JOINT COMMITTEE ON COMMUNICATIONS, MARINE AND NATURAL RESOURCES debate -
Wednesday, 23 Feb 2005

An Post: Presentation.

Chairman

I ask anyone in the Visitors Gallery who may have a mobile phone to switch it off.

The committee is reviewing the viability and finances for all divisions and subsidiaries of An Post. We are continuing with the question and answer session that began on 2 February when we suspended the session because of the necessity to vacate the room for another committee. I welcome again Mr. Donal Curtin, CEO of An Post. I thank him and his management team for making time available to attend here today. Members of the committee are aware of the pressures he, and An Post, face. There was not sufficient time at the meeting of 8 February for the committee to complete its deliberations.

Before we begin, I want to draw everyone's attention to the fact that members of the committee have absolute privilege, but this does not apply to witnesses appearing before it. The committee cannot guarantee any level of privilege to witnesses appearing before it. Furthermore, under the salient rulings of the Chair, members should not comment on, criticise or make charges against a person outside the Houses of the Oireachtas or an official by name or in such a way as to make him or her identifiable.

Mr. Curtin has already made his presentation to the committee and he is prepared to take questions immediately from members of the committee. There is a full agenda and I am allocating an hour for this section of the meeting. I hope, therefore, we can finish by early afternoon. Before we start, I will read into the record the Labour Court update and I want Mr. Curtin to confirm that this is the current position.

In relation to collection and delivery, on 8 February last, the Labour Court met to consider outstanding issues on delivery proposals considered by the Labour Relations Commission last year.

Rather than make a definitive recommendation on outstanding issues, the Labour Court decided to establish a technical group which could help to come up with a collection and delivery proposal which (a) the union could sell to members, and (b) would also be company requirements.

This group was expected to meet over a 13-week period and report back to the Labour Court on or before 6 May next. In relation to Sustaining Progress, on 8th February the Labour Court also addressed the issue of the non-payment of payments under Sustaining Progress to An Post workers since the end of 2003. The Labour Court recommended that the Labour Relations Commission appoint assessors to examine whether the company was correct to invoke the inability to pay clause in relation to Sustaining Progress.

In relation to SDS, on 11 February last the Labour Court conducted a hearing on outstanding issues in relation to SDS. The Labour Court issued a recommendation requesting An Post to share with the CWU parcel volume information on which staffing levels were decided. Mr. Peter Cassells will facilitate this process. The Labour Court will examine the issue again at the end of this month and issue recommendations on any outstanding matters at that stage.

Is that Mr. Curtin's interpretation of what happened as regards that hearing?

Mr. Donal Curtin

That is correct.

Chairman

That interpretation is now on the record and may be regarded as industrial relations matter for the information of the committee. We will now proceed directly to the question and answer session. I believe Deputy Durkan had a number of questions to ask.

Deputy Durkan

I realise that all members of the committee will have questions they want answered. I thank An Post for coming before the committee once again, in order to clarify a number of matters.

Will Mr. Curtin say what the company's policy is as regards the downgrading of post offices, the number earmarked for this and their location? Will he say what the financial implications are as regards, for instance, the sale of post offices and the economies likely to be achieved in the course thereof? For instance, we have had submissions with regard to the Cahir post office and I know there are a number of others throughout the country, the closure of which will have a negative impact on distribution and postal services generally in the areas affected.

As regards the accounts which showed a €43 million loss which turned into a €20 million profit, will Mr. Curtin give the committee more details on the breakdown of those figures? Were there any references to the SDS centre on the Naas Road? Were any provisions made as regards redundancies, or whatever? At this stage does An Post know the level or likely extent of the proposed redundancies, if any? What provisions have been made in the company's accounts this year and in previous years in respect of an employee share ownership scheme, ESOP? What was the final outturn of the SDS finances for last year? If provisions are made in respect of exit packages, are they drawn from the 2004 accounts or otherwise?

I understand some rebranding of the company's corporate image took place in recent years in respect of its logo. Will the delegation confirm the suggestion that this may be revisited at further cost? In respect of post offices, the total receipts from the Department of Social and Family Affairs are considerable. Does the delegation accept, however, that the total receipts to post offices are a fraction of that? I understand the social welfare contract is worth €50 million to An Post, of which the post offices receive €18 million. How is the remainder distributed within the postal services generally?

I do not want to get into the labour relations situation. However, will the delegation outline the extent to which An Post management recognises the need to improve labour relations, particularly in the current climate, to avoid a situation whereby disputes always go to the brink before resolutions are found, and in an effort to establish trust between management and unions? It is critically important to establish this without going into the minutiae of the situation. There may be serious repercussions in the absence of such an approach.

Chairman

Mr. Curtin has several questions to address and may wish to assign some to his colleagues. Will he introduce his management team?

Mr. Curtin

I am joined by Mr. Larry Donald, chief operations officer, Mr. Eoin Morgan, director of collections and deliveries, Mr. Liam O'Sullivan, director of mail processing, Mr. Peter Quinn, acting finance director, Mr. Derek Kickham, commercial director, and Mr. Aidan O'Donnell, acting retail manager. I will begin answering the questions as they were put and will assign some to my colleagues as appropriate.

Deputy Durkan asked about the policy of downgrading in terms of numbers, locations, financial impacts, economies and the diminution of service in Cahir post office. There is a policy of moving company offices to a contractual status. It may be informative for the committee to learn that 94% of the business conducted through An Post, and executed very well, is undertaken by contractors who are represented by the Irish Postmasters Union, IPU. The issue is of one of cost management and there is no policy of downgrading. The opposite is the case.

The contracted services from the IPU are top class, of which there is ample proof in many locations. The reality is that company offices are far more expensive to run than contractor offices. In view of the tight financial situation of An Post and the post office business in general, an examination was undertaken some years ago and a proposition put forward in regard to managing the cost of the post offices. One of the recommendations was the conversion of a number of company offices to contractor status. This is the programme in place.

There are some 50 contractor offices. It may not be appropriate to list all the locations but I am happy to send that information to Deputy Durkan. The financial implications of this strategy is an approximate €5 million saving from the transfer of services. These are the same services that were previously available and are often improved. Since joining the company 21 months ago, my visits to offices throughout the country have indicated that the quality of sub-post offices, to the shame of the company, possibly outweigh those of the company offices. We might do well in aiming to meet the standards of the contractors' offices. However, the reality is that An Post has been very short of money. Housing and office stock have been allowed to deteriorate over an extensive period and it will cost a significant amount to upgrade those stocks.

Regarding Cahir post office, the service contract is out to bid. That includes the availability of the current and very lovely post office in the Cahir town square. We are pleased to facilitate any potential contractor with regard to the availability of that building.

Chairman

Is An Post retaining the building in Cahir as a company asset?

Mr. Curtin

The company owns the building but is prepared to share it through either lease or sale if that were to facilitate the availability of contractor services. We have made this quite clear and advertised for such.

As I said on my last visit, as regards the €40 million loss and €20 million profit, the 2004 figures are not yet complete. A process is involved in the completion of year-end figures, as most people know, which incorporates audit, board approval and shareholder approval. Therefore, I am not in a position to speak in detail in regard to the 2004 accounts. I have given an indication of the likelihood of a break-even situation with perhaps a small profit. That is the current situation within the company in regard to the financial performance for 2004.

Deputy Durkan asked a number of questions about provisions made in regard to redundancies at SDS. We have indicated over a period that the additional provision which will be required for the SDS redundancies will be in the order of €20 million to €25 million. I will ask the finance director, Mr. Peter Quinn, to comment in detail on provisions for other exits. I understand, however, that the company made a provision in this regard in 2002.

Mr. Peter Quinn

In 2002, the company booked a provision of €52 million in its statutory accounts for restructuring. Some €20 million of this has been spent in the last two years while €30 million remains in respect of the core business.

Chairman

Is Mr. Quinn the company's new finance director? Has he taken over from the gentleman who has been ill for the last two years?

Mr. Quinn

I have been with the company since spring 2004.

Chairman

That is not what I asked. Has Mr. Quinn taken over from the gentleman who has been ill for two years?

Mr. Curtin

Mr. Quinn is the interim finance director, which is a contractual method of employment.

Chairman

Does Mr. Quinn prepare all the company's financial accounts?

Mr. Quinn

Yes, I am currently preparing the accounts.

Mr. Curtin

Regarding corporate rebranding, it appears a number of colour schemes were adopted by the company some years ago to reflect internal divisions, which included Post TS, Letter Post and SDS. My personal opinion is that the only brand that really makes sense to the public is An Post. In the context of the company undertaking the normal refreshing and refurbishment of our business, we will return to the normal green of An Post. The Deputy can be assured that in naming our post offices, we will meet all the requirements, including those regarding the use of Irish. There is minimal cost. My understanding is that over a period the cost is of the order of €400,000, approximately what we would have spent on refreshing the buildings.

With regard to the receipts from the Department of Social and Family Affairs, I beg the indulgence of the committee but must state I run a business in a highly competitive environment. The committee must tell me the rules of this business. Obviously, I know the commercial details. There are a number of very aggressive players in the market who would like to know them, which, if published, would be to the disadvantage of An Post.

There is no doubt, as the Deputy indicated, that there is a sharing of income. However, one must remember that Department of Social and Family Affairs and National Treasury Management Agency business which, by and large, accounts for the totality of the income of post offices is under attack from competitors. I indicated two weeks ago that the recipients of these services required significant cost reductions. If I was to publish the figures in the detail requested by the Deputy, I would put An Post and its owner at a commercial disadvantage. It is my commercial advice that I should not be asked to do so.

Deputy Durkan

To what extent is An Post in a position to compete effectively?

Mr. Curtin

The An Post network is the most extensive transaction network in the country. We have a view that a distinctly valuable asset is owned by the State which we believe can assist the rejuvenation of An Post. The commercial exploitation of that asset, with our partners in the IPU, is essential to achieving this. We are competing with large national and multinational organisations which would wish to have the same footfall and same transaction capability. An Post has competitors. It also has a business-——

Deputy Durkan

I am not asking for commercially sensitive information. Given Mr. Curtin's knowledge, is An Post competing effectively with its competitors? That is not sensitive information but a question that can be answered directly.

Mr. Curtin

It is a highly competitive business. We own a significant part of the transaction business. However, that business is potentially under threat and there are indications that some parts of it will be put out to public tender. Obviously, the numbers of transactions are known. If I give the totality of the cost, the cost per transaction An Post receives and how much is charged will be known.

Deputy Durkan

I did not seek that information.

Chairman

My interpretation is that the IPU raised the issue of the amount received by An Post from the social welfare contract and the amount received by its members. An issue which arose previously was the cost of running the company owned offices compared to the cost of the sub-post office network. An Post has never supplied a breakdown of this figure. Is this one of the core issues the IPU has with An Post?

Mr. Curtin

There is a contractual relationship between An Post and the IPU. In the normal cut and thrust I have experienced in business over a long period each side is obliged to manage its own vested interests. It is An Post's duty and my role to do the best commercial deal. However, if they are to last, commercial deals must be balanced. We have extended the offer to the IPU to renegotiate the contracts and the terms and conditions of the across-the-counter payments. I urge all to do so. This is important, not only in the context of An Post's existing business but of the business we will defend and the business we would like to win in conjunction with the IPU. It must be a good deal for both sides. We are available to negotiate those contracts. However, I cannot publicly negotiate the rates because it would be to the disadvantage of-——

Deputy Durkan

That was not the question I asked. We are going around in circles. I am not looking for commercially sensitive information. If I were a member of the IPU and saw that its members handled, say, €50 million in the course of a year but the percentage of this sum that accrued to them was not in concert with my expectation, I would feel aggrieved. Would Mr. Curtin feel aggrieved?

Mr. Curtin

While I would have extraordinary sympathy with the IPU, I must relate the An Post position. With regard to the business under discussion, generically, An Post moves €6 billion over its counters on behalf of the State. We are discussing the amount of money An Post receives to move that €6 billion. The real issue is that the company has received no increase from the State since 2002 for moving it.

Similarly, the NTMA business is under threat. A 34% decrease in our fees has been sought at a time when the business has just managed to break even due to the extreme and diligent efforts of all involved. If we must now accept significant costs or income cuts in addition to the requirements of Sustaining Progress which in a full year will cost that part of the business in excess of €12 million, the business cannot sustain that behaviour. It cannot sustain income cuts when Sustaining Progress is imposing large requirements to pay cash.

Chairman

There will be other questions on that matter. Has Mr. Curtin finished replying to Deputy Durkan's questions?

Mr. Curtin

I have one more Deputy to deal with. With the permission of the Chair, I will move to the next question.

Deputy Durkan

I would like my questions answered in writing, if I do not get answers at the meeting.

Chairman

What questions does the Deputy want answered in writing?

Deputy Durkan

If we do not reach all of them, I would like a written response.

Chairman

We will reach the Deputy's questions but I am conscious that other members have questions to ask.

Mr. Curtin

I am coming to the Deputy's final questions regarding labour relations and the perception that issues are regularly brought to the brink. The Deputy asked how trust could be established. My direct experience of business and labour relations in a number of companies in Ireland over an extended period suggests that trust comes from doing business and deals and delivering on them. I believe in doing deals — detailed deals where each side understands what the other has to deliver and what each will get for delivering. I have no difficulty with this. Of course, one expects that if one pays, one also takes delivery.

Issues arise with regard to recent and not so recent history at An Post in the context of non-delivery on deals. One of the reasons An Post is in its current financial position is non-delivery on deals. The management team which took on the role of stabilising the finances of An Post indicated clearly that one of the key conditions was an ability to do deals and collect on them. In that context, some difficult situations have arisen, which is well known. However, we are coming to a point, through the Labour Court process, where the key issues can be dealt with and solutions will emerge. We must all then apply ourselves to diligently implementing those deals. That will assist the manner in which we do business.

