Retirement Villages Amendment Bill 2020

Today Abigail successfully negotiated a series of amendments to the Retirement Villages amendment Bill 2020 that will strengthen the Bill and ensure greater financial support for those transitioning from retirement villages to aged care facilities. 

Ms ABIGAIL BOYD (22:47:02): On behalf of The Greens I speak in debate on the Retirement Villages Amendment Bill 2020. The Greens are broadly supportive of the bill and its intent, and we welcome the commitment by the Government to overhaul the retirement villages sector. In 2017 a joint investigation by the ABC and Fairfax Media exposed the extraordinary rort at the centre of the billion-dollar retirement village industry. Younger generations of Australians were shocked to learn about the price gouging, misleading marketing, extraordinary fees and charges, and further dishonest business practices found in the largest for-profit retirement village operators. Older Australians were not so shocked.

There are 66,000 people over the age of 55 living in more than 550 retirement villages across New South Wales. Retirement villages are a popular housing choice for older people who have left full-time work—and for good reason. Retirement villages provide a unique opportunity for community and for freedom, in addition to the very practical benefit that comes from the cost of buying into a retirement village, which is often a fraction of the cost of buying an equivalent home outright. That is why it is so devastating that sections of the retirement village industry have been able to exploit a lack of regulation to swindle thousands of often vulnerable people out of their pensions and retirement savings.

The Government-commissioned Greiner report into the New South Wales retirement village sector was an indictment on the exploitative practices of the industry exposed by the ABC and Fairfax. The Greens are pleased to see that the Government is continuing to put the recommendations of the Greiner report into practice. The bill is an excellent step, but it is certainly not the end of ensuring current and former retirement village residents are given the protection they deserve from predatory business practices. Of course, operators that take advantage of existing lax regulations are not the majority; however, the impact on some of the most vulnerable people in our community when taken advantage of compels us to ensure that our laws are as strong as they can be.

I thank the many industry and resident stakeholders for their advice and consultation. In particular I recognise the tireless work of the Retirement Village Residents Association and its president, Jim Gibbons, in working to achieve the best outcome for the diverse community of retirement village residents across New South Wales. I flag now that The Greens will be moving a series of amendments to strengthen the protections currently provided in the bill for current and former residents and to smooth the transition process between the commencement of the bulk of the bill on 1 January and the commencement of the 42‑day recurrent charges cap on 1 July 2021. I thank the Minister and his staff for their cooperation in discussing and agreeing to these amendments. We move our amendments in the spirit of the bill's intent. Retirement villages when run ethically and transparently are an extraordinary asset to the community of New South Wales. The Greens wish to see the sector thrive while ensuring current and former residents are treated with dignity and respect.

The Greens welcome the new aged‑care rule, which will effectively allow a former resident to request the village operator make payments to their new aged‑care provider out of exit entitlements not yet released in order to cover daily accommodation costs while their assets remain tied up in their former retirement village. We further welcome the ability for former residents to seek an exit entitlement order from the Secretary of the Department of Customer Service where the sale of their former residence is unreasonably delayed by the retirement village operator. However, we do not agree that these two reforms should be mutually exclusive. Both reforms are important pieces of the retirement village overhaul puzzle and there is no evidence that suggests the application of both reforms in a single case would cause additional cost for a retirement village operator.

More than 60 per cent of retirement village residents transition into aged care. It is unacceptable to ask older people who are already making a difficult life decision—often while facing health complications or escalations—to choose between easing the burden of a lack of liquid assets to pay their daily aged‑care expenses today and the potential to seek compensation tomorrow for the unreasonable delay of their retirement village operator in selling their former residence. I foreshadow that The Greens will move an amendment to ensure retirement village residents moving into aged care can access both of these key reforms. The Greens also welcome the introduction of a 42‑day cap on the recurrent charges that can be charged to former residents. This is a key reform which will ensure that people who have moved on from their former residence in a retirement village will not be on the hook for regular fees indefinitely if their former residence is, for whatever reason, not sold by the operator. People who have retired rarely have enormous pools of liquid money, with budgets for those living on a pension or superannuation being just as tight as those of people who are not retired, if not more so.

