I wish to share time with Deputy John O'Mahony.
Report on Promoting a Sustainable Future for the Post Office Network: Statements
This is the second opportunity we have had within the past couple of weeks to discuss the report of the joint committee on the future of the post office network. I discussed it recently in the Seanad.
It is clear that the role played by the post office network is held in high esteem throughout the country and among all the political parties. Another significant report on the post office network, which was commissioned by the Irish Postmasters' Union, compiled by Grant Thornton and published last year, contains some interesting proposals with regard to the direction the network might take in the future. I agree with the thrust of the report compiled by Deputy O'Mahony's committee. The committee examined the current configuration of the network and the importance of Government contracts and its report contains suggestions in respect extra business opportunities for post offices. The pivotal role post offices play in communities, in both financial and social terms, is acknowledged in the report. Post offices act as a financial hub and as front offices for Government and utility providers and serve as a social hub for local communities. In the Upper House, a number of Senators urged that we should divert more Government contracts to the post office system. I am entirely in agreement with that general proposition but what was suggested must be done in accordance with procurement procedures. The latter must be acknowledged in the context of the strictures under which we operate. A common-sense approach to improving the viability and sustainability of the network is reflected in the recommendations contained in the report before the House. I am pleased to say many of the suggestions put forward may have already been adopted, at least in part, by An Post.
The local post office is seen as a stalwart and unchanging part of the Irish landscape. An Post and postmasters have, however, recognised that in order to remain relevant to the needs of local communities, the network must move with the times. While offices may appear fairly traditional on the outside, the network has experienced some significant developments. Foremost among those development is the fact that the network is now fully computerised. Post offices operate in an increasingly competitive environment and face challenges from other retailers with electronic payment operations and from online channels. As a result, the investment in computerisation was timely.
One of the points made in the Seanad - this offers potential for the future but I am not sure it is being pursued as aggressively as might be the case - related to basic bank accounts. As Deputies are aware, in recent times An Post has engaged in diversifying its business, creating and offering new products to the public and reaching arrangements with particular banks, such as AIB and Danske Bank. This is the way of the future. The fact that the network has been computerised represents a major step forward. An Post was recently successful in winning the contract to handle half of the cash payments made by the Department of Social Protection to its clients. As that Department moves towards an electronic-transfer-of-funds model, challenges will arise. An Post will be as entitled as any other entity to bid for the business in this regard but even if it is successful, there will be less of a margin in respect of such business than is the case at present.
There is no doubt that An Post faces a number of challenges. As a result of the availability of e-substitution, its core business is in decline. However, it has managed to create new products and attract new business. It is modernising its network and its brand is trusted throughout the country. I am concerned, however, that when the electronic transfer of funds takes over, and even if An Post is successful in winning the relevant tenders, the yield, from a business point of view, will be lower than is currently the case. There are challenges but An Post has a solid brand and there is significant support for it.
My colleague, the Minister of State, Deputy Fergus O'Dowd, will reply to the debate. I understand he has agreed to share some of his time with Deputy Penrose.
That is noted.
I thank the Minister for sharing his time with me on this important debate on the sustainability of the post office network. I welcome the fact that this report is being debated here today. As a member of the working group of the committee that helped to draw it up, I am very aware, having listened to all the presentations, of the huge challenges there are and the changing patterns of the lifestyles of our communities as they are being lived in the 21st century. However, as well as the challenges there are opportunities and while change is taking place, and there will be more to come, all the stakeholders, including the Government, An Post, the postmasters' union and, above all, our communities and the people the post offices serve must realise that in terms of An Post and the post offices, we have a very strong and trusted brand.
This network has delivered a vital range of services to the most isolated rural villages, as well as to the biggest towns and cities in the country. It is important also that this debate is taking place at this time when all the major banks have announced the closing of branches throughout the country. Allied Irish Bank did it last year and Ulster Bank announced it would be closing up to 40 branches a few weeks ago. In many respects, the local post office is the one part of the financial network system around the country that is trusted and that provides the services that are so vital to communities.
