Retirement Villages Bill

Committee Stage

In committee.

Clause 1.

The Hon. I.K. HUNTER: Last week, the Hon. John Darley posed a question to the government about the operation of part of this bill in relation residents' contracts being terminated. He asked a question—understandably, because SACAT must agree with the decision to terminate residents' rights—and said, 'I would be grateful if the minister would confirm my understanding of this.' My advice is that is correct, and I can point him to a couple of parts of the legislation. If he goes to clause 4—Interpretation, subclause (2)(c)(iii) provides:

if—

(A) the operator decides to terminate the person's right of occupation under Part 3; and

(B) the Tribunal confirms the operator's decision to terminate the right of occupation,

Under the interpretation there is an 'and' connection, which requires the tribunal to do that work. Further, under clause 42, he can feel some degree of comfort that division 6, clause 42(1)(d) provides:

the residence becomes an unsuitable place of residence for the resident because of the resident's mental or physical incapacity—

which was the issue he was concerned about—

and the operator terminates the resident's right of occupation on that ground; or

Then, over the page, subclause (8) provides:

The operator's decision to terminate a resident's right of occupation under subsection (1)(c), (d) or (f) is ineffective unless the Tribunal, on the application of the operator—

(a) is satisfied that proper grounds, which are sufficiently serious to justify termination of the right of occupation, exist; and

(b) confirms the operator's decision.

So, that is the protection that the honourable member sought clarification on.

Clause passed.

Clauses 2 and 3 passed.

Clause 4.

The Hon. S.G. WADE: I move:

Amendment No 1 [Wade–1]—

Page 7, lines 24 and 25 [clause 4(1), definition of special resolution, (b)]—Delete '(either in person or by way of an absentee vote exercised in accordance with this Act)'

The provisions about absentee votes and secret ballots are a matter for balance, but in terms of getting that balance right we need to be aware of not only the importance of making ballots accessible to people who, for example, might have mobility issues within a retirement village, but also, in my view, the risk of manipulation of absentee vote arrangements.

On balance, the Liberal team thinks that the integrity of the process is better maintained by not allowing absentee votes. We think there is a significant risk that particularly operators might facilitate absentee votes and undermine the expression of the will of the residents of the village as they seek the support of the council for this amendment.

The Hon. I.K. HUNTER: The amendments moved by the Hon. Mr Wade on behalf of the opposition will not be supported by the government for these reasons: residents, I am advised, have consistently requested that the legislation be changed to enable residents who are unable to attend a meeting for various reasons to be able to vote on matters arising at the meeting. Allowing absentee voting encourages greater participation, of course, by residents to have a say in what is happening in the village. It also provides a voice to those residents who may not be able to attend meetings for various reasons.

Concerns have been raised, I am advised, about pressuring or bullying of residents occurring in the village to make them cast their absentee vote in a certain manner. The 2015 bill allowed for proxy voting, which was subsequently changed to absentee voting to address concerns about residents being pressured in relation to their proxy vote. An absentee vote will go directly to management, avoiding the pressure that might arise from proxy voting. We believe that is a significant compromise to overcome some of the concerns raised by the Hon. Mr Wade.

The Hon. S.G. WADE: In some ways it heightens them because at least with a proxy vote the power is not concentrated in the operator. If a single operator chooses to manipulate the process, there is no oversight. Remember, this is not absentee voting or proxy voting in a supervised election such as one might have in a governmental election or, for that matter, even a trade union election. This is an operator without any control, and in that context there is, as I understand it, not even a provision for the absentee votes to be examinable. The operator could claim the votes, claim the outcome, and not have to verify it.

The Hon. I.K. HUNTER: The only point I would raise in rebuttal is the advice I have is that the pressure to vote in a particular way usually comes from other residents; hence the desire to get a proxy vote from the resident, not from village operators. This is actually a protection for the residents so they do not feel like they need to respond by handing their proxy over to another resident who is applying pressure to them on a particular issue.

The Hon. S.G. WADE: I should stress that I am not advocating for a proxy vote. I am advocating for a direct democracy.

The Hon. J.A. DARLEY: I will not be supporting the opposition's amendment.

The Hon. R.L. BROKENSHIRE: I advise you that we will not be supporting the absentee vote amendment by the opposition.

