Retirement Villages Bill

We are all pleased to see the Retirement Villages Bill in the House today. This bill has been awaited by the Retirement Villages Association, as well as those people who currently live in retirement villages. Retirement villages have developed over the past 10 to 15 years as an excellent lifestyle choice for many New Zealanders. They give security, companionship, and support, and a very large percentage of those people who have entered retirement villages are very happy with the services they have received. However, the legislation that covers retirement villages has not been clear and concise, and there has not been a specific Act of Parliament that has covered that industry and the people who live within it. While 19 to 95 percent of retirement villages are run extremely well and deliver a very good lifestyle for those within them, there are a few, as is always the case, that do not provide the same level of service and care.

The Law Commission work on retirement villages signalled the need for a bill, and when I became a member of Parliament I had a member’s bill that went into the ballot, promoting the need for retirement villages legislation. That member’s bill had not been pulled out of the ballot before the Government was pushed to develop its own bill. Later this week under urgency we will debate the Intellectual Disability (Compulsory Care) Bill, which has sat on the Order Paper year after year without being debated, and it is pleasing to see that there is a commitment to getting this bill through the House.

The concern from the Retirement Villages Association of New Zealand residents has been about having legislation that makes it clear, when someone enters a retirement village, exactly what that person is buying into. As a geriatrician, I work with many people who have entered rest homes, continuing care units, and retirement villages. In the South Island, there tends to be a combination of that style of home, in which the three types of facility are together. In the North Island, however, there tends to be much more emphasis on larger retirement villages. Some of them have rest homes and continuing care units in order to market all-of-life cover, but many do not. There is quite a variation between the North Island and the South Island.

One of the concerns is that sometimes, when people buy into a retirement village, neither they nor their lawyer have looked clearly through the fine print, and they have not understood what the implications are if they wish to leave a retirement village. The disclosure documents make it very clear to people what they are buying into. There are two types of village: one in which people have a licence to occupy, and another in which people have a unit title. The “licence to occupy” concept is that people are buying into a lifestyle—especially if they are living on their own—where they have a call button, assistance if needed, protection and security, maintenance, gardening, and the companionship of those around them.

A lot of people have not understood exactly what they have bought into when they move into a retirement village. Grey Power has been particularly active in talking about the concerns that it has in cases when an operator may not have met obligations or the need for disputes resolution within a home. Sometimes there is one resident who makes it very difficult for other residents, and often the disputes are between residents, as opposed to the operator of the home. The village in itself has to be protected for all of those within the village so that it is a viable entity and unit, as opposed to functioning for the needs or wishes of one person. Setting up a disputes resolution process has been very important.

In addition, the statutory supervisors, which all of those retirement village members who were part of the Retirement Villages Association had, will now be compulsory. Statutory supervision will represent the good of the village overall, as well as the needs of the individuals who live within those villages.

We meet here in the Chamber on 21 October, as far as Parliament is concerned—although other people might think it is 22 October—and we are debating the Retirement Villages Bill. This bill had a very long consideration by the Justice and Electoral Committee, and I mentioned in the report-back debate that the drafting was about as fine as it could possibly be. I am disappointed that the Government has now issued a 15-page Supplementary Order Paper for us to digest and include in the bill under urgency. I wonder what consultation has taken place with regard to that Supplementary Order Paper and what opportunity all the submitters have had to consider it. I know that New Zealand First saw it for the first time when it was tabled in the House on 16 October. It is disappointing that we were not given the opportunity to discuss it any earlier. This is the first I have seen of it since that day, which was a Thursday; being a Thursday, it was easy to miss it until one got back to the House on the Tuesday of the following week.

I take the view that the Government’s lack of consultation is totally unhelpful to those of us who were trying to be as helpful as we possibly could in the select committee in order to get this important legislation through the House. I note that the Bills Digest has been issued, and I compliment the Parliamentary Library on the way in which it has prepared it. It has helped to clarify the major issues in the Supplementary Order Paper. Under the main heading “Main changes proposed by SOP”, there is a section headed “What is a ‘retirement village’”, which I think it is helpful to quote because this is one of the areas of confusion: “The SOP makes it clear that if one or more ‘residential units’ are located in a ‘rest home’ or ‘hospital care institution’, the only parts of that rest home or hospital care institution that comprise, or are included in, the retirement village are the residential unit or units themselves and the common areas and facilities within the rest home or hospital care institution (if any) to which the residents of the unit or units have access only by reason of their occupation right agreement.”

The next section is headed “Certain residential units not retirement villages” and states: “The Bill describes certain types of habitation which are not retirement villages including residential units registered under the Unit Titles Act 1972 or owner-occupied cross-lease residential units.” I refer to cross-lease residential units, because Mr Murray Smith made a big song and dance about a property that was comprised of cross-lease residential units, which he thought might have a change in their status as a result of this bill. I questioned at the time, and I question again, his view of the matter. I would be interested to hear the outcome.

The Bills Digest goes on to state: “The SOP makes it clear that it is ‘owner-occupied’ residential units registered under the Unit Titles Act 1972 which are excluded (as well as owner-occupied cross-lease residential units). Also excluded are ‘similar residential units’. The SOP qualifies this with the words ‘that are not intended to provide accommodation predominantly for retired people and their spouses or partners.’ ” A degree of uncertainty is starting to creep into this legislation. It is clear that a unit title property or a cross-lease residential unit is excluded. What is usually included in this type of legislation is what we call in the North Island, in the Auckland area, “licences to occupy”. They tend to get caught up in residential villages. Hopefully, those practitioners will be able to understand the words referring to similar residential units “that are not intended to provide accommodation predominantly for retired people and their spouses or partners.” I will be interested to hear from the Minister in the chair, Lianne Dalziel, just how much consultation has taken place.

The main controversial provision in this bill will be clause 29A, “Occupation right agreement voidable”. It was included in the bill only by a majority of the members of the select committee. The reason why there was opposition to it is that clause 29A as introduced by the majority of the select committee creates uncertainty. There is an occupation right agreement, and there are all the protections that are given now to the people entering into the agreement—usually the retirement village operator and the retiree. However, the bill as it was reported back states, in clause 29A(1): “An occupation right agreement entered into in contravention of section 17(3) or section 24(1) or section 26 or section 29(1) is voidable by the resident by notice in writing to the operator and to the statutory supervisor of the village (if there is one) given at any time within 3 years of the date the agreement was entered into.” That is, obviously, extremely uncertain. Who would go into business to provide retirement village facilities if the contract might be cancelled within 3 years?

