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Dáil Éireann debate -
Wednesday, 23 Oct 2013

Vol. 818 No. 2

Topical Issue Debate

Security of the Elderly

I thank the Ceann Comhairle for taking this Topical Issue and allowing us to express our concerns about the senior alert scheme. Post-budget there was much controversy and discussion, which one would expect, but there was also a good deal of misinformation and scare-mongering, for whatever reasons. Part of it surrounds the removal of the telephone allowance. I have come into the House to raise my genuine concerns about the senior alert scheme because it is a very successful scheme funded by the Minister's Department. I note the funding increased last year, which means that many proactive community and voluntary groups throughout the country are utilising this scheme to help the elderly and the vulnerable people in our society who may be isolated. It offers grant aid towards monitored alarms and the security pendants elderly people wear.

I refer to the information regarding the removal of the telephone allowance of €9.50 per month. I do not welcome the removal of the allowance but I welcome that a number of companies have since dropped their prices for the use of the telephone line to take account of that allowance being taken from older people.

Two weeks ago I was in the house of an elderly man who lives alone in County Waterford who had a telephone bill of over €100 per month, which I could not believe. When I examined the bill I could see that he was still paying his bills using the old direct billing method, which is for every call he made. Public representatives and voluntary and community groups would do a better job if we informed elderly people throughout the country that telephone companies now offer packages which allow the person to have unlimited phone calls for €30 to €40 per month. The telephone companies are in direct competition with each other and all of these packages are readily available to the public on the callcosts website. Elderly people should take advantage of that because it will reduce the cost of their calls.

I raise this issue because I want the Minister to allay any fears about it. I note his colleague, the Minister, Deputy Brendan Howlin, gave a public commitment on the evening of the budget that he would find additional resources to ensure the senior alert scheme will continue. We must reassure people, and the voluntary and community groups which operate this scheme, that it will continue.

I merely want to impress upon the Minister the importance of the scheme, which provides great comfort and reassurance to people over the age of 65. It allows them to avail of grant aid support for a pendant alarm through their local Community Alert group. I acknowledge the importance of Community Alert throughout my constituency of Laoighis-Offaly and beyond. Communities that may not have a Community Alert group should become organised. They have the assistance of the local community, the gardaí and the local county councillor.

It is essential in the context of winter coming, isolated areas, the possible closure of Garda stations and the Garda fleet being what it is, or not being what it should be. I want to impress upon the Minister the need to ensure the funding stream continues. I acknowledge that in my county of Laois, funding increased from €24,000 in 2010 to €50,000 last year while in County Offaly, it increased from €15,000 to €87,000. As it stands, there are 19 active groups in County Laois while there are 18 in County Offaly. It is important more towns, villages, townlands and rural areas become involved and establish their own community alert scheme because it is incumbent on us, as public representatives, to ensure our senior citizens are allowed to feel comfortable, safe and secure in their homes. The text alert system is working well, as are communities, but they need the Minister's support, encouragement and money.

The seniors alert scheme aims to encourage community support for vulnerable older people in our communities by providing grant assistance towards the purchase and installation of personal monitored alarms to enable older persons of limited means to continue to live securely in their homes with confidence, independence and peace of mind. The scheme is administered by local community and voluntary groups, community alert, active retirement groups and so on, and it is open to people aged 65 years and over, living alone or living with another eligible person and who have a genuine need for assistance. Any community-based, voluntary, not-for-profit organisation which has a track record of working with or providing services to older people within its community can apply to be registered with my Department and to draw down grant support. The maximum grant per beneficiary for the equipment is €250 for monitored personal alarms with pendant, and €50 for an additional pendant or re-installation. Annual monitoring costs are borne by the beneficiaries.

From 2004 to date, 80,000 people have benefited from the scheme at a cost of €25.4 million. All of the grant approved personal monitored alarms up to now are connected to a landline. The Department is examining the possibility of providing grants for systems using mobile technology. It would be a matter for a community group to assure itself that a mobile technology based system provided full coverage in its area.

