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House of Assembly - Fifty-Second Parliament, First Session (52-1)
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STATUTES AMENDMENT (COMMUNITY AND STRATA TITLES) BILL

Second Reading

Adjourned debate on second reading.

(Continued from 7 April 2011.)

Ms CHAPMAN (Bragg) (11:03): I rise to speak on the Statutes Amendment (Community and Strata Titles) Bill 2011 and indicate that the opposition will not be supporting the passage of this bill and, specifically, we will be seeking that the government withdraw it and undertake a substantive consultation with the stakeholders and ensure that any future bill addresses development contract enforcement. That is our position and that is what we will be asking the government to do. Its passage through this house today, therefore, given that we also can count, will not be with our blessing.

The history of this legislation is that the Attorney-General tabled this bill on 7 April 2011, and there had been a draft that had been presented, apparently, for some public consultation in December 2010. One of the difficulties that the opposition has, may I say at the outset, in understanding and therefore either appreciating, acknowledging or recognising the level of consultation in these exercises and therefore, if appropriate, our acceptance that it has either been adequate or, indeed, at least comprehensive enough to satisfy us, is that there is a complete cone of silence and shield of secrecy around who gets told what, what submissions they are invited to present and what they say.

Sometimes—I say this broadly—the Attorney-General sends a letter to myself, and presumably other members of the parliament, to say, 'There is a discussion paper attached on XYZ and you are invited to make a contribution about some proposed reform.' We thank the Attorney on these occasions that at least we are informed about an idea that he might have, whether it is a spark of genius, whether it is a perilously erroneous path that he is about to take or whether it is just to follow through on some ridiculous announcement that his leader has made in some previous election campaign. However, on some of those occasions we do receive an invitation to make a submission, or at least be aware that a review is underway. What is kept secret is who gets asked.

It is very interesting that when we go to briefings, which we attend in the usual course, we ask the representatives from the government who are there, or members of the department who are carrying out the consultation in pursuit of this legislative reform, 'Who has been consulted?' Sometimes they are quite helpful and they say, 'We have considered the various departments, we have gone through the usual suspects in legal stakeholders.' That might be the Bar Association or the Law Society if it is a legal matter, or the AMA if it relates to a public health issue, etc.

That can be quiet helpful because, if one is given sufficient time, then at least the opposition, or any member of the house, has the opportunity to follow up with that organisation to ascertain whether they have a particular view, whether they have considered the information provided, whether it has been enough to give them the full story and/or whether they are mindful to accept the principle being pursued but are concerned about the machinery that is about to be implemented. They may have one or a raft of amendments that they think might improve that position.

In that regard, that can be quite helpful too, because sometimes the Attorney-General, in carrying out his portfolio law reforms, if he considers it appropriate, is able to either adjust the terms of the bill that is ultimately laid in the parliament and/or make a contribution during the debate by tabling a number of amendments. Although I have not read them yet, I note that there have been some amendments tabled for this bill—106(3). I do not know yet whether it will remedy some of the issues that we are raising, but I will certainly look at that as soon as practicable.

Let us consider then what has happened in this scenario. This bill, tabled 7 April 2011, has been out to some form of public consultation in December 2010, and an assertion by the Attorney-General that the new regime that is proposed would improve protections to consumers. That is usually a very important aspect of a bill's attraction; that is, to think that it is to help the poor little humble consumers out there in the real world. It usually indicates to me that it is concealing some other mischief, and one needs to be careful of whether it really is the wolf in sheep's clothing.

In any event, it is always impressive to hear that there is some element of consumer protection provided, which, in the end, actually delivers consumer protection and which does not place a heavy burden on others that will ultimately come back at a major cost to consumers. That is the sort of thing that we are on the alert for when we hear these grand assertions.

Buying a unit in a strata and community title development does come with certain areas of responsibility, because, unlike the acquisition of a piece of real estate—that is, the purchase of a fee simple interest in a dwelling, property, or structure on a piece of land, with or without its improvements—where it is just one dwelling and it is somewhat more streamlined and able to be quarantined from all the complications that come with buying into an a strata entity, with a strata title there are inevitably shared areas of use, shared amenities and shared responsibilities.

I will say that, on our understanding of the history of this matter, a 2003 discussion paper led to a bill in 2008 under former attorney-general Atkinson. My recollection, although it is hazy regarding the debate and what happened, is that it did not advance very far and there were more complications. If my memory serves me correctly, I thought some issues had been raised and, in fact, I think the current Attorney-General, as a backbencher, had had some involvement in not just real estate reform but that this was the sort of issue that needed to be picked up.

I also say at the outset that I do—as I am sure a number of members of this house do—have some understanding of the complications that come with buying into a community or strata title. In my own case, one of my relatives—my grandmother, in fact—had a unit in a corporation which was transferred to strata title here in Adelaide and, from time to time, I would attend strata meetings on her behalf as her proxy.

This group of units was managed by a strata company. I think there is probably only a handful of them operating in Adelaide and they undertake most of the strata management of properties, and they are quite specialised in what they do. Essentially, one of their appointed representatives convenes the meeting and basically provides all the secretarial duties and ensures that proper compliance is met. Largely, they are paid a management fee to advise the owners at these meetings of the progress of maintenance of the community areas, or areas of joint responsibility, and are able to seek, by resolution, their support to progressing maintenance which can occur.

For example, if the property has external gutters that service the removal of stormwater from all the property and they are considered to be the responsibility of all of the tenants, then the manager might obtain some quotes for their maintenance, repair or upgrade, present those quotes to the meeting and seek approval to expend the funds to maintain or improve, as I have indicated. Certain rules apply in relation to a certain majority for decisions for them to have authority to proceed.

On other occasions, usually annually, a resolution would be put to the members as to how much money would be put into the fund to maintain areas of joint responsibility, and a levy or fee would then be issued to each of the owners for payment. Those moneys would be received, supervised and accounted for back to the meeting and in the annual report by the strata manager. It was a fairly basic sort of service, but it was necessary to appoint someone who was independent to do it.

Under the old corporation model, it was a shareholding interest which gave an entitlement to occupancy of the unit. That was a bit tighter sort of process, where a secretary of the corporation would be appointed, there would be meetings amongst the members and, again, they would go through the process of resolving how they would deal with areas of joint responsibility, but that was probably much more internal.

One of the difficulties with those sorts of structures (and hence the transfer by a number of them to the strata system) is that it made it more difficult to sell a shareholding interest in these corporations, and they were not as marketable. So, often the value of the premises, and the space they occupied, were diminished or discounted, and there was some attraction to moving to the strata system. In any event, certainly at the time of my grandmother's transfer, which is now some 20 or probably 30 years ago, it was accepted by the shareholders of the corporation that it would be of benefit overall to transfer to a strata system.

There is no doubt, however, that, when a group has to make a decision about what is going to be happening in an area of joint responsibility, it can be a bit like a family: you can have a roundtable meeting around the kitchen table. You can have a discussion; there can be some dissidents; there can be some who say they should not be spending any money on buying a new car, for example, and others will say they should. So, there will always be some diversity of view about whether developments should occur, whether a piece of equipment should be acquired, or whether certain maintenance particularly should be undertaken.

One of the common areas under consideration at the moment is circumstances where people living in a community entity of a number of dwellings together have only one water meter to their property. This is quite common, as we know (it has been very public), for those who live in groups of housing trust, or housing unit, accommodation, where they have only one meter. Prior to this government's changing the water pricing regime for consumers, the allocation of water to housing trust tenants was essentially a cost picked up by the South Australian Housing Trust.