Chairman

In his presentation two weeks ago Mr. Curtin stated: "Fundamental savings resulting from those investments have not been delivered, despite the agreements in place with trade unions. This is an issue which will be shortly dealt with by the Labour Court." Were financial arrangements included in these agreements at the time they were made?

Mr. Curtin

Yes.

Chairman

Is Mr. Curtin saying this was dealt with financially with the staff of An Post in exchange for the implementation of the new equipment and mail centres?

Mr. Curtin

I am saying that in a number of areas deals have been done with elements of unions within An Post and that the first issue is that the company must take delivery on the issues agreed. I am also saying further issues and efficiencies need to be dealt with within the company. An Post is willing and prepared to undertake negotiations and do deals in these areas.

Chairman

Mr. Curtin has said that savings were not delivered despite agreements which were in place. Is it the case that investments have been made but work practices and so on have not changed?

Mr. Curtin

It might be helpful if my colleague, Mr. Larry Donald, were to outline a range of such issues.

Mr. Larry Donald

These issues are being dealt with through industrial relations procedures. As Mr. Curtin has said, one of the items is the completion of the automation programme, an issue which has been referred to the Labour Court. We are awaiting a date for a hearing on this matter.

Chairman

It is not desirable that Mr. Donald should waffle on all day about different issues. I ask that he answer direct questions. A statement from An Post management asserts:"However, fundamental savings resulting from those investments have not been delivered, despite the agreements in place with trade unions." Will Mr. Donald explain this to the committee?

Mr. Donald

That is what I was doing. There have been a number of issues in regard to the automation programme. A specific agreement in regard to the completion of an exercise concerned with the outward concentration of mail into our mail centres has not been concluded. Likewise, another agreement regarding the closure of the letter forwarding offices, LFOs, has not been completed. Mr. Curtin has already dealt with the issues relating to the conversion programme of 50 company post offices throughout the country. Communications Workers Union members were paid increases of 12.5% in regard to that agreement but the company has been unable to advance or complete the programme at the intended rate because of the resistance it has encountered. There are a number of issues of this type. The point I am making is that they are being dealt with through procedures.

Chairman

The point I am making is that the company has invested heavily in automation systems in recent years and this issue must be clarified. Agreements were put in place at the inception of the automation programme. I understand those agreements were paid for but the programme has not been implemented.

Mr. Donald

That is correct.

Chairman

Has it been implemented in part or not at all?

Mr. Donald

The changes have been implemented in part.

Chairman

Where have they not been implemented?

Mr. Donald

The outward concentration programme, involving mail coming to our mail centres, and the programme of LFO closures have not been concluded. The completion of what we would call inward sortation, which has been bought and paid for and which would deliver significant savings to the organisation, has not been delivered. We are seeking delivery of those programmes and are going through industrial relations procedures through the Labour Court to find a solution.

Deputy Kelly

I welcome the chief executive of An Post, Mr. Curtin, and his impressive management team which I am sure is performing well. In the Visitors Gallery, I welcome Mrs. Kathleen Diamond and Mr. Pádraig McNamara, the postmaster from Granard, County Longford. The latter is a highly respected businessman who is known locally for the great service provided by his post office and his involvement in all aspects of community life — business, social, sporting and cultural. In drawing attention to Mr. McNamara, I emphasise that I do not believe An Post treats seriously enough the business side of rural post offices. I also welcome Mr. Alan Sloane, Mr. Patrick McCann and others in the Visitors Gallery.

I urge that management and unions should work together to ensure An Post is a successful company which gives good service and value for money to the public. Nobody should delude themselves there is any way forward other than through partnership. This country never moved forward until all bodies, unions and the Government worked together. We have seen the fruits of this approach in recent years.

An Post is a major company and the difficulties it is experiencing must be taken seriously. While I urge everybody to work together, management must take responsibility for the running of the company. Has the management met the IPU recently to discuss the issue of rural post offices and when was the last such meeting? How does An Post promote its business? Do the IPU and An Post management work together in this regard?

It is the belief of people in rural Ireland that rural post offices must remain. For this to happen, however, they must be viable. Why are 400 local offices not automated? In our modern, educated society which is recognised as one of the most technologically advanced in the world, it is incomprehensible to have 400 non-automated offices. It appears to be a policy of An Post to close as many rural post offices as possible. Why are these offices not encouraged to compete at the top level? It is not possible to compete in business today if best practice is not applied.

Does An Post encourage postmasters to hold sales and other seminars on a regular basis? Are management and staff au fait with the products sold and do all post offices sell the same products? Can I walk into any post office, whether in Longford, Cork, Kerry, Donegal or elsewhere, and know I will receive the same service in all? An Post is a brand we can be proud of and it has given great service over the years. However, it does not appear the company is striving for consistency in the service. More emphasis must be put on the business. Even the smallest business is now automated and up-to-date technologically. Will An Post work with rural post offices to promote business?

Unfortunately, the public has a poor perception of An Post. The impression is that staff and management relationships are bad and that morale is low. Is this true? It seems to some that it is a case of us versus them but that adversarial approach has never worked and never will. That situation cannot be allowed to continue.

I hope we will get more clarity from this management than was the case with previous management teams. On a previous occasion, I was probably somewhat soft in listening to a man who had no plan but claimed to have a great one. In any case, he was not prepared to tell this committee what this plan was. Even a business with only one employee must have a plan and objective. Are An Post's accounts public and accurate?

It would be remiss of me not to mention that Longford post office is a thriving business. If one were to walk along the main street in Longford looking for the busiest business in town, one need only look at the crowds outside the post office to realise that must be it. It appears that way. The staff promote a very good image for the company, and most of the people I know in An Post do a good job.

Chairman

I have given the Deputy tremendous latitude.

Deputy Kelly

It is decent of the Chairman to give me such latitude, but I have given him the same over the years.

Who really runs An Post? Is it the board, the management or the unions?

Chairman

I am first going to take the answers to those questions before calling on Deputies Broughan and O'Donovan and Senator Finucane.

Mr. Curtin

I thank Deputy Kelly for his nice introductory words about my management team. He asked five questions. One was with regard to the environment of change, partnership and morale, and I will handle it in that context. There was one large question regarding the future of rural post offices. One question related to the issue of whether there is a plan, and another to the issue of accounts. His last question was with regard to An Post.

An Post has a well defined corporate structure with regard to its ownership, board and management team. The best governance practices are employed in terms of the running of the company. In that context, the accounts are public. The Deputy asked whether they are accurate, and they are. These accounts have a process through which they are approved, as I outlined earlier, in terms of audit, board and shareholder approval. Unique among a number of companies in this country, An Post's accounts go before the Cabinet.

Chairman

It is important to clarify whether the accounts are only accurate since Mr. Curtin took over the company?

Mr. Curtin

My responsibility is for the accounts which I prepare, and it is only appropriate for me to comment on that for which I am responsible.

Chairman

I know, but we had a situation where Mr. Hynes told us the company would make a profit of €1 million but lost €43 million that same year. Is it only since his time in office that Mr. Curtin can stand over the accounts?

Mr. Curtin

An Post's accounts have always been accurate because there has always been the same procedure. I am referring to year end accounts. I have been asked to comment on budget projections, and I have said before that the only budget projection with which I dealt was with regard to 2003. I have been very precise in my comments on that. In my professional judgment, the 2003 budget projections were inaccurate.

Deputy Finneran

On a point of order, did a former Minister refuse to allow the Cabinet endorse the accounts of An Post——

Chairman

Deputy Finneran, Mr. Curtin should be allowed respond to my question.

Mr. Curtin

With regard to the budget projections, the only comment I could make was in terms of the budget projections for 2003. I stated here on two separate occasions that it was my professional judgment that the budget projections for 2003 were, at best, optimistic. Ultimately the outcome for the year demonstrated that the budget projections for 2003 were inaccurate.

Chairman

They were budget projections and not actual accounts. Deputy Finneran is a visitor to the committee and his question will not be answered by Mr. Curtin. He is the chief executive, and the Deputy should put the query as a parliamentary question in the Dáil.

Deputy Finneran

Are we not to get information from An Post?

Chairman

I am in charge.

Deputy Finneran

The question should be answered. The information available to me is that the Minister refused to bring An Post's accounts before the Cabinet.

Chairman

That question is not for Mr. Curtin to answer. I expect the Deputy to accept the ruling of the Chair.

Deputy Finneran

I accept the ruling.

Mr. Curtin

With regard to Deputy Kelly's question about a plan, I outlined a recovery strategy. On taking up my role in July 2003, we were faced with a very difficult and complex financial situation. At the request of the Minister, I prepared a recovery plan which has three fundamental principles: cost reduction, income growth and quality improvement. It is a detailed plan and we are on course to deliver that. This year's figures will in fact demonstrate that.

There is a key issue with regard to the change. The company has made extraordinary efforts with regard to internal cost reductions and there are two key elements which must emerge. One is the change programme to be agreed with the Communications Workers Union. As I have said on a number of occasions, the financial situation of An Post cannot be rectified by cost reductions alone. There is a complementary requirement for a further tariff increase and the company has also put forward a request for this. We require both a change programme and a tariff increase to deliver the recovery strategy approved by the board and submitted to the Minister in September 2003.

With regard to the issue of partnership and management, I concur that all the best businesses are done through partnership. To have partnership, one must have trust; to have trust, one must have delivery. We are there and willing to do the business and we will deliver our side of the business.

I have great sympathy with regard to Deputy Kelly's comments about post offices. Personally I do not believe that the identified, recognised issue of the problem of the post offices is potentially the problem. There is clear evidence in a range of post offices that services, such as the BillPay process, are attracting new customers. My management team and I are looking at this issue and proposals are going before the board over a period with regard to exploiting that business initiative. We and the Irish Postmasters Union will sensibly do good business.

While undertaking and seeking new business, it is vital we are not undermined by a precipitous reduction in our income at a critical point for the company or that we lose significant Department of Social and Family Affairs or National Treasury Management Agency business or that we do not receive the price increases due to us. An Post has not had a price increase since 2002. What other utility service has not received a price increase for the services it provides? We are owed that cash and we need it to develop the business.

With regard to issues of automation, the Deputy is well aware that the former Minister, Senator O'Rourke, commissioned a study in 2000. This indicated that there is not an economic case for the automation of those 400 post offices. However, at the last meeting, I indicated that it is now time to review that issue and we are taking a pilot study of ten projects. We will invest in local advertising, automate those and see the consequences. I will report the findings to the committee.

Chairman

What would it cost to automate the 400 post offices?

Mr. Curtin

The last figure I saw was approximately €5 million.

Mr. Derek Kickham

It was approximately €5 million, and approximately €1.7 million per year to maintain them.

Mr. Curtin

We will be examining the issue.

Chairman

We have been given an answer of €5 million and €1.7 million to maintain on an annual basis. Is that correct?

Mr. Kickham

It would cost approximately €5 million to invest in the capitalisation of the equipment and approximately €1.7 million to maintain and run it.

Chairman

Mr. Curtin has answered Deputy Kelly's questions.

Deputy Kelly

There was another question.

Chairman

Is that an additional question?

Deputy Kelly

No, it was my first question. When did management and the chief executive meet the Irish Postmasters Union? Did they meet recently?

What is An Post doing to promote business in rural post offices? I am not seeking a detailed answer. I am referring to expanding business, looking for new services and promoting those the company already has. From a business point of view, the company should do the work.

Chairman

We will get the answers to those questions now. I am going to be strict today. I do not want members asking questions which cannot be answered by the senior management here and which are better directed at the board of An Post or at the Minister. I ask the members for their co-operation in this matter or I will be obliged to rule against them, as I did a fortnight ago.

Deputy Broughan

I welcome back the chief executive and his team to resume the interrupted question and answer session. As regards the industrial relations area, I note the chairman's admonition that we should not discuss the matters before the Labour Court in detail. At the last committee meeting, everyone was astonished that for a long time Mr. Curtin had not been in contact with the four general secretaries of the trade unions or with the Irish Postmasters Union. Deputy Kelly alluded to this. Has Mr. Curtin contacted any of them in recent weeks? Has he met Mr. Fitzpatrick, Mr. Ronayne or any of the other trade union witnesses? It seemed astonishing to the committee that he had not been in close contact with them.

There appears to be poor morale in An Post's workforce to judge from the letters I have from postal workers and from the post office network. Is it one of An Post's basic aims not to recognise trade unions and attack trade union membership at every turn? Is this why it has recently forbidden workers to attend Communications Workers Union, CWU, training courses which had been the norm for decades in the postal service? Is this why An Post refuses to give shop stewards the normal accommodation for meetings or to establish any kind of partnership fulcrum within the company? Has the company not engaged in a campaign to take out the trade unions? Recently for example, within a few weeks of acquiring the Snap printing contract, An Post moved unilaterally to make work changes without consulting the trade unions. There are many other issues. I do not wish to raise the current negotiations but it is clear that Mr. Curtin is not prepared to share information about the company's performance with either this committee or his workforce to have a successful end to the negotiations.

Did An Post treat the SDS owner-drivers reprehensibly? Undoubtedly their treatment has placed any similar future initiative by An Post in severe difficulties. In SDS, what is the position for people who changed their minds after listening to the committee debate or reading newspaper reports or the newsletters of An Post and the trade unions and decided they wished to stay with the company? Has An Post moved towards compulsory redundancy for them and has it abandoned the policy of voluntary redundancy?

The issue of quality of services is very important. The committee recently received a report from ComReg which states that it has established a specialist committee to review An Post's performance in this regard. There appears to be hypocrisy and a vicious circle regarding the recruitment ban. How can An Post deliver a quality service with such a ban? I have examined some recent delivery service results in the Dublin region. For example, in Dublin 5, part of my constituency, there were 12 days when deliveries could not be covered; in Dublin 7, 20 days; in Dublin 13, another part of my constituency, four days; in Dublin 17, my native area, 16 days; in Blackrock, 15 days; and in Balbriggan, an astonishing 19 days. Does this not show a ramshackle development of services? Mr. Curtin and his associates should be managing this issue, yet they have a recruitment ban. What is the situation regarding the ban? A worker from An Post sent me an advertisement from the FÁS website which stated that the company will soon be recruiting a mail sorter for the Sandyford depot of its letter post division. An Post is recruiting while telling this committee it is not. What is the truth? If we are to have a quality service, do we not need the required workforce?