I am pleased with, and I would like to congratulate the Minister on, the amended clause 29A, which is a vast improvement. It still is not satisfactory, because I feel that if, after all the protection that has been given under this bill, a person is still not happy with the agreement, there should not be the length of time that is proposed to cancel it. However, the amendment on Supplementary Order Paper 157 provides: “(1) If an occupation right agreement is entered in contravention [the sections] in any substantial respect, the agreement is, unless it has been terminated, voidable by the resident by notice in writing to the operator and to the statutory supervisor of the village (if there is one) given at any time within the prescribed period.”

There is a very useful definition of “prescribed period”, and I have to congratulate the draftsman on it. But there will be a problem as to what is meant by “any substantial respect”. Efforts have been made to define what is meant by these phrases, but interpreting them will be difficult. The “prescribed period” will probably be the very important one, and all practitioners will have to be very careful about setting the dates as to when the prescribed periods begin and end. When one goes into the lawyer’s office and signs the contract, or when the contract is signed with the operator—the beginning—will be just as important as the end, because one will not know when the period has expired unless one knows when it began. The prescribed period is the lesser of “(i) a period of 3 years after the date on which the agreement was entered into; or (ii) a period of 6 months after the resident knows, or ought to know, of the contravention:”.

The difficulty in this entire area is that so often it is not the resident who complains, because the resident has passed away; the argument is with the family. We try to do our very best in this Parliament, but I think we are going overboard in so far as this legislation is concerned, because this is a very difficult thing to deal with. For older people who cannot remember what they have done, 3 years can be a very long time, as we know from our own relatives. When we go to see our parents they say: “You haven’t been to see me for a long time.”, yet we were there only the day before. It is a difficult piece of legislation, and I think clause 29A goes a little bit too far, even with the alterations that have been made.

I conclude by asking the Minister at some stage to let us know what consultation has taken place. I do not intend to spend a terribly long time on this Committee stage.

I am very pleased to see the Retirement Villages Bill coming back for its Committee stage and then its third reading. United Future has been pushing for this bill to pass through all its stages as quickly as possible. The Committee will remember that the second reading debate took place because United Future specifically requested it be included in the urgency held earlier this year, and we have also been pushing for this bill to be included in this lot of urgency. We finally see, very pleasingly, that the protection this bill will afford residents in retirement villages is getting a bit closer.

I note the commencement date is February next year for some provisions. That is good, but in terms of the other work that has to be done, with regulations being formatted, it seems it may not be until August next year that the full effect, and particularly the appointment of statutory supervisors, will occur. So we are still some months away from seeing the full effect of this bill, and the sooner we can see it, the better.

Looking at Supplementary Order Paper 157, and particularly looking at issues with regard to the statutory supervisor’s role, I have a number of comments I wish to make under those categories. Firstly, I welcome the change to clause 13(2)(c)(ii), which now provides that a statutory supervisor does not have to certify that financial statements comply with the Financial Reporting Act, but simply has to state that they comply “to the best of the supervisor’s knowledge and belief”. That was a concern for statutory supervisors. It arose from discussions I had with statutory supervisors on the bill and its format. I am very pleased to see that the Government has agreed to change that provision, to lower the threshold that statutory supervisors need to comply with. Otherwise, statutory supervisors would have had to inspect financial statements and go through, effectively, an audit before they could say they complied—as opposed to “to the best of the supervisor’s knowledge and belief”. That would have added significantly to their costs, and that extra cost would have been passed on to retirement villages and then on to residents.

I also allude to Supplementary Order Paper 129, which I have lodged, which would add a clause 41B. This was another change that was keenly sought by the statutory supervisors. In essence, the clause provides that certain disputes that are notified to the operators—in particular, ones that affect a significant number of the retirement village’s residents, or the general operation of the village, or the operator’s rights and obligations under the deed of supervision—have to be notified to the statutory supervisors. Not all disputes have to be notified. The wording of the amendment on Supplementary Order Paper 129 has been phrased so that not every dispute needs be notified to the statutory supervisors, but only those of some significance. Obviously, the statutory supervisors’ role is to protect the interests of the residents as a whole, and, therefore, if a dispute is lodged that affects a significant number of the retirement village’s residents, the statutory supervisors ought to be aware of that. The amendment I have lodged does not say that the statutory supervisors have an automatic right to get involved; nevertheless, if they see something happening, and have a feel for what is happening in the village, they can take appropriate action if they feel that intervention is necessary. Surely, at the end of the day, that is the role we ask the statutory supervisors to fulfil.

Clause 41B also covers the general operation of the village, and, again, the statutory supervisors are in a position to oversee the general operation. If the supervisors cannot get prior warning of disputes arising, by getting notification of those disputes at the earliest possible time, then that will fetter their obligation to do the job they are employed to do.

The third area is where the operator’s rights and obligations under the deed of supervision have been affected by the dispute. The deed of supervision is the key document that the statutory supervisors are obliged to look at and take cognisance of when dealing with operators.

I particularly wanted to follow Murray Smith to thank United Future for requesting that this bill be dealt with within the urgency motion. I also thank Mr Smith for his very helpful contribution, not only on the Justice and Electoral Committee, which was very ably chaired by my colleague Tim Barnett, but also in assisting the Government in developing a Supplementary Order Paper to deal with the matters he has just addressed. The Government is very happy to support those amendments in respect of the involvement of the statutory supervisors.

I should say, by way of a little bit of background in the Committee stage, that it was actually in my previous capacity as Minister for Senior Citizens that I introduced this bill, and now I take it through its Committee stage and third reading as Associate Minister of Justice. It was interesting to reflect back over the last few days on the original letters I received when I became the Minister for Senior Citizens, and the kinds of examples that were given to me of people who really had no idea of what they were signing up to. The tragedy was that many of those who signed up to entry into retirement villages had actually taken legal advice before they put their signatures on the bottom line. Unfortunately, what we discovered pretty soon was that, in fact, a number of lawyers had no real understanding of the whole concept of a licence to occupy, and that a large number of people living in retirement village complexes, from one end of the country to the other, thought they owned a piece of property that they themselves could sell. I tried to encapsulate the burden placed upon those people in a simple phrase, so that I could communicate it to others as I spoke at meetings around the country, and the very point I made was that by investing in a retirement village one is not buying property one can sell.