Now it is to be metered and, when it is over a certain amount of water, a bill is to be sent. It has become the practice of the government that they will simply divvy up the bill; so, if there are 12 dwellings in one group of units, they will each get one-twelfth of the bill. On the face of it, one might say, 'That's reasonably equitable.' Of course, the simple approach always comes with complications.

The sort of thing that causes disquiet about this type of model is when we find that a family of six lives in one unit and an 80-year-old widow lives in another. She might have a bath once a week, is very conservative with her water and only has a cup of tea in the morning and very little other liquid use during the day; she does not have a garden to water, just a little pot plant on the sill; and she is a very modest consumer of water—but very proud of her little pot plant. Next door, there are six people who are obviously using a significantly greater amount of water because there are children who go to school, play sport and might need a couple of changes of clothes, etc., and people going to work and need to launder their clothes a lot more. All the usual things that come with families—

Mr van Holst Pellekaan: And lots of visitors!

Ms CHAPMAN: And lots of visitors, indeed, the member for Stuart reminds me. When one has children living in the house you are usually feeding someone else's children most of the time. So there is extra consumption of lots of things and electricity and water, of course, are two of them. If you have a system which simply divvies it all up and there is a profile of occupants which is quite diverse then, inevitably, you end up with an inequitable system.

On that issue we have begged the government repeatedly to agree that it not have this system of charging their tenants until they give them access to their own meter. That would not only reward the water savers but it would ensure that the water wasters are not unfairly passing that cost on to some other neighbour. Of course, the government has consistently refused to consider that, but we think at a cost of under $300 per installation it would be sensible.

What has happened in areas in the independent or private sector, such as a group of 12 units under a strata arrangement? Some of them, I am told, have historically done just as the government is doing to its housing trust tenants—that is, they have one meter and they distribute it as to one-twelfth of the cost at their meetings when they receive it, or copies go out to everybody to pay one-twelfth each. In those circumstances, that is not uncommon, I am told by people who are in these arrangements, especially when it is very small and there might be only four or six in a strata, but also especially when the profile of the occupant is similar, that is, a single or a couple who are perhaps mature-aged as the general profile of those living in the households.

There is an acceptance that one or other might use a bit more water if they have a car that they might wash—although, of course, you have to be careful when you wash a car these days because there are all sorts of rules saying you cannot use a hose anymore—but the important thing here is that, as a group, they have a discussion at their strata meeting about whether it is even worthwhile to have the expense of everyone having their own meter, and they accept that there is a judicious use of water in their households and that everyone is on the same wavelength and they continue on quite happily.

Others have told me that they have discussed it at their meeting and it is thought by some, perhaps, that there might be one or two in the group who are much greater water consumers. Sometimes I have heard some quite flowery descriptions about the alleged waste by one or two of their neighbours and they are quite hostile about it. Many people in our community are very conscious about protecting water consumption in this state and they are very alert to the fact that it is important to preserve this natural resource and so they get a bit cranky when they see a neighbour who is wasting water.

In those circumstances the strata can meet, and a number of them say they have done that and said, 'Well, we think it is worthwhile each installing our own meter and transferring to that system.' One of the things necessary here usually is that you cannot just do it for one—there has to be an agreement. So by a majority decision it is resolved that it would be fairer, more equitable, that they pay the few hundred dollars each, have their meter installed and are actually able to then maintain their own judicious consumption and also ensure that they are not relying unfairly on a neighbour subsidising their consumption. That is the type of situation where we have an area of community responsibility when decisions need to be made.

There are others—it is not just maintenance or infrastructure discussions. I can recall another occasion when the strata manager was asked to call a special meeting. The issue was the apparent illegal parking of persons unknown but believed to be an acquaintance of some of the other occupants on the public property, on the area of community ownership. So that members can follow this important illustration, this was a block of 12 units, six of which had car garages and the other six did not. It was obviously built in an era when not everyone had a car and, furthermore, in those days some people did not want to have to purchase into a corporation, a shareholding, which meant that they would get a carport that they did not need. They were really just looking for a dwelling on a main road, with access to public transport; they did not want the expense, so they paid a lesser capital fee to the shareholding in the corporation.

This was a set-up where six had car parks and six did not. In the era of this strata group of units being built, not everyone had their own motor vehicle, nor did they seek to have one. Things have changed. A few years ago it became apparent that, having moved from a corporation arrangement where you had to have the other people's permission if somebody lived in the unit other than yourself—a family member had moved on and they had moved to a strata and some of the owners had then started to rent out their units—instead of being a community where everyone knew each other as owners, there was sometimes a regular turnover of occupants in these units as tenants; some would be students who were going to university and they would be sharing a unit.

Not surprisingly, here we are in the 21st century and a lot of these people had cars, and they had nowhere on site to park in a garage because the rules of the strata required that all of the other public area on the block of units was to be kept free of anything, including vehicles. So, if you visited somebody in this property and you could not use one of the carports at the invitation perhaps of another owner, you had to park on the street, around the next road or whatever, and that was the arrangement.

Nevertheless, some occupants decided that they wanted to park anyway, so they just decided they would park. They did not park on the driveway, where the other cars would come in and out, otherwise they would block the access of those people, they just parked on the lawn. There were nice little neat patches of lawn the occupants and other owners had proudly kept clipped and everything else, and next thing was that some of the tenants or their friends—persons unknown—would just come in, rip in in their car at midnight and park it on the lawn. In winter it become a quagmire and in the summer a dust bowl.

Not surprisingly, a special general meeting had to be called, and there had to be a discussion about what could be done about this and a request put to the strata manager as to what should be done, as there was a clear, deliberate flagrant abuse and disobedience of the rules of the owners. Because there were persons—apparently other than the owners or their authorised tenants—parking in this way on their private property, there was a question of whether it became a civil matter to identify these vehicles, sue these people for the damages caused, or whether in fact it should be reported to the police and that this property unlawfully parked on this private area could be removed. So, we went through all that process.

Of course, it is one example, I would have to say, where the strata manager at the time seemed pretty reluctant to really do anything about it. The tenants were saying, 'Well, somebody's got to do something about it. We're having our own property damaged. This lawn area is dug up. We can't use it ourselves. It's a mess. It depreciates the value of our property,' apart from the fact that it was unsightly, and so on.

Ultimately it was resolved, members would be pleased to hear, by the occupiers themselves paying for bollards to be put up to protect against people parking on their property. It is not unique that people have to spend money to sometimes protect private property, but it was one of those examples, I think, where we needed probably to look at protecting the occupants of a property where there is a dispute between the occupiers and owners as to how a problem is addressed or whether or not it should be addressed, and then a resolution process.

I have always felt that there must be some way that we can improve legislation to protect in those circumstances and to protect minority interests. There is a whole welter of law out there to protect minority interests as shareholders in companies, but I think that there have been some deficiencies in the area for those in a strata or community title arrangement.

I also make one other general observation before commencing on this, that is, I think it should always be understood here that the nature of the title to which one abides to be able to occupy or own a property can have a very significant effect on the value of what the consideration is to pay for it. For example, as I said, you could have an estate in fee simple of the ownership of a single dwelling on a piece of land which you have purchased, or the improvements thereon, and you do not have to deal with anyone else (apart from neighbours) but you do not have a shared responsibility about which there needs to be consultation.

You can go through myriad different types of legal ownership or legal entitlement which graduate down to the rights that you have in an exclusive way. The other end of the spectrum is where someone acquires a right to occupy, for example, which is common in a number of retirement-type facilities. I visited one in the member for Light's area some time ago in my shadow responsibilities for ageing, and they essentially pay a fee to have a right to occupy.

