of recurrent charges for newly built units, unless responsibility is clearly disclosed within a residence agreement.

We need to make sure that not only is money being held in trust but also that that money being paid in is not being used for reasons other than for that particular residence that these residents are going into.

When this chap gave me the example of what he was being asked to pay, the estimated resale value was $235,000. It had gone up by $15,000 in six years. I would have thought that, in South Australia, real estate had gone up by a bit more than whatever that percentage was, so recommendation 17 of the committee is:

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.

As to valuing the properties, there are a lot of common areas in these properties—not just the gardens and the paths but also the meeting rooms, the dining rooms, the libraries and the exercise areas. There is a whole range, and in fact, the number of facilities out there is becoming broader and we need to make sure that they are being valued. I am not a valuer, so I look forward to seeing how that is going to happen—because it does have to happen. There is nothing surer than it does have to happen.

Not only did we see difficulties with residents understanding their obligations with the owner-operators but we also saw that in some cases there were going to be discussions, differences of opinion, and sometimes arguments between residents of villages. Some people have idiosyncrasies, eccentricities, that do annoy other people. When you are living in close quarters, as you are in a retirement village, not cheek by jowl, if somebody walks past your front window whistling or speaking or talking loudly about others, or certainly, as the minister says, gossiping, that can cause consternation or angst, and so recommendation 18 from the select committee is:

That the Code of Conduct be extended to encompass behavioural policies which protect operators and residents from harassment and intimidation, and that promote a safe and secure environment.

A case was brought to my attention by a resident, who was a fairly forceful character (and so, I think, was participating in some of the issues), who was, in the end, the victim of quite intense intimidation, to the point of what I would say was bullying by other residents, residents who were on the management committee. This does not happen very often, fortunately, but if it does happen it needs to be catered for. So, the code of conduct in recommendation 18 of the committee is something that is needed.

To help resolve disputes that cannot be resolved by people talking to each other, and conciliation, we obviously use the Residential Tenancies Tribunal. Recommendation 19 of the select committee:

That the Act be amended to require that those RTT members hearing retirement village matters must be legal practitioners of at least five years standing and should have a sound understanding of the Act and previous decisions.

I am surprised that this is not the case; I was surprised at that time and obviously I am still puzzled why it was not changed beforehand. I know that when the member for Heysen makes her contribution she will be speaking from firsthand experience. She is a very experienced legal practitioner and has a lot of experience in this area. I will certainly defer to her on the way this bill should be looked at and the way the recommendations should be implemented. While we still need to have a bit of a balance in outcomes, we need to make sure that the evidence we received was being acknowledged, not just in word but by deed and in legislation. Recommendation 24 of the retirement villages select committee states:

That the Act be amended to prevent an administering authority from requiring a resident to vacate a village before the resident has been repaid their premium.

This is another example that was given to me. A person came to see me who had a brochure from another retirement village she wanted to go to that offered better facilities. She had been having a few issues with some of the other residents, and she thought it would be a fairly straightforward thing to move to another retirement village.

Again, she had gone in with her eyes wide shut to the obligations and requirements that she would be under in wanting to leave the village. Similar to the example I have just given, the exit fees, remarketing fees, reinstatement costs, recurrent charges and settlement fees added up to a huge amount. If my memory serves me correctly, she paid about $400,000 to go into this retirement village—and she had only been there a matter of four or five years—and by the time all these fees and charges had been taken out, she had about $200,000 left. Her investment had halved. To me, that was not only alarming but disappointing for her. I am not a legal practitioner but I assume that was all as per the contract she had entered into.

That is why it needs to be clear and open and needs to be transparent. People need to understand. I am just a humble veterinarian, and often I stand up in this place and say that I am not a lawyer, and by that I am boasting not apologising. The fact that we even have an Acts Interpretation Act means that we make legislation that is very complex and, if we find we need another act to help us interpret acts of parliament, then what about the punters out there who are having to make these decisions and may not be able to afford a QC or somebody else to look at the contract for them? Perhaps you do not need a QC; you may need somebody as experienced as the member for Heysen.

Recommendation 25 was that the act be amended to provide greater consistency with the Aged Care Act 1997 and allow greater flexibility in the way an administering authority can provide earlier payment of a premium to a resident who is leaving to enter residential care at an aged care facility. I think the owner-operators understand that and they are quite willing to work around it. The issue that has been put to us, though, is those couple of examples that I have just given. For people who want to get out of their retirement village and want to move for some reason—personal reasons, other reasons—they feel trapped by either the fact they have had to pay quite a large proportion of their initial payment in fees, exit fees and remarketing fees.

However, when it is the owner-operator who is doing that remarketing and charging you 3 per cent to remarket the unit, that can take a long time in some cases. As I have said before, a really good owner-operator probably has waiting lists, so this is not a problem that is going to be right across the board, but there are plenty of examples where people go into retirement villages, want to get out and then are stuck because the unit is not being remarketed and not sold as quickly as they would have liked.

The fact they actually have to get out of the unit as I mentioned before, is something that is being changed, I understand. We also need to look at whether there is some degree of flexibility that can be put into paying people out to enable them to get on with their lives. Obviously, people who have invested heavily in these retirement villages need to be able to ensure that they are not going to be caught by having four or five people who want to say, 'We would like to get out. We have decided we are going to buy a commune of our own,' and then they have to pay out millions and millions of dollars. Who has that in these sorts of operations? For most of them the turnover is there but the profit may not always be there, so getting stuck like that is something we really need to look at.

Exit fees were a very common problem, and section 26 of the act still requires some further review. I know the Property Council has been lobbying heavily, and I think the government is still in discussion with some of the owner operators, the Property Council and other representatives of the owner operators. I think there is a need to make sure we have some sort of cost-benefit analysis, some economic impact statement, on what legislation that forces them to sell these units would actually do.

I have probably said all I really need to say at this stage. We will go into committee on this. A number of speakers from the opposition want to speak on this. They will be giving examples and their points of view. I ask the government to listen to those points of view, as I know they do, and I thank the advisers for the briefings I have had and the minister for making those advisers available.

These select committees are really good committees to be on. I am on the jump racing select committee at the moment and that is a very interesting committee to be on because there are some really different views there. This particular committee opened my eyes to some of the issues and problems that are going on. I do not see this bill as being the complete panacea just yet but, with some changes which the opposition will be proposing in the other place, which we are still considering, I think the government should be able to produce a piece of legislation that will go on for quite a while.