What is so good about this legislation is that all that information is explained in plain language upfront, so that right at the very outset people know they are not buying property that they can sell. They know they have a licence to occupy, and they know what monies will be deducted from their investment should they leave the retirement village or, with regard to their estate, should they die. I think Dail Jones made some very good points. He is right that many of the debates that have occurred in terms of retirement villages have not occurred with the individual who entered into the agreement; but with the family who has inherited the estate of someone who has passed away.

I wanted to clarify matters in respect of Supplementary Order Paper 157. A lot of the provisions are minor, technical amendments, and I think the member would agree with that. But I take on board his comments in respect of clause 29A, and refer him to new subclause (5), which will provide the clarity he is seeking: “For the purposes of this section, a contravention of a particular provision is a contravention of that provision in a substantial respect if—(a) the contravention involves a significant detriment to the resident; or (b) the contravention is otherwise material, and is not solely technical or minor in character; or (c) the contravention involves deliberate misconduct on the part of the operator.” With that clarity in the legislation I do not think the clause itself will have much difficulty in being interpreted. It is not intended to catch technical and minor defects in approach, or contraventions of the particular provision; it is designed to catch material breaches that have an impact on the resident—particularly if there is deliberate misconduct, which would not be excluded, either.

I wanted to acknowledge the work of the Justice and Electoral Committee. The select committee has played an amazing role in hearing submissions. Often it has been a case of trying to balance competing interests. We have had Grey Power, representing consumer interests, on one side of the equation, and the Retirement Villages Association on the other. I have seen the competing interests try to find a workable solution that works on both sides of the equation—a position of balance. I congratulate all members of the Committee on their contributions on this important legislation.

I am pleased to follow the Associate Minister of Justice Lianne Dalziel, because I also want to congratulate the Justice and Electoral Committee, and particularly the National and ACT members of that committee, who made a substantial improvement to this bill.

National members still have some concerns, especially about the increased compliance costs that will be imposed on villages. We have looked at the consequences of those compliance costs. The likely compliance costs of smaller operators in particular are of concern. In my member’s bill facilities of up to six units were exempt. But in the Supplementary Order Paper that the Minister has introduced, coverage has been expanded under clause 6 to include stand-alone residential care facilities and hospital care institutions providing care for older people, if two or more residential units in those complexes offer occupancy in return for capital sums. This clause basically captures all the alternatives—unless someone happens to have a granny flat. All of those are included in this bill.

We have to ask who will pay the price. Who will pay the cost of the statutory supervision, of the disputes resolution process, and of the regulations that come under this bill? There will be increased compliance costs. That must be recognised, and it was a concern to National. National feels that this Government has put a huge number of increased compliance costs on businesses in our communities, and does not take this issue seriously enough.

But the select committee did make a lot of substantial changes. Grey Power gets representation from the small number of people who are having problems, not from the 99 percent who are not having problems. Because of that, it wanted to look at the buy-back provisions. The Minister mentioned that one is not buying a property, especially in the case of a licence to occupy; when one moves into a village one is buying a lifestyle. There has been a lot of concern about the fact that if, when somebody dies, the house is not sold on, ongoing costs are incurred. If the village is being developed, the new units often are the ones that get sold, and the unoccupied units do not. So there was a marked amount of debate about that buy-back clause. The Supplementary Order Paper makes some changes. I think a balance has been obtained. People need to realise that the situation is fine while we are in a buoyant housing market—as we are at the moment, when there are people on waiting lists to get into retirement villages—but if the market turns down it will be a different issue again, and people will once again be waiting to sell.

As well, the changes to clause 27 mean that someone who moves into a village can exit within 15 days. I can remember that the husband of a patient I had looked after, who had died suddenly, was pretty sad and depressed, and he went into a village when he was still quite a young man and did not need to make that sort of lifestyle choice at that point. As he got better he wanted to be able to exit. Now there is the ability to have what is called a cooling-off period in order for people to confirm their decision to live as part of a village. Some people have called retirement villages lifestyle villages, and that may be quite a good change of name, because people are buying into a lifestyle. But it does not suit everybody, and if someone wants to exit during that 15-day cooling-off period, then clause 27 states that he or she can do that.

The words of clause 29A(1) have been changed to include the phrase “in any substantial respect,” with regard to grounds for voidance of an occupation right agreement. If someone signs up to an agreement, generally that is totally legally binding. In this bill there is now a cooling-off period, and, otherwise, to void the agreement there has to be contravention “in any substantial respect”. That change of wording means it is a little bit harder just to exit. If people decide in that cooling-off period that they do not want to live in a village, even though they have signed all the forms to purchase into it, then they get a refund of their capital sums only. The cost of any goods and services used is not refunded.

The dumping of 14 pages of a Supplementary Order Paper with 10-odd pages of new technical clauses is quite a blight on the pride that Parliament might otherwise have wanted to feel in responding to all those submissions from Grey Power. This process involved the Justice and Electoral Committee doing what some members felt was an excessive amount of investigation, with an excessive amount of care about the actual words, and what the effect of the intentions, as translated, might be. Many of the words being changed or replaced in this Supplementary Order Paper were words that the committee agonised over—I think that probably is the right word. Now explanation is completely absent for many of the ones that look technical.

I take a simple example. A provision had been substantially modified to try to exclude parts of rest homes from what would otherwise be retirement villages or hospital care areas. It has now been replaced by new words that might or might not achieve what people submitting to the select committee wanted. It might or might not achieve a sensible purpose, but this House will vote on it without any opportunity of knowing. I would ask the Minister to explain that, and many others of these, but it might be unfair. We cannot really engage in a dialogue, because we will not get the time to do it. There are things that simply puzzle me, and I do not believe that is the right way to approach a document that was given such close select committee scrutiny—whether welcome or unwelcome.

Although I am told this is a wide-ranging and general debate on the whole bill, I am concerned that during this time we will slide past what look like simple wording changes. Those changes were presumably proposed by officials who, I believe, always had the earnest desire to make the bill work for people in retirement villages, but—to be quite frank—did not seem to me to have the technical knowledge that enabled them to know whether their preferred wording was properly translated into legal effect.