They are entitled—a little bit like an aged-care home—to have a portion of it back, diminishing in percentage according to the number of years that they occupy the property. There is no actual legal ownership of property for the purposes of defining the applicability of stamp duty and/or land tax, so it is not a property interest, but it is one which gives them a right to occupy. For some people, this is a really important product to be able to access, usually because it is much cheaper in the capital moneys needed to actually acquire it. That is why it is important that, as best as we can, we offer different products that will provide a home for people on the clear understanding, though, that with diminished capital consideration, frequently there is much less protection, much less exclusive control and much more vulnerability to having to acquiesce to the wishes of others.

Let's go back to this particular bill. The general proposal under this bill, which, as I say, amends the Community Titles Act 1996 and the Strata Titles Act 1988, purports to do the following things. Firstly, it will provide for pre-contractual and contractual disclosure for body corporate management contracts. Secondly, contracts for the management of a corporation will be limited to two years, will need to be in writing and must specify identified matters. Thirdly, a strata corporation will be able to revoke a delegation of its functions to a body corporate manager at any time even if there is an agreement to the contrary. Community corporations already have this right.

Fourthly, commercial body corporate managers will be required to maintain a policy of professional indemnity insurance providing cover of at least the amount prescribed by regulation. Apparently it is $1.5 million per claim in Victoria and that is recommended to be copied. Fifthly, the corporation itself will also be required to buy a fidelity guarantee insurance. Sixthly, it will clarify that the appointment of a proxy or a power of attorney can be revoked at any time and limits the life of proxies to no more than 12 months.

Seventh, it will provide that strata corporations can impose a penalty of up to $500 for breach of a by-law; and eighth, it will provide a mechanism for the members of a community scheme by a majority vote to agree to insure some or all of the buildings in a community scheme through the agency of the corporation.

There are a number of other aspects which I will quickly summarise. Firstly, all owners will be entitled to inspect any records of the corporation in the possession or control of the body corporate manager within three business days of a written request. Next, it will raise from $3,000 to $10,000 the income threshold for exemption of community corporations without managers from being required to have an audit. Any owner may apply to the Magistrates Court for an order requiring an audit, with the court determining who meets the cost.

Next, where the corporation intends during the developer control period to delegate functions or powers to a body corporate manager or to enter into a contract for services, the developer must exercise reasonable skill, care and diligence and act in the best interests of the community corporation as it will be constituted after the developer control period ends. A strata corporation special resolution is passed if no more than 25 per cent of all lot holders vote against it at a validly convened meeting. Deposits for off-the-plan sales are to be held in trust.

Next, there will be provision for a mechanism to enable requirements to be placed on developers to provide security for fulfilment of their obligations under development contracts and to provide for applications to cancel or amend a strata or community plan to be heard in the Environment, Resources and Development Court rather than the higher courts. Finally, council's power to require an owner to rectify or demolish a building will apply to buildings that form part of a strata or community title development without the need for approval of the works by the corporation.

I think these reforms fall into three categories. One is to introduce a regime which we think on the face of it is probably onerous on the strata manager, the agent who has been appointed to do the management, to resolve an ill which is not necessarily perpetrated by them, that is, how to address an issue where there is a significant minority or a level of intransigence in what would be on the face of it a reasonable thing to do by other owners and how to resolve that. It is difficult. Introducing a regime which purports to provide some remedy to the consumer I think is actually ill-founded, because even with all of this it is not necessarily going to provide any greater protection to the consumer, namely, the occupants who are in the facility.

The second area is to create some machinery of access to records and the like, which of course can be passed by resolution in any event within organisations, but there are significant obligations for the provision of insurance. I do not know of any in these circumstances who do not make provision for insurance, but there may be, and there may be some circumstances where the attorney can explain to us why this is necessary.

The final area is to transfer the role of these issues from the current courts to the Environment, Resources and Development Court. I do not think there is any justification for this. I think that we need some explanation as to why the government keeps going down this line. I do not know if the Environment, Resources and Development Court does not have enough to do that it keeps wanting to transfer property disputes, and why when we have a land and evaluation division in the Supreme Court and when we have a structure through the superior courts in South Australia, we should quarantine these off into determination by the Environment, Resources and Development Court. I do not see the connection. I see no valid reason to do that, and we need some explanation.

It is not unique; this is not the first time this government has not transferred the ordinary jurisdiction from the Supreme or District Court to the ERD Court, where the access to the court structure, we think, should be retained. Sometimes circumstances have a particular area of development and planning aspects which could be attached. An example is this question of having legislation for demolition of property by councils. Perhaps that is a process in the ordinary planning jurisdiction which councils would otherwise be going to the ERD Court on and which could justify some determination, but to have applications to cancel or amend a strata or community plan to be heard in the ERD Court I think will diminish the effective services to the litigants in those circumstances, and without proper explanation it simply cannot be justified.

We are further advised that, with the support of the Real Estate Institute and the Institute of Conveyancers, the Agents Indemnity Fund, under the Land Agents Act and the Conveyancers Act, will fund a dedicated strata information and advice service to provide unit owners with information about the rights and obligations attached to community and strata title properties. These always seem to be a good idea: when you read them you think that information is available to people and that you have somebody dedicated to the fund to provide it, but I wonder whether we keep reinventing the wheel with these things and whether, in fact, there has been any real assessment of what else is already out there and available.

For example, I have a booklet here, entitled Strata and Community Titles, which is published by the Legal Services Commission of South Australia. It sets out the obligations in relatively easy-to-read layman's terms, with easy-reference answers to what the rules are in a strata or community title. It does not purport to be so comprehensive that every answer is in here, but it contains common things raised by owners of property in these circumstances and a pretty easy reference to the process, the person, the party or the organisation that one would go to to have some remedy of their concern.

It outlines common questions and answers about converting to community title, about restrictive rules (in an apartment complex, for example), about fines, about administrative requirements and about buying a community title. It asks questions such as, 'My neighbour would like to buy a strip of land on my lot. Does this require a unanimous resolution of the corporation?' and questions about administrative requirements, 'We are members of a small group of units. Do we have to comply with all the administrative requirements of a community scheme such as annual general meetings and an administrative and sinking fund?'

All this is set out in simple language courtesy of this publication by the Legal Services Commission. I think it is a very helpful booklet, and I assume it is still being regularly published—October 2009 was the last update. At the back of the booklet, it provides a list of the contact addresses and numbers of all the offices of the Legal Services Commission across the state, of community mediation centres, of the Land Services Group (which is at the Lands Titles Office), and of all the community legal centres across the state, for people who do not elect to obtain their own paid legal advice to get access to advice on these matters.

I find it rather puzzling that we have a situation where more money is going to be harvested and then, to make it look really good and helpful for consumers, they are going to get a little publication, a booklet, or an educational database or something else out of it to try to make the pain of having to pay extra meritorious when we already have very comprehensive and adequate material available; if it is not, and somebody says, 'Yes, but they are not providing sufficient advice on this aspect,' for goodness sake add to it. Stop reinventing the wheel and trying to justify a whole new fee structure on the basis that it is going to have the side benefit of providing a cost to the consumer.

We have spoken with some of the key legal stakeholders, bearing in mind that the provision of documentation from the government as to what has been received has been woefully inadequate and that it is impossible for us to make an assessment without that information. Of course, we have had to have consultation, and the Hon. Stephen Wade in another place has sought a number of comments, including from the Community Titles Institute of South Australia, the South Australian division of the Property Council, the Real Estate Institute of South Australia and the Australian Institute of Conveyancers.

