Retirement Villages Amendment Bill 2008



About this Item
SpeakersSharpe The Hon Penny; Cusack The Hon Catherine; Moyes Reverend The Hon Dr Gordon; Hale Ms Sylvia; Nile Reverend the Hon Fred; Ficarra The Hon Marie; Brown The Hon Robert
BusinessBill, Second Reading, Motion


RETIREMENT VILLAGES AMENDMENT BILL 2008
Page: 12194

Second Reading

The Hon. PENNY SHARPE (Parliamentary Secretary) [11.08 p.m.], on behalf of the Hon. Ian Macdonald: I move:

      That this bill now read a second time.

This bill demonstrates this Government's commitment to ensuring appropriate consumer protection for a vulnerable segment of our population—that is, the people who live in retirement villages. It does that without compromising the viability of this important and growing industry. Sadly, there has been a significant degree of intentional misinformation circulated about this bill, primarily by the Opposition. Either the Opposition does not understand the bill or members opposite are deliberately trying to scare retirement village residents. That is simply disgraceful.

The new Minister committed to meet with peak groups to discuss the bill, and those meetings have taken place. Key stakeholders have expressed strong general support for the proposals in the bill and all want to see the bill passed by the Parliament. One set of amendments in the bill proposes to introduce a new model for sharing the costs of maintenance and replacement of capital items. Although this proposal would have removed a major area of conflict it has nevertheless caused concern among some residents.

Many people living in retirement villages are on low or fixed incomes, and the suggestions of massive fee increases that they have been hearing from the Opposition have naturally caused them great anxiety. Those concerned residents have now said they want to keep the current system: they pay for maintenance and the operator pays for replacement. The Government has decided that, given the level of concern of residents, the best option right now to allay these concerns is to make these changes to the bill. I foreshadow that in Committee the Government will move amendments that will take account of those concerns. I am pleased that these arrangements were reached following discussion with the Retirement Village Residents Association, the Retirement Village Association and the Aged and Community Services Association, which represents the not-for-profit sector. I can advise honourable members that those key stakeholder groups fully support these measures.

We nevertheless acknowledge that residents still have some concerns about new sections in the bill. The Minister has been hard at work talking to residents and I am happy to say most of their concerns have been put to rest. However, the residents association has raised the distinction made between registered interest holders and residents on loan/licence arrangements when it comes to paying recurrent charges after vacating and to the statutory charge that will be placed over land to protect residents' refund entitlements. Those issues raise legal and financial questions that would need to be examined in detail before they could be addressed in legislation.

The Government is not going to rush in and make last minute changes to the bill that could have unanticipated negative impacts on residents and operators. However, the Minister has committed to giving further consideration to these issues as they operate in practice. She has also undertaken to consult residents and other stakeholders in preparing regulations to address any further concerns about the details of some aspects of the bill, for example, defining more clearly what constitutes capital repair and replacement.

The bill includes many other amendments that will benefit residents and streamline procedures for operators, and I will go through those briefly. Retirement villages are becoming an increasingly popular lifestyle choice for our older citizens. Hundreds of villages operate in New South Wales, providing accommodation for tens of thousands of retirees. The Retirement Villages Amendment Bill 2008 deals with a range of complex issues, and time was needed to properly consult on the proposals. Given the significance of the legislation to so many people, the Government has put considerable effort into consulting and listening to the views of all interested parties. More than 300 submissions were received in response to the issues paper that was released in 2004, illustrating the high level of interest in this review. Further submissions followed the tabling of the report of the review in 2005. This bill largely implements the recommendations outlined in that report.

A consultation draft amendment bill was then tabled in November 2006, giving all interested parties the opportunity to examine the detail of the proposed reforms, prompting more than 500 additional letters and submissions. It is fair to say that both residents and operators have been involved in the development of the reforms. The concerns and issues that they raised have been carefully considered. It cannot be said that the consultation on this bill has been anything other than comprehensive. The proposals in the bill are the result of this process and clearly demonstrate that the Government is listening to the community. The Retirement Villages Advisory Council has also played an important role in the development of these amendments. Their diligent consideration of the issues and constructive advice is acknowledged and appreciated by the Government. All parties involved have expressed the view that they are keen to see the bill finalised as soon as possible.

I turn now to the provisions of the bill. A wide range of changes will benefit both residents and operators. The New South Wales Government is committed to reducing red tape and removing unnecessary restrictions on business. The bill seeks to reduce the compliance burden for smaller village operators. Community-minded volunteers in regional and country towns often run these smaller villages. The bill will provide for residents of villages with an annual recurrent income of less than $50,000 to consent not to have their annual accounts audited, or not to be provided with quarterly accounts. They will also be able to consent to not being supplied with a proposed annual budget. These smaller villages will be able to use the money saved to provide more worthwhile services to residents.

In addition, operators of villages of all sizes will no longer need to seek the consent of residents to the continual appointment of the same village auditor from year to year. Operators will be able to vary expenditure between line items in a village budget as long as the level of services in the village is not reduced and total approved expenditure is not exceeded. This will provide greater flexibility over the financial management of a village. Operators will no longer have to seek the consent of residents for increases in recurrent charges that are at or below the rate of inflation. This will be an incentive to operators to keep their costs down, and this should help those residents trying to meet rising costs on fixed incomes.

The bill makes a number of changes to the law regarding the provision of information to prospective residents. Under the reforms, prospective residents will need to be given a general inquiry document when they make an initial inquiry, followed by a more detailed disclosure statement if they decide to go ahead and move in, and express an interest in a particular unit. These amendments should help to better inform prospective residents by providing the right sort of information at each appropriate stage in the decision-making process. They will also reduce the compliance and cost burden for operators.

A significant new change is the introduction of a 90-day settling-in period for incoming residents. During this time if a resident passes away, needs to move to a nursing home or hostel, or finds that retirement village life is just not for them and elects to move out, they will only be liable for fair market rent for the period of their occupancy and a reasonable administration fee. However, I should point out that the outgoing resident's entitlements will not be affected if the new resident decides to leave.

All operators will be required under the bill to notify the Department of Lands that land they own is being used to operate a retirement village. This will lead to the creation for the first time of a comprehensive public register of all retirement villages in New South Wales, which will provide accurate statistics and assist education and compliance programs. Another reform likely to be well received by residents is that operators will be required to meet any budget deficits at the end of each financial year, rather than just rolling them over or asking the residents to pay a special levy. This should minimise overspending and help to make operators more financially accountable for their decisions. Transitional provisions are included in the bill to fairly deal with existing budget deficits as well as providing a time frame for the removal of these existing deficits.

Safety and security are important issues for many elderly people, including those living in retirement villages. The bill will require operators to prepare written safety and emergency procedures and to take reasonable steps to ensure all residents and staff are familiar with such procedures. They will also be required to undertake a safety inspection at least once a year and report back to residents on the findings of each inspection. Relief is to be given to those hardworking volunteers who find themselves elected to the same position on residents' committees year after year. A three-year cap is to be introduced, which should encourage other residents to become involved and lead to a rotation of positions that should increase the knowledge base among residents. The maximum number of proxies any person can hold is to be reduced from five to two, and a ballot voting system is to be introduced on matters requiring special resolution. This should increase the participation level of residents and result in voting outcomes that are more representative of the resident population.

The bill also proposes to give residents of retirement villages greater control over their living environments. Residents will be able to add or remove fixtures or make alterations to the premises with the consent of the operator, which shall not be unreasonably refused. Many residents pay a large amount of money to enter a retirement village and occupy their premises for many years. It is only fair and reasonable to allow them to make changes to the inside of their residence to suit their individual tastes or needs.

Often disputes arise in retirement villages because of a lack of communication between residents and the operator. To improve communication, operators will be required under the bill to hold annual management meetings with their residents. Importantly, residents will have the opportunity to raise questions prior to or at these meetings and the operator or their representative will be obliged to provide answers in reasonable detail. A concern for many residents and their families is the ongoing charges they remain liable to pay even though they have moved out of a village or passed away. It can be a particular concern for those who move to a nursing home or hostel and are faced with paying two lots of fees.

Currently, when a resident is not an owner or registered long-term lease holder, the maximum period over which charges can continue is six months from the time the resident vacates the premises. The bill will reduce this period to six weeks, which should encourage operators to take all reasonable steps to find another resident as soon as possible. Registered interest holders, including owners, currently face paying these ongoing fees indefinitely until the unit is sold. The bill significantly improves this situation for these residents by capping the length of time they are solely responsible for these fees to 42 days. After this time they will only be required to pay a share of these fees in the same proportion as they will share in the capital gains from the sale of their unit.

Regrettably there are occasional, albeit rare, instances when a retirement village operator goes broke and the village cannot be sold as an ongoing concern. This can place residents in a difficult position in terms of getting their money back as an unsecured creditor. To address this issue the bill will introduce a statutory charge, which will give those residents who are not owners or registered long-term leaseholders priority in the event of a Supreme Court ordered sale of the village.

Extensive consultation has been conducted during all stages of the review process and on the bill itself. Many submissions were received from residents of villages and their families, individual village operators and the lead stakeholder groups—the Retirement Village Association, the Aged and Community Services Association and the Retirement Village Residents Association. The issues raised in all of the submissions were carefully considered in developing and finalising the bill. This bill not only will protect the rights of residents of retirement villages but also provide a legislative framework that will enable the retirement village industry to continue to develop and expand to meet the needs of our ageing population. I commend the bill to the House.

The Hon. CATHERINE CUSACK [11.19 p.m.]: The original Retirement Villages Bill was introduced to Parliament in 1999 by the then Minister for Fair Trading, John Watkins, who described the purpose of the legislation as being to "greatly improve the rights of retirement village residents for the long-term benefit of the industry as a whole." In 1999 Mr Watkins said:
      People living in retirement villages have lived through the Great Depression and fought in the Second World War. Many residents are war widows. They are our mothers and fathers, our aunts and uncles, our grandmothers and grandfathers. They have worked to build our communities and protect our way of life, and they deserve security and peace of mind.

