Bills

Retirement Villages Bill

Committee Stage

In committee.

(Continued from 24 May 2016.)

Clause passed.

Clause 20 passed.

Clause 21.

Dr McFETRIDGE: Clause 21 is 'Information to be provided before residence contract entered into'. The select committee was very concerned about the ability for prospective residents to be able to understand the contracts, the intricacies and permutations. We obviously looked at proforma contracts, and there were some examples of proforma contracts in New South Wales.

The other thing we talked about, and perhaps the minister can tell the committee, is that if a resident chooses to lease a unit before they actually move in, does this act preclude that from happening? Are there any safeguards for people who enter into a lease arrangement, then being bound to continue to reside there and pay the premiums that are required? What will be the effect of the information that is being provided on the actual terms of the contract?

The Hon. Z.L. BETTISON: Thank you, member for Morphett. In short, yes, they can; therefore, they would have a rental agreement for that independent living unit. I understand it is often considered a 'try before you buy' to see if the lifestyle is what you want in a retirement village.

Clause passed.

Clause 22.

Dr McFETRIDGE: This is the clause, Premises condition report. The select committee received a lot of information about the inspections of premises and who was going to undertake repairs of premises. There was considerable concern that some operators of these facilities were using their own contacts, their own contractors, and some of the rates were quite high, to say the least. We heard examples from the member for Bragg yesterday the cost for changing a light globe could be $50.

Most of these people who are residing in retirement villages nowadays have limited incomes. They are not multimillionaires, not that I am aware of, so they want to be aware of their opportunities perhaps to choose tradespeople or contractors to undertake repairs, obviously to the satisfaction of both parties (the owners and the departing residents). They need to be well aware of who will be responsible for repairing or replacing items.

Some of the examples of what could be considered just normal wear and tear being passed on as something having to be paid for by a departing resident seemed unfair to the resident. Are there going to be checks and balances? Are the residents going to be protected, and are the operators also going to be protected?

The Hon. Z.L. BETTISON: With the greatest respect, member for Morphett, I think we are putting two lots of concerns together here. Clause 22 focuses on the premises condition report. I recall that this was discussed in the select committee. People were often under lots of pressure, and at the moment they often have to do that on entry and on the signing of the contract: you sign the contract and you agree to the premises condition.

One of the concerns was that often it was not until they had got into the residence that they recognised there were things that were not to the standard they had agreed to. It is now within 10 business days of a resident being entitled to occupation of the residence that they both sign the premises condition report; that is the focus of clause 22. I think the issue you talked about was transparency into costs and things like maintenance, and that is one of the things that will be discussed within the annual report that is put towards the residents.

Dr McFETRIDGE: In clause 22(2)(b), 'who will be responsible for repairing or replacing an item', there has been significant concern and, from what the minister has told us, I hope that it will be something that will be clarified because it is significant.

Mr DULUK: Also on clause 22, some people who have contacted me have asked for approximate periods for replacement of capital items to be included in this section—for example, 15 years on carpets. Will that be included so that residents who possibly enter a unit, at, say, 10 years into the 15 years, know that they will have to replace the carpets in five years' time?

The Hon. Z.L. BETTISON: I thank the member for his question. This was raised during the discussion and submissions. After much consideration, we did not think it was appropriate to put certain time limits on things—for example, to say that carpets must be replaced after 15 years. What we generally saw in the industry was that when that independent living unit turned over, whether it be seven years or 15 years, there was a refreshing of the contents, so we have not included that in the bill.

Mr DULUK: But there are some instances when the villages have made new occupiers refurbish a whole new unit even though items probably did not have to be replaced. If we put this into a time frame around capital or disclosure, at least, of capital items and when they do need to be replaced you will not see some village operators mandating that a unit needs to be refurbished even though there is nothing wrong with the capital items.

The Hon. Z.L. BETTISON: We feel satisfied that that would be accurately accounted for in the contract. We have often seen that that is reflected in the buy-in price, so our lower cost entry might have not brand-new furnishings, for example. So we are satisfied that will be articulated in the contract.

Clause passed.

Clauses 23 and 24 passed.

Clause 25.