The post offices of this country continue to provide a personalised service which is still required and appreciated by the vast majority of citizens. The post office is and always has been about much more than the services it provides. Changes in technology by the use of electronic substitutions or e-mail and so on has meant a decline in mail services and, as a result, the other sources of income to post offices are even more important. Two of the main sources are the Government contracts and financial services such as the NTMA contracts. In this regard, I very much welcome the recent announcement by the Minister for Social Protection that An Post was the preferred bidder for the delivery of the over-the-counter cash services in 2012. Some 43.7 million payments were made through the postal network of 1,152 post offices. However, along with this announcement came a sting in the tail with the aim to reduce the cash payments to 3% by the end of 2014. We should think carefully before this is processed. It should not be done at the expense of thousands of jobs in our post offices throughout the country. Post office income is based on each transaction that is processed on behalf of the client and if that money is paid electronically, that income will be drastically reduced. I note that for example in Ballymun post office, which is not in my constituency and, therefore, I have no brief to speak on its behalf, this would mean the reduction of 70% of the income of that post office.
It should also be noted that 13% of people do not have bank accounts and that they will have to pay to withdraw money from those bank accounts if it is paid electronically. Throughout the villages and towns of the country, whether it be a Friday or other days social welfare benefits are paid, the footfall for many of the local businesses and shops comes as a result of that money being passed out on those days.
Time prevents me from going into further details and recommendations of the report, but I want to briefly refer to two other matters. The range of services and Government services can be delivered efficiently to the people at local level. I am referring to motor tax renewals, property tax payments and water charge payments - we might wish some of them were not in place but they are in place - and people who pay them need to have an easy, convenient and accessible way to do this.
Some of the biggest controversies in recent years, in some of which I was involved, have surrounded the closing down of post offices. There needs to be a look at how that is done. Communities have to play a part also. There should be an early warning system where communities would be given the opportunity to demonstrate that they want to hold onto their local office. If they are not given that chance, there will be a feeling of bitterness in the community.
In other words, if income is declining in the local post office, the community in question should be given a chance to use it or lose it.
I would like to share time with Deputy Troy.
I welcome the opportunity to contribute to this discussion. I understand the Minister has to return to the Cabinet meeting. We are dealing with an important report. The joint committee put a great deal of work into its examination of the future of the post office network. I do not think there is anything more emotive in urban or rural communities than the closure of an office of the State, in this case, a branch of the post office network. In recent years, communities that have suffered the closure of post offices have become lesser entities because of those losses. We fear that the efforts of the Department of Social Protection to move to an electronic-based payment by 2017 could affect the income of postmasters and post offices and almost cut off the lifeline to the post office network. This fundamental point should be examined. There has been a fear over the years that social protection payments will be taken from post offices, on the basis of EU law, Irish law and everything else, and that such a measure will cause some damage. It seems that the Department of Social Protection is to issue a report on this proposal in September in the absence of any cost-benefit analysis or detailed analysis of its impact.
As long as I have been in this House, people have been talking here and elsewhere about motor tax and all the other State business that could be done in the post office. There does not seem to be any urgency about making sure that is done, however. There is always another agenda and another reason more payments are not being made at the post office. We should ensure this trusted brand, as the Minister quite rightly referred to it, operates as a community information office as well as a post office. While we acknowledge the great contribution of the joint committee in compiling this report and making proposals, this debate needs to have a serious focus on what is coming down the track. Is a Department considering the possibility of changing its system of payment in a way that would cut off the lifeline to the post office network throughout the country? It is vital a cost-benefit analysis to be done and proper procedures followed. The Department of Social Protection is highlighting the issue of savings, but we must not rush into cutting off the lifeline to the post office network. It would not be acceptable for the Department to make a decision that would be detrimental to a trusted brand that the people want to retain in their communities.
