The Victorian Government has now released its response to the Legislative Council's Legal and Social Issues Committee Report on the Inquiry into the Retirement Housing Sector which was released on 7 March 2017.
The Report sets out 15 recommendations for the Victorian Government to consider and the Government has now responded to those recommendations (Response). A copy of the report and the Government response can be obtained here.
It is disappointing that recommendation 1 from the Report, that the Minister for Planning give consideration to planning provisions that encourage increased supply of retirement housing has not been supported by the Victorian Government.
In relation to recommendation 2, that the Victorian Government review the Retirement Villages Act 1986, the Response supports this recommendation. However, the Response notes that there have been a number of significant amendments to the Act in recent years, including to residence contracts, disclosure and the aged care rule, and that current reviews are underway in relation to the Owners Corporations Act and internal dispute resolution processes.
The Response endorses the approach to a review recommended in the Report that the legislative framework established by the Act must, as it currently does, strike the right balance between consumer protection and facilitating the ability of the sector to innovate and grow. A number of the recommendations from the Report (recommendation 6 – in relation to defining the responsibility for repair and maintenance of units and communal facilities, recommendation 8 – that deferred management fees be applied on a pro rata basis, recommendation 9 – that operators provide each resident with an estimate of their exit entitlement upon request and recommendation 14 – that there be greater transparency and reporting required in relation to maintenance plans) are supported in the Response which notes that they will be considered as part of any future review of the Act.
Recommendation 7, that village operators disclose ingoing prices with and without deferred management fees is under review by the Government. The Response notes that the recent change to disclosure which requires an estimate of exit entitlements to be set out in the disclosure statement, has only recently been implemented and its impact needs to be assessed prior to considering any further review. The Response notes that a rigorous examination of the cost and benefit of any additional disclosure requirements through a regulatory impact statement process would be required before this recommendation could be implemented.
Recommendation 15, that the Victorian Government introduce a new alternative for low cost timely and binding resolution of disputes in the Retirement Housing Sector, is under review by the Government. The Response notes that a broader review of dispute resolution undertaken under the 2016 Access to Justice Review is in the process of implementation by Government. This includes changes to the Victorian Civil and Administrative Tribunal's processes, including expanding alternative dispute resolution. The Response notes that Government will await the outcome of these recommendations and their impact on retirement village dispute before considering further reforms. The Response also notes that the internal dispute resolution process in retirement villages is currently under review by Government and that this may reduce the need for disputes to be elevated to a specific external dispute resolution body.
In summary, the Response supports some of the recommendations of the Report, particularly around further reform of the Act with respect to maintenance and repair responsibilities, pro rata deferred management fees, and transparency with respect to expenditure against maintenance plans. It is pleasing to note that one of the more significant recommendations from the Report in relation to external dispute resolution is under review (rather than supported) by the Government, subject to cautionary comments in the Response that the impact of current Government reviews around access to justice and internal dispute relation must be assessed before further consideration of external dispute resolution reform.