HANSARD
SITTING CALENDAR
SEARCH
LIVE BROADCAST
Hansard Dynamic Member Index
Legislative Council - Fifty-Third Parliament, Second Session (53-2)
2016-10-18 Daily Xml
Contents
Pdf Xml

Retirement Villages Bill

Committee Stage

In committee.

(Continued from 27 September 2016.)

Clause 23 passed.

Clause 24.

The Hon. S.G. WADE: I just wanted to flag that I have some issues I would like to raise in relation to the issues dealt with in clause 24, but I think it is probably more appropriate to do that when we consider the review because I believe they are matters for future consideration rather than consideration in the context of this bill. So, I indicate that I will be addressing that when we consider the review mechanisms under this bill.

Clause passed.

Clause 25 passed.

Clause 26.

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

Amendment No 7 [Wade–1]—

Page 18, lines 2 and 3 [clause 26(2)]—Delete '(or a person claiming under the resident)'

This is a key provision of the bill. It requires an operator to repay a former resident or their estate the exit entitlement if 18 months after ceasing to reside in the village or giving notice of the same their interest in the village is not sold. Significantly, the statutory payment provision was not recommended by the select committee. It was only introduced to the legislation in the context of the draft bill distributed last year.

I think it is really important that we be clear about the mischief that we are trying to address in this bill: that is, that older South Australians wanting to leave their retirement village residence but who are unable to access their exit entitlement until their interest has been sold are, from time to time, unduly delayed in being able to leave and receive their entitlement. The Liberal team agrees that the problem is real and that a focused statutory buyback is a measured response to the mischief. However, our view is that the provision is drawn much more broadly than it needs to be, in particular it gives an automatic payment to beneficiaries of deceased estates.

The Liberal team does not consider that the state should legislate to enforce a buyback in favour of beneficiaries of the estate of deceased residents of retirement villages. Executors of wills have a duty to dispose of the assets of the deceased, such as a family home, without being able to force anyone else to buy it. We do not see why an interest in a retirement village should be treated differently from other assets of the estate. In fact, the Liberal team asserts that it would be unhelpful to do so.

If the beneficiaries have the capacity to force an operator to buy their interest there is at least the risk of a conflict of interests and even the risk of elder abuse. Potential beneficiaries of an older person may put pressure on a person to move into a retirement village unit to protect the value of their estates and to make it easier for them to realise the value of the estate on the death of the person. Limiting the scope of the buyback to residents current and former would also dramatically reduce the risk to the industry. The Liberal team considers that a more appropriate recognition of the interests of beneficiaries would be to allow, after a nine-month period, a beneficiary or a resident to take joint control of the marketing of the unit, and we have an amendment to that effect.

I would also argue that allowing deceased estates to access a statutory buyback reduces the housing options for older South Australians by undermining the viability of current operators and discouraging future investment. In relation to supply, I remind the chamber that retirement villages are an important option for people and support active ageing: 7 per cent of South Australians currently live in retirement villages, a number which I am told is significantly higher than other states and territories. The number of registered retirement villages has increased 14 per cent in the last seven years. It is very important that we not just sustain that growth but that we increase the rate of growth in this sector to accommodate our ageing population.

In 20 years, on my, shall we say, amateur calculations, there will be 347,000 South Australians over the age of 70. That is a growth of 66 per cent. On the basis of 8 per cent of people over 70 living in retirement villages and about 1.4 residents per residence, we would need over 7,730 more retirement village residences in the next 20 years. That is a 43 per cent increase in the supply of retirement village residences in the next 20 years. Current operators will need to make financial provision for buybacks under this bill rather than putting those finances into investments.

It is hard to quantify the impact because the government has not done a cost-benefit analysis but the prudent step would be to give priority to older people and, in my view, not just older people who seek to leave a retirement village but also protect older people in terms of the supply of retirement villages in the future. I also highlight to the chamber that I believe that this bill is dangerous because it could lead to significant market concentration.