The Real Estate Institute has confirmed that there is general support but suggested a formal two-year review of the act. The Law Society has indicated that there is general support and had no comment to make on it. Bear in mind here that, when we have stakeholders who say, 'We don't have any objection to the bill,' or, 'There is no legal impediment that we see that is going to contravene some principle that is going to be, perhaps even inadvertently, crunched,' it does not necessarily mean that they are either supporting or opposing a policy initiative of a government. They, I think quite rightly, leave those policy decisions to a government.

I think it is always important that we understand here that, when organisations scrutinise a piece of proposed legislation, whether or not they agree with the direction of the regime, they are looking at it—and this is what they are expected to do and properly do—from the perspective of how it might affect those over whom they have jurisdiction or a responsibility as members of their association. It is important that we understand that this is somewhat more limited.

The Community Titles Institute suggested a number of amendments; the first is to clarify that a delegate cannot undertake works without consultation; secondly, to increase from three days to 10 days the time frame within which records need to be made available for collection; and, thirdly, to clarify that the developer control period relates to the developer having control of the corporation, whether or not the developer, 'has an interest in, the majority of lots in the community scheme'.

The Property Council has expressed some concerns, including concerning the procedures for dissolving a strata title. It is their view that, with 100 per cent approval needed for individual owners in a strata group to amend or dissolve a strata scheme, it has become virtually impossible to use these properties for the higher and best use. Without reforms, they claim, it is almost impossible for the state to deliver the new housing and commercial stock essential for our inevitable future growth.

As I mentioned before, they are really saying that a number of different types of product can be available. They are at a very different regime of cost but, unless we can offer this variety of product, the capacity to accommodate those in future homes—especially if there is any growth in population and a growth in the dependent population, whether they be aged, disabled or otherwise—we are going to really struggle as a state. The Property Council has recommended the implementation of a 75 per cent threshold of strata owners supporting termination.

Members are probably aware that presently under the South Australian law, where owners are not unanimous a party can apply to the court for an order to terminate a strata or community scheme. The government claims that it is making this process more accessible under this bill by providing for applications to cancel or amend a strata or community plan to be heard in the ERD Court, as I have said before, rather than the District Court under the Community Titles Act or the Supreme Court under the Strata Titles Act. I do not accept that.

If it were to suggest that there would be a significant reduction in cost then we would look at it, but the ERD Court essentially has all the trappings of the District Court—whilst there are some limitations in the value of jurisdiction—and in my view it is important to maintain it in the general court system. We have yet to see any demonstrable benefit that the government could give if it wanted, and if it were accurate as to how much better, quicker or cheaper it has been for litigants in other jurisdictions where they have transferred into speciality courts and removed the capacity to be in the general court system. It has not done so.

The opposition believes that the setting of the threshold, the amount of support needed for termination of strata corporations, should itself be out there for direct consultation and we should be able to hear what people say about it and what alternative proposals they offer. At this stage we have had one significant stakeholder already saying that the threshold is too high and that we need to review it.

The Property Council has also looked at the issue of payment of deposits and how they are held in trust when people pay deposits for off-the-plan sales of property interests, for example, in a community title or small strata title. While the council acknowledges this 'appears to currently be standard practice within the development sector', the council claims that 'the development sector is still suffering under the financial constraints placed on it by the finance sector and the risk is any new regulations that increase red tape and/or put at risk the ability of residential developers to obtain finance'. So the Property Council here recommends that, if the government intends to maintain this requirement, the implementation of this amendment be delayed for 12 to 24 months to allow time for the finance sector to get itself back in order. That may not be necessary.

I suppose it is hard to understand the impact that the GFC had, or is still having, on the capacity of people to get finance. If you listen to the Hon. Wayne Swan, everything is sweet and beautiful again, according to his great stewardship. If you listen to the Prime Minister, she says that everything is under control because of the massive spending spree of public dollars that we have had over the last few years—as inept as the management of that was. Nevertheless, generally all is sweet and rosy and, in fact, we are in such good circumstances that we are about to have a 23 per cent carbon tax that can easily be accommodated. Well, she may have her view, but I have a different one.

From the federal government's perspective all is sweet and rosy. The reality is that we have significant areas of concern in unemployment, and we already have industries under pressure. I know from having a specific responsibility for families and communities, housing, disability and ageing in this place of the ever increasing number of people in our community—ordinary people, couples, individuals, families—who are straining under the weight of increased cost-of-living charges, especially service costs, with diddly-squat benefit from the state Treasurer. So, we will see whether the impact of this type of regime is going to be significantly onerous to add one extra aspect of weight, that is, access to finance.

I reiterate that the structures that we have under consideration are not applicable to many people (even in this house); that is, people who are in a position to buy property, real estate, investments, single dwellings, mansions (whatever) and who have lots of opportunity to buy and sell, remain independent and have that autonomy. That is a privilege, frankly, that comes with a lot of money. There is a whole group in the community who will never have access to private single dwelling ownership, let alone investment and other things, and there are many in the community who will not even have a home unless we have products which we maintain are accessible.

Whenever we are dealing with strata or community titles, which add this extra range of product to give people a home, it is important that we understand the significance of creating a regime which is more regulatory, which costs more and which ultimately is a burden to the very people in the community who will be excluded if we push them too far. We have enough people who are either homeless, sleeping in cars, or living in cramped accommodation (if they have it at all) and who are in desperate circumstances. That is already very much under pressure. For the significant group in the community who access these types of accommodation and who are able to do so, let us not make it harder for them and push them away from this opportunity.

Firstly, I ask the Attorney-General to provide the opposition with the submissions that have been received so that we may properly assess what may be beneficial support for some of the introduced reforms of the government and enable us to properly consider this bill. Secondly, the government must address the development contract enforcement aspect, which I suspect it has put in the too-hard basket. In other words, it has come up with this window-dressing that is going to regulate the strata management industry, impose all sorts of new obligations on insurance and transfer to courts, some of which, as I say, may have some merit in the course of that.

However, the really hard issue is how we are going to address the development contract enforcement, which, if anything, is the area that needs to be considered. What is the point of having reform unless we address some of these hard issues? I am sure the Attorney-General must have had questions raised about this. Putting your head in the sand, doing the whole ostrich thing, is not going to resolve the complications and genuine concern that this issue has raised, which just seem to have been completely ignored in this reform.

The summary of the amendments that seem to be significant—and they may have been picked up in the amendments that have been tabled—is: to provide for a formal two-year review, to allow delegates 10 days rather than three in which to make their records available, to clarify that the developer control period relates to a period in which the developer has control and not merely to the interests in a majority of lots in community schemes, and to set the start date for deposits for off-the-plan sales 12 months after the commencement of the act. They are some of the recommendations that have been picked up from the information we have received.

I am not personally familiar with the National Community Titles Institute (NCTI) but the shadow attorney, the Hon. Stephen Wade, has had consultations with this body and is familiar with it. The NCTI, which is affiliated with the Community Titles Institute South Australia, apparently wrote a letter to the Attorney-General, dated 18 May, highly critical of the bill, describing it as a draconian approach to consumer protection—and I see the Attorney's antenna coming up—in the context of an industry without any known problems. That is a summary, which I hope is clear, because I will not detail all of that.

As I understand it, the alarm expressed in the letter relates to the reform the Attorney has in this bill. The institute claims it will create confusion and increased costs, which is exactly the type of problem that we, from this side of politics, are concerned about: alienating people and making it more difficult for them to continue to have access to this service.

