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Retirement Villages Association Address - Dalziel

Hon Lianne Dalziel Speech Notes

Address To Retirement Villages Association
Hotel Grand Chancellor, Christchurch
9.30am, Wednesday, 23 May 2001


Good morning and thank you for inviting me to speak to you today. The invitation was given a few months ago by your executive officer, after a phone call from a member of the Retirement Villages Association, who had heard me speak at another function. I think the general idea was for a speech along similar lines. However, the ground has shifted since then. So rather than presenting an overview of Positive Ageing, Ageing in Place and the need for a continuum of care for older New Zealanders with support needs, I thought I would be best to focus my attention on why you are all here, namely the retirement village industry.

The reason I say the ground has shifted is that, although my portfolio of Senior Citizens is an advocacy portfolio, I have been given the role of introducing Retirement Villages legislation into Parliament this year. I spent last year writing to the Ministers of Justice and Commerce asking for updates on the Law Commission Report.

As a result of the significant pressure within the portfolios of both the Minister of Justice and the Minister of Commerce, I have been given the job, although I will be consulting as necessary with their ministries.

My main focus, however, will be to consult with your association and also with consumers (namely residents), and with the range of senior citizen interest groups that have raised concerns about retirement villages.

The Ministry of Social Policy is the lead agency, with support from the Senior Citizens Unit, and has engaged the services of a solicitor with significant experience in this field to assist in the process. He is John Greenwood of Chapman Tripp, Solicitors, Wellington.
Let me make an initial statement about the concept of retirement villages, and that is, I support the option that many retired people choose. A retirement village offers people in a similar age group security, activities, companionship and privacy, as well as accessible health and support services. Many older people are looking for those very things, at a time when their family home has outgrown them, and some of the familiar neighbourhood networks have gone.

So the concept is a good one.

However, the difficulties arise in the complexity of the legal relationship people enter into, when they decide to make an investment in a retirement village unit. licences to occupy, unit titles constrained by the licences to occupy, service agreements, and a prospectus¡Kthese are not the stuff of everyday life in New Zealand.

Couple the complexities with any one of the following, and the difficulties are obvious:

„h Making the decision to move into a retirement village immediately after the death of a spouse, or with family pressure to move into something more manageable, or both;
„h The investor never having dealt with legal documents before, perhaps because the spouse who did all the paper work has passed away;
„h The investor not seeking independent legal advice, or worse, and sadly more commonly, going to a lawyer who has no idea what to assess in terms of offering advice, and who simply says 'just a standard contract for these villages, dear'.
„h The investor not realising that a licence to occupy is not the same as buying a freehold house or leasehold flat, and that the unit is not theirs to sell;
„h Making the decision to move out of a retirement village immediately after the death of the spouse who was the one who made all the arrangements for moving in ¡V surviving spouses are often completely unaware of the detail.

As a result of any one or a combination of these events, it is not surprising that so many retirement village residents are writing to me saying that what they understood to be the case, is not the case at all. And that, in part, is because they didn't understand what they were signing up to in the first place.
You may well say ¡V caveat emptor ¡V let the buyer beware. But let me instance examples that are being sent to me on a daily basis:

„h Residents have been lumbered with all of the retirement village's legal costs and expenses to secure their investment;
„h Village management has increased fees without consultation with, or justification to, residents ¡V a letter I saw yesterday referred to a 14.5% increase this year;
„h Village management has changed and the new managers have set extremely high salary levels and 20 year employment contracts;
„h Residents have had no avenue for lodging complaints and no power to influence decisions about non-performing managers; individuals who have complained have had notices sent to other residents about their 'poor attitude';
„h Residents describe being trapped, as they haven't got the money to move;
„h Residents cannot get a definitive timeframe for the repayment of their investment, minus the depreciation, even though it's months since they vacated;
„h Families have described the ongoing service charges paid after the death of their parent, even though no services are being provided;
„h Unfulfilled promises of quality support services;

This sad and sorry list goes on and on. Now those in the retirement village industry can say, 'BUT that is what they agreed to. They signed up to a contract that said they would restore the unit to its original condition; they agreed to have the depreciation applied to the current market value, if it is less than what they originally invested; they agreed to continue paying service charges until the rtirement village found another investor; they agreed to pay depreciation on a yearly "or part thereof' basis ¡V and if they died two days into the second year ¡V well, it's what they agreed.'

This was the essence of the Law Commission's findings. Despite acknowledging all of the difficulties confronting people faced with these highly complex legal documents, they basically said it's about sanctity of contract.

I'd agree with that, if it was a level playing field, but it's not. Nor do I believe that the playing field is levelled by the mere act of disclosure, especially one that merely tells you to check what your rights/obligations are, rather than spelling them out. Nor indeed, a statutory disputes clause that enables a variation of provisions of an occupation contract, if the contract is harsh or unconscionable, or any power is threatened to be exercised in a hasty or unconscionable manner.

That is why, unlike the Opposition who are seeking to introduce the Law Commission draft as a Private Member's Bill, I believe we need to debate these issues much more carefully before a Bill is designed.

My goal is to come away with a bill that offers comprehensive protection to residents of retirement villages, and that demands good practice of the whole industry. Not just those who have signed up to the association and your Code of Practice and dispute resolution processes, which I am very positive about.

I have read a number of comments about the 'cowboys' and what are the minority of retirement villages who stand apart from your association, and I believe it is important to acknowledge the significant steps you have taken in regulating yourselves. However, although you are vulnerable to the damage that is caused to the industry's reputation by the 'cowboys', the risks that consumers are exposed to are even greater.

It is tragic reading of the search for security in retirement, turning into the never-ending nightmare that the experience becomes. You know as well as I do, that if the protection is across the board, then you can enhance your industry, by roping in the 'cowboys', and offering the security that both the residents and the industry is seeking.

I welcome your feedback on these issues.

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