This 1999 statement by Mr Watkins had the strong support of all members, as did measures in the bill that aimed to stamp out shonky practices. However, within a few years those unethical operators who seek to rip off the life savings of residents had found loopholes in the legislation that needed to be closed. On 19 November 2003 the then Minister Reba Meagher pledged to urgently address deficiencies by bringing forward the statutory review of the Act. On 25 February 2004 Minister Meagher told Parliament:
      Changes are now required to provide greater protection to residents and to those contemplating moving into a retirement village. It is argued that there are certain unfair and inequitable practices within the industry The complexity of contracts, the standard of village management, excessive fee increases, and who should be responsible for the cost of repairs are some of the issues raised more frequently by consumers.
The Retirement Villages Amendment Bill 2008 is the result of that review. It has taken five Fair Trading Ministers five years to get these reforms into Parliament and while some overdue measures are welcome, there are important areas where the Government has acted contrary to the interests of residents. Opposition members have four major criticisms of the legislation. First, we are adamant the purpose of the Act ought to be to protect consumers. This bill sees the Government move decisively away from resident rights and in favour of developer and banking interests. Second, the Government has failed to rectify a flaw that runs right through the current Act, which streams two classes of consumers, each with different rights and protections. The bill continues this discriminatory approach, replacing the inappropriate term "owners" with "Registered Interest Holders", who predominately reside in for-profit villages. Ironically, it is those residents who get the lesser protection. This bill overrides favourable conditions in their contracts to benefit the for-profit operators.
Third, the Government has dismantled important governance arrangements that gave residents the right to consent or withhold consent for the village budget. One of the objectives of the 2004 review was to improve transparency and reduce cost shifting of business costs onto residents. This bill does the exact opposite. In the name of flexibility, the Government has removed resident rights to review the budget for services and maintenance, ask questions and see quotations used in estimating work costs. The fourth and greatest failure has been to establish an effective consumer framework to police unethical behaviour at the extremes of the industry, and enable retirement village residents and their families to understand their rights and avoid the pitfalls. Resident contracts have thickened and become incomprehensible.

These elderly people and their suburban solicitors are being pitted against the legal and financial resources of Australia's largest public companies. The State Government has failed to take simple steps to simplify contracts and put in place professional advocacy support. The Liberal and National parties are alarmed by many measures in the bill and their negative impact on residents. We have given serious consideration to opposing the bill outright, but have been persuaded by the Retirement Village Residents Association not to do this. The Retirement Village Residents Association argues that, for all its flaws, this bill is better than no bill at all. I am concerned this recommendation may be being made under great duress, and I have discussed my reservations at length; I will discuss those reservations shortly. Nevertheless, we accept the guidance of the residents' representatives in determining our final position and will not oppose the bill.

To understand the complexity of the situation it is helpful to begin by highlighting the positive measures in the bill. For smaller retirement villages, which are mostly operated by the charitable and church groups, the bill will allow them to opt out of onerous requirements that are designed for good governance in very large villages. Taking the two extremes, it is inappropriate for a two-unit village run by church volunteers to meet the same standards of accountability expected for a village of over 500 residences operated by Babcock and Brown communities. A new section 119A in the Act permits villages where recurrent expenditure is less than $50,000 to forgo annual audited accounts. The residents of these villages must first give their consent and are able at any time to withdraw that consent. This measure is strongly supported by the Aged Care Services Association, which represents numerous standalone facilities in rural and remote areas with 12 to 15 beds.

The bill assists intending residents with new disclosure requirements for operators, including a general inquiry document, a disclosure statement for specific premises and a disclosure statement attached to the village contract. Of course we support more disclosure. It is, in principle, positive. However, we are not in a position to evaluate whether the new requirements are intelligently drafted and guard against swamping the consumer with documents that bewilder rather than enlighten their decision. We would all hope when we approve these measures that Fair Trading tests the efficacy of these proscriptive provisions before imposing them on an unwilling industry and bewildered consumers. Retirement village residents are already overburdened with too much paper and too little clarity in the information.

I fear however this is a forlorn hope. Fair Trading's record to date is to require documentation where there is an inverse relationship between the number of words and the level of genuine disclosure. Clause 38, dealing with part 5, division 2 of the Act, provides a new 90-day settling in period for incoming residents. Residents have up to 90 days after occupying a residence to give notice that they do not wish to proceed with the occupancy. They have up until 120 days after moving in to vacate the premises. These are generous arrangements but necessary because the age of the consumers increases the propensity for a significant intervening event such as death or severe health problems, which may make it impractical for the residency to proceed.

We support the initiative but are concerned it should not impact on the affairs of the outgoing resident. In response to our concerns, the Government has advised me—and the Parliamentary Secretary has restated it—that the outgoing resident, called resident A, will not suffer a delay in the operator refunding their incoming contribution. Should the new resident, being resident B, decide to leave the village during the settling in period, there will be no adverse impact on resident A because the operator will assume responsibility for any costs, including refunding resident A's incoming contribution. Will the Parliamentary Secretary confirm this understanding by stating plainly in her reply that outgoing residents will not have to bear the burden of costs associated with the new settling in period, including delays in refunding their incoming contributions?

The bill strengthens the powers of the Commissioner for Fair Trading to prohibit the distribution of certain types of promotional material. It revises powers of investigation and penalties. These powers are welcome, although they are not of any use unless they are activated. I can see no evidence the commissioner has exercised her existing powers and hope they will not continue to be paper powers of little benefit to consumers. There are new provisions to ensure operators are accountable to refund incoming contributions in a timely way. I will meet with the member for Albury later this week to discuss a dreadful case in his electorate where village residents have been robbed of their refunds, and Fair Trading has done nothing to help them.

The bill will allow residents greater control over their own premises, to undertake some interior decorating changes without having to seek approval. There is improvement to the setting of village rules and better treatment of surpluses in annual accounts so that operators cannot misdirect them. The bill establishes a register of retirement villages through the Lands Office. This will mean for the first time we will know how many villages there are and where. I understand this will assist with compliance activities. We support the register but believe in the initial establishment phase, operators and residents should not be forced to pay for it. By way of an amendment, we propose an amnesty on the initial fee. This will ensure hundreds of villages are not hit with charges they will regard as new red tape. An amnesty will extend the time in which the new villages can register so that they can deal with the paperwork. I remind the Government that many of these are very small villages in rural and remote areas. We also believe an amnesty will improve compliance and expedite the finalisation of the register.

The bill creates a statutory charge so that if the village goes into liquidation, residents who are non-registered interest holders can have some consideration as secured creditors. In a sense I think of these as the Judy Hopwood amendments. Judy crusaded for better security for residents' incoming contributions in the wake of the financial collapse of a village known as Woolcott Court in her Hornsby electorate. After the collapse it was realised the residents were unsecured creditors. Many lost everything and have been living on charity ever since.

New section 182G sets the priority of interests, and the pecking order for residents with existing contracts will be the costs of winding up the village, the banks, and then the residents. This is only a slight improvement in the residents' position because a bankrupt village often has extensive bank loans to be repaid and there will be little left for the residents next in line. At least they will now be ahead of the owner of the village. The full effect of this clause will be felt in future for those who enter retirement villages after the commencement of the Act. Future residents will have priority over the banks. This means the changes will not retrospectively affect existing security for bank loans. However, it will also mean that there will be considerable inequity between pre- and post-amendment residents.

The imposition of a statutory charge will only assist non-registered interest holders. It does not extend to registered interest holders in the for-profit villages. This is a great disappointment, as the operators experiencing greatest instability at the moment are in that sector. The bill gives them no consideration and is another example of the way in which these residents are being discriminated against to the benefit of big developers and banks. Liberal amendments to be moved today seek to give all consumers the same protection.

It is appropriate at this point to detail the substantial burdens the bill imposes upon registered interest holders. The current Retirement Villages Act 1999 has two classes of consumer—owners and non-owners. Throughout the Act those classed as "owners" are treated differently. It is important to note that I am not referring to village owners or operators; I am referring to residents whose interest is confined to their personal residence. The Government argues in its 2004 discussion paper:
      Currently the Act classifies residents who hold a long term registered lease under which they are entitled to at least 50 per cent capital gains as "owners". While there is little argument that such residents should have the same rights and obligations as ordinary owners, calling a person who has a lease an owner adds an unnecessary element of confusion and complexity.

The review recommended abolishing the term "owners" and replacing it with the term with "registered interest holder". Registered interest holders, as defined in schedule 1 [11] of the bill, include residents who have strata or company title, or who are long-term lease holders where the term of the lease is at least 50 years and there is at least a 50 per cent share of the capital gain. Generally speaking, registered interest holders are in the for-profit villages, while the non-registered interest holders are in the charitable sector.

Registered interest holders receive second-class protection in this bill. When they vacate their premises they do not have the same cap on recurrent charges that apply in the not-for-profit villages. Neither will this bill afford equal protection for their incoming contribution if the operator goes bankrupt. They are second-class consumers in this bill because the Government takes the view that they share in capital gains and have the same rights and obligations as "ordinary owners". The Opposition strongly disagrees. The statement that these residents reap capital gains from their investment is misleading. We all think of capital gain as being profit from a sale after all the costs have been deducted. This is also the Australian Tax Office's definition of capital gain. But that is not the case in this bill. Schedule 1 [11] inserts a definition of "capital gain" which says, "Fees and charges payable under a village contract are not to be included in the calculation of the capital gain."

The definitions are very problematic, because working out the cost of a contract means taking into account all the fees and charges. A capital gain provision in a resident's contract does not mean a resident is profiting—far from it. I have seen instances where a resident with a zero share of capital gain is getting far bigger refunds on their incoming contributions than residents who allegedly receive 100 per cent of the capital gain. For example, a resident whose contract provides for 100 per cent of the capital gain with a 39 per cent draw down and marketing fee on the sale price is much worse off than the resident who pays 25 per cent on the incoming contribution and receives no share of the capital gain.

Registered interest holders are thought to benefit because they have a legal form of ownership. But compare their situation with that of a person who actually owns their own home and can borrow money by mortgaging their home. The retirement village registered interest holder cannot. His residence is not an "asset". The homeowner with strata title can sell and transfer that title to another person. The retirement village resident cannot transfer his lease. Prospective buyers must accept the new lease under the terms decided by a third party—the retirement village operator. If these terms are worse, there is nothing the resident can do about the effect on the saleability and resale value of his home.

Retirement village residents do not enjoy ownership as we understand it. In some villages under strata title the management rights are in perpetuity and the residents have no say over the sale of those rights. That is not ownership, as we know it. The residents I am concerned for are almost all in the commercial for-profit villages. In 1999 the for-profit sector was small and family based, and registered interest holder residents were a minority. Today retirement villages are big business and such residents are almost certainly the majority of consumers. An example of second-class consumer protection for registered interest holders can be found in section 152 (3). This deals with the problem of residents who die or vacate their dwelling but continue to pay recurrent charges, which can range from $400 a month to well over $1,000. It is not a new problem. When John Watkins was Minister for Fair Trading and introduced the initial bill, he told Parliament:

      the single issue causing the greatest concern to residents is the way they or their families might be treated by operators after they die, or move to a nursing home or otherwise leave the village. All fair-minded people will find it abhorrent to learn that older people and their families are being charged for meals, cleaning and other personal services years after they have died or otherwise left the village. But this is precisely what is happening in certain sectors of the retirement village industry.
      Under the [1999] bill, a resident who dies or moves out of a village, either temporarily or permanently, will cease to be liable to pay recurrent charges for personal services after 28 days. Residents and operators can apply to the Residential Tribunal if a dispute about fees arises. The Government recognises that savings are rarely made on general services such as staff costs, council rates and insurance when residents die or move out. It is, however, unjust that residents who no longer get the benefit of living in the village should pay for general services indefinitely.