This legislation has not been reviewed for years and years, but it needs to be reviewed more regularly because things are changing. I will leave it up to my colleagues in this place to make further contributions, and I will ask the minister some further questions provided to me by the Hon. Stephen Wade in the other place for clarification so we can make sure that this bill is not going to sit around in this place for months and months and that it does progress.

Ms COOK (Fisher) (14:45): I rise to support the Retirement Villages Bill 2016 and commend the minister for the development of the bill. I am pleased to see a number of provisions included to ensure that a situation such as happened in my electorate of Fisher does not occur again. Fernleigh Gardens is now known as Living Choice. It is less than 500 metres from my house and holds a very special place for me. I have lived in my home for over 25 years and in that time, through the building of the estate, my young son and I spent many, many hours adventuring through the building site and I have watched with pleasure as it has developed.

Many of you would know the history of Fernleigh Gardens estate and the terrible cost to both residents and prospective residents of the village a number of years ago. In brief, the owner of that village failed to repay moneys to prospective residents who rescinded their contracts, and a number of other prospective residents lost their family homes. These residents transferred their residential property to the operator in repayment for a brand new village unit to be built. These people remained in their homes waiting for the building of their new units.

This operator subsequently mortgaged the property to raise funds without building the new units. The mortgagee foreclosed on the properties and applied for the winding up of the Fernleigh Gardens estate. The elderly residents had to vacate their family homes and had limited recourse to recover in many cases their life savings. Two separate receivers and managers were appointed over the village, and residents of the village endured a number of years of extreme angst and stress as to their rights and the protections available to them. The village has since been sold and renamed, as I mentioned previously.

This bill directly addresses some of the deficiencies of the current act, which were identified following investigation into Fernleigh Gardens. These deficiencies include the strengthening of investigative powers to the department and the ability for the minister to apply for the appointment of an administrator of a retirement village. There are also minor additions which provide for a major increase in protections for residents.

One of these protections is clause 25 of the bill, which specifies that an ingoing contribution must be held in trust until the resident takes up occupation. This accounts for any ingoing contribution paid to a representative of the village. The current act prescribes that a payment paid to an administering authority must be held in trust. The act never envisaged that an operator may encourage payment to an alternative entity involved within the village, as happened at Fernleigh. As such, the Fernleigh operator never placed those funds in trust and they were gradually disbursed for various purposes, with no reclaim for the residents.

Another protection is clarification that all funds to which a resident contributes must be audited and payment of all capital fund contributions must be made within 10 days of settlement. Following a review of Fernleigh Gardens' accounts and practices, it was found that the village had a debt to the capital replacement fund of at least $160,000 in 2008-09, and by June 2010 the size of the debt was unable to be determined, although the balance of the account was only $4,000. This is the fund that, commonly, payments are made into upon resale of a residence as a percentage of the resale price.

The operator did not make payments into the account in accordance with the contract despite deducting the amounts from exit payments. The true financial position of the village was unable to be gleaned through the reports presented annually to residents. All residents will be reassured that the obligation for contributions into village accounts and the auditing of those accounts will be legislated, thanks to the bill. These provisions will only strengthen confidence in the sector and reassure consumers that there are clear obligations relating to financial matters.

Of course, there are many other sections of the bill that I will watch with interest as we enter into the next stage of the debate. In commending the bill, I would really like to acknowledge the hard work done by the minister and the minister's staff leading up to this presentation and also the very hard work and commitment of all previous committee members, including the member for Heysen, who is sitting in the chamber now, and also the late Hon. Bob Such, who was previously a big advocate for all residents in Fisher and statewide regarding the Retirement Villages Act. I commend the bill, and I am looking forward, as are all of my constituents, to its rapid passage.

Ms REDMOND (Heysen) (11:50): I am not sure I can say it is a pleasure, but at least I get an opportunity to make a contribution in relation to the new Retirement Villages Bill 2016, which of course arises out of a draft which was circulated in 2015. I have gone to the bother of comparing the two, and I must say that not very much has changed between the draft and the bill which is now before the house.

Members are probably aware that I have had a longstanding interest in the issue of aged care generally and retirement villages in particular. That comes out of quite a number of factors in my life, many of them before I came into this place and some of them since I have been here, where I have had extensive engagement in relation to retirement villages. Indeed, for 27 years before coming in here I served on the Stirling District Hospital Board, and that board runs a rather nice retirement village known as Pinoak Tiers in Stirling, which has about 34 units. I think it was originally built by my Rotary Club in Stirling but handed over to the hospital, and the hospital runs that village.

Just along the road from that is Sevenoaks of Stirling Retirement Village. Unfortunately, my engagement with that particular village came about because many of the residents were deeply unhappy with the way they were treated by the administering authority, and in particular I ended up acting in 13 cases in a period of six months. The Retirement Villages Act provided for them to be heard in the Residential Tenancies Tribunal, and that is indeed where those cases were heard. In that particular period of six months, there were only 19 cases statewide involving the Retirement Villages Act and 13 of them came out of Sevenoaks retirement village. I am not aware of those problems continuing at this stage, I am pleased to say, but there were significant difficulties with the administering authorities.

I guess it was because of that background that Steph Key, who was the relevant minister when the first review of this act was undertaken early after I came into this place, originally invited me to make a contribution, and I subsequently made a contribution at the next tranche of amendments, and then I was invited to be on the select committee. I certainly enjoyed working on that committee, as did the member for Morphett. I would have to say that my impression was clearly that no-one who served on the committee would ever contemplate going into a retirement village. That was because it became very obvious to us that it was not a financial model that was going to be viable, I suspect, as the baby boomers entered the market.

I will go back and explain a bit about the history. The member for Morphett has put on the record already that there are some 500 villages in the state and, although the act says that you only have to be over the age of 55 (and the select committee recommended no change to that), the reality is that the average age of people going into retirement villages in this state is well over 70, and indeed the average age is moving up into the 80s in terms of the people who are resident in those 500 villages. Many of them have been there for many years. In every village I visit, there will be people who have been there since the village opened.

The member for Morphett mentioned that there was originally simply a retirement village product available in this state which was basically run by charitable or not-for-profit organisations. The problems really seemed to come about when the act which was in place, which was probably adequately governing them, then had to extend because we got into the situation where people started to come into the industry of building retirement villages on a for-profit basis and the industry expanded fairly rapidly. It is, at least anecdotally, provable that that is where the problems began, and it is the involvement in the for-profit sector as a business money-making enterprise that has given rise to the current difficulties.

