Resumed from 21 November on the following motion moved by Hon Alison Xamon —
That this house —
(1) notes the growing ageing population increasingly looking for suitable accommodation options to facilitate ageing in place;
(2) calls on the government to reform the Retirement Villages Act 1992 and associated subsidiary legislation as a matter of priority, particularly, but not limited to, strengthening provisions in the following areas —
(b) enforceability of a code of conduct;
(c) timely action by the Commissioner for Consumer Protection;
(d) training of managers;
(f) responsibility for capital maintenance and upgrade/replacement;
(g) refurbishment of residential units on departure from a village;
(h) dispute resolution process; and
(i) exit fees; and
(3) calls on the government to engage in extensive consultation with the sector, including the Western Australian Retirement Villages Residents Association, prior to finalising any proposed legislation.
HON ALISON XAMON (North Metropolitan) [1.16 pm]: When last I spoke on this motion, I had begun to elaborate on its various points to explain why this reform is of particular concern, and why organisations like the Western Australian Retirement Villages Residents Association are very keen to see swift reform within this space. This second tranche of reform was expected to begin around about 2013, but it has been five years and we have still not seen reform in this space. This was brought to my attention because right now people are very concerned about unconscionable contracting and the potential mismanagement of retirement villages. During my initial contribution, I said that as more and more retirement villages come on board, given our ageing population, the concern is growing. This type of housing should be encouraged. It works really well for a great number of people, and we need to ensure that the regulatory framework around it is sound, and, ideally, ensure that retirement villages are wonderful places for people to live in the later years of their lives.
I have already indicated that a number of issues had specifically been brought to my attention. I wanted to talk a little about the need to clarify responsibility for capital maintenance, upgrades and replacement. Clearly, we need to ensure greater clarity between the operating costs and capital costs. Operators must be held responsible, particularly for construction faults. The problem is that because retirement villages are considered commercial constructions, builders are responsible for work for only two years after construction, as opposed to the usual seven years for a residential home. This creates genuine problems for people even if they are moving into newer retirement villages. A number of submissions that were sent to me gave quite detailed accounts of sometimes even basic construction faults not being rectified. The faults related not just to the buildings but also to the surrounding earthworks. The sorts of concerns raised were about essential structures like retaining walls. The problem is that no-one is taking responsibility for fixing those shoddy works so the cost of these faults often falls to residents. I want to reiterate that these residents are moving into relatively new builds and would have expected that repairs would be covered in the same way that residential homes are ordinarily covered. Again, we are talking about a population of people who are largely on fixed incomes so when they experience these sorts of unexpected and, I would suggest, quite unfair bills, it has quite a detrimental impact. It has been suggested to me that part of the solution would be to ensure that it is mandatory for all retirement villages to have a reserve fund if major capital expenditures are required. People are advocating for that sort of reform.
Another huge issue, which I suspect members may have been approached about through constituents or families of constituents, is certainly something that has been brought to my attention separate from the work I have done around this motion. It is the vexed issue of the refurbishment of residential units on a person’s departure from a village. People in this situation start to really find that their concerns are not adequately addressed. It is very similar to the point about capital maintenance. Simply, clear limits need to be put in place for the responsibilities of the residents as opposed to the owners. I suggest that the requirement to pay refurbishment costs on exit also needs to be reviewed. In many instances, just like in the rest of the real estate industry, it is often the case that new owners want to change the decor, or redecorate. Retirement village units can end up being refurbished in quite quick succession by the exiting owners and then straightaway by the incoming owners. In this context, the requirements for refurbishment on exit should be looked at again. As part of that, we also need to look at whether the requirements for refurbishments are reasonable or genuinely required.
There needs to be some serious reform around the issue of the dispute resolution processes. Although I note that a dispute resolution process is currently outlined in the Fair Trading (Retirement Villages Interim Code) Regulations 2018, it is not clear what happens when a dispute remains unresolved at the end of this process. It appears that the majority of residents who go down this route are of the view that they are effectively coming to a dead end. Beyond a lack of clarity, there are a number of other reasons that the existing dispute resolution process is problematic. It has been suggested to me that it is very likely being underused. For example, in some instances residents are directed to take their concerns straight to the State Administrative Tribunal, but this involves quite complex and formal arrangements. If lawyers are involved, the retirement village owners are usually able to obtain a higher level of legal representation than the residents involved can obtain. It is an expensive option, which can often be quite intimidating for residents and it is a route that they simply do not want to go down. The problem is that often the scale of the problem that needs to be resolved in the first place is simply not commensurate with the scale of the formal action that has been proposed.
Another concern that has been raised with me around the reluctance to undertake the formalised dispute resolution process is that residents are concerned that if they do at some point exercise their right to make a complaint or raise a concern, they may be ostracised within their retirement village, bearing in mind that it is their home. They are very concerned that if they make a complaint against management or another resident, it will make life unbearable for them within the village. The management of retirement villages may also be reluctant to seek help from the department when the department both investigates complaints and provides information and advice. The problem with having a situation in which the department plays the role of both ensuring that accurate and impartial advice is given at the same time as potentially being required to undertake investigations is that there is a general concern that people therefore do not want to access that option. Of course, that hinders the timely resolution of disputes. Overall, we really need to look at a quicker and more streamlined process to ensure that disputes can be resolved. A number of suggestions have been put forward for what the process might look like. The sorts of models that have been proposed would be able to be teased out with a comprehensive consultation process with the relevant stakeholders.