Amendment negatived; clause passed.

Clauses 5 to 17 passed.

Clause 18.

The Hon. S.G. WADE: I move:

Amendment No 2 [Wade–1]—

Page 14, lines 8 and 9 [clause 18(2)]—Delete subclause (2)

My understanding is that the government has every intention of protecting against self-incrimination. There is already a provision in clause 18(2). There was some doubt, in the way that it was drafted, that it might not apply to clauses 16 and 17. Amendments Nos 1, 2 and 3 seek to remove that doubt. For the same reasons that the government included protection against self-incrimination, I seek the support of the council for this amendment and the subsequent amendment.

The Hon. I.K. HUNTER: The government will be very happily supporting the Hon. Mr Wade's amendments Nos 2 and 3. These amendments aimed to confirm the protection against self-incrimination applies in relation to all clauses where an authorised officer may request information from a person. By creating a separate clause relating to self-incrimination, it does clarify that this protection extends to the whole division and will address concerns raised by operators over the current bill. We are grateful to the Hon. Mr Wade for moving the amendment.

Amendment carried; clause as amended passed.

New clause 18A.

The Hon. S.G. WADE: I move:

Amendment No 3 [Wade–1]—

Page 14, after line 12—After clause 18 insert:

18A—Self incrimination

A person may refuse to comply with a requirement of an authorised officer under this Division to provide information if the information might tend to incriminate the person of an offence.

As the minister has already kindly indicated, we regard this as consequential.

New clause inserted.

Clause 19.

The Hon. J.A. DARLEY: I move:

Amendment No 1 [Darley–2]—

Page 14, after line 33 [clause 19(2)]—After paragraph (c) insert:

(ca) detailed information about who will be responsible for repairing or replacing the fixtures, fittings and furnishings provided in the residence and how the cost of repairing or replacing such fixtures, fittings and furnishings is to be funded;

This is a very simple amendment. Clause 22 outlines that an operator must provide a resident with a premises condition report, which is to outline who will be responsible for repairing or replacing the fixtures, fittings and furnishings and who is responsible for payment. The aim of my amendment is merely to have this information provided at the same time that a resident's contract is provided.

The bill currently allows for this information to be provided after a resident took occupation of the premises and may have occurred outside of the cooling-off period. This could be a problem if a resident does not agree with the repair and replacement provisions. By providing this information up front, if a potential resident is unhappy with the provisions they are able to withdraw from the contract during the cooling-off period with no consequence.

The Hon. I.K. HUNTER: The government is pleased to support the Hon. Mr Darley's amendment. The removal of information from the premises condition report and insertion into the contract may, we suppose, complicate the contract; however, it may also assist in the resolution of disputes and provide further transparency for prospective residents and so we are pleased to support the Hon. Mr Darley's amendment.

The Hon. S.G. WADE: The opposition also supports Mr Darley's amendment.

Amendment carried.

The Hon. S.G. WADE: I move:

Amendment No 4 [Wade–1]—

Page 15, after line 7—After subclause (3) insert:

(4) A residence contract will not be taken to be validly entered into unless the resident, at the time the residence contract is entered into, gives the operator a notice in writing advising the operator that the resident has obtained independent advice in relation to the contract (in accordance with any requirements prescribed by the regulations).

The minister referred to the transparency elements and the Liberal team welcomes this bill as it supports the transparency of transactions and the provision of consistent information and consumer understanding. One of the fundamental problems in relation to this sector, in terms of promoting community understanding, is the problem we have with the variety of titles that people are offered. As I understand it, the main types of arrangements offered are strata, community title, a licence to occupy, leasehold, and so forth, so it is often not easy for people to identify what in fact they are buying. I suspect that most people think they are buying a fee simple, which is not what they are getting.

I quoted the McCrindle Baynes report, a respected industry report, in my second reading, which highlighted that 93 per cent of recent purchasers regarded the deferred management fee as unreasonable and 13 per cent stated that they did not understand it. The report, in one of the few pieces of analysis in terms of consumer understanding, says:

This clearly identifies that new residents are still not achieving a clear understanding of the contracts they enter when joining a village—with the consequence that conflict and increased regulation is likely with the increase in consumer advocacy from the upcoming Baby Boomer generation.