Preliminary inquiries indicate that the cost of monitoring a mobile solution is lower than the overall cost of monitoring a landline system when the landline rental is factored in. The mobile device costs around €160 per year to monitor while the cost of the landline solution can be around €280 per year when line rental costs are included. It should be noted that the mobile device is not normally supplied for use as a mobile telephone because additional costs are involved with such use, even though a limited number of telephone numbers can be programmed into the device for outgoing calls.

I have some good news for Deputies Coffey and Charles Flanagan in that I have been able to maintain the €2.35 million allocation for the 2014 senior alert scheme. That level of funding is sufficient to meet current demand levels for this important scheme. It would not, however, provide for grants to individuals wishing to replace existing alarms with the mobile version where a landline is being discontinued. This is a matter my Department is considering and, if feasible and there is a requirement for additional resources, I will take the matter up with my colleague, the Minister for Public Expenditure and Reform, in due course.

I thank the Minister for reassuring us that his budget for the senior alert scheme is intact. I note he will have to go to his colleague, the Minister for Public Expenditure and Reform, Deputy Howlin, to seek additional funds for the installation or utilisation of mobile technology. Given the progress that has been made in mobile technology, it is something on which the Minister's Department needs to focus as soon as possible. In the county and city of Waterford alone, there are 29 active, voluntary and community groups helping the elderly, the vulnerable and the isolated. I am glad the grant aid is in place to assist them but I urge the Minister to ensure agreement is reached as soon as possible to have the new system up and running and allow for a seamless transfer, where necessary. The elderly served our country well and the Government needs to be seen to support and encourage them in every way possible. I add my voice to that.

I am pleased with the Minister's reply.

I thank the Deputies. There is an appreciation of this scheme on both sides of the House. It is a community-based initiative which promotes independent living for older people, and I am a very strong supporter of that. Under the scheme to date, grants have only been provided for landline solutions. Mobile solutions, which are being examined by the Department, have additional advantages and benefits, as Deputy Coffey said, and they can be used in the same way so that the user can seek assistance at the touch of a button. We are anxious to continue the scheme.

The current scheme does not go out of existence until 1 January, so we have a number of weeks in which we hope to be in a position to reassure the elderly, in particular those in isolated areas, that they will have the protection of, confidence in and comfort of having a telephone to get in touch with people in case of emergency.

IBRC Mortgage Loan Book

The special liquidators of the Irish Bank Resolution Corporation are moving to sell the loan book as quickly as they can with substantial discounts. Just over 11,000 IBRC mortgage holders are owner-occupiers while just over 2,000 are in the buy-to-let category. I have been hearing from some of them who feel they are affected by this and whose loans are performing.

The Minister for Finance confirmed to me in a reply to a parliamentary question last week that it was intended to split the loan books into four distinct segments, namely, performing, non-performing, owner-occupier and buy-to-let, to maximise market interest. This comes after the special liquidator sought advice from PricewaterhouseCoopers. It is clear that only bids from big operators will be entertained. Of course, it was PricewaterhouseCoopers which was asked to assess the balance sheet of Anglo Irish Bank and the other core banks after the bank guarantee. The information it provided about the solvency and capital ratio of Anglo Irish Bank was critical to the decision to nationalise the bank in 2009. There is an issue of confidence in terms of where the information is being obtained.

The decision has been taken to dispose of the legacy of IBRC as quickly as possible. The Minister for Finance told us on budget day that there was no Anglo Irish Bank any more, but that is not quite the case. We must ensure there are protections for citizens against the excesses of the market.

The special liquidators have decided to dispose of the loan portfolio in blocks of 30 and 40, and I relied on an article in The Irish Times for that information. This has the effect of enabling large corporate debtors to buy out their loans at a discount. There is an inherent moral hazard on a number of levels to what is happening. It seems moral hazard is a concept invented for the small guy. Who is benefiting here? Will we see people who gambled as bondholders, perhaps foreign investors, and who were bailed out by this country coming back in to buy these loan books at a discount?

