Rates Rebate (Retirement Village Residents) Amendment Bill

I move, That the Rates Rebate (Retirement Village Residents) Amendment Bill be now read a second time. Early in the 1970s a great Prime Minister Norman Kirk looked at the situation that low-income earners found themselves in after they purchased a house and were, obviously, faced with an annual rates bill, which, for people then and now, is big. There is no way of avoiding it—it is not an option. You cannot say: “Oh, I’ll do without the rates so I won’t pay my rates.” It is not like food or clothes or travel; you have to pay it. So he decided to introduce a rates rebate scheme—that was central government money that was passed through to homeowners via local government. It was on a sliding scale, so the higher your rates and the lower your income, the more money you got. It is a very straightforward scheme based on an important principle: that people on low incomes who have high expenses not of their choosing deserve some financial support.

In those days, there was no such thing as licence to occupy; there was just freehold title or leasehold title. There was no such thing as licence to occupy. In fact, even now, within retirement villages—which are what this bill seeks to address—there is a mix of freehold title, unit title, and licence to occupy. This bill wants to extend the eligibility for applications for rates rebate to those in retirement villages who have a licence to occupy. Those people pay rates. They pay them to the retirement village owner, and the retirement village owner then passes them over to the city council or district council.

The owners of villages support this legislation because they know it would advantage their residents. The retirement village residents support this because, again, they know it will advantage the residents who find it difficult—if they are solely dependent on superannuation, particularly—to pay their rates bill. It is exactly the same situation that Norman Kirk saw in the 1970s that we are facing now; it is just that the nature of the relationship between the person who lives in the unit in the retirement village and the village owner has changed. We no longer have as many unit titles.

I had an email from a woman today who lives in a retirement village in Mosgiel. She said “I really hope your bill gets passed, because when I bought my unit in the retirement village I had no option but to buy under a licence to occupy regime.”—so you pay a big deposit and then you pay ongoing fees. You have a licence to occupy; you do not have ownership. But she said that people who were also in exactly the same village, in exactly the same type of unit, had purchased 20 years ago and have got a unit title. They get a rates rebate; she does not. She thinks that is not fair, and I do not think it is fair either. I think she should get a rates rebate.

When I introduced this bill to the House and explained it in that way, every single member of this Parliament supported the bill to go to the Local Government and Environment Committee. I was delighted. It is not very often that that happens. It is not very often that legislation is passed without exception. It is not very often that I agree with David Seymour, actually, but on this occasion I am delighted that he and I agree. The bill went to the select committee, and the submissions that we got were thoughtful and helpful. A lot proposed amendments. A lot said to make sure that this system works as efficiently as the rates rebate does for homeowners. The Retirement Villages Association, the organisation that represents the owners of retirement villages, came along very early and put its hand up and said: “We can help make this work for the owners. We can help make this work.” Local Government New Zealand came along and put its hand up: “We can make this work.” The Residents Association said: “We can make this work. We can help make it work efficiently.” Everyone is onside.

The committee asked for an extension of 2 months. I did not think they needed it. It is a small bill; it does something very straightforward. There is no complexity about this, actually. Anyone who thinks this is complex is simple. I granted the 2 months’ extension when the Hon Scott Simpson—who was not honourable at that stage but has since been appointed to the executive. I granted the 2 months’ extension, and in that time the select committee did nothing—did nothing—to engage with those three organisations that had come along and put their hands up, saying: “We’ll help make this work.”

I went to the last deliberation of the select committee, and the chairperson of the select committee—it would have made you laugh if it had not been such an important issue for so many of our senior citizen residents—said this is a complex issue. No it is not; it is extending the rates rebate to people in a licence to occupy—no complexity about it. He said there will be some other forms of homeownership other than what is already covered by the rates rebate and what this extends to, so there will be another anomaly. Good—introduce a member’s bill, Mr Bayly, and fix that, if you can find one, but you know you cannot. If you can find another anomaly, introduce a member’s bill and fix it.