      The bill places a six-month maximum limit on liability for general services unless the resident owns the premises within the village. The liability for general service fees for residents who own their units will cease as soon as they sell their unit.

This was a fine statement by the Minister, except for the 30 words at the end: " unless the resident owns the premises within the village. The liability for general service fees for residents who own their units will cease as soon as they sell their unit." Those 30 words have had a massive impact on many residents in the for-profit sector who have the misfortune of being defined as "owners". It means that residents in church and charity villages are covered but residents in the not-for-profit sector overwhelmingly are not. It is nonsensical.

Sharp practice by some for-profit operators has seen contracts drawn up so that most of their residents are now trapped in that definition of being "owners" who have no cap on their recurrent charges. The pitfalls are highlighted in the case of Claire Phillips, which was publicised in the Sydney Morning Herald last Thursday, 27 November 2008. Mrs Phillips is a pensioner who lived for three years in a village known as Pittwater Palms at Avalon. It is crucial to note that in seeking to find an appropriate place for Mrs Phillips to live the family was not shopping for the right contract; they were shopping for the right accommodation for their mother. When they found the right accommodation, they accepted the contract that was offered.

In this case it was a strata contract, so Mrs Phillips unwittingly fell into the trap of being an "owner" of her premises for the purposes of the Act. The family obtained legal advice and that distinction was not pointed out—and nor is it normally pointed out. Mrs Phillips paid $115,000 for a studio apartment without a kitchen and signed a personal services contract that obliged her to pay $1,236.77 per month for laundry, meals and cleaning. I stress that this was in addition to her recurrent charge, strata fees, strata sinking fund, and council and water rates. Mrs Phillips vacated the apartment in January 2006. Having given proper notice under the termination provisions of clause 13 of her contract, she expected that the $1,236 personal services charge would cease. It did not cease, because a nasty little clause 9 in her contract says that you can terminate the agreement but you cannot terminate the liability to keep paying the charge until the unit has been sold.

Three years later, Mrs Phillips' unit has not been sold. The personal management services fee has been redefined as a "services fee", which has been increased to $1,556.50 per month but then discounted by $302.50 in a sneaky way to comply with the Act. This means Mrs Phillips is still paying $1,254 per month. She cannot afford this, so a special charge has been levied against her strata title. After three years the fee is up to $39,143.37 and it is still growing.

The ability of the operator to continue to rake in such sums means it is in his financial interests for the apartment to be vacant. It is almost impossible to sell the apartment because of the terms of the operator's contract. Mrs Phillips is hopelessly trapped. It is an absolute scam. If Mrs Phillips had not been classed as an "owner", she would have been protected by the 1999 Act. If the manager was bearing the costs instead of shoving them onto Mrs Phillips, you can bet his attitude to the contract would be transformed. A fairer contract would mean the property could be sold. But sadly for Mrs Phillips the Act defines her as an owner, and under this bill a "registered interest holder" is not deserving of the same protection she would have if she lived in a charitable or church-run village with a loan licence agreement. Her family are desperate to sell the unit and have even dropped the price to $87,000 with no luck. There is no prospect of capital gain when an $115,000 unit cannot be resold for $87,000. The prospect of a capital gain is ludicrous. The family is desperately trying to end the costs. Our amendments today seek to give equal protection to Mrs Phillips and to stop the ongoing charges that are bleeding her life's savings dry.

I turn to the village budget that pays for maintenance and services in the common areas and includes gardening, lighting and the costs of managing the village. Operators of villages must obtain the consent of residents to the proposed annual budget under section 114 (1) of the Act because the budget is fully funded by residents through a recurrent charge. There is a clear set of steps as to what information is to be provided, when it is to be provided and what is required of the residents. Village budgets range in size. At Henry Kendall the budget is in the order of $2 million and covers a wide range of services, and the residents committee, in a cooperative spirit with management, closely monitors it. Last year errors in the order of $30,000 were detected by residents and were corrected by management in favour of the residents.

For larger villages the Government proposes to allow operators to increase the budget by the consumer price index without obtaining residents' consent. The Minister did not tell us in her agreement in principle speech in the other place that proposed section 114 (8) suspends the entire budget consent process. This means that as long as the increased charge to residents is at or below the consumer price index, operators will still be required to give residents the annual budget but they will no longer be required to provide information about the budget to the residents committee or show the residents what quotations have been obtained for proposed work, nor do they require the consent of residents.

This also means that items inserted by operators into the budget cannot be disputed at the Consumer, Trader and Tenancy Tribunal [CTTT]. This is a profound and astonishing deletion of residents' rights. The budget process is the only opportunity residents get to have a say about the type and quality of services that they are paying for. Some villages have budgets exceeding $1 million per year, including Henry Kendall at more than $2 million. A lot of the money of the residents is at stake. Minister Burney's failure to explain this in her agreement in principle speech is reprehensible. This provision in the legislation has not been detected by many residents, most of whom were distracted by the madness of the new capital maintenance proposals, which have thankfully been deleted. It will come as a shock when operators tell them what has happened to their right to consent to the budget.

Our amendments seek to reinstate the right of a resident to be consulted and to give consent to the village budget. The Opposition will move to improve transparency of the budget and accounts process by requiring operators to attend and answer questions at the annual budget meeting; to provide residents with monthly statements of accounts and ensure that those accounts are separated where there is more than one village managed by the operator; and that the auditor attend the annual management committee where the audited accounts are presented. It was pointed out to me that residents fund the audit and therefore ought to have the right to meet with the person they are paying for this important service. The biggest hurdle for retirement village residents is lack of knowledge and enforceability of their rights. Our consumer framework for retirement villages is confusing and ineffective.

A key challenge for the 2004 review was the diversity and complexity of contracts that residents are required to sign. It is an even bigger problem today as big banks and developers have created new financial products around retirement villages and thus the complexity has escalated. The laws keep changing and the tribunal disputes process delivers unpredictable and inconsistent decisions. It is a completely unnecessary and unfair problem. Consumers looking to buy a home do not go out contract hunting; they go house hunting. When you find a house you like you do not have to worry too much about the contract because in normal circumstances real estate contracts are standard for all houses. It is a straightforward matter for your solicitor to identify problems in the document and advise you accordingly and you can make an informed decision. The same applies to purchasing a motor vehicle. Standard contracts mean you do not have to sweat over each clause and crosscheck it against the legislation in force.

The situation with retirement villages is the complete opposite: every contract is different. It is the worst-case scenario for "buyer beware" and this situation is unfair and inappropriate for elderly residents. For every resident I encounter who has been ripped off, the complexity of his or her contract will always form part of the explanation. Even within a single village the contracts are all different. The bill treats consumers as two groups even within the same village. Most residents are unaware of the distinction, let alone have the ability to navigate around it. As a result of the complexity, many positive initiatives in the bill will not be of practical benefit to consumers because they will not understand them and, if they do, they will lack the resources to effectively exercise their rights.

There are various measures the Government could adopt to assist residents. The first and most obvious is model contracts to cover the different arrangements in retirement villages. The 2004 review looked at the possibility of the Commissioner for Fair Trading exercising her power to prescribe clauses in contracts as a possible step towards model contracts—the Government has always had the power to do this. However, nothing has been done and we are now in a mess with thousands of different contracts and confusion galore. New South Wales needs model contracts, which would greatly benefit residents and those who seek to help them, including their solicitors, resident committees, family members and advocates. The Office of Fair Trading and the Consumer, Trader and Tenancy Tribunal would similarly be far better placed to advise and rule on matters if model contracts were adopted.

The Government is well aware of the financial and legal might that big business has brought into the retirement village debate. The residents have no such funding or access to professional advocacy. The average age of entry to villages has increased from 65 years to nearly 80 years. It is ludicrous and heartless for the Government to expect elderly pensioners to be a match for the Gordon Gekkos of Babcock and Brown, Macquarie Bank, FKP, Lend Lease and Stocklands, yet these elderly people are the ones left exposed and unprotected by the bill. In 2005 the Victorian Government was alive to this problem when it embarked on reforms to its Retirement Villages Act. A consumer grant of $170,000 was allocated over three years to ensure effective education, research and advocacy during changes to the Victorian Retirement Villages Act. The Victorian Minister's media release of 23 February 2005 stated:
      The Bracks Government is proposing improvements to the industry to ensure some of our most vulnerable consumers are protected,

      The residents association will provide vital information to retirees about their rights and obligations of living in a village. It will also act as a policy advocate and advise the Government on retirement village issues.
That media release announced the purpose of the $170,00 grant. The Minister, the Government and the Parliament of Victoria were confident that the views of residents had been professionally represented and there is certainty and security for residents and industry.

Contrast that with New South Wales, where the volunteers on the residents association have struggled for five years with five different Ministers. Those who served in the early stages have not been able to stay the distance due to illness and stress. The formal consultation period was about six weeks at the end of 2004 and the remainder has been Ministers visiting ad hoc retirement villages, reissuing the same media release over and over again and saying they have consulted. We had a draft bill in 2006 that expired, then a Minister who attended as special guest at a $1,500 retirement industry fundraiser for the Labor Party right at the time when these amendments were being finalised.

As a further measure, the Office of Fair Trading and the Law Society should meet urgently to examine the legal advice given to potential residents. Many solicitors engaged by retirees and pensioners seem unaware of the existence of the Retirement Villages Act. It is essential that they are made more aware of it because the future of residents turns on the quality of legal advice. A resident also has suggested the appointment of an industry ombudsman. I note advice from another resident that last year the New Zealand Government appointed statutory supervisors under its Retirement Villages Act 2003. Given the case-based nature of complaints and the failure of Fair Trading to act to protect residents, they are ideas well worth considering. They would assist the Government and the Parliament immensely in preparing future reforms to the bill.

I have never encountered anything so slipshod and challenging as this legislation. The Government offers little by way of factual information to guide us as parliamentarians. There is no research, no published paper and no explanation for many major changes, such as abandoning the requirement for residents to consent to the budget. The Government does not seem to know how many retirement villages there are, let alone residents. There was no cost modelling for the legislation. On top of this, the Government is moving extensive amendments to its own amendment bill. It is no way to implement reforms that have such a profound impact on the financial and physical wellbeing of elderly residents in retirement villages. Former Minister John Watkins did a good job in 1999. What we face tonight is a farce. I am not at all confident the Government knows fully what it is doing. The governance arrangements for the bill are appalling, and given the nature of the affected constituency, I find that frightening.

