Retirement Villages Bill

I move, That the Retirement Villages Bill be now read a second time. This bill addresses the situation that I began to address when I was Minister for Senior Citizens. Although the bill was properly that of the Minister of Justice, and was then delegated to me as an Associate Minister of Justice, I was very grateful that the Prime Minister delegated the role to me early on, so that it could be given a priority that the bill could not get against a significant number of other justice bills. I have now gained the Prime Minister’s agreement to refer other bills to other population and advocacy Ministers, so that priority can be accorded work in those areas. That is a very good model.

At the outset I express my appreciation of the work of the Justice and Electoral Committee for the comprehensive and thorough consideration it has given to the bill, and for the careful thought that the majority of members obviously gave to changes that will improve the bill. This bill is much better as a result of the consideration of the select committee than when first introduced to Parliament. I am particularly pleased with the work of the Government members of the select committee, and I congratulate Tim Barnett on his chairing of it. I also acknowledge Murray Smith from United Future, who has made a significant contribution to the better bill that we have before us today. On that note, I also congratulate Stephen Franks and thank him for his contribution to the legislation. Although noting the report that the ACT party will not be supporting the passage of the bill, I did note that Stephen Franks was prepared to make a professional effort to ensure that the bill was in the best possible shape for return to the House, and I thought it would be appropriate to acknowledge that here.

It would also be remiss of me not to mention the Law Commission, whose report, of course, was made to a former National Minister of Justice back in 1999. The Law Commission played an important role in giving some impetus to the development of this legislation.

Retirement villages have become more popular over the years—I guess for lifestyle reasons, but also, more important, for security. However, the nature of the transaction that brings an individual into a retirement village has caused many retirement village residents and their families considerable grief, if my correspondence file is anything to go by. I know the select committee heard many submissions that contained examples of the kinds of misunderstandings that arise when the nature of the transaction is not understood. I came up with a simple expression, so I could engage in discussion at large meetings on this subject, where misunderstanding was very widespread: investing in a retirement village does not mean buying a home that one can sell. That is the simplest way to describe the nature of the transaction. The significance of the capital outlay, though, that is made at the time is very easily equated with the amount that one would spend on an apartment, and that often leads to an assumption that occupiers are protected in the same way as homeowners. However, in fact, most people receive only a licence to occupy the premises, and for access to the facilities and services of the village.

In the absence of more specific legislation, the situation of people moving into retirement villages was left to the Securities Act and its regulations, whereby the financial outlay was identified and treated as an investment only. However, there have been difficulties as to the coverage of that Act with regard to those villages that offer unit titles in addition to a licence to occupy, and with regard to others that were exempt from that Act. In addition, securities law is actually an inappropriate mechanism to address the social dimensions of retirement village living.

This bill addresses both the investment and social policy considerations that apply to buying into, and living in, a retirement village. It responds to the very many letters of complaint I have received as Minister for Senior Citizens from people concerned about certain aspects of retirement village living, including complaints about the way that villages are financed and the charges that are applied. In some cases, the concern was about the way that villages are run. In many instances, the concerns raised showed a lack of understanding by their writers of the terms and conditions that they had, in fact, agreed to when they signed up to enter a retirement village. But in a considerable number of cases, they indicated an imbalance of power between the parties, and the unfair way that residents were treated. This bill addresses the needs of residents and owners through measures that will ensure a balance in the responsibilities and obligations of residents and owners, and that will establish quality practices in the way that village operations are managed.

The measures in the bill, however, will not restrict the variety and diversity that is part of the retirement village scene in New Zealand. Nor do I believe this legislation will diminish the growing popularity of retirement village living as a lifestyle choice. Some 20,000 older New Zealanders have already chosen to live in a retirement village, and that number is increasing. To the contrary, I believe that by according much better protection to both the financing and occupancy aspects of retirement village living, this legislation will enhance the attractiveness of retirement villages. As long as people understand what they are signing up to, then many of the concerns will diminish.

The definition of a retirement village in this bill is wide and inclusive. Housing that might be caught inadvertently by that broad definition can be excluded by regulation. In the bill there is an emphasis on disclosure. That will ensure that people who are considering entering a retirement village do so fully aware of the terms and conditions that would apply to them—and, of course, there is a cooling-off period contained within the bill, as well. A very important and preventive measure, I guess, is what disclosure focuses on, and that is fully consistent with the approach to securities generally. The suggestion of the select committee that disclosure be further enhanced by legal advice and certification by a legal adviser that the terms and conditions have been adequately explained is one that I accept, bearing in mind the age, and sometimes the vulnerability, of the people who enter villages. I also agree with the committee’s suggestion that the essential requirements of the disclosure statement be outlined in the bill itself, instead of relying totally on regulation. Good practice in the management of relationships between residents and operators is achieved by a code of residents’ rights that summarises the key provisions of the bill, as they impact on the day-to-day responsibilities of village residents and village operators to each other.

Processes for dealing with complaints and disputes are addressed in the bill in a comprehensive way, so as to promote harmony within villages. A good complaints system can deal with issues in an appropriate way, before they become big issues. For those complaints that do involve more material matters, there is a formalised disputes resolution process that will ensure that disputes are resolved at the appropriate level and remedies are applied, if necessary. The disputes resolution procedure is prescribed in some detail, in order to ensure the fairness and robustness of the process. I expect that having a good process will significantly reduce the need to use it. The bill provides for a degree of external oversight, and also the concept of statutory supervisors has been adapted to meet the specific needs of the retirement village sector.

Many members of the House are aware from constituents’ concerns that the greatest source of concern to residents and to families, after a village resident has left or died, is that there is no real incentive for the prompt sale of a vacated unit. I am very pleased that the select committee has suggested a more rigorous process and better alignment of incentives in that important respect. In relation to the code of practice, I can report to the House that the Retirement Villages Association is already working on it, and I look forward to working with the association.