The retirement village industry is predominantly a not-for-profit industry. Currently, as I understand it, 74 per cent of villages are operated by not-for-profit operators and there is a significant proportion that is for-profit operators who are small to medium operators. I think it is important that we realise that the not-for-profit sector is more likely to be cash poor and that the impact of the current provisions may well lead to a significant market concentration.

In terms of small operators, data provided by the government shows that 31 per cent of operators have less than 10 independent living units. Almost half of the operators maintain less than 50 units across all their villages, so that means that almost half of the operators are what I would describe as small operators and that small operators are disproportionately not-for-profit and regional and therefore they are particularly at risk from this provision. I remind the house that we are not just legislating for large, cashed-up corporate entities. Less market diversity and less competition are not in the interests of consumers.

I would like to finish my comments on moving the amendment by quoting a letter that has arrived since we last debated this bill. My understanding is that this letter has been provided to all members of this place, and also to the government. It is signed by 12 operators, a range of operators, both for-profit and not-for-profit, and also small and large operators. This is my copy, and it says:

Dear Mr Wade,

The signatories to this letter, who represent a broad cross section of the retirement village industry in South Australia (including not-for-profits) met on Thursday, 6 October 2016, to discuss this Bill.

We are alarmed at the way in which this government has not properly considered the consequences of the Retirement Villages Bill 2016.

We do not believe that the views of large sections of the industry, particularly smaller and regional operators, have been heard.

The major issue of concern is around the statutory buyback. Not one of the signatories to this letter indicated that they would find development of new retirement villages in South Australia attractive under the proposed legislation. Much needed future investment would be aborted. It is no coincidence that no new villages have been foreshadowed since the intent of the Bill became known. Plans for over 1,000 units would be immediately shelved by operators in yesterday's meeting alone.

Further,

The proposed legislation is retrospective and overrules current contracts.

The buyback provisions have the capacity to render operators bankrupt in poor property markets, which we experience from time to time. This is particularly salient in rural and regional areas.

Future supply will be severely impacted. Not only will smaller operators withdraw from the market, but Banks have indicated that they will not finance developments in South Australia under the proposed Act.

The value of villages will fall. This will impact small business and ultimately retirement villages residents.

Any future development will only be able to be undertaken by large national groups with big balance sheets. Do we wish for our future seniors' housing needs to be in these hands?

We understand the concern of older South Australians who feel 'trapped' in a retirement village, wishing to leave but delayed by the sale process. We accept that people like this need a way out.

However, a unilateral buyback is 'a sledgehammer to crack a nut'. If the industry is destroyed, this issue will not be a problem.

We do not believe that the government has properly researched or consulted on this bill, has turned a deaf ear to small business, and does not understand the consequences. No cost benefit analysis was done and no regulatory impact statement.

We would like the bill deferred. We suggest that a broad-based steering committee be established, including representatives from both the industry and SARVRA, to try to find the right balance in this legislation. The industry will fund this initiative.

We do not need to preside over the death of another industry in this state particularly given the increase in accommodation needed over coming decades to house an ageing population. It is our view that retirement villages, in conjunction with homecare operators, will have an increasing role in looking after the needs of our seniors.

Health and aged care is currently one of our state's few growth industries. It will not provide growth or jobs if this Bill proceeds.

So, the council is put in the predicament of having a very strong letter from industry operators. They tell us that, amongst those 12 signatories alone at that meeting, they are shelving 1,000 units. As I said before, units with a residency factor of about 1.4 per unit, that's about 1,500 South Australians who immediately would have their housing options constrained. Yet we have no idea what the long-term impact would be. They indicated that there had been no new villages foreshadowed since the bill had been known.

The impact on the industry is clearly stark. I note the concern of the industry that no cost- benefit analyses were done and no regulatory impact statement was done. I note the request of the committee that there be a steering committee established to consider the legislation. The opposition is of the view that we, as a parliament, should pause and give the government an opportunity to do a proper analysis.

