Smith Murray: Retirement Villages Bill — In Committee Third Reading 
Smith Murray: Retirement Villages Bill — In Committee Third Reading 
[Volume:612;Page:9441] 
MURRAY SMITH (United Future) 
: 
 United Future is very pleased to see the passing of this bill and its third reading today. We want to thank the Government for responding to our call that the bill be given urgency during this urgency period so that it could go through the Committee stage and the third reading and be sent on its way to come into force in the quickest possible time. I am disappointed that the ACT party is the only party unable to support the bill. I hear what Mr Franks says—he made very valuable contributions during the select committee process—and I hear some of the dangers he talks about. However very clearly on balance this is a very good bill. It provides a balance between market forces and the necessary statutory control. 
Retirees and their families are often in a vulnerable position. Retirees investing in their final homes are often in a difficult situation. It is an emotional situation for families and a situation where larger villages in particular have a power imbalance and are able potentially to rip off retirees and their families just because of their greater knowledge of the situation and because of the unique situation and construct that retirement villages provide as compared to ownership of one’s own house. 
Formerly the protections provided were really through the Securities Act and as a lawyer I know the huge amount of paperwork that used to be involved concerning retirement villages. I tried to wade through the paperwork and then explain to potential residents just what was involved. It was not always clear and transparent. This bill will provide far more clarity and transparency specifically directed at the retirement village situation rather than at the broader securities regime that exists currently. 
The balance between market forces and statutory controls is necessary. In my second reading speech for the benefit particularly of Mr Jones who had not heard of any cowboy operators I referred to a retirement village in Petone that I have been directly involved with known as Jackson Mews. In my second reading speech I made reference to the fact that the residents had had extraordinary difficulty in getting the operator Mr John Gilbert even to respond to the queries they had. I promised in that speech to report back to the House what happened particularly following Mr Gilbert’s promise that he would respond to queries within 7 days and would meet with the residents. I am pleased to say that at least he met with the residents. There was a strong turn-out of residents who expressed their strong disgust at the way that he was operating. Unfortunately it appears that Mr Gilbert cannot see beyond the dollars involved in his investment and he is unable to understand the residents’ point of view. For him this is his village that he developed and effectively he seems to see the residents as guests. He cannot understand why they should be making waves including making waves publicly about the running of the village because all it does is undermine everybody’s investment. We hope that with the passing of this bill and the appointment of a statutory supervisor he will be forced to come to the position of having to address these issues and address them through the disputes regime that is there. 
The statute will provide a framework—and only a framework—within which retirement villages will operate. I guess one of the cautions about the bill is that a huge amount of ministerial discretion is provided for the village through Orders in Council and other regulations. There is considerable scope here for a very interventionist approach which I think would be both unwise and unnecessary. There needs to be a balance between control and the allowance of some flexibility within the market. Mr Franks has referred to the danger of over-intervention by the Government and over-control of this sector which I think would be to its detriment. 
There are two matters particularly that come to my mind in respect of this level of control. One is the new provision in the Supplementary Order Paper for the statutory supervisor to enter into a deed of participation with the operator and the other is that the requirements of the deed of participation will be set out by regulation. It seems to me that statutory supervisors know what they are doing and if they have to be appointed and the operator has to appoint them the statutory supervisors will provide deeds that will adequately enable them to fulfil their responsibilities. I question whether the Government needs to tell statutory supervisors what ought to be in their deeds. Maybe there is some room for standardisation but I would have thought that that would have developed through the market anyway as statutory supervisors colluded to compare notes and come up with what they needed. They are experienced in the field. That is just one example of a signal that the Government may want to be too hands-on here. 
I was also critical in the select committee and continue to be critical of the provisions of clause 26 which require lawyers to certify that they have explained to residents the general effect of the agreement and its implications. As a lawyer I almost took offence at the provision stating that the explanation required to be given must be given in a manner and language that is appropriate to the age and understanding of the intending residents. I see that as an insult to the legal profession because lawyers already do that. That is their job and their trade and to be told in legislation when there is no evidence whatsoever that lawyers are falling down on the job in any respect in this regard is a little like telling them how to suck eggs. Nevertheless the provision is there and I do not think it needs to be there to do the job. 
I referred to exemptions during the Committee stage. The danger is that exemptions will backfire on residents by putting them in the situation where if they are in an exempted retirement village they can be faced with being threatened that if they stir up trouble that will effectively mean the exemption will be lost at extra cost to the village and extra cost to all the residents. I can see a situation where an operator could put pressure on residents by saying that if they make a complaint then all their fellow residents would have to pay the cost of it. I hope that when the Minister draws up the criteria for exemptions under clause 75B they are very tightly controlled. I think she could include some provisions to provide more balance. One might be for the registrar of retirement villages to chair the annual general meeting—or provide someone to chair the annual general meeting—where an exemption is granted so that an independent person can get a feel as to whether residents are being heard and whether there are some genuine complaints without having to go through a formal process of complaint. Certainly I think the registrar would have to take a greater interest in villages with exemptions than in those with a statutory supervisor appointed which is really what this provision is getting at. 
Possibly the bill should also be used in a transitional fashion. Some smaller villages should be encouraged to amalgamate with other villages—it could happen where a church ran a number of villages—to get that economy of size so maybe exemptions can be looked at as a transitional measure to ease villages into a more satisfactory set-up. Mr Franks was certainly concerned about the impact that the bill might have on lower-level operators and that if it is too draconian and standards are set too high then the whole industry will effectively be left to the major players and small people will not be able to get into it. I think it is a danger that the Minister needs to weigh very carefully and be conscious of. 
It will be nearly a year before the full regime is in place. It will be interesting to see how it develops. Anything new has to have a settling-down period but generally it is a good bill. The officials have spent a lot of time on it. The select committee spent a very constructive period of time listening to submissions and developing the issues and have obviously made a lot of changes that I think have been very positive. I think we have had the advantage of a Minister who is knowledgable and is concerned to weigh up competing interests and provide some sort of balance. Many aspects of the bill will provide a far better environment. United Future is very pleased to see the bill go through its the third reading and finally come into force as law.