The NCTI has proposed a number of changes to the bill: one, to remove the limitations on remuneration; two, to remove the capacity for a body corporate management contract to be cancelled at any time by the passing of a general resolution; three, to redraft the fiduciary duty provisions; four, to remove the three-day time frame for the handing over of records during the transition from one body corporate manager to another; and, five, to remove the proposed complaints and information service.

On a general assessment of other material available, I would have to agree with the last change for a start because, as I say, I think that is just the window dressing sweetener to try to suggest that this is all for the public benefit. The NCTI considers that a more focused review should take place immediately with appropriate industry stakeholder participation, including consultation with the NCTI. I address this comment to the Attorney: it is concerning to our side of the house that this is a body which, on the face of it, has not been consulted, and it found out about—

The Hon. J.R. Rau interjecting:

Ms CHAPMAN: Right. If it has been consulted and is familiar with it and ignored it—that is, it was given an invitation but ignored it—that is something it can explain. Nevertheless, it seems that at least by 18 May, having apparently seen the bill and read it, the NCTI raised concerns about it. I think I am correctly assessing that this is a body that had been given an opportunity to be consulted. If it was consulted on an issues paper back in December and it did not put in a submission—or even if it did—and then was not shown the bill, that is a big concern. What we are told in here about what has some merit and what a structure is proposed to have benefit for does not necessarily translate to what was available or clear at the time of the discussion paper.

Let us assume that we have a statement in a discussion paper about the importance of the owner of an interest in a community or strata title having control of instruction and authority in the appointment and dismissal of the managing agency, that is a principle that seems to permeate the need to be able to have some level of accountability and avoid what apparently appears to be an ill; that is, that the strata manager comes in and runs the show, everyone else gets told what to do and then it is hard to get rid of them.

That is the impression that we are getting, that the baddies in this are the strata managers and not recalcitrant or intransigent owners of a property who are expressing some noisy minority interest, perhaps. I think if anyone acts as an agent, whether it is someone who is selling property on their behalf, a lawyer or an adviser, they obviously have a certain duty of care, they have a responsibility. There needs to be, and there frequently is, some regulation as to what they are to do if they are holding trusts for people: accountability of records, access to records, information and the like.

What is also important here is that apart from having a chance to be consulted, I certainly do not, and I do not think others in this house, presume that everybody who lives in these community structures, or stratas, is some kind of fool that they have to have all of this controlled. They may be, on an overall profile, less financially well off, they may have less access to private advisers, they—like many people in the community, irrespective of their pecuniary background—may not have an easy understanding of what their rights and responsibilities are, but that does not mean that they are fools.

To try to dress up a complete new structure which states that you have to have automatic cancellations of appointments for a period (whether it is a year, two years, or whatever), seems to me the suggestion that the owners of these titles are somehow or other not competent themselves to make a decision about who they have or how they can get rid of somebody they do not like. It is sort of an automatic cancellation policy.

I can remember the Australian Labor Party in South Australia going ballistic about a proposal introduced in this state by the former Brown Liberal government in which it amended the automatic deduction of union fees from government employees' wages as something that was not to be a continuous authority. The former premier Mr Brown said, and I paraphrase, 'We think it's important that members of a union'—it might be the teachers' union, the nurses' union, of which they are legitimate members—'can make a decision for themselves about whether they want to have their union fees deducted.'

But so that they might even be reminded that this money is being deducted from their salary into the union, that authority to have it deducted from their salary had to be annual, although it may have been every two years. It was a time period which had elapsed and it required the employee to sign a further authority, and presumably email it to the relevant party, which enabled the government then, as an employer, to deduct those payments to the union, presumably along with their income tax and Medicare fees or whatever, under the instruction of the employee.

The Labor opposition at the time thought that this was outrageous. Why should there have to be a termination of this? If an employee wants to have a never-ending time, why shouldn't they? They are not fools. They can continue to do that. They can find out at any time on their pay slip and get advice on it and they should be able to do so. The member for Waite was in that previous government, not as a minister at that time, but I think at the time that Mr Brown and Mr—

The Hon. J.R. Rau: Olsen, the other one?

Ms CHAPMAN: No, I will come to him in a moment. Mr Brown and the then treasurer, who was the Hon. Stephen Baker, and the then attorney-general, Trevor Griffin, had outlined the significance of this new regime and why it was important that they be given back some control over their pay packet and not to be ravaged by some group that had some other interest. The opposition was outraged at this. I think the member for Waite came in later in the regime and would probably still have heard the echoes of outrage and heartache from the Labor opposition at the time of this regime.

They were very vocal on this issue, so what is extraordinary to me is that here they are saying that the people who own community titles and strata titles need to have protection and that they need to do a reappointment of these people after a certain period of time. Is the government now saying, in direct contradiction to what they had done when it came to automatic deduction of union fees for government employees, that these people who own these titles are too stupid or too something to be able to manage their own affairs that we have to have these automatic removals? I find it puzzling that there seemed to be an absolute triple backflip, or whatever they are, in the apparent desire to protect the consumer now and give them some heightened power in the apparent imbalance in the relationship between them as the appointor of this manager and the strata manager themselves.

The Hon. J.R. Rau: We are the consumer's friend.

Ms CHAPMAN: Yes, the Attorney says, 'We are the consumer's friend.' Where was he when the workers of the Public Service in this state were being protected by the Brown administration against similar ravages? I simply say that the hypocrisy is deafening. The Attorney-General said in his second reading contribution, on the question of NCTI:

During consultation on the draft bill comment has been received from over 50 respondents, including the [NCTI]...There was broad support for the measures contained in this bill. The NCTI and individual body corporate managers who commented supported the proposed disclosure and insurance requirements for managers. The NCTI was concerned that the proposal to allow contracts with managers to be terminated at any time could lead to managers suing for damages for termination without cause. However, the effect of this provision is that it will prevent such litigation.

Introducing a regime which is wrong but would cauterise any right to sue does not necessarily remedy the problem.

The Hon. J.R. Rau: It stops the suing.

Ms CHAPMAN: It may stop the suing, but the point is, if the regime is draconian in the first place, that is unacceptable. What is important, though, is that that is the contribution made by the Attorney in relation to the NCTI. He may wish to read out the letter of 18 May which, I simply make the point, appears to be a very different description to what the Attorney has given to this house. What the Attorney has told us is a very sanitised, glossed version and summary of what the NCTI's position was, and remains.

Therefore, I would not go so far as to say that the Attorney in some way was misleading in his summary, but it highlights the importance of all members having the opportunity to view these submissions and be able to generally consult and nut out where we might make improvement (and everything can always be looked at from the perspective of improvement), where the ills are that need to be remedied and how we might practically apply that. We should not have some expensive regime which will produce onerous costs ultimately for title holders which, surely, is contrary to the intent of the legislation which, on the face of it, as the Attorney claims, is supposed to be for the improved protection of consumers.

Therefore, let us go out and deal with this properly, let us have some full disclosure and, most certainly, let us look at what is clearly still the elephant in the room, that is, dealing with development contract enforcement. Clearly, that is an issue on which we cannot just put our heads in the sand: it must be dealt with. With those few words, I trust that the Attorney will give serious consideration to those matters raised.

Mr HAMILTON-SMITH (Waite) (12:23): I rise to speak on this matter largely from the point of view of small business and just to raise a few issues. My colleague talked about the need for the house to ensure there has been adequate consultation. The minister assures the house that that has occurred and I am sure he will add some detail to that later in the debate. Naturally, members on this side want to be comfortable that all of the relevant parties have been thoroughly and exhaustively consulted, and I look forward to that confirmation.