Dr McFETRIDGE: In relation to ingoing contributions, clause 25(1) provides that the contributions must be held in trust. I was surprised to hear that in some cases this has not been the case in the past. I thought that with most real estate transactions now, if money was handed over before the transaction was finished it was being held in trust, and certainly it is good to see that this has been put in and there is a significant penalty for people who do not comply with this clause.

The question is: can you give the committee a brief overview, for the benefit of the committee, of the basic business model for the average run-of-the-mill retirement village, and explain the deferred management fee and exit entitlements?

The Hon. Z.L. BETTISON: Clause 25 specifically talks about ingoing contributions; I think you are asking about the whole model?

Dr McFETRIDGE: The ingoing contribution is a concern for everybody who is going into these facilities, and so for them to have an understanding of what they are going to put in and then what they are going to get out I think is something that needs to be explained. We can either do it here or we can do it in clause 26.

The Hon. Z.L. BETTISON: Perhaps I can clarify what will be considered as part of ingoing contributions, which is covered in this clause. It is a payment made by, or on behalf of, the person in consideration of becoming a resident in a retirement village. But that does not include recurrent charge and exit fees, a special levy and any other payment excluded by the regulations from the ambit of the definition of ingoing contribution.

I think what you are touching on here is what we aim to achieve in the disclosure statement. The disclosure statement will cover ingoing fee, fees during the course of your stay, and on exit. As I spoke about yesterday, there are different models about how villages operate. The loan licence or licensed occupier, is the most common used model, where you make an entry payment, so that is your ingoing contribution, at market value, and then there are fees and charges upon leaving, and that may include a share of capital gain. I think that is what you are concerned with, and obviously there is also the donation entry, which is a low-cost entry premium which reduces the return after the first five years, and after five years no refund, and also the strata title model.

The key thing, which was articulated quite strongly, is for people to have their eyes wide open. So, while you might have a variety of models in retirement villages, we want people to be clear about what that model then entails going forward. So the ingoing contribution, as part of clause 25, covers part of that, but the disclosure statement would aim to articulate that quite clearly, so people are very aware of what those costs will be.

Clause passed.

Clause 26.

Mr DULUK: On clause 26(2), I just want to know, minister, how the 18-month period was derived in this section and what data has been used to form the basis of this sort of broader policy decision.

The Hon. Z.L. BETTISON: I thank the member for his interest. When we put out our proposed bill in 2015, the requirement was that the operator should repay a resident's exit entitlement 12 months after the resident vacates the village, if it was not relicensed any earlier. What we wanted to do was provide assurance, so the focus is on consumer protection, to residents of when they would receive that exit entitlement, and encourage operators to remarket a residence to the best of their abilities.

The 12-month statutory repayment was well received by residents, but many operators raised with me their concerns about this impact, with a particular focus on smaller and regional operators meeting the repayment requirements, and there was concern that this might lead to the sale of residences at discounted prices to meet the time frame, disadvantaging both the residents and the operators. Operators raised some concerns that it might limit the ability of retirement village developers to borrow funds.

I was given that information, and also some data that the Property Council shared with me that, on average, it takes 315 days to relicense an independent living unit. That is from go to whoa, from the moment that villager says to the operator, 'I would like to leave the village. I would like to relicense.' That is a little bit less than 12 months, so then to have an additional six months has been acceptable, with some reluctance I could say, to SARVRA—they prefer the 12 months—and other groups. We have obviously talked to ACS. The Property Council have been very clear. They wanted no statutory repayment, and they were not prepared to negotiate on that.

One of the other areas that I looked at, though, and I think one of the greatest issues, was that we often hear that people are very happy in retirement villages and that hardly anyone wants to leave. While that might be so, I think it is very complicated to leave. Many people pass on from a retirement village or they may go into residential aged care, but if you decide that it is not for you that might be triggered by the death of your spouse or changes to the village or changes to what you want to do, it is very complex.

One of the key areas was that from the moment you said to the operator, 'I would like to leave,' you had to leave. If that took five years or three years to relicense, you then had to rent another property in another location. I do not know about your experience with this, but from my experience talking to many of the residents they had put most of their money into their asset—the licence. They did not have a lot of cash flow to rent separately, so one of the areas I proposed to change after the issue was raised was that the resident may also choose to remain in occupation while the residence is being relicensed, and that changes what currently happens.