We have heard the chief operations officer outline the outstanding issues that must be delivered and we all recognise this. However, as I stated at the previous committee meeting, is it not astonishing that general levels of basic pay in An Post are so low? The company is unique in that there have been no pay rises for nearly a year and a half. In particular, pensioners of the company have been treated abominably. Does Mr. Curtin accept that if he wishes to lead the company to success, An Post must deliver the terms of the Sustaining Progress programme?

Is Mr. Curtin prepared to provide to us the proportion of the fees that An Post receives for BillPay, the Post Office Savings Bank, POSB, television licences and postage in comparison with what is paid to the post office network? Can we have transparency on this issue?

A few minutes ago, Mr. Curtin spoke at length to the Chairman, but the operators of the postal network need to know where they stand. Should they not get a better deal? This is a basic point. As my colleague said, Members recently met postmasters from throughout the country, including County Longford. Deputy McGuinness and others were quoted to the effect that we were taken aback by the kind of reward that people receive for giving a fantastic service in remote rural locations. Why did An Post not inform the Irish Postmasters Union about the pilot scheme for ten offices before the previous meeting rather than on the steps of the courthouse? Why can An Post not implement a pilot scheme for 100 or 150 offices to support the people from the Beara Peninsula up to Donegal who wish to deliver a quality service, but need the company to give them a decent reward and get them computerised as soon as possible? Why will there be such a lengthy evaluation period and why run a pilot scheme in the first place?

As to the management team's performance, I note that this high quality team attending this meeting probably costs several million euro in rewards, emoluments and salaries. At the previous committee meeting, Mr. Curtin informed us that An Post spent more than €2.5 million on consultancy services. There does not appear to be a problem with giving rewards to management. The chairperson received a rise of 150% in her salary while pensioners, on a miserable €200 a week, were told that they were not entitled to a rise. What is the position in 2005 concerning consultancy services and the extensive management structure that the company seems to have? Deputy Finneran is correct that the Minister and this committee were treated like total idiots by a previous management team regarding the projection for 2003. What is An Post's projection for 2005? Does the projection take into account the payment of the terms of Sustaining Progress and the delivery of a settlement for the workforce and the postmasters which will give this important national service stability in the future? What tasks are consultants Dr. Tony McNulty and Mr. Tim Hastings carrying out with regard to the management team? The communications chief, Mr. Foley, kindly sent us a copy of the Economist from several weeks ago with information on the postal service. The committee members had read this already but it highlights the difficulties that postal services grapple with and the difficulty in finding solutions. Is it fair to say that the future of the management team depends on the delivery of a success?

A reasonable amount of time has passed and we are receiving feedback of bad morale and annoyance with the lack of a spirit of partnership in the negotiations. There will be other management teams in future. In two years' time I may not be the Labour Deputy for Dublin North-East. That is a decision the people must make but I will do my best in the interim to keep my position. The same applies to the delegation in that there may be different management teams in future with different spirits of partnership. The Taoiseach spoke on the desperate efforts he is making to keep the Northern Ireland peace process on track. The same considerable efforts must be made in respect of this important national company.

Chairman

The questions can be spread amongst the members of the management team if Mr. Curtin wishes it.

Mr. Curtin

There are many questions to deal with and I will attempt to group them. During my most recent meeting with the committee I gave an answer of approximately €2 million spending on consultancy fees. This was an estimate as I had not been expecting that question but I am now in a position to give the details. Expenses on consultancy for 2004 totalled €1.6 million and not my previous figure. Of this, approximately €160,000 could be better described as professional fees paid to accountants and solicitors. In excess of €100,000 was paid for consultancy services for unions. This leaves the total for An Post in the order of €1.3 million.

Chairman

What type of consultants were referred to and what type of assistance did they give?

Mr. Curtin

I would categorise them in four main brackets. There were four regulatory consultants of the order of €200,000. There is an ongoing need for these because of tariff increases, downstream access and REIMS which highly specialised technologies and techniques that must be imported into the company. We have taken on board significant consultancy assistance to develop financial services. These skills are not within our business.

Chairman

Would these be skills for running the company, for example?

Mr. Curtin

No. These are specific banking skills that do not exist within An Post for the development of the financial services project for the post office network.

Deputy Broughan

Were any consultants hired specifically for industrial relations this year or last year?

Mr. Curtin

No. McNulty Management Consultants, a company rather than the individual mentioned by Deputy Broughan, has assisted in our management reorganisation issues. There is also quality of service consultancy. All this falls within the first bracket. There is a general bracket of €40,000 that includes a range of technology consultants. The figure of €1.3 million is not excessive for a company of An Post's size.

Deputy Broughan

What is the projection for this year?

Mr. Curtin

I do not have the budget for this year with me but I will be able to provide a detailed figure in the future. Perhaps one of my colleagues knows.

Mr. Quinn

For the core business An Post spends approximately €800,000 on consultancy fees, but a year is a long time. If a situation changes, extra funds for any special projects that arise will be sought from the board.

Deputy Broughan

Has the board not discussed the financial projections for 2005? Most business people would have done this in late 2004 or, at the latest, in early 2005.

Mr. Quinn

The board received budgets in November and approved them in December. They contained consultancy fees of the magnitude indicated for the ongoing running of the business. However, management may seek approval from the board for extra spending on special assignments in the course of the year.

Chairman

Is there a consultant advising on the management of the company?

Mr. Curtin

No. There is a specialist consultancy company used for reorganisation issues as there has been a significant degree of reorganisation. To address the question of the size of the management team, one of the deliverables in the recovery plan was a significant reduction in management size. We are moving towards a target decrease of 41%. This is an extensive and difficult task that has required considerable negotiation at union level by the management team and a reorganisation process. These levels are in place and surplus staff have started to exit the business and will continue to do so until we achieve our target reduction of 41%.

On the issue of the 2005 projections, I indicated the order of the issues for this year during my previous visit. This is a dynamic business. Significant developments since that visit have impacted negatively on An Post. The consequence of the 13-week delay in delivering results on the collection and delivery project will be significant and, unless remedial action is taken, it will move An Post from a situation of having a small profit to experiencing a loss. While the company has moved from a sizeable overall loss to a point of breaking even, I cannot stress enough that our finances are extremely sensitive to issues being carried out in the context of the recovery plan. As I have often stated, the company's income will reflect any slippage in the delivery of these changes, be it in the recovery programme or the price increases. For An Post the consequences are usually negative with little scope for good news if we do not deliver in the timeframe that has been agreed upon.

I have answered the questions put to me concerning transparency to the best of my competency during successive meetings with the committee. If there are matters that my management team or I have not addressed, then I ask that the committee either raises them in writing or via a telephone call. I will be happy to oblige the members.

Chairman

We accept that and do not expect Mr. Curtin to know the answers to everything we have asked him.

Mr. Curtin

It is our objective to be transparent in our actions. The situation in An Post is so grave that there is nothing to be gained by hiding information. Everyone here must grasp the issues within An Post, including the short timeframe we may have to seek recovery. Deputy Broughan referred to the article in the Economist. It is evident from this that there are many issues on the horizon for postal companies and An Post is not unique in this respect. My colleagues throughout Europe and I are struggling with the same concerns of restricted and low growth, inefficiencies, high costs and competition. Unless we get to grips with these we may not be relevant in the future.

Basic pay was mentioned the last day. I took the trouble to find out how many people in An Post are on the famous €440. My information is that there are 36 out of 9,500 people on that money. The figure I have given, the average postal worker income of €37,000, is far more representative of the true earning power. Obviously, the issue within the company is to take delivery of a business result and, bluntly, work commensurate with paying €37,000 a year.

Chairman

Is that a gross figure, excluding overtime?

Mr. Curtin

No, that is the figure for average earnings, including overtime.

Chairman

What is the average industrial wage within the postal service?

Mr. Curtin

The average earnings are €37,000.

Chairman

That includes overtime.

Mr. Curtin

Yes.

Chairman

What is the average wage for a person in An Post?

Mr. Curtin

If I recall correctly, with allowances it is approximately €28,000 or €29,000.

Senator O’Meara

Is it the case that some of that overtime is paid for but not worked?

Mr. Curtin

I have no difficulty with paying overtime; I have no difficulty with paying anybody provided I, as a manager, get something back for it. That is my job. My job is to do collective and individual deals. It is true that in An Post overtime is paid but work is not done for it.

Senator O’Meara

How much?

Mr. Curtin

It is significant. I cannot give the exact details but it is significant. It is also significant in the context of the financial position. The issue is in contention and it is now before the Labour Court. It is one of the critical elements within the current Labour Court case.

Chairman

Mr. Curtin, are you telling the committee that there is significant expenditure for overtime for employees within An Post but that significant work is not being done in return?

Mr. Curtin

Overtime is paid and the hours are not worked. That is a fact.

Senator O’Meara

Can Mr. Curtin tell the committee how much that involves?

Mr. Curtin

I cannot give that information today but it is significant and is part of the negotiations.

Deputy Broughan

Would Mr. Curtin accept that it was the management's job to manage innovation in the company?

Mr. Curtin

I believe poor deals were done in An Post. Deals were done under pressure. Deals were done to ensure the quality of service at a financial cost that the company cannot now bear. The reality is that this is a commodity and people have choice. There is a choice in the marketplace and people will go where they will get most for their euro, in terms of both quality and price. The price point we are at was the core issue within SDS. We could not be competitive. We could not meet the market in terms of price, quality or delivery and, unfortunately, in an open market there is the absolute reality that one will lose business at that point. One moves into continuous losses and that is where SDS has been for years.

Chairman

Are we to understand that this is one of the issues you are trying to deal with in the Labour Relations Commission?

Mr. Curtin

That is correct.

Chairman

We will leave it at that point. Can you answer the other questions from Deputy Broughan because I wish to bring in Deputy O'Donovan and Senators Finucane, Kenneally and MacSharry?

Mr. Curtin

With regard to Sustaining Progress, I have indicated on a number of occasions that it is the absolute intention and wish of the company to pay those increases. However, we must be able to fund it. Sustaining Progress within An Post costs €58 million every year. That is in addition to our current cost base. Price increases alone are not capable of meeting that figure. It is well known that we have sought a large price increase. I believe that increase will bring us to the limit of our capacity to price our product. Any further increase will meet price resistance and volume loss and will result in a decrease in our income. We need a change programme just to fund Sustaining Progress alone.

Deputy Broughan

What price stamp is the aim?

Mr. Curtin

The Deputy has confronted me with a difficulty. It is possibly well known but it is under negotiation at present. I prefer not to answer the question. It is not in the company's best commercial interests to do so.

Chairman

Is that an issue in contention at present?

Mr. Curtin

Sustaining Progress, the change programme and the tariff increase are all interconnected issues. Unless they all move in tandem and work out, the company will not be able to fund its requirements. We need a significant tariff increase to assist us to fund the business.

Chairman

You can move to the next question.

Mr. Curtin

The Deputy spoke about the quality of service and ComReg's special committee. The performance obviously has improved. The last quarter and the first month of this year, excluding Christmas, have seen the best performance since we started to take the ComReg measurements.

Deputy Broughan

The figures are not inaccurate, are they?

Mr. Curtin

I am coming to that point. I am clearly on record as saying that the performance of An Post over an extended period is not good enough with regard to quality of service in a commercial environment and a competitive marketplace. An Post must do better in all areas of service and quality delivery if we are to compete. We have a programme in place to improve that and it is producing results, but we need the change programme. We need the flexibilities and efficiencies the change programme will give us if we are to meet the requirements of ComReg.

I disagree with the Deputy with regard to SDS and his comment on the treatment of owner drivers. It is both untrue and unfair. If the Deputy seeks the facts, he will see they are different. I have a clear corporate, and personal, commitment to the concept of owner drivers. I have previous history in another business before this — in fact, with the CWU — where I negotiated for them. I believe I helped them to do a very good deal. I have an absolute commitment to this form of change. It facilitates change in complex, long-term, service industries. I am personally committed, I have given that commitment to the owner drivers and I will pursue that commitment.

The Deputy mentioned a number of people who have changed their minds. There is no compulsory redundancy within An Post. There is a voluntary redundancy programme. That is my remit and it is the only thing I can allow to happen with An Post. That is the board's decision.

Chairman

How many have subscribed to it?

Mr. Curtin

If memory serves, 108 people have left. A further 43 have been granted terms but we require them to stay for a short period in order that we can maintain the quality of service.

Deputy Broughan

The 12 who changed their minds have to go.

Mr. Curtin

The Deputy's information might be better than mine but I believe there are six.

Deputy Broughan

I have been informed that there are about a dozen and that they want to stay. Mr. Curtin is saying they must go.

Mr. Curtin

As of yesterday evening, I was informed that there were six and those six are under reconsideration. Nobody is being forced to leave An Post.

Chairman

You might clarify that for the committee.

Mr. Curtin

Absolutely, I will be happy to do so.

Chairman

We will move on, Mr. Curtin.

Mr. Curtin

Two further issues were raised. One was the low morale issue regarding basic pay and the other was the issue of Snap Printing. Perhaps I have information the Deputy does not have about Snap Printing. An Post does not have a business presence in a number of the key areas of business growth. For some unknown reason, An Post decided not to locate a sub-post office in the Irish Financial Services Centre. That was a brave decision at the time in the context of the great growth of the centre. The practical reality for me, however, is that An Post now has no business presence in the IFSC, an area which is generating huge volumes of paper. It has come to my attention that in some cases this paper is put into containers, moved out of the country and posted elsewhere. That does not make business sense.

