JOINT COMMITTEE ON COMMUNICATIONS, NATURAL RESOURCES AND AGRICULTURE debate -
Tuesday, 7 Feb 2012

Postal Service: Discussion with Irish Postmasters Union

Vice Chairman

I apologise for the absence of the Chairman, Deputy Andrew Doyle, who is unable to attend. I will chair the meeting in his absence. I apologise to the witnesses for having to wait so long to make their presentation. I welcome the representatives of the Irish Postmasters Union: Mr. Sean Maher, president; Mr. Simon Murphy, vice president; Mr. Brian McGann, general secretary; Mr. Sean Martin, treasurer; and Ms Breid Gallagher, executive committee member.

Before proceeding, witnesses are protected by absolute privilege in respect of the evidence they give this committee. If you are directed by the committee to cease giving evidence in relation to a particular matter and you continue to so do, you are entitled thereafter only to a qualified privilege in respect of your evidence. You are directed that only evidence connected with the subject matter of these proceedings is to be given and you are asked to respect the parliamentary practice to the effect that, where possible, you should not criticise or make charges against any person or persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable.

I invite Mr. McGann to make the presentation.

Mr. Brian McGann

I thank the committee for allowing the Irish Postmasters' Union the opportunity to meet and to make a presentation to it today. My name is Mr. Brian McGann, general secretary of the union. With me today is our union president, Mr. Sean Maher, our vice president, Mr. Simon Murphy, our treasurer, Mr. Sean Martin, and Ms Breid Gallagher, all of whom are serving postmasters.

The Irish Postmasters' Union represents the vast majority of self-employed postmasters who, on behalf of An Post, run the country's network of 1,100 post offices and who, in turn, employ approximately 3,000 people in local jobs within their community. Postmasters, many of whom come from generations of postmasters, are deeply rooted in the communities they serve. They, with An Post, are trusted servants of the community, providing valuable services such as banking, welfare payments, mail services, foreign exchange, investment products, postfone and many other products and services.

The post office serves 1.7 million customers every week over five and half days, including Saturday. Every post office is fully automated and is capable of providing any of An Post's services in any part of the country. The post office is trusted, flexible and accessible. When customers walk through the door of a post office, they know they are dealing with people they can rely on and trust and that the sensitive information they provide in order to do their business will be safe, secure and treated in confidence. The post office provides banking transaction services for Allied Irish Banks and National Irish Bank, while savings and investment products, many tax-free and DIRT-free, are also available at post office counters.

Post offices provide welfare payment services to 800,000 people and the provision of this face-to-face service plays a significant role in fraud deterrence. Approximately 18% of people in Ireland are "unbanked", and we believe this figure is rising. For this group, the post office is the supplier of first choice and is their only point of access to financial services. The post office is the institution that allows people, in these hard times, to make part-payments on their bills and, for those in straitened circumstances, we provide a household budgeting service.

The post office is about much more than the services it provides. Many people turn to the post office to get Government application forms, seek advice on a range of citizen information issues and, in some parts of the country, post offices provide a valuable source of tourist information and local knowledge of the area's heritage. Indeed, the value of the post office goes even further than that. In many cases across the country, the post office is a focal point of the community, giving citizens an opportunity to exchange information on what is happening within their area and keep connected with their community. The post office plays a vital role, even in this age of technology, in creating a sense of connectedness and belonging.

The upgrading of technology at post offices has taken place with the introduction of flexible systems that can easily be adapted to provide a range of services to customers within a short timeframe. Among the many achievements and innovations in the post office that we have taken on in recent times are as follows: banking transactions for AIB and National Irish Bank; Passport Express; mobile phone services with postfone; commission-free foreign exchange; Garda fines payments; and various bill pay services. In terms of State savings, we have grown the fund to €12 billion. We deliver a faultless welfare payments service to 800,000 customers each week and we developed a fully integrated solution for Garda fines in a very short turnaround time.