The amendment proposes that potential residents would not merely be advised to seek advice, but that they would be expected to indicate to the operator that they have sought advice. I must stress that I am not talking about independent legal advice. I am not envisaging that all people would need to go to a lawyer. In fact, many lawyers, because of their lack of familiarity with the licence to occupy product, may not be well placed to advise them anyway.

I think independent advice, such as the monthly information sessions that are provided by the Office for the Ageing, would be a useful opportunity to alert potential buyers of the pitfalls and strengths of this industry. People often leave the decision to leave their family home rather late. Surveys show that health problems remain a predominant reason to move, so many of the people considering purchasing retirement village properties are vulnerable, they are under stress and, I believe, they are better protected by being given an opportunity to be better informed. The Liberal Party considers that insisting that residents receive advice is likely to reduce problems going forward.

The Hon. I.K. HUNTER: Whilst we have some sympathy with the desire to ensure residents go into a contract with their eyes wide open, we believe this is not the way to do it and is probably bad practice. We will not be supporting Mr Wade's amendments Nos 4 and 5. Legislating that an independent person must seek advice, we believe, is too prescriptive. The advice provided may not be appropriate or accurate, or may not even come from the appropriate person. The disclosure statement, I am advised, will advise residents to ensure they understand the contract and will recommend that legal and financial advice is sought prior to signing.

This statement, I am advised, will be in a prominent position on the front of the disclosure document. The regulations currently require the contract to include a statement, in conspicuously bold type, advising a person they should seek independent legal advice and new regulations will also require this, but to compel them to give an operator a notice in writing advising that operator that the resident has obtained independent advice, I would say is just encouraging, and putting into legislation an encouragement, for some people to in fact lie or perjure themselves, in this regard.

I do not believe it is good practice to do that and it also may, potentially, for those people who do not wish to get advice but will sign the form saying they got it, open them up to some unknown contractual liability down the track. I do not think we want to be in a position where we are putting people in that spot in legislation. So, for those reasons we will not be supporting the amendment.

The Hon. R.L. BROKENSHIRE: We sit comfortably with the fact that we believe the disclosure statement does cover and protect. We support the caveat emptor, let the buyer beware, but these people are also adults and they have, most of the time, gone through many transactions in their life. They are putting hundreds of thousands of dollars, on most occasions, into their investment in the retirement village, and we sit comfortably with the fact that it is covered in the regulations. So we will be sticking with the government on this amendment.

The Hon. J.A. DARLEY: I have some questions for the Hon. Mr Wade—and, I must admit, he has partly answered some of them. The amendment indicates advising the resident that they must give the operator a notice in writing advising that they have obtained independent advice in relation to the contract. My questions are:

1. Is this relating specifically to legal advice, or would it be sufficient to consult with family or friends?

2. What would happen in the case of the operator providing advice to the resident and then advising the resident that this is sufficient advice to fulfil the requirements of this clause?

3. If obtaining legal advice, will a note from the resident suffice, or will a letter from a lawyer be required as proof of that advice?

The Hon. S.G. WADE: Now I know how a minister feels when you roll three questions into one and you have to try to unravel them all, so if the honourable member might remind me if I miss some. In terms of what form will be acceptable, I refer the honourable member to the statement in parentheses at the end of the amendment, which reads 'in accordance with any requirements prescribed by the regulations'. What I am anticipating is that there might be a range of advice that is prescribed by the regulations. Two obvious examples would be: advice from a financial or legal adviser, but in particular I am thinking of the monthly information sessions that are provided by the Office for the Ageing.

In terms of what else might be acceptable, I think that is a matter that the industry—the operators and the residents' representative organisations—might well want to discuss as the regulations are developed. The point is that I expect if this provision was in place, most people would actually choose the OFTA-type approach of going to a monthly information session just to, if you like, be made aware of what they need to beware of.

The Hon. Robert Brokenshire must know a different group of people than I do because most people buy one or two houses in their life. They have been dealing with fee simple. They would probably never have come across a product called a licence to occupy. They would never have come across a product called community title or strata title. They would never have had a leasehold for a residential purpose. It is one thing to say, 'Buyer beware,' but the buyer needs to be informed enough to be able to beware.