We could consider a raft of issues in the context of this debate on the joint committee's report, but I would like to put this specific point to the Minister of State, Deputy O'Dowd. I ask him to ensure An Post and, more importantly, the Department of Social Protection are aware of the need for a cost-benefit analysis to be done before any decisions are taken. If a decision is taken on foot of the report that is to be published in September and we move on from there, it will be too late for many of the smaller post offices that depend on Friday payments and weekly payments to generate an income, a trade and a footfall in small communities. This is vital, given that the retail sector in our small villages is suffering huge hardship at the moment. This debate is a signal of our serious intent regarding the recommendations that are in the report. A great deal of work was done and many people came before the committee to give an honest analysis of where things are at.
In 1994, an association called Conserve Our Rural Post Offices started up in my own community of Kiskeam. At the time, there were plans to only have mail in specific post offices. The association has been fighting since then. There is no sense of urgency on the part of the Departments of Social Protection or Communications, Energy and Natural Resources or An Post, which is wholly owned by the taxpayer, regarding protecting post offices, which are vital throughout this country. Every politician, be they from urban or rural Ireland, wants to maintain post offices. If there was a threat to post offices some 20 years ago, very little has been done to ensure that new State business is provided through the post office network.
I thank my colleague for giving me an opportunity to speak in this important debate. I place on the record of the House that I have an interest in this area. I have been a postmaster in my constituency of Longford-Westmeath for the past eight years and am proud to be the fourth generation of a family that has provided a service in the community. Not only are we providing a service, we have been supported so well down through the years by people throughout the community we serve.
I am unashamedly supportive of the post office network and have first-hand knowledge of the pivotal role played by An Post and its network, particularly in rural Ireland. It plays a strong and pivotal role in urban Ireland but particularly so in rural Ireland. Only last Friday, I had occasion to spend a couple of hours in the post office and saw at first hand the number of people whose only outlet may be a weekly visit to the village to collect their old age pension, disability pension or carer's allowance and who then go on to support other businesses and commercial entities in the village in which the post office is located. It is not only about the post office but about supporting rural businesses also.
The Department of Social Protection's tender will go out in September 2013 and there is a very real threat that the payment of social welfare payments will be removed from post offices and be paid electronically, which is why we are here today. If this was to happen, one would see a reduction in cash payments from 51% to 3%, which would make many post offices totally unviable. It would pull out one last major piece of service from rural Ireland. We have already seen Garda stations close. Only this week, we saw the effects of a reduction in Garda personnel resources. We have already seen bank branches close. This is not the responsibility of the Government but it is another service coming out of rural Ireland. We see a policy where the Government wants to force the amalgamation of rural schools.
Instead of just coming forward with platitudes, niceties and compliments about the good work done and the pivotal role played by the post office network, the Government should follow them up with real actions. It should accept that the Department of Social Protection's strategy of electronic payments will have detrimental consequences for the post office network. The Minister of State should be man enough and honest enough to come out and accept that. The Government should carry out a cost-benefit analysis before this issue goes to tender. This analysis should look not just at the economic costs but at the social costs to rural communities if these post offices were to close.
We have witnessed it. If one looks at the United Kingdom where many rural post offices closed, one can see that not only did the post offices close, small family groceries became unsustainable as a result. We need to look at that. At a time when there has never been such little confidence and trust in our banking institutions, this Government is trying to force more people into the banking institutions.
It must be acknowledged that An Post has carried out a great deal of work on examining how it can produce and offer alternative services. It commissioned a report from Grant Thornton to examine how it could expand the services it offers. This independent report showed that at a time when we want to bring about greater efficiencies and savings in the public service, if An Post was able to offer motor tax renewal it would save the Department of the Environment, Community and Local Government €60.6 million a year. We should also examine An Post being eligible to offer other alternative services such as paying hospital fees. There is a myriad of services it could provide to ensure one of the most integral services in communities is maintained.
During my short time in the Dáil I have noticed an absence of holistic planning in government and this has probably been the case for years. We tend to take a service or a set of services within a Department and analyse it and produce reports, but up to now we have not looked at the wider impact of these services and Departments. We have been slow to look at connections between Departments and take an holistic view. This report is a beginning in adopting such an holistic approach. It probably does not go as far as I would like, but it is beginning to get there. The report, which examines the context in which An Post's services are provided, outlines a number of recommendations and highlights several issues which affect not only the post office network but also those who avail of its services.
