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RETIREMENT VILLAGES BILL 2003 (No. 83)

Second Reading

[4.32 p.m.]

Mr GREEN (Braddon - Minister for Primary Industries, Water and Environment - 2R) - Mr Speaker, I move -

That the bill be now read a second time.

The bill before the House is to regulate the operation of retirement villages. This bill has been prepared in response to a report of the Law Reform Commissioner, report No.72 - Report on the Operation of Retirement Villages and other Types of Older Person's Accommodation in Tasmania.

In 1994 the then Attorney-General requested a review of the law relating to the operation of retirement villages in Tasmania. A retirement village is a type of accommodation development catering specifically for older people who are independent and able to look after themselves. The Law Reform Commissioner was given the task of reviewing and reporting on the law relating to the operation of retirement villages in Tasmania. In particular he was asked to:

(a) review the present law in Tasmania relating to the operation of retirement villages;

(b) consider whether the present law is adequate to safeguard the interests of the residents of retirement villages; and

(c) consider whether there is a need to introduce legislation to regulate the operation of retirement villages.

The Law Reform Commissioner recommended, in recommendation 1 of the report, that specific legislation be enacted in Tasmania to regulate the provision of older person's accommodation in this State. Since the release of the report in 1994 most areas of older persons' accommodation have been protected by new legislation such as the Commonwealth's Aged Care Act 1997, the State's Residential Tenancy Act 1997 and the Strata Titles Act 1998

The purpose of this bill is to cover another area of older person's accommodation, namely independent living in retirement villages. The Law Reform Commissioner noted that many challenges are posed by the gradual rise in the proportion of older people in the Australian community, one of which is the important challenge of housing for older people, in retirement villages in particular.

The Law Reform Commissioner stated that one of the reasons given for the need for legislation regulating older persons' accommodation was, and I quote, that -

'There is a social obligation upon the community to recognise the contribution which has been and continues to be made by older persons. Older people, therefore, have the right to dignity and respect and freedom from abuse and exploitation. They deserve peace of mind in respect of their accommodation. Legislation should ensure that older people have security in the most important aspect of their daily living - their homes.'

This Government fully supports such a view and through the Retirement Villages Bill 2003 is committed to ensuring older people living in or contemplating moving into retirement villages enjoy their retirement years with dignity and respect.

The Retirement Villages Bill 2003 provides certainty and security for prospective residents and residents of retirement villages. The retirement village industry will benefit in the long run from this certainty and security when Tasmania's ageing population look at accommodation to live in when they retire. Retirement villages will be seen as a viable option which provide them with a safe and secure place, and the bonus of a ready-made community.

This bill supports this Government's stated aim of providing all Tasmanians with a better and brighter future in which they feel secure and certain. Housing has been identified as a key determinant of health and well-being.

This bill promotes the health and well-being of older persons in Tasmania through the regulation of retirement villages and consequently promoting them as a real housing alternative for Tasmanian retirees. The bill also furthers the achievements of the goals identified by the community in Tasmania Together, in particular ensuring all Tasmanians have a reasonable standard of living with regard to shelter - goal 1 - and to have a community where people feel safe and are safe in all aspects of their life - goal 2.

We live in a time when Tasmania has an ageing population. At the time the Law Reform Commissioner's Report was released in 1994 it was evident, and is still true today, that the population of Australia in general and Tasmania in particular had an increasing population of people of 55 and over. This ageing trend is a result of both declining fertility and mortality rates and will be particularly significant around the year 2025, as the peak population of 'baby boomers' reach their late 60s and 70s. Inevitably, members of an ageing population will at some time consider entering retirement villages. This bill introduces a regulatory framework for the retirement village industry which clearly establishes the rights and obligations of operators, prospective residents and residents.

The bill aims to achieve the following objectives considered by the Law Reform Commissioner as those that older persons' accommodation legislation should be directed to achieve -

to identify the rights of residents and prospective residents of retirement villages as well as the obligations borne by those people;
to identify the rights and responsibilities of retirement village operators; and
to provide a means for people to make complaints about retirement villages and for the resolution of disputes concerning retirement village matters.

The recommendations made by the Law Reform Commissioner address a number of issues he identified with the law relating to the operation of retirement villages in Tasmania. The recommendations relating to retirement villages in the report form the basis of the Retirement Villages Bill 2003.

The bill is prospective in application, not retrospective. It was the view of the Law Reform Commissioner that it would be unacceptable to impose legislation retrospectively. It applies both to existing retirement villages as well as to new complexes set up after the commencement of the bill - recommendation 7.

