Page 3272 - Week 08 - Wednesday, 22 August 2012
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I have said this before: this is complex and important legislation, and I do not think the first version was treated very well. It would have led to some terrible, unintended consequences. I note that neither of the bills was backed by a regulatory impact statement.
As to the current bill, I note that this bill has the support of the retirement villages sector. We have consulted widely with this sector and residents alike, and there is consensus that the second bill is more acceptable than the first. It was noted that many operators in the ACT also operate in New South Wales and, as such, it makes operational sense to adopt the equivalent legislation as in New South Wales. That said, by doing so, we will be adopting the benefits and the shortcomings of this New South Wales law. Either way, the benefit of this legislation as opposed to Ms Porter’s first bill is that it is familiar legislation for most operators.
The bill promises greater rights for residents, for example, an increase in the cooling-off period from five days to seven days; provisions for a 90-day settling-in period; a decrease in the liability for current charges from six months to six weeks after vacating their units; security and refund entitlements owed to certain creditors should a village be sold due to insolvency; greater access to ACAT for the resolution of disputes; quarterly reporting requirements on the part of the operator; greater say by residents on how profits should be spent and greater involvement by residents in the preparation of the village budget; and narrower scope for the closure of retirement villages and assurances that residents must be rehoused in accommodation of the same standard and cost.
That said, the fact that ACAT has had no recent cases leaves me to conclude that the code has been operating reasonably well. As one industry body has noted, Ms Porter’s second bill is the lesser of two evils. It is unfortunate, I think, that there was not more consideration for looking at ways of making the code stronger, and there are a number of concerns with the bill.
The retirement villages industry code of practice has legal effect status through the Fair Trading Act; it is not just a document with conventions. The concerns around introducing prescriptive legislation would not guarantee any further certainty for operators and residents that could not be achieved by strengthening the code. It would not necessarily be beneficial to alter the entire structure of the operational aspects of retirement villages without first getting the code administration committee to review the code or reform the current system before opting for legislation. More complexity and more compliance can potentially mean more costs if not handled well. New South Wales has legislation to regulate approximately 600 retirement villages. In contrast, the ACT has only 28. I think that all of these things need to be taken into account.
Some additional concerns that have been raised in relation to the legislation are the bill’s effects on existing contracts. There is uncertainty regarding this matter, and sections 501, 502 and 261 in the bill do not provide clear guidance, although it does imply that existing village contracts would become residents’ contracts, retaining their existing terms and conditions unless they were contrary to this bill. I think it is fair to say also that, whilst this bill gives residents greater rights, this is complicated legislation and it is not always easily understood by most people.
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