What we are endeavouring to do here is strike that balance, and that is what we want to do. We want to provide certainty about the ability either to remain in occupation or move out while it is relicensed, and also an incentive for the resident to work in conjunction with the operator to achieve this sale.

Mr DULUK: Thank you, minister, but my question was about what data was used, not what process was followed. I appreciate the process but, once again, I ask: what data was used? The only data I seem to be able to find is the turnover of properties that was received from the Property Council. What other data besides that turnover was used? What economic data about the state of the economy or the desirability for accommodation was used? Will you release that data as well?

The Hon. Z.L. BETTISON: As I am advised, data was also gathered on the general real estate market and the time taken to sell properties, as operators indicated that the general real estate market impacted on the time taken to find a resident to purchase a licence to reside.

Statewide data was sought from CoreLogic as to the average time residential properties—both houses and units—were on the market by suburb for the last 10 years. The CoreLogic data showed that the average number of days on the market for metro areas was 76 and the average number of days on the market for rural areas was 117. Overall, the average was 83 days.

Mr DULUK: Are you happy to release that data and table it?

The Hon. Z.L. BETTISON: Obviously it is on Hansard now.

Mr DULUK: Are the data looked at in terms of why people are leaving—whether they are leaving to go to higher care, or because they want to go back into their owner-occupied or because they have gone to a better place?

The Hon. Z.L. BETTISON: We do not collect the detail of that data. In fact, we have actually found that, within the industry, they keep that data fairly closely to themselves. What I can say is that, when we discussed these issues with the Retirement Villages Advisory Committee, the opportunity was there to put forward their own experiences. When I held my 13 forums, I think many local members, yourself included, said that many people enjoy living in retirement villages. There is security and community, but there is a lack of transparency. I am not saying that people do not enjoy living there, but I want to look at the balance between the rights of the consumer and the capacity of this industry to go ahead.

The Hon. P. CAICA: I have a couple of questions on this clause. The minister clarified that the period of 12 months in the draft 2015 bill has been extended to 18 months. Clause 26(2)(b) of the bill provides for the 18-month period, but clause 26(7) provides that the tribunal may, on the application of the operator, extend that 18-month period 'if satisfied that special circumstances exist'. However, there appears to be no limit specified as to the extent of the additional time the tribunal may grant, and my constituents are regarding that as indefinite. Could you please respond to that?

The Hon. Z.L. BETTISON: I thank the member for Colton. The bill does not restrict the tribunal on the length of time, if any, that the tribunal may extend the statutory repayment period. The South Australian Civil and Administrative Tribunal (SACAT) is a judicial body and any decision made is considered and determined on each circumstance, weighing up the benefit or detriment to each party.

In considering any extension, the tribunal advised that they would consider why the situation has arisen. Is it for reasons essentially unrelated to the administrating authority? Has it arisen due to unscrupulous behaviour of an operator? Is it a one-off or is there a consistent problem with the village concerned? Is the village a small not-for-profit or does it have the backing of a large corporation? These are only some of the considerations made by the SACAT, and it is appropriate that we do not restrict its ability to deal with a matter in the most appropriate way.

The Hon. P. CAICA: I thank you for the answer. The previous bill, I think, used the terminology 'serious financial hardship'. That has been replaced by 'special circumstances'. Again, I cannot see, nor can my constituents, any definition of what special circumstances means under this clause.

The Hon. Z.L. BETTISON: Without prescribing the grounds on which the SACAT could make a decision, exceptional circumstances could be a natural disaster—for example, an earthquake. In recent times, we have seen the significant impact of an earthquake on Christchurch in New Zealand. But I would leave it to the SACAT to determine what those exceptional circumstances would be.

The Hon. P. CAICA: My final question—

An honourable member interjecting:

The CHAIR: Order! We cannot hear the member for Colton if someone is going to talk over him.

The Hon. P. CAICA: I will speak very loudly, ma'am.

The CHAIR: No, you will not have to, because this person is not going to keep talking loudly.

The Hon. P. CAICA: Thank you very much, ma'am. Minister, has any consideration been given to the fact that there might be an increase in the number of references, if you like, to the tribunal? Has any modelling been done to show, in view of the change from 'serious financial hardship' to 'special circumstances' and the decrease from 24 months to 18 months, whether it is likely or possible that there will be a substantial increase in the number of applications being made before the tribunal by operators and their legal representatives anxious to take advantage of the time alternatives offered to them in relation to their exit fees?