We are not being prescriptive on what that analysis might look like but clearly, with a government that is not willing to come to the table with a clear cost-benefit analysis and not willing to do the work, with industry players making very strong statements that they—with the decision-makers who drive the development of this industry—are not in a position where they can invest and provide the services that older South Australians need, I think it would be reckless to let this bill proceed without proper analysis.

On that basis, I suggest to this house that we should pause at this point. We should pause at the committee stage to give the government an opportunity to provide us with proper analysis and to provide us with assurance that this legislation will not do damage. At the moment, the information that has been provided to us is that to address a mischief for a relatively small group of people—which I am told by the industry is probably about 3 per cent of people who leave retirement villages—we are threatening the future supply for 100 per cent of residents. So, I intend—

The Hon. I.K. Hunter: Well, let me respond.

The Hon. S.G. WADE: I take the minister's point. I will let the minster respond, but I would foreshadow that I intend to move that we report progress.

The Hon. I.K. HUNTER: I thank the Hon. Mr Wade for giving me an opportunity to respond to his comments. The amendment moved by the Hon. Mr Wade—there are a number of others too, but we will come to those in due course—seeks to exclude deceased estates from the statutory requirement to repay a resident's exit entitlement 18 months after the resident vacates their village.

There are a number of very good reasons why this amendment should not be supported, and the key one is this—I will come back to this later again, but I will just say it now: operators will be able to apply to the tribunal under section 26(7) for an extension of the time frame for repayment if they are unable to repay an exit entitlement to an estate at 18 months. So there is already, in this legislation before us, an ability for operators to apply to the tribunal—which is the appropriate place to give consideration to this—for the opportunity to extend, if their arguments are strong enough to do so.

There are many other arguments that I would like to make in response to the Hon. Mr Wade's comments as to why we should not be supporting this amendment, and then I will come to address the letter the Hon. Mr Wade referenced as well and give some response about its contents. The amendment creates, fundamentally, two classes of people. The Hon. Mr Wade's amendment creates two classes of people or two classes of resident, I should say: those who are alive, who will receive payment in 18 months; or the estates of those who have passed away may continue to wait indefinitely for finalisation of the estate. There is no control on that.

We should ask ourselves a question: would the repayment time commence from the time the resident leaves the village or the date of death? A resident who leaves a village and nine months later, for example, passes away, are they or their estate or their heirs no longer entitled to a timely repayment? We already know the degree of anxiety that people experience—any of us here will have had to deal with relatives in this situation—when it comes to the terms of their estate, their wills. If it is entirely disbursement to the inheritors of their choice, why would we be creating, in this amendment by the Hon. Mr Wade, further anxiety, when the whole intention of this bill is to remove and relinquish that anxiety from people in this situation? I do not know why we would.

Estates also deserve a finalisation date, the government believes. One of the compelling reasons to introduce a statutory repayment period was to address longstanding contract settlements, with an estate being tied up until a unit is licensed again. This provision provides certainty to residents and their estates as to when the repayment of the exit entitlement will occur. The government believes they should be treated in exactly the same way.

If I can turn to the letter referenced by the Hon. Mr Wade in his contribution. It is on the paper of Karidis Corporation Limited. My copy is signed by Mr Gerry Karidis AM. I do not have any other signatures annotated at the back of mine, so when it says, 'A broad cross-section of the retirement village industry in South Australia met on Thursday 6 October to discuss this bill,' I am not aware of who of they may be. I can assume, I suppose (and I may be wrong), that it was a meeting of the Property Council's retirement living committee. Members will understand and remember that the Property Council has been recalcitrant in dealing with these issues, and in that light the letter is not all that compelling.

We also need to remember that extensive consultation has occurred with industry, residents and other interested parties over the development of this bill. There were 13 public forums on the RV bill and over 300 submissions received, and my information is that the Karidis Corporation did not provide a submission or comment on this bill.

