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


Dalziel: Address to the Retirement Villages Assn

Lianne Dalziel: Address to the Retirement Villages Association

Good afternoon and thank you for inviting me again to speak to you.

This is the third year in a row that I have addressed your annual conference, but the first time as the Associate Minister of Justice, with responsibility for the Retirement Villages Bill.

When I addressed last year's Conference, the Justice and Electoral Select Committee had just commenced hearing submissions on the Retirement Villages Bill. As some of you will be aware, the Select Committee has completed its report on the Bill and submitted it to the House of Representatives.

The Select Committee has done an excellent job of hearing submissions on the Bill and has taken care to ensure it

· addresses essential protections for residents of retirement villages,

· while balancing the interests of residents and what is a diverse industry.

The last time I spoke to you, I outlined the areas I believed would need to be dealt with in the Bill:

· Disclosure of information relevant to occupancy

· harsh and unconscionable provisions

· dispute resolution

· exit payments, and

· ongoing liability for service charges when a resident vacates a village.

The reported back version of the Bill, although fundamentally the same as introduced, deals directly or indirectly with all of these provisions.


The Bill is designed to ensure that all the critical pieces of information that a prudent person requires to make a sound decision on whether or not to enter a village, or make a choice between villages, are available in a consistent and accessible format. It had been the intention to fully provide for the 'disclosure statement' in regulations. However, it is clear from some of the submissions made to the Select Committee that the emphasis on disclosure was lost because of the limited reference to the disclosure statement in the Bill itself.

The Select Committee's recommendation that the minimum matters to be included in a disclosure statement will be outlined as a schedule in the Bill itself, is welcomed.

The areas on which disclosure will be required are: · ownership structure · management structure · legal entity · statutory supervision · type of development, services and facilities · entry costs · service charges · termination rights, and · exit charges

The Schedule requires that information on each of these matters must be set out comprehensively.

For example, under service charges, villages will have to show: · the level of the service charges, their frequency, and what service and facility costs they cover · policies applied in adjusting charges and · provision for maintenance and repairs

Regulations will still be required to provide a template for the disclosure statement to ensure uniformity and to minimise jargon and legalese.

Harsh and Unconscionable Terms It is in the nature of the retirement village industry that its ongoing success, and its continued acceptability to older people as an appealing retirement option, is very dependent on its public image. Bad publicity affects the industry indiscriminately.

The Law Commission, in the draft Bill attached to their report and in their submission, favoured the inclusion of a specific provision giving the High Court power to strike down harsh and unconscionable terms in occupation right agreements. The Bill as introduced did not contain a "harsh and unconscionable" provision, which meant that few submissions made on the Bill included comment on that particular matter. Both the original and the reported back versions of the Bill do however contain provisions that should have the effect of eliminating terms of existing occupation right agreements that are harsh and unconscionable, and preventing new agreements from containing such provisions.

Dispute Resolution Fair and just complaints and dispute resolution processes are key planks of the Bill. While the two are linked they are quite distinct processes. An effective complaints process makes a positive contribution to life in the village and provides an opportunity for dialogue between residents and village managers on matters that need to be addressed or are not mutually understood.

Where matters cannot be resolved at this level, a dispute resolution process allows matters to be resolved in a formalised way.

In its report, the Select Committee recommends several changes that are significant. It correctly deals with complaints as just that - matters to be resolved between a resident or residents and the village management. It is only where complaints cannot be resolved to the satisfaction of the parties that the matter proceeds to a disputes hearing.

The disputes process itself is more carefully prescribed by the Select Committee in that: · low level concerns are dealt with at the appropriate level · dispute resolution can be initiated by both residents and operators · the Retirement Commissioner will establish and maintain a list of approved persons from whom disputes panels can be drawn instead of the operator approving their suitability · the responsibility for appointing the disputes panel from the approved list will rest with the operator · the process to be followed in the conduct of the dispute hearing, the powers of panels and the enforcement of decisions are carefully prescribed, and · a right of appeal to the District or High Court against a decision of a disputes panel is inserted.

Exit Payments Concerns about the time taken to on-sell units and continuing charges on vacant units were a major consideration in initiating the Bill.

A survey of a sample of the correspondence received by my office in 2001 on retirement villages showed that 49% had concerns at the time taken to sell vacant units and continuation of fees following people vacating their units. Some 34% were concerned at the level of exit charges. Those same concerns again came through the many consumer-oriented submissions to the Select Committee. I shared these concerns that the Bill did not go far enough to address these aspects and raised the matter with officials and with the chairperson of the Select Committee.

