I thank the committee for the opportunity to address it on this issue. I thank postmasters the length and breadth of the country for the dedicated service they have given to rural and urban communities over many years. As members are aware, some postmasters have taken the difficult decision in recent weeks to leave the business. I will return to that issue.
Some people have, perhaps mischievously, given the impression that I do not understand or care about issues in rural Ireland. As many members are aware, I represent the most rurally dispersed constituency in the country and have consistently raised the issue of our post office network in Dáil Éireann over many years. I have first-hand experience of the concerns and issues involved. I understand the concerns of older people and that this is a very anxious time for many of them. I have watched the gradual demise of the post office network over many years. More than 500 post offices closed during the economic boom in this country between 2002 and 2007 while people sat on their hands and allowed the post office network to fall into decline. No new investment or services were put into it. I did not want that to continue. The postmasters of this country and the communities they serve deserve a clear future and a plan to be put in place for the development of and investment into the post office network and its services. Such action was not taken by a series of Governments over many decades. Although Government after Government promised to do something, nothing was done. We have now set out a clear path and future for the post office network.
As a Member of Dáil Éireann, I have for many years put forward constructive solutions to bring new business into the post office network. I am now lucky to be able to help to implement such solutions. I point out to members, some of whom have been Members of the Dáil or Seanad for a considerable number of years, that I was one of only five Members of Dáil Éireann or Seanad Éireann to make a submission to the Kerr report, which has now been almost fully implemented by An Post. We want to have a sustainable post office network that is available to all of our citizens, both urban and rural, in the medium and long term.
Much has been made in the press over the past week of the impact of the closures. Although I accept that the closures will have an impact on the communities served by the post offices in question, the background to the issue has not been well represented. It is important to put the An Post announcement of the changes to the post office network into context.
Ninety-seven weeks ago, I was presented with a future for An Post and the post office network that was uncertain and extremely bleak. I was determined the company would not go under. There was a very real possibility that that could happen because of the failure to act by successive Governments. The potential for a complete shutdown of postal services with the loss of thousands of jobs was undeniable. Immediate action was needed because of the need to ensure the survival of An Post. We also needed to safeguard the post office network. That was necessary to protect thousands of jobs across the country; the 9,000 people working in An Post. Those imperative requirements needed decisions. I can tell the committee that decisions have been forthcoming. I did not shirk from my responsibility as Minister. We have worked tirelessly to restructure the company in order to save it. I am sure members will recall the urgent need to introduce legislation to facilitate an increase in the price of a stamp. That was an essential first step to avoid a cash crunch for the company and to give An Post time to construct a plan for a sustainable future. The challenges facing An Post were recognised across all political parties. That legislation was widely supported in its passage through the Oireachtas. I thank members of this committee for their support in providing An Post with a much-needed window to put a strategic plan in place.
I also worked hard on securing a Government investment of €30 million in An Post to safeguard the five-days-a-week mail service and collection and to protect the post office counter services. Two years later, critically important decisions have been made. An Post has been stabilised, because of the action that has been taken, and is now one of the few mail services in the world that is expanding its service, from a five-days-a week letter service to a six-days-a-week parcel service. The fabric of services An Post delivers has been strengthened. The company is changing from a 19th century model to one that has relevance and can have resonance in the 21st century in rural and in urban areas. In fact, the current postmasters' contract dates back to 1907 and we all can accept that things have changed dramatically since then.
Today, the future is not as bleak for An Post but underlying challenges remain. Mail volumes continue to decline. E-substitution and the move to online payments and online banking continue to have an impact on the post office network. Standing still is not an option. If, politically, we tread water or if we shirk decision-making, we will not have a stronger post office network; we will have a weaker one and, potentially, ultimately we will have no post office network at all.
I believe in An Post as a public company delivering a public service. That is why I am determined to embrace change, because change is required to deliver for post offices and a postal service for the future. Change is especially required in rural areas. There is widespread acceptance that the post office network requires modernisation to build, maintain and protect a service that meets the needs of communities across the country today and into the future. Investment of €50 million in the network, equivalent to €45,000 per post office, is based on getting communities to use the enhanced services that their local post office will provide through a modernised network.