Then the committee said this could cost money. Well, that is rocket science, is it not? That is very good. The members of that committee may not know that every year there is an appropriation in the Budget for rates rebates, and not 1 year since 1973 when it was introduced has that full appropriation been used, so there is money in the bank sitting there ready to be spent. I think residents of retirement villages should be the recipients of that money.

Then the chairman, Mr Bayly, said: “Oh, this is going to be so difficult for councils to administer.” You know, Auckland Council does it now. To be honest, and I do not want to offend Aucklanders—oh, yes, there are a few Aucklanders; actually, I am surrounded by Aucklanders, I will make no comment. Auckland Council administers a rates rebate scheme for residents of retirement villages who have a licence to occupy. It does it. It thought it was fair, but it uses ratepayers’ money, not taxpayers’ money. Kāpitī does it; other councils are looking at doing the same thing, because they think it is fair.

So having gone through a great process at the first reading and gone through what I think was a very engaged and—receiving offers of help from organisations that know this stuff far better than any members of Parliament; the Retirement Villages Association, the Retirement Village Residents Association of New Zealand, and Local Government New Zealand, all offering help. The National Government then says: “Oh, what a good idea, but we’re not going to support it.” It is the second example of petty party politics getting in the way of just doing some good for people who deserve support.

Those people in Mosgiel, in the retirement village, will be listening to this debate. They know that five units down from them on the same street there is somebody getting a rates rebate because they bought over 20 years ago and have a unit title, and they are not getting a rates rebate because they did not plan ahead well enough. They should have bought long before they needed to so they did not end up with a licence to occupy.

It is stupid, but it is not stupid deliberately; it is stupid because our legislation did not keep up with the changing nature of occupancy in retirement villages. They are expanding, we know. Every time you turn around there is another retirement village. We should take this opportunity to support legislation that will give additional financial support to those who meet the criteria and are eligible for a rates rebate. It is a very small measure, but I think it would be something good that we could progress before the election for the benefit of those people. Rates bills are big. If you are on superannuation, they are really big. This is the chance for us to help those people.

Before I finish, I want to acknowledge those organisations that I said came along to offer their help. I also want to offer my thanks to Grey Power New Zealand branches all over the country, which have debated this bill and totally support it. It is a good measure. We are not going to get to vote on it tonight because we do not have enough time for 12 speeches, but we have got another member’s day before we rise for the election, and we have other members’ days after that. I certainly know that this bill will be continued. It is time the rates rebate—such a visionary idea from Norman Kirk—was extended to people who are eligible for it but not eligible to apply because they are in a licence to occupy. It is time to address that anomaly.

It is a pleasure to be talking on the Rates Rebate (Retirement Village Residents) Amendment Bill. First of all, I would like to congratulate the member the Hon Ruth Dyson on actually introducing this member’s bill. The purpose of the bill is laudable, understandable, and, on the face of it, fair. This bill was considered by the Local Government and Environment Committee, and, as noted before, we have spent considerable time looking at its merits.

By way of context, it is worthwhile just noting that at the moment it is estimated that there are about 34,000 retirement residents living in about 360 villages around New Zealand. I am, in fact, very conscious of the residents living in retirement villages in my own electorate, particularly the four in Pukekohe, although not exclusively there, including the very exciting new development of Ryman Healthcare, which has now got over 600 residents and is growing rapidly as it further expands.

The purpose of the bill is to provide financial support to those low-income retirees living in retirement homes. Under section 6 of the Retirement Villages Act 2003, a retirement village is defined as a part of a property that contains two or more residential accommodation units, predominantly used by or housing retired people who have also paid a capital sum to live in those villages. The rebate scheme was actually introduced back in 1973 to allow the residents living in these retirement villages to receive a rebate. Since then, as the member has just noted previously, there has been an absolute proliferation in what is called licence to occupy agreements. Previously, when the Rates Rebate Act came in in 1973, there were very simple property ownership structures. Now it is estimated that approximately 80 percent of all people living in retirement villages actually live there under a licence to occupy agreement.