I am concerned that the changes, which look so technical, will be more like own goals of the kind that we identified in the bill. For example, the bill started out simply stating that some rights of secured creditors would expire upon registration. The select committee received submissions on that from the Law Society and some secured creditors. They made us realise—those of us who did not already see it—that simply doing that to a secured creditor was, firstly, a major breach of a rule-of-law principle and bad in principle, and, secondly, would make lending for retirement village purposes unattractive. Once the Government shows that it is quite willing to override contractual rights and simply replace existing rights with what it feels it would like to see were it standing in the shoes of the parties, the industry knows that it can happen again. It is notice to the industry that if it lends to a retirement village and the retirement village gets into difficulties, then the Government might well respond to the clamour to rewrite the deal in a way that a lender would certainly find expensive.

The consequences are obvious. I believe that these provisions will put retirement village lending in the same category as farm lending. From having been on the board of a very profitable farm finance company, I know that there is a persistent premium on lending to farmers that can be explained only by the fact that farmers gang up when there is a mortgagee sale, and therefore make it hard to exercise the lender’s security. That persistent premium costs New Zealand farmers many millions a year. We used to think that somewhere around half a percent per year could not be justified for any reason of practical security, that farms were good security in terms of the underlying asset value, that their cash flows were usually there, and that they could usually work their way out, but it was persistently more profitable to lend to farmers—

In an earlier speech, I spoke of my disquiet at the idea of retirement villages. I spoke of the undesirability of monocultures of any kind, whether human, animal, or plant. They tend to be prone to predators and disease. I am not sure that retirement villages are prone to disease, but the fact that we have a bill like this in front of us certainly indicates that they are prone to predators. That people choose to live with a whole lot of other people of a similar age is a little strange as well, but clearly they do. Society has changed, and too many of us have too little time for too many of our old folk. This bill clearly recognises that older folk choose to live with other older folk in villages, and attempts to put in place a measure of protection.

The provisions I will briefly speak about are those that simply spell out the conditions of occupancy, so that older folk know what the conditions are regarding the security of their tenure and the security of their investment. The elderly are likely to live much longer these days. Statistics tell us that they live longer and die more quickly. They could be in retirement for 20, 30, or more years, and it is as likely that they will want to change homes as the rest of us. When they do, it is important that their investment is protected, and that they can make those changes easily, quickly, and safely. The Greens will be supporting the Retirement Villages Bill, and I have been pleased to speak briefly on it.

I draw the Committee’s attention to a survey done by John Bell, who is a senior lecturer in marketing at Otago University. It was a survey of the satisfaction of residents with retirement villages. In that survey only 1 percent of retirement village residents were dissatisfied with their retirement village. None were extremely dissatisfied, while 34 to 55 percent, respectively, were satisfied or very satisfied with it, and a further 10 percent had no view on the issue. I think that shows us that those people—following on from the last speaker, who made a few disparaging comments about living in monocultures—who buy into retirement villages are pretty happy.

It is a bit of a shame that the ability of retirement villages to offer integrated care has been reduced. As I said before, retirement villages in the South Island tend to have rest homes, dementia units, and continuing care units. I remember that years and years ago my grandmother went into a unit in a retirement village. When she fell and fractured her hip, she went into the rest home, and then, when she had a series of strokes at the age of 95, she went into the continuing care unit. The integrated care model allowed her to stay in a place she was familiar with, and with staff she was familiar with, and to stay within the whole concept of that home. That type of care has been reducing because, under this Government, rest homes and continuing care units have had their prices held for nearly 5 years. It has become much less viable to deliver those services, so a great number of retirement villages are no longer following an integrated care model. That is a shame, especially when we continually hear Ruth Dyson talk about integrated care. That system was being delivered, and had been delivered for a long time, in New Zealand. It is a shame to see it reducing.

I believe that this bill will make it more difficult to develop and buy into retirement villages. The cost—and we have heard from the ACT party about the financial implications—means that there is likely to be some limitation now on the sale, development, and expansion of retirement villages. I guess that is a price to pay for ensuring that residents have protection and understand what they are buying into, and for that protection to come under one piece of legislation.

Grey Power wanted the Retirement Commissioner to appoint the statutory supervisors who will act under the legislation, but I was pleased that was not taken up, because it is the owners and operators who will have to pay for those services. It is appropriate that statutory supervisors work in the type of situation where they are responsible for residents and for handling disputes, but also have an obligation as well to the operator of the village to maintain the village and ensure it can continue as a whole. I think that for most people who came to the Justice and Electoral Committee, it is a balancing act between the concerns of residents that we heard about from Grey Power, and those that we heard about from people in the retirement villages industry.

The Minister mentioned the disclosure document, which will make it very clear what someone is buying into. I do not think that issue has had any effect. People are happy with their villages, and they know what they are buying into. As I said before, certainly in the North Island there are waiting lists to buy units at many of the villages at this time. People have not been concerned about having knowledge about what they are buying into, and about the financial implications if they leave early—within the first 4 years, when there are quite high depreciation costs. What often happens is that elderly people have a lot of equity in their homes. They may not have a lot of cash, but they have a lot of equity in their homes. If they can sell a large home and buy into a village, it frees up capital for them to buy a new car, travel, or go overseas. At times, when they buy into a village the price they would pay for a 2-bedroom unit would be less than they would pay for a similar stand-alone unit down the road. That frees up some capital for them, so the quid pro quo is being able to free up that capital.

When I began discussing this matter earlier today, I indicated that it was a great shame that this legislation has been thrust upon us in this way, with 13 pages of amendments in Supplementary Order Paper 157 that we have not had an opportunity to consider fully. As we go through the Supplementary Order Paper more things come to our attention than ever before.

We can look, for example, at the disputes procedure under this legislation. This is one of those areas about which there was great contention before the Justice and Electoral Committee. People wanted to make sure there was a good disputes procedure. We spent a tremendous amount of time on trying to be fair to everyone with regard to the disputes procedure, and now we have interference by the department and, we are told, by United Future in the decisions made by the select committee. I think we all know that United Future has had a good deal to say about the bill already, at the select committee.