This bill is eagerly awaited by many people in retirement villages, who until now have felt quite powerless and frustrated in terms of the way they have been treated. I particularly want to thank Grey Power, the Retirement Villages Association—and, in particular, I mention Helen Melrose and Cliff Cook—and a Christchurch solicitor, Leo Steele, who not only offered his knowledge and expertise to the select committee but devoted a considerable amount of his personal time to getting this Minister up to speed with the intricacies of securities law, licences to occupy, unit titles, and all the permutations that form the complex legal framework of the retirement villages industry. I thank also the Office for Senior Citizens, without whose help and support this progress would not have been made. I commend the bill to the House.

The National Party will be supporting this bill, for several reasons. Before I entered Parliament, as a geriatrician I had worked extensively with older people. Retirement villages have been a huge growth industry in New Zealand over the last 10 or 15 years. During that time we have seen quite marked changes: people no longer drove to the door of rest homes in their car; they usually arrived in ambulances. People stayed at home over the 1990s, because National had put a lot of money into home support services. But for a growing number of older people the opportunity to move into a retirement village, which took away some of the stresses and strains of life—not having to do upkeep on their building any more, not having to look after the grounds, and having companionship and people of like mind around them—became a very attractive option. We now have 300 villages, but the Law Commission work, which was reported on in 1999, stated that there needed to be one legal system that retirement villages operated under.

When I came to Parliament I developed a member’s bill on this topic. That is the one thing that, as an individual MP, one can do. That bill was in the ballot, and it did put pressure on this Government to get ahead of the game and to develop this bill. That is actually why we are here tonight and are able to debate this matter. It would have been very embarrassing, after all the promises the Government had made, if my bill had been drawn out of the ballot first. So we have seen this legislation, which Lianne Dalziel admitted needed to be quite markedly altered during the work done in the Justice and Electoral Committee.

I would like to thank Simon Power, Lindsay Tisch, and Richard Worth, all of whom the Minister forgot to mention when she said how hard the committee had worked on this bill.

💬 Richard Worth: It was uncharitable.

It was very uncharitable of her. Stephen Franks also put in a great deal of work. I do not think that the committee as it was first comprised grappled with the bill particularly well, but with the addition to the committee of some excellent members from the Opposition side of the House we have ended up with a fairly comprehensive bill that will solve some of the problems within the sector.

Most retirement villages are excellent. They run a very good service, and supply a great standard and lifestyle for their residents. But when I first put my member’s bill into the ballot and it attracted some television exposure, a huge number of people wrote to me with their concerns. I remember the case of one 92-year-old gentleman, who had moved into a village and was very unhappy there. He found it extremely difficult to get out. If it had not been that his family was able to buy another property for him to move into, he would not have been able to move from what he found to be a pretty intolerable situation. Disputes that can cause major problems for residents happen not only with the people who own and operate the villages but also with other residents, so a disputes resolution process is something that is needed.

The Retirement Villages Association has done an excellent job. Cliff Cook has put a lot of work into this legislation. The members of that association have excellent standards. They have statutory supervision, and they ensure they have disputes resolution processes and prudential supervision, as well. It is only those villages that stand outside the actual—

💬 Hon Lianne Dalziel: Aren’t you a member? will you declare your conflict of interest?

No, I am not. The Minister needs to be better informed; she continually makes chipping comments about things that she knows nothing about. She should get herself informed. The Retirement Villages Association has done a very good job. The problems have occurred only with the maybe 5 percent of villages that operate outside the association.

I remember a case where a person who had developed a Wellington village moved into the village when the residents became unhappy. He actually took over the residents committee, so that he could complain to himself—or not complain to himself, as the case may be. That was an abuse of his position and his power, and the residents came to me to debate the issues. They needed legislation to work under.

When people buy into a village, they often do not understand the situation. They are not buying an independent unit down the road; they are buying, basically, a lifestyle. They are buying a licence to occupy and the lifestyle that the village offers, with its increased security, its protection, the lack of worry about maintenance and the upkeep of the grounds, and the companionship of other residents. Those are the things that people are buying when they buy into a retirement village, as opposed to buying an independent freehold unit down the road. There has been a lot of confusion about that when somebody has wanted to leave a village, and that is where most of the problems have occurred. There are quite large financial penalties if a person wants to leave after a short time. One of the things this bill does is to provide for a cooling-off period of 15 working days.

I remember that one gentleman whose wife had died moved into a village once the funeral was over. He was quite a fit, extremely active 74-year-old—that happens to be the average age at which people move into retirement villages—but he was very disturbed by the death of his wife, and was feeling very low at the time. Moving into a retirement village was not really the right thing for him to do, and when he recovered and got over the stress and the grief—he was an extremely active person—he found it quite difficult to make the decision to leave the village, because he was penalised financially by the clauses he had signed up to. In some cases, lawyers have not given people a full understanding of what they are buying into. Consequently, there has been a lot of confusion.

One of the things the bill requires is that retirement villages supply a disclosure statement, which is supposed to be in plain language, so that anybody buying into such a village actually knows what they are buying into and how it will work. Also, the villages are required to have statutory supervision, because sometimes people have not understood that although the individual’s interests and rights need to be protected, the village as a whole needs to be considered, as well. It is important that the village can survive financially as a whole, and while one individual may want certain things, that wider issue needs to be taken into account. There was a lot of debate from Grey Power, in particular, about what happens when people leave a village—about who can sell a unit, and how long the ongoing costs have to be paid by the estate of somebody who has died. Those issues have been taken into account in this bill. The bill sets up a disputes resolution process and a code of rights for villages.

I have been somewhat concerned that the bill defines retirement villages as premises containing two or more residential units. There will be increased costs associated with this legislation. I think it will impose some quite significant costs on the smaller villages, and that that should have been taken into account. I certainly would have liked to see villages with up to six units—often they are attached to church properties—being exempt under this legislation, but that has not happened.

Also, some retirement villages have residential care facilities within them—rest homes and geriatric hospitals. There has been quite a lot of cross-subsidisation, because this Government has not increased by one dollar the amount of money that goes to geriatric hospitals, which give the highest level of care to our elderly. A lot of retirement villages are making some money from that particular part of their operations. They have been able to cross-subsidise the hospital and rest home sector, which is unfortunate, because that sector should be funded adequately to be able to provide that level of care. I remember many years ago my grandmother went into a retirement village, then the rest home, and then the hospital. It was excellent for her not to have to leave an environment that she knew.

