Retirement Villages Bill 2016

24 May 2016
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Mr SPEIRS ( Bright ) ( 16:15 ): It is a pleasure to be able to speak today on the Retirement Villages Bill that is before parliament. 

Retirement villages are a very important part of my electorate. There are a number of large retirement villages in my electorate, reflecting the ageing demographic of the part of Adelaide which I am fortunate enough to represent, and particularly around the suburbs of Somerton Park, Brighton and Hove, which are known as communities which have a significant proportion of ageing residents within those suburbs. As such, we do find fairly significant retirement villages within that part of the electorate. 

We have one of the largest retirement villages in metropolitan Adelaide within the electorate at Somerton Park, and that is Somerton Park Seniors' Living Community, which was previously the Masonic village on Diagonal Road. 

Dr McFetridge: Always the best booth. 

Mr SPEIRS: A paired booth with the member for Morphett and a very significant retirement centre can be found there. There is also Townsend Park at Hove, the new Minda Dunes development at North Brighton, Sturt Palms at Brighton, and Voules Close and Noble Close just across the road from my electorate office, also in Brighton. So I do represent a large number of residents who live in retirement villages and call those places home. 

The bill which is before us today does make for interesting reading. I believe this bill is well overdue. There is no doubt that legislative reform is required with regard to retirement villages in South Australia. The act which it seeks to update is the Retirement Villages Act of 1987. When legislation was first formulated to deal with retirement villages in South Australia, it is fair to say that it was a far less complex jurisdiction than it is now. 

The retirement villages of old tended to be small clusters of residences, often run by not-for-profit organisations and often church based. There might be a little close or a cohort of retirement properties put together through funding from a church or another not-for-profit organisation, and these would be dotted around the metropolitan area. Since legislation in this area was first introduced, the sector has become much more complex. There has been the arrival of very large national operators who may have hundreds or even thousands of retirement units within their holdings, not necessarily just in Adelaide but also interstate and potentially even overseas. 

I know in the past there have been superannuation funds and large organisations purchasing retirement villages, and that has not always gone to plan. There have been examples across the nation of retirement village operations going bankrupt, leaving significant complexities behind, often before buildings were actually completed. I did represent a constituent quite some time ago, early in my time in this office, who had lost money through a down payment in a retirement village which subsequently went bankrupt before the development was complete. 

This is a sector that has become more complex in the last couple of decades, and with it the expectations on residents of retirement villages have also become more complex. They are now entering into much more complex contracts than might have traditionally been the case. They are entering agreements with organisations that have far more capacity in terms of creating legal contracts, and also fighting legal contracts, and administering retirement villages. 

It may be the case that that one-on-one relationship, which was quite easy to establish between a retirement village occupant and the owner-operator of the retirement village, which was traditionally the case when they were a small not-for-profit or church-based organisations, might be much harder to establish in these large conglomerate villages owned by companies that are far removed from the village themselves. 

That is not always the case. There are still lots of examples of those small retirement villages in operation, particularly in rural and regional South Australia and also dotted across metropolitan Adelaide. I know that the retirement villages I represent, while some are large, do try their best to create a relationship with residents, and that often is a positive relationship, although it is not without its difficulties from time to time, particularly in the larger operators. 

When we come to retirement villages, it is often worth asking why someone would enter into a retirement village environment and decide to spend what are often their twilight years in such accommodation. There is no doubt that a big driver for people moving into retirement villages is the need for additional security, the peace of mind that retirement villages give them, the idea that these are often gated communities, that they can lock up their homes and go away overseas or interstate for extended periods of time and know that their homes are going to be relatively safe. 

People move into retirement villages to establish a greater sense of community, with the hope that, being with a group of people of a similar demographic, they will be able to build relationships and involve themselves in community activities. Many retirement villages do offer community facilities; some have swimming pools, some have community centres, some have games areas, some have social programs, and that appeals to many older people. 

There is also the concept of downsizing. I come across elderly people time and time again when I am out and about doorknocking who are either in retirement villages or who are contemplating going into retirement villages because they are in the homes that they have had since having children, large suburban homes which might have three, four or five bedrooms, a large garden, perhaps a swimming pool, large living areas, and outdoor living areas. 

These are difficult for people to afford or manage the upkeep of themselves, perhaps because of declining physical capacity or just because they want a bit more time on their hands, so they look to downsize, to get rid of that larger family home, and move into smaller retirement village accommodation. There is a range of reasons and motivations for people entering retirement village accommodation. 

When someone asks me for my opinion about retirement villages, I always caution people to make sure they have thought of all the options. Is going into a retirement village the right approach for them at the moment, or should they be looking at perhaps getting a bit of extra help, whether that is through the council or looking at a reverse mortgage on their home to pay for a gardener and a cleaner to come in once a week or once a fortnight? 

That might give them the flexibility to stay in their home, to stay in the community that often they love. That is an option open to them, as opposed to necessarily selling that home, leaving a community they know and entering into a retirement village environment. I think it is important for older people to know that retirement villages are not the only option available for them if they want to downsize or make life a little bit easier. 

Since my election, I have been running quarterly seniors forums in my electorate, where we try to pick a topic of interest for older people living in the community. We put on a guest speaker, we have a complimentary afternoon tea and bring people together to learn about a particular topic. We have done a range of topics in the two years that I have been a member of parliament, but one that was very well attended was our accommodation options seniors forum that we held a few months ago. There was no doubt that it created an environment where people were able to have their awareness raised and to ask questions about the various accommodation options that would be available to them if they were looking to either stay in their own home or downsize as they aged. 