I would have to say that my sympathies are very largely on the side of the people who have gone into retirement villages. If the minister had ever read the select committee's report, she would know that the select committee looked at a whole range of things. We heard evidence from all sorts of people and, largely, the people who ran retirement villages and, in particular, the Property Council, which now for some inexplicable reason represents that cohort. They basically said, 'There's nothing wrong with the act. You don't need to change it.' But all the other evidence coming in from people who reside in retirement villages and from their organisation (the retirement villages association) basically said, 'Yes, there are things wrong.'

I was well aware that there were many things wrong with the legislation. The committee therefore looked at whether we should actually have some sort of standard contract. We said, 'No, that's not the way to go because people should be free to enter into whatever sort of contract they want to.' But the problems largely arise because people going into the contracts do not understand the consequences of the contract they are entering into. Even in the bill it refers at one point—at least in the 2015 bill—to a residence owned by someone.

The reality is that residents in retirement villages do not ever own a village unit and they think they do. There is also a lot of the sales stuff that you see around the place, such as 'Available for purchase now.' They are not made to understand clearly enough that what they are purchasing mostly—sometimes it is a lease, but mostly it is not even a lease—is a licence to occupy, and that is a very different thing.

The report, if you read it, is divided into three sections and they are: before you go into a retirement village, once you are in a retirement village, and then when you are leaving a retirement village. Of course, a lot of people only leave a retirement village to go to a higher level of care because they are no longer capable of independent living. I think the emphasis really must be on that first part, and that is where I am profoundly disappointed in this bill because the bill, although it makes a provision for information to be provided before a resident's contract is entered into, does not really address the fundamental thing that this committee recommended, and that is to make it clear enough for people. Giving them a copy of the last accounts that were presented to the last annual general meeting will mean nothing to most people.

In my view, what we need to do is to ensure that people get very, very clear financial and legal advice about the consequences of the contract they are about to enter into so they absolutely understand that what they are purchasing is not a unit. It is not like a strata corporation or a common property situation. They own a mere licence to occupy, at best, and they are subject to all sorts of rules and regulations within that. In my years in legal practice, one of the things I used to do commonly was to explain mortgage documents and particularly security documents for people who were about to take the advice of financial advisers and invest in something, mortgage their properties, and so on.

A lot of those things required that they specifically get legal advice and financial advice. The same applied when people were getting a WorkCover payout, for instance. After a period of years after a significant accident they might get a very significant amount of money, but they were not allowed to finalise settlement of their claim until it was signed off by a lawyer and a financial adviser that the consequences of entering into this arrangement had been clearly explained. That is where I think this current bill utterly fails us because the fundamental thrust of the select committee's recommendation was that that is where we needed to put our attention.

My frank view is that a lot of retirement villages in this state are likely to face significant financial difficulty in the next few years because, as I said, the average age of people going in there are those who are in their 70s. We are now getting to the point where the baby boomers are retiring, and the baby boomers are financially more alert than the previous generation. With a lot of my parents' generation, for instance, the women allowed their husbands to take complete financial control of their lives. They did not even have part ownership of the family home, and so on—it was often in the husband's name only. Everything was controlled by the husband. I know that my mother had no financial skills whatsoever, and she was fairly typical of her generation.

People have been, in a way, conned into going into these licences to occupy retirement villages, and my view is that as the baby boomers come through men and women are going to be much more alert—and I will do everything I can to make sure that they are much more alert—to the pitfalls of going into these retirement villages. I was in a village just the other day, and more than one person mentioned to me that when they left the village they were only going to get back about 60 per cent of what they had paid to go in. By way of explanation, some villages operate on the basis that you pay X dollars to go in and there will be a retention fee deducted each year up to a maximum of, maybe, 25 per cent, and you will get back only the percentage of what you paid to go in.

Other villages operate on the basis that you will get back 100 per cent of what you paid to go in, but you will not get any of the improvement in value. Other villages still operate on the basis that you will get back a percentage, but it will be a percentage of the new resale price. There are numerous models, and some of them are done on the basis of loans and some of them are done on other bases. There are numerous models, but none of them involves ownership and control by the person purchasing a unit. I suspect that what is going to happen is that a number of retirement villages, particularly the smaller ones—and certainly it is a recommendation I have made to more than one village—will face the difficulty that they cannot relicense vacant units over the next few years.

I was in a village the other day which had about 74 units, and around about a dozen of them were vacant. That is going to start to build up, in my view. We are going to end up with a whole lot of villages where, no matter the state of the village, people cannot relicense. Of course, that then puts pressure onto the people who run the village, and it also makes it much more difficult for the people who live in the village because issues about maintenance, and so on, start to become obvious.

All of that said, in my view there are some fundamental failings in this legislation. First of all, I believe we should have required that people have to get specific legal and financial advice—not just get a copy of whatever the contract says and a disclosure statement, because that does not really explain it to them. They need concrete examples of what might happen to them financially as a result of going into the village. I think that that will lead to a massive downturn in the number of people prepared to go into a village.

As I said, I believe there will be a move towards making some of these villages into strata corporation type models because people should not be in a situation where the administering authority controls, to the extent that it does, the marketing of the unit and the remarketing. However, that said, I am strongly opposed to inserting into existing contracts, which were voluntarily entered into by adults, a clause which then changes the nature of the contract between the persons who entered into it to the benefit of one and to the detriment of the other.

I do not believe that there is a basis for putting retrospectivity into this legislation, and I do not believe that it is appropriate for the government to decide what should be the terms of the contract. People have entered into a contract, and it seems to me, knowing as many villages as I do, that the biggest risk we have is not the big players who are the for-profit players often based interstate but that the little community-based not-for-profit sector can be bankrupted by what is proposed in this legislation.

I am not going to have a lot of time to go on with a lot of the other details that I will cover when we get to the committee stage (and, trust me, I have a lot of questions for the committee stage), but there are a couple of other things I wanted to mention. First, one of the bugbears that I think is quite legitimate for people in retirement villages is that, although they to not actually own the title to their unit, they nevertheless have to pay rates as though they own it. In my view there should be a differential rate. Local government should have to come up with a differential rate, which is cheaper for people who do not own it. They do not actually get to control a lot of things, but at the moment councils simply value every unit as though it is an independent living space like a strata title unit, so people have to pay rates on it.

There is a provision in the legislation that deals with land tax (it does not seem to effectively deal with land tax; nevertheless, there is a provision there about that), but it seems to me that it is inappropriate for people to have to pay rates and other taxes, insurances and even the emergency services levy based on what is simply a commercial resale value of the unit when in fact they do not own that unit. It seems to me that there is huge scope for how we manage all of that.

