Review of the Costs and Pricing of Interment in New South Wales

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By Alison Sadler, Lawyer

Background

Late last year, the Independent Pricing and Regulatory Tribunal (IPART) released a report with interim findings and recommendations about costs and pricing of interments (burial of a body or cremated remains) in New South Wales (NSW) cemeteries.

The IPART review was initiated due to significant reform in the sector over recent years, which included the introduction of the Cemeteries and Crematoria Act 2013 (NSW). Section 145 of the Cemeteries and Crematoria Act 2013 (NSW) provided that IPART was to produce a report within three years which showed the results of an investigation of interment costs and pricing of interment rights within the interment industry with regard to:

  • The relativity of costs and pricing factors for perpetual and renewable interment rights; and
  • Full-cost pricing of perpetual interment rights, including provision for the perpetual case of interment sites and cemeteries.

This article will discuss some of the proposed recommendations in the interim report.

Proposed recommendations

In evaluating the costs and pricing of interments, IPART was conscious of the need to find a balance between ensuring that interment prices are affordable and equitable, and that cemeteries operate in a way that is financially sustainable. The 15 recommendations of IPART range across these considerations. In our view, the majority of the recommendations are sensible.

Some of the recommendations are:

Recommendation 1: Cemeteries and Crematoria NSW (CCNSW) be made responsible for acquiring land for new cemeteries in Sydney as part of a statutory review of the Cemeteries and Crematoria Act 2013 (NSW).

As identified by the interim report, the absence of a consolidated development approach for new cemeteries has contributed to a highly competitive land acquisition market characterised by price distortion. Cemetery operators who are forced to acquire land at exorbitant prices necessarily pass these costs onto consumers.

Accordingly, we agree with the principle behind the interim report’s recommendation to centralise the process for identifying new cemetery land, in that it will reduce competition and increase efficiency in an industry dealing with mounting economic and practical pressures.

However, the proposal that CCNSW should be made solely responsible for acquiring new cemetery land does not adequately address the expertise and flexibility that is demanded by the cemetery land acquisition process. The effective identification and acquisition of land for use as a cemetery requires specialist planning, valuation, infrastructure and development experience, and accordingly should be the responsibility of a suitably qualified entity such as the Department of Planning, Industry & Environment.

Recommendation 6: There be a legal obligation on all cemetery operators to make adequate financial provision for perpetual maintenance of interment sites and the cemetery.

The interim report identifies how there is currently “no legal requirement for cemetery operators to set aside funds for the costs of perpetual maintenance.”[1] We acknowledge that a framework for adequate perpetual maintenance is essential.

However, we note that recommendation 6 has the effect of burdening cemetery operators with the future responsibility for this prior failure, and in turn increasing the cost of individual interment rights for consumers. In requiring all cemetery operators to make adequate financial provision for the perpetual maintenance of interment sites and cemeteries, the implementation of recommendation 6 will result in cemetery operators necessarily factoring future perpetual maintenance liabilities into contemporary interment pricing.

We have suggested in our submissions to IPART that the process of correcting historical failures should be done by way of a government subsidy provided to cemetery operators, so that these prior perpetual maintenance costs are not passed onto present and future consumers.

Recommendation 9: CCNSW to develop guidelines on when and how a cemetery operator can use perpetual maintenance funds for a cemetery.

We welcome the recommendation that CCNSW develop guidelines on when and how a cemetery operator can use perpetual maintenance funds for a cemetery.

In particular, the guidelines have the potential to negate the need for an independent perpetual fund manager, such as Treasury Corporation, in that they may outline:

  • The degree of separation required between a cemetery operator and the maintenance fund;
  • The permitted uses of perpetual maintenance funds; and
  • How maintenance providers may access perpetual maintenance funds set aside by cemetery operators.

We submitted to IPART that existing cemetery operators should be invited to provide input on the development of the guidelines by CCNSW.

Recommendation 11: To make it easier for consumers to compare and understand prices for bodily interment services, cemetery operators be required by regulation to publish prices for all bodily interment services on a consistent basis.

We agree with the interim report’s recommendation that interment prices be published consistently by all cemetery operators, as it will in principle simplify the interment process for consumers and make that process more transparent. In our submissions, we suggest that CCNSW consult with cemetery operators on the different names and types of service components that are included in their interment prices, so that a common terminology may be developed that is both easily adopted by cemetery operators to their existing services, and appropriately comparable for consumers.

Summary

The deadline for feedback on the interim report was 24 February 2020. IPART will consider the feedback it receives from the public and conduct further research before releasing a draft report in July 2020.

Pursuant to section 145 of the Cemeteries and Crematoria Act 2013 (NSW), IPART is also required to investigate competition, cost and pricing factors in the funeral industry as part of this review. However, due to the current effects of the COVID-19 pandemic on the funeral industry, IPART has decided to delay commencement of the review for the time being.

[1] Interim Report, 5.

For further information, please do not hesitate to contact us.

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Third Dimension - Issue 16, Summer 2017