A further difficulty in considering this bill is the constant need to refer to the regulations, which have not yet been drafted. The Government has brushed numerous concerns raised by residents aside with the mantra, "Don't worry, we will sort it out in the regs". I am sure all members empathise with residents, who are not reassured by this repetitious and unenlightened response. I have given notice to the Government of the following question and I ask the Parliamentary Secretary to answer it when she speaks in reply: Will the Government give an unequivocal assurance that residents are fully consulted during the drafting of the new regulations and again prior to submitting the final regulations to the Executive Council? Item [163] reads:

[163] Section 203 Regulations

Insert after section 203 (3):

(4) The regulations may exempt specified village contracts or a specified class of village contracts from any provision of this Act.

What is the Government's intended use of this power? The effect of this proposed subsection, which is buried at the back of the bill, is that the Minister can table at any time a regulation that can exempt any or every contract from all the requirements of the Retirement Villages Act. It is an extraordinary provision and it is unexplained.

I now refer to industry restructure. Although the Government has not referred to it, I draw the attention of the House to the state of the for-profit sector, which is dominated by very large businesses. It has coloured my consideration of the bill and ought to be aired during this debate. On 30 October the Australian reported in an article headed "Developers vie for control of retirement villages":
      MORE blood is expected to be spilt in the $30 billion retirement village market battle, according to industry insiders, who say the fight for dominance could extend to unlisted and private aged care operators.

      Lend Lease and Stockland have been vying for slices of the listed retirement groups hit hard by the recent sharp falls in the price of property stocks.

      But as the ground in the listed sector is picked over, some say predators will look at the unlisted sector, with stakes in some funds on offer at the right price.

      UBS Investment Research says if Stockland acquired the retirement properties of [FKP and Aevum], it would control 11,500 units, compared with its current portfolio of 3400 units. "SGP [Stockland] would become the largest public for-profit retirement player, with 38 per cent of market share among the top nine players versus Lend Lease and Babcock & Brown at 28 per cent," says UBS in a recent note.

This is taking place through the stock market. Many of us think of the stock market as the not-real economy. But what is being traded is very real. Thousands of homes of elderly residents of this State are being traded like marbles between developers and merchant banks. This morning I read the FKP annual report to its shareholders, who have seen more than 90 per cent wiped off the value of their shares in the past 12 months. FKP is the operator of Claire Phillips's retirement village, Pittwater Palms. I was not surprised to read that FKP's retirement village earnings have surged over the $100 million mark for the 10,000 units it has under management or ownership, or both, over the past financial year. I calculate that to be an annual profit of $10,000 average per retirement unit. FKP's problems clearly do not relate to profit, they relate to debt. I also noted that for his troubles the chair of FKP, Mr Ben MacDonald, received $243,695 in board fees this year. The chief executive officer of FKP, Mr P. R. Brown, was paid $5,378,768. These men, whose fees and salaries are being funded by cheating people such as Claire Phillips of her life savings and pension, show no compassion or mercy.

I am sorry that former Fair Trading Minister Linda Burney saw fit to share food with such people at the Retirement Village Association fundraiser held at the Aria restaurant to raise $39,000 for the Labor Party. I think of Claire Phillips sitting down to tea in her rented apartment in Alstonville. I implore all members to consider her plight when they decide whether to side with our amendment, which will salvage the little Mrs Phillips has left, or side with the Labor Party and its FKP mates to ruin Mrs Phillips completely. Somewhere on this bill's long journey its original intentions to protect consumers have been perverted. The bill, like the Labor Party itself, has been derailed by money, property and big business and has lost its way. There has been one victory of sorts. I use the word "victory" advisedly because it did not improve matters for consumers. It really was a win in the battle to stop things getting far worse.

Members would be aware of a proposal to force all residents to pay 50 per cent of the retirement village owners' capital and capital replacement costs. This was an extraordinary uncosted initiative and it would have been the first time in Australia that one person was required to pay for another person's property. After a large outcry and a fantastic campaign by residents, assisted particularly by Alan Jones, this pernicious plan was dumped. I thank the Government for giving me credit, but Alan Jones played a crucial role and I thank him for that. I will say more about that matter in Committee. My task as shadow Minister has been to research the industry and consult residents. I thank them sincerely for their patience and perseverance. I should particularly thank many people.

I acknowledge Leslie Williams for opening up Pandora's box in the first place when the good residents of Port Macquarie first issued me with my marching orders. I emphasise that the Opposition has not made up the issues. We have been given very robust feedback from residents on all the issues and it certainly began at the village level. I acknowledge Ian Hooper, Malcolm Mackenzie, Phillip Pearson, John Wheelan, who is in the public gallery tonight, John Cooper, Malcolm Squires, Roger Compton, Bryan McGrath, Sarah Fairfall, Neil Smith, Neville Carnegie and Betty Whiffen. I also acknowledge another dear lady who prefers not to be named, but when she rings talkback radio she uses the name "Catherine" to disguise her identity. All of them have spent hours and burned the midnight oil on this legislation. Many others have made submissions and put in hundreds of hours of work. I assure the House that I have read all the submissions and they have been of invaluable assistance.

I acknowledge the editor of the Camden Haven Courier, Kelly Burke of the Sydney Morning Herald, and Mike Carlton and Sandy Aloisi, who have reported on the seriousness of these changes. The news cycle has been clogged with reporting on global terrorism and, at a State level, the fall of the Iemma Cabinet, with Ministers sacked for dancing in their underpants or bullying staff, and the State's budget crisis. All those stories have conspired to crowd out reporting on this complex and important legislation. As I said, Alan Jones can claim credit for his successful campaign against the capital and maintenance fiasco. We should all be grateful to him, particularly the Minister for Fair Trading, who, admittedly, did not introduce the legislation but would have been the one politically ruined by the consequences of its implementation. And I say that whether she fully appreciates it or not.

The residents and their colleagues are remarkable Australians who have accomplished great things in many fields before having this battle forced upon them. It has been a great responsibility to represent their views in this debate. In preparing for debate on the bill I met with many people from business, industry and peak groups, including the Combined Pensioners Association, the Aged Rights Service—known as TARS but should be renamed TOARS, the Overworked Aged Rights Service—the Aged and Community Services Association representing the not-for-profit sector, the Retirement Village Residents Association and the Retirement Village Association.

Many villages are functioning well and residents want to be happy. But with the industry in the throws of major change the pressure increases every day to suck even greater profits out of resident contracts and all future ownership is uncertain. Some villages have changed hands three times already in three years. One resident said to me that FKP could sell them to the mafia if they liked and there would not be a thing they could do about it. That is literally true.

Residents need genuine protection, not an honesty system of the type that has allowed unethical practices to flourish and become institutionalised. I urge members to carefully consider the amendments we are moving to the bill to restore some fairness for registered interest holders; to maintain the right of residents to review their village budgets and withhold consent; to preserve the status quo with residents committees and their voting rights; and to stop the shifting of business costs, such as payroll tax and owners insurance, onto residents. The overall aim is to give more accountability, to close loopholes as best we can, and to provide some fairness for what is a very lopsided arrangement. Above all, we have got to recognise that the industry has changed from one run by charities and family businesses to one dominated, as I said, by Gordon Gekko's mates down under. Village contracts are vehicles for extracting rivers of profit from people's lifelong savings, and residents themselves are commodified according to computer projections based upon age, gender and health. We have a chance tonight to rescue the industry from itself. I urge crossbench members particularly to join our effort.

Reverend the Hon. Dr GORDON MOYES [12.01 a.m.]: I speak on behalf of the Christian Democratic Party in debate on the Retirement Villages Amendment Bill 2008. I agree with much of what the Hon. Catherine Cusack said. This is very complex legislation. I estimate I have spent 50 or 60 hours working on this bill and I know the Hon. Catherine Cusack has spent many more hours working on it. The bill amends the current Retirement Villages Act 1999, which commenced on 1 July 2000, and regulates the retirement village industry in New South Wales. It amends the principal Act to make further provision with respect to the rights and obligations of residents and operators of retirement villages, and for other purposes.

Under the statutory review, a major update of the 1990 legislation was due in 2005 but that was brought forward to 2004. The former New South Wales Minister for Fair Trading, Linda Burney, introduced to Parliament the long-awaited Retirement Village Amendment Bill on 26 June 2008, which replaced the exposure draft bill tabled by Minister Beamer in 2006. Consultation was conducted during the review process and in relation to the bill. Many submissions were received by the new Minister for Fair Trading, the Hon. Virginia Judge, from residents of villages and their families, individual village operators and stakeholder groups: the Retirement Village Association, the Aged and Community Services Association and the Retirement Village Residents Association. I thank the Hon. Virginia Judge and one of her senior staffers for giving me plenty of time to work through all the points I am about to make. I appreciate the Minister's concern that the bill should reflect an equitable working through of a very complex situation.

Hundreds of village operators in New South Wales currently provide accommodation for tens of thousands of retirees. In the agreement in principle speech, the former Minister for Fair Trading stated that these reforms seek to ensure that the rights of retirement village residents are better protected while also providing a more effective legal framework for the retirement village industry to develop and expand. Clearly, reform is needed in the industry as residents play a more proactive role in the operation and the financial affairs of retirement villages as well as the continued expansion of retirement villages.

It is important to understand why retirement villages are becoming such a major issue in society. The ageing of the population is due to two factors: longer life expectancy and decreasing birth rates. Around 9 per cent of our population—some 2 million people—is aged 70 years or older. This is expected to rise to 13 per cent by 2021 and to 20 per cent—around 5.7 million people—in 2051. With the baby-boomer generation now in or nearing retirement, the proportion of Australia's population over the age of 65 has more than doubled in the past 35 years, with those aged over 85 increasing five-fold. People aged 80 years and over currently make up around 4 per cent of the population and this proportion is expected to increase to 10 per cent by 2051.

Consequently, the retirement village sector and especially the aged-care sector anticipate continuing increases in demand for services. The retirement village sector provides independent living accommodation, generally to older, retired persons. Additional services may also be provided such as meals, cleaning and other personal services, sometimes also including some basic nursing care, and generally that is referred to as assisted living. A number of retirement villages also have on their campus an approved high-care facility such as a nursing home. I always made sure in each of the villages for which I was responsible that we sought to develop high-care nursing homes on the one site.