We support this bill, and are pleased to see it in the House tonight.

Jackson Mews is a small retirement village located in Petone. It comprises 34 units, all of which are unit-titled and in individual ownership. The village was created in 1994 by one John Gilbert, effectively as a retirement fund. His company, Jackson Mews Management Ltd, is appointed under the terms of an encumbrance that he, as manager, put on all the titles for a period of 40 years. It is secured by the encumbrance, and all residents and new purchasers must sign up to that contract, which gives him the exclusive right to manage the village.

In return for that right, which residents pay $3,000 per year for, John Gilbert receives $94,000 per annum from the village. In order to justify that, he provides—or is meant to provide—a 24-hour personal paging service by a resident manager, the maintenance and upkeep of the exteriors and common areas, the collection of prescriptions for the elderly people who occupy the village, the payment of rates for a few of the units, and the payment of the insurance. My calculations are that after employing the manager at $31,000—and I must say that $10,500 of that goes back to Mr Gilbert by way of rental for the unit that the manager occupies, but I will leave that aside—the village costs Mr Gilbert $44,000 a year, leaving a profit of $50,000 a year from the residents for the convenience of having him oversee the village.

The residents accept that; they have gone into the village with their eyes open. Many are elderly, and need the personal paging service that Mr Gilbert provides. If Mr Gilbert’s company was faithfully fulfilling the agreement there would be no problem; the difficulty is that it does not. The residents have a list of complaints of inadequacies in Mr Gilbert’s fulfilling of his side of the bargain: a lack of maintenance, a lack of mowing of lawns, the failure to replace plants and bark although that was promised 2 years ago, no maintenance schedule to cover exterior painting or clearing of gutters—all of which are overdue—the failure to pay for repairs caused by leaking windows and water tanks, the lack of coverage for the resident caretaker when he is absent by way of illness or holidays, the investment of some of the corporate body funds in Jackson Mews Management Ltd without authority, and a failure to provide audited accounts.

The residents have long tried to contact Mr Gilbert and lay their complaints; they have written to him and tried to get some answers. Mr Gilbert is a hard-headed businessman. The complaints of the residents are that he has bullied and threatened elderly residents, and has refused to answer their correspondence. One of them described John Gilbert at a meeting 2 weeks ago by saying he walks all over them and does as he pleases. They have tried to sue him, but there is an arbitration provision that requires it to go to arbitration, and when they did that the arbitration was drawn out. There was a dispute as to whether the body corporate’s disputes were different from the residents’ disputes, and the outcome of the arbitration was that they had to be separated. The costs to the residents meant that they simply could not afford to pursue the matter.

The manager has taken Mr Gilbert to the Employment Relations Authority, because I understand that he is owed $7,000 that has not been paid. He has recently gone into hospital for a spinal operation that needed 3 days in hospital for the operation and 5 to 6 weeks for his convalescence.

In his conversations with the manager, Mr Gilbert refused to accept that the manager should be off work for more than the 3 days in hospital, but now, having taken some advice, the manager has told Mr Gilbert that he must be off work for 5 to 6 weeks. Currently there are difficulties in having the manager’s position filled while he is away.

How will this bill help the Jackson Mews residents? In a number of ways they will be extremely helped by this legislation. Firstly, a statutory supervisor will have to be appointed. Under clause 37 the statutory supervisor will be appointed, at the expense of Jackson Mews Management Ltd, to look after the interests of the residents and to ensure under clause 38 that the financial position of the retirement village remains secure. The statutory supervisor will report annually to the Registrar of Companies and to the residents on the performance of the operator’s duties and exercise of its powers. The statutory supervisor will perform any other duties imposed by the legislation. The statutory supervisor will have considerable powers. If he or she believes that the financial position of the retirement village, the security of the interests of the residents, or, notably the management of the retirement village is inadequate, the statutory supervisor may direct the operator to supply all residents with information that he or she may specify. The statutory supervisor may direct the operator to operate the retirement village in a specified manner, or he or she could apply to the court under section 49 of the Securities Act, which could lead to the putting of the retirement village into receivership or management, or to the imposing of restrictions.

So the statutory supervisor has considerable power to step in where there is a situation like the example I have given, to ensure that the residents of the village receive the services they have contracted to receive. I am pleased to say that, effectively, the costs of the statutory supervisor with regard to Jackson Mews will not be passed on to the residents. Under the terms of the contract, the operator is entitled only to a consumer price index increase each year, so any costs of the statutory supervisor will come off the $50,000 that John Gilbert is pocketing each year.

Secondly, there is a complaints facility provided in the bill. Mr Gilbert will have to have somebody who can respond to complaints, and if that person does not respond within 20 working days after a dispute notice is provided, then the operator will have to provide a panel of one or more independent persons who have been sanctioned by the Office for Senior Citizens to resolve the complaints. Again, that is at the operator’s expense—in the case of Jackson Mews, Mr Gilbert. There is provision for hearings before the disputes panel, and it has a wide power to make orders. The operator is responsible for meeting all the costs incurred under clause 53, and even for costs incurred in resolving disputes between residents.

I plan to introduce a Supplementary Order Paper during the Committee stage of the debate on this bill, to strengthen the statutory supervisor’s responsibilities even more. It seems to me that the statutory supervisor should be notified where there is a dispute that affects a significant number of residents or the general operation of the retirement village, where the outcome may affect the rights and obligations of the operator under the deed of supervision that he has with the statutory supervisor, or where there is a dispute concerning the disposal of a residential unit. I think those strengths are necessary so that the statutory supervisor is well aware of what is happening in a village, particularly in so far as the residents’ interests are concerned.