We had a guest speaker from the Seniors Information Service who came along and spoke to the group of about 120 residents who attended that forum. The speaker went through the various options that residents had with regard to their accommodation as they entered into and progressed through their senior years. It was really interesting, from my point of view, to sit there and listen to that presentation and consider the various options, the reverse mortgage that can be used to assist people to get that extra bit of help to stay in their own homes, the downsizing into a unit or an apartment which does not necessarily need to be in a retirement village—it could be a private residence in the community—or, of course, the retirement village option and then, further down the track, perhaps a nursing home option. 

In relation to retirement villages, one message that was put across very firmly at the seniors forum that I hosted was that seniors need to go into the retirement village with their eyes wide open and not to think that this is going to necessarily be a straightforward venture. Yes, it might be more straightforward when they get there and when they get established, but both at entry and exit there can be a particularly unique set of challenges and complexities they have to work through, bearing in mind that at both the entry and the exit point of retirement villages residents who are looking to move in or move out are going to probably be in a particularly vulnerable state. 

The emotion of leaving the family home, the emotion of perhaps making a decision to move into a retirement village upon the death of a spouse, the difficulties that surround moving, and the stresses that come with that, are a unique set of circumstances and vulnerabilities that arrive at the entry point to a retirement village. But equally, when people are potentially looking to leave a retirement village at the end of their time there, there is also a unique set of vulnerabilities, likely to involve failing health, physical frailties that might have emerged or family pressures to look at moving into nursing home accommodation, and so that needs to be considered as well. 

We are dealing with a vulnerable group of people who are making major accommodation-based decisions and who may need additional support to help them work through those. The message from our seniors forum was that retirement villages are certainly an option, and a good option for thousands of South Australians who choose to live in such accommodation, but it is very important that older people go into these villages with their eyes wide open and that they have the requisite support to assist them moving into the retirement village environment, that they go through the contracting process, and that they are fully aware of their rights and responsibilities as they contract to enter a retirement village. 

The piece of advice that was given very firmly by our guest speaker at the seniors forum was that you must get legal advice. You must get professional independent legal advice from your family lawyer, or from a lawyer independent of the retirement village, so that you are aware of what you are contracting to do and that the key points of that contract are pointed out to you, highlighted, and you know what you are taking on. That certainly is something where legislation is needed to improve that process. 

Too often we have situations where residents of retirement villages find that they have contracted to be responsible for a range of obligations, particularly financial obligations and exit fees at the close of their time in a retirement village, which are very onerous financially. They can cause a huge amount of stress if not properly understood and planned for, or avoided altogether by not entering the retirement village should people, when fully informed, realise that it is not for them. I have come across a few specific examples in my electorate of constituents who have not understood what was necessarily going to be required of them at the exit point. When they have come to look at leaving the retirement village accommodation, they have been confronted with exit fees that were far greater than they expected. 

I represented one constituent who had gone into a retirement village when his health went into decline. Unfortunately for him, after about six months he found himself unexpectedly improving, and he decided that the retirement village probably was not for him. He had only been there six months, so you can imagine that, if he was in a residential tenancy environment, six months of rent might have been $6,000, $7,000 or $8,000, depending on what sort of accommodation he was in, but not a significant amount of money; whereas his exit fee from the retirement village after six months was $70,000—that is $70,000. You can imagine the huge chunk of his retirement savings that was lost as a result of that. He was able to negotiate a bit more of his funds to be released, but he still lost tens of thousands of dollars as part of that operation. 

Another person, who is not in my electorate but whom I came across recently, had purchased their licence to occupy their retirement accommodation when the retirement village was being constructed. At the time of construction, they said, 'We really like open-plan living, and we would like you not to put in the wall between the living room and the kitchen.' They had a very spacious, attractive retirement unit that suited them really well. They are now at the point of looking at moving into perhaps nursing home accommodation and getting a bit of extra support, so they are looking to exit that retirement village. 

They have been told by the retirement village operator that they need to return the unit to what it was when they contracted to buy it, which included the wall being in place between the living room and the kitchen. The unit is far better in its open-plan environment; for them to reinstate the wall will probably cost them $10,000 to $20,000 to do the work that is required, and it will reduce the overall amenity of the unit for future residents. That sort of thing is really quite ridiculous, but we do see these surprises emerge in retirement village contracts when residents come to exit. Unfortunately, we see them time and time again. 

That is why I support wholeheartedly the government's approach to updating the Retirement Villages Act to make it more proactive with regard to a range of these disclosure items. I also commend the government for ensuring that legislation requires the responsible management of residents' funds, by strengthening audit requirements and improving transparency in financial reporting, and ensuring that residents know where their money is going with regard to maintenance fees and the various fees they have to pay to be part of retirement villages. 

In closing, I would also like to make mention of the buyback provision, which is legally quite unusual because it is a retrospective provision requiring the buyback of a retirement village unit if it is not relicensed within an 18-month period. That is unusual legally, but I think it is worth supporting because of the unique vulnerabilities associated with people in a retirement village environment—not only those vulnerabilities when they enter but the particular vulnerabilities when they exit through failing health and need to be able to access their funds as quickly as possible. I commend this legislation to the house and I look forward to it being progressed into law. 

Extracted from Hansard