In the bill a 'retirement village' is defined as a complex of residential premises - including adjacent land - established for retired persons and their spouses or predominantly for retired persons and their spouses, at least one of whom, before or on becoming a resident, is required to pay an ingoing contribution. The term 'at least one of whom' refers to the retired person and their spouse. For the purposes of the definition of 'retirement village', 'predominantly' means 50 per cent plus one. If, for example, 60 per cent of persons residing in a complex of residential premises have been required to pay an ingoing contribution, and those persons are retired persons, the complex of residential premises has been established predominantly for retired persons and therefore is a retirement village and those persons who paid an ingoing contribution are 'residents'.

Those other persons residing in the complex of residential premises who have not paid an ingoing contribution are not 'residents' for the purpose of the legislation. Only those persons who have paid an ingoing contribution would be considered 'residents'.

As the bill is not retrospective it does not override residence contracts entered into before its commencement. Therefore residence contracts entered into before the commencement of the bill that do not fully comply with the bill are not required to be amended. Specific provision is made that if there is a conflict between a clause in a contract entered into prior to the commencement of the bill and a provision in the bill, the provision in the contract prevails. This does not mean, however, that other provisions in the bill will not apply to residents living in retirement villages at the date of commencement. If a matter is not covered in the residence contract and a provision in the bill does cover the matter, the bill will apply. For example, if the residence contract does not provide a timeframe for repayment of an ingoing contribution when a resident leaves, the provision in the bill relevant will apply. In effect, the bill will add to the residence contract. Residence contracts entered into after the commencement of the bill will have to comply with the provisions in the bill.

The bill does not provide for the granting of exemptions - recommendation 8. This is because it is believed that the standards that are set throughout the legislation are minimum acceptable standards and all are achievable. Further, existing operators will be required to comply with the terms of the bill when a new resident is admitted, but current contracts will not be affected.

The bill also explicitly precludes persons contracting out from its provisions -recommendation 9. This means that an operator and a resident cannot enter into an agreement, intentionally or otherwise, which negates any of the rights or obligations provided in the bill. For example, the bill provides that a copy of the village rules must be provided prior to entering into a residence contract. A residence contract which provides that the operator will give the resident a copy of the village rules after they sign the contract is ineffective as this would be construed as contracting out of an obligation that the operator has under the bill.

The intention is that the bill applies universally to all prospective residents, residents and operators. By prohibiting contracting out, the bill avoids establishing different rights and obligations for individual residents and operators.

The requirement for the operator to provide relevant information to a prospective resident prior to them entering into a residence contract introduces the concept of full disclosure on behalf of the operator - recommendation 14. One of the problems faced by prospective residents is being able to make an informed decision in choosing a suitable and affordable retirement village.

An operator will be required, before a person enters into a residence contract, to give to that person information concerning the financial position of the village, the rights and obligations of residents, the services available and the process when residents vacate their premises, so that they can make an informed decision regarding entering the retirement village. The information required to be provided includes a copy of the residence contract, a copy of the village rules, a checklist of questions they should consider when thinking about entering a retirement village, a notice of their rights under the bill, and a copy of any financial information that is available.

The provision of this information will allow prospective residents to compare different retirement villages and make an informed choice. It also provides a prospective resident with the opportunity to thoroughly read the residence contract and to seek advice before signing.

Further information is provided to residents at the meeting operators are required to hold each year. During this meeting issues affecting both parties will be discussed, for example the introduction of a new levy or changes in existing levies. A 'levy' for the purposes of the bill includes a one-off payment for some larger type of item, for example a mini-bus for use by the residents of the village.

The bill provides for two cooling-off periods - recommendation 16. The concept of a cooling-off period assumes that until signing, the full force and understanding of the responsibilities of the contract do not become apparent. It is at that time that the resident is most likely to repent the decision made and ought to have the opportunity to be released from the signed document. The time for cooling off is limited to 5 business days. The first cooling-off period arises automatically after the contract is signed. The resident is given five business days within which to rescind the contract, without penalty, if they change their mind about living in the retirement village.

The second cooling-off period arises if a person enters into a residence contract and the operator fails to provide all of the documents required to be given to that person prior to them entering into the residence contract. They are given five business days after the day they receive a document not previously provided within which to rescind the contract. Situations may arise where the information subsequently provided would have resulted in a decision not to enter the retirement village.