The other aspect of this, of course, is to ensure that what we do not do is solve one problem and create another, that is, that we do not introduce measures that might seek to protect consumers but, in the process of doing so, create red tape and obstacles for small businesses that might provide strata services and make their businesses unviable as a consequence. One has to find balance.

A number of parties have made representation to the opposition on this bill, and my colleague the member for Bragg mentioned the NCTI (National Community Title Institute), which is just one of several parties that contacted us. I understand they been consulted extensively but they did feel that in some respects the bill was a little draconian and might have some unintended consequences.

I know that they were particularly concerned about issues such as the removal of limitations on remuneration, the removal of the capacity for a body corporate management contract to be cancelled at any time by the passing of a general resolution, the re-drafting of fiduciary duty provisions, the removal of the three-day time frame for the handing over of records during the transition from one body corporate manager to another, and issues to do with how proposed complaints and the information service were managed. These are concerns coming from the industry and I would hope that the government can consider those concerns and, in its response during this debate, assure the house that they have been addressed.

The stakeholders that have contacted the opposition are seeking what they feel is a more focused review to take place immediately, with appropriate industry stakeholder participation. I note the government feels that has already taken place, so again we look forward to receiving that reassurance. A number of stakeholders that contacted the opposition did support large tracts of the bill and did see a need for many of the provisions it will introduce.

However, as I said, there were some concerns. I will focus in particular on the issue of contracts. I am sure it would be the case that many body corporate strata managers are big businesses. They probably have quite a lot of body corporates on their books. They might be large enterprises that employ quite a lot of people in large offices and, as contracts are entered into or expire, they probably have enough deal flow through the business to keep their business rolling forward.

However, there would be other small businesses who are strata title or body corporate managers that might be much smaller operations. They might only have two, three or four contracts. The idea initially put forward in the bill that, after a very short period—I think it was only a matter of months—the body corporate could by resolution terminate that business and, if you like, escape the contract, did raise some concerns with me as a former small business proprietor. I know what it is like. I had 120 staff and six businesses in two states. You go to the mailbox every morning and if it is not a cheque, you put it in the pending tray, and you are there filling out your forms. If it is not GST, it is WorkCover, Payline or whatever the case may be. It is not easy running a small business.

I did warm to that concern, I have to say. It did seem to me that, if you have entered into a contract as a manager of a strata title for a year or a two-year period and you have hired staff and set your business and your office arrangements up on the basis that that business will be there for you over the year or the two years of its tenure, you have a right to expect your customer to honour that contract. That is not to say that, if there are provisions in the contract for malfeasance, inappropriate behaviour or if you fail to deliver on what you have agreed to deliver—you do not do your job properly—there should not be escape clauses in the contract. I did understand the concern that we might be introducing a piece of legislation that could somehow interpose onto that contract and give the customers a right to escape from it and leave the small business high and dry. For that reason, my view is that a longer period of certainty should be there.

I understand that the minister has amendments and that, as a consequence, there is consideration of a 12-month period or so when there will be some certainty for the small business that is managing the strata title. Perhaps we need to talk to industry about whether that should be 12 months, 18 months or two years. I am not sure what a reasonable period is, but perhaps that is something that the minister and the shadow minister in the other place can thrash out over the coming week if need be, and we can reach some sort of compromise.

I certainly understand the point the minister makes, that you can have a circumstance where a developer might build a development, engage a strata title manager over a very long period of time—maybe 10 years—and effectively foist that manager upon the unwitting owners of these small homes as they buy them. Suddenly, they find they are struck with a strata title manager who then acts like Lord Dudley, does not do his job, acts in an arrogant and superior manner and does not deliver the services that people expect. They were not part of the original deal; they have bought into the development six months or a year afterwards, and they are virtually done over in a cosy deal between the developer and the strata title manager.

I can well imagine that that might occur, and I can understand why the government might seek to remedy that in this bill, but the problem is that we do not want to swing the listing ship over to the other side to such a degree that we simply then fix that problem but create a problem for the small real estate agency or office that might only have two or three contracts.

They get caught up in a situation where they have no certainty in the contracts they have entered into, and the bank manager simply says to them, 'Look, I can't extend to you that business loan, because on examining your business arrangements, I see that your customers can simply vanish on you in two months or in 12 months, because there is a cause here that says they can just cancel their business with you, even though you have a two-year or three-year contract.'

So, I can understand how these businesses might take the view that, if they have a two-year, three-year, or five-year contract to be the strata title manager for that building complex, that is a bankable bit of goodwill; that is their business. If they want to sell their business and they want to sell that goodwill, the value is really contained in the tenure of that contract. I can well understand why, from the point of view of protecting their property and their business, and protecting their interest with the bank, they want some certainty that those contracts are going to be delivered.

I am also not completely convinced that there would not be cases where a five-year or a 10-year tenure might not be to the mutual benefit of all parties. After all, as a general principle, being a Liberal I take the view: let business do business. The less government interferes, the better. There may well be cases where a body corporate feels they can get a really good deal out of a strata title manager over a five to ten-year period and they want to enter into a longer contract. Well, good for them; why should we interpose?

But, I do accept, as the minister has argued, that there can also be these cases where cosy arrangements emerge between developers and strata managers that are ultimately to the disadvantage of individual homeowners but very advantageous to the developer and the strata title manager who gets the good deal. So, we need to strike a balance, in other words, not solve one problem and create another. It is that point that, to me, stands out in this bill as one that we need to thrash out together and make an effort to improve the bill.

My colleague who opened (the member for Bragg) has talked about development contract enforcement. There are obviously some issues there that need to be dealt with as well. I can understand the intention of the bill, and I can understand that it seeks to protect the innocent, and it seeks to protect customers. I have certainly seen, in my own experience, cases of body corporate managers throwing their weight around, in the knowledge that the members of the body corporate cannot do much about it.

All sorts of things occur in bodies corporate, as the minister could well imagine. Situations occur where there might be two or three homeowners living in the building who feel they own the building, and 70 per cent of the owners in the building might be investors. They enter into all sorts of wonderful arrangements in consultation with their body corporate manager; such as, for example, 'We won't allow tenants in the building unless it is a minimum of 12 months.'

That suits the people who are homeowners in the building, because it means they do not have people coming and going, and so it suits them just fine; they are going to have other people living there as long-term residents just like them. But what about the other 70 per cent of owners in the building—and this might be a building down at Glenelg; it might be a building in a wonderful seaside location, where holiday rentals could result in a much higher return for the investor? The investor might say, 'Well, why not make it a six-month period?' Again, members of the body corporate can cook up something with their strata manager that suits the people who have managed to get themselves elected as president and secretary because they happen to live there and, unbeknownst to the investors, the value of their investment is being diminished by these cosy arrangements.

These are the sorts of things that go on all the time in body corporates, where two or three people get control of the committee and then try to impose all sorts of rules and regulations on the poor old silent majority, who suddenly find that they have to wrap their garbage in silver and gold-lined packaging and drop it down the chute in the five minutes between 9pm and 9.05pm, and no pets are allowed, or pets are allowed, whatever the case may be—and so it goes on. So, all sorts of abuses go on in the body corporate process and a whole lot of people are not happy, for one reason or another, with the way in which their body corporate is being managed.