As a result the matter was opened up for further consultation with the Retirement Village Association and some of the main interested parties, on the basis of the following proposal: · Units vacant for three months or more would be subject to monthly advice to the former resident or their family on the steps taken to market the unit and the progress made · After 6 months the former resident would be able to request the operator to obtain an independent valuation of the unit to establish the appropriate price at which the unit should be marketed. · If still unsold after 9 months, the former resident would have the right to have the matter referred to a specially constituted disputes panel chaired by a retired judge or experienced lawyer. This special panel will be able to determine whether there has been any failure to meet obligations relating to the sale and have a range of powers including, in extreme cases, a payment to the former resident of an amount equivalent to a sale.

Provisions giving effect to the first two steps are not in the Bill, however it is my intention that these will be included in the Code of Practice, which will have legal force under the legislation. Access to the specially constituted disputes panel will be provided for in the Bill itself. The point to be made is that the process outlined should lead to the establishment of good practices in the management of exits while at the same time allowing flexibility. Once people understand from the outset that they are not buying an apartment or a unit they can sell, then I suspect that the concerns that have been expressed in the past will dissipate.

Service Charges following Exits Liability for service charges following exits is also another problem area where both the industry and residents would benefit from greater uniformity in practices. It is an issue, which causes considerable concern to families in particular. It is recognised that charges on vacant units are a matter of being fair both to the departing resident and to other residents who would otherwise have to carry the costs.

The Schedule outlining the matters to be included in the Industry Code of Practice includes 'requirements relating to payments due when an occupation right agreement is terminated and the manner in which those amounts are calculated'.

Code of Residents' Rights It is acknowledged that life in a village is as much about relationships as it is about bricks and mortar, services and facilities. The Code of Residents' Rights has been designed to provide the basis for a positive relationship between residents and village management and owners. The Select Committee has sought to change the status of, and simplify the Code and align it more closely to the provisions of the Bill as they apply to occupation right agreements. It has also extended it to recognise the reciprocal rights and obligations of operators and their staff.

Statutory Supervisors The quid pro quo for the plain language disclosure of the details people need to know before buying into a village is relief from having to prepare a prospectus. This does not relieve intending residents of the need to apply diligence in ensuring that their selection of a village provides investment security. Within the Bill the role of statutory supervisors has been retained but will be more focused on the financial viability and management of villages. With the complaints and dispute resolution process villages will have introduced to conform to the Bill, their involvement in disputes should be minimised. There has been concern expressed that the Bill is silent on notification to the statutory supervisor of disputes that could in fact have an impact on the financial operation of the village, and I have undertaken to look at that.

Following submissions from a number of villages, many of them small not-for-profit organisations, the Select Committee accepted that some villages have little need for the protections that a statutory supervisor has to offer and to require them to appoint such a position would involve their residents in considerable expense. As a consequence, it recommended that in very carefully defined circumstances villages may be exempted from the need to have a statutory supervisor.

Approvals of statutory supervisors will transfer from the Securities Commission to the Companies Office. However Statutory Supervisors approved under the Securities Act will be able to be appointed as statutory supervisors of retirement villages under the Bill.

Code of Practice Once the Bill is passed, and it has a Category 2 Status 'Must be passed in 2003', our next area of work is the Code of Practice. As many of those with interests in these matters have said:- the devil is in the detail. And look forward to either watching with interest those developments, or being directly involved as the case may be.

I am confident however that with the goodwill that I have seen displayed on both sides of the issues as well as all the work the RVA has done leading up to this that we will see the Code developed in a timely and satisfactory manner.

Conclusion In conclusion, my attendance at the Retirement Villages Association Annual Conference presents an opportunity to thank the Association for the positive way you have responded to the preparation of the Retirement Villages Bill and its progress through the Select Committee process.

Special thanks are due to the President, Helen Melrose, and Past President, Cliff Cook, who have made themselves available, often at short notice, for advice and consultation.

When I first came to see you, I said that this would always be about balancing the sometimes, but not always, competing interests of the residents and the retirement villages. I think that balance is now pretty right, and I look forward to answering any questions you may have.

© Scoop Media

Parliament Headlines | Politics Headlines | Regional Headlines


Sector Opposes Bill: Local Government Bill Timeframe Extended

The Minister of Local Government Peseta Sam Lotu-Iiga has asked the Select Committee to extend the report back date for the Local Government Act 2002 Amendment Bill (No 2). More>>


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>>


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>>


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>>


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>>


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



Search Scoop  
Powered by Vodafone
NZ independent news