I look at clause 48(1) and new subclause (1A). Clause 48 sets out that a hearing must be held, and subclause (1) states: “In the course of conducting a dispute resolution, the disputes panel must hold a hearing”. Subclause (1A), which we inserted at the select committee, states: “The parties to the dispute are entitled to be present and heard at the hearing.” Now the Minister has put in an amendment to insert new subclause (1AA) in clause 41. It states: “Nothing in subsection (1) enables a resident to give a dispute notice concerning any health services or disability services, or any facilities to which the Code of Health and Disability Services Consumers’ Rights under the Health and Disability Commissioner Act 1994 applies.”

Really, I think the Minister is starting to curtail the rights of the individual resident. There may be areas in which the resident does want to have a dispute with the people about matters in the Code of Health and Disability Services Consumers Rights, and why should that not stay in the legislation? Why must a measure be inserted in the legislation by the Minister, without any proper discussion with the select committee? If there were areas in that code that did not come within the contemplation of the legislation, then clearly the referee or the party considering the dispute would not hear it. Here we have matters that should have been put to the select committee but were not, and now they are being dealt with by way of a clause inserted by the Minister.

I also look at clause 48A(2). In that particular clause, inserted by the select committee, there is a provision that if a panel refuses to hear or continue to hear a dispute, that is without prejudice to the right of any party subsequently to begin proceedings in respect of the subject of the dispute in a court of law. That clause has been deleted. That is extraordinary. Is the Minister saying that, with the subsequent clauses that are there, there is no longer any without-prejudice right to commence proceedings in a court of law? Maybe that is stating the obvious and did not have to be in the bill in the first place, which should have been made clear to the select committee. But why delete subclause (2), and put in its place a provision that states: “If the panel refuses to hear, or continue to hear, a dispute under subsection (1)(b), the panel must refer the dispute to the nearest District Court for hearing.”? What if the parties do not want to go to the District Court for a hearing? Here they are, having the District Court imposed on them. That will mean more costs for the resident, and more costs for the operator.

This measure is another classic example of more compliance costs being imposed on people by this Labour Government and, we are told, by United Future and Murray Smith, who says he has had a big hand in the Supplementary Order Paper. We know that United Future and the Labour Party support more compliance costs. Why require people to go to the District Court, as is proposed here? The amendment states the panel must refer the dispute to the nearest District Court for hearing. That is appalling. I am sure that the reason the select committee did not take that view is that it would be totally wrong. We put in more discretionary provisions when we did the legislation, rather than this compulsory provision, which is so much a feature of the way that Labour, a socialist party, looks at things. Labour believes in compulsion, in making people do things rather than have discretion, whereas the New Zealand First Party—and I am glad to be disassociated from the National Party and the ACT party, as Lynda Scott disassociated us from National—believes in discretion being given to people. The National Party members may not support discretion. They may support the compulsory view, and that is their affair.

I will answer some of Mr Jones’ comments by telling him that when I looked through Supplementary Order Paper 157 in the name of the Hon Lianne Dalziel I had a similar concern to his, which I raised with the officials. But they pointed out to me, quite rightly, that clause 48A(2) refers only to refusals to hear a dispute under subclause 1(b)—that is, the referee believes “that the dispute should be heard by a court of law;”. That is the only circumstance when the referee has to refer a dispute to a District Court, and it seems to me to be quite appropriate that if the parties go to a disputes tribunal and the referee believes the dispute should be heard by a court of law, he or she then refers it to a court of law. Obviously, the parties can withdraw at any time.

But I come back to my point in new clause 41B on Supplementary Order Paper 129 in my name. I know that when I first proposed that at the Justice and Electoral Committee, albeit, admittedly, at the eleventh hour, the advisers had some reservations about that, and I would like to express my appreciation to the advisers and to the Minister, as well, for the very good working relationship we have had with regard to this bill. I have enjoyed working with them, and I have enjoyed working with the Hon Lianne Dalziel. That has continued a very good relationship that we have had over the past year or so. I thank the advisers for their willingness to sit down and go through points with me, humour me with regard to some of the questions I had, consider some of the things I said, and review their position.

In that light I also mention to the Committee that I have tabled another amendment to clause 21(4)(b). In my view, it does fulfil the intention of the select committee, which was not clear in the bill as reported back, and that is that the right of security holders to continue to have their priority right, and not to consent to the registration of the retirement village and the subrogation of their rights below the rights of residents, is limited to the security right that they had on 31 December 2002. The amendments have made it clearer that the security interests that continue to be secured relate to the sum that was secured on 31 December 2002, and not to any increase in that sum. The amendment that I have put forward would also limit it to the rights that the security holder had as at 31 December 2002, to avoid a situation where the security holder could increase those rights, to the detriment of residents, after this legislation comes into force. I thank the advisers for being prepared to consider that and be favourably disposed towards it. So I will be moving that amendment, as well as the amendment in new clause 41B.

I had concentrated before on the statutory supervisor’s role, and another provision that statutory supervisors I spoke to were concerned about was in clause 77. They thought that provision would put too much of an onus on retirement villages to have to prepare two sets of accounts, when in situations where there may be only one retirement village one set of accounts is quite adequate. Again, I am pleased to see that the Minister has been prepared to adopt an amendment that would give more flexibility, so that two sets of accounts are required only if the statutory supervisor, or, failing the statutory supervisor, the person who is now named as the registrar of retirement villages, deems that two sets of accounts need to be prepared. I think that that flexibility is a mark of this bill, and is further enhanced by Supplementary Order Paper 157 so that there are greater discretions to try to minimise the costs.

One area that I do have some continuing concerns with is in schedule 2. It concerns the change that has been made to the select committee’s recommendation, so as to provide that an operator does not have to notify residents, or consult residents, if the operator is putting the village on the market. It seems to me that that is potentially problematic, because very often the first that residents will know that something is afoot is when they are told by somebody else that the village is on the market because it has been advertised. I think it would be a backward step for any operator not to consult residents before doing that, because it is likely to be quite destabilising for residents to suddenly find that their village is on the market.

I have an amendment I should speak to, lest I not get the opportunity later, even though it comes late in the bill and there are other matters I would rather address. The amendment I have put forward is one that is mentioned by the Justice and Electoral Committee in its report. It was one that the committee had drafted as a proposal. The words I have put forward are those that the parliamentary counsel had proposed, at least in terms of the substantive paragraphs that would require the Minister to take into account two considerations when looking at a code. The considerations are essentially the barriers to entry that can be created by a code that suits the big end of town—the sorts of operators who will end up having the time and resources to put into the negotiations with the Minister that this bill envisages. This bill codifies industry capture.