Post offices are the very heart of rural communities. I represent a rural area with a low population and I know how essential is the post office. Schools, Garda stations, local shops and pubs are at the heart of local communities and the post office is there with them. We are witnessing the closure of local Garda stations, shops and pubs and this damages our infrastructure, particularly in rural communities. The withdrawal of a school bus can have the effect of closing a school and ripping out the heart of a rural community. It is the same with post offices. Rural communities are also suffering because of emigration. Many rural communities are beginning to lose hope, which is the most frightening aspect of this. Every decision we make on what services are available and what we should do with them must take into account the impact on the wider rural community.
The post office network is part of the fabric of many communities and should be seen as a vital part of the campaign to hold our communities together. We often receive briefings from various groups and sectors with the aim of protecting their place in the community. What makes the post office network different is the fact it has the ability to be cost neutral if it is managed and utilised to the maximum.
The post office network has existed for decades and has built up trust over the years. It has been paid for by taxpayers and provides an essential service. It provides a service way beyond its statutory obligation. It is the conduit of communication for people in rural communities and the place where they meet.
This report sets out nine recommendations. It is good that we did not come up with hundreds of recommendations that might never be implemented. There are only nine but they are all capable of being implemented and, if adopted, they would make the post office network more sustainable.
Given the social benefit of personal contact between post office staff and their customers, the committee recommended that other Government services should be made available through the post office network. Access to services is key and we should make it easy for people to do so. We have a ready-made network of facilities and we do not use it as well as we should. We must broaden our mind beyond the traditional services that were provided at post offices and make them busy places where even in rural communities people walk in and out and talk to each other.
Considering the isolation that can occur, especially among older people and in rural areas, it seems appropriate that Government services should be moved to a facility with which people are comfortable and in which they have confidence. I refer to the payment of motor tax renewals, hospital charges, business rates, rent and other Government payment services. We should examine every transaction between the citizen and the State involving paper or electronic communication with the aim of involving the post office.
The social welfare contract has been of major importance to the sustainability of the post office network. I welcome the recent announcement by the Minister for Social Protection, Deputy Joan Burton, that An Post is the favourite candidate to retain the social welfare contract into the future. The loss of the social welfare contract would have major implications for the sustainability of the post office network. However, I am concerned at the proposal to consider electronic funds transfer. We must take a cross-departmental approach. Unless and until every post office in the network is capable of handling electronic funds transfer the Government should, unashamedly - regardless of pressure from the banks or the European Union - say that the post office is the preferred carrier for electronic funds transfer. That might give rise to competition issues but let us deal with them. There is a danger that citizens will have to pay high banking charges from their already low social protection payments and we must champion them and the public post office services.
A very important aspect of the committee report was the need for a warning system for post offices that could face possible closure. We referred to an amber light warning system. I have seen in my area that in many cases the community is the last to know that the post office is about to close. One needs more than one month or two months notice. One needs between 12 months and two years to give a community an opportunity to consider whether it is possible to retain the service with different personnel or by introducing a slightly different model. Such notice would give communities some power to organise their own future. If one is going to take something away, a community should be given an opportunity to fill the gap itself before taking a decision to close a post office. That would allow for a community response to the problem and the possibility of community solutions.
One of the services in danger of closure, especially in rural Ireland, is the local bank. Post offices must be ready to handle financial transactions, including deposits and withdrawals in respect of credit unions and the major banks, but in particular they must be capable of dealing with electronic funds transfer from the Department of Social Protection, if that is to be the way forward. Let the banks complain. If the post offices can do it without charges and the banks want to continue to charge their customers, on their head be it.
During the hearings, there was no reluctance on the part of the staff organisations to examine ways of making processes more efficient, using bar codes, etc. However, the organisations fear that to become more efficient is to make the network leaner in order to have it privatised. Privatisation must be resisted every step of the way. Private companies would cherry-pick profitable areas and the taxpayer would pay more for services in rural areas. Streamlining should be for the benefit of services and customers. It should not be used to make the service a more attractive proposition for privatisation.