However, I am also pleased to say that this legislation has been effective even before it has been passed. Today I met with Mr Gilbert and his lawyer in my office, and finally succeeded in getting him and his lawyer to talk to me about the problems at Jackson Mews and to agree to a meeting with the residents to sort the problems out. That will happen in a few weeks’ time. I received an ongoing commitment from Mr Gilbert to accept monthly reports and to respond within 7 days to any written complaints that are made to him. I indicated to him that it would be worth his while to do that, because if he can sort these things out before the statutory supervisor is appointed it will save him a great deal of money in terms of the cost if a disputes panel has to be brought in at his expense to resolve the ongoing grievances. If Mr Gilbert does not restore his goodwill with the residents of Jackson Mews, it will prove to be very expensive to him.

So I think this is an excellent bill, and I look forward to advising the House in future of progress as we endeavour to resolve the problems concerning Jackson Mews. I endorse this bill, and say United Future will certainly support it through the House.

As the New Zealand First member on the Justice and Electoral Committee I would like to express the thanks of New Zealand First to the staff and the officials. From my previous experience on select committees, all I can say is that the staff and the officials on this select committee worked harder than I have ever known officials and staff to work before. This was relatively straightforward legislation, and now I think it is gold-plated legislation. We have covered just about every full stop, comma, and the like, that one could possibly dream of. I know that members still wish to make further amendments to it, and good on them. It was a very interesting exercise. We finally got something out of the select committee. Of course it was made more difficult by the fact that we had a snap election and it was necessary to go over things a second time. I would like to thank those submitters who had to come back to the select committee for a second time, for the time and trouble they gave, and the assistance they gave us in putting everything together.

As far as Mr Smith’s example is concerned—obviously I do not know all the facts, but I assume the other party’s lawyer will be looking at clause 6, where it states: “(3) For the avoidance of doubt, the following are not retirement villages for the purposes of this Act: (b) residential units registered under the Unit Titles Act 1972”—and I understand that it was a Unit Titles Act residential unit he was talking about—“or owner-occupied cross-lease residential units that in either case do not provide services or facilities to their occupants beyond those commonly provided by—(i) similar residential units; or (ii) residential units occupied under tenancies to which the Residential Tenancies Act 1986 applies:”.

I would be interested to know just how those units come within the category as regards the services, and whether the lawyer for the owner decides that the best solution is to cancel the services contract, and then the older people might be worse off than when they started. However, I just say that in passing with just the slimmest knowledge of what is going on.

As far as the legislation is concerned, I and many other lawyers who are involved in property practice have some experience with the documentation relating to retirement villages. We quite often have people in their late 60s and early 70s who sell their home—and married couples; not just widows or widowers—who decide that the time has come for them to move on.

Often they do not make that decision until they are about 80 or 81 years of age. Then a lawyer—and there has been some criticism of lawyers here—has to try to explain complicated documents to people who have only one ambition at that particular time, and that is to move out of their home and get into the retirement village.

When a lawyer tries to explain the documents to people, they accuse the lawyer of being a busybody who wants to spend far too much time on the documentation and who is going to charge them an exorbitant amount to try to tell them what the document says and what they are letting themselves into. In this day and age of conveyancing, when lawyers are told they have to charge as little as possible but have all the liability if things go wrong, they are placed in a very invidious position. Often the son, the daughter, or the son and the daughter-in-law, come with the elderly people, and the lawyer ends up telling them more than he or she tells the elderly people, but the lawyer always has to realise that it is the elderly people who are the clients. Of course, when things go wrong, often the elderly people have forgotten they even went to see a lawyer, let alone that they signed anything, and the lawyer virtually has to point out the document to them 10 years later and say: “Look, there’s your signature.” They say: “Who are you?”. They often cannot remember that they came to see a lawyer to sign the form. It is difficult, but I think the Retirement Villages Bill is a very good idea. It is an excellent idea. New Zealand First supports it.

💬 Steve Chadwick: Well done.

It is; it is an advantage to lawyers. This type of legislation is a protection for lawyers.

💬 Russell Fairbrother: They need protecting, too.

The lawyers need protection. We need it more than anybody else, especially from other lawyers sometimes. The bill sets out a procedure that must be followed. The lawyer has to say to people: “Look, you have to come and see a lawyer to get advice, and I have to give you this advice. The law says so.” Of course, many people will still not believe the lawyer, even if the person is a lawyer and is supposed to know the law. That is just a fact of life. But the bill now sets it out, so that there is a statutory way of going through the process.

💬 Hon Lianne Dalziel: The disclosure document will help.

Yes. It should be made clear at the beginning that we are talking about—if I could put it in a loose way, a simple way—properties that people actually own, and have a licence to occupy. We are not talking about rest homes where people just go to live and are cared for, and they pay rent or the social welfare department makes a contribution, and suchlike. We are talking about retirement villages where people have a form of ownership, regardless of what it is called. So that should be borne in mind.

I think it is important to make it clear that the changes made in the select committee included kaumātua flats as coming within retirement villages. We felt, and we recommended in the select committee, that kaumātua flats should be included in the definition of a retirement village and that the clause excluding them should be deleted. The bill as drafted contains a specific exemption for kaumātua flats, which could have created a loophole for operators attempting to evade complying with the provisions of the bill. If kaumātua flats are specifically excluded, we are aware of the possibility that some operators might avoid compliance by establishing a complex that in form and substance is a retirement village, as defined in the bill, but that also in form meets the definition of a kaumātua flat. So we felt it was important to make that change, to make it clear to any people going into kaumātua flats that the key distinction is, if they own it and if it is theirs, then it is going to be a retirement village and those rules will apply. But if it is like a residence where people are paying rent and suchlike, it is more likely that they are in a rest home.

Of course, the usual Māori type of kaumātua village that might be around a marae complex, where the occupants do not own the property they are occupying, can still be a kaumātua village in the ordinary way. The distinction is whether they own it. If they are merely renting it on the marae, or about the marae, then it can be a kaumātua flat in that area, and this Retirement Villages Bill will not apply.

As far as other aspects of the bill are concerned, we have set out a code of residents rights, and they are quite detailed. I should mention that we have also set out some residents’ obligations. Someone mentioned the instance of an elderly gentleman who moves into a village, but perhaps he cannot get on with people. It is a two-way street. The select committee did recognise that people have to give and take, and there is a code of obligations as well.

