12 April 2022

Reminder: Consultation period for 2022/2023 budget

Before the start of each financial year, the residents of a retirement village must have access to the proposed budget documents for the next year. This is in preparation for the operator and residents budget consultation process. This bulletin aims to remind operators of their budgetary obligations.

What does the operator need to do?

Under the Fair Trading (Retirement Villages Code) Regulations 2022 (the Code), the operator of a retirement village must establish appropriate procedures for consulting with residents and the residents’ committee on future planning and budgeting of the retirement village. This includes any proposed change to the operating financial arrangements of the retirement village. Operators are expected to be transparent and accountable to residents about budget setting and village operating expenditure and must:

• develop a proposed operating budget for the next financial year;
• develop a proposed reserve fund budget for the next financial year (only if residents or former residents are contractually obligated to contribute to a reserve fund);
• include the information used in the preparation of the proposed operating and reserve fund budget that a resident might reasonably expect to have access to. This may include relevant accounts of actual expenditure, and information explaining proposed fee changes or changes to the provision or availability of amenities or services;
• display a copy of the above budget documents in a central location in the village. Operators must also make a copy of the documents available to each resident upon request. Both must occur no later than one month before the end of each financial year;
• give each resident written notice stating where and when the budget documents will be available; and
• ensure the proposed operating budget meets the formatting and content requirements of clause 17(3) of the Code.

What creates effective consultation?

A well-developed consultation process with residents and the residents’ committee can save an operator time and minimise disputes. It is also required under the Code.

The proposed budget determines the recurrent charges that residents will pay in the coming financial year. Village budgets and recurrent charges are a common cause of complaints. Effective consultation provides residents with the opportunity to have a say in the proposed budget. It also allows them to understand the proposed recurrent charges, which will minimise the possibility of a dispute arising.

Providing information plays a part in the consultation process. However, effective consultation is much more than providing information – operators should fully engage residents and the residents’ committee in the decision-making process for the village’s budget.

Residents have the right to request and obtain further information to provide them with an understanding of the financial budgets presented. The operator is required to comply with reasonable requests by residents for such information within 10 working days.

The Code provides examples of effective consultation. This includes the operator giving the residents and residents’ committee the opportunity to express views on matters that affect the operation of, or experience of living in, the retirement village. The operator needs to listen and consider these views, comments and concerns before making a decision. The operator should respond to matters in writing in a timely manner. They should provide reasons why requests can or cannot be met, as well as taking steps to put in place requests where appropriate and reasonable.

Finalisation and approval of the budget

The proposed budget must not be finalised or approved until:

• each resident receives the required minimum of 10 working days to consider the budget documents. This period starts the day after they are served the written notice of the location of the proposed budget documents; and
• the operator holds an annual general meeting (AGM) of residents before the end of each financial year. The AGM specifically deals with matters relating to the final budget proposals for the next financial year.

Operators should not use the AGM as the initial means to engage with residents about the proposed budget. Operators should consult with residents and the residents’ committee before holding the AGM. Residents should be encouraged to raise queries or concerns direct with the operator or through the residents’ committee. Consider holding a pre-AGM conference to provide an opportunity for residents to voice their queries or concerns.

How to be COVID safe when holding the AGM

Consumer Protection understands a number of operators are concerned about complying with the legislation given the public health measures currently in place and the ability to conduct the required meeting while adhering to appropriate requirements for close contacts, testing and isolation.

It is important for village operators to remember that retirement villages are not aged care facilities, however it would be reasonable to restrict the number of residents physically in attendance to 30, in-line with the indoor gathering limits and, depending on the facilities available in a village, to combine physical and online attendance.

With online or virtual meetings, remember not everyone may be computer savvy and residents might need assistance to use technology or access certain apps. Whatever method is chosen it should ensure that all residents are able to attend and not impose additional cost on residents. Also consider whether residents of your village may be happy to receive documents and send questions via email.

You may have residents within your village who are able to teach others how to attend online meetings. Retirement villages in regional communities might be able to get assistance from their local Community Resource Centre. Local government libraries in suburbs around Perth can also help.

Consumer Protection encourages you to work with residents and their committees to come up with ways of holding meetings that suit you and your residents whilst keeping your community safe.

If providing an opportunity to attend in person remember the venue limits and that everyone in attendance should wear a mask. It may also be appropriate to maintain a handwritten contact register although it is not a requirement.

More information

If you have any queries about the obligations regarding proposed operating or reserve fund budgets, please call Consumer Protection’s Contact Centre on 1300 30 40 54 or email consumer@dmirs.wa.gov.au.

If you need more information about the current requirements for COVID-19 check the WA Gov website or call 13 26843.