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Dáil Éireann debate -
Tuesday, 7 Oct 2003

Vol. 571 No. 4

Priority Questions. - Post Office Services.

Thomas P. Broughan


114 Mr. Broughan asked the Minister for Communications, Marine and Natural Resources if he has received the recovery plan from An Post which he ordered the company on 4 September 2003 to produce within four weeks; the likely impact on services provided by An Post and staffing levels of the plan; and if he will make a statement on the matter. [22183/03]

In early September, the board of An Post advised me that operational losses for this year were expected to be €50.3 million which, after contributions from property disposals and savings, would amount to €31.5 million. In 2004, the company expects to incur operational losses of €39.1 million with net losses estimated at €20.3 million. These figures represent a serious deterioration in the financial position of An Post and are significantly worse than the information supplied to me earlier this year.

My officials and I have on numerous occasions this year expressed disquiet about the An Post financials but were assured by the company that the situation, while difficult, was under control. As a response to the serious financial situation outlined to me last month, I expressed my concerns to the board and asked for confirmation that the losses forecast represent an accurate representation of the An Post group as it currently stands, and an assurance that the cash position of the company is sound for the remainder of the year. I also requested a report outlining how the current financial situation arose, a recovery plan, and monthly meetings with An Post's management team and departmental officials to review progress. Finally, I asked for a review of the financial operations of the company.

Early last week An Post submitted a response to my letter including an outline recovery strategy. In regard to the issues raised in my correspondence, the company has confirmed that the financial position as outlined is an accurate account of the An Post group financials as they currently stand; that the cash position for the company is sound for the rest of this year and that An Post's management will meet monthly with departmental officials. A review of the financial operations has been concluded and key steps are being implemented to improve the quality of financial reporting to the board, and a report on how the current financial problem arose has been provided.

My Department is examining the recovery strategy but the detail of this has to be discussed with unions before it can be finalised. An Post has a statutory obligation to provide a nationwide postal service and to operate a post office network. Therefore, I expect that the recovery strategy would have no significant adverse affect on An Post's customers. As I have already mentioned, the plan is subject to negotiation with unions. An Post signalled staffing reductions amounting to approximately 1,140 early last year but provisional numbers from the outline recovery strategy envisage an advance on this figure.

While the board, management and staff of the company have my full support and assistance, and that of my Department, in dealing with the difficult challenges ahead, the responsibility for designing and implementing the recovery plan ultimately rests with the company.

Is the Minister happy with the performance of the board of An Post? When he appeared recently in public after this astonishing announcement of the major losses for 2002 he seemed to be extremely unhappy with the directors' work performance. Is he seeking to make any changes in regard to the chairperson and directors? He seems to be calling into question the way in which the board carried out its oversight role and suggested that he and his Department had been grievously misled.

There has been grave criticism about the payment of large performance-related bonuses to the outgoing chief executive officer over recent years, given that the company was losing money and that it was not dealing with major problems. Does the Minister have any view on performance-related bonuses? I sympathise greatly with the 1,100 to 1,500, employees whose jobs are now in jeopardy. The number varies depending on which report one reads. Is the Minister happy with what seems to be a grave deterioration of the service apparently connected with restructuring and the introduction of new technologies which are not successful despite the effort of the workforce to use them?

A large part of An Post's financial problems seems to stem from the REIMS II agreement with state and non-state companies outside our borders. There is another question today about volumes of post going through the Royal Mail and other companies in the UK. Will the Minister be asking the board of An Post and the new chief executive to renegotiate the REIMS II agreement and perhaps to give An Post a better chance to make progress? Some administrative areas of An Post, such as subsidiaries and so on, fall within the remit of the chief executive and the board but how does the Minister see restructuring in the context of some of the directives? Will he issue any directives to ComReg on the future, given the universal service obligation of An Post in regard to the future development of the company?

Some time ago my officials asked the company to review the issue of the REIMS II agreement. Unfortunately it will be a difficult one to renegotiate. It is somewhat unfair of the Deputy to infer that the board is totally responsible for the situation in which we now find ourselves.

The Minister said that.

Boards can operate only on the information that is relayed to them. The company was in a state of denial regarding the position of its financials as far as back as November 2002. My Department indicated its concern on what it saw, based on the figures which it had received, indicating that there were difficulties in this area. In December last we were told that there was no need for a survival plan and in May of this year we were again told that the existing plans were working and there was no need for a recovery strategy. It was only after I refused to bring the annual accounts to Cabinet that the company confirmed that things were getting worse fairly quickly. Over recent years certain commitments on cost reduction have been made but not fulfilled yet employers have fulfilled their various commitments under An Agreed Programme for Government, and the various partnership agreements have been fulfilled. The company has seisin of the strategy and it is up to the company and its management, in association with the board, to ensure that the relevant cost reductions are made.

When the economy was doing reasonably well in recent years this probably to an extent masked the difficulties in An Post. Now as we are going into a situation of more difficult economic circumstances tough decisions will have to be taken and I like to think that would be done in consultation with the management and the board.

The Minister gets a monthly report.

An Leas-Cheann Comhairle

The time is up on this question. We must move on to Question No. 116.

Tough decisions will have to be taken. I hope that will be done in consultation with the management and the board.