Being indefinitely liable for maintenance and services costs, council rates and insurance for your former residence when you are also paying for your current residence—whether that is aged care, a private home or elsewhere—is an extraordinary burden which people do not deserve. Older people remaining in retirement villages after members of their community move on do not deserve to be paying the price of the village operators' inability to fill residences. I foreshadow that The Greens will be moving an amendment which seeks to prevent operators increasing recurrent charges payable by residents to recoup the cost incurred as a result of the introduction of the 42‑day cap, except where the regulations otherwise provide. We understand that in some circumstances operators will have no choice but to share this cost with residents but, particularly in profit‑motivated organisations, this should be the last option. The 42‑day recurrent charges cap is a motivation for operators to swiftly engage with the market. The cost of not doing so cannot be allowed to be passed on to residents while profit margins remain steady.

I move now to mention the planned regulations which will supplement the amended Act. In supporting this bill, The Greens seek clarification from the Government on a number of points which we understand will be addressed further in the regulations. Firstly, we seek an indication as to how the regulations will define what does and does not constitute an "unreasonable delay" on the part of the village operator in the sale of a residence. While it is important to recognise the reality of demand on sale prospects, it is equally important that operators are not able to claim, for instance, that the possibility of a low sale price dissuading genuine attempts to sell is in any way reasonable.

Additionally, we seek confirmation from the Government that independent valuers appointed by agreement of the former occupant and operator will be required to demonstrate independence as a requirement of their being appointed. It has been raised with The Greens that particularly in regional areas the pool of valuers from which to select is likely to be small and former residents may feel pressure to agree to appoint a valuer whose independence they are not sure of if the alternative is not finding a valuer at all. For this reason, The Greens would like to see the regulations reflect the need for confirmation of independence by implementing the requirement that a statutory declaration confirming independence must be completed by an independent valuer appointed by agreement between the former occupant and operator under division 4 section 182AI.

Finally, The Greens seek clarification from the Government on the prescribed period after which a former resident can apply for an exit entitlement order. We understand that the regulations will set the prescribed period at six months for metropolitan areas and 12 months for regional areas. We would like clarification as to how metropolitan and regional areas will be defined under the regulations. The Greens strongly support the three key reforms in the bill. The retirement village sector is in extreme need of overhaul. The bill begins the process of ensuring that older people do not need to worry about being ripped off or let down by the organisations that provide them access to rich and vibrant retirement communities.

Ms ABIGAIL BOYD (23:24:55): By leave: I move The Greens amendments Nos 1 and 2 on sheet c2020‑216F in globo:

No. 1 Termination of residence right

Page 4, Schedule 1[9], line 5. Omit all words on that line. Insert instead—

Omit the subsection. Insert instead—

(3)The operator of the retirement village must not increase the recurrent charges payable by the residents of the retirement village as a result of any liability that may be incurred by the operator once the former occupant's liability to pay recurrent charges ceases under subsection (2), unless the regulations otherwise provide.

No. 2 Exit entitlement order

Pages 5 and 6, Schedule 1[13], proposed section 182AB(3), line 44 on page 5 to line 2 on page 6.

Omit all words on those lines. Insert instead—

(3)The prescribed period commences 40 days after the following, whichever occurs first—

(a)the date the former occupant's premises are first advertised for sale,

(b)the date the former occupant permanently vacates the premises, including by returning to the operator all keys to the premises,

(c)if the former occupant does not intend to move out of the premises while the premises are for sale—the date the former occupant gives written notice to the operator of that fact.

I will deal with these amendments together because amendment No. 2 is of a relatively minor nature. Amendment No. 1 captures some of the issues we were talking about before. It is primarily an issue of fairness and transparency. I acknowledge the concerns of the Retirement Village Residents Association that residents remaining in a retirement village following the departure of other residents will potentially be stuck with grossly increased recurrent costs designed to make up the operator's actual or projected losses and former residents will not, after these reforms, be on the hook indefinitely for recurrent charges in their former residence.

The Greens have concerns about the circumstances in which operators might pass on these costs to residents. We believe it requires strong regulation from the Government to ensure transparency for residents, and that is what this amendment intends to do. The amendment intends to ensure that the Government will provide this through regulation and guidelines to remove that concern. Amendment No. 2 closes a small loophole that will delay an exit entitlement order in the unlikely, but still possible, circumstances of a former occupant's premises being first advertised for sale before the former resident has either permanently vacated the premises or notified the operator they do not intend to move out of the premises before the sale.