The Hon. Z.L. BETTISON: Perhaps in order for me to answer that question we should have a consideration about what happens now. Many operators already have a repayment clause within their contracts. Let me give some examples of those contractual terms across South Australia. Let me be clear, though, that that contract might not be the same for all villagers in the same village. One of the things we have come to an understanding about, particularly when villages have been sold to different operators, is that within 100 households in a village you may have people who moved in on a certain date and they will have specific contractual terms, whereas people who moved in five years later will have different contractual terms because it was a different operator.

So, to give some examples: with a not-for-profit metro operator with more than 1,500 residences and nearly 100 villages, any refund dues are repaid within 30 days of the residence being returned to the operator. With a full-profit metro operator, with more than 1,000 residents and more than a dozen villages, exit entitlements are repaid within 12 months of the resident vacating the village. With a for-profit metro operator, with nearly 2,000 residents and about a dozen villages, it is generally 12 months after the resident vacates the village. A regional council operator, with seven residences in one village, is 90 days after the resident vacates this village.

So, when you say to me, 'Do you think SACAT will be called upon often?', I do not expect that will be the case. We envisage that 18 months is a reasonable time within which an operator should be able to relicense a residence.

Dr McFETRIDGE: This particular clause has been quite contentious. The exit fees and procedures, obviously, in very many cases depend on the ability of the owner-operator to sell or relicense the unit. For the benefit of the committee, I will just read the notice that was given to one of my constituents by the owners of a village he was in. He wanted to get out. I gave the example of this particular fellow's circumstances: he paid $220,000 in 2009, in 2015 the capital value was $235,000, the exit fee was $82,250, the remarketing fee was $7,050, the reinstatement costs were $7,810, recurrent charges (he did not know what they were) were to be advised, and there was a settlement fee of $330. So, he was having to pay—obviously, he has been living there—$97,440, a significant amount.

In the notice of the process of vacating, the operators said that there are really nine steps that they take. The resident or their family contacts the village manager to advise them that they are leaving the estate, then the village manager issues them with a notice of an intention to vacate (an NIV), to be completed and signed. This officially notifies them of the date of vacant possession ('vacant possession' means the property is completely empty and ready for reinstatement/refurbishment) and the keys are handed back. This is an issue because people then have to go and rent somewhere else, or do not have the money yet, and this is what this whole issue of compulsory buyback periods has been based on. That condition then goes on:

Where applicable we also request a copy of a Power of Attorney, a Will and Probate to ensure the process runs smoothly. We also request that the power be left on to enable reinstatement work to be carried out without interruption.

That has been a concern for people, that they have had to pay the power bills and, with power bills being so high in South Australia, if refurbishment is taking weeks and weeks, or months in some cases, they are having to pay the power bills. I have had cases when contractors have come in and left the lights on when they have left, so who pays? The person who has vacated. The processes go on:

Once the signed NIV—

that is, the notice of intention to vacate—

has been returned to us, the village manager and sales consultant meet with the outgoing resident or their representative (if available) and discuss the reinstatement or refurbishment options to ensure the optimum return and shortest time on the market.

So, they obviously want to sell it, they want to relicense it. They are not licensed real estate agents these operators, they do not have to be, but they can indulge themselves in being quasi-real estate agents. The statement continues:

A condition report is normally prepared at this time as well. Within three business days of the return of the signed NIV, the premises are inspected by the [owner operators] to determine necessary works to be carried out. A scope of works and a Resale Price Appraisal (RPA) form are submitted for approval.

Interestingly, the resale appraisal form is based on the fact that the apartment has been or will be reinstated as required under the contract. A recent independent valuation of the apartment—and that bothers constituents, and it bothers me, as to how they are valuing the apartments. It goes on here to say that the resale value is the fair market value based on current real estate trends. How do you value an individual unit in an apartment?