I have looked at retirement villages overseas. The one in Hawaii I have to say was a particular favourite, but I did not think I would ever have $5,000 a month to stay there; it was like a five-star hotel. The interesting thing about it was that it basically operated as a time share, and you could shift around so that if you stayed in the one in Hawaii, yes, it was $5,000 a month, but if you wanted to visit your kids in Pennsylvania, there were hundreds of these under the same umbrella around the country, and you could go to Pennsylvania and stay there. Everything was taken care of, everything was found: the only thing you paid for was your phone bill—that was about it. All your meals were found. Obviously you had to pay if you had guests for meals, but it was like a five-star hotel, fascinating place, and well worth the visit.

It is clear that a retirement village can, as the member for Morphett mentioned, offer security. It can offer community, it can offer relief from the problems—and there are a lot up my way—of living in an older dwelling, particularly on a large block of land, which becomes increasingly difficult as people age. People may be prepared to pay a premium for that privilege. Some retirement villages have bowls, swimming pools and all sorts of things going on in them, and that is all to the good, providing the people going in understand that they will be paying a premium for the lifestyle. I have no difficulty about the issues of people needing to sign up and choose that lifestyle, if they wish, at any time over the age of 55, but they need to understand very clearly what it is about the financial implications. They need to have concrete examples about what will be the consequence to them and to their family.

I was emailed the other day by someone whose mother has now moved into a nursing home. His experience was that they will get back only, I think, some $87,000 out of what has been resold at $348,000. If that is the contract that you have signed, that is the contract that you are stuck with, as far as I am concerned. However, we need to make sure that people going into these contracts do understand that that is the effect of what they are doing. It seems to me that there is a high likelihood that there will be people like my girlfriends and I, who often talk about being the Golden Girls of the future, where we will simply create our own mini retirement village for our own accommodation.

Members interjecting:

Ms REDMOND: I bags not being the nutty one. We will create our own retirement village with our own rules and regulations. I will have some questions for the minister about the nature of retirement village schemes and the definition of those schemes because there does not seem to be a provision for actual ownership within the definition as provided at the moment. Once again, I indicate that, whilst I congratulate the minister on at least bringing the bill in finally, I do indicate that I have significant misgivings and I do not think the minister has read or understood the select committee's report.

Ms BEDFORD (Florey) (12:10): There are a large number of retirement villages in the electorate of Florey, both big and small. There have been well-attended public forums in the electorate during the consultation, and I am regularly in contact with many residents of the villages, so I have taken a keen interest in this very complex topic. The bill will help with many of the concerns that are raised with me by residents and their families. Most residents make a move into a village with the expectation that their lives will be comfortable and hassle free, and they are often shocked and disheartened when issues arise and they are unaware of either their rights or their obligations within their contracts.

For example, in recent years I was contacted by residents seeking help on how they could ensure that any surplus, often accumulated over many years, is dealt with appropriately by the operator of the village. The residents' voices seemed to carry no weight. Eventually, a significant amount of money was paid back to the residents. The requirement in the bill that a surplus and deficit policy must be put in place with resident approval is a significant clause which will ensure that residents no longer have to worry about a battle every year over finances. Every resident will know, should the accounts be in deficit or surplus, exactly how that will be treated.

In the same village, there were also disputes over the budget which dictated what their monthly service fee was going to be as well as ongoing concern when repairs and replacements in the village were paid out of incorrect accounts. I cannot stress how important it is for there to be transparency and accountability in reporting how an operator spends the village funds. The additional clarity as to consultation, reporting and audit obligations included in the bill will be welcomed by residents, and in many cases by operators too.

The issue that is most distressing to residents and their families is uncertainty in the timing of their repayment when the time comes to leave the village. The introduction of a statutory repayment period will address situations which have been of concern for residents and their families for a number of years. I am aware that a number of operators have advocated for South Australia to adopt provisions similar to those on the eastern coast of Australia, such as in Victoria. This was surprising, given that those jurisdictions offer a six-month or lower repayment clause.

Unfortunately, in many of these jurisdictions it appears that operators can avoid their responsibilities to make a repayment if they agree to let the older person sell the licence themselves. This is often a difficult task, which I understand is not frequently taken up, given the specialised nature of retirement living accommodation and the varying standards of accommodation involved, depending on the age of the village. Constituents have been in contact regarding this provision, and I am very surprised to learn that many of them currently have no time frame for repayments in their contracts.

They are understandably pleased to see this provision introduced, giving the long-sought confidence that in future, when the time comes, those who want to or need to move will have access to their funds in a reasonable period of time. I applaud village owners who already offer a guaranteed repayment time and can foresee a change in the market which will demand such a guarantee. Baby boomers will not accept an undetermined time of repayment. This provision will give surety and promote greater confidence in the industry into the future. As always—and I think this has been reinforced by the member for Heysen—the devil is in the detail, and people must read and understand their contracts.

I commend the work of the committee and all who have worked so hard on the review, and I particularly acknowledge the member for Ashford and the member for Colton, as well as the member for Newland, who has co-hosted many local forums with me. I also want to acknowledge the local residents' associations and residents of the villages who have come and spoken to me about their concerns: they have been invaluable.

For those with older contracts, it is imperative that they, as permanent residents of a village, become members of the South Australian Retirement Villages Residents' Association. This association is the peak body and has been involved in the review process. It is well placed to provide information on all aspects of retirement village contracts and advocate to achieve resolutions when conflicts arise with existing contracts.

Mr TARZIA (Hartley) (12:15): I also support the Retirement Villages Bill 2016. Obviously, an amended 2016 version of the 2015 bill was tabled in parliament on 14 April this year, and here we are at the second reading stage.

I have gone through the 47 pages of the bill and, notably, some of the salient points are as follows. When you look at retrospective application, the bill replaces the Retirement Villages Act 1987, and I understand that it will apply to' existing residence contracts and villages, and all future residence contracts and villages'.

Some of the definitions have been altered. The 'administering authority', I note, will be changed to 'operator' plus 'village landowner, senior manager' and 'village manager' being added. I understand that 'premium' will be changed to 'ingoing contribution', with 'exit entitlement, exit fee' and 'capital fund' added. 'Date of contract' will also be removed and changed to 'enters into occupation' and 'vacant possession' added.