Exit fees also remain a huge issue. A light was shone on this issue in recent months by the ABC Four Corners program, which undertook an exposé of the practices that had occurred, particularly in some retirement villages over east. Exit fees represent a major concern for residents and their families. We know that exit fees can affect a person’s ability to even choose to leave a village, even if they absolutely need to, because having to pay a significant proportion of the value of a property’s sale price can mean that people cannot afford to leave, hence they may find themselves locked into situations that are counter to their wellbeing. These people might need to leave because they require a higher level of care or they may need to leave because their family situation has changed. There could be a whole range of reasons that people need to leave and, in the same way that anyone else who has a property—whether they rent or own—finds it relatively easy to be able to move on, we should be able to enable residents of retirement villages to do so.
Exit fees are unique to the retirement village industry. In no other real estate transaction is a person required to pay 30 to 50 per cent of the final price to an administering body. A case study that was presented by one resident demonstrates, I think, some of the difficulties associated with deferred management fees. After spending $420 000 on their villa, this person spent another $80 000 on improvements. The deferred maintenance fee for their village is three per cent per annum for the first 10 years and one per cent per annum thereafter. Assuming no capital growth and that they sell after 15 years, they would be required to pay $175 000 plus commission, refurbishments and any other costs. Because the resident has paid $80 000 to improve the villa, which the operator benefits from, the improvements will end up costing them an extra $28 000 in deferred management fees. Accordingly, these exit fees, otherwise known as deferred fees, should be reviewed. I think a cap on fees needs to be considered. Further, a clear statement needs to be given to residents at the time of entry outlining all the charges to be levied at the time of exit. I am very concerned about the number of stories I hear about people who have no idea of the extent of the exit fees that they have inadvertently bought into. Operators should be required to supply a full statement of the process and the charges that will apply at exit to residents’ next of kin or legal personal representative. I am very concerned to hear of children whose parents have passed away trying to navigate their way through probate and not getting the information they require to settle the estate.
Where to from here? There is no doubt that legislative reform in this area is long overdue and desperately needed. Since the last review of the act took place, eight years have passed. I understand that the Department of Mines, Industry Regulation and Safety is planning to release a discussion paper. Today in the other place the Minister for Commerce and Industrial Relations tabled a statement on the report of the operation of the Retirement Villages Act 1992 for the 2017–18 financial year and gave some statistics about complaints. In that statement to the other place he made it clear that a discussion paper is expected to be released in early 2019. Reform proposals include a maximum period for repaying former residents on their departure from a retirement village and better clarity for consumers about the total cost of a retirement village product. It is good to know that there will be some movement on this.
I suggest that it is imperative that the next phase of reform be undertaken collaboratively and be informed by the voices of the sector, especially bodies such as the WA Retirement Village Residents Association, which is a large organisation that incorporates most retirement villages. I went with the member for Mount Lawley, Mr Simon Millman, to a meeting it held recently that was very well attended. The issues I have raised today were echoed in that meeting. The purpose of WARVRA is to be the voice of retirement village residents. In the motion I specifically referred to the need to consult with it as well as with other relevant stakeholders. It is ideally placed to inform this process. I think it must be at the table to ensure that legislative reform is relevant to the day-to-day experiences of people living in retirement villages and their families. Its members have indicated that to date they have felt discouraged by the lack of timely information that has been made available to them and they do not feel they are being adequately consulted. It is not enough to provide information and simply ask for feedback. The voice of residents needs to be involved throughout all steps of this process. That is how we will ensure that we get it right and that this critical reform will achieve the necessary change.
We urgently need action in this space. The issues have been well defined and there are clearly significant gaps in protections for older people. These problems will impact more on Western Australians as our population ages. Let us see if we can get this right now. I call on the government to ensure that reform of retirement villages legislation is a priority. I recognise that this government is undertaking a massive legislative agenda—some of it is good and some of it is not so good—and that when a government has large agenda it is very easy for certain matters not to receive the priority they need. I suggest that the government has an opportunity to prioritise this reform and to engage in good faith with an organisation that really wants to engage with this government around this area. We can get this right and set the parameters. Ideally, Western Australia can be a leader in this space. As more and more retirement villages pop up and, as they age, more Western Australians choose to take advantage of these housing options, hopefully it can be a success for all families who want to live in these environments. I hope that the government decides to make this a priority.
[Speeches and comments from various members]
HON ALISON XAMON (North Metropolitan) [2.08 pm] — in reply: If there are no more speakers, I would like to give an address in reply. I thank the government and the Liberal Party for their comments and their support for this motion. I think that will be very well received by the residents of retirement villages, who were very keen to see that the issues they wanted to have addressed could be brought to this house’s attention. It will be particularly encouraging for people to know that this remains a priority piece of work and is very firmly on the legislative agenda.