Similarly, with property prices in central urban areas — particularly, Dublin, Cork, Limerick and Waterford — it is difficult to locate sub-post offices where there is not significant social welfare business. We need locations to do postal business. In an attempt to find and service that postal business, we did a deal with a certain company. That was to facilitate people to do commercial postings. Unfortunately, since that deal was done, there has been no co-operation by the CWU to the point where I believe that business is being frustrated. I do not see the point — I do not see the business sense.

We are losing business and cash that we need. Why would we not take the business? Why would we decide to take two bags when our customer gives us 12 bags? Is it because someone says "I only always take two bags"? That is really not good business practice in this day and age. How long will a company survive if people continue to behave in that way? Why would someone refuse to collect from the boxes that are put outside those offices? The person's job is to collect mail and they have the time and wherewithal to do it. As there are no safety reasons for not doing it, why not collect the mail? Look at the damage that is being done to the perception of the company and the company itself. I just do not understand such behaviour.

There is low morale. This is a period of extreme change within the company. This is a company that did not change and we are now bearing the consequences of not having changed and not having even accepted the need for change. For An Post to survive and prosper it must embrace change. It must accept the reality of the business environment in which we all live, in a prosperous and competitive Ireland. To do that, however, one must be flexible. One must also be prepared to give the quality of service the customer wants, rather than the quality of service that we decide to give.

There are some fundamentals that need to be changed at An Post if we are to be successful. I believe we can be but we must all embrace that change together, get over the bridge and start to work on the other side.

I have listened to the points raised with regard to the contact issue. There is cut and thrust and we all accept that things have to be said in order to gain position or make one's point, but I will not react to those type of comments. I have been in this business for a long time and I worked for very experienced operators, people like Paddy Moriarty and Joe Moran, who managed significant changes in large companies in this country. With all due respect, they did not meet every shop steward every time there was an issue.

Deputy Broughan

I knew Paddy Moriarty too. He phoned who he had to phone. He phoned me, for example, or whoever, if he had to. Mr. Curtin may not have chosen the best example if he wanted to illustrate that point. Paddy Moriarty was a man who personally imbued the spirit of partnership — as his brother, the great commentator, does — and the spirit of having a strong Irish nation able to look after its key interests.

Mr. Curtin

Absolutely, and he trained some very good management teams. In a company the size of An Post there is a large industrial relations organisation, which one must have to deal with the complexity and range of issues. That works through a series of different layers — industrial relations front men, managers, human resources, operational directors, chief operations officers and me. There is also a process to which we have all signed up and one cannot cross over processes, as the Deputy knows from his own experience. Ultimately, one crosses over processes to one's detriment.

My door is open on the key issues and always has been open. There are extensive negotiations between my management team and all the unions concerned, but we are now at a critical point. We are in a process where we have brought complex issues to a third party. It would be sensible now to allow those third parties to create their adjudications and then we must all sit down, cope with the consequences and begin implementing them. The truth is that one does move on at that point. We will all move on because we have to do so. We must move on because An Post demands that we do so.

Deputy O’Donovan

I have five or six questions to pose. Does An Post's rescue package or plan have a social dimension to cater for rural Ireland, particularly having regard to the CLÁR regions which were established under the Minister, Deputy Ó Cuív, to try to stymie rural decline? Has An Post taken cognisance of the significant flagship case made by my own west Cork post office in Clonakilty? They made a compelling case and I was here when they made their original submission. Where is that submission now? Clonakilty would represent several other post offices throughout the country that are under threat of being demoted or downgraded.

What is the future for rural post offices? For example, on the Beara Peninsula, which I represent, the Ardgroom post office is now turning out in excess of 55,000 units but has still not been automated. To get the geographic sense, it is 110 miles from Cork city and roughly 275 miles from Dublin.

Chairman

That might be included in the pilot scheme. You do not know.

Deputy O’Donovan

I hope it will be. There may be a positive answer. Is An Post selling the crown jewels by selling off real estate? One example would be selling Clonakilty post office which is probably worth in excess of €1 million. I am not an expert in economics but from my accountancy days, it would be reckless management if An Post were to engage in selling off real estate to counteract current day losses which are due to particularly bad management in the past six or seven years. I am not referring in particular to the current team.

Would Mr. Curtin agree that there is a lack of future certainty not alone for rural post offices, but also for the workforce? There is conflict within the unions. Mr. Curtin said he was in active negotiations and that his door is open to the unions. Is there any possibility in the near future that An Post would be ad idem with the unions on the way forward? An Post is at a critical stage. Two or three years ago, I listened to a previous chief executive here who gave us a blurb which turned out within 12 months to be absolutely inaccurate almost to the point of being untrue. We were misled.

An Post has a major role to play. A significant sum of money is being paid to workers for overtime they do not actually do, while the cost of converting some rural post offices to an automatic system would work out roughly at €10,000 or €12,000 each. Since there are 450 of them, the total cost might be €5 million. I have done that rough calculation but I may be wrong and perhaps the economists will say otherwise. In that regard, it is galling when one sees places in my own area of Sheep's Head, such as Kilcrohane post office and others, which are 20 or 30 miles from any big post office. Therefore, the social dimension cannot be neglected.

Unfortunately, due to other commitments, I was not here on 2 February, but I read that there was some media response — be it true or otherwise — that An Post was examining the area purely on economic factors and not the social dimension, which is important. Right or wrongly, I believe many of An Post's problems are based in Dublin and that rural post offices are not really an issue. I want to fly the flag for rural Ireland and I hope Mr. Curtin and his team will bear that in mind for the future. As he said, we are at a crossroads as far as An Post is concerned. If certainty is not achieved in the next couple of years, we will have major headaches.

Chairman

We will bank those questions for Mr. Curtin. I will now ask Senators Finucane and MacSharry to contribute. I wish inform the committee that Deputy Eamon Ryan has sent his apologies as he is unable to attend the meeting today. I meant to state that at the outset.

Senator Finucane

Mr. Curtin indicated that he possessed considerable negotiating skills, which I do not doubt, and that he had worked for a long period in the ESB. I contend, however, that the negotiating skills required for use in the ESB are different from those required in An Post. The ESB turned over a profit of €250 million last year and workers at the company tend to be well paid, which is their good luck. Any redundancy packages offered by the ESB have always been generous.

I may be illustrating the frustrations of An Post when I say this but if one looks at one's ESB bill, one will see a 2% levy in respect of the public service obligation relating to peat-fired power stations. In the past four years the regulator, Mr. Reeves, has given the ESB an increase of 30% in respect of the charges it is allowed to impose. Last May An Post sought an increase in its tariffs from 48 cent to 57 cent and ComReg continues to evaluate the proposal.

We met postal officials and union representatives recently. I never thought that in 2005 I would hear a union representative describe the management of the company as "behaving like a pack of marauding animals". When such terms are used, one begins to wonder about the industrial relations malaise. Is the use of such language symptomatic of another problem?

Mr. Curtin previously made a statement to the effect that An Post was a commercial company and must operate like one without any social obligations to rural communities. However, most of the postmasters we met operate in rural communities. In many instances, these individuals receive only a pittance for the work they do. Even those one could describe as successful do not obtain excessive amounts of money for their work.

We met representatives of the postmasters recently in Buswells Hotel. Politicians from all parties indicated their support for the post offices at that meeting. There is a feeling abroad that the social dimension offered by post offices is not being recognised. In trying to carry that social dimension by virtue of the universal service obligation perhaps everybody is losing out. Those in management at An Post are trying to make it commercially viable in a way similar to other semi-State companies such as the ESB. In that regard, they are operating with their hands behind their backs, particularly if one considers what I have said on the matter.

Somebody must recognise that there is a social dimension. The management of the company should look at the position of the Royal Mail in the United Kingdom and the British Government's statement to the effect that it will not allow the closure of post offices. It has also guaranteed that, regardless of their size, post offices will be automated. An Post is dithering over whether it will automate 400 post offices in order to sustain them. Perhaps this is because someone has said it would be uneconomic to proceed in this regard. The Royal Mail is able to pay the minimum legal wage to the operators of its post offices, regardless of whether they are situated at Land's End or in a suburb of Edinburgh.

Mr. Curtin is operating under terrible constraints in trying to make the company a financially viable entity. The ESB charges customers a levy in respect of its public service obligation. The Government must recognise — it can do so before the end of 2006 — that there is a social dimension to An Post's work and that the company should be able to evaluate whether this dimension can be maintained in areas where post offices are not financially viable. We want the company to succeed, industrial relations to be harmonious and post offices to survive.

The national lottery is the responsibility of An Post. I am familiar with the operator of a small post office who is extremely upset because they may no longer be able to sell national lottery scratch cards. The post office in question is situated in a rural location. It is frequented by pensioners who may purchase scratch cards, thereby making a small contribution to its business. Mr. Curtin should consider matters of this nature, particularly in terms of the social dimension. As stated, he has indicated An Post is a commercial company and must operate like one without any obligation to rural communities. It is not possible for it to operate without having such obligations. However, it must be compensated in that regard.

Senator MacSharry

As many of the greatest hits have been played, I will not go over old ground.

While I do not expect Mr. Curtin to indicate the amount involved because the information may be sensitive, will he indicate whether the counters division makes a profit? If it does, what percentage comes from sub-post offices? Is the share of transaction fees given to post offices fair? In the light of the contribution post offices make, is there scope to increase this or should it be increased? There has been a high level of investment in post offices in the United Kingdom, particularly in terms of the social dimension and keeping those located in rural areas open. The management team has stated one third of post offices here are not viable. In that context, what level of subvention would be required to keep them open?

Mr. Curtin has stated post offices form the most extensive transaction network in the country. In the light of the fact that An Post's services extend to all parts of the country, it has access to a customer base that would be the envy of any and all agencies offering a wide range of products and services. Has the possibility of the company offering, obviously at a cost, services provided by, for example, county councils at its post offices been explored? Has An Post's marketing team conducted an aggressive campaign to try to extend its services and make the one third of post offices to which Mr. Curtin referred more viable, while also catering for the social dimension?

Senator Finucane referred to Mr. Curtin's comment that the company had a commercial mandate and that it should not have social or cultural responsibilities. I am trying to build up a picture of the semi-State sector. In that context, will Mr. Curtin indicate whether the company, because of its commercial mandate, should ignore the CLÁR programme or the national spatial strategy? If that is the case, does he agree that any public service obligation on companies, An Post included, in the semi-State sector will go out the window in favour of a bottom line approach?

Chairman

Mr. Curtin may provide answers to those questions before Senator Kenneally and Deputy Finneran make their contributions.

Mr. Curtin

I will group the questions because there is a commonality among them, particularly in terms of the fundamental issue of the social obligation. At the previous meeting I outlined the technical position of the company. An Post has a commercial mandate on which the management has a commercial obligation to deliver. As human beings, everything we do has a social and cultural context. The various members of the management team come from different parts of Ireland and are aware of the issues involved. However, we have an obligation to conduct our business in the way set down in our mandate.

The social obligations of An Post are enshrined in the universal service obligation. In essence, the latter is defined for us by ComReg. It is also enshrined in legislation. In addition, the various governmental initiatives must be taken into consideration. However, we must comply with those under the universal service obligation, which dictates issues such as collections and deliveries that we must undertake on a regular basis at specific times. We have a social obligation in that context but we do not define it.

Deputy Broughan

Has An Post ever made a proposal to Government regarding a social obligation subsidy?

Sitting suspended at 4.01 p.m and resumed at 4.03 p.m.

Mr. Curtin

The social obligation is an ongoing, increasingly expensive issue within An Post. I outlined my view on how An Post should progress during my first appearance before the committee. Basic housekeeping issues within the company must be rectified. We have credibility issues with our owner and customer base and we need to rectify them. I have spoken to all the union chiefs in this regard and I have a commitment that when we get through the change process, one issue will unify us——

Chairman

Has Mr. Curtin spoken to all the union chiefs?

Mr. Curtin

A number of times on this specific issue. One issue will unify us once we manage to agree on the format of the change programme, the division of responsibilities, the costs and the income generated. The company is working within a regulatory environment that is difficult, if not inappropriate. We will have to come together to examine the regulatory environment, which will necessarily include issues relating to the obligations under which the company operates. The examination will indicate issues where we are not being commercially rewarded because, as a commercial company, we undertake services which, if they were subcontracted, would not be undertaken without reward. Why should An Post not be rewarded for what it undertakes? If we find we carry services for which we are not commercially rewarded, we must face that issue. The only mechanism available to address it is the regulator.

I refer to the comments on the ESB. I could not be expected to comment on another company, albeit that I have an intimate knowledge of the issues having worked extensively for the company.

Senator Finucane

I do not expect Mr. Curtin to comment but I made a comparison between the ESB, a company which made a profit of €250 million last year, and An Post, which is fighting to survive.

Mr. Curtin

If issues are identified in the review relating to commercial activities the company undertakes on behalf of the State for no reward, as its manager, it will be my mandate to seek commercial reward for them. If such a public service obligation is required, so be it. However, first, it is incumbent on An Post's board and staff to clean up their own house and do what they can. It will then have the credibility to seek the tariff increases that are due. If, following examination, there are areas in which the company is not compensated, we should seek compensation through the regulator. That is the programme I have for the company. I have shared the programme with the board, which fully supports it.

With regard to a number of the specific issues, there is a perception regarding the selling off of company offices. The company has sold a number of surplus premises over the past 18 months to pay operational expenses and, as I stated last year, that is no way to run a business. There is no future in that and that is not the company's policy. The value of the converted offices in the balance of premises does not play a part in the assessment. We do not consider the release valuation as part of the decision making process. I guarantee that is not the policy of An Post. My colleague will comment on Clonakilty and the Beara Peninsula.