The post office network provides a valuable resource for local communities, particularly those in rural areas. With the loss of so many services, it is essential that the network be retained so that it can continue to provide for communities the length and breadth of the country.
May I share time with Deputy Wallace, with five minutes each?
I welcome this important debate on the committee's report. It is timely, given the recent announcement that An Post is the preferred bidder to continue the Department of Social Protection's contract. This is important for the future of the An Post service, as well as for all citizens.
The importance of the post office network to rural Ireland has been well rehearsed in the House. Donegal has seen a number of closures in recent years. These have had negative impacts on communities across the county. That the network is also vital in urban areas shows An Post's importance as an entity. For example, post masters have told me of the importance of human contact to people in urban areas who visit their post offices to collect their weekly pensions. The staff and customers have built relationships. This is good for the social well being of everyone in rural and urban Ireland. We should maintain this aspect.
The report's amber light proposal is worthwhile. An Post should do more to communicate with communities about what is happening in the network. Currently, a decision to close a post office has already been made by the time An Post communicates with a community. It is not a discussion on whether to keep the office open, but on how to manage its closure. It is probably too late for the community to save the service.
The citizens of the country are the sole shareholder in An Post. Through this House and the Minister's office, we should be able to direct An Post to do what we want it to do. Clearly, people want it to provide services and to maintain a presence in rural communities. Government policy should be to ensure this. All Departments must work together to determine opportunities for rolling out government services through the An Post network, which is in most communities.
In this regard, one of An Post's best opportunities in the coming years will be that of the roll-out of the basic payment account. The Government must ensure that An Post is at the heart of that roll-out. Some 51% of An Post's payments are over-the-counter cash payments. People who are unbanked and cannot access bank accounts for electronic payments - approximately 18% of our society - are the same people who collect cash from An Post. We would be able to maintain this system if An Post was at the heart of the roll-out. People would have basic payment accounts and be able to collect money from tried and trusted people in their communities' post offices on a weekly basis.
It would also benefit anti-fraud measures by the Department of Social Protection. I raised this point with the Minister, Deputy Burton, last week. There is less chance of fraud if human contact is maintained when people come to collect their social welfare payments. That is vital, especially when the new contract will see a move towards electronic payments. The Government, and society in general, need to realise that An Post is of vital concern to the postal network. If that means discussing the matter in Europe to maintain the network, then we need to do so. We should be maintaining what is a vital public service throughout the country.
The situation was well described by the Irish Postmasters' Union which stated:
Post offices are an important strategic asset for Ireland and we must ensure that the network is sustained for the future. The Grant Thornton report highlights how important the post office is for communities, especially in rural areas and for the elderly, disadvantaged and financially excluded. The network of post offices is too valuable to lose. The contribution of the local post office in sustaining the economic life of communities, especially in light of bank branch rationalisation, cannot be underestimated. Now is the time to act so that the post office, a vital ingredient in the life of communities throughout the country, is not lost like so much of the infrastructure that has already disappeared. The cost of losing the network cannot be understated in both social and economic terms.
If we only make decisions on the basis of the financial bottom-line, it will leave much to be desired. If I was prepared to maximise my own profit in building a house, the building might not be quite as good as it should be. There are many such matters to be considered in this context.
I ask the House to forgive the parish pump element, but a post office in Duncormick, a village near my home, has been closed. Some 1,200 people wrote to An Post appealing for it to be kept open. It was the last post office in the parish of Rathangan, and there is no post office left there now.
An Post seems to believe that if people do not have to travel more than 10 km, that is grand. The reason so many people wrote to complain is because it is too far to travel to another post office. Many old people in rural areas do not have bank accounts or transport. The local post office means so much to them. Too many people are affected by such closures and the Government should not abandon them.