I want to reply to a few of the things that have been said and to make some more general comment. One thing I really feel like I need to reinforce for members is that residents wanted to make it clear that they love their villages. In the main, the choice to live in a retirement village is one that they embrace. They really thoroughly enjoy it and they do not want to give an impression that somehow moving into retirement villages is all doom and gloom and that it is one disaster after another. What is very, very clear to me is that it is anything but the case. People feel as though they are supported, and love the sense of community; frankly, retirement villages are simply nice places to live.
One set of my grandparents moved into a retirement village in Booragoon and lived there for many, many years. In fact, my grandfather ran the finances of that retirement village. They loved it, and I am not surprised. It was a particularly lovely village to be in and had all the facilities they required. Their experience there was an extremely positive one. I want to reassure members that retirement villages as an option for people to age in place and to be able to lock up and leave and get on with enjoying life is very much appreciated and treasured. There is, however, as I have mentioned, always a need to provide further reform in this space, particularly in a growing industry. I absolutely share the concerns raised by the two previous speakers about making sure that we have the balance right between ensuring that people are able to have clarity around the issue of contracts and enjoy where they are living and at the same time ensuring that we have a sustainable business model. I think members would find that no-one would agree with that more than the residents themselves. If we do not have a sustainable business model, we are going to see retirement villages collapse and people will lose the very homes that they want to live in for the rest of their lives. It is always about trying to get that balance. But that does not mean that we have the balance right just yet. Clearly, we need to look at areas of reform.
The second tranche reforms fall into three broad categories. I want to touch on that a little bit. I have spoken about the issue of contracts at length: What are the various components of those contracts? What are the obligations on people for ongoing maintenance? What does it mean when they exit? What are the obligations around fees? What are people actually signing up for? Clearly, there is a great desire to make sure that contracts are more easily understood. I will flag that it has also been floated that one of the reforms we may want to contemplate is a more uniform contract arrangement—a bit like the system we currently have for the sale of land or residential tenancies, for example, which has a set form that people can feel fairly confident that they might be able to sign up to. I am not suggesting that that has to happen; I am suggesting that these are the sorts of things that have been raised with me that would make life easier for people as they enter into these sorts of arrangements and also enable them to more easily discuss these arrangements with their extended families if need be, because a concern that gets raised is that families become aware after the fact of the nature of the contracts people have engaged in.
The second issue, which I do not want to understate, is the culture around these retirement villages. In particular— this has been raised with me extensively—the problems that arise within particular retirement villages around the culture of the village when there is someone in a management position who perhaps should not be in a management position—who does not have the necessary people skills and perhaps is not able to keep up with the administrative requirements and tasks. When people raise concerns and feel that their concerns are responded to with obfuscation or outright hostility, it makes for a pretty distressing situation for those people. It becomes even more difficult for people as they get older, particularly if they have lost a partner or their spouse and are becoming increasingly isolated and perhaps feeling more dependent. There is a real need to have some consistency of training across this area. I understand that training is being made available, but this is by no means mandatory. It is not a mandatory requirement, and yet there is a strong sense that if people want to put their hand up to run and manage a retirement village, which, again, are people’s homes, they really need to have the necessary qualifications and skill base and, although we cannot regulate this, it would be good to have people with the appropriate temperament to be able to manage these villages. There has been a suggestion that we should ensure that there is some sort of online presence, so before purchasing into a retirement village, people can get an idea of a rating, if you like, of how that retirement village is viewed by the residents.
The third point I want to touch on is the broad issue of disputes. I heard in the minister’s contribution that there is a sense within the department that the dispute resolution process is adequate. I will relay the feedback that I have received—that is, people do not feel that it is. People often do not utilise the resolution process at all, so we do not know how many people are simply not taking advantage of the process. Anecdotally, I have heard that people do not feel confident in being able to undertake dispute resolution in the current process for the reasons that I have already articulated. An idea that has been bandied around, which is not necessarily the solution but it is useful to be mindful of, is the idea of having an independent arbitrator, similar to an ombudsman, that could potentially take a more arm’s length approach to dealing with disputes and would be less adversarial than needing to go through the formal arrangements of the State Administrative Tribunal.
It is really wonderful that sooner rather than later we are going to look at this issue of reform. I, for one, am going to keep a very keen eye on the progress of the reform to make sure that it is comprehensive. As has already been said by Hon Michael Mischin, taking into account extensively people’s lived experience is really critical. They are probably in the best place to contribute information and to tell people whether they are on the right track. It is then the burden of government to ensure that those concerns are heard, addressed and responded to, and at the same time ensure that we deal appropriately with the inherent tension of ensuring that we have a viable business model as well. I thank members who have contributed to this debate. I thank members for their support. I feel confident that those people keeping an eye on the government’s and others’ response to this debate will hopefully feel some sense of satisfaction that their concerns will be addressed in the very near future.
Question put and passed.