There is absolute fury among some of the people, in particular those directly affected by this, that this is again being done at the taxpayers' expense. Some people are being rewarded and being given a bargain opportunity. The only conclusion one can draw is that these people are getting an opportunity. They may well be the very people who had the benefit of us paying them in full, and now they are coming back to take more out of the pot at a discount. There is little or no risk to them because many of these loans are performing.

To be perfectly honest, the only people who seem to be rewarded in all of this are those in the big corporate sector. People who have mortgages that are performing are being bounced around the place and will be moved on under this plan. I have been contacted by several people who are absolutely furious about what is happening. I will be interested to hear what the Minister has to say on this matter.

I am standing in for the Minister for Finance, Deputy Noonan, who is overseas on official business. I am sorry he is not able to be here to answer the question with more knowledge and detail. I will give the Deputy the benefit of the information with which I have been furnished.

The Irish Bank Resolution Corporation Act 2013 was introduced to enable the liquidation of the IBRC to proceed in an orderly manner consistent with financial stability and in the interests of its creditors. Special liquidators were appointed to oversee the liquidation of the IBRC for the benefit of all creditors of the institution, including taxpayers. This process involves the valuation and sales process for all the assets of the IBRC, including the residential mortgage portfolio. The special liquidators have engaged professional independent valuers to provide a confidential valuation of the loan books of the IBRC. As the valuation of the loan book was being progressed, the special liquidators wrote to all IBRC borrowers, including the residential mortgage customers, to give them an update on the special liquidation and on the sale of their loans. Borrowers were invited to make representations on the method of disposal of their loans and the criteria for determining who may bid for their assets.

The special liquidators have given significant consideration to how this portfolio should be sold. In light of the independent sales advice received and the responses received from the borrowers, the special liquidators arrived at the decision that the residential mortgage book should be split into four segments - performing, non-performing, owner-occupier and buy-to-let mortgages - and brought to the market. I am advised that the independent advice received recommended that this sales approach would be the most beneficial with regard to maximising sales and the return to creditors, including taxpayers. The decision to sell the mortgage portfolio in this manner was arrived at having regard to the scale of the sale process and the size of the loan book. At the end of May, there were 17,411 residential loans in the IBRC outstanding to more than 13,000 individual customers. The special liquidators independently decided that the most efficient method of disposal and the one most likely to maximise sales was to sell the loans as part of a larger portfolio.

It is important to note that the special liquidators are obligated by the conditions set out under the 2013 Act to ensure the assets are sold at a price which maximises the overall return for its creditors, including the State. I understand that many mortgage owners might be interested in buying their loans, but the time, cost and practicalities involved would make this option more costly. Taxpayers have already incurred far too high a price from this bank to impose further costs on them. The special liquidators are obliged to ensure the assets of the IBRC are sold at a price that is equal to or in excess of the independent valuation obtained from the independent valuers. If a bid is not received which is either at or above the valuation price, the loan asset will be transferred to NAMA at the independent valuation price. In the event that the portfolio is transferred to NAMA, the board of NAMA will determine its strategy at that stage. In doing so, NAMA will be mindful of its legal obligations and the general market norms under the Central Bank code of conduct on mortgage arrears and mortgage arrears resolution strategies.

Although I understand the anxiety of individual customers in relation to the sale of their mortgage loans, they can be assured that the contractual terms and conditions of customer mortgages and other borrowings have not changed as a result of the appointment of the special liquidators, nor will they change as a result of the ultimate sale of these obligations to a third party. All debts owing to the IBRC will remain due and enforceable. In order to avoid breaches of their obligations, it is important for customers to continue to make payments on their loans and otherwise honour the contractual obligations of their borrowings. The special liquidators are under the instruction of the Minister for Finance to ensure the valuation of all assets is completed by 30 November. The sale of all IBRC assets should be agreed or completed by no later than 31 December 2013, or as soon as practicable thereafter. The decision on how the mortgage portfolio is to be sold must take account of the time constraints faced by the special liquidators.