Mr. Kickham

The issues relating to Clonakilty are well known. The building is stunning but the issue facing An Post is that to secure the future viability of the network, we are obliged to take costs out of the network through the conversion programme, which will contribute to the overall viability of the network. We do that by examining the offices that have the lowest volume of business. The location of the post office is an issue of concern to local communities, as we found during our interaction in both Clonakilty and Cahir. We responded to that in Cahir by making our premises available for somebody to use in the context of continuing to deliver the same services and even superior services, as the chief executive mentioned. We will not accept downgrading or a lesser service being given by postmasters for the IPU.

We examine every case for conversion on its absolute merits. No decision has been taken on Clonakilty. It may well feature but the availability of the property for sale does not come into the equation. An Post has paid 12.5% to take advantage of conversions and cost savings and if we are committed to secure the viability of the network and not close post offices, we need to take costs out where we can, where we do not have to close post offices and where we can do it by using a much more economic model consistent with 94% of the country.

Mr. Curtin

Senator MacSharry asked a question about the counters division and I will attempt to be as open as I can. The counters business is marginally profitable as a result of the work of management. The payment of Sustaining Progress obligations would reflect a 10% increase in the cost base.

Any marginal profit being made by the public counter business would be absolutely swamped by the full payment of Sustaining Progress. This is in the context of where An Post is being asked to take a 34% cut from the NTMA and where we have not received a DSFA increase since 2002. There are legitimate questions for this company to ask the people we serve. I ask that we be paid for what we do. If we are paid for what we do, we have no difficulty sharing that with the people we work with but we cannot share what we do not have.

With regard to the marketing issues and the UK——

Senator MacSharry

There is another part to the question I asked. What percentage of that albeit marginal profitability would be contributed by the sub-post offices?

Mr. Curtin

I would prefer not to answer that question because——

Senator MacSharry

That does not surprise me.

Mr. Curtin

I remind the Senator that part of the question moves into the area of margins. Our transaction fee is a competitive issue and there are people out there who compete for this business. There are at least two other players in the marketplace and I crave the indulgence of the committee to allow us to do sensible business on its behalf. The Oireachtas is the owner——

Senator MacSharry

A percentage of nothing is nothing. What percentage of that nothing do the sub-post offices contribute to that very marginal profitability? That could not be sensitive information because there are no figures.

Mr. Curtin

It is the totality of business. One cannot take away the actions of the counters from the actions of the back office because there is significant back office work associated with the counter transactions. If a customer buys a savings certificate, significant back office work is devoted to that transaction and this is also the case if somebody wishes to encash a certificate.

Senator MacSharry

An Post is able to quantify that the counter division as a whole contributes the figure X. Is it therefore not simple mathematics to deduct the value of the work of the back office and give a percentage?

Chairman

I presume An Post's post office division had a turnover of €127 million last year with a contribution of €1.3 million to the group.

Mr. Curtin

That is correct.

Chairman

Does An Post expect a significant increase on that figure this year? Who is in charge of that section? Is it Mr. Kickham or Mr. O'Donnell?

Mr. Curtin

Mr. Kickham is in charge.

Chairman

Is it expected to have a surplus for 2004 for the post office division?

Mr. Kickham

Yes. We expect that the business would continue to be as the chief executive indicated, marginally profitable.

Chairman

Regarding the accounts for 2004, has the end of year figure, the turnover, been received?

Mr. Kickham

The structure of those particular accounts is not yet fully finalised.

Chairman

Yes, but you know how much.

Mr. Kickham

I expect it to be marginally profitable.

Chairman

How much more than last year, in your estimation?

Mr. Kickham

I would be very reluctant to give a specific figure until they are finalised. Certainly we would expect it would have improved its position but not to such a material extent that the very real threats to which the chief executive referred are not very material issues and would not arrive at loss making.

Chairman

Mr. Kickham, you have not told the committee anything. I ask Mr. Curtin to tell the committee whether a surplus profit will be made in the post office division. What percentage will it be of turnover? Will it be more than the €1.3 million?

Mr. Curtin

It will be more but not significantly more.

Chairman

It will not be millions. It will not be enough to fund the——

Mr. Curtin

Not at all. This is the point I am making. The €12 million alone on Sustaining Progress just swamps everything.

Chairman

I am referring to the post office division. Is An Post making a surplus in the post office division? When An Post appeared before the committee last year, the post office division was losing money and now it is in surplus and hopefully it can move on. An Post will not make significant profits in the post office division for 2004.

Mr. Curtin

The post office business has an improved profitability in 2004. However, relative to the issues that are arising — the €12 million is just for the post office division — the profits are almost immaterial relative to the costs and that cost will swamp any profit that is there.

Chairman

That €12 million is purely for your own workers?

Mr. Curtin

Purely for the post office. It comes for the people who work within the post office area in An Post and it comes through the commitment of the company to increase scale payments relative to Sustaining Progress.

Chairman

Is this for the staff who are working for An Post——

Mr. Curtin

No, Chairman, what I said is that the €12 million covers the people who work within the post offices and the scale payments increase under Sustaining Progress. The €12 million due to be paid under Sustaining Progress swamps all of the profitability. The position within the post offices could go back very rapidly to where we were a number of years ago if we do not get the price increase that has been due since 2002 and we do not get a precipitative 34% reduction in our fees from the NTMA. These are the key issues I want to highlight.

Chairman

I acknowledge they are very important issues. I ask Mr. Kickham to reply. The post office network had a turnover of €127 million in 2003. What is the turnover for 2004? There is no mystery, is there?

Mr. Kickham

I expect the turnover in 2004 to be of the order of €137 million.

Chairman

The business is being developed. Is it growing?

Mr. Kickham

Absolutely. We have driven nearly nine million or ten million transactions into the network in the past few years.

Chairman

That is what I wanted to hear. It is obvious that if this continues to grow and if An Post sorts out the other problems, it will be able to fund the automation.

Senator Kenneally

I also welcome An Post management to the meeting. I will try not to go over the same ground in my questions to the delegation.

The committee heard at a previous meeting from the other representatives. They referred to a lack of consultation. I was amazed that An Post management was in the building on that day, 2 February. The trade unions and the postmasters' representatives were here before the committee and to the best of my knowledge, no member of management came into the Visitors Gallery to listen to what those people were saying to the committee. I find this very surprising. I ask for the delegation's comments.

What efforts has An Post made since 1986 to increase ordinary letter post volumes in the network? Have new products been introduced to encourage volume mail in the network? Has there been an advertising campaign? The only one I can recall in the past 20 years is the advertisement used every Christmas. I was amazed to turn on my radio a few weeks ago and hear an advertisement for the post office network. When I asked the Irish Postmasters' Union about this advertisement when we met in Buswell's Hotel, I was informed the union had approached An Post with a proposition to part-fund the advertising campaign but An Post refused. I would have thought it would have been in An Post's interests as well as in theirs, to help grow the business. This was a gilt-edged opportunity to become involved in advertising and An Post did not take it.

I spoke extensively during a debate in the Seanad about the development of a banking business for smaller accounts. The larger banks and institutions do not want people coming into their premises and prefer customers to use cash machines or the Internet. An Post is in a unique position in that it can deal with people face to face. I am amazed it is not developing the banking sector which would obviously create more business and help many of the smaller post offices. A report was published in the Sunday Business Post stating that An Post had such plans. I ask the delegation to clarify the position.

The An Post annual report for 2003 states that mail volumes decreased by approximately 6% over 2002. The chief executive in his presentation to the committee at a previous meeting stated that volumes in 2004 were 2% lower than in 2002. I find this difficult to believe. My local postman tells me that volumes are up as do workers in the sorting offices. People involved in direct mail order all say that they are doing more business by post. I cannot understand how the only people who seem to be of the view that post business has not increased are the people in the GPO. How does An Post estimate the volumes of mail?

What action is being taken by An Post to get out of the REIMS agreement and the UPU agreement which result in the Irish customer subsidising the cost of mail from other countries? An Post is earning a fee as low as 7 cent per item. As An Post appears to be losing money on this, is any effort being made to change it?

In discussing the management style, Cahir post office was mentioned. A letter sent from Cahir post office referring to a conversation with Mr. Kickham states:

During this telephone conversation Derek Kickham assured me that An Post would answer the queries and concerns of the people of Cahir and he also told me that he was very willing to come and meet the Save Cahir Post Office Group to discuss the issues and answer queries and concerns.

That promised meeting never took place. In Mr. Curtin's submission to us he stated:

The management team is fully committed to a process of discussion and negotiation with trade unions representing staff in its efforts to achieve agreement on change programmes.

However, An Post management agreed to negotiate with the group representing Cahir post office, but failed to do so. This appears to be contradictory and to be part of the management style.

While I cannot remember if this was said on 2 February or the previous occasion the witnesses were before the committee, I recall somebody saying that business deliveries would be made by 10 a.m. I have received a letter from a company which cannot get its deliveries before 4.30 p.m. It cannot continue in business on this basis and ten jobs are under threat. I ask Mr. Curtin to clarify the commitment on deliveries to the business community.

Chairman

I call Deputy Finneran to ask questions on the management of An Post.

Deputy Finneran

Will the Chairman confirm my entitlement to speak at this committee?

Chairman

The Deputy has the permission of the Chair to ask questions relating to the management of the company.

Deputy Finneran

I was part of the initiative regarding the public debate on post offices within our parliamentary party in November 2004. I have some very pertinent questions regarding post offices and the management of An Post. I welcome the postal services providers sitting behind me who meet the public. They have given great service to my constituency of Longford-Roscommon and to the whole west of Ireland and beyond.

I welcome Mr. Curtin and his management team. I have been here since just after the start of the meeting and during that time Mr. Curtin has stated on, I believe, five occasions that he has a commercial mandate regarding An Post, which I accept. However, in 2001 An Post had losses of, I believe, €6.7 million. In 2002 it lost €17.4 million and in 2003 it lost €43 million. Those figures must be described as representing a commercial failure. While Mr. Curtin was not there all the time, if that management team was in charge of a company in the private sector, its members would no longer have jobs.

A company in my constituency, Elan Corporation, nearly went down the tube. However, decisions were taken and people had to find other employment. Other people took over and the company is now a success. Does Mr. Curtin feel An Post has a responsibility to the commercial mandate, about which he speaks so often? I am not impressed with the management approach and record in recent years. I understand that a previous Minister for Communications, Marine and Natural Resources refused to take the accounts and financial report to the Cabinet. The CEO can confirm or deny this, or he can ignore the question.

Chairman

I have already ruled on that matter. The CEO will not answer that question. That is a matter——

Deputy Finneran

This is a public meeting and all information should be available to the public as far as I am concerned.

Chairman

I am advised under Standing Orders that questions about policy matters concerning the Minister or the board of this company are not in order. I would not expect anybody to answer questions about the board.

Deputy Finneran

I have stated it for the record and the question does not need to be answered.

Deputy Broughan

Deputy Finneran's point has been vindicated on numerous occasions in the Dáil by the former Minister for Communications, Marine and Natural Resources, Deputy Dermot Ahern.

Chairman

I will not ask Mr. Curtin to respond to the matter. The Deputy may raise those matters when the Minister appears before the committee.

Deputy Finneran

I will move on to my next question. Can the chief executive officer confirm that 500,000 post boxes were purchased and paid for by An Post with the intention of them being placed at different locations throughout the country, at the heads of roads and outside houses, and that the purchase was made without prior clearance from the regulator? If that is the case, the finances of An Post were misappropriated.

Chairman

Mr. Curtin answered that question last year. He may answer it again. I understand from last year's presentation there were no purchases.

Deputy Finneran

Are we only talking about last year?

Chairman

Mr. Curtin already briefed the committee about that matter in January 2004.

Deputy Finneran

Was confirmation given that this had happened?

Chairman

I will allow Mr. Curtin to answer again in order that he can reiterate it.

Deputy Finneran

That something happened before Mr Curtin's time or before any CEO's time does not hold water with me. If everybody can walk away from what happened in a previous year it would not solve anything. As far as I am concerned, whatever management is in place must answer for An Post, irrespective of whether it was there at the time — it is nothing personal against Mr. Curtin.

Chairman

I understand that Deputy Finneran does not have the benefit of having attended all the sessions of this committee. I am trying to be helpful to him. Mr. Curtin will answer the question and I presume he will give the same answer as he did last year that no such boxes were purchased. The Deputy should move on to his next question because other members wish to contribute.

Deputy Finneran

I have waited here for more than two hours and I have only just started. From the document here, I understand that An Post has decided that SDS is no longer viable. However, I am reliably informed by An Post employees in Athlone that 30,000 parcels per week went through that office. With that level of business, how could the service be running at a loss? I am informed locally that, with that level of activity, it would be impossible for that to be the case.

If I were to set up a business in County Roscommon I would consider the opportunity of what my customer base might be. Would it not be appropriate for An Post to consider the national spatial strategy or the local government strategy regarding the development of the county? I highlight three locations in particular that were clearly identified and earmarked by Government and local government as areas of possible, and now proven, population growth. The three areas are Bealnamulla in the south of the county, with a projection of 1,000 new houses, many of which have now been built; Tulsk in the middle of the county on the N5 with a projection of 500 new houses; and Keadue, the winner of Ireland's best kept town in 2004, with a massive increase in interest as a residential area. However, in the past two years the post offices in all three locations have been closed. If someone were setting up a postal business in County Roscommon it would make sense to establish the areas with likely population growth to get a few extra euro from people who post letters in such locations I do not doubt that people would post letters in such places. Pensions, child benefit and other social welfare payments could be made at such locations.

I asked earlier whether An Post submitted a document to the Government in recent years, asking for a financial package to help it to maintain its network of post offices, particularly in rural areas. I asked that question in light of a commitment that has been made in the UK. I have discovered that ten post offices will be involved in a pilot scheme. All one can call it is a sop. It does not make sense to me because approximately 400 post offices will be left to swim the Shannon and the Suck on their own.

Mr. Curtin placed great emphasis on automation when he last appeared before this committee. If it is of great importance to the core business of An Post, as he said at that time, why has a large percentage of post offices been deprived of the benefits of automation? The smallest paint shop is automated in this day and age, but the post offices to which I refer have to use pieces of paper to manage their business. I have asked some serious questions. It is clear that the management of An Post has not examined the company from a business perspective.