Earlier, the National Party quite properly pointed out there are waiting lists for entry to these villages at the moment. We know that the increasing prices represent a desire to be in them. The best way of dealing with waiting lists in any kind of business is to increase supply and lower costs. The committee recognised that the code would be the focus of the 60 percent of the industry that is covered by the professionals, the big companies, or those who can easily afford to cover compliance costs. The smaller entrants, the new entrants, the charities, and the iwi groups, those who are not sophisticated and experienced in this area, will be most adversely affected if the code becomes cumbersome or overly prescriptive, or if it stipulates an excessive manning or “womanning” level at night, excessive nursing levels, security fences, and many other things—all the other things that add to costs, and drive out new entrants. Therefore, the committee at that stage considered that the bill should record that the Minister ought to weigh against the representations from the big end of town the concerns that would exclude the builder who decides to run a spec and have a crack at it. It is that type of builder who keeps pricing pressure on the big operators. It is the prospect of those kinds of new entrants that will ultimately control whether there are excess profits at the other end of town.

Unfortunately, the officials recommended strongly against that. The reasoning, I thought, was absolutely unbelievable. I did not expect to see advice as bluntly in the pocket of the industry as the advice that the committee was given. The officials urged against including a requirement that the Minister think about barriers to entry—and I will read the words: “To effectively constrain the Minister to approve only a code of practice that does not act as a barrier to persons of modest means gaining access to accommodation in retirement villages is not appropriate. This is because, in spite of the broad pricing variations in the retirement village market, people of modest means are already excluded. It is not the purpose of the retirement villages legislation to widen the range of retirement living options for people of modest means.”

💬 Hon Brian Donnelly: This is the Labour Government?

This is the Labour Government. We have just heard, in a very fine speech from the National Party, that only 1 percent of people polled in retirement villages do not like them and want to complain. The Government says openly that it is not passing this bill in order to expand the range of retirement options for people of modest means. The officials’ conclusion was that it should not 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.

The whole purpose of considering a code against the prospect of industry capture was because there is a continuum. At the bottom end there may be retirement villages that offer the very bare minimum, but that bare minimum may be far better than where prospective residents are now living. For example, it is highly unlikely that at present they will have any security or any on-call care. The risk of gold-plating the code was something the committee was alive to. The committee tried to respond to it, and, to our absolute astonishment, the Minister’s officials told us that it was not something we should take into account, and it certainly was not something the Minister was planning to take into account.

I ask this Committee and I ask the Minister, who may well have been very busy and not aware of what was being said on her behalf, to take that issue into account.

I want to make a contribution to the bill, for a couple of reasons. One is that I am a trustee of the Kerikeri Village Trust, and I have taken a bit of an interest in this legislation. I want to make one or two comments. First, I would like to compliment the Justice and Electoral Committee on the work it has done on this bill. I have observed the bill going through, and note that the select committee has addressed a number of issues that were initially of concern. I congratulate the Minister, the select committee, and, indeed, Parliament, on the work they have done in addressing some of those concerns.

An issue that has been addressed already is that this bill—and there is no way to avoid it—will impose compliance costs that will obviously impact on the viability of retirement villages, and the like. That is unfortunate, and I am sure better minds than mine have endeavoured to find a way to achieve what the bill is trying to achieve without adding costs. Unfortunately, I cannot see a way around that. Imposing a regime that will put on some costs is one of those conundrums we get into in trying to lift standards, or in trying to make sure that there are consistent standards.

The issue I want to talk about in particular is the matter that appears on pages 16 and 17 of the commentary on the bill, with regard to the sale and disposal of units. It is not specifically in the bill itself, but I understand it will be part of a code that will be drafted up. One of the issues talked about is the steps that can be taken if a person wants to sell his or her unit for whatever reason. There is a 3-month step, a 6-month step, and a 9-month step, but I understand that after the 9-month step the disputes panel, depending on how the code is drafted, might well have the right to insist that the retirement village purchases back the property. Someone who is more familiar with the bill than I am may correct me if that is wrong.

I can understand why we might put that in the bill, but there is a dilemma in it. For example, the Kerikeri Village Trust is a community trust, not a profit-making organisation—it puts all its resources back into the trust. It has a bare minimum of charges, just so it can survive and be viable. If it is likely that a retirement village has to buy back the property, we might well end up putting at risk community enterprises such as the Kerikeri Village Trust. Perhaps the Minister can indicate whether that is so, because I can sit down if it is not. I do not want to carry on debating the matter, but I just urge caution: if the disputes panel has the authority to force an organisation such as the Kerikeri Village Trust to buy property when it might not be able to financially, then that will cause the trust some difficulty in operating, because it does not have that flexibility in terms of the way it has structured its finances. Our whole purpose is to provide a service for the community. We do it for the community, we are a non-profit-making organisation, and the system we have works. We do not have a slush fund with which to buy a whole lot of property.

Sitting suspended from 1 p.m. to 2 p.m.

Over lunch I had the opportunity to discuss with the Minister the matter I was debating. She told me that the code that will be put in place with regard to the sale of property will not be compulsory, in the sense that retirement villages will not be forced to sell, although—

💬 Hon Lianne Dalziel: The disputes panel will have the power.

Yes, the disputes panel will have the power, under certain circumstances, to require retirement villages to purchase, but—[Interruption] The Minister explained to me there are things like if they had not been intending to sell, etc., and obviously we will need to go into those details. But there was also an understanding of the pressures that could be put on a place like the Kerikeri Village Trust. One makes the assumption that the code will be flexible enough not to put at risk the likes of the Kerikeri Village Trust. But in a case where the owner of a retirement village is not playing his or her part of the game, then it might well be that we see the compulsion invoked.

I want to refer again to the Supplementary Order Paper—the one we have only just had the opportunity in the last few days to consider—and, in particular, to the “Registrar of Retirement Villages” provision.

First, if I could just touch on the matter that Mr Carter, the senior National Party whip, mentioned. Obviously, if the code of practice created provisions that were far too onerous, lawyers would find it difficult to advise clients to enter into retirement village contracts. I would expect that no disputes panel would suggest that a retirement village be forced to buy a unit and have to raise money to buy it. I would expect that the code of practice would have to be drawn up extremely carefully to make sure that the remaining residents of a retirement village were not made to pick up a burden that would make their situation intolerable.