It is important to note that the decision concerning how the loans are packaged for sale and what bidders constitute qualifying bidders for the purposes of the sales process is to be made by the special liquidators. The Minister for Finance is not in a position to interfere with these decisions, as to do so would leave him open to challenge from other IBRC creditors. The special liquidators are confident that the decision to sell the residential mortgage book as part of a large portfolio is the most efficient method of disposal and the one which is most likely to maximise sales. This is in the best interest of the creditors of the IBRC and, by extension, the State and the Irish taxpayer.

The Minister has said he understands "the anxiety of individual customers". Those who have non-performing loans might be anxious, but those who have performing loans are absolutely furious that large corporate entities will be able to come in and buy those loans at a discount. The loans that are being valued relate to properties that have already been discounted because of negative equity. I do not know how these discounts will work. It is clear that large corporations will be able to cherry-pick, whereas individuals will be unable to bid to buy their mortgages, obviously, because the banks are not making enough loans available to allow that to happen in a timely way. These people are being cut out by the speed with which this process is being pursued. The Minister said that borrowers received letters asking them to outline how they would prefer to proceed. It was a one-way communication in relation to the individual mortgage holders. Essentially, it will be decided for them. They will not be able to make an input into how the decision will be made. There is real anger because people who have been paid in full for bonds, some of which were not even secured, will be able to use that money to buy performing loans at a discount. It just seems absolutely unconscionable. When people see that scenario in front of them, they have to question whether the best return for the taxpayer is being achieved.

There is no easy way to maximise the return for the taxpayer from the sale of a loan book, especially at a time when the pillar banks in this country, like society in general, have very few options when trying to access credit for people who wish to retrieve their loans from those institutions. Those who wish to buy products from NAMA or the IBRC or from loan books generally, which is desirable if we are to maximise the return for the taxpayer, are depending largely on institutions outside this country. The sad situation in this country is that the low level of liquidity in the financial institutions means that people are finding it difficult to retrieve and buy back their loans. As policy makers, we continue to worry about the moral hazard issue when we are making decisions. The Deputy referred in her contribution to people who are paying their loans in the normal way and do not want to subsidise others who have made no effort to deal-----

That is not the point I was making.

I suppose the Deputy's point is that she does not want to see corporate greed entering into this situation and taking advantage of the problems I have mentioned.

The Minister for Finance thought about this long and hard before putting in place a process, including an Act of the Oireachtas, to ensure we maximise the return for the taxpayer. The judgment calls have to be made. We will see the outcome of those calls in November, when we will know what value we will get from the sale of the loan book in the first instance.

Flood Risk Insurance Cover

I will be brief. I am grateful to the Chair for allowing me to raise this Topical Issue. I recognise the work that the Minister of State, Deputy Brian Hayes, has done on this issue over some time. While I intend to focus on a local example from Dublin South-East, I emphasise that this is a national issue. In 2007, some €13 million was spent on flood defences along the River Dodder to protect an area stretching as far as Lansdowne Road against a flood event that was likely to occur once every 200 years. Following the heavy flooding that was caused by rain in October 2011, a further €2 million was spent on emergency works and new flood defences along the river as far as Ballsbridge. Work has now started on flood defence works costing approximately €10 million to protect an area extending as far as Donnybrook and Clonskeagh. This means that over €25 million will have been spent to protect homes, communities and businesses along the River Dodder.

Taxpayers and the Government need to see a dividend from the money that has been spent on the protection of these communities. When I surveyed 1,000 homes in an area covering Ringsend, Sandymount and Bath Avenue, I found they cannot get flood cover or, if they can, their policies have been doubled.

For the most part they have not been able to get flood insurance. This is replicated in Carlow, Cork, Donegal and across the country. Every week members of my community contact me about the problems of getting flood insurance. They are people who want to sell, to downsize, or who have outgrown their family home and want to move to another property. They are locked in because the person who wishes to buy their home cannot get a mortgage as they have failed to get flood insurance. Nobody can buy because nobody can get flood insurance.