In terms of disclosure to prospective residents, it is noted that a statement of disclosure with certain details will have to be given to a prospective resident 10 business days before they actually enter into a residence contract, and other statutory documents that are at the moment given to the resident before the contract also need to be provided at the same time. A premises condition report will no longer be included in documents to be provided to a resident before entering into a contract but will be within 10 business days after entering into occupation. I note that the date for repair or replacement has been deleted.

Cooling off has also been altered and changed from 15 business days to 10 business days, and it will start on the actual date that the resident signs a contract, not the date the last of the parties signs the contract and not on the date the statutory documents are provided. Cooling off, I understand, can also be waived by residents by written notice if they enter into occupation. There has been much talk this morning about the compulsory buyback period. At the moment, it will be 18 months after termination, rather than 12 months, if not previously remarketed. An extension of 18 months will be possible in special circumstances as well, and the buyback at market value will be determined, I understand, by the operator or an independent valuer, whilst the buyback includes an ingoing contribution and capital gain less deductions.

Occupation by the resident during remarketing will be allowed on notice to the operator. There is also an early payment provision. In terms of new residences, the operator under the bill must assume responsibility for fees, charges and other monetary amounts in respect of newly constructed residences not yet subject to a residence contract. There is also a mandatory consultation with the residents' committee in relation to the annual budget clause and, if there is a residents' committee, there must be at least two meetings between the committee and the operator to discuss the budget, unless the committee advises in writing—which is obviously a good thing.

In terms of administrators, receivers and managers, I understand that the minister will be able to apply to the court for an administrator, receiver or manager to be appointed to be paid for by the residents out of recurrent fees. In terms of leases on land, leasing a residence outside the scheme will be limited to new residences not previously occupied and residences where the previous occupant has paid in full. In terms of powers of investigation, they will be expanded under the bill. There will be many more offences, fines and expiation fees. The right to silence has been preserved, but not in all ways.

We on this side of the chamber have had a longstanding concern that the previous act did not go as far as it needed to and that it needed to be updated to reflect the development of the retirement living industry, which is both enormous and essential. I note that members on this side of the chamber were extremely active in the select committee which reviewed the operations of the previous act, and we are frustrated that it has taken so long for the government to bring a bill of this nature to the parliament.

We will be supporting the bill in this house. I have had the privilege of serving an electorate in which there are many retirement villages, and they do an absolutely fantastic job in providing care for our community. In fact, on Monday 18 April I attended the Aveo Glynde Lodge, which is a delightful part of the world in my electorate. They are always very hospitable and I enjoy chatting to the residents. We went to Aveo to hear from the SARVRA representative and to talk to residents and gauge their feedback and concerns about the bill. We discussed several issues that morning, including the balance that needs to exist between residents and operators, and I think this bill maintains a good balance between the two.

There was much talk about the statutory repayment period. I note that there is a petition circulating. I thank the many residents who have presented me with their petition and I share their concerns. I understand that a 12-month statutory repayment provision was initially proposed, and I understand that the feedback has been received by the government.

I would expect the minister, respectfully, in her remarks to address why the government has gone for the 18-month period rather than the 12-month period. I understand the government decided to go for the 18-month period in recognition of unintended consequences which were highlighted by key stakeholders (including residents, industry groups and third-party representatives) during the consultation period.

There are other issues in aged care, such as elder abuse, which can occur. This is a really important issue in our community. Whilst we have very high standards and very good levels of care in our aged communities across the board, we have seen examples of elder abuse in the past. Legislation must always ensure that we continue to protect some of the most financially and physically vulnerable members of our community. Many of these people have paid taxes and have worked for their whole lives, and they deserve respect, dignity and care in their final years. We, as legislators, need to make sure that we do all we can to protect them. It is with those few words that I commend the bill to the house, and I look forward to its passage through this place.

Ms HILDYARD (Reynell) (12:24): I rise today to speak on and in support of the Retirement Villages Bill and the important reforms our government is championing. In doing so, I want to congratulate minister Bettison and her staff on their work on this, and their commitment to ensuring that South Australians have access to the best possible living options in their older age.

As part of our discussion, I would like to note that every six minutes a person in Australia is diagnosed with dementia and that 20 per cent of adults are affected by a mental health disorder every year. These are indeed sobering statistics and remind us that, in providing lifestyle and accommodation options for our very diverse older population, consideration must be given to how we can best meet the needs of people with cognitive decline and mental health concerns.

That deep thought and consideration must be given to how community members, families, health professionals and service and accommodation providers can work together, with support from government, to ensure that everything we do provides the best possible outcomes for those we serve. This bill seeks to address a number of longstanding issues within the sector, including the need for improved transparency and contractual awareness and encouragement for the early resolution of disputes.

I understand that, during the consultation phase of this bill, minister Bettison rightly sought and received a great deal of important and robust feedback from both residents and operators on proposed statutory repayment requirements and aged-care provisions. I understand from members of my own electorate that they were pleased to be able to contribute directly to the process. I know how important these reforms are to residents in a number of retirement villages, including at Elkanah and Almond Grove at Morphett Vale and at Living Choice in Woodcroft.

I had the pleasure of attending a turning the sod ceremony at Living Choice a couple of weeks ago as they got ready to develop their new leisure centre, a centre which will absolutely provide for all aspects of the promotion of wellbeing amongst residents and will provide an important connection for residents with the community. I was absolutely struck by how engaged in this ceremony, and indeed in this process, so many of those residents were. They were absolutely positive ambassadors for every aspect of this work. I was, I must say, also struck by the fact that at this ceremony they served copious amounts of red wine and champagne at 9.30 in the morning. I did not partake myself, but it was very clear that many people were very happy at Living Choice in Woodcroft.

The key elements of the bill rightly include ensuring that there is a balance between the rights and responsibilities of residents and operators of retirement villages. It is so important for vulnerable people to ensure that they are very clear about the arrangements they are entering into, and full disclosure will ensure this. It will also ensure that consumers have greater choice about which facility to choose by allowing them to more accurately compare choices. Of course, many villages already provide this information, but through this bill we are standardising this practice across the sector.

I am pleased that the bill also deals with issues around deficit and surplus of retirement villages and statutory repayments. These are issues that will also assist in ensuring the best possible operation of retirement villages. With sometimes less than clear arrangements, this can be an area of concern for residents who put their money into these funds without knowing ultimately how they might be used. The statutory repayment period will also address situations which have been of concern for residents and their families for a number of years. This provision will give surety and promote greater confidence in the industry.

