General services charges increased by more than CPI

About this article

This article is aimed at residents, and explains that the amount you pay for existing general services for the next financial year may increase by more than CPI.

Definitions

CPI is the All Groups Consumer Price Index for Brisbane – see also s 106 of the Retirement Villages Act 1999 (RV Act).

CPI percentage increase is the percentage increase in CPI between the March quarters immediately before the start of the budget year being reviewed, and immediately before the prior financial year – see also s 106 of the RV Act (Note 1).

General services are services supplied or made available to all residents of a village – for example, management and administration, gardening and general maintenance, a shop or other facility for supplying goods to residents and a service, or a facility for the recreation or entertainment of residents.

General services charges are the sum of costs for supplying all general services to a village.  Charges for each service are itemised in the general services charges budget.  Each accommodation unit must pay a proportion of the total of costs for all general services. The payment is usually collected on a fortnightly or monthly basis.

Total of general services charges, for a financial year, means the sum of all charges for general services for the financial year, other than the following charges –

  • a charge for a general service that has been increased by more than CPI percentage increase for the financial year and that the village residents, by special resolution at a residents meeting, have approved.
  • a charge that is allowed under s 107 of the RV Act to increase more than CPI – for example, rates, taxes etc, or salary and wages under an award or certified agreement, or insurance premiums, or maintenance reserve fund contributions (Note 2).

Put simply, the total of general services charges is the collective amount of all charges other than those specifically excluded above.

Background

Residents may be of the misunderstanding that the collective amount they pay for existing general services for a new financial year may be increase by not more than CPI.  However, the RV Act provides that some charges may be increased by more than CPI, and also that the collective amount may also increase by more than CPI.

General service charge increased by more than CPI

Excluded charges

There are certain charges under s 107 of the RV Act, which –

  • individually, are allowed to increase by more than CPI; and
  • are also excluded from the calculation for the percentage increase for total of general services charges.

The excluded charges are for the following –

  • rates taxes or charges levied under another Act
  • operational salaries or wages paid under awards, agreements or Acts as stated
  • insurance premiums or insurance excesses
  • maintenance reserve fund contributions (Note 2).

As can be seen where a charge mentioned above increases by more than CPI the collective amount residents pay may also increase by more than CPI – for example, insurance premiums and wages charges increase significantly, and all increases for other charges remain at CPI, the collective amount will increase by more than CPI.

Charges approved by residents

There are charges for an individual general service which are proposed to increase by more than CPI, but residents have approved the increase by a special resolution made at a residents meeting.  However, before proposing to increase a charge for a particular general service, the scheme operator must consider whether there is a more cost-effective alternative to the service – for example, a scheme operator supplies from an external provider an electronic emergency assistance monitoring facility. The charge for the service increases by more than CPI but it is not viable for the scheme operator to change the provider as there is significant costs involved in changing the over from the existing infrastructure.  The residents agree to the additional charge by passing a special resolution at a residents meeting.

A separate special resolution is required for each charge increased by more than CPI.

Increase in total of general services charges

Provided the total of general services charges does not increase by more than CPI, the RV Act authorises that charges for individual services, other than those charges mentioned above as exclusions, may increase by more than CPI – for example, 1 charge increases by more than CPI but the increase for the collective amount (except those which are excluded)remains at or below CPI, due to other charges decreasing.  There is no requirement, in this case, for a special resolution vote for the increased charge.

 

Note 1.  A further revision of the RV Act is underway which will specify the March quarters. It is not sufficiently clear in the current Act.

Note 2. The next revision is expected to exclude the current exemption for the Maintenance Reserve Fund contributions from these items.