We have set out a disputes resolution process, and I think it is almost the best aspect of the bill. A low-level process is established, where people can try to sort something out without getting too formal about it. Too often if we have the type of process in the bill as it was, it starts to get too formal, people get too carried away, and then we always get someone who wants to do things by the book, and all sorts of problems arise. There is a less formal way of doing it; there is a more formal way of doing it. If people really want to go to town, they can appeal to the District Court or, instead of doing it through the disputes panel, they can go directly to the District Court as well. But one would hope that all these types of problems will be resolved by the lower-level procedure.

This is a very big bill. I believe that it sets out a very good code for all of those people who are in a position to buy a property and move into a retirement village. I will be looking forward to its progress. New Zealand First supports the bill.

I rise in support of the bill. There are about 15,000 units in New Zealand, housing 26,000 people. These numbers are increasing by 5 percent a year, so we have over 350 retirement villages. Over 5 percent of our people aged over 65 years live in retirement villages. This bill skilfully, because of the select committee that worked on it, balances the difficulties of the elderly with the avariciousness, often, of the capital interests in retirement villages. This bill reflects the good work of the Office for Senior Citizens, whose staff worked tirelessly to come back with the correct answers to a very trying committee that demanded the best from them, and in fact has got the best, which is now reflected in this bill. In supporting this bill, I congratulate the officials.

The Greens support this legislation. This bill sets out to protect the property rights of some of the most vulnerable people in our community, the elderly, and their interests in their retirement village homes. It is all too easy, as we sit in this place discussing the minutiae of the legislation, to lose sight of the big picture. That we find it necessary to build retirement villages is a little strange. Is there any other culture that would take its elderly and put them together in, as Mr Smith said, one lot of 35 houses just for the elderly? I find that a little strange. That we have to protect our oldest, and frequently our wisest, and those to whom each and every one of us is most indebted, from a minority, predators, who would rip them off or deal with them with a good deal less respect than they deserve, is an indictment of where we have come to as a society.

I spent a good deal of yesterday trying to get a handle on retirement homes and the protection of property rights. I came back to my apartment this morning, after a 30-minute run through the city, and it struck me that we are making legislation for people who are very little different from myself, and with similar needs and passions. Many of them are not a lot older than myself. As unnatural as life in a mid-city apartment can be, my apartment is in the middle of a thriving community. I cannot leave my apartment without being thrown into that community. I buy my coffee, I run down Lambton Quay, I interact with the staff around Parliament, and I have the occasional meal with my family. I return to my electorate. I interact with an enormous and diverse range of individuals. I know that my life is enriched by those experiences, and I would like to think that occasionally the experiences I bring to those interactions might add a little to the sum total of human happiness.

My fear is that retirement villages run the risk of removing our elders from our communities. I can understand why, in communities where we do not have time very often for our older folk, and maybe all they have time for is themselves, but I still find it a little strange.

I have a lot of people dear to me, who range from the fairly ancient to the very young. They include 84-year-old Arch, who still cycles down to the port and takes his dinghy out to his twin-masted yacht. It is not moored in some sheltered marina but on the other side of Nelson Haven, where at 76 years old Eddie is still the best sports injury fix-it man in the business. He phoned me this morning to say that someone who fell off his bicycle last week in Belgium is flying 12,000 miles around the world to be fixed up by him. He told me about Ben Blair, and the injury he sustained. He was fixed up too. He is 76 years old. Do we isolate him? Do we put him in a village? No, we leave him in our community—or Amy, and James her 80-plus-year-old husband, who knocked on every door for me in Richmond during the last election campaign.

Would that we were discussing not simply how to protect retirement village property rights and retirement village residents, but rather, how best to create the kinds of communities that make more of us not merely comfortable and safe, and able to enjoy the company of people of a similar age, but also able to live in situations that guarantee the opportunity to mix with folk of similar and diverse interests, whatever their ages.

Retirement villages and rest homes are at risk of turning into monocultures—and monocultures, whether they be people, forests, or cornfields, are risky. They are prone to disease and predators. Clearly, the fact that we find it necessary to pass this legislation demonstrates the truth of that. But at the risk of offending every retirement village resident, I say that such villages run the risk of making our communities much less interesting places.

Retirement villages also make it more likely that we will assume that our near and dear no longer need us quite so much, when, in fact, we have never needed one another more. In diverse ecosystems the old trees provide shelter and nutrients. Their very presence ensures that the young trees and all the other components of the forest are able to thrive and to contribute. Human communities are no different. We need one another. This need is not just about meeting our responsibilities; it is about making sure that our children live with a full range of human experiences, that they experience the kind of love that is unique to grandparents, and that our oldest and wisest know that they are needed and valued.

Just as the old trees reach deep down and bring up nutrients and hold the land together, so our old folks have memories, wisdom, and values that all of us need if we are to have any chance of learning to live again within the capacity of our communities and the planet to sustain.

While I have no great love of rules or bureaucracy, I believe that our elderly have a right to be protected from the unscrupulous, the incompetent, and the unreasonable. To give that protection is the purpose of this bill. But the legislation will also protect the great majority of good and competent operators from having their reputations sullied by the activities of the less competent, the less careful, and the downright difficult.

If this legislation is successful, there is likely to be less opportunity for the kind of behaviour that disadvantages the elderly and that has given rise to the horror stories of the innocent elderly or their descendants waiting for ever to get their investments—and sometimes a good deal less than their investments—returned when the residents die or move out.

For those who are concerned about compliance costs, I imagine that just as landlords will take all necessary steps and willingly pay their lawyers to protect their own properties and interests, this bill will provide a similar level of protection for the rights and property of retirees in retirement villages. For retirement village operators, the cost of compliance should be no more than what any responsible landlord, with some concern about the welfare of his or her tenants, might expect to meet.

The standard requirements for registering, complying with the industry code of practice, and disclosing the terms and conditions of residence in terms of payment, should minimise the cost and the effort required for measuring up, while the disputes procedures are likely to simplify life for both parties in the event of either party getting difficult or getting into difficulties.