In general, there are two types of retirement villages: donor-funded villages, which are funded by way of charitable and/or Government contributions as well as donations from residents as they enter the village, such donation being non-refundable; and resident-funded villages, which are, as the name suggests, villages whose total capital expenditure is obtained from residents by way of ingoing payments for the purchase or, more usually, the whole-of-life lease of self-care units or assisted apartments occupied, with such ingoing payments being refundable in full or in part in accordance with the resident's contract at the commencement of occupation.

Figures released by Jones Lang LaSalle show that as of April this year Australia had 1,756 retirement villages, an increase of 35 villages from July 2007. Approximately 140,000 residents are currently accommodated in those villages, with that number set to rise as the supply of villages increases. About 500 new villages are in the development pipeline, including proposed villages. At the same time, more than 300 existing villages are scheduled for some form of major redevelopment over the next few years.
The latest data from Jones Lang LaSalle shows that New South Wales leads the way with 569 villages; South Australia comes in next with 374 villages; followed by Victoria, Queensland, Western Australia, Tasmania, the Australian Capital Territory, and the Northern Territory. In just nine months, there has been a 2 per cent increase in the number of retirement villages, and these latest figures show that the industry will continue to expand with the ageing of the population and the retirement of baby boomers. Current population projections from the Australian Bureau of Statistics show that 5.26 per cent of people aged over 65 live in retirement villages, and that is increasing as each month goes by. These statistics clearly indicate the expansion of the industry as more and more retirees choose to live in retirement villages as a lifestyle choice.

The big issue currently with such expansion is whether we are catering for people or for profits. The Hon. Catherine Cusack has spoken about some of the high-end developers and what they are doing in this field. Retirement villages were initially established to provide a secure and reasonable lifestyle for seniors and pensioners in the latter stages of their lives. However, in recent years retirement villages have become much more of a commercial venture, which has resulted in the financial security of residents being severely threatened. The commercialisation of retirement villages is exacerbated by the expansion and operation of finance and investment companies acquiring the retirement villages. I will briefly list some of them.

FKP Property Group operating under the Aveo-Live Well brand, controls Forest Place Group Ltd and has a stake in the Retirement Villages Group, a joint venture with Macquarie Bank. FKP Property Group owns approximately 5,300 retirement village units with additional expansion underway. FKP also has very substantial property developments and construction activities. In the recent financial downturn it is rumoured that the value of its shares has dropped by 90 per cent.

Primelife Corporation Ltd operates 38 retirement villages with more than 6,000 units. Primelife has had a controversial history through its original founder, Ted Sent, and its initial financing from certain unregistered investment schemes. Another investment company, Babcock and Brown, currently controls Primelife. Babcock and Brown itself has been under considerable pressure.

Lend Lease Corporation operates retirement villages in Australia under the Retirement by Design brand. Retirement villages form only a small part of Lend Lease's overall activities. Certain properties and rights to deferred management fees have been sold to investment funds, with Retirement by Design continuing to manage the properties under licence agreements. Becton Property Group owns approximately 700 retirement village units. Fund management and property development also form substantial parts of its activities. Aevum Ltd operates 1,400 retirement village units under the Aevum Living brand. Aevum has gone through spectacular recent growth following the purchase of properties in August 2006 from Sakkara Living and Moran Healthcare. Zig Inge Retirement Villages Limited is a privately owned group and assets are held by a private entity for which accounts are not available. Zig Inge Retirement Villages Ltd develops and manages retirement village properties under a management agreement with the private entity. Village Life Ltd operate more than 80 retirement villages with around 4,200 units. Retirement villages are run under the rental model. It has had significant financial difficulties in recent years and has undergone several restructuring of its activities. Properties are currently owned by the MFS diversified Trust and leased back to Village Life Ltd.

I do not need to go further to demonstrate that the retirement village sector is causing a great deal of concern for elderly people who have put their life savings and the initial home into their future. It is evident that the retirement village sector is undergoing considerable growth with all the major players planning to expand their number of retirement villages in operation. Smaller and weaker operators will continue to be taken over by financially stronger entities. As seen in the examples I have provided, retirement villages are now saleable, resulting in several changes of ownership. The retirement village operators are more and more becoming large public and private equity companies. This has ensured the ongoing provision of aged accommodation into the future, which comes at a detrimental cost for retirement village residents.

This bill sets out to amend the Retirement Villages Act 1999 in key areas. The much-anticipated definition of "capital gain" as it relates to a resident's exit entitlement has been included in the bill. It is defined to mean any increase between the amount the resident paid for these premises and the amount the next resident pays for those premises, less any costs associated with the resale of the premises. This should overcome uncertainty created by recent court decisions and provide certainty for residents and operators. I met with a number of bureaucrats working with the Department of Fair Trading, a number of whom working on this legislation were greatly confused about the real meaning of "owner". I was able to help them to understand the different styles of ownership that were not mentioned in the previous version of this bill.

This bill replaces the term "owner" of a premises with the term "registered interest holder". The change does not materially affect the previous definition, as a "registered interest holder" is defined as the registered proprietor of land, a strata scheme lot, or community land scheme lot, the owner of shares in a company title scheme, or a resident whose right is created by a long-term lease of at least 50 years duration, including options to renew, and who is entitled to receive at least 50 per cent of any capital gain. I do not know of many aged people going into a retirement village who are talking about a 50-year lease. However, the rights and obligations of a registered interest holder are revised under the bill. References to a resident owning or a resident who owns their premises also incorporate the new definition of registered interest holder.

Capital replacement and maintenance is a vexed question. The Hon. Catherine Cusack made the point quite strongly that this issue has been the subject of a great deal of attention. The bill imposes further regulation with respect to capital maintenance and replacement of property within villages. This includes prohibiting an operator from selling, entering into an agreement to sell or otherwise passing on the responsibility for the replacement or maintenance of capital items for which the operator is responsible and obliging the operator to establish a capital works fund in circumstances where the operator funds capital maintenance or replacement of items that extend beyond the end of a financial year from recurrent charges. For capital items that are the responsibility of the operator and located within the premises of a registered interest holder, the bill specifies that the cost of maintaining and replacing those capital items is to be shared between the operator and the registered interest holder in the same proportion as the parties are to share in any capital gain.

I will not go into the details of recurrent charges because it is a very complex issue. Increases in recurrent charges under village contract may be varied by a fixed formula provided that 14 days written notice is given to the residents, without requiring consent of the residents. There are also issues concerning the cessation of recurrent charges and the registered interest holder who has liabilities in a number of ways. The Hon. Catherine Cusack mentioned a settling-in period similar to that included in the South Australian legislation. This bill introduces a settling-in period that enables new village residents to terminate their resident contracts in approximately 90 days of the resident being entitled to occupy the premises or within 90 days of the resident first occupying the premises.

Departure fees have been a serious problem. The bill gives an outgoing resident the right to apply to the tribunal for a recalculation of the payments the operator must pay to them under their residence contract including departure fee if, amongst other things, the resident considers the operator's conduct has unfairly had a negative financial impact on the resident. I am glad to see that spelt out in the bill and I congratulate the Minister on taking advice on that issue. With regard to costs of sale for registered interest holders under the Act, the costs of sale incurred in reselling the premises are to be shared between the outgoing resident and the operator in the same proportion as the parties are to share in any capital gain. The bill does not seek to change this position. Contributions payable by instalments is an ongoing concerning. The bill permits a residence contract to provide for payment of an ingoing contribution by instalments at intervals specified in the contract and also for interest to be payable by the resident on the unpaid portion of the ingoing contribution calculated at the rate set out by the regulations. In the absence of any statutory exemption, I query whether the form of contract required and the period over which the ingoing contribution is payable will need to comply with, for example, the provisions of the Consumer Credit Code. The Parliamentary Secretary might examine that and provide an answer.

Statutory charges over village land that is held jointly are also an issue. A number of points have been raised about annual and audited accounts, but I will not go into them. The bill provides that an operator must carry forward any surplus in the annual accounts of the village and is not permitted to carry forward any such deficit and is not permitted to seek a special levy from the residents to make good any such deficit. I will not go into the details of the disclosure requirements because they are complex. The bill also deals with the registration of retirement village land. It requires land used as a retirement village to be notified to the registrar general. If the land is already used as a retirement village immediately before the commencement of proposed section 24A, the operator of the village must provide the notice within three months after such commencement. Otherwise, the notice must be provided before an operator enters into a residence contract with respect to residential premises on that land. This is a very good move and I congratulate the Minister on it.

There are other interesting points, but it is now after midnight so I will not go into the detail of statutory charges to protect certain ingoing contributions. They are complex. Although I have developed a great deal about this for my speech, I will not take the time of the House. There are issues concerning budgets, the concept of statements of proposed expenditure and statements of approved expenditure being replaced with proposed annual budgets and approved annual budgets, respectively. There are issues concerning village safety, residents committees, participation in management, and changes to village premises. I have some concerns with this bill, but I will not take the time of the House to go into them in any detail. I simply indicate that the Parliamentary Secretary should comment on these issues and raise them for careful examination with the Minister for Fair Trading. I refer to section 26, subsections (1), (2), (3), (4) and (5), which probably should be omitted from the bill and replaced with a revised section 26. There is the issue of registered interest holders and section 152, the recurrent fees agreement, when a resident vacates a residence.

I will not go into more detail about the bill, because some of these matters will come up in discussions at the Committee stage of the bill. I have 19 areas of concern, and I am sure the Chair appreciates that I will not go through all 19 now. Instead, I will conclude by making a number of brief points. Many operators have introduced changed leases for new entrants, with far more onerous departure fees to be retained by the operator on the vacation of a unit. With some retirement villages, the current lease provides for a departure fee, capped at 25 per cent after nine years. For example, the operator Aveo now offers new entrants a lease with the departure fee capped at 30 per cent after only five years. This, of course, significantly depresses the market price that a purchaser would be prepared to pay, thus effectively reducing the return that the original leaseholder might reasonably have expected to gain on departure. The outgoing leaseholder has no redress against what seems to be a quiet unfair manipulation of the price of a unit.

The effect on market value is readily demonstrated. One new village in Port Macquarie, for example, recently offered a "nil departure fee lease" as an alternative to its normal lease contract, which has a departure fee structure. The "nil departure fee lease" attracts a higher purchase price, or ingoing contribution, than does the departure fee lease. There are instances of other villages employing similar marketing techniques. A new village in Manly Vale, Sydney, is offering new units with leases having a relatively low departure fee structure—1 per cent per annum, capped at 10 per cent after 10 years. However, the purchase price is much higher than the expected market value for such units in that area. Just as lower departure fees attract purchase prices, so the converse applies—higher departure fees depress the market value of the units, leading to a lower purchase price, or ingoing contribution. In other words, those who are organising the village can easily manipulate the price of units to be either purchased or leased.