In terms of the development of independent advice, I expect that, in the face of this sort of provision, operators will want to make it as easy as possible for their potential purchasers to be as informed as possible. I would expect that one of the things the operators might well suggest is, 'We love the Office for the Ageing seminars, but we will be having ours as well. Are you comfortable with that?' Presumably, you would have some accreditation, almost, of the seminars. OFTA provides them monthly. If there was an expectation that people would be informed before they make a decision as significant as this one, I believe you would find that these seminars would be quite regular. You might have different ones in different weeks on different opportunities.

Let us remember that, indeed, these are adults, but the evidence shows that they are often at a very vulnerable stage. Often, they are driven by health issues. I can think of one advocate I got to know through this process who had to make a quick decision to go into a village because of the illness of his wife. His wife is no longer with us. The situation for people in the later years of their life can often be very dynamic, and they are being expected to grapple, often at times of stress, with a totally different product—a product which, to be honest with you, until my parents moved into a retirement village recently, I did not know even existed.

The Hon. I.K. HUNTER: It is important to drill into this because the Hon. Mr Wade has just indicated, I think, some of the horrible problems with what he is proposing in his amendments. He says that he believes the Office for the Ageing monthly information sessions would be sufficient. I do not think that is right. His amendment says:

…gives the operator a notice in writing advising the operator that the resident has obtained independent advice in relation to the contract…

The Office for the Ageing, I am advised, does not give information about a contract or 'the contract'. They offer general advice. This is a government organisation. They cannot offer information about the contract because, if that contract goes wrong or something happens down the track, that government officer could be liable for the advice they gave.

The Office for the Ageing's monthly sessions are about general advice about what to look out for and what issues you need to be alive to, but the amendment from the Hon. Mr Wade says 'independent advice in relation to the contract'. Again, I come back to my other point: do we want to be putting into legislation a requirement that some people—not all, but some people—will just ignore and sign a form saying they have received independent advice when they have not? If that is how we legislate, I think that is very bad practice.

The Hon. T.A. FRANKS: The Greens were originally quite concerned that, indeed, this did constitute legal advice and shared some of the questions that the Hon. John Darley raised, but we had a briefing from the Hon. Mr Wade that outlined very much what he has made known to the council in his response in the last few minutes. However, while tending to want to support this, I cannot support the actual wording in the way that it has been put. I put on the record that the idea that COTA and other groups should be providing, and should be supported to provide, advice is very much something that the Greens would like to see more of.

The idea, as Family First put forward, that it should be a case of 'Buyer, beware,' does not give us comfort. These people are buying a product that they will probably only buy once, and it is possible that their families have not had any experience with this before. Certainly in my family we have not had any experience in dealing with retirement villages and this particular product. We support education and would encourage the government to ensure that is more widely available. While wanting to support the opposition's amendment in principle, we will not be doing so in this situation.

Amendment negatived; clause as amended passed.

Clause 20.

The Hon. S.G. WADE: My amendment No. 5 is consequential and I will not be moving that one.

Clause passed.

Clause 21.

The Hon. S.G. WADE: I move:

Amendment No 6 [Wade–1]—

Page 16, lines 7 to 11 [clause 21(c)]—Delete paragraph (c) and substitute:

(c) if the contract relates to a retirement village already established—

(i) the financial statements presented at the last annual meeting of residents of the village, including a written statement of any subsequent change in the affairs of the village and the operator that may significantly affect the resident's decision to enter the village; and

(ii) a copy of the minutes of the last 2 annual meetings of residents of the village (if 2 or more such meetings have been held) or of the last annual meeting (if only 1 such meeting has been held);

I mentioned in the previous clause that, as I understand it, there are four significant forms of title. My understanding is that over 90 per cent of retirement villages are actually licensed to occupy, but two of the other significant classes are community title and strata title. In the community title and strata title legislation, there is an obligation to provide the minutes of the last two meetings of the corporation. I understand that is a way to highlight to a potential resident issues that might have been at play in the life of the village.

In that sense, a significant number of current retirement village residents are already getting access to these minutes. To me it seems to be a good way of bringing any issues to the attention of potential residents. If my memory serves me correctly, this is a proposal that was put to us by resident advocates, and if we believe that buyers should beware, then buyers need to be informed.

