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RRVV Submission has been lodged for review of Retirement Villages Act
A big thank you to everyone who lodged a submission and a special thank you to those of you who provided feedback on drafts of RRVV’s submission, case studies, helpful material and guidance.
The deadline for submissions was just before midnight last Friday. A copy of our submission is available here
RRVV 2020 Annual General Meeting – held on 18 January 2021
The President’s Report for the 2020 AGM is available here
Increase in Service Fees for 2020-2021 Financial Year
It’s that time of year again when operators of retirement villages propose service fees (described as maintenance charges in the Retirement Villages Act 1986 (the Act)) for the coming financial year.
An operator may only increase the service fee by more than the Consumer Price Index (CPI), except as provided by section 38(5) of the Retirement Villages Act (the Act), with the approval of the residents of the village or the villages residents’ committee.
Section 38AA of the Act provides the formula for the calculation of the CPI increase by reference to the annual increase in the all groups Consumer Price Index for Melbourne published by the Australian Bureau of Statistics (ABS). You can calculate the CPI increase dividing the sum of the index numbers for each of the quarters of a financial year by the sum of the index numbers for each of the quarters in the previous financial year.
The Australian Bureau of Statistics does not release the June quarter CPI figures until mid-July. Hence, most operators use the index numbers for the year ending 31 March. Operators do this to calculate the new fees from the beginning of the following financial year. This practice does not comply with the Act. RRVV advocates changing the Act to align it with common practice.
The table below shows the relevant index numbers for the years ending 31 March 2019 and 2020 necessary to calculate the CPI increase where the operator proposes to increase your village’s service fee from 1 July 2020.
Source: Australian Bureau of Statistics 6401.0 released 29 April 2020.
The index numbers total for the year to 31 March 2020 (465.91) is 1.93% higher than the corresponding numbers for the year to 31 March 2019 (457.1).
Section 38(5) of the Act does permit operators to increase service fees by more than 1.93% without residents’ approval where that increase is the result of increases in:
- Rates, taxes or charges in respect of retirement village land or the use of a retirement village land levied under an Act or subordinate instrument; or
- Salaries or wages paid in accordance with an award made by a Commission, Tribunal, Board or other body under-
- An Act other than this Act: or
- A Commonwealth Act –
If the salaries or wages are paid to a manager or a person employed in connection with the retirement village.
If you would like a sample calculation demonstrating how Section 38(5) works in conjunction with the CPI increase, please email firstname.lastname@example.org.
Section 38(4) sets out the voting rules for residents approval, at a meeting, of an increase above the threshold established by the CPI increase and section 38(5). Approval requires a majority of the residents attending the meeting to vote for the increase. Therefore, the meeting scrutineers must count the number of residents voting for the increase and the number of residents at the meeting.
Australian Retirement Village Accreditation Scheme
In February 2019 the Retirement Living Council and Leading Age Services Australia published their draft Retirement Village Accreditation Scheme. The purpose of the scheme is to certify the quality of village services and operational processes. RLC and LASA are inviting comments on the draft document from village residents and the retirement village industry.
Comments can be sent by email to email@example.com or mailed to:
Retirement Living Accreditation
Property Council of Australia
Level 7, 136 Exhibition St
Melbourne VIC 3000
by Friday 12 April 2019.
RRVV encourages members to read the draft scheme and send in their comments. In the meantime, as mentioned in the March 2019 edition of our Newsletter, the RRVV president has written the following letter to the chairman of the committee responsible for the draft scheme, setting out RRVV’s views and recommendations:
Please see the attached document, “RRVV recommended objectives for ARVAS”. In developing these recommendations, RRVV relied heavily on contributions from seven of our members we recognise as opinion leaders and having relevant experience.
These opinion leaders expressed a variety of views and raised a wide range of questions in addition to proposing specific objectives. There were some clear themes in their additional contributions.
Resident engagement is perhaps the most contentious of the themes. The contributors observed that the peak bodies and RRVV seem to have quite different views. Please see the attached document “Good practice for resident engagement in the development and ongoing review of retirement living accreditation scheme”.
RRVV’s views have their origin in the conviction that retirement village residents are stakeholders in the businesses of the operators of their villages and in the villages they live in, and that stakeholder engagement is good for business.
Residents qualify as stakeholders because:
- In most cases, they contribute the capital employed in their villages
- They are customers of their village’s operator
- Their village is their home giving them a powerful emotional stake in it its facilities and operations.
Several of the contributors noted that the Retirement Living Code of Conduct seemed to exhibit a confused understanding on the part of the peak bodies as to who the stakeholders are. There is one reference indicating residents are stakeholders but numerous examples of the expression “residents and stakeholders” suggesting that residents are not. The contributors suggest amending “residents and stakeholders” to read “residents and other stakeholders”. I have a hunch the other stakeholders would see this as a slight. They should not be surprised that resident opinion leaders see “residents and stakeholders” as a slight.