I have organised meetings between Dublin City Council and Insurance Ireland, formerly the Irish Insurance Federation, to ensure the transfer of information from the council and the OPW, to enable insurers to see the quality and quantity of work done. We urgently need to bring forward a clear protocol. If the taxpayer spends this much money there has to be a dividend. The insurance companies need to co-operate but if they fail to do so, and if this cannot be achieved by agreement or protocol, I call for legislation.

Earlier this year Insurance Ireland indicated that it would come forward with a protocol in September saying to the effect that it had a mechanism to recommend to its members to give flooding cover where the OPW has invested such large moneys in flood protection. It has failed to do that. Families are living in overcrowded conditions and want to move on. Older people want to downsize and move to something more suitable but they are locked in. The OPW has spent over €40 million on this one small area and that is not recognised. At this stage we need to move on urgently. We need to say to the insurance industry that it should introduce a protocol or agreement or this House will bring forward legislation.

On behalf of the Minister of State at the Department of Finance, Deputy Brian Hayes, I thank the Deputy for providing the opportunity to update him and the House on developments on this matter.

I am fully aware that the issue of obtaining flood insurance cover is a matter of some concern to some people in certain locations around the country, whether in terms of the higher premia they are being asked to pay or where their existing insurance company indicates it will no longer provide such flood cover specifically. Insurance Ireland, formerly the Irish Insurance Federation, has indicated that the incidence of such difficulties remains at a low level and that only of the order of 2% of insurance policies nationally are involved. Nonetheless 2% of households represents a significant number of affected people and for this reason the Government is anxious that the problem is addressed.

The Minister of State at the Department of Finance, Deputy Brian Hayes, and his officials in the OPW have been actively engaged with the insurance industry for some time in regard to the transfer of information on completed flood defence schemes. In January 2013 a working group was established with representatives from the OPW, Insurance Ireland and the main household insurance companies operating in the Irish market to consider and address this issue. This group has a specific aim and purpose and it is important that this and the role of the OPW in the process are clearly understood.

It must be emphasised that the OPW has no role or function in regard to the oversight or regulation of the insurance industry or of insurance matters generally. The discussions between the OPW, Insurance Ireland and the insurance companies have a specific focus and are concerned solely with agreeing a basis on which information can be provided to the insurance industry on flood relief schemes completed by the OPW and the standard of protection offered by those schemes.

The discussions have been complex and quite technical in nature and it is important that all matters are addressed in a comprehensive way that will ensure that the system of data exchange is robust, reliable and sustainable. I am happy to report that the working group has made very good progress and agreement has been reached on a data-sharing platform which will facilitate the transfer of detailed information on completed OPW flood relief schemes. This will allow the insurance industry to properly take into account the levels of capital investment in flood protection measures over several decades by the OPW when assessing flood risk in localities where such flood measures have been completed.

The information being provided is in a readily accessible format which will show in digital map files the areas benefiting from completed flood defence works. The initial focus of the group's work is the provision of information on schemes which provide protection for the one in 100 year flood. The OPW has provided an initial batch of information to the insurance companies and the latter are currently working on integrating this information into their own individual operating systems. It is expected that this work will be completed shortly.

It is intended that the OPW and Insurance Ireland will agree a memorandum of understanding to guide present and future interaction between the insurance industry and the OPW in regard to communications around completed flood defence works. The OPW is satisfied that the insurance industry is engaging constructively and positively in this process and that there is a strong willingness to co-operate on implementing a sustainable system of information exchange. Ultimately, it is a matter for the insurance companies themselves to decide how they will use the information provided on completed flood defence works. As part of the process they are committing to take the information into account in their assessment of risk and it is to be hoped that this will facilitate the provision of flood cover in all areas that are protected by completed schemes.

Finally, I remind the Deputy of the avenues available to those having difficulty, complaints or queries in seeking insurance cover through Insurance Ireland's free insurance information service. In addition, the Financial Services Ombudsman deals independently with unresolved complaints from consumers about their individual dealings with all financial service providers.