I also understand that particular attention was paid to smaller and regional operators about the impacts of the bill, and members may recall that they originally proposed a 12-month repayment period. The time frame was extended to 18 months in response to concerns raised, which, I think, was an adequate and sensible compromise. The other thing to bear in mind is this: I am advised that there is a total of 92 villages in rural and remote SA and the majority advise that an 18-month statutory repayment period will not affect their day-to-day business. I am also advised that 60 of these already repay within 12 months or less.

So in terms of the content of the letter, I can understand where it is coming from but it is incredibly alarmist. To say that development of new retirement villages in South Australia will not be attractive and that no new villages have been foreshadowed since the intent of the bill became known is not, I think, correct. The retirement village sector is extremely active, and the prospect of legislation has not slowed or deterred operators.

I am advised that five new villages were registered in the 2015-16 financial year and media reports have announced a number of village developments this year, including the Carmelite premium apartments at Myrtle Bank by Southern Cross Care, Uniting Community developing the Maughan church site, and The Brougham on Brougham Terrace in North Adelaide overlooking the city. Life Care has announced a development on the grounds of Pedare College in Golden Grove, and I am also advised that a new boutique retirement village is proposed on the grounds of the former Underdale bowling club.

Those are just a few points in rebuttal to the letter that the Hon. Mr Wade read into the record, and I conclude with this: the ultimate reason the Hon. Mr Wade's amendment is not needed is because of the 'get out' provision in the legislation. It is simply this (and it is what I started with): operators will be able to apply to the tribunal under section 26(7) for an extension of the time frame for repayment if they are unable to pay an exit entitlement to an estate in 18 months. That is sensible, that is proper. For the life of me I cannot understand why you would want to set up in legislation two classes of people, two classes of residents: those who are living and those who have died.

The Hon. S.G. WADE: I would like to respond to a couple of points the minister made. The legislation already has more than one class of people; we have aged care residents, and people exiting aged care residences, for a start. Why we would want to establish two classes of people is because in our view this should be focused on the interests of older South Australians, and if providing a benefit to a large number of deceased estates is going to jeopardise the future provision of housing options for older South Australians then we stand with older South Australians.

In relation to the minister's alleged rebuttal of the letter, my understanding is that that meeting was not a meeting of the Property Council. In terms of the suggestion that there has been a range of retirement villages announced since the legislation was announced, I spoke to a senior member of the management team of one of the developments the minister refers to, asking how retirement villages can be so bad if they are going ahead with X development, and was told that all relevant contracts were signed before the draft bill was tabled.

The Hon. I.K. HUNTER: One final point on this. If we are trying to introduce and bring forward legislation in the interests of older South Australians, surely to goodness it is in the interests of older South Australians that their estates are treated no differently than they are when they exit retirement villages. If you ask older South Australians they would tell you that is absolutely one of their key interests.

The Hon. S.G. WADE: I might just glance around the room and see if anybody else would be wanting the call but, if not, I move:

That the committee report progress.

The committee divided on the motion:

Ayes 9

Noes 6

Majority 3

AYES
Darley, J.A. Dawkins, J.S.L. Hood, D.G.E.
Lee, J.S. Lensink, J.M.A. McLachlan, A.L.
Ridgway, D.W. Vincent, K.L. Wade, S.G. (teller)
NOES
Franks, T.A. Gago, G.E. Gazzola, J.M.
Hunter, I.K. (teller) Maher, K.J. Ngo, T.T.
PAIRS
Brokenshire, R.L. Malinauskas, P. Lucas, R.I.
Kandelaars, G.A. Stephens, T.J. Parnell, M.C.

Progress thus reported; committee to sit again.

PARLIAMENTARY BUSINESS
MEMBERS
GET INVOLVED
ABOUT PARLIAMENT
VISIT
LEGISLATIVE COUNCIL
HOUSE OF ASSEMBLY
CONTACT