OWNERS CORPORATIONS AND OTHER ACTS AMENDMENT BILL 2019

Mr KENNEDY (Hawthorn) (18:15): This bill sees changes to the Owners Corporations Act 2006 and the Retirement Villages Act 1987. I point out that for the past four years I have lived in a retirement village myself; however, these legislative changes will not directly impact me. In due course I will say more about retirement villages.

My electorate of Hawthorn is 19 square kilometers of lively activity, restful beauty, history, many sporting options and great educational opportunities, from primary schools to tertiary level. More and more people are coming to live in my community, and therefore our housing is changing. While we are conscious and respectful of our architectural heritage and are home to many beautiful Victorian-era villas and some mansions, change is apparent, with around 60 per cent of people in my electorate now choosing to live in an apartment, unit or type of townhouse. Over the past 20 years that proportion has increased by over 10 per cent. This bill reflects these changes in housing and will accordingly improve the regulation of owners corporations.

Gone are the days when a major apartment or unit development consisted of four or five dwellings. In fact just down the road from my electorate office in Camberwell Road a development of 345 dwellings is nearing completion. Common sense from a commonsense government will see a new five-tier system of owners corporations based on size, introduced because the needs of a 345-dwelling development and those with four units are vastly different, calling for different provisions. The bill is informed by common sense and will introduce new thresholds relevant for larger owners corporations, subjecting them to more requirements regarding committees and annual financial statements while relaxing regulation on smaller owners corporations.

The decision to require owners corporations to deposit fees into a maintenance fund will ensure equity between past, present and future owners of each property. With many first home buyers purchasing apartments or units, money can be tight. The maintenance fund ensures adequate funds are in place to implement an approved maintenance plan, ensuring new and future owners are not bearing unexpected costs and fee increases. This amendment ensures a fairer system now and into the future.

Meeting with constituents I have often heard complaints regarding owners corporation managers, so changes to improve the quality of owners corporation managers will certainly be well received in my electorate and no doubt in many others. The changes will mandate a requirement for managers to hold professional indemnity insurance. This will ensure that managers are answerable to and always acting on behalf of the owners corporation. Further, the registration scheme will be strengthened to ensure that certain criminal offences will disallow such a person from becoming an owners corporation manager.

Our aim is to ensure that complaints of cowboy managers will be a thing of the past thanks to modernised legislation. Logical changes will also be made to ensure that developers cannot appoint themselves or their associates as owners corporation managers and they cannot vote on any resolution relating to building defects. Simple changes such as this ensure that there are no conflicts of interest and that there is a better system for all.

Under the current legislation, all lot owners are equal, but some lot owners are more equal than others—to quote. These amendments will change this. New requirements for the initial settings of lot liability and entitlement are to be set up according to specific settings. Most importantly though the amendments remove the ability for a majority lot owner to prevent an application to VCAT for changes to settings where all other lot owners have consented, enhancing equity between lot owners.

Changes to proxies will see greater strength given to lot owners. Term limits and new restrictions on what a proxy can vote on give assurances and support to owners corporations. Constituents often bring complaints about proxies, and I believe these changes will alleviate some fears.

There are many other reforms this bill enacts, such as improving the governance through enabling owners corporations to make rules controlling smoke drift from private lots and improving the financial administration of owners corporations by enabling owners corporations to separately levy lot owners for a range of costs directly attributable to the particular user of certain lots.

However, I now turn to speak on a particular and important section of the bill—that relating to retirement villages. The bill proposes to amend the Retirement Villages Act 1986 to enable residents of a retirement village to elect a resident committee to represent the interests of residents who do not own their lots. This has proven invaluable at my own retirement village, and I have had the opportunity to serve on one of these resident committees in one of the years there.

The bill will also improve the regulation of owners corporations in retirement villages by providing for a clearer separation between owners corporations meetings, retirement village meetings and village resident committees. The bill will also align the powers of village operators who control owners corporations in retirement villages with the aims of the Retirement Villages Act 1986, which is currently under review.

These reforms will, amongst other things, ensure the policy objective of the Retirement Villages Act to protect retirement village residents from increases in their cost of living without their consent by preventing retirement village owners or their close associates from voting on fee resolutions where they control a majority of lot entitlements; and ensure that control over the rules for use of village facilities is not undermined by village operators who control the owners corporation by preventing them from voting on the making, amendment or revocation of rules.

I will now discuss the suggestions received from the community that will strengthen the bill. In its consultative mode the government has listened to feedback provided by various stakeholders in the retirement village sector, such as Residents of Retirement Villages Victoria, who requested fine-tuning of the various exemptions for owners corporations in retirement villages, and these are contained in the bill. Further adjustments have been made to the retirement village exemptions to address concerns raised by stakeholders, with several provisions either changed or removed. However, it is not appropriate to grant leasehold residents voting rights on financial matters, given they do not have the same property rights and interests as lot owners.

Over the last year or so it has been a privilege of mine to represent the minister at various forums, including one here in Melbourne last November and others as well, because, as you know, there has been a review process. An issues paper was produced, which marked the beginning of public consultation for the review of the Residential Villages Act. It is very obvious that there are still many unresolved issues, particularly in regard to the rights of residents. I was only just speaking to someone today as a matter of fact who was trying to get some clarification on the difference between capital costs and recurrent costs, whose responsibility it is to replace fences and whose responsibility it is to replace a call system. Who should pay for those capital works? It seems that we still have a long way to go, but setting up that issues paper and now this particular bill represents a first step. I am sure we will see lots of other reforms to legislation as time goes on in regard to these residential villages. Accordingly, I commend this bill, and I look forward to future ones.