I will finish by making one point—a point I think is very important, but one that no member has yet raised: the Department of Housing wants the joint venture clause removed. Removal of the clause would mean that any Department of Housing tenants living in a joint venture would not be able to defend themselves from discrimination in the future. If this clause is removed, the self-funded residents will be protected against discrimination, but Department of Housing tenants will not. This creates an environment where two groups of people living in the same retirement village are not covered by the same legal protection. That can be seen as a form of discrimination in itself. It is about a group of people—in this case Department of Housing tenants—who will become scapegoats and perhaps be demonised by other tenants.

I have assisted in building such joint projects with self-funded retirees and Department of Housing residents. Some years ago I anticipated the problem that has now arisen in many such joint projects whereby self-funded residents disparage Department of Housing residents. Sometimes the village operators, very unwisely, build a section of units on their own within the village for the use of Department of Housing tenants. These units often are referred to as "the slums", for example. Other residents who have paid large sums of money to enter the village feel the Department of Housing referenced residents have got their security in the village on the cheap, and a form of apartheid grows up. Sometimes the management adopts a "them and us" approach to the residents.

Anticipating this kind of problem arising, some years ago I had written into an agreement between Wesley Mission and the Department of Housing that a certain number of department-funded units be made available to the department's recommended residents. These units would not be in a separate building, would not be in an isolated group, and would not actually be able to be identified—because they would be selected at random whenever a unit became available in the entire village. No resident would be identified as a Department of Housing recommended resident. Hence, no-one would know either who or where any Department of Housing recommended resident was, or where the resident lived. My concept was that a retirement village should consist of a normal cross-section of society. Even a village established by a church should not be full of Christians only, but reflect a similar cross-section of any society. I the Minister to consider notifying all village operators who are involved with any joint ventures—such as with the Department of Housing—that responsible relationships be established to prevent isolation and disparagement of those who are recommended by the Department of Housing.

For more than 35 years I have had close links with the retirement village industry and its residents. During my time at the Cheltenham Church of Christ, in Victoria, in the 1970s I established five retirement villages—long before other organisations had really developed self-funded retirement villages. Then, during my tenure at Wesley Mission, I was involved in the establishment of several retirement villages worth in excess of $600 million. Currently, I am chair of the board of an aged persons welfare foundation, which has many millions of dollars involved in helping funding people who want to move into a retirement village without being ripped off in the private sector.

I have met with representatives of several retirement villages on the bill. I have had many discussions with Mr Ian Hooper and the Retirement Village Residents Association. I thank them for their active campaigning on behalf of the village residents. I also thank the Premier, Nathan Rees, who invited me to discuss with him some of the issues about which I had concerns. When I raised with him my concerns, I was delighted to find out that the Premier did not realise that his Government was actually planning to do the very things that I indicated were in this legislation. He made it possible for the Hon. Virginia Judge to spend quite some time with me, along with her senior advisers, and eventually accepted a number of suggested amendments that served the interests of retirement village residents, including removing the amendments that would force retirement village residents to pay more than half of all capital expenditure costs, as well as pay extra levies charged on top of existing charges. In the current economic climate, this clearly would have been an injustice to thousands of elderly residents who are already struggling to pay for basic necessities. I place on the record my appreciation of the Premier and also the Hon. Virginia Judge and her advisers, who took advice in the right way. There is no doubt about the growing importance of retirement villages in our communities. As our population is ageing, retirement villages will have an increased role in service delivery for the elderly and retirees. Some members of this House are approaching retirement age and are considering living in retirement villages.

The Hon. Christine Robertson: Some have gone past retirement age.

Reverend the Hon. Dr GORDON MOYES: I make no comment about those who have passed that age. Some of us have loved ones living in retirement villages. It is vital that we get this matter right. The reforms outlined in the bill will improve overall the quality of operators and will raise the standards of the industry. I do not oppose the main premise and the substance of the Retirement Villages Amendment Bill 2008, as I believe it provides a balance for both the residents and the operators. However, it is in the best interests of public policy that we have a proper and well-informed discussion about this contested issue. I cannot for the life of me understand how we can get through all the debate, plus the 80-odd amendments, before Christmas 12 months. However, I will look closely at the foreshadowed amendments by both the Opposition and the Greens. All in all, I commend the bill to the House.

Ms SYLVIA HALE [12.31 a.m.]: On behalf of the Greens I speak on the Retirement Villages Amendment Bill 2008. Although I have no wish to delay this bill, the Greens are concerned that it needs more work and are yet to be persuaded that the Government's last-minute amendments cover everything that has caused concern to many retirement village residents. To that end, we have drafted amendments that attempt to address other aspects of the bill, as well as the critical issue of who pays capital replacement costs. We were inclined to send the bill to General Purpose Standing Committee No. 4 for review, in the hope that it would come back next March in a shape that all members here could be confident in supporting, but that option is not available because some members are reluctant to delay the bill further.

In many respects this bill is innocuous and, indeed, it assists residents in a number of key ways. When it was first debated in the lower House the bill contained totally unacceptable clauses. The Government proposed to allow elderly residents of retirement villages to be ripped off. The bill gave carte blanche for them to be charged up to 50 per cent of the costs of capital replacement, costs that should be 100 per cent the responsibility of the owner. The Government told residents, "Don't you worry about having to pay for big-ticket items; they will all be in the regulations. It's a pity but we haven't written these yet, so you can't see them and we can't tell you precisely what is in them." At least the new Minister has realised that this was asking people to take too much on trust. I will return to this aspect of the bill later.

This legislation has been years in the making. Like so many Fair Trading bills, it has taken an inordinate length of time to reach the Parliament and has spanned the incumbency of five different Fair Trading Ministers, the latest being Virginia Judge. The provisions of the bill have been outlined at length, both here and in the lower House. Therefore, I will not comment further, other than to say that following discussions with the Government and in light of the Government's amendments, residents are happy with 90 per cent of the bill and are relieved that, after some years, the bill is finally in the Legislature.

Positive aspects of the bill are: requiring the operators of retirement villages to hold an annual management meeting and to provide certain information at that annual management meeting; requiring the operator of a retirement village to ensure that the retirement village is generally safe and that emergency and home care services have vehicular access to residential premises within the village; limiting the period during which a former occupant is required to pay recurrent charges after permanently vacating premises within a retirement village; providing for a settling-in period during which a resident may terminate a village contract; creating a process by which the right to receive a refund of an ingoing contribution paid under a village contract may be enforced; and creating offences for failing to comply with certain provisions of the principal Act.

The Government should be congratulated on those aspects of the bill. However, residents were desperately unhappy about several aspects of the bill, such as the attempt to shift onto residents up to half of capital replacement costs. The Minister fortunately has had the good sense to back away from this, no doubt due to many residents becoming aware of what was in the bill and making numerous representations. The attempt to cost shift onto residents by the village owners is of concern, all the more so because of the willingness of the former Minister for Fair Trading, Linda Burney, to capitulate to the owners' demands.

We know the operators wanted to include in the bill a section that would allow them to charge residents up to 50 per cent of capital replacement costs and the owners initially got what they wanted. That Retirement Villages Association, which is the industry group, congratulated itself on its success in a media release. Prior to that temporary victory the former Minister, Linda Burney, had supped with industry representatives such as Babcock and Brown and the Tulich family at a $1,000 a head Australian Labor Party fundraiser at the Aria Restaurant at Circular Quay—expensive tastes!

Under the Act as it currently stands, residents are responsible for capital repairs and operators are responsible for capital replacement. This can cause confusion on occasion. The Greens have suggested that if the owners choose unreasonably to repair rather than replace items, residents should have access to the Consumer, Trade and Tenancy Tribunal to resolve the matter and the Office of Fair Trading should investigate if a pattern emerges of an operator attempting to avoid his or her responsibilities in this way. However, the former Minister made residents responsible for meeting 50 per cent of the costs of all capital replacement other than roads. No such provision had appeared in previous drafts of the bill, nor in any of the recommendations of the reviews of the Act.

Residents were rightly concerned about the unknowable amounts they might be asked to pay. They were told not to worry because the regulations would protect them, but without being able to see the regulations, residents were being asked to sign a blank cheque. The Greens did not support this approach, nor did the Opposition and other crossbench members. It seemed obvious to us all that if an owner owns the village and keeps 100 per cent of the capital appreciation when the village is sold, the owner should pay 100 per cent of the costs of capital replacement. The provision that the former Minister inserted in the bill was contrary to accepted business practice and amounted to blatant cost shifting from owners onto residents. Residents were vocal in their objections. A resident in one Sydney village stated:

      If you read her second reading speech, Minister Burney didn't understand the implications. The Minister's people are acting in favour of the operators' interests This amendment gives operators licence to improve, maintain or replace their asset at any dollar value in the sure knowledge that they will be subsidised to the tune of 50 per cent. This could never happen in any other business venture Your urgent intervention is desperately sought.
A letter from another resident stated:

      It seems unfair that operators can benefit handsomely from the use of residents' ingoing contributions (on which no interest is paid) and the retention of a significant part of that ingoing contribution as a retention payment on exit from the accommodation and then back up for more of the residents' money for capital replacement.
Rather than the tranquillity that many retirees seek when moving to a retirement village, the bill, if unamended, would force them to immerse themselves not only in raising funds but also in obtaining quotations, engineers' reports, structural building issues and so forth, in order to make informed decisions about capital replacement. The Minister has backtracked but it is important to acknowledge that, but for their tireless lobbying, residents could well have faced a far grimmer outcome.
    The Retirement Villages Residents Association has worked tirelessly and the Greens thank the association for its advice and comments on the bill. The former Minister, Linda Burney, handed Virginia Judge a poisoned chalice although, as pointed out by Ms Catherine Cusack, Ms Judge in her capacity as member for Strathfield is not a complete stranger to donations from village operators. However, to her credit, Ms Judge met with retirement village residents and listened to them. She was no doubt also aware of the distinct possibility of this House amending the capital replacement provisions of the bill. The result is that today the Government is moving to remove those provisions that would have required residents to pay up to 50 per cent of capital replacement costs.
    I now turn to the section dealing with recurrent fees. Operators will be able to increase fees without consulting residents as long as fees are in line with Sydney's consumer price index. The Greens do not like this section, but note that it is consistent with other Fair Trading legislation, such as the Residential Parks Act. There is no need for operators to prove that they have actually incurred additional costs before increasing fees. We need to remember that the CPI encompasses a range of goods and, although pensions are linked to average weekly earnings, basic necessities such as groceries, petrol and other goods are increasing in price faster than pensions or the CPI.
      There are several other worrying aspects of the bill, such as those that allow residents in the smaller villages whose budget is less than $50,000 to opt out of seeing annual budget figures. That could well be a recipe for trouble. I will save my remarks on the other aspects of the bill that residents are concerned about for the Committee stage. There are other issues that cannot be dealt, however, because they are in regulations or for other reasons. I will refer to a few of these issues briefly. Housing NSW tenants in joint venture retirement villages come under tenancy legislation, rather than retirement villages legislation as proposed in this bill. The Greens do not want to see Housing NSW tenants disadvantaged. If they are living in a retirement village, they should be on the same footing as other residents, that is, be subject to the Retirement Villages Act.