The bill provides for establishment of a dispute resolution process, albeit different in form from that recommended - recommendations 23 and 24. The dispute resolution process is intended to address complaints raised by residents and operators. The bill provides for a dispute resolution process which has an internal and external part. Each retirement village must establish an internal dispute resolution process to be contained in its village rules. It is desirable that minor grumbles, problems and disputes be resolved internally and as amicably as possible.

If a dispute cannot be resolved through the internal process, an operator or resident can apply to the Director of Consumer Affairs and Fair Trading to deal with the dispute, the external part of the process. The presence of an external arbiter ensures openness, integrity and accountability in the dispute resolution process.

An issue of particular importance to prospective residents and residents is the repayment of the portion of their ingoing contribution they are entitled to when they leave the retirement village. The ingoing contribution is the money they are required to pay for, or in contemplation of, entering into a retirement village.

Currently the provisions of the residence contract govern repayment of the relevant portion of the ingoing contribution when a resident leaves a retirement village. If the contract does not provide for this event, the operator has no time frame with which it must comply.

The bill establishes a maximum time period of six months in which an operator must refund to the resident the portion of their ingoing contribution they are entitled to after leaving the village. The bill, however, recognises commercial difficulties that may arise for an operator, for example if two or three residents leave the village at the same time. Operators are able to apply to the Director of Consumer Affairs for an extension of time which the director may give if satisfied that the refund required would cause serious financial hardship to the operator if paid within the required period of six months. The director may then extend that period for any further period, either unconditionally or subject to any conditions considered appropriate in the circumstances of the case.

The bill provides for a charge on land. A charge on land means the right to secure payment of a debt in much the same way as a mortgage. The purpose of providing such a charge over land is to protect a resident's interest; that is, their ingoing contribution.

When a resident attempts to give effect to the charge, that is, when they do not receive the portion of the ingoing contribution to which they are entitled, the Supreme Court determines its priority in relation to other interests in that land. The Supreme Court is considered to be in the best position to make the determination taking into account all of the circumstances of each individual case.

The commencement date for the bill is 6 months after the bill receives royal assent. The six-month lead-in period provides operators with time to prepare themselves, and the paperwork, to meet the new requirements.

An extensive consultation process was undertaken with residents, operators, operator representatives and consumer representatives during development of the bill, which included a number of visits to retirement villages to gain a better understanding of how they operate. Public comment was sought on three versions of the bill. Comments were received from operators, operator representative groups, consumer representative groups and residents.

A reference group chaired by the Director of Consumer Affairs and Fair Trading and consisting of operators, residents, consumer representatives, operator representatives and government was established. This group provided extensive comment on the bill prior to finalisation. A number of their recommendations have been included in this bill. There can be no doubt that the views of all parties in the retirement village industry have been widely canvassed and given close consideration in the final development of the bill.

The introduction of this bill places Tasmania on the same footing as other States, which already have legislation regulating the operation of retirement villages. In recognition that the current retirement village operators generally are offering a satisfactory service, the bill does not include many of the provisions contained in legislation in other States, on the basis that they are unsuitable or unnecessary for this State. Rather, the bill reflects the Tasmanian situation regarding retirement villages. It became evident during the extensive consultation process undertaken by my department during the development of the bill that we do not yet have the same retirement village culture present in other States, due primarily to Tasmania's smaller population and the relatively small size of its retirement village industry.

The bill establishes fundamental rights and responsibilities of operators, prospective residents, and residents without interfering with the particular arrangements in each retirement village. Central to this approach is the requirement for full disclosure of all relevant information before entry, which is supported by contract enforcement and accessible dispute resolution.

The bill establishes a regulatory framework which provides sufficient protection and security for residents and their rights, whilst ensuring that operators are able to continue to provide the type and quality of service expected by residents.

The bill has been drafted to accommodate the industry of today and the industry of the future as Tasmania's older persons look for accommodation to live in when they retire.

The bill complements the legal framework applicable to retirement villages already in place, including the common law and legislation such as the Fair Trading Act 1990 (Tasmania), Residential Tenancy Act 1997, Trade Practices Act 1974 (Commonwealth), Aged Care Act 1997 (Commonwealth), and the Corporations Act 2001 (Commonwealth).

I would like to take the opportunity to acknowledge the effort made by officers of my department within the Office of the Recorder of Titles throughout the development of the bill. The extensive consultation process undertaken by these officers has greatly assisted in the development of the bill. I commend the bill to the House.

[4.55 p.m.]

Mr ROCKLIFF (Braddon) - Mr Speaker, I move -

That the debate be adjourned.

Debate adjourned.