The Hon. NATASHA MACLAREN-JONES (23:26:47): First of all, I thank Ms Abigail Boyd for bringing forward these amendments, which the Government will be supporting. Amendment No. 1 on sheet c2020-216F inserts a new clause 152 (3) (c) stating that the operator must not increase the recurrent charges payable by residents of the retirement village as a result of the new provisions for the 42-day cap unless the regulations provide otherwise. This is a good safeguard for residents, and builds on the safeguards already provided for in the Act. It will prevent an operator increasing the charges for those residents who remain to make up for the shortfall of those who have left and are no longer paying for general services unless the regulation prescribes otherwise.

The Government has made it clear that it will work with both operators and resident groups to determine an equitable means by which any shortfalls in the recurrent budget will be dealt with and, while we are strongly of the view that the regulation-making power already exists to achieve this outcome, the amendment puts this beyond doubt. Amendment No. 2 provides an additional criterion for deeming provisions of the 40-day time period for the six- and 12-month clock to start under new section 182AB (3). The date of the former occupant's premises are the first advertised for sale and has been inserted into the provision. This means that after 40 days from the date when the premises is advertised for sale the six- and 12-month time clock will start. This is also fair and reasonable. A premises is advertised for sale once legal contracts have been drawn up and real estate agents engaged. This is an approximate time to commence the 40-day time period.

The Hon. DANIEL MOOKHEY (23:28:32): The Opposition does not oppose the amendments.

The TEMPORARY CHAIR (The Hon. Shayne Mallard): Ms Abigail Boyd has moved The Greens amendments Nos 1 and 2 on sheet c2020-216F. The question is that the amendments be agreed to.

Amendments agreed to.

Ms ABIGAIL BOYD (23:29:05): By leave: I move The Greens amendments Nos 1, 2 and 3 on sheet c2020-234I in globo:

No. 1 Exit entitlement order

Page 5, Schedule 1[13], proposed section 182AB, insert after line 39—

(1A)However, this section applies to a former occupant who has been paid any part of the former occupant's exit entitlement by way of an accommodation payment under section 182AG only if the former occupant's residential premises have not sold within 2 years after the date on which the former occupant first entered the aged care facility to which the payment relates.

No. 2Exit entitlement order

Page 6, Schedule 1[13], proposed section 182AB, insert after line 2—

(3A) Subsection (3) does not apply to a former occupant referred to in subsection (1A).

No. 3Exit entitlement order

Page 6, Schedule 1[13], proposed section 182AB(7), definition of prescribed period, line 12. Omit "182AE.". Insert instead—

182AE, or

(c)for a former occupant referred to in subsection (1A)—2 years from the date on which the former occupant enters into an aged care facility after permanently vacating the residential premises.

These amendments address the need for former retirement village residents to be able to access both the new aged care rule reform and the exit entitlement order process. As I mentioned in my contribution to the second reading debate, The Greens believe that both of these key reforms are crucial for older people moving from retirement villages into aged care and in fact complement rather than contradict one another. The amendments allow people accessing the aged care rule to also access an exit entitlement order after 24 months as opposed to six or 12 months as was referred to in the Parliamentary Secretary's reply speech in the second reading debate. Importantly the amendments do not allow the estate of a deceased person to apply for an exit entitlement order.

The amendments ensure that if someone is in aged care and their daily accommodation payment is being paid by their former retirement village operator out of their exit entitlement and they are still waiting for their unit to sell 24 months after they have moved into aged care, they can then apply for an exit entitlement order. It differs from the exit entitlement order time line, which the Government has indicated will be implemented in the regulations. We believe that this 12- to 18-month extension for operators to sell the former residences of people accessing the aged care rule is generous and strikes a balance between the concerns of operators and the concerns of residents that operators will de-prioritise or delay selling units whose former residents have access to the aged care rule. I thank the Minister and his staff for their cooperation in discussing and agreeing to this key amendment in particular. It has not been easy to balance the concerns of residents and operators, but I believe that we have reached a point of compromise in this amendment that has managed to strike that balance.

The TEMPORARY CHAIR (The Hon. Shayne Mallard): Ms Abigail Boyd has moved The Greens amendment No. 4 on sheet c2020-234I. The question is that the amendment be agreed to.

Amendment agreed to.

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