      I now turn to the capping of exit fees. Exit fees should not exceed 20 per cent of ingoing contributions. That is, they should comprise 20 per cent of the purchase price of the villa and not 20 per cent of the outgoing price when a resident leaves a village. With regard to the lack of a standard contract, contracts vary and the regulations—unlike, for example, the Residential Tenancies Act regulations—contain no standard contract. I will now deal with the nature of the industry, which other speakers have spoken about at length. While there are many small operators and not-for-profit organisations in the retirement villages sector, increasingly there are some very big businesses owning many villages and doing pretty well. One example is taken from Aevum's latest annual report, which I quote:

          Over the course of the year Aevum delivered a record net profit of $28.5 million, representing a 24% increase over the corresponding period in 2007. Earnings per share were up 4% to 24.1 cents per share. Net tangible assets grew during the period, from $1.97 to $2.17 per share. Most pleasing was the strong cash flow generation of the company's retirement division with operating cash flows up nearly 100% to $20.4 million for the year. This was primarily as a result of the company turning over a record 161 units for the year as well as recording an encouraging result from the aged care business.

      Clearly, Aevum was very pleased with the way its retirement village operations were proceeding. Aevum also provides a graph showing net profits since 2001-02. The graph shows a quite remarkable climb in net profit from 1.5 per cent to 28.5 per cent from 2002 until the most recent financial year. At the same time, assets held have grown to $809 million in value. Clearly the business is profitable. It is also clear that these people can afford to attend $1,000-a-head dinners at the Aria Restaurant with Labor Ministers.

      Many members of this Parliament will have parliamentary pensions or superannuation to rely on in their dotage. But it must be remembered that many people do not have superannuation and will only receive the pension. Some sell the family home in order to enter a retirement village, and some do not even own a family home to sell. Regardless, the overwhelming majority of operators of the villages make handsome profits. The Greens will seek to amend the bill. The sheer number of amendments, and those proposed by the Opposition, clearly indicate that the bill needs much more work. I hope, however, that in the next 12 months the Minister will address many of the issues that remain to be resolved, such as adequate protection of registered interest holders and the preparation of a standard contract.

      Finally, I thank all the retirement village residents who wrote to the Greens and other members. The Greens acknowledge the work of the Hon. Catherine Cusack, who has been very active on this issue. I also acknowledge the work of Reverend the Hon. Dr Gordon Moyes, who facilitated a meeting between the Minister and residents and expressed his views in no uncertain terms.

      Reverend the Hon. FRED NILE [12.44 a.m.]: The Christian Democratic Party supports the Retirement Villages Amendment Bill 2008. As honourable members are aware, the bill was originally introduced by Minister Linda Burney and was then taken over by the new Minister, Virginia Judge. I congratulate Minister Virginia Judge on her cooperative spirit and willingness to listen to residents' concerns. I have also spoken to the Minister on a number of occasions expressing my concerns about the bill and about her willingness to accept amendments to it. Members will vote on 22 amendments that the Minister has introduced to the bill, which will meet many of the residents' concerns that have been causing them unnecessary stress and heartache.

      As we can see, tension develops between residents in their retirement, when they have no real cash reserves and only a very limited income—we could almost say they are the new poor—and the commercial operators who want to make a profit from the operation of the village. It is therefore very important that the Government ensures that there is justice for the residents as opposed to the operators, who are concerned about profits. The residents must come first.

      I am pleased that the amendments deal with a number of issues. An issue that many residents are very upset about is the proposition that they share up to 50 per cent of the cost of new capital repairs and replacements. I received a letter from residents of the Lake Macquarie Retirement Village in which they said that residents of the village are not the owners of all units that are under loan and licence agreements. Those matters have been dealt with in the bill and also in the 22 amendments. The residents will be pleased that in future the operators will pay for 100 per cent of the replacement of fixed items; the operators will not be allowed to sell capital items to residents; the residents will pay nothing for the replacement of non-fixed capital items; the residents will pay nothing for depreciation; that residents can be reimbursed for the cost of having urgent work carried out in their unit, and can go to the tribunal if the operator does not reimburse them. Under the amendments the operator is responsible for keeping the village properly maintained, including replacing capital items if it is no longer practicable to repair them.

      The amendments require the annual budget to contain specific details for capital maintenance work. Each item of work must be listed, together with the expected cost. Operators must provide quotes and must include provision for urgent work. Residents do not have to pay for fixing defective building work, for refurbishment of vacant premises within the village, and so on. The amendments will allow residents to distribute any surplus money from the capital works fund, with respect to maintenance, to themselves. I believe that those amendments have now met the concerns of the residents, and I hope they will remove the stress that many of them have been experiencing.

      The amendments and the legislation will make it clear that there will be a 90-day settling-in period for new residents. It will cut the maximum time most residents must keep paying recurrent charges once they move out of village from six months to only six weeks. It will also make village operators responsible for budget deficits. It will require operators to carry out annual safety inspections. It will give the residents the right to add fixtures and make alterations to the property. It will oblige operators to hold annual meetings with their residents. It will reduce the number of proxies any resident may hold from five to two. There will be better protection for refund entitlements of residents in the event of a financial collapse of the operator, which is a genuine concern, particularly as we face the global economic crisis, particularly in Australia, and given the financial pressure on a number of operators who have invested in these villages, such as Macquarie Bank and so on.
        If any of these collapse, that could have a dramatic impact on the rights of residents. The bill will provide better protection for the refund entitlements of residents in the event of the financial collapse of the operator, which we hope and trust will not occur. The bill also reforms the way in which capital repairs and replacements are funded within a village. The Christian Democratic Party and I strongly support the bill. I note that Ian Hooper, President, Retirement Village Residents Association, has welcomed the amendments announced by the Minister for Fair Trading. He said:
            I'm very pleased to see that residents' concerns have been listened to and that the Government will retain the current system and introduce new regulations to clarify any existing uncertainties.

        Jill Pretty, Chief Executive Officer of the Aged and Community Services Association of New South Wales and the Australian Capital Territory, said that she was pleased with the conciliated resolution. She said:
            We look forward to continuing to work with the retirement Village Residents Association, the Retirement Villages Association and Fair Trading to ensure the division of capital costs between residents and operators is fair and transparent.

        Tom Galetta, President, Retirement Village Association, said that the bill was a good result. He said:
            We are very pleased with the outcome which was the result of active consultation with residents' representatives and now provides certainty for residents and operators moving forward.

        I again congratulate the Minister for Fair Trading, Virginia Judge, on her very positive attitude to her role and for her cooperative spirit in dealing with this very complex legislation, which I am pleased to support.

        The Hon. MARIE FICARRA [12.51 a.m.]: The Retirement Villages Amendment Bill 2008 amends the existing Retirement Villages Act 1999, which came into effect on 1 July 2000. The bill increases regulation on the retirement village industry in New South Wales and in particular outlines the rights and responsibilities of both operators and residents. Many years of operation of retirement villages in New South Wales and throughout Australia have given us a wealth of feedback and a clear indication of increased regulation to improve social harmony within aged accommodation facilities. However, the bill had in its original presentation, and still has, many deficiencies showing a lack of understanding of concerns of older village residents throughout New South Wales.

        The Coalition is delighted that the Government has been humiliated and had to back down from making retirement village residents pay 50 per cent of capital costs of their respective village owners. This backdown took a lot of protesting by residents and I congratulate Mr Ian Hooper, President of the Retirement Village Residents Association, and the many hundreds of residents who wrote or telephoned members of Parliament, newspaper editors and radio talkback hosts—well done folks! The power of grey activism is alive and well, and we hope they remain alert but not alarmed, as governments realise they are no longer a soft-touch constituency. Along with other members, I also congratulate our Coalition shadow Minister for Fair Trading, the Hon. Catherine Cusack, on her relentless pursuit of the Government to reverse this onerous, inappropriate and ill-conceived measure.

        We all know and support the fact that retirement villages are becoming an increasingly popular housing option for our senior citizens. It is important for both residents and operators of those villages that we legislate against unfair practices and that we protect the many vulnerable retirees who chose that lifestyle. The bill is long overdue by many years. Why was it rushed through that other place on the one day in August when Parliament was recalled? Coalition members were not able to properly place their constituents' concerns on the record, which was such a miscarriage of democracy given our communities have such an ageing demographic. Aged housing is, apart from healthcare, the major issue for most of our seniors. An estimated 700 retirement village operators in New South Wales provide accommodation for an ever-growing population of retirees, currently estimated to be 70,000 plus, with anticipated growth in this sector being significant given the ageing of our society and healthcare initiatives that are increasing longevity for our citizens.

        A deficiency that exists in the present system is the absence of a register for retirement villages and as such, the bill aims to address this by requiring that all land utilised for the purposes of a retirement village be registered with the Department of Lands. Hopefully it will assist this Government and those that follow to better prepare for the future of our biggest growth sector—the housing, healthcare and social services that retirees will require. Such planning has been a major shortcoming of the Government that has been in power for 13½ years.

        The Coalition has received a multitude of submissions and correspondence on which we have formulated our position on the bill. The consultation that has led to this point, with many individual retirees representing, at times, their own interests as occupants of retirement villages or their fellow residents in their particular village, has been frustrating: the process has been too long and government acknowledgement of their concerns has been minimal.

        The question asked by all who have been associated with this long, drawn-out consultative period is: Why the long delay between 2004 and late 2008 to get to the point of actually introducing a bill? It has not been a model of public service efficiency; it has taken four Ministers for Fair Trading to get the bill before the House. In 2003 Parliament was told of the urgent concerns of many retirees and the clear need for reform of the sector to protect the interests of senior citizens. The process has been linked to two reviews, the cause of long delays. Many ask: Why have the more than 500 submissions to the draft bill been kept secret? That lack of transparency leads us to ask: How do we know what input has been taken into account and is the bill truly reflective of the bulk of submissions received? Surely they should have been made public.