There are cases where I have seen other communities that have a council rate applied right across the whole of the property, not individual units or homes. There are lots of complicating factors in this—obviously, the age of the apartment, recent comparable settlements within the particular estate, which are also taken into consideration, and any additions or alterations to the apartment, the location of the apartment and its proximity to communal facilities all affect the cost. The need to be clear about how they actually come down to these values is obviously a concern to the residents who are leaving or who have left through death and obviously then their beneficiaries of the estate. This statement continues:

Once the RPA is approved the Sales Consultant arranges, within 5 business days, for the builder to meet on site to determine the works required. These quotes are to be received within 14 days of the site meeting.

They are pushing things along to get their place back on the market. Quotes are then approved by a national building manager within four days. Sales administrators will then, within two days, prepare an estimate of any type of exit entitlement fee and a letter to the outgoing resident. Once the outgoing resident signs and returns the estimate of exit entitlement, the builder is issued with a purchase order and work commences. The specified turnaround time for the builder to complete the works is six weeks—and let's hope they do not leave the lights on for six weeks—depending on the level of work required.

Marketing and refurbishment of the unit cannot officially commence until the return of the signed estimate of exit entitlement. Once the work is completed, we inspect the unit and a quality inspection report is signed and the unit is opened for inspection by prospective purchasers. Maintenance fees continue to be payable for up to six months from the date of vacant possession unless sold beforehand, then ceasing on date of settlement of proceeds.

The above processes are dependent on a number of variables; however, the refurbishment is expected to take 12 to 16 weeks—up to four months just to refurbish it—following the signed notice of intention to vacate and the time it takes for sale and settlement. People are waiting, a long time in some cases; we hear of years in some cases. Certainly, in the case where people are wanting to go to another village this is a huge issue for them to be able to access their funds.

At the same time, if you are going to introduce this type of legislation, we need to be able to protect the operators. Can the minister tell the committee: why is this legislation retrospective, not just prospective? What safeguards are in place for small operators? What is the average time that a retirement village resident lives in a unit? What proportion of residents transfer to an aged care facility/another village? How many residences are vacated because the residents die?

I am happy for you to take this on notice, minister. The committee also should be aware of the impacts—or the minister could tell the committee. Have particular impacts been undertaken on various areas where there are different socioeconomic conditions in regional areas, metropolitan areas, inner suburbs, outer suburbs? What is the ability for owners to go and borrow money from banks? Are banks going to look at the owner-operators differently if they know that they could be subject to a compulsory buyback? The residents and the operators need to know this.

If the minister can tell the committee either now or between the houses give us this information, it would certainly help in deciding what we end up with with this, because this is probably the number one priority for people who own and operate these facilities and also residents who want to live in these facilities or live in them now.

The Hon. Z.L. BETTISON: I thank the member for Morphett for his detailed discussion. He was a member of the select committee, and I know that you followed the concerns of the residents in regard to retirement villages. Can I just mention clause 26(14)? You talked about market value. If a resident disputes the operator's determination of market value, the resident can request that an independent valuation be undertaken, and the costs of that valuation are to be shared equally between resident and operator. I believe that addresses some of your concerns about the residents' rights within the valuation aspect.

Dr McFETRIDGE: Sorry to interrupt but, on that, I know that when we get our rates notices at home there is the Valuer-General's CV on there. Do owner-operators get that? Do they get it broken down into units and then there are the communal areas, the common areas? Is it broken down that way? If not, I am not sure how they do it, actually.

The Hon. Z.L. BETTISON: It does occur at times. It depends on the site and the local council, how they value the site within that. It is not consistent. Some do receive that, and they would have that land value on their rates notice, but others do not have that. There is some inconsistency in this area.

Dr McFETRIDGE: That is the individual unit residents? They get that?

The Hon. Z.L. BETTISON: As I am advised, at some of the sites you would look at the site as a whole and, I think, divide it by the number of independent living units on that site, and some are individual units within that space. It is rated although it is not covered under the Retirement Villages Act; it is under a different act.

Mr DULUK: On subclause (14), why would we not have the individual obtain the valuation report as opposed to having the operator instruct that report?

The Hon. Z.L. BETTISON: There has been much discussion on this point. Obviously, we looked at interstate and different models that were out there. That independent valuation would be carried out by someone from the Australian Property Institute, so they would have to be registered and accredited to do so. We do not think that there would necessarily be an issue if the resident went out and got that independent valuation, but I guess what we would specify here is how you would divide those costs. That would be that the operator would get them and they would divide those costs. If there were concern with that independent accreditation, obviously you could talk to the Office for the Ageing or the Aged Rights Advocacy Service, but we believe we are quite clear here in how those costs would be distributed.