In the case of licence to occupy agreements, the liability to make the rate payment rests with the owner or operator of the retirement village. It is standard that the owner or the operator of the retirement village charges the retiree living in the village a fee that covers not only the rates but also insurance and property maintenance fees. As such, most residents end up paying a rate of a sort, but, in most cases, a direct payment is not made to the council. The amount of the rebate possible for a household is actually based on income levels, the level of the rates, and also the number of dependants. The current maximum rebate at the moment is $610, with an income threshold of $24,470.

Whilst, as I said before, the aims of this bill are to be applauded, the work of the advisers showed that it is actually a very complicated bill to implement. I may be simple. However, the first issue with the bill in its present state—and I would comment that the bill has only five clauses to it—is that it does not accommodate these varied property arrangements that I referred to before. By way of example, at the moment we have freehold title, we have leasehold title, we have cross-lease, we have licence to occupy, we have lease arrangements, we have residential tenancy arrangements—to name but a few. The bill does not anticipate these arrangements. It is very simplistic in its assumptions.

The second thing related to that is that the bill proposes to amend the Rates Rebate Act of 1973 to ensure that the residents of retirement villages are considered to be ratepayers for the purposes of the Act. But in order to be to defined as a ratepayer, apart from meeting those income thresholds that I specified before, a person must be a ratepayer, and, secondly, a ratepayer in relation to the property in question. The issue with the Local Government (Rating) Act of 2002 is that for the purposes of determining the ratepayer, this is defined as the person who was nominated on the rating information database and on the district valuation roll. Here is the rub. To be named on the database, the person must be the owner of the village—of the property in the village—and licence to occupy arrangements do not mean that the person owns the property. What this bill is seeking to do is to provide a connection between the resident and the ownership of the property, which at the moment is broken because of the licence to occupy arrangement.

The next thing that the bill raises is what the apportioned rates cost is. The second issue is that it is not always easy to ascertain this. For example, it is estimated that about a third of all village operators agree with their new tenants or residents on a fixed fee at the outset of going into that village, and at that point it is a set fee for the rest of the term of the licence to occupy that has no relation to the actual increase in rates that may occur over time. It is also common that village operators link the payment, which may include property maintenance and insurance, as I referred to, to the increase in superannuation. There is no direct link to the actual increase in the rate or, in fact, a direct link to the rate itself. As such, how you calculate what is appropriate is a real, substantial issue.

The other thing about this is that the bill does not comprehend that there actually may be a different range of rates. For example, there could be a rate on the land that the normal council rate would apply to. There could be a charge for water and waste water, and in the case of Auckland, as was referred to before, Watercare Services has a separate rate that, actually, for the purposes of rating, can possibly not be regarded as a levy, in fact. And there may be, in fact, a third rate, which is a regional council rate. Again, this bill offers no clarity on how those three rates would be interpreted or calculated or assessed. It is very simplistic in its nature.

The next issue with the bill is the administrative costs to the village owner and operator. We know that it is going to be complicated, because it requires an assessment for each of the residents. However, if a village operator wants to do it, it gives rise to an issue of privacy because to be entitled to receive a rebate, by definition you need to be on a low income, and what this does is it will require the resident to disclose to the owner of that property, that village, their straitened financial circumstances. For some that may be a barrier too far. That privacy issue is a significant issue, which, again, has not been contemplated in the bill.

The other issue with the bill is that, at the moment, we give about $56 million in rebates annually, which is paid by the Government. The increased costs associated with this bill are estimated to be between $3 million and $5 million. It is actually a very, very small number. The issue is not about money, as asserted previously by the previous member. It is not about the money; it is actually about how you implement this system, this scheme, to make sure that it is appropriate and can be implemented.