Whilst the length of time has been increased, it now provides an option for a resident to remain in situ until their premises are relicensed or the time expires. I have been contacted by constituents regarding this provision and I was surprised to learn that many of them currently have no time frame for repayment in their contracts. They are understandably pleased to see this provision introduced, giving them the long-sought confidence that, when the time comes when they want or need to move, they will have access to their funds in a reasonable period of time.

This is an important development, whether the person is moving to residential aged care, to another state, to the next suburb to be closer to family or perhaps to be part of a new relationship in a different village, even if the move is unfortunately related to a resident's death. Having to wait years for funds to be released is not an arrangement that people find acceptable. If this industry is to flourish, its market (the residents) needs certainty. The 18-month time frame allows operators time to market the unit, with advice from the Property Council that the average is 315 days for a retirement village unit to sell. It is recognised that the bill is taking a balanced point of view, ensuring that operators that use their best ability to relicense a residence will not be disadvantaged.

The provision to apply for extenuating circumstances takes into account events outside the control of the operator, such as a significant change to the housing market or even a natural disaster. I have heard comments that the bill puts us out of step with the retirement villages legislation in other jurisdictions. I am somewhat confused by these comments, as it appears there are repayment provisions in Victoria, New South Wales, Tasmania, Northern Territory and Western Australia, with these jurisdictions having repayment periods of between 45 days to six months.

Unfortunately, in many of these jurisdictions, it appears that operators can avoid their responsibilities to make the repayment if they agree to let the older person sell the licence themselves—a difficult task, which, I understand, is not frequently taken up given the specialised nature of retirement living accommodation. Again, I commend this bill to the house and am pleased that so many have had input into this bill which I strongly believe strikes a great balance between the interests of residents and operators. I would also like to congratulate both residents and operators on their thorough input into this process.

Mr WINGARD (Mitchell) (12:30): I also rise today to speak in support of the Retirement Villages Bill 2016, which deals with a very important issue in my community. There are a number of retirement villages in my electorate and I have worked very hard to engage with all village members.

The Retirement Villages Act was enacted in 1987 and was reviewed by a select committee in 2013. From statements made by members before me, we can see that this act has been very messy, and a lot of grave concerns have been raised about this act before the select committee. It is great that we are moving forward in this area. Early in 2015, the government released a draft amendment bill. An eight-week public consultation on this bill also took place, and there were over 300 submissions on the draft bill.

It is good to see that the intention of the bill, as outlined by the minister, is to ensure improved clarity and transparency of retirement village contracts, increase disclosure of information to ensure that consumers are well informed before entering a contract and improve clarity for residents and operators in understanding their rights and responsibilities under the act. They are some of the issues that have been raised with me.

The most contentious issue in relation to the bill, however, centres around the statutory repayment provision. This is the key provision that seeks to address the concerns of older South Australians wanting to leave their retirement village residence. They are sometimes left unable to access their exit entitlement until their interest has been sold. Interestingly, the statutory repayment provision was not recommended by the select committee.

The 2015 consultation draft bill proposed a 12-month statutory repayment provision but, of course, the bill now before us has an 18-month statutory repayment provision. I also note that the minister stated in her second reading speech:

The bill includes a five-year review clause of the statutory repayment period. This review of the statutory repayment period will provide an opportunity to assess the impacts of the clause and to ensure that the application has achieved the desired outcomes.

Some other concerns raised, as I sought feedback from my community and listened to a number of stakeholders, centred around elder abuse, which I think all in this house would be very concerned about. We do need to make sure that this bill does not allow it take place. We do want to make sure that elderly people are protected and that, in fact, this bill does not go towards helping people pressure someone either to move into, or out of, a retirement village in order to achieve a financial gain, whether they be families engaging in untoward dealings with their elderly family members or any other operator involved in this process. Elder abuse is another thing that we want to keep a very close eye on.

We can see from the bill and the previous act that it is a very complex situation. Contracts are very complex. Again, many members before me have spoken about that and the fact that people have had troubles dealing with these complex contracts. Whatever we can do to make that as easy as possible, I think, is a step in the right direction.

With those few words, I support the bill. I support the fact that it is about having a balanced way to ensure that people in retirement villages are protected and have a wonderful environment to live in but, at the same time, that the retirement village industry is sustainable in the long term so that people in the future have the option of living in a retirement village that offers security, community and friendship.

Mr PICTON (Kaurna) (12:35): It is my pleasure to rise to support the Retirement Villages Bill 2016. This is a very important issue for electors in the seat of Kaurna. We have three of the more modern retirement villages in our area. Moana Mews was the original one, followed by The Sands at Seaford and Aldinga Shores retirement villages, where I have spent a lot of time visiting residents. They are all growing areas, and I think, generally, people enjoy their lives and enjoy the flexibility and smaller land sizes and sense of community that they have in those retirement villages.

That is not to say that everything is perfect in the regulation of retirement villages and this is something that has been well overdue for reform. I note it was my predecessor, as the member for Kaurna, who chaired the select committee looking into retirement villages across the state and came up with the recommendations that have led to this bill today, so I congratulate him and the other members of that committee. I think that committee found that there are a number of issues that need to be updated. There is a number of things where the process of the market has outdated what was in the act, and as well we need to prepare for the ageing population that we are particularly seeing in South Australia.

In the bill brought before the house, we are seeing improvements for people before they enter a retirement village, in terms of the contract and financial settlement of what is being signed; improvements in terms of the financial clarity for people once they are in a retirement village; and improving things for people when they need to leave a retirement village, whether it is to go to an aged care centre or for other accommodation.

There has been an extensive period of consultation, and I congratulate the Minister for Communities on her work on that. We were lucky enough to have a consultation meeting that I attended last year in Port Noarlunga, and the minister spoke at that, as well as Vanessa Clarke from the department, so I thank her for her expert work on this issue. There was a strong turnout, showing the strong passion and desire to see improvements on this issue.

A number of people in my electorate have contacted me (probably the largest number were from Moana Mews) about this bill, with a very strong number of people advocating for the statutory repayment element of this bill. I note, particularly, that Judith Morgan is one of the people who contacted me. She sits as a representative of Moana Mews on the South Australian Retirement Village Residents' Association and so was very across all the detail of what was being discussed. She was pointing out that having a statutory repayment requirement in this bill is absolutely essential for residents in that village where they have seen people and units going on the market for four or more years without being repaid, which obviously causes significant distress for those families and residents involved.