Mr DULUK: The clause says that the owner may require the operator to obtain it. On that as well, has the minister considered bringing in a panel of valuers who are dedicated panel valuers for retirement villages, just like there is in the commercial property sector, where there are dedicated valuers who are known to be experts in that area?

The Hon. Z.L. BETTISON: As I am advised, there are some aged-care and retirement specialist valuers out there already, so it is deemed not necessary at this point to have a panel of valuers.

The Hon. P. CAICA: I certainly agree with the member for Morphett that, of all the aspects of the Retirement Villages Bill, this has been the one that has been most emotively argued and advanced by my, his and others' constituents. I want to give the minister an example: this is not a hypothetical but it actually exists. The parents of some friends of mine moved into a retirement village some time ago and paid $430,000 for entry into this village.

The kids were worried about that amount of money and thought that it was too much, but in the end they said, 'If that's what you want, just go ahead and get it.' The father died some time ago and the mother has since died, but she moved out at around the time of her husband's death, so it has been vacant since September or October 2014. The valuation has plummeted significantly. The proponents or the operators believed that they would not get $400,000 for it and might get only $360,000. However, my constituents are arguing that there has not really been much effort in attempting to sell it in the marketplace that exists at this point in time.

Putting that to one side, my specific question is: they are now, for all intents and purposes, the people who have the licence to occupy based on the fact that it was their parents' property and they will be dealing directly—just as I did with my mum, as I described yesterday—so am I to assume that because a period of 18 months has already elapsed that, when this legislation comes into place (and that might be some time down the track, plus there needs to be regulations put in place), will it be regarded in circumstances like this, if it has been vacated for, by that time, 2 years, 3½ years or whatever it might be, that that constitutes the waiting period of 18 months, when this act comes into place?

The Hon. Z.L. BETTISON: No, it will not. It will come into play the date the act commences. While you may already have a contract and you reside in the retirement village, it will be from the date the act commences, then you give your notice the next day or that day; that is when the 18 months will begin.

The Hon. P. CAICA: Notwithstanding the fact that a notice was already in place?

The Hon. Z.L. BETTISON: No, it will not.

The Hon. P. CAICA: This is my final question on this clause. There will be the dawn of a new era and the act will be put in place and, from that day, the provisions of 18 months will apply. I appreciate the fact that you do not want to be—and quite rightly so—so prescriptive across the various forms of the Retirement Villages Act, but this is a cover-all clause for all retirement villages. We will just call it the 18-month period and what hangs off it. There will be the dawning of a new era and my constituents will not be able, if that place has been vacated, to retrospectively use that as an argument. It will be the dawn of a new era; from the day the act comes into place and the regulations come into place, that will apply to everyone.

The Hon. Z.L. BETTISON: That is correct. Just to clarify, as I am advised they would then be entitled to the 18-month period from the start of the date of the act's commencement. It will not be counted for the 12 months previous, but from that date they will be entitled to the 18 months.

I want to clarify something that I think we should be clear about. If the contract provides that the exit payment is based upon relicensing of the resident and this has not occurred after 18 months, the resident can elect not to receive the payment and to wait until relicensing occurs. That is still something that is there, particularly if they feel that the market is increasing and that there is going to be more interest in that area; they can wait. The resident is not forced to relicense at that price at that time.

I think that might satisfy some people's concerns because there is a mutual interest here by both the operator and the resident, and that still remains. However, the resident can elect to receive the payment upon current market value.

The Hon. P. CAICA: I accept that because the provisions in the act say whatever comes first, don't they? That is there, so it has those provisions. Minister, I thank you for your response.

The Hon. Z.L. BETTISON: Can I just clarify that: a resident can elect not to receive the payment and wait until relicensing occurs, and they may choose to do that.

Mr PEDERICK: I am certainly interested in the statutory buyback provisions, especially in relation to regional areas and the amount of equity people need in regional areas, no matter if they are running a retirement village or whatever they are investing in. I am wondering whether the minister has done any research on the statistics of who will be affected, what villages will be affected by the statutory buyback provision and also whether the minister has done an industry impact statement—and I mean right across the industry, from small operators to larger operators—on the potential impacts of this statutory buyback.