We asked for more time to work through these issues. The officials actually identified some other options that may work and that may be able to take into account these complexities that have been raised by officials and noted by members at the Local Government and Environment Committee. We sought one extension, which was granted, but, unfortunately, the second extension was not granted. I was very disappointed that the member did not choose to support that extension, because if she had, we probably would have had the time to work through and actually come up with a bill that actually works. But this bill, in its present state, is simplistic, it is poorly formulated, and on that basis we cannot support it, even though we strongly support the intent of the bill.

It is always interesting to watch crocodile tears in this House. To say “If only we’d had more time, we would’ve supported it.” is absolute nonsense. This bill was sitting before the Local Government and Environment Committee. There were organisations that were more than prepared to answer any of the very fragile excuses that National members put up as the reasons why they could not support this bill. The real reason that the Government members wanted more time on this bill was so they did not have to go to a vote before an election when they were not going to vote in the best interests of thousands of New Zealanders.

Let us have a look at the reasons that the members opposite are putting up as to why they cannot vote for it. They are saying that it is just administratively too difficult, that it is too hard to administer, and how would you do it? Well, there are several answers to the “how”. We actually had the Retirement Villages Association saying it would work through that with the committee. But, more importantly, we can point to local authorities around the country that are already paying rates rebates to people in retirement villages. That is the most important thing. It is not too difficult; it is being done.

This original scheme was introduced in 1973 by the Rt Hon Norman Kirk. And, like most things that Norman Kirk did, it was a very pragmatic solution to an identified problem. What Norman Kirk saw was that there were a whole lot of people who were asset rich and income restrained, and that in your retirement years paying rates to the local authority on your property could be a stretch when all you had was your pension to pay for it. I think that that was a laudable scheme. It was a laudable scheme in 1973 and it certainly is a laudable scheme in 2017. I congratulate my colleague the Hon Ruth Dyson for continuing that legacy.

Both Ruth and I can trace lineage to the Rt Hon Norman Kirk in the seats that we hold.

💬 Matt Doocey: So can I.

That this is the kind of pragmatic solution that—well, it is a pity that Mr Doocey will not vote for it because, actually, the former member for Kaiapoi certainly saw that there were ways to help people and that there were ways to support people. So I congratulate my colleague the Hon Ruth Dyson for doing this. When this scheme was instituted in 1973, no one could have imagined the kinds of property arrangements we now have for people in their retirement years—the kinds of titles or ownership arrangements that would exist—and licence to occupy is by far and away the most common way in which people purchase a home and the type of ownership arrangement that they have. That simply is not eligible under the current legislation.

I have in my electorate some very early retirement villages; one in Hornby is one of the first retirement villages. Within that village there are about four or five different types of title. So we have the anomaly with some residents, who hold title to their villas and who can claim the rates rebate, and we have others, who are more recent purchasers of villas in that village, and they are not entitled. They live right next door. The determining factor is when they bought it and the type of title they had. I do not think this is fair, I do not think this is equitable, and I do not think that this is what the 1973 legislation was aiming to do—to discriminate against a group of people based on the type of ownership package that they had around their home.

It is a type of ownership package that we are seeing increasing numbers of New Zealanders take up as they enter their retirement years, and it is becoming far more common. So to hear the previous speaker, the chair of the select committee, Mr Bayly, who has just taken his seat, talk about there being privacy issues for this—another excuse that the Government has to not support a huge group of New Zealanders who will benefit from this legislation.

Mr Bayly’s argument is that there are privacy issues and that people would have to reveal that they are on a low income. Well, Mr Bayly needs to get out his front door a little bit more often. Fifty percent of residents in retirement villages rely solely on national superannuation as their form of income. If your only form of income is the pension, then you are eligible for the rates rebate. Mr Bayly needs to get out of his ivory tower and see that 50 percent of the people living in those villages are in this situation. That is the way most New Zealanders who are retired live; they rely on the pension, and we do not have to see that as a low income that they should be embarrassed to reveal. It is the reality for most retired people.