Chairman

I thank Deputy Finneran for his questions. I know he is passionate about this issue because he has raised it at meetings of the Fianna Fáil parliamentary party. I acknowledge that he has done good work on behalf of the party in this area. I ask members of the committee not to interrupt as Mr. Curtin responds to the questions he has been asked.

Deputy Durkan

Can I ask two questions?

Chairman

I will give the Deputy a further opportunity. I ask Mr. Curtin to respond to Senator Kenneally and Deputy Finneran, whom I welcome to this meeting of the committee.

Mr. Curtin

I will respond to the various questions. It acknowledge Deputy Finneran's comments about the commercial history of An Post. He was correct to state that it had operating losses of €6.7 million in 2001 and €17.4 million in 2002. The loss for 2003 was budgeted at €6 million. When the management team of An Post arrived in the middle of 2003, it was charged with turning the loss into a profit. As I said at a meeting of this committee in December 2004, the projected loss of €6 million became a projected loss of €48 million.

That was the real situation we encountered when we took charge. I will not comment on what happened before that, but I will comment on the good performance of my management team since then. As the Deputy said, the projected loss of €48 million became a loss of €43 million as a result of action taken by the management team in the last quarter of 2003. We took significant action to reduce costs throughout 2004. The company is now breaking even. We have delivered what we were asked to deliver as a management team. We have produced a good result for the owner.

I have no knowledge about the Deputy's suggestions about the term in office of the previous Minister because I was not involved with An Post at the time. I do not know what the Deputy is talking about. It is not true that 500,000 boxes were purchased. I inquired about the matter after I was asked about it on a previous occasion and I was informed that it did not happen. If it happened, I could not find evidence of it. There are no purchase orders, no cheques were paid and there are no boxes.

Deputy Broughan

Does the Minister, Deputy Cullen, have them somewhere?

Chairman

I do not know what the members of the committee had for lunch, but I am finding it difficult to manage them today.

Mr. Curtin

As a commercial manager, I would like to put a theory about SDS's commercial activities to bed. I ask Mr. Kickham to outline succinctly the commercial history of SDS in the past five years.

Mr. Kickham

SDS has been involved in a series of crises. It lost almost €2 million in 1999, but it was forecast at that time that it would be profitable to the tune of €2 million by 2001. It was still losing €2 million per annum in 2001, however. A new plan was then developed, which forecast that by——

Mr. Curtin

I ask Mr. Kickham to give the details of the projected turnovers and the actual performance, which is the bottom line. People need to hear the reality of this matter.

Mr. Kickham

It was projected that in 2003, SDS would have revenues of €93.7 million and would make a loss of €3.7 million. The new SDS plan was placed in the recovery plan that was produced later in the year. No review of the SDS business was conducted when the recovery plan was compiled. The new SDS plan forecast that there would be revenues of €77.6 million and a loss of €9.1 million in 2003. SDS's out-turn for that year was revenues of €73.9 million and a loss of €12.1 million. Similarly, the forecast for 2004 in the new SDS plan was for revenues of €78.5 million and a break-even situation of approximately €400,000. In February 2004, the forecast had deteriorated and it was envisaged that SDS would have revenues of €69 million and a loss of €7.7 million. By the middle of 2004, it was forecast that the company would have revenues of €63 million and a loss of €10 million. The out-turn for 2004, which was forecast late last year, will be of revenues of between €65 and €68 million and a loss of between €8 million and €12 million. We believe that forecast to be accurate.

Deputy Broughan

What is the company saying in its projected accounts? What is the bottom line with SDS?

Mr. Kickham

SDS's 2004 out-turn will be actual revenues of approximately €56.5 million and a loss of approximately €10 million.

Deputy Finneran

I am amazed. An Post's representatives can provide figures when it suits them to do so. When my colleague, Senator MacSharry, wanted an answer to a very simple question, however, it could not be given. That has been the case for most of this meeting. Figures can be cited immediately to defend An Post's position, but when a serious query is made by a member of the committee, we are told that the relevant figures cannot be provided because they are of a sensitive nature, they are not available or there is some other small complication. The statistics we are looking for are certainly not being made available. I am not at all impressed with that approach.

Chairman

We will return to the question asked by Senator MacSharry.

Deputy Broughan

I would like to discuss SDS, which is important.

Chairman

Who prepared the estimates and projections in respect of SDS?

Mr. Curtin

The figures are——

Deputy Broughan

Is it not the case that the company turned down many valuable contracts? In fact, it has been deliberately run into the ground since last May or even before then. An Post decided it would close the company, in effect, irrespective of the downturn.

Mr. Curtin

That is absolutely incorrect and I deny it. The management team——

Deputy Finneran

Businesses in my area were informed that the facility might not be available in the future.

Chairman

I ask the Deputy to allow Mr. Curtin to speak.

Mr. Curtin

The management team examined the business at the request of the board. The examination started in December 2003. We informed the board of the reality of the business, as we uncovered it, at a series of meetings. There were a number of options for the business, including joint ventures, closing it down and reintegrating portions of the business back into An Post. The board of An Post ultimately took a business decision to maximise the amount of profitable business and the level of related employment. The management of An Post was mandated to undertake that action.

Deputy Broughan

Did the management team not instruct staff to tell customers that deliveries could not be provided? As Deputy Finneran said, very profitable services were being provided in Athlone and elsewhere. The management team deliberately decided that such services could not be provided. It deliberately gave up profitable contracts.

Mr. Curtin

No. The figures prove that was not the case. From time to time, one has to come to terms with the facts of business. The business in question has a sad history of under-performance since it was established. An Post has been unable to provide a competitive cost base. People have choice in a competitive market — they do not have to come to An Post — and they have spoken with their feet by going elsewhere.

Deputy Durkan

Is it not true that some of An Post's competitors are as costly, if not more costly, for customers?

Deputy Broughan

A recent article in The Economist suggested that the parcels sector has a bright future——

Mr. Curtin

Yes, indeed.

Deputy Broughan

——because of the development of e-commerce, etc. Is it not incredible that An Post is getting out of the business at a time when An Post's accountants are saying that projections for the year, in terms of losses, are more favourable? The company is deliberately getting out of this sector at a time when it has a bright future.

Mr. Curtin

We have said over and over again that we are not getting out of the business. In some cases there has been a certain interpretation for reasons I do not know. We are reintegrating the parcel business as we believe there is significant business the company can carry on profitably. This level of business will provide for a significant number of sustainable jobs. The reality is that large chunks of unprofitable business were being undertaken by SDS. The range of losses demonstrates as much.

Chairman

Can Mr. Curtin explain the meaning of "unprofitable"? My company was one of the first customers of SDS in 1989 at which time we were using other interlinking companies. While SDS prices were then very competitive, I do not know at what level they are now. If the business was successful for other companies, why was the SDS cost base so high? What was the death-knell of the company?

Deputy Broughan

As an addendum to the Chairman's point, we heard repeatedly from the workforce that there was scope to increase charges significantly while remaining competitive. Management simply wanted to close the company.

Mr. Curtin

I can only say again that what Deputy Broughan said is untrue as well as unfair. The management team spared no effort to find commercial solutions. The commercial solution we have found is to reintegrate those parts of the business in which we can be profitable.

On the Chairman's contribution, we are making losses of the order of €10 million to €12 million on a turnover of €60 million to €70 million. I know of no business which could sustain such losses. I know no business person who would allow such losses to continue to be made.

Deputy Durkan

While that is correct, in the circumstances outlined by the Chairman in which private sector companies and SDS competed side by side, why did SDS lose business? Given the network and contacts of An Post, how did SDS began to lose its market share to competitors?

Mr. Curtin

The Deputy has left out the salient issue of what we were paying ourselves relative to private companies. An Post management and staff were paying themselves far more than they would have received in a private operation and our quality of service was lower. We could not compete on price or quality of service. Ultimately, we failed in a competitive market.

Deputy Durkan

The jury is still out on the quality of the service. From the reports I have received, a number of small businesses nationally have a high degree of regard and respect for the service provided by SDS.

Deputy Broughan

And were willing to pay more for it.

Deputy Durkan

I will speak more about that later.

Chairman

I add my appreciation for the service SDS has delivered since 1989, of which my company continues to avail.

Mr. Curtin

While I cannot answer the questions about customer base immediately, I will be happy to have some of my colleagues provide the information for Deputy Finneran later.

Deputy Finneran

In the event of closure of an operation, does An Post take into consideration the population projections provided in the national spatial strategy and local government county development plans which are public documents? I have mentioned to Mr. Curtin two specific areas where the number of houses is projected to increase by 1,000 and 5,000, respectively. An Post closed post offices in both. Were commercial criteria taken into consideration?

Mr. Curtin

We should provide for an understanding of the commercial and planning criteria we use, not only with regard to post offices. The measure we use is the postal business. Perhaps Mr. Kickham can answer for me.

Chairman

Can Mr. Kickham be helpful to the joint committee?

Mr. Kickham

I will do my best. It is important to be clear that there is no proactive programme of post office closures. The closure of a post office is often the result of the retirement or resignation of a postmaster and our inability to find someone locally to take on the contract. It is not a question of An Post wishing to close down a post office but of no one locally being prepared to take it on. We make a great effort to take account as a matter of course demographics and the national spatial strategy. This has especially been the case in the past year as we have sought to drive targeted local marketing campaigns to boost business locally. This is reflected in some of the figures the business achieved last year. Ultimately, it is a decision for a person locally as to whether he or she sees a business opportunity in a post office. An Post does not make proactive decisions to close down operations which deliver the value we want to retain as a business.

Deputy Finneran

We cannot let that go as it is incorrect. The three people concerned in the cases I cited were paid off by An Post without any consultation with the public. Three service units were installed in place of the post offices. The public made the strongest possible case for the retention of the post offices but public meetings and resolutions passed by county councils were completely ignored. There was even a deputation to the Minister. It is time the facts were declared. There have been many attempts to deal half-heartedly with matters to do with An Post and I am glad we have been given an opportunity to dig a little deeper into some of its activities and responses.

Mr. Kickham

I cannot comment on the specifics of the three post offices to which Deputy Finneran referred. I am not aware of the details in each case. From the information he has provided, it is most likely that what he describes involves a specific scheme put in place a number of years ago to allow postmasters to convert to postal agents and take a severance payment.

Chairman

Can Mr. Kickham not comment because he does not have the information with him?

Mr. Kickham

I do not have the information on the specific locations mentioned.

Chairman

I charge Mr. Kickham with the responsibility of sending the information to the joint committee.

Mr. Kickham

I have no problem with that request.

Chairman

Mr. Kickham should bear in mind that we have a letter which states An Post failed to communicate with people in Cahir. Mr. Kickham can answer the point when it is raised by Senator Kenneally. Will Mr. Curtin take it upon himself to ensure Mr. Kickham communicates with Deputy Finneran and the clerk to the committee on the closures to allow us to move on?

Mr. Curtin

I have no difficulty with that request, nor would I mind if Mr. Kickham responded on the Cahir issue.

Mr. Kickham

I will. We outlined the position on Cahir. Regarding the specific assertion made, I had a number of lengthy conversations with the individual concerned and undertook to try to keep informed. I am willing to have a meeting. I had intended to travel to Cahir before Christmas but it did not turn out that way. There was no specific commitment to have a meeting, nor was one arranged. The area and regional managers and our head of public relations also had a number of conversations with the individual concerned. Subsequent to the committee's discussion, I met the south Tipperary county manager and local representatives and consulted widely and in depth with the people of the area. It is in response to these events that we have made the movements described to deal with the concerns of everyone involved.

Deputy Finneran

The question has not been answered. Is it the case that Mr. Kickham never agreed to meet anyone?

Mr. Kickham

I made no specific commitment to have a meeting other than to indicate that I would be very willing to have one if I were in Cahir. A number of people have met the individual concerned.

Mr. Curtin

To respond to another question, I have no knowledge of a request to the Minister regarding finances.

Deputy Finneran

Will Mr. Curtin confirm that no application has been submitted to the Government in recent years for a financial package to support the automation and continuation of rural post offices, even though such an approach has proved effective in the United Kingdom?

Mr. Curtin

As the Deputy is aware, in 2000 when Senator O'Rourke was Minister for Public Enterprise, the Flynn report analysed this issue, including——

Deputy Finneran

The Senator is no longer Minister. Mr. Curtin stated previously that a certain CEO was no longer in place. My question is whether an application has been made since Mr. Curtin became CEO.

Chairman

Deputy Finneran should allow Mr. Curtin to answer and must not interrupt without permission from the Chair. I am aware that the Deputy is passionate about this matter.

Deputy Finneran

I like to get straight answers.

Mr. Curtin

The Flynn report commented on the issue of the reorganisation of the post office network and the company received an injection of capital of the order of €12.5 million.

Chairman

I do not like to cut Mr. Curtin short but he should answer Deputy Finneran's specific question.

Deputy Finneran

Did Mr. Curtin seek financial assistance from the Government for rural post offices? I did not refer to other Ministers or CEOs.

Mr. Curtin

I am in the process of implementing a programme agreed during the term of office of a previous Minister. My obligation as chief executive is to implement a programme agreed as a result of the Flynn report. That is what I am doing.

Chairman

The answer to Deputy Finneran's question, therefore, is that no proposal was submitted to the Government regarding the post office network or the injection of capital or funding.

Mr. Curtin

I have indicated that a number of issues have arisen in the context of the agreed programme. With regard to the automation programme, we are reviewing the criteria used in the decision taken under the Flynn report. To do this, we are setting up a test and pilot project. This is a prudent way to proceed as it will give us all the facts to determine whether automation will improve the business. Let us find out the current prices for automation and what impact it would have. We will address the issue in a manner that will give every chance to the business. Why would I not give the business every chance? Why would I not want more business?