It has certainly been expressed to me that smaller operators will be forced out of business, especially in regional areas where they potentially have to have about 60 per cent equity for a start, and then all of a sudden they are asked to have 100 per cent on top of that, so essentially 160 per cent equity. I am wondering what consultation has happened, what studies have been done, and also, apart from consultation with the owners and operators of these villages, what consultation with the finance sector has been undertaken.

The Hon. Z.L. BETTISON: I thank the member for his question. I note that he was not in the house when I did speak about this before, and you may recall when I summed up yesterday—

Mr Pederick: I heard it.

The Hon. Z.L. BETTISON: We did receive feedback that some concern was expressed about the 12 months, and therefore we have moved to the 18 months for that.

Mr Pederick: That's not—

The DEPUTY SPEAKER: Order! Are you standing up?

Mr PEDERICK: Minister, that is not the question. I am talking about a statutory buyback, whether it is 12 months or 18 months. I do acknowledge your comments, and I heard those comments yesterday. I am asking about what impact a statutory buyback of even 18 months would have. I understand that, yes, it has been pushed out six months, but it has been relayed to me that some smaller operators will not be in the field if this happens. Yes, it is good to give licence holders some clarity around their position but, as I indicated in my contribution, if owners of these villages do not want to invest we will not have villages.

The Hon. Z.L. BETTISON: What I have endeavoured to do here is strike the balance, and I am satisfied that that balance has been struck. I acknowledge your concern, and we have had some submissions from the banking industry on the initial bill and they provided some advice to us.

Previously, as I said, one of the things we looked at was the data because we know there are great connections between the general real estate market and the time taken to sell the properties as operators. The average number of days to market in rural areas was 117, and that is from CoreLogic. Overall, the state average is 83 days. The Property Council itself says that the average time it takes to relicense a retirement village property is 315 days, so I am satisfied at this point that an additional six months from that time will be acceptable.

Just before I run through what some of the people already do, we know that many people already have 30-day relicensing and 12-month relicensing. It is not consistent and it is quite diverse, depending on the business model. We think that this would have some impact on it, but in general we would expect to see very few people approaching SACAT, as this would be an issue.

Mr PEDERICK: But, minister, when you were discussing this with stakeholders, were you proposing, instead of a 12-month statutory buyback, a 24-month statutory buyback? That is also feedback I have had, that you have somehow come up with the 18-month figure.

The Hon. Z.L. BETTISON: I think whenever you put out proposals, there are some discussion points around it. Obviously, the initial bill in 2015 was 12 months. People came to me with different versions of that. What was proposed, and what has gone forward, is the 18 months. I accept that there were discussions around this point. This has been the most significant focus of this bill.

Consumers have been very active across the whole state, and they have been very clear that this is their number one concern in relation to this bill. I have endeavoured to have a balance, and that is the 18 months. But I accept that there was some negotiation, and I have talked to the peak bodies. The Property Council did not want any statutory repayment and were not prepared, through my discussions, to accept any of the discussion points I had on that. I believe there are protocols within the bill of the issues that you have raised.

Mr PEDERICK: From what I understand, you have not done an exhaustive study on the potential impact on the whole retirement village sector if this goes through? I am certainly concerned for all regional areas across this state, and especially for the areas in my own electorate. I have many villages throughout Goolwa and Murray Bridge. I guess you can either say yes or no: have you done an exhaustive study on the impact of any statutory buyback? I do not believe there has been. Have some village owners, especially smaller operators, expressed that they may pack up shop and not reinvest in the industry?

The Hon. Z.L. BETTISON: Obviously, that is not the outcome that we are seeking here; we are seeking to find that balance—

Mr Pederick: But have they said that to you?

The DEPUTY SPEAKER: Order! The minister is answering the question.

The Hon. Z.L. BETTISON: I think one of the key things is that this has gone under a considerable amount of consultation. I really do not think you can consider that I have not spent time—in fact, I have been criticised for taking too much time, because I wanted to make sure that we went out there. We had 300 submissions; we had eight weeks of consultation and 13 forums, many of which I attended and held.