The Hon. I.K. HUNTER: Again, we are sympathetic to the aims of the Hon. Mr Wade, but we do not believe this is a useful way of getting extra information to prospective residents and we do not support the amendment. I am advised that these financial reports are quite large. To do two years' worth of reports, I am advised you are looking at something between 40 to 80 pages of what is effectively a financial reporting system. So, it is predominantly about the financials of the institution.

Some people would be trained up to be able to read those documents and many people will not be able to. Of course, that extra cost would be passed on to the residents, and we think that is an onerous provision in that respect as well. The concern is essentially this: if we believe that mandating giving two years' worth of financial statements to a prospective resident will acquit the village owner of any other duty to provide information, in fact that is probably not the information the prospective tenant needs. They probably need further information in a much more readable and digestible form.

Whilst we are not opposed to actually giving them the financial statements if they ask for them—I am sure villages would do that— we think it is overly onerous to require a village to give these statements to every prospective tenant. It is probably not going to give them the information they require, and will probably make the village feel like they have acquitted their duties by giving them these financials when they should be giving them something else instead.

The Hon. R.L. BROKENSHIRE: I advise that Family First will be supporting the opposition's amendment. I do not believe it is a very difficult task for a professional retirement village to provide a copy of one or two annual general meetings. When I was in the House of Assembly I was intensely involved with some residents of retirement villages. I have mentioned in the second reading speech that whilst most of them do a great job, unfortunately there are some that do not, and that is part of the reason behind amending this legislation.

I do not believe it is a difficult job at all; I do not believe that it is going to be a very costly job for an effective and efficient secretary of a retirement village proprietor to provide. Not only is it important that they see the financials, but if the minutes are a true record, which they should be, of the annual general meetings, it will also reflect if there are concerns in that village. They will get a good feel of just what is the ethos of that village and whether any concerns have been raised, particularly for two years in a row.

Where you have had residents at the annual general meeting bringing up issues that are not addressed, then clearly that honours the caveat emptor, 'let the buyer beware', that I talked about earlier, because the buyer would be very much aware that either the financials are tight, that there are questions around the outgoings or that matters have been raised at the annual general meetings that show that there are concerns in that village. For those reasons, we will support the amendment.

The Hon. S.G. WADE: I thank the Hon. Mr Brokenshire for his comments. I did not want to cut off the Hon. Mr Darley, but I wanted to correct the record of what the minister is suggesting. The minister is suggesting that my amendment would impose an obligation to provide financial statements from the previous meetings. In that regard, all my amendment does is restate what is already in the bill.

The current government bill, clause 21(c), already requires financial statements. All my amendment does is add to that a new subclause (ii), which talks about the copy of the minutes. So, the onerous financial obligations are not being imposed by me; they are being imposed by the government. I support them. All I am doing is saying that, as well as the financial statements, let us also send the minutes.

I spoke to a resident advocate, because I was shocked to think that resident meeting minutes would be 40 pages, as the government suggested. They suggested that their village was about four pages each; eight pages ain't too much to me.

The Hon. T.A. FRANKS: The Greens will support this amendment. We note that it does not actually require that they be printed out, but, even so, 40 pages is a small price to pay for peace of mind.

The Hon. J.A. DARLEY: I will also support this amendment of the Hon. Mr Wade, based on my experience of 10 years running a retirement village.

Amendment carried; clause as amended passed.

Clause 22.

The Hon. J.A. DARLEY: I move:

Amendment No 2 [Darley–2]—

Page 16, line 23 [clause 22(2)(a)]—Delete '(an item)'

This amendment is consequential to my former amendment.

The Hon. I.K. HUNTER: The government supports it.

The Hon. S.G. WADE: For the sake of harmony, we support.

Amendment carried.

The Hon. J.A. DARLEY: I move:

Amendment No 3 [Darley–2]—

Page 16, lines 25 to 26 [clause 22(2)(b) and (c)]—Delete paragraphs (b) and (c)

This is also consequential.

The Hon. I.K. HUNTER: The government supports it.

Amendment carried; clause as amended passed.

Progress reported; committee to sit again.