Franks Stephen: Retirement Villages Bill — In Committee Third Reading 
Franks Stephen: Retirement Villages Bill — In Committee Third Reading 
[Volume:612;Page:9430] 
STEPHEN FRANKS (ACT) 
: 
 Given that this is my last call I will try to address clauses that have not been touched on clauses that in fact probably no one in this Committee has even noticed other than the Minister. 
For example I take the amendment to clause 37 on Supplementary Order Paper 157 which states: “(1B) A deed of supervision must contain all information and other matters or provisions that are required to be included in it by regulations made under this Act.” Suddenly in effect the industry has been nationalised. It is true that the drafter has throughout the bill regarded the operators as if they were rapacious landlords when in fact in a number of villages the operators are in economic terms the residents themselves collectively. The operator may be a charity the operator may even be a separate party but by the way that the villages are set up the operator is the residents collectively for many purposes. If the operator incurs costs if the operator has extra trouble if the operator finds it much harder to deal with a troublesome resident and if the operator has to spend time reassuring the Minister or the registrar ultimately that cost will fall back on the residents. So in effect they are being potentially inflicted with the costs of the competence or incompetence with which this industry is now to be regulated. By a simple piece of drafting of an amendment to clause 37 after the select committee hearings the Minister has become able politically to decide the terms of the contract between the supervisor and the village. 
That is not a neutral change. The Minister will of course now be embroiled through the regulators in any disappointment that residents feel. That is the classic means by which lowest-common-denominator regulation starts to become gold plating. Ultimately it becomes oppressive and damaging to the interests of those in the villages those in the industry being regulated. The supervisors will now be required to jump hurdles created by the response to the circumstances of the last problem in the industry—not the problems that it would be most rational to deal with. They will not reflect solutions that over time have evolved as the best mix in regulation between the pressure to ensure that no one can ever complain and the pressure to make sure that precautions do not cost more for the people at the bottom end of the market. The mix will now depend on what is needed to cover the Minister’s back because a power becomes a duty and a power is certainly a political exposure. If the Minister has not stipulated a deed of supervision with all the things that are a defence against political criticism then she will get political criticism. It will not be rational. It will not take into account the fact that a little change here or there might shut out the 5 percent of people who otherwise could afford to get into a retirement village. 
The effect is that this Government which pretends to act for the people who cannot look after themselves is taking the best-equipped 4 percent of our elderly population and gold plating facilities for them. It is giving them a protection that most of them already have. They are in perhaps the most desirable form of retirement living for many despite the Greens’ view that it is a monoculture. The Government is now saying that it will make them more privileged. It will expend its political time and energy and its regulatory resource on making those people even more privileged. It does not matter to it that a whole host of people will be shut out at the bottom end. The Government will pull up the drawbridges. The personal liabilities it will put on operators will discourage the next group of church trustees who decide to have a crack at it. It will discourage the iwi who thinks it might be a good idea to put three or four units together until it is told by its lawyers that it has to learn how to comply with an elaborate code and meet the requirements of a deed of supervision that is properly related to villages of hundreds of units. 
The effect of this is that this industry will become politically directed not market directed. The explosive growth in it has been precisely because it has not been growing along the lines of some politician’s best idea. Indeed in this industry the New Zealand pattern has evolved quite differently from patterns overseas. It has elements of life insurance and elements of property investment. The fact that people do not get back the full amount they put in has been a source of grievance and it is sensible for the Minister to have come up with a scheme where there will be a form of disclosure that should make it a little easier for people to know that the industry is not pure property investment and does have elements of life insurance. 
All of that could have been done without the Minister succumbing to the pressure and the temptation to become the dictator of the industry rather than the sunlight agent—the agent ensuring that there was proper disclosure and treating elderly people as if they could be trusted to make their own decisions. Our elderly now become the only class of competent adult New Zealanders who are not allowed to make the bargains for their homes that everyone else can make. They are the only class who can no longer front up and sort out for themselves what they think is the optimum mix of protection and investment. It will now be prescribed by the Minister and prescribed according to a code proposed by the big end of the industry—that is by the major operators who have a very obvious interest in what they call keeping up standards which is code for keeping out those who would bring competitive entry. 
Hon Lianne Dalziel 
: Cowboys! 
STEPHEN FRANKS 
: The Minister does not have the faintest understanding that competitive entry is the willingness of people to come in at the bottom end of an industry and challenge it with a new idea. This Minister calls those people cowboys. Are the people who decided to build kaumatua flats cowboys? What about the people from the Dutch community who decided all those years ago to create out of a combination of the Unit Titles Act which did not contemplate it and some other pieces of law a form of communal living that no bureaucrat could have prescribed? The Minister is now going to prescribe through the deed of supervision exactly how the risks will be allocated and there is no risk that is carried without a return. If the supervisors are made responsible—as was included in this bill when it started out—for acts over which they have very little control they will stipulate more control. Instead of the operator being able to sort out what best appeals to people who want to buy units it will have to sort out what gets past the regulator. 
This of course is the same Minister who is now holding up the Stock Exchange as she decides with all her wisdom what the rules ought to be between the Stock Exchange and companies. That is a relevant other example. This Labour Cabinet has a new power to tell the Stock Exchange what its rules should be. This Minister is now giving herself through a Supplementary Order Paper that the Justice and Electoral Committee never saw the power to tell this industry what the pattern of risk will be and she is refusing to accept a provision from Parliament that would at least direct her to take account—and that is all it was—of the potential cost to the people who will be shut out of these gold-plated villages. The drawbridges have been pulled up and the security fence has gone in. The staffing requirements will be set at a level that amateurs simply cannot match unless they are inside the industry. 
This Supplementary Order Paper has many provisions that probably have the same effect. The Minister chose not to highlight that particular clause. The explanatory note did not mention it as far as I can see. It is a major change in the relationship between statutory supervisors those they are supervising and the operators. The operators are the promoters who ensure that we cut down the waiting lists for these villages that the National Party mentioned. Those waiting lists will be cut down only by the villages being made more expensive and people being rationed out of them or— 
Dr Lynda Scott 
: Or more access. 
STEPHEN FRANKS 
: —having more access or more supply and it is not available here. I think the National Party spokesperson on the elderly although not a member of our committee has hit the key problems with this bill very very well. I know that National will vote for this legislation because of the good parts of it and there are good parts in it but ACT cannot support the bill in this form simply because it encourages this kind of imperialism by Cabinet. 
The question was put that the following amendment in the name of Murray Smith to the amendment to clause 21(5) set out on Supplementary Order Paper 157 in the name of the Hon Lianne Dalziel be agreed to: 
to add the words “(being a right provided in that security interest as at 31 December 2002)”.