Chairman

I must try to get a clear answer for Deputy Finneran. Did the company make a specific proposal?

Mr. Curtin

No, work is in progress and we are analysing the issues involved.

Chairman

Is Senator Kenneally satisfied that he received answers to all his questions?

Senator Kenneally

The only answer I received related to Cahir post office. I did not get answers to any of my other questions.

Mr. Curtin

I was conscious of that and apologise to the Senator. I was working backwards but have the answers. It was suggested that anecdotal evidence derived from speaking to people indicated that volumes had increased. Anecdotally, the people with whom I speak have confirmed that the figures coming through show that volumes are down. With regard to the differentiation between 2003 and 2002, the statistics may have been misinterpreted. In 2002 volume increased by approximately 5%, while a 1.5% decline was recorded in 2003. Perhaps this is how the 6% figure was calculated.

Senator Kenneally

I cited the annual report.

Mr. Curtin

There is detailed evidence to show volumes are falling, which is not unusual. They are falling all over Europe and all the companies involved are coping with the problem. There are two groups, the optimists and pessimists. The optimists plan for plus or minus 1% in volumes. An Post is planning for minus 1% and is at the lower end of the optimistic scale. A significant group of players, including some of the largest companies in Europe, are planning for a 4% annualised decline in the postal business. If that were to materialise, it would have a significant impact on all of us.

Deputy Broughan

Why do continental Europeans send more letters than we do?

Mr. Curtin

That is incorrect. Ireland is slightly above the European average. When one is more selective, one finds that we send fewer letters than the Dutch but more than the Italians, Spaniards and Greeks. For every nation which sends more letters, another sends fewer than us.

With regard to volumes, the recovery plan includes significant initiatives to increase business. However, the areas in which we can increase business are limited and it would be disingenuous to suggest otherwise. These include direct mail and packages and parcels, areas which require a specific service. In other words, while there is demand for home deliveries, no one is at home during the day in the new houses to which deliveries are made. If one wants this business, one must be prepared to deliver when people are at home because packages do not fit through the standard letter box. An Post is prepared to do this but does not have the necessary flexibility. Part of the change programme we are negotiating involves an attempt to secure the flexibility we need to allow us to compete properly in that part of the business.

Demand for direct mail, an aspect of the business we want to develop, is limited. Again, however, the current agreement with the Communications Workers Union provides for specific constraints which limit our usage of direct mail. We would like to negotiate greater flexibility and develop this business. While opportunities are available, they are limited.

Senator Kenneally's ambitions with regard to financial services and banking are the same as mine. There is a discrete business opportunity with regard to the footfall in post offices. Proposals are being generated and will go to the board and the shareholder. I hope we will get the support of the joint committee in undertaking these proposals and building a profitable business platform for An Post.

A range of initiatives have been taken on new products. I accept we should have been more active in promoting the company. In the past two weeks members will have noticed from their post boxes that a new campaign is under way to deliver with a smile on our faces. It is a difficult time but we may as well smile because the only way An Post can go is forward. That is our intention.

Chairman

Does the campaign feature on every post box?

Mr. Curtin

It is featured on a significant number of post boxes in Dublin this week.

Deputy Broughan

We always took it for granted that postal employees worked with a smile on their faces. They are famous for it.

Mr. Curtin

I agree. It is a sensible initiative to remind ourselves of the good reputation we have with customers. If An Post can deliver the products customers need at the times they want and at a price they are prepared to pay, the company will have a future. We must come to terms with these three issues. Is the Senator's question on consultation the final one?

Senator Kenneally

Mr. Curtin has not answered three questions, on the date of the previous presentation, business deliveries and the REIMS and UPU contracts.

Mr. Curtin

An Post is satisfied with the REIMS arrangement. It did not work for us because our price point was lower than that of our competitors. With tariff increases in the pipeline, REIMS will be a sensible agreement from a commercial point of view. I encourage continued support for the agreement, although other major players question it.

Chairman

What does An Post receive for delivering a letter from abroad?

Mr. Curtin

We are moving towards the position where we will receive 78.5% of the value of the postal stamp.

Chairman

How much is that?

Mr. Curtin

It is 78.5% of 48 cent. If the suggested new price point of 57 cent materialises, it will be 78.5% of that figure.

Chairman

Does Mr. Quinn know?

Mr. Quinn

It is 37.6 cent.

Chairman

I apologise for cutting across the Senator. An Post is getting 37.6 cent for delivering a letter here and we must pay 48 cent to post a letter in Ireland.

Mr. Curtin

The person who has posted the letter and who needs it to be delivered has paid the other contracting partner, the other post office.

The difficulty for us is that our prices were significantly below the European average. Because they were below the average it was not the percentage that was the problem, it was the fact that our price point was too low and that therefore we were not collecting enough from our contracting partner. That has improved since we increased the price to 48 cent. If we go to the next price point, I do not believe the Reims agreement will be as significant for us.

Senator Kenneally

Do we know how much we are losing as a result? Is it true that up to 20% of mail delivered comes from abroad?

Mr. Curtin

The current updated calculation is that at 48 cent we have narrowed the gap. I do not believe we make any loss at this point in time.

Senator Kenneally

On international mail?

Mr. Curtin

That is correct. It is very close to break-even. Obviously at 42 cent and at 40 cent there was a discrete imbalance. It was a very big loss-maker. The UPU is a completely different agreement. I am an implementer of an agreement. The committee will need to consult the Department on that issue. It is an international governmental agreement signed on behalf of Ireland by the Government. An Post just implements it.

Chairman

How often is it reviewed?

Mr. Curtin

I understand meetings are held every four years. I believe one took place this year.

Deputy Broughan

Is it no longer profitable for an Irish company to post material from abroad?

Mr. Curtin

I am being careful in my answer, because it should not be if they are being charged the normal rates. However, if a company was discounting and we were unaware of it then it would be different. From my perspective if one plays by the rules it should not be.

Senator O’Meara

I apologise for having to leave——

Senator Kenneally

I have a question about business deliveries——

Senator O’Meara

I am under time pressure and I have been here for three hours. I would really appreciate if I could ask my question.

Chairman

Is there a problem with business deliveries?

Senator Kenneally

I have an example of a company which I can pass on to Mr. Curtin. I can write to him about it if the Chairman prefers.

Mr. Curtin

I can get Mr. Morgan to talk to the Senator and answer his query in detail.

Chairman

If that is agreeable to Senator Kenneally. I beg Senator O'Meara's pardon.

Senator O’Meara

I thank the delegation for its extensive presentation. I also thank Mr. Curtin for answering all our questions in this afternoon's long session. This is an important matter. The chief executive will appreciate the committee members' commitment to the future of An Post.

How will the management of the company manage change? We are not looking at a short period of managing change; it will be an ongoing process in an uncertain future for the postal industry throughout Europe and the world. I do not consider acceptable the conflict that has been a feature of workplace relations in An Post, as outlined in the presentation dated 2 February but obviously relevant today. Is it essential to have conflict and to have 10,000 workers out on the streets? Other companies, including other State companies, have managed change in a difficult environment without their workers taking to the streets. It is unacceptable to us as Members of the Oireachtas that this would happen in a State company. I appeal to company management to get its act together on that front.

On 2 February this year we listened to the postal unions set out an extraordinary and intolerable background of failed industrial relations. I do not say the blame is all on one side; it clearly is not. Two partners are involved in this process. There were references to totally unacceptable work practices and practices that should have been changed that were not changed. I agree with the point that resolution has been left very late.

I appeal to management to set up some kind of internal structure that has genuine partnership at its heart to ensure that the change is successfully managed without people having to take to the streets and monopolise the time of the Labour Court. It is not necessary to do that. Other companies manage change and I do not see why An Post cannot do so.

I do not attach all blame to management, but as somebody said earlier, it is the job of management to manage. A company must be commercially successful but not at the price of forcing workers to take to the streets to be heard. On 2 February we heard union leaders say to us that they felt they were headed for confrontation. This is unacceptable in 2005 against a background of national partnerships and all the measures that have been put in place. Not only is it unnecessary, it is unacceptable.

I welcome the fact that An Post has reopened the case for the automation of rural post offices. What timescale is envisaged? It sounds more like an aspiration than a reality at this point. A great deal of change is taking place in villages all over the country. I ask that An Post look at this. The population of some villages has increased from 100 people to 500 people in a short period of time. The population in general is increasing, including in rural areas. Rural Ireland is being transformed overnight. This must be taken into account.

I accept the point made by Mr. Kickham that in some cases people do not come forward to run rural post offices but where they do, they are totally committed to their communities. I ask that An Post would work in partnership with them and recognise their commitment to their communities. They want to upgrade their service.

Will the chief executive indicate if any thought has been put into creating an internal structure of genuine partnership and dialogue?

Chairman

I will take questions from Deputy Durkan and Deputy Broughan. I hope we can finish the meeting in about ten minutes.

I have received a number of complaints from some Oireachtas Members who find it difficult to get responses from An Post. I have been asked to raise the matter with Mr. Curtin. That has not been my experience but it has been the experience of other Oireachtas Members.

Deputy Durkan

In regard to competitiveness, Mr. Curtin mentioned that both management and staff in An Post had overpaid themselves. That hardly extended to post offices because they certainly were not overpaid.

In terms of Sustaining Progress, have there been any payments in recent times such as bonuses to management or staff? Mr. Curtin can answer yes or no.

In 1998 An Post handled 80% of the social welfare contract. It is now down to 62% or 63% and falling. To what extent has An Post contacted the Minister for Social and Family Affairs or the Minister for Communications, Marine and Natural Resources, with a view to redirecting business to post offices? We must bear in mind the significant profits made by banks. It appears as if there is a consensus that banks should get an increased share of the business. I know from previous experience how that is done. It goes without saying that banking institutions are not short of profit at present while the postal service may well be.

In the event of the impending sale of the SDS premises, under what heading will that fall for accountancy purposes?

Deputy Broughan

In the case Mr. Curtin put to ComReg and the Government, regarding an increase in the price of a stamp, for example, did he take into account the cost of subsidising the universal service in rural areas? He did not seem keen to state definitively whether he had done so. It is clearly very important to the 400 post offices that want to be computerised, etc. Has the chief executive tried to insert it? When this committee examined his previous employer, the ESB, and Bord Gáis regarding their increases, with which we did not really agree, it was argued that the universal service obligation was coming into play in the form of a subsidy for the companies' brilliant, gold-plated new networks. Will Mr. Curtin make a definitive comment on the subsidy?

On the aforementioned Snap Printing contract, Mr. Curtin lectured us on the responsibility of the workforce. However, I note from my information that the workforce was given less than three weeks, perhaps two and a half, to consider the implementation of the contract through normal trade union structures. It welcomed the contract but was not given a sufficient opportunity to enable it to have a proper discussion on it or become aware of what was to happen.

On the projections for 2005, let us hope that in late May or early June, when I hope we meet again, there will have been a benign outcome to the two sets of negotiations. Mr. Curtin is making projections regarding the payment to the pensioners under Sustaining Progress. Surely he has had to do that in respect of the budget for 2005. Otherwise, he would not be a serious negotiator at all and his game plan would be totally different. It would be a malign game plan if such provision were not made.

We heard very strong criticism from the workforce of the company during a demonstration outside this building. It feared that management was driving the company into the ground and that it was bent on privatisation. It was feared that this was the ultimate game plan of management. Will Mr. Curtin state whether, in respect of his contract or that of the chief operations manager or anybody else, there are any restraint of trade provisions regarding whether one is permitted to set up in the postal business if one is not part of the senior management team of An Post? As I stated, it is extraordinary to hear such allegations from the workforce. They demonstrate how low morale is.

Mr. Curtin did not address the issues I raised on trade union recognition. I introduced in the House the Trade Union Recognition Bill, which the Government effectively implemented. Even Mr. O'Leary of Ryanair has to come to terms with it, as he is now doing in the courts. My party decided that, ultimately, the Labour Court and the industrial relations machinery of this country——

Chairman

Has the Deputy a question?

Deputy Broughan

I am raising issues associated with sharing essential information on partnership with the workforce, the removal of accommodation for union meetings and the normal training facilities for members of trade unions. Has management not taken a blanket decision to seriously hurt the trade union movement as it operates in the company?

Chairman

An Post is seeking a substantial price increase. If this is sanctioned by ComReg, what does the company plan to offer the customer in return? For example, does it intend to introduce a compensation scheme similar to the one that applies to delayed mail in the United Kingdom?

Mr. Curtin

I will first address Deputy Broughan's questions. I was not avoiding his questions on the malign game plan, the privatisation issue or trade union recognition. I accept that regrettable comments are made in the heat of the moment. It happens in all business discussions, no more so in An Post than in the Deputy's profession. We must address those issues. There is a point at which comments become unacceptable because they are untrue. All the allegations are absolutely untrue. They have no foundation or justification and anybody who knows my track record of operating with the trade union movement could not make such charges against me. If people continue to make such charges I will have to question their motives.

The Deputy referred to two outcomes by the middle of the year. However, three outcomes are required by the middle of the year, the third of which is the tariff increase. It is a three-legged stool, it falls over on two legs. We need the tariff increase and I accept the Chairman's inference that it needs to be justified in terms of the quality of service and performance of An Post. It needs to be justified in such a way that the customer is not the one bearing the cost of the change and that the company and employees are playing their part. Efficiencies and cost reductions need to be delivered by management. I would not and could not object if metrics were imposed on management to restrict it and reprimand it financially if it did not realise these objectives. It would make common sense.

On Sustaining Progress, I reiterate that An Post has budgeted for the payments under Sustaining Progress. The company has always intended to make the payments but they must be made in the context of the changed programme being delivered because the money simply does not exist. We must achieve the programme change and secure a tariff increase. We have no ulterior motive. The company does not have the cash to make the payments at present.