I thank the Minister of State for his reply. I know that this is not his area. What I hear in the response is that the insurance industry is talking the talk but delivering very little. There is nothing really new in the reply from the industry. Insurance Ireland came before the Oireachtas Joint Committee on the Environment Community and Local Government where it cited the figure of "only 2%". Our evidence shows that this affects far more than 2% of householders. The industry has put a 500 metre extension on either side of every river in the country. The houses at the top of the hill in Lucan Village cannot get household insurance. In Cork, the houses at the top of Patrick's Hill - we all know how steep that is - cannot get flood insurance.

What I hear again today is the insurance industry saying it will co-operate while nothing happens on the ground yet we spend large sums of taxpayers' money to ensure that flood protection is provided. In my own area flood protection is at the level of a one in 200 year event. That is far above what the insurance industry talks about in any other area. It is double the standard it seeks. I facilitated the transfer of information from Dublin City Council and the OPW to Insurance Ireland, which made pledges that it would respond within a week and said that the information seemed to be correct.

The OPW is one of the best groups to work on flood relief. In my constituency, and many other constituencies, it has done excellent work. I ask the Minister of State to tell his colleague, the Minister of State, Deputy Brian Hayes that we have listened carefully to the insurance industry but we have seen very little action. I believe that it is now time for action from this House to tell the insurance industry to get its act together and let the taxpayer see a real dividend from the excellent work carried out by the OPW. While this is an important constituency matter for me, it is equally so in many areas across the country where there is such a large investment. The OPW spends approximately €40 million a year on flood protection. We need to see a dividend from money that we spend on behalf of taxpayers. I am telling the insurance industry to get its act together or we will bring in legislation to ensure that this insurance cover is provided. I have been dealing with this matter for ten years and the insurance companies are great at talking the talk but not very good at walking the walk.

I thank Deputy Humphreys. His point is very well made.

He wants action and results. The catchment flood risk assessment and management plan is well under way. I will provide some background information. Studies carried out under the programme will provide the most comprehensive survey of the flood risk associated with Ireland's waterways. In total, more than 3,500 km of major water courses are being subjected to these detailed surveys. A scale of measurement will allow for the development of sophisticated hydraulic models.

Regarding the issue of whether the Government will consider alternative ways of addressing the problem such as a State indemnification scheme or an insurance pool type of solution, a State indemnification scheme for those unable to obtain flood insurance has been considered before. While it is difficult to quantify the cost in any particular year over a period of time, it is possible to say that the cost would be significant on the basis that there have been eight major flood events costing the insurance industry approximately €700 million in flood claims from 2000 to 2012. These costs would be in addition to the normal infrastructural costs arising from flooding such as repair of roads and bridges.

If a scheme of this type were established, there exists a very real possibility that the industry would have a strong incentive to discontinue the provision of flood cover in medium to high-risk areas thus increasing the potential cost of the scheme over time. Therefore, such an arrangement has the potential to undermine the nature of existing private insurance, making it difficult to withdraw even if it were introduced on a short-term basis.

In respect of the point made by Deputy Humphreys, I will speak to the Minister of State. Perhaps there could be a round table discussion in the committee rooms with the Minister of State. Deputy Humphreys has ten years of experience on this and has a deep knowledge of what he is talking about. It is unreal that if people live at the top of a hill, they cannot get insurance. People want action. The OPW does outstanding work but what Deputy Humphreys wants is collective action on behalf of the insurance companies to deal decisively with this problem. I have no doubt the Minister of State will take note of the concerns raised by the Deputy and I ask him to arrange a meeting with the Minister of State to see about convening a round table discussion with the insurance industry in Leinster House.

Post Office Network

I wish to put on the record of the House that I have a personal interest. I am a postmaster of eight years in my constituency. I am the fourth generation to do so and I am fortunate to serve the community. I also wish to put on record, and with no disrespect to the Minister of State, Deputy Perry, that I am disappointed the Minister with direct responsibility for this area is not present. The moving of Topical Issues to this time of the day was to facilitate the relevant line Minister to be present to hear the concerns, especially of Opposition Deputies because Government Deputies have the opportunity to speak to relevant Ministers at parliamentary party meetings about concerns they may have. I am very disappointed in this regard. I hope and expect the Minister of State to bring back to the Minister the concerns I raise, and I expect a direct reply from the relevant Minister.