        I am fortunate in having had the experience of family members living in retirement villages and being in local government for 16 years, then representing the Georges River electorate in that other place. I have had many conversations with retirees living in village accommodation. Moving into such facilities is often a quite traumatic experience for our elderly. It is essential that residents and prospective residents understand their rights clearly as it is a major social and financial undertaking on their part. Unquestionably, the most significant changes in the bill and the most controversial involve the treatment of capital maintenance and capital replacement in both the homes of residents and common areas of retirement villages. This was by far the biggest issue that drew the most criticism in submissions to the review process.

        It is acknowledged that the current situation, which makes residents responsible for maintenance and operators liable for replacing capital items, has its problems. It encourages attempts at cost shifting, that is where items are repeatedly repaired beyond their economic life instead of being replaced by the operators. Under the Government's original bill that all Labor members voted for in that other place, it was proposed that all capital works, including maintenance, replacement or new improvements, would be treated in the same way; that is, operators would have imposed 50 per cent costs onto residents! The then Minister for Fair Trading, Linda Burney, justified such an amendment when introducing the bill by saying:
            the changes should take some of the pressure off the need for recurrent charges to rise, and in some cases may result in a reduction in the charges residents are currently paying. This will be particularly beneficial to residents on fixed incomes who struggle to meet the rising costs each year.

        The Coalition cannot believe that Minister Burney or her advisers actually listened to any senior citizens living in villages in New South Wales, those vulnerable constituents most often on fixed incomes, particularly those living in villages run by churches or charities. Of course, they were up in arms with this amendment, which led to this bill being introduced. It is difficult to know whom the Minister listened to at that time, and we are grateful that the current Minister has at least met with, listened to, acknowledged and amended the bill. We have heard much about the Government selling out the elderly and the vulnerable retirement village residents when they receive sizeable political donations, including the $1,000 per head fundraising dinner at the famous Aria waterside restaurant in Circular Quay last year.

        Minister Burney was the guest of honour on the night. This lovely dinner netted the Labor Party coffers $36,840. Who was there? None other that the Retirement Villages Association, which was looking after the interests of the retirement village operators—not the residents—the operators! Honourable members should keep in mind that in 2004 this Labor Government promised that it would put a stop to village owners charging residents for expensive capital items such as road resurfacing, pavement reconstruction, replacing hot water systems and so on.

        Only last year, following the Aria dinner, the Minister embraced the Retirement Village Residents Association wish list, at the top of which was a policy requiring residents to pay 50 per cent of maintenance plus 50 per cent of capital costs. What happened then? In June 2008 Minister Burney introduced the bill before us in a most hurried fashion on the day that Parliament was recalled to pass the doomed electricity privatisation legislation—28 August 2008—and the Retirement Village Residents Association, quick as a flash, issued a press release thanking this Labor Government for adopting its changes.

        Some heartless operators would have used this change to cover the costs of improving their assets. It is outrageous to impose capital costs on residents who have often paid large sums to lease their units, pay substantial weekly levies and contribute to maintenance costs, as well as upon departure to be liable for up to 25 per cent of the final purchase price. The Coalition has been adamant for months now that even though aspects of the bill are worthwhile improvements, due to the overwhelming opposition of residents to this aspect of the bill, if the Government refused to accept our amendment we would have voted against it. The result is what we see today—a humiliating back down by a hapless Minister and her insensitive advisers, and the Government rabble.

        Residents throughout the review period had hoped for a tightening-up on payroll tax being allowed into the budget for recurrent charges. Payroll tax should have been excluded from the equation for residents as a part of this bill. It is unacceptable to force residents to meet the costs of the payroll taxes of owners. Payroll taxes have always been a charge to business, and residents should be reassured that that is to remain the case as part of this bill.

        An equally important concern for many residents and their families is the ongoing charges they remain liable to pay even though they have moved out of a village or passed away. It can be particularly onerous on those who move to a nursing home or hostel to be faced with paying two lots of fees. Currently if a resident does not own his or her premises the maximum period for which charges can continue is six months from the time the person vacates or dies. The bill will reduce this period to six weeks, which should encourage operators to take all reasonable steps to find another occupant as soon as possible. However, the glaring problem with this bill is the change of terminology from "owner" to describe residents who have strata title or leases that include a share in capital gain. The new term in the bill is now "registered interest holder". These persons will be exempt from the new beneficial provision of the 42-day limit. Many for-profit village residents appear to be adversely affected and they demand to be treated in the same manner as other residents, or have certain pre-existing favourable conditions in their leases upheld. Clarification from the Government would be appreciated.

        A significant new change is the introduction of a 90-day settling-in period for incoming residents. During this time if a resident passes away, needs to move to a nursing home or hostel, or finds that retirement village life is just not for them and elects to move out, they will only be liable for fair market rent for the period of their occupancy and a reasonable administration fee. Too often we hear reports of unhappy occupants who realise that the particular culture of a village is not for them, yet the operators bind them to contracts that make their life in retirement most unsatisfactory. Seniors and their families welcome this amendment. It is a shame that this Labor Government does not apply the same financial regulation upon itself.

        I highlight the tale of many seniors and their familles who are caught in the trap of purchasing State environmental planning policy [SEPP] 5 approved aged accommodation for themselves in an effort to remain independent but who still have the facilities they need to shower, enter and exit their home with safety, and all the other worthwhile facilities of SEPP 5 approved dwellings. Sadly, in some cases during the time of construction if their health deteriorates to a point where they need to enter a retirement village this Government does not refund in toto, or a portion, their stamp duty for the original purchase of the SEPP 5 dwelling that they were never able to occupy. I believe the aspect of stamp duty collection to be outrageous and I ask the Minister for Fair Trading and the Minister for Ageing to work closely with the Treasurer to address this shameful treatment of our senior citizens who suffer deteriorating health.

        Importantly, the bill amends the law regarding the provision of information to retirees prior to moving into a retirement village. This aspect of entry is handled to varying degrees by some of the villages I have come in contact with: some operators and managers who do it well and others are inadequate. Under the reforms, prospective residents will need to be given a general inquiry document when they make an initial inquiry, followed by a more detailed disclosure statement if they decide to go ahead and move in and express an interest in a particular unit. It is reasonable that a more detailed information pack be provided when seniors decide to commit to purchase, and the content of those documents should be prescribed by regulation for consistency and transparency.

        In many of the instances of complaints as to the management of villages it was found that communication by operators to residents was woeful, or at the very least lacking, leading to unnecessary disputes that could be handled better by having good communicators as managers. Ideally, management representatives should attend resident committee meetings regularly but, in particular, prior to the budget being presented for consideration and approval so the committee members can ask all the questions they need so as to fully inform their colleagues.

        This bill is long overdue and the Coalition, through the Hon. Catherine Cusack, has expressed its strong views on aspects of the bill that are clearly unsatisfactory. Many amendments to the bill will be moved tomorrow. Chiefly, the Opposition is happy that the Government's cheap shot on behalf of its developer mates in the aged housing market—the imposition of 50 per cent of capital replacement costs on residents—has been defeated. Elderly residents on fixed incomes would have struggled to meet these unexpected costs. Clarification is still needed on payroll tax and what the Government is doing to ensure such costs by village operators cannot be passed on to residents. Consumer price index caps on recurrent charges will also need to be closely monitored to ensure the 42-day limit on recurrent fees post departure applies to all residents regardless of the department's classification of residents across the retirement village spectrum. Safeguarding the welfare and protection of our senior citizens and loved ones living in aged accommodation is vital to the wellbeing of our communities and the State. The Coalition does not oppose the bill.

        The Hon. ROBERT BROWN [1.06 a.m.]: The Shooters Party supports the Retirement Villages Amendment Bill 2008. Rather than read a 15-minute speech at this late hour, with so much business still remaining, I will quickly make some observations on comments made by other members in the debate. First, I refer to the comments made by Reverend the Hon. Dr Gordon Moyes on the likely increase in the percentage of aged population in the country and the likely demand on retirement village places. That places less of a, shall we say, moral paw over the filthy, grubby developers such as the Gordon Geckos and the like—reference has been made to all sorts of names—who put their money up for investment in these retirement villages.

        Retirement villages need customers and customers need housing, so let us not get too carried away. The purpose of the bill is to try to bring some balance into the equation between people who are generally at the latter end of their lives and therefore one might regard as somewhat frail, particularly in their capacity to negotiate with the Gordon Geckos of the world. Having met Mr Ian Hooper from the Retirement Villages Residents Association and representatives from the not-for-profit villages, I have to say the image of frail people not being able to handle themselves is far from the truth. Mr Ian Hooper and his colleagues have done a sterling job in managing to convince the Minister to move 22 amendments to its bill. That is an outstanding achievement. To place the position of the Shooters Party on record I read from an email that was sent to Reverend the Hon. Fred Nile, my colleague the Hon. Roy Smith and me from Mr Ian Hooper today:

            I am forwarding a copy FYI of an email agreed with the Minister's Chief of Staff this afternoon

            Dear Zoë,

            This email confirms the statement that I read out [to] you about 2.15 p.m. this afternoon.

            Basically, the Retirement Village Residents' Association [RVRA] agrees that the Bill does deliver benefits for residents, but RVRA does not agree with all aspects of the Bill, such as the Sections on Registered Interest Holders.
            RVRA accepts that after lengthy consultation with all stakeholders, the Government has agreed to consult further on RVRA's remaining concerns.
        I ask the Parliamentary Secretary when she replies to the debate to re-confirm to this House that that is the case and the Government will consult with the RVRA and the other residents' bodies on the promulgation of the regulations. That is vital. On that basis, the Government has our trust in this. I do not think the Government will betray that trust. Mr Hooper goes on to say:

            To summarise,

            RVRA supports the Bill
            RVRA supports the Liberal and Greens Party amendments
            In the event that these amendments are defeated RVRA accepts the result
            RVRA hopes the Government will accept the result if the amendments are passed.
        That is Mr Hooper's wish. Our fix on this is that we—the Hon. Catherine Cusack, the Greens, Reverend the Hon. Dr Gordon Moyes and Reverend the Hon. Fred Nile—have pushed the Government about as far as we think we can push it. Obviously, the Opposition and the Greens disagree, and hence we see another 60 amendments from them. The Shooters Party supports the bill. It has been too long in coming. The residents now need certainty. They need to have this legislation dealt with in this House and passed. We support the bill but I cannot see us supporting any but the Government's amendments. Once again, I ask the Parliamentary Secretary to re-confirm that the promise the Minister made to the residents will be extended to the RVRA and the other residents' groups. In closing, I say that it has been a pleasure dealing with the new Minister on this bill. She has demonstrated that she is prepared to consult widely and to substantially amend her own bill. I will not say that is rare, but I will say that it is refreshing. I commend the bill to the House.

        Debate adjourned on motion by the Hon. Penny Sharpe and set down as an order of the day for a later hour.