Speech to Seven St Vincent Retirement Village

Thank you for having me. Thank you for building the New Zealand that we all enjoy today. The generation who worked, served, and raised families still has a lot to offer New Zealand, starting with a good example of how to live.

The Outlook for Thursday

Dave Dobbyn famously wrote that ‘your guess is good as mine,’ but we do need to plan for our future, and we need to know the outlook further out than next Thursday.

New Zealand’s population is growing older. Every year more people reach retirement age. At the same time, more and more are looking to retirement villages as the place they want to live.

Whenever visiting these retirement villages, I hear the same themes. People tell me how much they value the friendships, the activities and the peace of mind that comes from knowing that help is nearby if needed. For many it’s the best of both worlds.

But alongside the positive, I also hear the frustrations. Too often, people moving into villages face contracts that are pages too long, full of dense legal language that is hard to explain clearly. Residents and their families are asked to sign on the dotted line, but the cost of decoding what they’re signing up to can be prohibitive. That’s not right.

Then there’s uncertainty about what happens when a resident leaves. Families are saying they’re waiting months, in some cases much longer, before the capital they’re owed is repaid. These delays can be distressing, especially at such an emotional stage of life.

I want to take a moment to thank the Retirement Village Residents Association for sitting down with me and my ACT colleagues. They’ve shared with us the real challenges residents are facing, and the thinking behind the “Four Pillars” policy framework they’ve developed in response.

The concerns residents have raised need to be taken seriously.

Retirement Sector Review

The Government’s review of the retirement village sector is still underway, with officials hearing from residents, families, and operators across the country. That process is important, but it can’t go on forever. People need certainty, and we hope the review is completed soon so changes can be made where they’re needed.

The wrong lesson from Australia

Some people suggest that we could simply copy what Australia does. However, the well-meaning reforms have often led to more harm than good.

In Australia, most States have some form of mandatory repayment times, and more prescriptive rules for capital sums. But when governments try to mandate every detail, they add costs to operators. The operators have no source of funds other than you, the resident, so when their costs increase, guess who pays?

Capital-sharing arrangements, compulsory interest rules, or complex compliance obligations sound good, but they mean higher entry costs, higher ongoing fees, and fewer retirement village options.

Every dollar of extra compliance eventually shows up in a resident’s bill. Heavy-handed government regulation should not be the reason that a resident cannot afford to live in a village or be the reason residents struggle to enjoy their retirement lifestyles.

I know this is a generation that had waterbeds, so you’ll know what I mean by the waterbed effect. You can push the water around, but you cannot make it go away. It’s the same with costs. Government cannot make costs disappear, but it can push them around to another part of the bed.

This is clear in Australia, where Governments have mandated more costs, and Australians often pay 25% more in weekly fees than their Kiwi counterparts.

Similarly, despite some people commending Australia for its capital sharing, year-on-year, fewer retirement villages offer this option due to cost.

What next?

The best outcome for residents is choice – choice about where you live, and the contract you sign. Choice only happens when there’s real transparency, so people can see the options and pick what works for them.

Every resident is unique. Some want more day-to-day care and higher service, and are happy to pay for it. Others prefer something modest and affordable. Some want certainty about when their family will get money back, while others prefer lower upfront costs and don’t mind waiting. There is no one-size-fits-all model and the system should allow for all of those choices.

ACT’s Plan

Any fix has to start with people. Residents and villages should be able to sit down, work together, and agree on what actually meets their needs, no what a bureaucrat in Wellington thinks should work.

This is why ACT believes we need to make it easier for residents and retirement villages to understand what they’re signing up for.

We’re taking a leaf from residential sale and purchase agreements, and commercial lease agreements. The Government doesn’t tell you, for example, how long settlement on a home purchase should be. That varies, and so it should.

However, there are standard agreements that have been around for a long time. They serve as templates for all agreements, with any variations marked up and visible.

ACT is proposing a standard plain-English contract, developed by the Ministry of Housing and Urban Development working with residents and the industry. It would put the key details in one clear document, without pages of legal jargon nobody can understand.

It would be easily accessible, easy to read, and you would be able to compare it with any other alternative contract you may be offered. That way, if you’re signing up for an ORA or choosing between two villages, any differences between the contract and the standard contract would stick out like a sore thumb, and you could see whether you’re getting the best deal possible.

That default contract means some basic protections – like getting your capital back within 12 months, ensuring interest is paid if it’s late so families aren’t left carrying the cost, and a simple disputes process so if things go wrong, residents aren’t left powerless.

These terms should be a starting point, not the whole deal. ACT backs the right to contract – residents and villages must be free to negotiate what works best for them. But there should be a fair baseline to work from, broad enough to fit the different models out there. This is why the contract would be voluntary for villages to adopt.

I expect the standard agreement would quickly become universal. No village would want to explain why it’s not using the standard agreement. ‘What are you hiding?’ people would ask if they didn’t.

Regulation

Most politicians love a good regulation. The problem is politicians are seasonal, and the regulations build up over time. I’m sure you can see the analogy to one of those rocks that seabirds like.

I know there’ll be people who’ll say, why don’t you just make a compulsory rule? The answer is history shows it usually backfires. Sector after sector, more rules lead to longer, denser documents that nobody can understand. Red tape drives up compliance costs, and in the end its residents who pay the price.

If we want efficiency, we can’t afford to supress competition or make it harder for villages to offer options. That only reduces choice and ends up hurting both today’s residents and the people who’ll come after them.

Retrospective changes

I have heard some suggesting that any new rules should apply to residents who have already signed their contracts.

I want to be clear that ACT does not support retrospective changes. If an agreement is signed in good faith, it should not suddenly change because Parliament decides to rewrite the law. That is not fair on both residents and villages who had expectations in the strength of their contract.

Parliament’s own design guidelines are clear: laws should look forward, not back. That’s why any reforms must apply to future contracts, not rewrite agreements people have already signed in good faith.

Keeping the focus on people

At the heart of this is a simple principle; the system must work for residents, not for the bureaucracy.

Reforms to the system need to happen and they need to make your life easier, not harder. They should not stress out families, they should give peace of mind. And they should work with retirement villages not against them.

Retirement village supply

Retirement takes two sides. We need to get the settings right so would-be investors are still interested in taking a punt with their money, because that’s how villages actually get build and open, and how residents can have the homes and communities like you do.

As many reports have said, we will face a shortfall in the thousands of units over the coming years. This is a sign of a poorly designed system which restricts the upgrades of current villages and stops the building of more. This pushes up costs for residents. This Government is already doing work in the Resource Management space to ensure that more units can be built, and that residents can have access to what they need.

Closing

New Zealand has an ageing population, and more people are asking the same questions you once did: how do I want to live in retirement, and what options do I have? The choices we make now will shape those futures and determine whether retirement villages continue to offer security and community, or frustration and cost.

ACT’s vision is clear: more choice, more transparency, more competition, and less red tape. That’s how we preserve the good, fix the bad, and make the system work for people.