The Minister of State knows about the great anxiety among members of the public who use their local post offices, the future of which is far from certain given the Department of Social Protection's desire to move social welfare payments to electronic payments. If An Post loses this contract, in the region of 50% of its network will be unviable. I am unashamedly supportive of An Post and the pivotal role and service it provides to the community it serves, be it rural or urban Ireland. The An Post network brand inspires possibly the greatest degree of confidence in the country.

Rural Ireland has seen a severe reduction in services in recent years. We have seen the closure of Garda stations and the forced amalgamation of small schools. Community welfare officers no longer go out to rural communities and rural pubs are closing. All of this is happening as a direct result of Government policy or the lack of support from Government. We have also witnessed the closure of sub-branches of banks. The blame for that cannot be laid at the door of Government because it is a commercial decision.

On 16 July 2013, this House heard statements on the future of the post office network. Deputies from all sides of the House spoke glowingly of the service provided to communities by An Post, but we do not need platitudes, niceties or words of encouragement. We need action. The Department of Social Protection has a crucial play in the sustainability of our post office network. I acknowledge that the Minister for Social Protection has deferred the sending out of the tender until the first quarter of 2014. In the intervening period, she needs to conduct a cost-benefit analysis to see how this would benefit the Exchequer, both economically and socially. A cross-departmental working group needs to be set up involving the Departments of Communications, Energy and Natural Resources, Justice and Equality, the Environment, Community and Local Government, and Public Expenditure and Reform because An Post, which is a State-owned agency, is under-utilised.

The Irish Postmasters' Union commissioned a report by Grant Thornton which looked at ways in which post offices could better serve the community and enhance the services they provide. They could be given a banking licence to ensure they operate as banks. The post office network could be utilised as a citizens' information bureau. Gardaí could use the post office network as a one-stop-shop in locations where Garda stations have closed. We see a reduction in staff in the various councils. People could pay their motor tax and fines and renew their driving licences through the post office network. There is an opportunity to ensure An Post's network is viable while reducing costs for the State. I hope the Minister of State will bring this issue back to the Minister for Social Protection. At very short notice, I collected 3,000 signatures in part of my constituency from people who were afraid of losing their post office and who are calling on this Government to take direct action to support the future of our post office network.

I thank Deputy Troy for raising this very important issue. I am taking it on behalf of the Minister for Social Protection who regrets she cannot be present. Deputy Troy should be assured she is aware of the issues he raises. The concerns raised by the Deputy have been raised by other colleagues in the House and I am pleased to allay some of their concerns by setting out the Department's plan to modernise the payment of welfare on a progressive basis over the coming years. The Department is a key player in the payment services sector in Ireland, being the largest issuer of electronic funds transfer, EFT, payments in the country and given the scale of cash payments disbursed weekly. The decisions made by the Department about how payments are made to customers impact on the State, most notably in respect of costs.

The Department undertook a root and branch examination of its payment processes, methods and approaches. This resulted in the preparation of a payment strategy which was approved recently by the Government. The strategy has the goal of reducing significantly the level at which welfare payments are made in cash. At present, 50% of all social welfare payments are disbursed in cash. This amounted to approximately €9.5 billion distributed over 43.7 million transactions last year. The analysis undertaken for the payment strategy indicates the very significant variation in the cost of different payment methods. The movement of cash imposes security risks on customers and staff alike who handle, distribute and receive these moneys. Cash limits the options for customers to make onward transactions, limits the scope for customers to avail of cheaper prices online and curtails financial inclusion of customers.

The move to digital transactions is in line with wider Government policies and objectives on better public services and more effective electronic payments as set out in the public service reform plan and the eGovernment strategy 2012-2015. The goal is also shared by the national payments plan and the roll-out of the standard bank account. These initiatives have made the case quite strongly for a move to electronic payments which will contribute to improved national competitiveness.