Looking at the “Registrar of Retirement Villages” provision in the proposed amendments to the bill, once again I have to ask why that provision was not made known to the select committee. Why were the Justice and Electoral Committee not given the opportunity to discuss these matters? It is a clear example of this minority Labour Government, aided and abetted by United Future, not being willing to consult. After all, we hear so much about this minority Labour Government wanting to consult with people, and yet that provision was not put before the select committee. The way it has been drafted, the ministerial officials, and suchlike, could quite easily have put it forward. Instead, we have been given more bureaucracy in the shape of yet another Government official—a Registrar of Retirement Villages. Who will this person be?

💬 Hon Lianne Dalziel: It’s the Registrar of Companies—as it reads at the moment.

“Deemed to have been appointed … in accordance with this section”, but have members read the explanatory note? OK, the position will initially be held by the Registrar of Companies, but who will hold the job after that? If the Minister would only read her explanatory note to the fullest, rather than briefly, she would understand my concern. That person will initially hold the position, so someone else will hold it afterwards. Is this another job for the girls? Even the Minister herself does not know what she has done. Is this job for the likes of, say, Susan Bathgate, created in respect of retirement villages? [Interruption] The senior Government whip clearly does not know what is in this legislation.

The Minister herself has not read the explanatory note; she has only read a few words, but not the rest of it. The New Zealand First Opposition has had this amendment for only a short while, but knows more about what is in it than the Minister does, and she is the one who is accepting responsibility for it. New Zealand First asks whether this is another Susan Bathgate amendment, with the likes of her being appointed to this position? That is clearly what can happen, so far as the information in the bill is concerned. We have every right as an Opposition to raise these issues.

Clearly, there will be more compliance costs. Who will pay for this registrar? It is another job for the boys and girls. Someone will have to pay for it, and it will be the elderly people going into the retirement villages. Clearly, the Minister has not thought of that. The Government does not set up a new position unless more money has to be put forward to pay for it. The regulations will set up requirements: more costs for the elderly, more costs for the children to worry about, as the elderly people are in a retirement village. Seemingly unbeknown to the Minister, that seems to be the situation here—more bureaucracy, and overall, more compliance costs.

This minority Labour Government loves imposing more compliance costs on people. Here we have another official, and clearly that will mean more charges, more letterheads, more application fees for the registrar, more regulations put out on behalf of the registrar and the person to whom he will delegate, more charges for filing annual returns, more charges for filing particulars of rest homes and retirement villages and who is living there.

This Minister has not grasped what is in the bill. Clearly, she could not even begin to grasp the consequences of what is in the bill. It is a great shame that the Justice and Electoral Committee was not given the opportunity to discuss this matter in the many months that this bill was before that committee. Then the Minister would have been better informed, and the committee would have had the opportunity to point out to the Minister the error of her ways.

I rise again to correct my colleague Dail Jones. I note his comment that he believes that he and his party know more about this bill than the Associate Minister of Justice does. I have worked closely with the Minister, I have also worked with Mr Jones on the Justice and Electoral Committee, and I find that the Minister is totally competent and in charge of what is happening, and knows exactly what she is doing. I commend and support her for that.

In terms of the change that he alluded to, from the Registrar of Companies to the Registrar of Retirement Villages, to me it makes a great deal of sense. When I talked to people from one statutory supervisor firm, and told them that was one of the changes being made on the Supplementary Order Paper, they thought it was an excellent idea and were strongly complimentary of it. Some flexibility is provided within the Ministry of Economic Development in terms of how that particular position is filled and who fills it. I think that is a very good idea.

Obviously, at the beginning of the consideration of the bill the select committee had to address whether the registrar would be the Registrar of Securities or the Registrar of Companies. The Registrar of Securities did not want to do it, although there is a lot in the bill that is security related. There was some question whether the Registrar of Companies was the best person; some people felt the Registrar of Companies was not necessarily the best person. So we have a situation where there is some fluidity. The Registrar of Companies was prepared to do it, and we welcomed the fact that the Registrar of Companies volunteered to take over when the Registrar of Securities did not want to do it. But now we have built-in flexibility that enables this matter to be dealt with by another body if that is more appropriate, without the Act having to come back here to be changed.

In terms of consultation, well, I have consulted the Minister. I question whether Mr Jones even tried to contact the Minister’s office to ask to be consulted and to discuss the bill. My advice is that he did not. He can hardly complain that he has not been consulted about it if he has not even asked to be consulted about it.

When I spoke previously I talked about the amendment on Supplementary Order Paper 157 to clause 1(b)(i) in schedule 2. The amendment takes out the provision that the select committee had put in that the operator ought to consult the residents before putting the village on the market. I suggested that it would be quite disruptive of residents if they learnt through a third party that the village was on the market, rather than hearing it directly from the operator. I discussed this with the Minister in our very good consultation. The industry’s concern was that if its members were trying to negotiate a private sale—that is, non-public—the fact that the village was on the market could have a detrimental effect on their bargaining ability. I think that is a worthwhile consideration. My only concern continues to be that if the fact that the village was on the market became public, and the residents did not know about it first, that would be quite disorientating for them. It is important that all retirement village operators are very cognisant of the fact that they need to keep the residents as informed as possible, to avoid a situation where they have lots of complaints and lots of criticism. It is in their own interests to do that.

When I was talking to a statutory supervisor about the situation, I found there is still concern among at least some statutory supervisors who operate in this area about the exemption requirements. They are particularly concerned that if exemptions are able to be given, and if any retirement villages gain exemptions, then that will put a bit of pressure on the residents not to complain, because the operators can say: “If you make a complaint, you’re likely to cause us to have to appoint a statutory supervisor. That would mean we’ve got far greater costs, and those costs will be passed on to you.” There is a bit of danger that granting exemptions could backfire on residents and put them under undue pressure.

It was the view of the company I spoke to that there would inevitably be some consolidation of small villages, particularly ones run by church bodies, so that they effectively were combined into one larger entity that was more able to meet the requirements. However, it is my view that, at least at the early stages, an exemption requirement is necessary because there will be a transition period, and even if there is some aggregation to make it economic to comply, then at least there will be time for that.

I move, That the question be now put.

Given that this is my last call I will try to address clauses that have not been touched on, clauses that, in fact, probably no one in this Committee has even noticed other than the Minister.