I know this bill is seeking to free up and, to some extent, empower the homeowners, the people who comprise the body corporate, to make sure that they are not pushed around by the strata manager; I understand all of that. I would simply say to the minister: if we could look at those parts of the bill which might create an unnecessary burden on small business, which might affect the value of their enterprise and which might affect their relationship with the bank by taking away the value of their business, simply because there is no certainty in the contract. If we could look at that, I would be much more comfortable with the bill. Having said that, I look forward to the rest of the debate.

The Hon. J.R. RAU (Enfield—Deputy Premier, Attorney-General, Minister for Justice, Minister for Urban Development, Planning and the City of Adelaide, Minister for Tourism, Minister for Food Marketing) (12:37): I thank members opposite for their contribution. I want to say a couple of things by way of an initial response to what has been said. The first thing I would like to say is that I note with disappointment that the member for Bragg, in effect, has announced to the parliament—and it is important to know this—that the opposition intends to oppose the bill, not amend the bill.

I know the member for Bragg to be a reasonable person. I know that, if the matter were left to her, she would have identified those aspects of the particular bill before the parliament with which she had a disagreement. She would probably have rang me and said, 'Minister, I have a disagreement about X, Y and Z in your bill. Can we have a talk about it because this is an important bit of reform, and it is important that the parliament can actually do something. The parliament is supposed to be constantly reviewing the legal system in South Australia and trying to upgrade and update things and I, like the you, as a lawyer, think it is important that we do that.' That is what the member for Bragg would have done.

Unfortunately, here, as in so many other instances, we are not really dealing with the member for Bragg, we are dealing with the Hon. Stephen Wade, who managed to find 52 ways to amend a law that basically said that habitual criminals should be banned from using knuckledusters. Unbelievable, but true. One would have thought that what we had tried to do in that legislation about weapons was introduce a new regime whereby all children under the age of six were going to be shot, compulsorily, because that is the sort of attention that legislation received.

I say again: that legislation was designed simply to say the sort of person cannot have a firearms licence, because they are such a ratbag, should not be allowed to buy big knives and knuckledusters, either. Well, goodness me! What an outrageous piece of infringement of civil liberties: well-known thugs and criminals not being allowed to openly buy or possess knuckledusters. Yet there were 52 amendments. I have not seen the final list of amendments and everything, but the bill is probably now more like the pig marketing act than the bill it originally started off as, that is how much amendment it has had.

I do not know whether the obstructionism, which is deeply engrained, it would seem, in Mr Wade, is because he does not understand what is in the bill or he thinks that being able to say no makes him significant. I am not quite sure but, whatever it is, unfortunately it has come through here. Instead of offering constructive amendments, what has happened is that there has been opposition, and it has been opposition on spurious grounds with a couple of exceptions—and I will come to them in a moment. First of all, in relation to consultation, I invite Mr Wade in particular—because I am sure the member for Bragg has done this—to read the second reading speech.

Ms Chapman: I've done that.

The Hon. J.R. RAU: I said I know you have. I am not worried about you; I am worried about somebody else who has not, obviously, because if he had he would not be persisting in the behaviour that he is going through now because the second reading speech makes it fairly clear about consultation. Just for the record, can I say that originally I wrote to the former attorney-general in 2003 because, when I did an inquiry into the real estate industry in South Australia in 2002, I had a whole bunch of people complaining about strata title and community title issues.

It was too big to do the whole lot as one thing, so I finished the work I was doing in relation to dummy bidding at auctions, handed it over to the attorney and said, 'Here you are; do what you will with this,' and then I went off and did this other thing, which I handed to him. However, simultaneously—and not because I was doing it—he was also preparing a discussion paper about it, and he put it out. That was 2003.

Ms Chapman: I have mentioned that.

The Hon. J.R. RAU: Yes, I know, but I am just addressing the point that some of these Johnnies-come-lately in terms of grizzles are suggesting that there has been no consultation. We have this business, and then we have a draft bill that goes out—and, again, my predecessor did that. Was this bill hidden in a cupboard and not shown to anybody? No, it was put out. I have a list here of all the people who were sent a copy of the bill and invited to comment on it.

Just to give you some flavour of it, there were people from the courts, as you would expect; a number of MPs who had written to the then minister about strata title issues who clearly had an interest in it; consumer affairs people; the Local Government Association; the Community and Strata Corporations Institute of South Australia—member for Bragg, are you listening to all these people?

There was also the Community Titles Institute of South Australia, the Real Estate Institute of South Australia, the Australian Institute of Conveyancers, the Property Council of Australia, Whittles (and that name will become important later), Gordon Russell, Strata Data, Adelaide Strata and Community Management, Ace Body Corporate Management, etc.—and on it goes, pages of them, even lawyers who were seen in public with strata managers were sent one just in case. So that was 2008.

Ms Chapman: Where are the answers? Show us the answers.

The Hon. J.R. RAU: There are the answers—tantalisingly, there they are. We are talking about consultation. When I became Attorney, I said, 'What's going on with this strata thing?' They said, 'Well, there's been a whole bunch of stuff done. We've got a draft bill. We've consulted with all these people.' I said, 'Okay, let's have another look at it,' so we did, and then—because, member for Bragg, we actually like consulting with people before we drop things on them—we did it all over again and sent another bunch of letters out to people, the usual suspects as you might call them. Out the letters went and, interestingly enough, they went again to people like the Real Estate Institute of South Australia which, by the way—as the Premier would say, 'News flash, late-arriving news'—represents these characters.

Ms CHAPMAN: World-breaking news.

The Hon. J.R. RAU: World-breaking news, right. If the Real Estate Institute does not take letters out of its letterbox or, when it does it, does not read them or does not send letters to people it represents to ask them, 'What do you think?' that is not my fault.

We have been writing to people about this. This is back in December of last year, and we received a great many responses, which were then the subject of further consideration with the bill. The member for Bragg might say (I am anticipating this), 'Well, why didn't you go out with your next version?' Because, at the end of that, there would have been more comments by more people and at the end of that we might have a new version where we go out again. It is endless. The fact that this has been the subject of consultation for at least eight years I would have thought is not bad; it is not a bad start.

The other thing is that this is an area of law that is crying out for reform. I have had so many people complain about this to me as a member of parliament, and other members of parliament have had it too. It is in a disgusting state at the moment and it needs to be fixed up. A constructive attitude in relation to this would be: there might be elements of the bill that we have a difference of opinion with you on; let us talk about those between the houses, let us try to work them out. If that is your point, I am in for it—I am absolutely happy to talk to you about whatever you want to talk about.

I have given you the time line—November/December last year—when all these things happened. Then, in May this year, a tiny two watt globe goes on in the head of somebody who has not read their letterbox for eight years, and they write a letter to me as Attorney, which I am paraphrasing a bit, starting off basically, 'Dear Imbecile'. It actually does not have 'Dear Imbecile'; it does not have 'Dear' anything.

Mr Hamilton-Smith: It might have been sent to your predecessor.

The Hon. J.R. RAU: No, it is directed at me, trust me. It says here:

There are several problems in this ill-conceived and poorly thought-out bill. These are the critical ones:

1. The bill was introduced into parliament and—

I quote here as they are really good words; this fellow has chosen his words so, so carefully—

without any prior consultation with key stakeholders. This is highly irregular for legislation of this nature.

Yes, it would be, but it is not true. I suspect that the member for Bragg has not been taken in by this person, but I suspect somebody else has, which is why, instead of having a constructive conversation about what we should be doing with this bill, we had the bizarre spectacle of the opposition opposing the bill completely—completely opposing it.

