There is a need for reassessment of key clauses in the BCCM Act amendments to remove financial concerns which threatened the viability of existing and new self contained apartments in community title scheme properties used for tourism accommodation. 

Kim Cox, President of the Queensland Resident Accommodation Managers Association warns that tourist industry financiers were raising serious concerns about the financial viability to support buildings and resident managers. 

Self-catering apartments for tourist and holiday accommodation with resident managers are a mature and growing asset in Queensland tourist industry resources, with some 55,000 units currently providing holiday accommodation throughout Queensland in 1200 sites. 

The current BCCM Act amendment proposals introduce considerable financial and investment uncertainty to the industry.  QRAMA supports most of the 250 amendments in the Bill and regulations but several issues must be reviewed. 

The addition of another apparent layer of protection is adding a layer of difficulty for the industry without providing real protection for investment owners or guests.  

QRAMA believe that protection and choices for investors are already provided by PAMDA and the Managed Investments Act.   

The tourism accommodation industry needs the capacity and variety that self-catering apartments with on-site managers provide.   

One great strength of Queensland's tourist accommodation is the variety, from caravan parks, bed and breakfasts, farm stays, five star resorts, country motels, houseboats and self-catering apartments.  

The industry cannot afford to risk instability by fragmenting the rules and discouraging investors. 

Tourism accommodation has been a major source of construction work in Queensland.   

Tourism services are labour intensive and provide many direct jobs for cleaning, repairs, supplies and services as well as the multiplier effects to service industries in the region. 

There was input from community groups and stakeholders in 1998 and 1999 as part of the review process.   

Since that time, new legislation by the Commonwealth and Queensland Governments has addressed many of the concerns but has not addressed the very real issues of the future.   

Industry agreement is needed to review the likely outcomes of a few key issues.  The Draft Bill and likely impacts have NOT been discussed with industry groups. 

Six items have been identified as being of particular concern to the ongoing provision of self-catering apartments as tourist accommodation: 

§                                   Office on Common Property 

The amendments propose that the office must be on common property for all schemes that commence from July 2002.   

The real estate is often a significant factor in providing security for banks when managers borrow funds to operate the business.  The banks have made submissions to the Minister and we understand they have concerns with the viability of some schemes.   

§                Term of Engagement 

The term of engagement between the manager and the body corporate cannot now be "rolled over" but must be replaced by a new agreement.   

This additional expense of $3,000 to $10,000 in legal fees is an impost that provides no benefit to the owners or manager, especially when both parties agree to extend the current terms.   

These costs must be recovered from the operating expenses of the letting business.   

Banks set a minimum time, usually of about 7 years, that must be in an agreement before they will provide finance.  The proposal now encourages the body corporate to consider non-renewal and allow the agreement to expire.   

Such a situation will erode the practical operation of these schemes, changing the asset into one of diminishing value, resulting in losses for the manager and investors and so discourage investment in this type of accommodation by both operators and investors.   

§                Manager on Committee  

The BCCM proposals prohibit the manager from voting if he is an elected member of the committee, although he is usually the largest investor in the scheme.   

The investment owners depend upon the manager to drive their investment.  Again, there are requirements that protect investment owners from conflict of interest and related issues.   

The body corporate committee in many buildings currently consists of the chairman, the body corporate manager (who has administrative responsibilities) and the resident manager.   

The proposal as presented will have a committee with only one person who can vote.  This is a most unusual form of representation and accountability.   

§                Code of Conduct 

A Code of Conduct has been introduced that requires the resident manager and the body corporate manager to be honest, fair, not engage in unconscionable behaviour and the items normally expected in such a document.  This document duplicates most of the requirements currently required by PAMDA.  

However, other members of the committee are not required to adhere to the Code.  It does seem unusual that the committee chairman is not required to be fair, honest or act in the best interests of the body corporate.  

§                Agreements with Financiers 

Agreements between the body corporate and financiers will be prohibited.  This practice has been required by financiers to provide protection for their interest.   

There may be a better solution with an amendment to Section 110 but the banks have not yet assessed the impact of this change.   

We are concerned that banks may reduce their financial support for management rights, with possible adverse financial consequences for investment owners and resident managers.   

§                Transfer Fee 

When the BCCM Act was passed in 1997, Mrs Liz Cunningham held the balance of power in Parliament.  A "transfer fee" applied to the sale of management rights was added to the Act to obtain the support of Mrs Cunningham and has been the source of much dispute when management rights are sold to a new operator.   

The transfer fee concept clearly has caused problems without providing benefits and this issue needs elimination or at least a review to establish some balance of fairness.   

The BCCM Act has the potentially difficult task of addressing the community living needs of both resident owners and investors in the tourism industry.  Unfortunately, the rights and needs of the second group have been overlooked on these key issues.   

The Draft Bill does not provide the certainty that is needed for investors and operators to have a medium term view of the business.  With the uncertainty that these changes will bring, the longer-term issues are less likely to be addressed. 

There are many accommodation managers and investors who require these few issues to be reviewed to protect investments in this key sector of the tourism industry.   

The Minister seems to have considered the resident owners but has ignored the investors who provide around 55,000 units at complexes with resident managers and another 40,000 holiday units managed by off-site agents. 

Queensland second biggest industry, tourism, cannot afford to chase investors away by making these proposed legislative changes.  It has taken many years for investors to gain confidence in Queensland's tourism accommodation industry and for the industry to attract competent operators.  Those achievements are now at risk.