RRVV is currently in the final stages of negotiating its 2019 partnership agreement with Consumer Affairs Victoria. This agreement recognises RRVV’s stakeholder status, details the nature of the relationship, goals, an engagement program largely based on roundtable meetings and the scope of ad hoc interactions. RRVV proposes that the ARVAS committee consider a similar agreement with RRVV. This idea is not new. Some years ago Mary Wood, the then RLC Executive Director, proposed a similar agreement between the RLC and all six residents’ associations, but the final document contained motherhood statements rather than anything practical. It was quickly forgotten.
Recognise that retirement villages are unique
Both Lifemark and IRCAS appear to be derivatives of other schemes rather than schemes tailor made to the unique requirements of retirement living. Accordingly, RRVV recommends rejecting Lifemark and IRCAS as models for ARVAS.
Focus on known areas of underperformance
Lifemark has 5 categories, 26 standards and 87 pieces of evidence. IRCAS has 4 categories, 10 standards, 22 criteria and 75 indicators. How relevant is all of this to residents? If the complaints our members bring to our attention are any guide, neither Lifemark nor IRCAS covers the quality issues of greatest importance to residents. Are the schemes too broad to be effective? RRVV believes they probably are.
RRVV members with relevant experience suggest that Australian businesses do not make full use of the information contributed by customers who complain. Owners and operators of retirement villages are no exception. Accordingly, RRVV recommends:
- Basing at least a third of the standards on residents’ complaints
- Making complaints analysis one of the main drivers of continuous improvement under the scheme
Both the Lifemark and IRCAS standards documents (particularly IRCAS) have something of the flavour of a management primer. RRVV believes that radically improved management training as a prerequisite for accreditation would allow the scheme to focus more directly on performance and responsiveness to residents.
Introducing and maintaining the scheme at the village level
Some of our opinion leaders reported that their villages achieved accreditation without any resident involvement and that there has been no resident involvement in any review of scheme effectiveness in their villages (if there was such a review). RRVV acknowledges that not all villages have residents willing and able to participate in the process of achieving accreditation. Nevertheless, accreditation provides an opportunity for management and willing residents (not just residents’ committee members) to work and learn together.
Village service levels vary across time reflecting the available funding, the changing needs and wants of residents and the changing business and social environments in which villages operate. RRVV believes that ARVAS must recognise this variability and guarantee residents the opportunity to shape changes in service levels.
Some of our opinion leaders noted that prospective residents searching for a retirement village do not have access to independent information on village facilities. They propose something like the star system used for hotels and motels.
Overlapping accreditation schemes
A couple of our contributors queried the wisdom of covering areas covered by other accreditation schemes. Take food safety as an example. Both contributors pointed out their municipal council runs a food safety scheme that includes regular audits by the local food safety inspector.
RRVV remains keen to meet with you and your committee.
Lawrie Robertson, President, Residents of Retirement Villages Victoria
[End of Letter]
Online Retirement Village Cost Calculator
Macquarie University has made available an online retirement village calculator to enable retirees to estimate and compare the costs of moving into a retirement village.
The calculator, developed by Associate Professor Tim Kyng of the Faculty of Business & Economics, estimates the relative costs of different retirement village contracts – allowing potential residents to compare contracts and their features.
Professor Kyng developed the calculator after having his own frustrating experience while assisting his mother in choosing between retirement villages.
The retirement village calculator project was funded by a grant from Financial Literacy Australia.
To find out more, click on the button:
Thank you to those members who told us about their views and experiences of their electricity suppliers, in response to RRVV’s request. This information was sought to provide input to a number of consultation meetings held with the Essential Services Commission during 2018, regarding the regulation of electricity sellers in embedded networks in retirement villages, apartment buildings, caravan parks, etc. Members’ responses indicate that about half the retirement village residents in Victoria are supplied with electricity by village operators via so-called “embedded networks”.
The commission recently introduced new legislation to ensure that village residents and other customers supplied via embedded networks have similar protections to other energy consumers. The new rules require village operators who sell electricity to residents to:
- make sure they get a resident’s consent to an electricity selling arrangement
- provide a separate bill with specific details to each resident
- ensure that information provided to residents is clear
- offer assistance to residents who have difficulty paying electricity bills
- follow rules for disconnecting residents including those with life support equipment.
The commission has published a fact sheet which you can download: Information for Customers Living in Retirement Villages. RRVV advises members who are supplied with electricity by their village operator – via an ‘embedded network’ – to check with their manager that the village is registered with the Essential Services Commission for the supply and sale of electricity.
On the important subject of electricity prices, research conducted by RRVV indicates that residents in villages with embedded networks pay on average the same rate per kWh as retail customers in the same area but less in daily supply charges. Details on page 7 of the December 2018 edition of the RRVV Newsletter.