I realise that An Post has a financial mandate to turn a profit, even though it is a State agency. If necessary, however, the Government should help rural post offices to remain viable. If State aid is required, then that is what we should provide. It would be money well spent. Joined-up thinking is seriously lacking in this regard. It would be very positive to provide such help and, in the long term, it would be financially beneficial for the Government to keep rural post offices open, even though they may not appear to An Post to be financially sustainable.
I wish to share time with Deputies Penrose and Bannon.
I apologise for the unavoidable absence of the Minister, Deputy Rabbitte, who is attending a Cabinet meeting.
As we draw this discussion on the post office network to a conclusion, I acknowledge and appreciate the opportunity to discuss this important topic. It is clearly evident from the various speakers how much the post office network matters to the daily lives of ordinary people. The post office is often the first port of call when personal, commercial or financial matters need to be transacted.
As the Minister said in the Seanad and in an address to the Irish Postmasters Union, the post office is unique in that it provides a personal face-to-face service with its customers in this era of increasing moves towards faceless electronic transactions. That point has also been well made by many Members of the House.
All post offices are now computerised and automated. This, coupled with the personal touch, can only augur well for positioning the post office to do its best in rising to the demands of new business opportunities in the rapidly developing electronic commerce world.
I thank the Joint Committee on Transport and Communications for its comprehensive report, which has captured the essence of the range of issues facing the post office network. An Post, the IPU and the Government are desirous of having a strong economically viable nationwide network of post offices, where this makes sound and reasonable commercial sense. As set out in the joint committee's report, any efforts for new business must be mindful of public procurement and compliance with all relevant national and EU legislative provisions. Notwithstanding this, I wish all involved in the post office network every success as it charts its way forward. As Minister for Communications, Energy and Natural Resources and a shareholder in An Post, Deputy Rabbitte will do all he can to ensure that the future will be one in which the tradition of the well respected post office network will be passed on to new generations.
I thank the Minister of State for sharing time with me. I, too, compliment the Joint Committee on Transport and Communications on its focused, clear and targeted report, the recommendations of which are precise and leave no room for doubt or ambiguity.
The Irish Postmasters' Union commissioned report by Grant Thornton outlines in detail the range of services that could be provided through the post office network in Ireland and sets out a compelling case for new services and contracts. The post office network, which comprises approximately 1,150 post offices countrywide, is a key natural resource and a significant retail network. In many rural communities, the post office may be the only retail outlet available. They may, in the context of bank closures, be the only one available.
The post office network has the capacity to facilitate additional services. The Grant Thornton report identified such future services as motor taxation payments, extension of current banking facilities, payment of the household charge and hospital charges. It must be acknowledged, when considering long-term sustainability of the post office network, that the socio-economic factors are substantial. For many local businesses and residents, the closure of a post office could result in significant additional expenses, including time and cost of travelling to a post office located further from them. From a community perspective, it is undoubtedly the case that the post office acts as a focal point for information exchange that facilitates social inclusion and reduces isolation. It is important we are actively involved in post offices continuing to play a vital role in communities. The biggest danger in this regard is the Department of Social Protection's tender on electronic transfer of social welfare payments due in September which, if lost to the post office network, could lead to a significant reduction, from 51% to 3%, in cash transactions from December 2017 and could result in the closure of approximately 400 post offices, to the devastation of rural Ireland.
I support what has been proposed.
I thank the Minister of State for sharing time.
As we all know, post offices are the cornerstone of rural communities, in particular for the elderly. I believe they should play a greater role in the future, including by way of provision of additional banking services. The potential growth and economic benefits of the post office network for rural areas cannot be ignored. The provision of additional services by post offices would save the taxpayer millions of euro, increase business and save jobs. The Grant Thornton report on the future of the post office network in Ireland should be supported. It is a proactive approach to the development of the post office network. Furthermore, post offices, of which there are approximately 1,100 branches, are the largest retail network in this country. It is important we support the provision of services to the communities by the post office network.
What is needed is provided for in the report. I am sure if time permitted every Member would wish to speak on this issue. There is political support for the concept of the post office network, which should be translated into real action. The politicians of this country believe the post office network should be maintained and expanded for the benefit of communities.