For example, I take the amendment to clause 37 on Supplementary Order Paper 157, which states: “(1B) A deed of supervision must contain all information and other matters or provisions that are required to be included in it by regulations made under this Act.” Suddenly, in effect, the industry has been nationalised. It is true that the drafter has, throughout the bill, regarded the operators as if they were rapacious landlords, when, in fact, in a number of villages the operators are, in economic terms, the residents themselves collectively. The operator may be a charity, the operator may even be a separate party, but by the way that the villages are set up the operator is the residents collectively, for many purposes. If the operator incurs costs, if the operator has extra trouble, if the operator finds it much harder to deal with a troublesome resident, and if the operator has to spend time reassuring the Minister or the registrar, ultimately that cost will fall back on the residents. So, in effect, they are being potentially inflicted with the costs of the competence or incompetence with which this industry is now to be regulated. By a simple piece of drafting of an amendment to clause 37, after the select committee hearings, the Minister has become able politically to decide the terms of the contract between the supervisor and the village.

That is not a neutral change. The Minister will, of course, now be embroiled, through the regulators, in any disappointment that residents feel. That is the classic means by which lowest-common-denominator regulation starts to become gold plating. Ultimately, it becomes oppressive and damaging to the interests of those in the villages, those in the industry being regulated. The supervisors will now be required to jump hurdles created by the response to the circumstances of the last problem in the industry—not the problems that it would be most rational to deal with. They will not reflect solutions that, over time, have evolved as the best mix in regulation between the pressure to ensure that no one can ever complain, and the pressure to make sure that precautions do not cost more for the people at the bottom end of the market. The mix will now depend on what is needed to cover the Minister’s back, because a power becomes a duty, and a power is certainly a political exposure. If the Minister has not stipulated a deed of supervision with all the things that are a defence against political criticism, then she will get political criticism. It will not be rational. It will not take into account the fact that a little change here or there might shut out the 5 percent of people who otherwise could afford to get into a retirement village.

The effect is that this Government, which pretends to act for the people who cannot look after themselves, is taking the best-equipped 4 percent of our elderly population and gold plating facilities for them. It is giving them a protection that most of them already have. They are in perhaps the most desirable form of retirement living for many, despite the Greens’ view that it is a monoculture. The Government is now saying that it will make them more privileged. It will expend its political time and energy and its regulatory resource on making those people even more privileged. It does not matter to it that a whole host of people will be shut out at the bottom end. The Government will pull up the drawbridges. The personal liabilities it will put on operators will discourage the next group of church trustees who decide to have a crack at it. It will discourage the iwi who thinks it might be a good idea to put three or four units together, until it is told by its lawyers that it has to learn how to comply with an elaborate code and meet the requirements of a deed of supervision that is properly related to villages of hundreds of units.

The effect of this is that this industry will become politically directed, not market directed. The explosive growth in it has been precisely because it has not been growing along the lines of some politician’s best idea. Indeed, in this industry the New Zealand pattern has evolved quite differently from patterns overseas. It has elements of life insurance and elements of property investment. The fact that people do not get back the full amount they put in has been a source of grievance, and it is sensible for the Minister to have come up with a scheme where there will be a form of disclosure that should make it a little easier for people to know that the industry is not pure property investment and does have elements of life insurance.

All of that could have been done without the Minister succumbing to the pressure and the temptation to become the dictator of the industry rather than the sunlight agent—the agent ensuring that there was proper disclosure, and treating elderly people as if they could be trusted to make their own decisions. Our elderly now become the only class of competent adult New Zealanders who are not allowed to make the bargains for their homes that everyone else can make. They are the only class who can no longer front up and sort out for themselves what they think is the optimum mix of protection and investment. It will now be prescribed by the Minister, and prescribed according to a code proposed by the big end of the industry—that is, by the major operators, who have a very obvious interest in what they call keeping up standards, which is code for keeping out those who would bring competitive entry.

💬 Hon Lianne Dalziel: Cowboys!

The Minister does not have the faintest understanding that competitive entry is the willingness of people to come in at the bottom end of an industry and challenge it with a new idea. This Minister calls those people cowboys. Are the people who decided to build kaumātua flats cowboys? What about the people from the Dutch community who decided all those years ago to create, out of a combination of the Unit Titles Act, which did not contemplate it, and some other pieces of law, a form of communal living that no bureaucrat could have prescribed? The Minister is now going to prescribe through the deed of supervision exactly how the risks will be allocated, and there is no risk that is carried without a return. If the supervisors are made responsible—as was included in this bill when it started out—for acts over which they have very little control, they will stipulate more control. Instead of the operator being able to sort out what best appeals to people who want to buy units, it will have to sort out what gets past the regulator.

This, of course, is the same Minister who is now holding up the Stock Exchange as she decides, with all her wisdom, what the rules ought to be between the Stock Exchange and companies. That is a relevant other example. This Labour Cabinet has a new power to tell the Stock Exchange what its rules should be. This Minister is now giving herself, through a Supplementary Order Paper that the Justice and Electoral Committee never saw, the power to tell this industry what the pattern of risk will be, and she is refusing to accept a provision from Parliament that would at least direct her to take account—and that is all it was—of the potential cost to the people who will be shut out of these gold-plated villages. The drawbridges have been pulled up, and the security fence has gone in. The staffing requirements will be set at a level that amateurs simply cannot match unless they are inside the industry.

This Supplementary Order Paper has many provisions that probably have the same effect. The Minister chose not to highlight that particular clause. The explanatory note did not mention it as far as I can see. It is a major change in the relationship between statutory supervisors, those they are supervising, and the operators. The operators are the promoters who ensure that we cut down the waiting lists for these villages that the National Party mentioned. Those waiting lists will be cut down only by the villages being made more expensive and people being rationed out of them, or—

💬 Dr Lynda Scott: Or more access.

—having more access or more supply, and it is not available here. I think the National Party spokesperson on the elderly, although not a member of our committee, has hit the key problems with this bill very, very well. I know that National will vote for this legislation because of the good parts of it, and there are good parts in it, but ACT cannot support the bill in this form, simply because it encourages this kind of imperialism by Cabinet.

The question was put that the following amendment in the name of Murray Smith to the amendment to clause 21(5) set out on Supplementary Order Paper 157 in the name of the Hon Lianne Dalziel be agreed to:

to add the words “(being a right provided in that security interest as at 31 December 2002)”.