Retirement Villages Bill

Second Reading

Adjourned debate on second reading.

(Continued from 20 September 2016.)

The Hon. J.A. DARLEY (15:30): This bill has come about as a result of the review of the Retirement Villages Act, which had not been reviewed since its introduction in 1987. It introduces a mandatory requirement to provide residents with a residence contract, disclosure statement and premises condition report. I am supportive of this as it increases transparency and will make it easier for residents to compare different villages.

With regard to the premises condition report, I understand this will outline the condition of fixtures, fittings, furnishings, etc., as well as who is responsible for repairing or replacing an item, and how this will be funded. I have been contacted by constituents who have had disputes with operators over who is responsible for the cost of replacing or repairing capital items and whether this is to be covered by the maintenance fund that most operators require residents to contribute to, or whether it is the responsibility of the resident to cover the costs themselves.

I wholeheartedly support the clarification of who was responsible for what. However, I believe this should be provided to residents prior to the cooling-off period expiring. This will give residents the opportunity to withdraw from the agreement if they do not agree with the terms. As such, I will be moving amendments to ensure that this information is provided as part of the residence contract.

With regard to the time in which prospective residents have to consider documents before signing a contract, the bill currently provides for a minimum of 10 business days. Prospective residents will then enter into a 10-day cooling-off period where they are able to withdraw from the contract without penalty. Industry feedback on this provision was that this effectively meant that operators would need to put units on hold for a month before they have certainty of a tenant.

Industry requested that this be changed to 15 days, as is the current practice. I had drafted and filed amendments to address this, which would have seen operators required to provide documents a minimum of five days prior to a contract being signed at the beginning of the 10-day cooling-off period. However, feedback has overwhelmingly been unsupportive of this. Industry has requested that the paperwork be provided a minimum of 10 days prior to a five-day cooling-off period. However, I hold grave concerns of reducing the statutory cooling-off period from 10 to five days.

Such a reduction would be bad for consumers and I am unwilling to make this change. As such, I flag that I will be withdrawing this amendment. The manner in which exit entitlements are paid has also been outlined in the bill. This is a contentious issue, as industry stakeholders have contacted me with concerns that 18 months will be unworkable for some villages and cause significant financial stress.

Instead, they have requested this be changed to 24 months. I have personally had experience with retirement villages in that I chaired a board of a not-for-profit retirement village. The practice in this village was to pay exit entitlements within 60 days. In reality, exit entitlements were often paid within 30 days of the resident exiting. I understand the average time for a payout is 315 days and that it is only less than 5 per cent of villages that are unable to sell the vacant property within 18 months.

Arrangements for when a resident moves to a nursing home are also outlined in the bill. The provisions allow for greater financial support for residents who want or need to move to a nursing home, but would otherwise have to wait for their old unit to be sold before they could access finances. This is a positive move. I understand some good operators already operate like this and it is good to see that it will now be the standard for the industry.

Late yesterday, SARVRA (South Australian Retirement Village Residents Association) issued a media release in relation to retirement village residents moving into care facilities. I understand the crux of this release was to highlight the fact that the provisions of the bill differed from the provisions which were in the original consultation bill. I have discussed this with SARVRA's president and have today filed amendments to address the concerns they outlined in their media release. I will give further details on this during the committee.

Procedures for the annual meetings between the operator and the residents, as well as for residents' committees, are also outlined in the bill, with a requirement for the operator to consult with residents on certain matters. The bill also contains the circumstances where residents' rights can be terminated, how disputes can be resolved and procedures for having administrators, receivers and managers appointed.

I was alarmed to see that residents' rights could be terminated due to mental or physical incapacity. However, I understand this provision was to address circumstances where it is no longer appropriate for a resident to remain at a village as they are really in need of a facility which can provide care or assisted living and there is no family or power of attorney to make this decision. I understand that in these circumstances SACAT must agree to the decision to terminate residents' rights and would be grateful if the minister would confirm my understanding of this.

This bill is an improvement on the current act, as it provides more protections and clarity for residents. I believe this is important, as some entering retirement villages may be vulnerable and it is important to protect the vulnerable. Most retirement villages operate well, with the interests of their residents being of paramount concern. However, as in all industries, there are bad operators who do the wrong thing.

Providing standards for the industry will improve matters, but there are still concerns from both residents and operators about the current bill. I appreciate this was consulted on widely; however, I believe there is still scope for the bill to be reviewed after three years to see if further improvements can be made.

The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Climate Change) (15:37): I understand that all honourable members who wished to make a contribution on this second reading have done so, so I rise to close the debate. This bill is a result of over three years' significant consultation, which commenced with a parliamentary select committee. This was followed by extensive consultation and development of the bill and subsequent feedback.

I would like to thank honourable members for their contributions in the debate and I would like to address some of the emerging themes, particularly relating to clause 26, the statutory repayment period. Members raised concerns about various aspects of the statutory repayment provision, including protections and the length of period, both for residents and how to ensure that unit sales are not rushed, and what protections there were for small operators. These things were all considered in the development of the bill.

As you may be aware, the original bill that was consulted on proposed a 12-month repayment period. Residents were generally supportive of this, whilst operators suggested that two or more years would be more acceptable. There was a recognition that a 12-month repayment period could carry a high risk of fire sale practices being undertaken, which would be detrimental to both the existing resident and may also impact the value of the other units in the village system. A shorter statutory repayment period may also unintentionally have driven a change in the marketplace to larger operators or to contractual arrangements, with poorer long-term returns for residents and their families.

All stakeholders had varying views at different ends of the spectrum, as you might expect. I would like to extend my thanks to those operators, large and small, country and metro, that provided some insight into their operations, which helped us in drafting the bill. Noting all of this, I think the bill takes a sensible middle ground approach of 18 months, which seeks to successfully balance increased consumer protection with the interests of not-for-profit and for-profit operators across a diversity of community-based organisations.

It has been challenging to determine the impact of these regulatory changes to such a diverse industry where there is little publicly available information about sales within villages. The government invited operators of villages in the state to share information about their current practices relating to repayment periods, including how often and in what circumstances repayment took longer than 12 months. Information was also sought about the residential sales market, as this also plays an important part in the entry into a village. The information provided was used to better understand possible impacts.

It is pleasing to see that there is significant confidence in the retirement village industry in South Australia. I have noted with interest the number of announcements of multimillion dollar village developments currently in the pipeline, as has been relayed to me, and the prospect of new legislation has not slowed or deterred operators. The industry is forging ahead with developments, including: the Carmelite premium apartments in Myrtle Bank by Southern Cross Care; the Uniting Communities development on the Maughan Church site; the ECH will be building in Modbury, I am advised; a boutique village in Underdale by Karidis Corporation is underway; the Brougham in North Adelaide, overlooking the city, is in the pipeline; and Life Care has announced a development on the grounds of the Pedare Christian College in Golden Grove.

Our government has worked in partnership throughout the development of this bill with stakeholders in the retirement living sector, including for-profit and not-for-profit operators, industry specialists, residents and community members. I thank them all for their commitment to this very important work. In closing, I understand that the Hon. Mr Darley has flagged that he is considering lodging late amendments, in which case it is probably appropriate that we do not move to the committee stage today, allowing the opposition, crossbenchers and the government to consider those amendments and come back to it for further consideration during committee.

I would like to thank honourable members again for their contributions. I look forward, once the amendments have been considered, to the speedy passage of this legislation.

Bill read a second time.