Franks Stephen: Retirement Villages Bill — In Committee Third Reading 
Franks Stephen: Retirement Villages Bill — In Committee Third Reading 
[Volume:612;Page:9421] 
STEPHEN FRANKS (ACT) 
: 
 The dumping of 14 pages of a Supplementary Order Paper with 10-odd pages of new technical clauses is quite a blight on the pride that Parliament might otherwise have wanted to feel in responding to all those submissions from Grey Power. This process involved the Justice and Electoral Committee doing what some members felt was an excessive amount of investigation with an excessive amount of care about the actual words and what the effect of the intentions as translated might be. Many of the words being changed or replaced in this Supplementary Order Paper were words that the committee agonised over—I think that probably is the right word. Now explanation is completely absent for many of the ones that look technical. 
I take a simple example. A provision had been substantially modified to try to exclude parts of rest homes from what would otherwise be retirement villages or hospital care areas. It has now been replaced by new words that might or might not achieve what people submitting to the select committee wanted. It might or might not achieve a sensible purpose but this House will vote on it without any opportunity of knowing. I would ask the Minister to explain that and many others of these but it might be unfair. We cannot really engage in a dialogue because we will not get the time to do it. There are things that simply puzzle me and I do not believe that is the right way to approach a document that was given such close select committee scrutiny—whether welcome or unwelcome. 
 Although I am told this is a wide-ranging and general debate on the whole bill I am concerned that during this time we will slide past what look like simple wording changes. Those changes were presumably proposed by officials who I believe always had the earnest desire to make the bill work for people in retirement villages but—to be quite frank—did not seem to me to have the technical knowledge that enabled them to know whether their preferred wording was properly translated into legal effect. 
I am concerned that the changes which look so technical will be more like own goals of the kind that we identified in the bill. For example the bill started out simply stating that some rights of secured creditors would expire upon registration. The select committee received submissions on that from the Law Society and some secured creditors. They made us realise—those of us who did not already see it—that simply doing that to a secured creditor was firstly a major breach of a rule-of-law principle and bad in principle and secondly would make lending for retirement village purposes unattractive. Once the Government shows that it is quite willing to override contractual rights and simply replace existing rights with what it feels it would like to see were it standing in the shoes of the parties the industry knows that it can happen again. It is notice to the industry that if it lends to a retirement village and the retirement village gets into difficulties then the Government might well respond to the clamour to rewrite the deal in a way that a lender would certainly find expensive. 
The consequences are obvious. I believe that these provisions will put retirement village lending in the same category as farm lending. From having been on the board of a very profitable farm finance company I know that there is a persistent premium on lending to farmers that can be explained only by the fact that farmers gang up when there is a mortgagee sale and therefore make it hard to exercise the lender’s security. That persistent premium costs New Zealand farmers many millions a year. We used to think that somewhere around half a percent per year could not be justified for any reason of practical security that farms were good security in terms of the underlying asset value that their cash flows were usually there and that they could usually work their way out but it was persistently more profitable to lend to farmers—