Now that we have that issue settled in the bill and the government has settled on the 18-month repayment issue, there is broad support for it. In fact, the other day I received a letter from the Residents' Association of Moana Mews, which has the fantastic acronym of RAMM. I will read it into Hansard:

Dear Chris,

Thank you for your letter…re…new rules for retirement villages. We support all of proposed changes, particularly the rules concerning repayment period as we have witnessed serious delays of 3 or more years in clearing up and renovating units after a resident leaves permanently for one reason or another.

We have also been aware of lack of details such as Managerial fees and council fees and we would strongly support much more transparency from directors, who, I sure would be fighting such changes. There are many more residents than owners however.

My compliments on the great work you are doing in parliament,

That was from Syd Monkhouse, who is the president of RAMM, the Residents' Association of Moana Mews. So, I think there is very strong support out there for the changes the minister has proposed in this bill, not just the statutory repayment issue but also the improved financial disclosure requirements for people before entering into contracts.

Just last week, I met with a resident of one of the retirement villages in my electorate who is seeking to try to move now that he has remarried. He is looking to move into a bigger house and was very surprised to learn that he could not get his money repaid very quickly or easily. He had to go to a solicitor to interpret the very thick contract that he had signed originally, which read over 100 pages. I think that goes to show how difficult it is for some people to understand the obligations they are entering into, and a better disclosure method of that right up-front will save a lot of pain later on.

I think another thing is to have a better disclosure for residents of what their maintenance fees are being used for. It is their money and should be used for their purposes. I am very supportive of that improved disclosure for residents because I think that if it is all being spent well then residents will be happy, if it is meeting their objectives. It is absolutely something that they deserve to have knowledge about.

Those three issues—before, in terms of the disclosure; during, in terms of disclosure of the fees; and, after, in terms of statutory repayment—are for me the three big issues coming out of this and I think they will be widely supported in my electorate. I should also note that my grandmother lives in a retirement village, in Netley Grove, in the member for West Torrens' electorate. She also is very strongly in support of the bill and likes to keep me up to date with all things happening in retirement villages, if I was not hearing them in my electorate as well. I congratulate the minister on the bill and I hope that it has a swift passage through the parliament.

Mr DULUK (Davenport) (12:42): I also rise to speak to the Retirement Villages Bill 2016. The premise of this bill is very important to South Australians, especially for our ageing population. Demographic change is happening and there is no need for crystal ball gazing: it is here. Of course, government, and indeed this parliament, needs to pave the way for this change.

We know there is a significant shift underway in the age structure of our population, driven by an ageing baby boomer generation and longer life expectancy. In June 2014, South Australia had 287,700 people aged over 65 years, representing 17 per cent of the state's population. It is estimated that by 2036 there will be 495,000 people aged 65 and over in South Australia, making up almost 24 per cent of our state's population. As the number of retirees and people aged over 65 grows, so will the demand on age-appropriate accommodation.

Governments cannot meet this increasing demand alone, nor should we. Private investment and development will be critical to providing the accommodation that our older population needs, especially creating the accommodation options that they want. But private investment is not a given. South Australia needs to ensure our legislative environment does not act as a disincentive to investors, particularly in an economic climate that desperately needs economic growth and job creation, and indeed, for the record, thanks to 14 years of poor economic management by successive Labor governments.

Excessive red tape, financial impositions, and endless difficulties will discourage operators as they search for markets to grow in. It is critical that our endeavours to create an attractive environment for investors and retirement village operators does not come at the expense of the consumers and that is, of course, the residents. We must protect the rights of our ageing population to ensure that they are treated fairly and without disadvantage. The legislative framework must be responsive and achieve a balance between the rights and responsibilities of residents of retirement villages and, of course, the operators of those villages.

But legislative change must be fluid. Delays and uncertainty will have a negative impact and, unfortunately, this is exactly what we have seen with this Retirement Villages Bill. Once again, we have seen this Labor government drag its feet and cause unnecessary angst amongst village operators as well as existing and prospective residents. The select committee reported on a review of the Retirement Villages Act 1987 on 27 November 2013. The government response was initially tabled in May 2014, and it took until February 2015 for a draft bill to be released for public consultation.

Now, almost 2½ years after the select committee delivered its report, we finally have a bill before parliament that includes clauses that were not raised or canvassed in the select committee. It is quite extraordinary, yet not particularly surprising given the light legislative program we have become accustomed to from this government.

The uncertainty around the regulation of the industry has made it difficult for operators. It has made it difficult for operators to prepare their budgets, frame contractual arrangements and make investment decisions. For residents, the ambiguity has created confusion and angst at a time of their life when they are hoping for transparency and simplicity. However, the government's tardiness in introducing this legislation should not deter our efforts to deliver the best outcome for South Australia.

Whilst I welcome the overall objectives of the bill, I would just like to speak to a couple of particular clauses; one of them is the 18-month compulsory buyback and the other is, of course, existing exit entitlements which have long been a source of stress and frustration for residents—we all know that, and it has been mentioned by almost every speaker on their feet so far today—both in terms of accessing their investment, and the investment being significantly eroded by exit fees.

We have all no doubt heard the stories of elderly residents waiting years to receive their original investment back. The member for Kaurna just mentioned that some residents in his electorate have been waiting for more than four years to realise an investment. Such delays, as I said, can be costly and distressing. Vacating residents can be held responsible for ongoing maintenance costs at their retirement village while also accruing interest on a combination of charges at their new residence, under the current regime, and families sometimes face lengthy delays in finalising an estate.

The introduction of the mandatory repayment of an exit entitlement has been welcomed by many residents. Under this bill, operators will be required to pay an exit entitlement within 18 months of the resident vacating the premises. While I appreciate that residents strongly favoured a 12-month buyback period included in the draft bill, I understand there is general acceptance amongst many for the 18-month period.

However, I am also very sympathetic to industry concerns, especially from small private operators who are fearful that this requirement will have serious cash flow implications for their business. In the current economic climate of our state, any concerns that legislative changes are anti-investment and anti-jobs growth must be considered further.

The operation of a compulsory statutory buyback clause has the potential to be onerous, particularly in light of fluctuations in the real estate market, and further consideration on the operation of this clause and its implications would be very wise, in my opinion. This is a clause where we just have to be mindful of unintended consequences. By providing residents and prospective residents with confidence about the time frames of accessing their investment, I am hopeful retirement villages will become a more attractive option for seniors, with rising demand actually encouraging investment, which is what we want.