So in the commentary we read that the bill will require that all retirement village operators register all retirement villages with the Registrar of Companies—that is not an unreasonable expectation—and comply with the Government-approved industry code of practice. Again, that is a reasonable expectation. They are required to disclose, in a standard format, all essential information on the procedures, terms, and conditions of residence, entry and exit, and sale or disposal arrangements, and charging systems. They are required to have a disputes procedure. Would that everybody enjoyed those protections—especially the disputes procedures—an ideal situation!

I must confess that as I sat on the select committee for only part of the deliberations on this bill, I thought it unnecessary to spell out to lawyers their responsibility in respect of ensuring that their clients understood what it was they were signing. Does that mean that in future if it is not spelt out, a lesser expectation might prevail? However, this document enshrines the conditions affecting one of the most expensive and important purchases in people’s lives: their homes—in this instance, they are the homes they probably expect to see their lives out in. This reminder to lawyers to spell out to their clients the conditions that they hope will guarantee their comfort during what may well be their most vulnerable years, is probably not unreasonable, and the certification is a reasonable attempt to guarantee that occupants understand what they are letting themselves in for.

We share the concerns of those submitters who expressed their frustration about unheralded changes—for example, a change of operator, or the sale or dispossession of a village. Having one’s village sold is a strange notion, and the very least one could expect is forewarning. The requirement to consult goes some way to meet those concerns. The industry code of practice could also spell out what is actually involved in such consultation, to the mutual benefit of all parties. The statutory supervisor could also alleviate some of the frustrations, particularly over day-to-day issues.

So the intent of this legislation is good, and having a range of housing options for our retirees is no bad thing, but having turned housing and communities into commodities to be marketed and sold, let us, in addition to safeguarding the property rights of residents, look at the diverse needs of our whole community and think about how to create homes and villages that reflect the diversity of our communities and that meet our diverse needs. The Greens take pleasure in supporting this legislation.

I rise to support the legislation.

The previous speaker Mike Ward attempted a substantive review of this bill in the form in which it was returned from the Justice and Electoral Committee. He showed the kind of confusion that I had expected. He talked warmly of diversity while supporting a bill that in fact sets out to create a monoculture, and without apology.

This bill could have been sound. I believe that it was simply terrible when it was introduced, in terms of the intrusive, patronising attitude it took to old people, and the interference it would have made in their property rights and the rights of those who dealt with them. Retirement villages would have been an undesirable industry for anyone who valued any kind of certainty in the contracts he or she had, because of the political power to change the rules midway through any kind of enterprise.

I believe that the bill has been dramatically improved. I was certainly grateful to have the acknowledgement from the Associate Minister of Justice, just as I was grateful that the Minister did not have such a stock of pride in her initial product as to reject the suggestions that came from the Justice and Electoral Committee. I felt that made it a worthwhile exercise to be involved in. But I still believe that the outcome is, sadly, short of what it should be.

When the bill came in, it simply told the lenders to retirement villages that they would not be able to exercise their securities. It told the operators that they had to produce a simple, clear, and comprehensive disclosure statement, which I know, as one who has spent years trying to do that, is simply impossible. Comprehensiveness, in the face of liability, becomes voluminous, and simplicity and clarity disappear to almost all readers in the face of size. The bill told people that they would have a cooling-off period before they could have reliability in their contracts, but there was mystification expressed at the suggestion that that would mean older folk would not be allowed to move into their properties, despite their having feelings of full confidence, and despite their being adults with their own money. They would not be allowed to enter into a contract without some third party telling them that they could not move in until a specified period was up. The bill provided for a level of supervision that had not been sought by the industry to date, and it overrode contract in such a way that the Law Commission said to us, quite simply, in its terms: “If you are going to depart from freedom of contract, you might as well do so in a way that is effective in achieving the consumer protection that is aimed at.” In other words, the Law Commission, which originated this bill, felt that it had fallen woefully short.

What had happened by the end? We had a process of slow and agonising improvement. I believe we have largely fixed the retrospective and arbitrary interference with financing contracts, which, it seemed, the original proposers felt could just happen with no cost. From my experience in the related area of lending to farmers, who quite often oppose enforcement, there is a consistent and otherwise unexplained premium on lending to farmers that this industry would have rapidly attracted. Lending to even the best farmers costs about 0.5 to 1.0 percent more than lending to an equivalent business in town of exactly the same cash flow and security characteristics, and from the studies it appears that that is because of the risk that it will be hard to enforce the security. We had a Government that was going to tell the lenders to this entire industry that it would rewrite their contracts, and that would mean they did not have their fundamental right to sell up on default.

That has been sort of fixed. We have sort of fixed the overriding nature of the code and its ability to rewrite the contract that had been the basis of the risk allocation and the financial arrangements that people go into these villages with. But we have not fixed it completely, and, as the Law Commission expressed it: “It seems to have happened here. There has been industry capture of the law reform process. There is a genuine risk of ending up with a measure that is a mere facade, rather than a genuine safeguard.” That was from the very well-known Dr Dugdale, who does not mince his words. He would have abandoned all pretence of freedom of contract, and would have simply stipulated what all contracts would contain.

In the committee, we tried to make sure, instead, that the code could address only matters clearly stipulated for the Minister to address, and towards the end of it we tried to make sure that the drafters of the code were required to take into account the anti-competitive effect of such a code. A minority on the committee proposed the very simple suggestion that the Minister make sure that the code is not so onerous as to act as a barrier to persons of modest means gaining access to accommodation in retirement villages. It seems absolutely self-evident that the code should not be a barrier. We also suggested that the Minister ensure that the code is sufficiently flexible to permit the operation of villages with a range of pricing structures, and offering a range of services and facilities to residents.

To my absolute astonishment, the officials recommended strongly against those provisions. Not only did they recommend against them, on what I believe were spurious technical and legal drafting grounds, but they actually said that this measure is not intended to assist people of modest means. It does not matter if this code “gold plates”, because it is intended to affect only those who are rich enough to afford a gold-plated retirement village. Their advice said: “It is not the purpose of the retirement villages legislation to widen the range of retirement living options for people of modest means. It should not therefore be a requirement for the Minister to take into account the effect of code requirements on a group of people for whom retirement village living is not currently, or in the foreseeable future, an affordable option.”

