Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


Lianne Dalziel Address to Hutt Rotary

29 May 2002 Hon Lianne Dalziel Speech Notes

Address to Hutt Rotary “Retirement Villages Legislation”

Good afternoon and thank you for the invitation to speak to you today about the proposed Retirement Villages legislation.

The Retirement Villages Bill was introduced to Parliament just before Christmas. It underwent its first reading and is now being considered by the Justice and Electoral Select Committee. Although my role has to be somewhat removed from the process at this stage, I have made it clear to the Select Committee Chair Tim Barnett, that the government is interested in a comprehensive report-back, which identifies all the key concerns raised by submitters, so that we can consider whether changes are necessary.

Before I discuss the issues that have arisen in terms of submissions and correspondence, I thought it would be useful that we remind ourselves of the purposes of the Retirement Villages Bill.

These are set out in clause 3 of the Bill, and they are:

- To protect the interests of residents and intending residents of retirement villages; and

- To enable the development of retirement villages under a legal framework readily understandable by residents, intending residents and operators.

To achieve these purposes, the Bill has been designed to:

- Promote understanding of the financial and occupancy interests of retirement village residents;

- Provide an industry-focused regulatory and monitoring regime in which compliance costs are minimised;

- Provide external oversight of the conditions of entry into, and continuing operations of, retirement villages;

- Introduce a range of requirements and procedures necessary to give effect to the regulatory and monitoring regime;

- provide an environment of security and rights protection for retirement village residents; and

- Confer on the Registrar of Companies, Retirement Commissioner and the Securities Commission, powers, functions and duties relating to the legislation.

The legislation has been designed to prevent avoidance, by having the widest possible definition of retirement villages, and requires all retirement villages to register with the Registrar of Companies.

Law reform in this area was clearly needed, and the Law Commission reported to the previous government with its proposals prior to the last election. They recommended the introduction of “stand alone’ legislation for retirement villages, although the Bill we have introduced is different in a number of material respects to that recommended by the Law Commission.

I was pleased in the consultation process that we appeared to have relative consensus between the Retirement Villages Association and the consumer groups, however the balance appears to have shifted, which I guess is not surprising when people have to opportunity to study an actual Bill in detail. It is clearly the opinion of some submitters, and that includes the Law Commission, that the balance is weighted towards industry.

Naturally I cannot predict what changes will be proposed, but I thought it would be worthwhile to traverse the key issues that have been raised so far, and also those issues that have been raised with me.

I am disappointed to report that the rate of correspondence has not reduced in the wake of the legislation, and more disappointed to learn that some residents still fear that they will be “turfed out’ if they are seen to “rock the boat’. Retirement Village operators who treat their residents in such a manner ought to be ashamed, but the fact that some do, provides a salutary reminder of why we need comprehensive legislation.

At the RVA Conference last week I was asked, if what I said was true, why hadn’t residents voted with their feet - my reply was that their feet were stuck in concrete, and that is the most significant problem; people feel they cannot get out of the situation they are in, without exposing themselves to the risk of losing a substantial part of their investment.

Disclosure

Disclosure is designed to ensure that people know exactly what they are letting themselves in for, both in terms of their financial investment and living in the village.

The most difficult concept that people have had to grasp, (and this truly is one of the more complex areas of law), that when investing in a retirement village unit, residents do not buy property they can sell. It is significant that I used the word “invest” rather than “buy”, because that is usually the nature of the transaction. That is why until now, retirement villages have been covered by broader securities legislation.

Although the Bill allows for the disclosure statement to be provided by regulation, there has been almost universal opposition to this approach. There has been a call for an explicit framework for the disclosure statement, if not the disclosure statement itself, to be included in the Act.

I believe there would be an advantage in this approach. Detail could still be left to regulation, which would make ongoing review and amendment a much simpler process than amending the Act, however, there would be a degree of comfort to those who don’t feel able to sign up to something they cannot see.

We have already made it clear that we anticipate the Disclosure Statement to include:

- The ownership and management structure of the village and the ownership structure of the units within the village.

- The village development, numbers of units, services currently provided and to be provided and other developments that would impact on residents’ use and enjoyment of their unit and the village facilities.

- Full information on entry costs, periodic charges and fees, what they represent, and on what basis they might be adjusted.

- Availability to residents of information, including relevant financial information, and how this is to be provided.

- Details of what happens on departure and sale of a unit.

- The rights of owner and resident in respect of any changes to the terms and conditions of occupancy.

It may be preferable to have these spelt out in the legislation, so that there is clarity about the content of the Disclosure Statement in advance of its development, which would enable the detail to be measured against specified criteria.

Harsh and Unconscionable Provisions

The Law Commission Report recommended the inclusion of a High Court power to strike down “harsh and unconscionable provisions’. In their submission to the Select Committee, they have recommended that this be included in this Bill.

When people speak of the principle of sanctity of contract, they often forget that there is not always a level playing field. I do not accept that the playing field is levelled by the mere act of disclosure.