One of the key peak bodies is Aged & Community Services, which represents 51 members, and they operate 333 retirement villages, many of which are in regional areas. I have spoken with them at length; they have had great engagement with me. There are 529 villages and 153 operators. Some are very small and some are very large. Some are regional, and some are in metropolitan areas. This bill endeavours to satisfy the requirements of both.

Mr DULUK: I just want to pick up on valuation. I do not have a problem with this buyback per se, and I understand it, but has there been any analysis done by your office in terms of the valuation impact on villages across the whole because of the statutory compulsory buyback? Are we expecting, across the board, the price of villages to decrease and then plateau?

The Hon. Z.L. BETTISON: The majority of residents are relicensed within the 12-month period, so we would actually see that this is unlikely to have that impact.

Mr DULUK: I appreciate the majority are relicensed in a 12-month period, but has there been work done by your office in terms of a valuation impact across the board for this sector, in terms of the implementation of a buyback scheme coming into place?

The Hon. Z.L. BETTISON: Our data has focused on the sale, and the sale of the general real estate market and how that impacts on the relicensing of these market areas. Can I just go back to say again that a resident, after 18 months, can elect not to receive payment and wait until relicensing occurs. Obviously, we are very heavily influenced by the market here, and it changes. So, while it is a licence to occupy, it is also quite heavily influenced by the general real estate market.

It is also influenced if something opens up nearby that is fresher and newer at a different price point. So, there is relatively significant competition in this, which is why people have different business models and different contracts. What we want here is the disclosure so that when you go in you know what your costs are and you know what is going to happen. What we wanted was some certainty. However, as advised, the majority of independent living units are relicensed within that 12 months, so we would not see that impact.

Mr DULUK: I appreciate that, and I and probably the member for Fisher support the right of residents for disclosure, but my question is: has your department undertaken a valuation impact statement on the proposed buyback scheme and what that will mean? I know you have said you have your data on the turnover, but have you actually sat down and mapped out what it will mean when all units come due at 18 months and when you obviously bring back those that have been sitting across the state on a three or four-year waiting period? At that 18-month mark, have you done a valuation impact statement? It is just a yes or no answer really.

The Hon. Z.L. BETTISON: There was a regulatory impact statement back when this was initially produced, but I think you are talking about a regional economic impact statement and that has not been produced. That is why we have had the 20 people who are members of the Retirement Villages Advisory Committee go out to regional areas and have this consultation.

We continue to have these elements within the bill to provide the ability to have the statutory buyback, but we also have the ability for that resident to wait until re-licensing occurs. As I am advised, the majority of relicensing does happen within 12 months, but in some cases it does not. There is still the ability for what I would see not as a major impact on the industry but to give that consumer protection.

Dr McFETRIDGE: Minister, do you know how many examples there are, like the member for Colton's example, of where the clock will start ticking for owner-operators the day this bill is proclaimed and the legislation comes into force? What is the monetary value and what is the economic impact going to be on the owner-operators when this bill is proclaimed and the clock starts ticking?

The Hon. Z.L. BETTISON: We do not have that data so, as of today, I cannot tell you how many residents within a retirement village have indicated that they wish to leave and relicense. I do not have that data. Obviously we know the three ways people leave a retirement village: passing on, going to residential aged care or because it is not for them and they want to either move to another village or go to a different form of accommodation, but we do not have the detail of that.

One of the things I want to be very clear about is that there is quite considerable commercial-in-confidence data that often we find the industry is not prepared to share or does not want to share, because they each have individual business models. One of the things we will do after this is a census to determine some more details about people's motivations and what their thoughts are.

What I actually expect within this industry is significant change. Right now, the average length of stay in an independent living unit is about seven years, but some stay much longer. Now that we have the focus on ageing in place, what I expect you will see is an increase in the amount of personal care services that will be delivered to people in the retirement village, and I suspect many of the providers will deliver those services themselves.

If someone has a home support program or a support package from the commonwealth, and that is determined by the commonwealth, then they can choose how they are going to get those supports into the home. So I would actually expect that we will see people live in retirement villages for much longer than we did previously. I suspect there is some greater movement here within the industry that is impacting on the different changes within that industry as well.

Progress reported; committee to sit again.

Sitting suspended from 12:59 to 14:00.