Cost containment and efficiencies must be sought by all public bodies and the Department is required to examine the means through which all welfare services are delivered, including payment processes. The payment strategy is a multi-phase strategy that will be implemented over a number of years. The first phase has commenced and contract negotiations are currently under way with An Post for the provision of over the counter cash services to ensure that customers can continue to receive their payments in cash at local post offices for the foreseeable future and provide an assurance on the continuity of cash payments to customers for up to six years while other aspects of the strategy are progressing.

The next phase of the strategy will be the progressive migration of customers to electronic funds transfer, EFT, payments. The move to electronic payments for social welfare transactions is a trend that has been apparent for some time and most new social welfare customers, aside from jobseekers, are choosing EFT as their preferred method of payment. The Department does not intend to migrate higher risk customers to an electronic payment until appropriate and robust measures are defined and fully implemented to mitigate the potential for increased risk of fraud within an electronic payments environment.

Undeniably, a loss in the current revenue stream from social welfare payments would impact An Post. I understand that in anticipation of the increasing use of EFT generally, An Post has prepared and implemented a strategy which aims to address the reality of increased use of electronic payment methods within the economy. On the revenue side, An Post has made significant progress in developing new commercial opportunities with other financial and payments institutions and insurance services bodies, notably AIB, Danske Bank and Aviva. New lines of business have been generated, such as foreign exchange where An Post now holds 30% of the domestic foreign exchange business. Post offices were also used as a payment channel for the property tax.

My colleague, the Minister for Communications, Energy and Natural Resources, envisages a strong future for the post office network in which it remains a key player as a front office provider of Government services. The Department of Social Protection is happy to continue to work with the post office network, which delivers excellent and trustworthy services to customers. I assure the House that the phased move to electronic payments and the fact An Post is the preferred bidder for the cash services tender, subject to contract, will provide the board of An Post with the time necessary to ensure its network and services can continue to meet the needs of a changing society.

The Minister of State noted that 50% of the payments made through post offices are in the form of cash. People chose to collect their payments in cash from rural post offices for a variety of reasons, such as fear of the banks or convenience. This cash supports other businesses in a local community, from the grocer and butcher to the petrol station. The cash inflow is very welcome to the local community. However, the Government's strategy aims at reducing significantly the proportion of welfare payments made in cash by progressively migrating customers to electronic fund transfers. If that happens the future of 50% of our post office network is finished, along with all the other services that have been eroded in rural Ireland over the past several years.

This Government can make policy decisions that will support the post office network. We have seen what happened in parts of England where the post office network was eroded. This is more than simple economics; it is a social service to a community. I urge the Government to consider the recommendations in the Grant Thornton report commissioned by the Irish Postmasters' Union in regard to enhancing the services provided, such as providing a banking licence to An Post so that people can have their money paid into a bank account and withdrawn from local post offices. An Post is working on an e-payments card to facilitate electronic payments but it needs the Government's support. It is a State owned agency and it is under utilised at present. I hope the Minister for Communications, Energy and Natural Resources and the Minister for Social Protection can put aside the difficulties they appear to have with each other in order to work alongside the other relevant Departments to develop a robust strategy that maintains one of the pillar services for our communities. I do not want An Post to suffer the fate of many other services over the years, of being gone and never to be seen again.

The Government is pursuing a multi-phased strategy with the final element being the cash payments. The transformation of post offices around the country has entailed significant change, such as the introduction of e-commerce systems and banking facilities. They are facilitating a wide range of services. The Government is very supportive of the post office network, which does a fantastic job in providing a critical service. However, we must move towards a certain level of technology. I have no doubt that the strategy will allow post offices to develop their own concepts for allowing payments in cash and other methods. Approximately €9.5 billion was distributed over 43.7 million transactions last year and that is assured for the next six years. That shows the modernisation approach the Government is taking with the post office network. It will not diminish the role of post offices in any sense. It will only expand the services provided, which are already multiple and varied. I assure Deputy Troy that his concerns will be brought to the attention of the Ministers, Deputies Rabbitte and Burton. The post office network is part of the Government's plans for continuing to provide services to the consumer.