I had felt that the Disclosure Statement coupled with the “cooling off’ period would suffice, however, perhaps it should still be open for the court to intervene to prevent harsh and unconscionable provisions or actions to prevail.

Dispute Resolution

Good disputes resolution requires access to a process, which:

- Is fair;

- Is capable of dealing appropriately with both small and large issues; and

- encourages complaints and disputes to be addressed as quickly and as simply as possible.

This is one aspect of the Bill that I believe called for some detail and prescription. The benchmark we have used is the Residential Tenancies Act. However, there are those who feel it is too prescriptive, others feel that there is too much industry control over the appointments.

As an observation, based on the extensive correspondence to my office, I believe that a good complaints process linked to a sound disputes resolution process is absolutely critical to the success of the legislation.

Exit payments and ongoing liability for service charges

Although the issue of exit payments and ongoing liability for service charges is intended to be dealt with in the Industry Code of Practice, these issues present as complaints to my office more than all other issues combined.

I gave serious consideration to imposing statutory boundaries around these charges, however I was not persuaded that it would meet the balance test that I have tried to apply throughout. Now I am not so sure.

I believe we need to do some further thinking around this.

In saying that I acknowledge that a significant number of retirement village residents choose this option, because it enables them to maximise their resources during their lifetime, leaving a significant part of the costs to be borne by their estate. I also know that limiting service charges after leaving the village, could lead to a transfer of costs to remaining village residents, which could disadvantage, in particular, people living in small villages.

It could also pose problems between existing residents and those entering into new occupational agreements.

However, I am also mindful of the fact that given the fact that retirement village residents have not actually bought property, which they themselves can sell, then it may be that they require more protection than the Code may give. Again, I am sensing a reluctance to sign up to provisions that are not yet written.

Ongoing service charges are also an issue. Given that depreciation is deducted for deferred service charges, then perhaps the ongoing service charges should be limited to the fixed charges, and be time limited.

What people are writing to me about all the time is what possible chance do they have in seeing their unit re-occupied, when there are brand new units to be occupied first. They complain there is simply no incentive to sell when they or their estate continues to pay.

Process

As I said, my intention in raising these issues with you is to highlight what appear to be the key concerns.

It may not be exhaustive, as all the submissions have not yet been heard. No decisions have been made to change the content of the Bill as introduced, and any significant changes will have to go back through Cabinet.

However, I thought it would be worthwhile to signal to you those areas where my correspondence and the submissions have raised concerns thus far. I have also asked the chair of the Select Committee to consider bringing back the key representatives of industry and residents before reporting the Bill back, to ensure that the widest possible input is achieved.

Conclusion

In any discussion of the merits of the proposed legislation it is always important to return to the purpose of the legislation, and to ask whether that purpose has been achieved. The overarching purpose is to protect the interests of residents and intending residents of retirement villages, as well as allow the continued development of further villages within a readily understandable legal framework for residents and developers alike.

I have always preferred to see this Bill as one of seeking balance between competing but not necessarily opposing interests. I believe that balance is achievable.

Thank you and I am happy to answer any questions you may have.


© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

 

Breed Laws Don’t Work: Vets On New National Dog Control Plan

It is pleasing therefore to see Louise Upston Associate Minister for Local Government calling for a comprehensive solution... However, relying on breed specific laws to manage dog aggression will not work. More>>

ALSO:

Corrections Corrected: Supreme Court Rules On Release Dates

Corrections has always followed the lawful rulings of the Court in its calculation of sentence release dates. On four previous occasions, the Court of Appeal had upheld Corrections’ practices in calculating pre-sentence detention. More>>

ALSO:

Not Waiting On Select Committee: Green Party Releases Medically-Assisted Dying Policy

“Adults with a terminal illness should have the right to choose a medically assisted death,” Green Party health spokesperson Kevin Hague said. “The Green Party does not support extending assisted dying to people who aren't terminally ill because we can’t be confident that this won't further marginalise the lives of people with disabilities." More>>

ALSO:

General Election Review: Changes To Electoral Act Introduced

More effective systems in polling places and earlier counting of advanced votes are on their way through proposed changes to our electoral laws, Justice Minister Amy Adams says. More>>

Gordon Campbell: On Our Posturing At The UN

In New York, Key basically took an old May 2 Washington Post article written by Barack Obama, recycled it back to the Americans, and still scored headlines here at home… We’ve had a double serving of this kind of comfort food. More>>

ALSO:

Treaty Settlements: Bills Delayed As NZ First Pulls Support

Ngāruahine, Te Atiawa and Taranaki are reeling today as they learnt that the third and final readings of each Iwi’s Historical Treaty Settlement Bills scheduled for this Friday, have been put in jeopardy by the actions of NZ First. More>>

ALSO:

Gordon Campbell: On The Damage De-Regulation Is Doing To Fisheries And Education, Plus Kate Tempest

Our faith in the benign workings of the market – and of the light-handed regulation that goes with it – has had a body count. Back in 1992, the free market friendly Health Safety and Employment Act gutted the labour inspectorate and turned forestry, mining and other workplace sites into death traps, long before the Pike River disaster. More>>

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news