So here we see nakedly what this bill is about. This bill has been captured by the industry. This bill is all about buying votes from the lucky ones who are conscious of what the law can do for those who get their hands on its levers. This bill has become a charter for the majority in the industry to limit access by those pesky, untidy, often incoherent, often over-optimistic new entrants who keep pricing pressure on the industry and make sure it grows fast. This bill now makes sure that old people will never have the very best protection that they could have. The best protection for people in any industry is competitive tension. The very best protection that old people could ever have would be an over-supply of retirement units—retirement villages going broke because there were not enough residents to fill them. That is the very best protection we can supply to people in this industry, because when there are too many units, everyone in the industry has to find ways of attracting and increasing the number of people in his or her units. The way that every successful market economy works is by making sure that people—

💬 Hon Lianne Dalziel: This is not a market situation.

The Minister just tells me this is not a market situation. That says it all.

💬 Hon Lianne Dalziel: It’s all one-sided at the moment.

💬 Murray Smith: There’s no bargaining power.

Listen to them. It is coming from two sides. We have United Future saying there is no bargaining power. An operator cannot force people to go into a village. An operator has no show whatsoever of getting people to go somewhere they do not want to go. An operator does not control people’s money. This is absolutely hilarious, and just as I expected. They have shown themselves. What we have here is: “The Government knows best. The Government knows far better than the people.”

We can be assured of one thing after those comments. If there had been any risk of ACT party support reaching any threshold, it now is well and truly down the drain, because no aged person would support them after that extraordinary admission. I am pleased to have in my electorate of Dunedin South a number of large retirement villages. Many of the issues that have been brought to me by the people who live in those villages are in relation to misrepresentation, and to the misery that has arisen from the sorts of misunderstandings, genuine or deliberate, that have been encouraged as part of what the Associate Minister of Justice spoke about in her introductory speech. There has been a sad misunderstanding of the reality, which Ms Dalziel characterised perfectly when she spoke of retirement units not being the capital asset that people expected they would be when they bought their new retirement home. I acknowledge there are extraordinary levels of community, of health support, and of security related to these organisations and communities, and I commend that. It is a very sad comment on how our society has developed that so many people have been suckered into that sort of environment because of that attraction, and in many cases have lost what are often quite meagre life-savings. I am absolutely flabbergasted at what I have just heard from the ACT party, as will be readers of the Hansard that I will distribute with pleasure in my electorate. I commend this bill to the House.

National has not had a male speaker yet. Richard Worth.

Mr Speaker, thank you very much for selecting a male speaker at this stage to advance the debate. Before I turn to the merit of the bill, I would like to say that two people should be singled out for the special contribution they have made in connection with this legislation. The first is Dr Lynda Scott, who modestly told members of the House how her bill had panicked the Government into initiating this Government measure, which now comes before the House for its second reading as reported from the Justice and Electoral Committee. The second person I would nominate for special mention is Cliff Cook, not only for his period of service in, and exemplary leadership of, the Retirement Villages Association, but also for the fact that he is instrumental in leading one of the prime providers of excellent retirement villages throughout New Zealand. I am speaking, of course, of the publicly listed Metlifecare group.

Retirement villages are increasingly a residential option for older New Zealanders, with some 4 percent of people aged over 65 currently living in a retirement village. I understand that there are around 300 villages currently in operation, accommodating more than 20,000 people. As an earlier speaker has indicated, growth trends show both increases in the number of villages and expansion of residential capacity within some existing villages.

It is somewhat easy to overstate the issues, and I believe that some of the Government members have been guilty of that in the short comments they have made. But there is no doubt that the charging and management practices of some retirement villages have, over the last decade, been the subject of complaint. A range of problems have been identified by residents and by their representatives, which have included difficulty in comprehending the nature of village financing and charging regimes; hidden costs associated with exit from a village—and members have spoken about that issue—uncertainty about residential rights, particularly where occupancy of a villa or a unit is based on a licence to occupy or a lease agreement; poor management of villages, including unchecked deterioration of communal facilities and reduced quality of services; and, finally, I would say an absence of formal, efficient, and fair processes to deal with complaints or disputes, whether between residents or between residents and management. I have entered a word of caution, because it is easy to overstate these issues, and the problems are not endemic. But they are too frequently documented to be ignored at a social policy level, and there is little doubt that they are a cause of concern from a consumer and residential rights perspective.

The average age of entry to a retirement village is 74 years. For many people, the village they choose represents their last place of residence. Their investment therefore not only is significant on a financial level, but has attached to it expectations and an understanding that their interests and their rights will be protected. As Dr Scott has told us, a Law Commission report in 1999 concluded that separate legislation was required to give retirement village residents protection as consumers, residents, and investors. So it is that, as a result of Dr Scott’s urgings, the Government introduced this bill.

It is a journey that had earlier been travelled in Australia, where in 1980 there was specific legislation for retirement villages.

💬 David Benson-Pope: That’s a good thing.

Members opposite need to know that I am not in the least disconcerted by the barracking that they offer. It does little to advance the debate, and simply indicates a measure of immaturity and intolerance.

Major changes were made to the bill in the course of the select committee process. Indeed, there are significant changes on just about every page. That is not a bad thing, but I simply note—and it is apparent from looking through the commentary—that members of the committee looked at the definition of retirement village, and at issues of kaumātua flats, registration, memorial on title, and occupation right agreements.

The select committee also looked at a particular issue that was a cause of tension between residents and their representatives, on the one hand, and the operators of the village, on the other, and that was the issue of certification, which was referred to earlier by a member. Under the current model proposed in this bill as reported back, a legal adviser now needs to certify that he or she had advised an intending resident before that person signed an occupation right agreement, and that the general effect and implications of the relevant agreement had been properly explained.

We looked at cooling-off periods; cancellation for delay; a code of residents’ rights, which I would like to come back to; issues of statutory supervisors; dispute resolution; and the tricky issue of delays in the sale or disposal of units. The end result—and I agree with Mr Franks—is that the legislation that has emerged from the select committee is much the better for the process. For those who argue in the context of a unicameral Parliament that a select committee performs a function akin to an Upper House, I can only, in the context of this legislation, agree with the observation.