That is why the Labour Party, through Ruth Dyson’s bill, wants to extend that same support to those people who are living in licence to occupy villas in retirement villages, where they need that support. The very same conditions exist that existed in 1973 when Norman Kirk introduced the original legislation. So that is something that has not been adequately addressed by the Government. So we have the fact that it is too hard administratively—that is clearly nonsense. Other Governments did it. To say that they did not have time—again, nonsense. The committee had an extension and did not utilise it.

The reality is that the Government members did not want this bill coming back to the House before the election because they were not going to support it, and they know that it is bad politics to not be supporting such a group of New Zealanders who will benefit from this legislation. They can see that this is not something that they want to front up to a few weeks before an election and explain to thousands of New Zealanders why it is that they are going to deny them assistance in the way that people who only live a couple of doors down the road might receive. That is not something that can be applauded at all.

The other arguments we have heard from the National Government just do not stack up. This is a good piece of legislation. It is a piece of legislation that the National Government has bought—hook, line, and sinker. Some of the objections from officials just did not stack up. The Government did not listen to the evidence. It did not listen to the evidence of the officials who came and talked about the ways around any objection that was raised about this legislation.

By the end of the select committee process—if Government members had actually been listening; if Government members had actually been engaged in the process—none of their very flimsy arguments against the bill were left standing. It can be done; we just need to look around the country. It is not that administratively difficult. We had the time. We had the offers of help to address any concerns that were in there. We had a member, whose name this bill is in, who was more than willing to listen to advice and make any changes that resulted in better legislation as it came along.

What we have is a group of people who just failed to see that there is a group of New Zealanders who need this assistance. I think the speech from Mr Bayly made it quite clear tonight why that is. Government members just have not got their heads around the fact that for most New Zealanders relying on Government superannuation is the reality. It is the way most people live their lives. And, actually, as we did in 1973, we need to help this group of people who have moved into retirement villages.

The way in which licences to occupy operate is akin to homeownership, and more akin than in terms of people who are renting a property. There is a huge capital investment that goes into the property. It may actually be the same price for a retired person as selling their house and choosing to move into a retirement village. They may use all the capital that they had in their home, and may reinvest it in a villa in a retirement village. This is not the case as it is with someone who is renting a home.

So to discriminate against this group of people was not the intent of the original legislation in 1973. It was just that this category did not exist when the original legislation was passed. I applaud my colleague Ruth Dyson, who is trying to bring this important piece of legislation that makes a real difference in people’s lives—fast-forwarding it to 2017 and making sure that it is fit for purpose, for the reality of how an increasing number of retired people are living their lives. This is legislation that I am more than happy to support.

I rise in opposition to the Rates Rebate (Retirement Village Residents) Amendment Bill in its second reading. I must say I have learnt something new. I did not know that “the Tōtara”, the big man himself, Norman Kirk, was responsible for rates rebates. He is a man who spent part of his time in my electorate of Kaiapoi—well, it was his electorate at the time, I suppose, but he was living in Kaiapoi. It is great to see another strong member of the North Canterbury community. I must say, potentially not agreeing with every point of view of his, that you would have to respect his life.

What I want to raise as a point, in the short time I have for this bill, is that we agree with the intent of the bill. That is why we supported it for the first reading. Unfortunately it was disappointing that we were not allowed further time to work through the complexity of this bill.

When you look at one key issue—so I have got a new retirement village in my electorate. I will not say the name because there are a range of providers. But they offered lifetime service fees. So, as you can imagine, it sold out pretty much straight away. There are 350 residents. So there will be some residents in there for 10, 15, or 25 years. Their service fee is capped.

One of the issues that has come out through the select committee process—and that is exactly what we are discussing here today, at the second reading: what the arguments were, what we debated, and what we learnt through that process—is that in fact a lot of retirement village residents are not, or will not be, paying their full rates because their service fee is capped. So then, how do you go through the apportionment of what percentage of the rates they are paying and what they can receive back, through the rebate?

Debate interrupted.

The House adjourned at 10 p.m.