Yes, this chap from Whittles, who in May this year for the first time in eight years—bing, the little light goes on—realises something is going on and did not like it. We had not consulted with him. Wrong! He had not been to his letterbox or, if he had, he did not read the letters because guess what? We have a record of the stuff that has gone to Whittles. This is the man whose credibility you are nailing your colours to the mast of, a man who makes outrageous statements like, 'The bill was introduced into parliament without any prior consultation with key stakeholders.' Completely and utterly wrong, absolutely wrong! How can you take seriously a person who is prepared to make an idiotic statement like that? Most of the rest of the complaints in there are similarly lightweight.

Let us go back to some of the particulars. I agree with the member for Waite that, if there are issues about how a strata group can get out of one of these contracts and there is a question about whether a one year, two year or whatever notice has to be given, I am happy to have a discussion with the opposition about what is an adequate balance to solve that problem. If that is the only problem holding up this bill, I will sit down as soon as we finish here and talk to whoever I have to talk to—although I would prefer it to be you two, rather than somebody else—to try to sort this out and sort it out quickly.

The Parliament of South Australia expects us to do something. If you collectively aspire to be a credible alternative government, occasionally you have to say, 'Yes, that is something that is sensible. It is in the interests of the community of South Australia it be done, and we will support it', and, guess what? The public will say, 'Well, hey, maybe that mob have got a few brains. Maybe they are actually on the ball. Maybe we might even take them seriously', but no, no.

Rather than, 'We want to talk about amendments. We oppose the bill; absolutely oppose the bill.' Okay, you are going to lose that vote here, probably, but, in another place, if you persist with that attitude, well, who knows what is going to happen. Anyway, I just think that it is appalling that, after eight years of discussion about this (and everyone knows that this desperately needs reform; everyone knows that), and we are putting up these proposals, and you are not even prepared to come to me and say, 'Look, can we just fix up this business about the notice period for strata people getting out?' Okay, fair enough—small business, I understand your point.

But do not ignore this: I have seen contracts where developers in multistorey buildings have assigned strata management rights for 25 years to strata managers, and if you do not believe that dollars are not changing hands somewhere in relation to that, you must have come down with the last shower. That means that, in effect, that strata manager is getting a guaranteed income stream for 25 years. Where do you get one of them these days? Where do you get one of them?

Not only that, not only have they got the income stream guaranteed for 25 years, but they have got their hands on all the knobs that calibrate how much the income stream is, too. How good is that? It is not like you are saying, 'Well, you can go to the bank and you have got 6 per cent interest if you can do a fixed deposit for 25 years.' You get the 6 per cent interest, but if you do not like six you can tweak it up to eight, 10 or whatever you feel like, because you have got the knobs in your hands as well. Fantastic! What a deal! Why would you not want one?

That is what you are defending, and that is what we are trying to do something about. Now, I agree that if you have the really small operator who wants some certainty as to whether he has a part-time person on to help him do the rent roll, and an abandonment of contracts with 28 days' notice is going to make his life impossible, fair enough, let us have that conversation. I am happy to deal with that, but, for goodness sake—I am sorry to be directing these comments to the members for Waite and Bragg, because they should really just turn around and look that way, behind them.

Anyway, then there was a lengthy thing about the trade unions and that, and we all know that story about payroll deductions and all that. The big difference is this: whether or not you are a member of a trade union is entirely a matter for you and whether or not you have a strata manager is not an option—you have to have one. There is a captive market already and, as I have just explained, some of these people are being locked up for up to 25 years in this situation.

As interesting as that sort of digression down memory lane was, it is not an apposite comparison. Can I say, too, that the honourable member mentioned development contract enforcement. I agree with you—

Ms Chapman interjecting:

The Hon. J.R. RAU: Can I just finish? I agree with you, but that in itself is a big topic. It is a big topic because I agree that something needs to be done about that. There is no question about that, but the mechanism by which it is done is very important because, for example, do you use bonds? Do you use bank guarantees? Do you use deposits into a certain fund? What mechanism do you use, because every mechanism you use—and you were talking before about cost to business—will have a potential implication for the development industry?

If you say to a potential developer of a housing estate, 'Look, before you do this, you've got to put $5 million in the bank—just in case you go broke—to finish the garden off.' That might actually affect that person's capacity to do the whole project. I am in fierce agreement with you that something needs to be done about this, but, first, it is a discrete topic; and, secondly, it is a topic that we should give very serious consideration to in consultation with the development industry, because I can tell you that, despite the member for Bragg's considerable legal skills and practical knowledge of the universe, if we were to devise something today to solve that problem, I am sure that we would find that industry would say, 'Hang on, that's not right.'

Ms Chapman: You've had eight years.

The Hon. J.R. RAU: Oh, for goodness sake! I have been talking about strata titles. I am telling you that this is a severable issue. You show me a draft provision and I will be able to get back to you in 24 hours as to whether we will go with it. You give it to me and I will have a look at it, or give it to me next week or the week after that and we will have a go at it but, for God's sake, do not hold this up on account of the fact that there is another issue out there which I agree needs to be addressed but which nobody has actually turned their mind to properly yet.

Ms Chapman: Why not?

The Hon. J.R. RAU: Why isn't there a replacement for the space shuttle? I don't know. Anyway, let's get back to the strata title thing. I would urge the opposition to please consider two things. Remember this: I have actually brought to the chamber anyway amendments to our original bill which attempt to take into account some of the complaints made by the people from Whittles who did not read their mail for eight years and also other people who have raised issues.

I have attempted to deal with that. If that is not good enough, let's have a conversation about that. I am happy to talk to the member for Waite and the member for Bragg about these things. In fact, I would love to. Quite frankly, I would love to. Let's try and find a position that we can actually all agree upon in relation to those matters. I am happy to do that. If we can do that, we can get this important piece of legislation in place so that there is some protection for people who are being ripped off. They are being ripped off, so let's get this protection legislation in place.

I agree entirely that the development contract enforcement is a very important point. As soon as you give me your view as to how that should be constructed, I am ready to have a go at it, but I caution everybody about this. This is exactly the same as the contractor guarantee legislation which we have in place about how people who are working as subcontractors in building sites are guaranteed that they are going to get paid. It is a great idea.

Nobody disagrees with the idea, but the practicalities of it are not necessarily obvious, and the implications of getting it wrong can be bad. The last thing we want to do is to introduce well-intentioned development contract enforcement legislation here that shuts the development industry down. So, yes, let's do it; I agree with you but, if we do that and we get that wrong, we are going to cause some serious trouble.

Can I just finish on this note, because it is nearly time for me to stop talking, you will be relieved to know. What we are talking about in our legislation here is actually more competition, and you folks should like that. We are talking about more competition for people offering the service of strata title manager, inasmuch as the market has consumers who are the strata title holders who are going to have a better option to move from one to the other.

It is a bit like the banks. We have had this argument about bank exit fees. Most people say: why should you be locked into a bank if they are really working you over when you should move to another one but you cannot because there is an exit fee?

I know that causes its own little debate as well, but the point is that we are trying to free up movement from one strata manager to another by removing the anti-competitive, restrictive practices that are entrenched in this industry and, if you want to defend anti-competitive, restrictive practices that benefit people at the expense of consumers most of whom, as the member for Bragg quite rightly points out are not the most affluent people in our community, then good for you, but I think it is an absolute shame.

Can I just finish on this score: please talk to me about amendments you want; please consider the amendments we put up; please reconsider your decision to simply oppose this legislation. It brings this house into disrepute and it will bring the parliament into disrepute.

Bill read a second time.

Committee Stage

In committee.

Clause 1.

Progress reported; committee to sit again.


[Sitting suspended from 13:00 to 14:00]


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