I would like to refer to two issues at this stage. The first is National’s position in respect of this bill. We support the bill—we worked hard to improve the bill during the course of its consideration—but we are concerned about two aspects, which are highlighted in the commentary. The first is the possible consequence of significantly increased compliance costs for some operators, and the second, which Mr Franks has referred to, is the likely consequence that smaller operators will withdraw from the industry or be dissuaded from entering. He put the issue attractively as the possibility of a monolithic culture developing. That can, assuredly, not be ruled out. If either of those two possibilities that I have referred to comes about, it would be our hope that the Government would move to make changes to the legislation to ameliorate those concerns.

Finally, I conclude on the issue of citizens’ rights. If members opposite turn to page 95 of the bill as reported back, they will see, in my view, amazing stuff. I am referring to schedule 3, which includes the code of residents’ rights. Arguably, this sort of material should not appear in primary legislation. There are many examples where it appears in tertiary legislation. I make two points. The right to be treated with courtesy and have one’s rights respected, and the right not to be exploited are, I suggest, gross examples of extreme political correctness, and it is sad that they should be in the bill.

This bill is about balancing the sometimes, but not always, competing interests of the residents and the operators of retirement villages. I believe that the balance provided in the bill is pretty well right. It is interesting to note that those who face retirement much more imminently make lengthy speeches; those of us who do not have to worry about it too much are happy to sit down.

We have heard tonight some horror stories from the United Future member and the Green member about what can go wrong in retirement villages. Just to give a little balance, I commend to those members of Parliament who feel that they might have gone past their use-by date a retirement village in my electorate of Clevedon called Longford Park Village. I make that recommendation with some trepidation, on the basis that something might go wrong, but that is a retirement village about which I have not heard one complaint from the residents. I have even had one darling old man, who must have been close to 90 if he was not over it, suggesting that I might like to put my name forward so that I could sign up there when I was old enough. I thought that was a really nice suggestion. I am sure that Mr Gosche opposite would love to come and join me there, but actually I am not sure that he would be able to.

One concern this legislation is trying to address is that people in an elderly condition are often alone—often they have lost a lifelong partner—and in a very vulnerable position. As a lawyer of 22 years in practice, I have to say I have seen quite a few who wanted desperately to move into a particular retirement village. They have been sold it on the basis of lovely brochures, and recommendations from their local MP—oops, I did not mean to say that, Mr Speaker—and those sorts of things. Some also feel, unfortunately, some pressure from family members who would like them to move to a retirement village because they are becoming a bit of a handful. It is actually quite sad that people should ever feel like that. I am very fortunate that neither of my parents ever felt the need to go into a retirement village. But it was great to know that there were some very nice villages available should they ever have wished to go into one.

Of course, there are many reasons for people wanting to move into villages, and one in particular is concern for their personal safety. Unfortunately, many elderly people feel that they are not in fact secure in their own homes. It is an absolute disgrace that people in their 80s and 90s feel that they could be attacked in their own homes. Unfortunately, some are, although most are not.

In addition to that, there is the concern over loneliness. Many elderly people are so divorced from what their children and grandchildren are doing that they just feel plain lonely. If a person has had a lifelong partner, then has lost that partner, it is very difficult for that person—and these people are often very elderly—to try to resurrect some form of relationship with other people. It is very, very hard. In a well-run retirement village, they can often do all sorts of things, such as the activities at Longford Park. They play bowls, there are indoor swimming pools, they go on day trips and to the movies, and so on. Elderly people often live a more active life, in those retirement villages that are well run, than they would have done if they had stayed in their own homes or with their families. In many ways, these sorts of retirement villages are a great thing. They have been existing and operating without this bill, which is another stunning fact, and they have done so in the market economy.

One of the concerns is that sometimes elderly people sign up to retirement villages on the basis that they have good health, and often do not realise that, under the agreement, the licence to occupy is such that they cannot go back to their own unit once their health deteriorates to the point where they have to go to a hospital wing. That is often a very difficult thing to know, because most people would see themselves as owning the property rather than simply having a licence to occupy, such as a licence to occupy a room. That is one of the concerns, so I am pleased to see that there are provisions relating to disclosure in the bill.

Retirement villages, no matter what we want to say about the market economy and how well it works most of the time, are quite a new thing, from the point of view of both the legal system and of many elderly people being connected with it. We have heard tonight that 4 percent of people over the age of 65 are in retirement villages, but that is a very small number of people. Consequently, there are not many people who can say that they know about retirement villages because their parents went into one before them, or their cousin, or sister, or brother. It is quite a small number of people. In part, that number has been kept small because people are concerned about the financial ability of retirement villages to keep operating, and about just how secure their own investments are. At the end of the day, most retirement villages are for the elderly living in them rather than for investment. They are more of a safety net and a lifestyle choice. Quite often, elderly people can free up some capital by going into one, as well. So it is very important that we have the same sorts of safeguards as have been put forward here.

I stress that the vast majority of retirement villages in this country are well run. They are not places where the elderly are routinely ripped off, because those sorts of operations would never survive in this environment, let alone any environment that was more regulated. I take some exception to the comments of one particular member, who cast aspersions on all the retirement villages in existence at the moment. I thought that was a shame. But I applaud Mr Smith’s speech, when he talked to us about his dissatisfaction with the way that a retirement village was run, because of the many complaints from his constituents living in the area.

In essence, this bill has been brought about by some excellent work in the Justice and Electoral Committee. It started with the member’s bill from my colleague Dr Lynda Scott, the first geriatrician, as far as I am aware, in the House, and someone who can truly say she has worked for many years with the elderly and is fully aware of their concerns. I am very pleased to be able to support this bill, both as a lawyer and as a member of Parliament, and, at the same time, to commend to the House those many, many retirement villages that are well run and managed, and are providing a very good service, even under the limited law that we currently have.

Amendments recommended by the Justice and Electoral Committee by majority agreed to.