As part of its strategic plan, An Post announced a renewed vision for the post office network, which centres on the availability of new services in a modernised, revitalised network. Such services must include a better range of Government services, financial services and e-commerce services for shoppers and small businesses. I was one of only a handful of Deputies to make a submission to the Kerr report because I was determined to see new innovative services coming into the post office network. I argued strongly for the need to channel more Government services to the An Post network. I am pleased to say that earlier today, I got a decision from the Government to look at an offline avenue for all Government online services. We expect to come back to the Government with decisions on that quite soon.
Since taking office I have been driving the offline avenue with my officials, my Cabinet colleagues, the management team in An Post, the Office of Government Procurement and other agencies. Government funding of €80,000 has been allocated to roll out the digital assist programme. By means of the digital assist programme, ten post offices are being equipped to become digital hubs to help citizens navigate online Government services and other online goods and services. The intention is to expand the number from the initial pilot scheme.
There is already a rapid expansion of banking services in the post office network. One can now get US, Canadian and Australian dollars and sterling cash and currency cards without having to order them in advance. Post offices will make credit card services available in addition to the An Post smart current account. Personal loans will be provided as well as loans to small businesses. An Post has committed to investing €50 million to grow and modernise the post office network.
Essential to delivering on a renewed vision for the post office network is the agreement reached with the Irish Postmasters Union, IPU. This agreement followed months of intensive negotiations which were overseen by Turlough O'Donnell SC, at my invitation. I take this opportunity to once again thank him for his work, time and commitment to this process.
In its negotiations with An Post, postmasters and postmistresses sought both the modernisation of the network and a voluntary redundancy package for those who wanted to leave the business. It is important that the decision of those who wish to leave the business is respected. They are not decisions that have been taken lightly or without good reason. There are a number of reasons that postmasters are availing of the offer, including age and low population levels, as well as the fact that some postmasters were not even earning the minimum wage as a result of declining transaction levels and mail volumes. I must repeat - the decision on whether to accept the package was one for individual postmasters. All closures have been on a voluntary basis and Ned O'Hara of the IPU has publicly confirmed that. No one was forced to take the package. It is important to state that any retailer in the locations of the 159 post offices can apply to An Post to be considered to take over some or all of the services of the closing post office.
The reality is that by facilitating those who wish to exit the business, neighbouring offices will be further supported, thereby ensuring a sustainable network for the future. Where a post office closes, 70% of the business transfers to a neighbouring office. This agreement removes a level of uncertainty that has existed as a result of the piecemeal approach associated with closures of post offices for the past 30 years. The IPU has publicly acknowledged that. An Post has given a pledge to retain a post office network right across the country. However, we must be cognisant of the declining transactions in recent years that reflect the reality of the world we live in today. We must equip post offices with a range of services that will attract and retain footfall, but those measures are meaningless unless the public use the service the post office provides. Key to the survival of a renewed network is the willingness of us all of us to use post offices. Last week at a public meeting in Athleague I spoke about Imelda Burke. She is the postmistress of Ahascragh post office. Some 18 months ago she sent out 1,000 letters to her community asking them to please use her services. On foot of her initiative she received three positive replies. Last Friday she sent out another 800 letters, again pleading with her community to use her services.
I am aware of the suggestion from various quarters that some form of public service obligation, PSO, levy or State subsidy should be provided to maintain the post office network in its current form. It is long-standing policy that postal services will not be directly subsidised by the Government. Successive Governments have held such a view. An Post is a commercial semi-State body with a mandate to deliver postal services and a viable post office network. Aside from state aid rules and other competition-related issues, it is likely that a subsidy to retain those offices in which postmasters have opted to take the package - in most instances because the business is no longer viable - could have a negative impact on the remaining offices. They would lose the opportunity to enhance their existing businesses and such a move could jeopardise the long-term sustainability of the entire network.
While much has been achieved in An Post over the past two years, there must be a clear focus on continued delivery for the future. That is critical to ensuring the long-term success of the national postal operator and a sustainable post office network to serve future generations.
After years of drift, there is now a clear direction for An Post. Innovation and change are being embraced and new services to meet new needs of the future are being developed. Politically, our responsibility, and the responsibility I take as Minister, is to lead that change, to strengthen An Post as a public company delivering a public service and to support the decisions required to translate that aspiration into effective action.