What I would have liked to see presented with this bill though is a regulatory impact statement. This should have accompanied this bill but did not, in terms of the 18-month clause. A regulatory impact statement may have provided consideration of these issues which would have benefited us as members of parliament in this debate and, of course, all interest groups in terms of how the 18-month period was derived.

This bill, in terms of section 26, also provides an operator of a retirement village with the ability to apply to the tribunal for an extension of the 18-month repayment period, with the tribunal able to grant an extension if it is satisfied that special circumstances exist. Such a general reference is open to a very broad interpretation, and it could potentially erode the objective of the mandatory provision and undermine the confidence the bill is aiming to provide. Codification of special circumstances, in which an operator does not need to make the payment, would alleviate these concerns. It is something I will further develop in the committee stage.

Indeed, many residents of the villages with whom I have met would like to see a return to the original terminology in the draft bill, that the tribunal may extend the period if it is satisfied that, and I quote, 'the payment would cause serious financial hardship to an operator'. In the bill, independent valuations are also touched upon. This is another aspect of the exit entitlement that highlights the need for an independent valuation. The bill currently provides that residents may require the operator to obtain an independent valuation if the resident disagrees with the operator's determination of a market value of a residence.

I am indeed cautious of this approach, wary of any potential for manipulation or abuse. The South Australian Retirement Villages Residents Association has instead recommended that the resident, not the operator, should be responsible for obtaining the independent valuation. Once again that is something that should be considered in the committee stage.

Something that has caused a lot of concern for my constituents, and those living in retirement villages and their families, is when a resident leaves a retirement village to enter into a residential care facility. We need to explain and further develop the provisioning around the arrangements where residents leave to enter an aged-care facility. At the moment, the bill provides that an operator must, within 30 days after receiving an application properly made under this section of the bill, commence making payments to an aged-care facility for the daily accommodation payment applicable to the resident's care at the aged-care facility.

I welcome the aim of the proposed arrangement of the bill, and of course the minister outlined in his second reading speech that the aim of this section is to provide greater flexibility to the way that operators can provide early repayment to eligible residents. Also, residents who demonstrate need will be able to apply for the village operator to pay the lump sum, or meet the daily payments from an aged-care facility, until the village unit is relicensed. These payments will be deducted from the final exit entitlement.

Unfortunately, where operators pay the daily accommodation payment instead of the refundable accommodation deposit, residents are also charged daily interest on the outstanding deposit amount. This has the potential to cause serious disadvantage by saddling residents with debilitating interest charges, so we do need to look at this. I appreciate the minister's intent in this clause, but I do think it is important that we consider the impact of this provision further.

In conclusion, legislative changes to the retirement villages sector are indeed very important, but we must remember that it is not about favouring one group or another: it is about getting the best legislative framework we can for South Australians. We must provide a framework that delivers the best outcomes for all South Australians today and into the future. The private sector will have a critical role in meeting the ongoing needs of our ageing population.

We must ensure that our legislative framework does not stifle the private sector or deter investment. This must be balanced with what our residents need, because after all they are the ones who live and spend their time in these retirement villages. We need to ensure that residents of these villages have the ability to live independently, with financial security, and be confident that the retirement village that they live in provides both a safe and a comfortable environment, one that does not cause undue stress on them in terms of the management of their facility.

Finally, I would like to put on the record my appreciation to SARVRA and indeed their president, Gill Kennard, for all the work she does on behalf of residents in retirement villages. I know that she is a constant and tireless advocate for them. She has been hounding my door for many years on these issues, and I know that she has had a lot to do with this bill, and hopefully the final bill that is passed will go a long way towards meeting the needs of SARVRA, of residents, and indeed of the whole industry.

The Hon. A. PICCOLO (Light) (12:54): I will speak briefly on this matter, but I think there are a couple of things to be said. First of all, I would like to commend the minister and her staff, and also the staff of the department, for bringing this bill to the chamber. I am aware of the amount of work that has gone into it. I am also very mindful of the competing interests in this sector and how the minister has had to find a balance between the interests of those people who own the facilities and those who live in those facilities.

It is not an easy task because often they are competing interests and to find some common ground can be at times very difficult, but I believe the minister has found the right balance. Issues have been raised by people who live in retirement villages in my electorate. Having said that, I would like to thank those officers from the department who came out to speak to people at the retirement villages, and we had hundreds of people come along to discuss this.

The key issues for them are very simple; one is that they want quite clear terms. They need to know what they are buying, the product they are buying. What is the licence, etc? Hopefully this bill will lead to greater clarification, and also simplification, about what they are buying. You can have this huge disclosure document, which hides everything and has the reverse, and that is what was happening in the franchise sector some years ago. So, this bill helps that.

They wanted to know clearly what their ongoing commitments were in terms of fees and charges; that is a main issue for them as well. This bill, again, helps to make sure that happens. The third element was that they wanted to know, when their licence is terminated, what are the benefits to them, what are the costs to them, etc. So those are the issues which were raised. I believe the bill addresses those issues.

Another thing this bill does, in an ongoing sense, is allow an advocate on their side. There is an advocate in place and that person makes sure that they have somebody to support them through the scheme should they have a grievance of some type. I will not go through this bill line by line because it has been debated already at length, but I can say that this bill also is mindful of the fact that in the marketplace we have quite small operators and quite large operators, and they can be quite different in terms of needs. With those comments, I would like to say that this bill reaches a good balance in protecting the rights of residents but also makes sure that we have enough people who wish to invest in the facilities.

Mr PEDERICK (Hammond) (12:57): I rise to speak to the Retirement Villages Bill 2016. I acknowledge the many villages throughout my electorate. In Murray Bridge, we have Murray Bridge Lutheran Homes, Murray Lands Retirement Village, Murray Heights Lutheran Village, Waterford Estate, and The Bridge Village. In Goolwa, we have West Park Residential Services, Thornbury Park Retirement Estate, Riverside Retirement Villages, Lakeside Goolwa, Village Life Goolwa, Heritage Homes, SunnyCove, SeaChange Village. At Tailem Bend, we have Taberefta Homes for the Aged.

As it has been indicated in this chamber, aged care and retirement living are going to have more of our population involved at a much higher percentage as our state gets older. Sadly, so many of our youth have left this state for job prospects. In regard to the retirement villages in my electorate, they do a very good job in providing housing for people. I have had some issues with some management in some of these places. I am directly involved in Taberefta at the moment on the committee. It is nice to be able to contribute directly in how a village is run and to have the benefit of doing that. I seek leave to continue my remarks.

Leave granted; debate adjourned.

Sitting suspended from 13:00 to 14:00.