With all due respect to Deputy Broughan, the PSO associated with the ESB is actually for peat stations. That is a specific issue. On the price of the stamp, the proposed tariff increase is such that it is the maximum that can be absorbed commercially. If we went any further, we believe there would be a significant decrease in volume and a consequent loss of overall net income.

Out of respect for Senator O'Meara who is not present I should answer her questions. Does the Chairman want me to answer them at another time?

Chairman

Mr. Curtin should answer them now because the replies will be on the record. Senator O'Meara has to attend another meeting. The fact that members of the committee are absent does not mean they are not interested in what Mr. Curtin has to say. They are all engaged in different activities today.

Mr. Curtin

A very specific question was asked about future developments. We will move on from our present position and we have a process for doing so. The national implementation body of Sustaining Progress has facilitated both sides in recommending and appointing Mr. Peter Cassells to assist us to develop a partnership process. I believe the partnership process delivers change and it does not constitute an unreasonable request. Confrontation is not the answer on either side but we must move on from here and proceed with a programme for change. The management team will co-operate fully with the process under the auspices of Mr. Cassells to develop an appropriate partnership structure for An Post.

Deputy Broughan

Is Mr. Curtin saying that nonsensical events such as the suspensions that took place in SDS during Labour Court hearings will not happen any more?

Mr. Curtin

That is unfair.

Deputy Broughan

It happened.

Mr. Curtin

It is an unfair comment.

Deputy Broughan

Why?

Mr. Curtin

It is unfair because the Deputy knows that, within any large organisation, there are defined operational practices and consequences if people do not undertake what they are paid to do. The specific issue to which the Deputy referred originated at the premises on the Naas Road. It was an incident sparked off by the instruction of the CWU to its members not to undertake normal work. The process in place was that, as part of rebuilding this business, we had reacquired a traditional business which every one of us of a particular age group understands pretty well, namely, the parcel from America. We had lost one of the basic pieces of business and we had now got it back.

In the context of the new parcel business within An Post, it was to be operated from Portlaoise. We employed 16 part time people to undertake that business. The customs people facilitated us by placing a temporary customs business there. However, on the first day of the new business, the workers refused to load, on the instructions of the CWU. That is normal business and the normal conditions when people do not undertake their normal——

Deputy Broughan

The bottom line was that if negotiations were ongoing, why suspend people? It does not seem a good way of fostering a spirit of partnership.

Chairman

If we go down this road, I will have to invite the CWU back before the committee. The committee has a huge programme. We have taken enough time in the two sessions we have had and we do not want to get into the realm of industrial relations when I have already read into the record the Labour Court update. Does Mr. Curtin have anything else to add?

Mr. Curtin

with regard to the automation timescale to which Senator O'Meara referred, I am optimistic. This is not a long-term issue. I need answers to it this early this year. I must be informed how long it will take but we must have answers and they will be available to all concerned this year. It is in our interests to do so because we must plan our future. We will not delay in this process.

The Chairman asked about issues in regard to responses to the Oireachtas Members. If there are issues I apologise to Members. I would welcome details, which I will handle myself.

Chairman

We will not give details. Rather, we will ask Mr. Curtin to send a memo to his management team in order that they understand clearly that genuine answers must be given to Oireachtas Members who make representations or put queries on behalf of the electorate we serve and the customers served by An Post.

Mr. Curtin

I will do that. However, one can also be guaranteed that when the proceedings of this meeting are published, my commitment will be clear.

Deputy Broughan

Does Mr. Curtin wish to say anything about the management contracts?

Mr. Curtin

I was asked a specific question about bonuses being paid, which I answered before. The only bonus paid was in the context of a Labour Court determination for some IT staff. It was paid from a Labour Court determination that it should be paid.

Deputy Durkan

Did no management or staff receive any other payment?

Mr. Curtin

The only payment made so far for 2004 was a bonus payment paid on determination by the Labour Court for a small group of people in the IT area.

Deputy Durkan

Since the suspension of Sustaining Progress, has nothing else been paid other than the IT staff payment?

Mr. Curtin

Yes. There were normal promotions in every category — post-persons and sorters. If one is promoted, it is not unreasonable to expect that one would be paid the rate appropriate to that promotion. That has been paid.

With all due respect, my contract is a private matter between my employer and me and I do not believe I have any obligation to answer that here. However, for the sake of clarity I will answer this issue. There are the normal restraints on trade and confidentiality that one would expect in a contract. Other than that, unless I am instructed, I do not believe I have to answer any specific questions with regard to my private life.

Chairman

Does Mr. Curtin have a confidentiality clause in his contract?

Mr. Curtin

All contracts within An Post have standard confidentiality clauses.

Deputy Durkan

We could do with that.

Deputy Broughan

Everything about our contract with our employers who are the same as those of Mr. Curtin is public.

Deputy Durkan

There are a couple of other issues, for example, the social welfare contract.

Mr. Curtin

The Deputy can take it that on the issue of the Department of Social and Family Affairs, this management team has been valuable if eloquent on the issue. Quite bluntly, it is a business issue; it is unfair. We have not received an increase since 2002 and we are overdue one. We use all mechanisms, verbal and written.

Deputy Durkan

The company is losing volume also.

Mr. Curtin

That is a separate issue.

Deputy Durkan

It may well be a separate issue but it is still an issue which affects the viability of the post offices and the potential profit. Therefore, it is an issue which needs to be dealt with because there is a simple method in front of Mr. Curtin for contacting the Minister for Communications, Marine and Natural Resources or the Minister for Social and Family Affairs with a view to achieving some kind of equality of esteem in regard to the banking services which, as I stated already, are highly profitable by comparison. Has An Post management done that?

Mr. Curtin

We have made the case for the use of our systems. However, there is a publicly acknowledged position with regard to the DFSA's encouragement of the electronic payments. Until An Post has a position in that business, it is at risk of losing that business. That is why we are progressing the issue of An Post being a financial player as well.

Deputy Durkan

That is the whole question, namely, progression of the on-line system has to be the issue. There is no use informing the committee that An Post cannot compete because it is not on-line and as a result is losing business. In which case, if we allowed that continue for two or three more years, there would be no business.

Mr. Curtin

With respect, this is a strategic issue. It has arisen, we are tackling it. We have identified it. We have identified options and proposals, all of which will require investment which is an issue under consideration by the company.

Chairman

Is it true that the NTMA and the Department of Social and Family Affairs have difficulties with An Post regarding the quality of service that both organisations have received from An Post. Is it not true that the relationship between An Post and its two biggest customers has been characterised by poor communication and a reluctance by An Post to engage in meaningful negotiations on service improvements?

Mr. Curtin

I do not know from where the Chairman has received this information but I am unaware of it. I can categorically state that while there are issues between An Post and the NTMA and the DFSA, they are about the cost of the service and what we are paid to do it. They are about the type of service. I am absolutely unaware——

Chairman

If we were to invite the Department of Social and Family Affairs and the National Treasury Management Agency before the committee, does Mr. Curtin believe that they would dispute my comments?

Mr. Curtin

I can only categorise a personalised comment of what I see this company doing. As I am a relative newcomer, I am only seeing it in patches. I saw an issue during the year during the security crisis in regard to the movement of cash. I saw extraordinary efforts by the management and staff of An Post to a point at which I would have to comment on certain safety issues. We were the one company that ensured that the cash moved and was delivered to the social welfare recipients. This company has an absolutely proud record of what it does in this area. If someone is suggesting that we are not giving a quality of service, I would like to see the details. I am not aware of them.

The cost of the services is another issue. It is public knowledge.

Chairman

Is An Post communicating with both customers. Who is in charge of this in the organisation?

Mr. Curtin

Mr. Kickham. We have regular meetings.

Chairman

Does Mr. Kickham communicate with these two large customers.

Mr. Kickham

Not alone do I communicate directly and often with them, we have a very structured account management in place, and a number of people who work solely on those accounts. We have a process in place with the NTMA in terms of discussing all the issues between both organisations, much of which revolves around price.

Chairman

Is the statement I made incorrect in Mr. Kickham's view?

Mr. Kickham

I am not aware that there is any dissatisfaction with the quality of service.

Deputy Broughan

We did not understand the situation with regard to the NTMA. Did it and the DSFA try to effectively bully An Post? Has the company analysed the e-commerce alternatives? What are the alternatives for the Department of Social and Family Affairs and the National Treasury Management Agency if they decide to walk away from the An Post contracts? There are costs if they do their business in different ways because An Post has an unrivalled network — we talked about enhancing it earlier. Has An Post carried out a cost benefit analysis in order that it can get a good dividend for its work that can be passed on to both workers and postmasters?

Mr. Curtin

This is a matter we are currently negotiating. We have put forward options that are desirable from the point of view of An Post but that also meet some of the requirements of our two trading partners, the Department of Social and Family Affairs and the National Treasury Management Agency.

I am surprised at the Chairman's comments, they are news to me and I am concerned about the threat they pose to the company. I will take those away and ask where they came from because I want to satisfy myself as to their veracity.

Chairman

I do not make them lightly. Have you had the opportunity to ask customers what services they would like to see in the post office? Have you carried out any surveys where customers say what services they would like and how they could be augmented and increased?

Mr. Kickham

We have. We have looked at this from a marketing point of view. I have done it, not least in the GPO, which can be instructive.

Chairman

Was that a market survey?

Mr. Kickham

We carry out structured surveys but I often go to post offices and just talk to the customers.

Deputy Broughan

The civil servants and politicians who work here are some of the biggest customers but none of us was consulted about the closure of South Anne Street post office, a useful office for private business when we do not use Oireachtas envelopes. It is now empty.

Mr. Curtin

The horrible reality is that was a leased business and the multiplier for the lease was seven to ten times. That was a trading position——

Deputy Broughan

I was told there was once a post office in the Houses.

Mr. Curtin

——but the commercial cost of lease renewal made it untenable for us. We would have preferred to have stayed there but Grafton Street is one of the most expensive streets in the world.

Chairman

Could the details of where and when the surveys were carried out be sent to the committee? Mr. Kickham, did you consult the people running the post offices to find out what services they could develop and increase?

Mr. Kickham

A business development exchange forum meets on a periodic basis. It is not as well structured as I would like but there is a mechanism for some of those elements.

Chairman

Did you ask them personally?

Mr. Kickham

No.

Chairman

Would it not be a good idea to engage with the Irish Postmasters Union if An Post is now generating a surplus to find out how to develop the services? It would also then be important to update the surveys on customer needs.

Mr. Kickham

I agree. We are open at all times — there is regular and frequent exchange between the IPU and ourselves on any business initiatives.

Chairman

You are in charge. Was there any engagement on a personal level?

Mr. Kickham

I am in charge in certain areas.

Chairman

Would you undertake to engage with the IPU on how to drive forward the business of the post office?

Mr. Kickham

An invitation has already issued to the IPU and we are making arrangements to meet to deal with these issues.

Chairman

I am glad we are working together to drive forward post office services and ensure they are sustainable.

Deputy Durkan

Is the proposed sale of the SDS premises and ancillary facilities likely to fall within the accountancy division?

Mr. Curtin

In the past 18 months I have visited every sub-post office within two miles of this business to communicate and to ask those questions. I was told that I was the only chief executive of An Post who ever went into any of the post offices.

Chairman

Did you learn anything from doing that?

Mr. Curtin

Yes. That is why we are doing the snap printing.

Chairman

Did you communicate that information to Mr. Kickham?

Mr. Curtin

Yes. We talk on a regular basis. Why do you think we did the snap business?

Mr. Quinn

There is a heading in the annual report for profit on disposal of land and buildings and I expect any sales that take place in 2005 to be in the 2005 report.

Deputy Durkan

Only one is mentioned for 2004.

Deputy Broughan

Have Mr. Curtin and Mr. Donald given any consideration to doing a day's collection and delivery to get a proper feel for An Post?

Mr. Curtin

No, because I did it often enough when I was a student. As I spent four Christmases doing it, I do not need to remind myself what it is like at my age. I have a bad leg and Patrick's Hill is very steep.

Deputy Broughan

Mr. Donald might do a few days out in Cabra.

Chairman

I apologise to Mr. Donald for using the word "waffling" earlier. The transcript of today's proceedings will appear on the Internet in the next week. There are issues we asked you to consider today and to report back to the committee on. It is not our intention to invite the delegation back to the committee for the remainder of the year unless it is necessary.

Deputy Broughan

Before the end of the Dáil session we should meet all parties again given that we have taken an interest in this matter that is vital to the country. An Post is a great company offering a splendid service and we want it to continue in that manner. Coming up to the final plenary sessions of the Dáil, unless the Taoiseach decides to go to the country early——

Chairman

Does the Deputy mean this year?

Deputy Broughan

Anything could happen. I am shortly heading for Dunshaughlin.

Chairman

We will leave that matter for the present.

Deputy Broughan

Could we have a meeting if we are still in session?

Chairman

We will leave it to the committee to decide that.

Deputy Broughan

We could do it in July.

Chairman

After our exchange with Mr. Curtin and the other witnesses today, and with the IPU and the four different unions at our last meeting, the committee wants to see full automation of the post office network. It only involves a small sum to give an equal service to every other post office in the country. I realise there are other constraints in other areas of the business but the post office network is in surplus. As business is developed and surpluses grow that are not offset against losses in other areas of the company, it will be a tremendous vote of confidence if the pilot scheme is extended and automation is rolled out over a two to three year period.

We hope you will be able to work through your difficulties. I am aware that the technical group and the assessors are looking at certain issues and we hope that all sides will communicate with each other and bring this matter to a resolution. Two issues take up too much of this committee's time, namely, mobile phones and An Post. Most of the correspondence and presentations we receive deal with those issues. We hope this matter will be dispensed with and that Mr. Curtin and his management team will work together to run the company, in partnership with the workforce, which has served this State so well since its foundation.

Mr. Curtin

I have nothing further to say. I thank the committee for its indulgence. We answered its questions as best we could.

The joint committee adjourned at 5.41 p.m. sine die.