This clearly shows we are flexible, efficient and adaptable in regard to embracing new products and services. In this context, we believe the post office has the capacity and appetite to take on much more business. We are not here to talk about what the Government can do for us; we are here to talk about what we can do for the Government.

In the banking area, given the major banks are trying to reduce infrastructure costs, the post office could become the provider of banking transaction services for major banks such as Bank of Ireland and Permanent TSB. Apart from helping the banks manage their cost base, making banking services available through the post office will make these services much more accessible to many communities, especially in rural areas. Studies in the UK show that SMEs regularly use the post office for banking services and, therefore, local availability would help local businesses keep costs down. We ask this committee to request the Department of Finance to ask all of the major banks to offer banking transaction services through the post office network, especially in rural areas.

Motor tax renewal is another service that could ideally be offered through the post office. A majority of people do not renew their motor tax online and either renew by post or by going to a local authority office in person. According to figures seen by the union, the average cost of a motor tax renewal is in the region of €5 and the average transaction time is five minutes. Quite simply, we can do it faster and cheaper. In the context of 25,000 people being taken out of the public service, we all know that those who remain cannot do the same level of work with fewer resources. We would argue that non-core activity in the public service, such as payments and transaction-type services, should be transferred to the post office to allow the staff remaining to concentrate on delivering essential front line services. In addition, making services such as motor tax renewals available through the post office will make these services much more accessible to many communities throughout the country. We ask this committee to request the Minister for the Environment, Community and Local Government to direct local authorities to transfer motor tax renewal payments to the post office as a matter of the highest priority.

Among the other services that we could provide are: driver licence renewals based on a Passport Express-type model; the new household charge payment; water charges, rates, rents and other local authority payments; lodgements and withdrawal services for credit unions; and value-added services for the Department of Social Protection such as signing-on and identity validation.

I want to deal with a number of key concerns of the union and highlight the importance of these in ensuring that we have a sustainable network of post offices for the future. The Department of Finance published a strategy on financial inclusion last year. Under this strategy, those who do not have a bank account would be given a basic bank account. The strategy, driven largely, it must be said, by the Department of Social Protection, envisages that the "unbanked", mainly welfare recipients, would then be paid their welfare payments through this bank account.

This strategy is flawed in that the provision of a bank account, in itself, will not lead to financial inclusion. Indeed, last year alone 100,000 credit card accounts were closed as people moved away from the mainstream banking services and back toward more direct forms of controlling their finances. People, especially the unbanked, do not trust the banks and many do not want to be forced into a relationship with institutions which they fear will take control of the small amount of money they have. If financial inclusion is to be achieved, the post office must be at the centre of any solution.

People trust organisations such as the post office and the credit union. However, the post office alone has a single, coherent, accessible infrastructure that can deliver the banking solution that will help to achieve financial inclusion. The experience in other countries, such as Brazil, has shown that financial inclusion measures work best when the post office is the vehicle used to provide basic banking services. We recommend that this committee ask the Minister for Finance to ensure that the post office is at the centre of any plan to address financial inclusion.

Moving on to the Department of Social Protection, the union would like to highlight the importance of the welfare payment business to the long-term sustainability of the post office network. Much investment was made in computerising the post office network to facilitate the delivery of the welfare payments business for the Department. The union is gravely concerned that the Department is planning to take this business away from the post office as early as 2013. The union has received many reports that the Department is actively trying to drive business away from the post office by forcing persons to have payments made though bank accounts. We believe in consumer choice but persons should be free to choose the post office if they want payments to be made to there.

If the welfare payments business is removed from the post office network, the union believes that this would lead to the immediate closure of up to 600 post offices. The effect of this, particularly in rural areas, would be catastrophic. Not only would post offices disappear, but many shops in towns and villages would disappear too as in many cases the shop can only exist if the post office remains open. Studies have found this to be the experience in the UK.

The union has been seeking a meeting with the Minister for Social Protection since March last but, to date, we have not been granted a meeting. We ask that this committee would write to the Minister for Social Protection highlighting its concern regarding the impact on the network if the welfare payments business is taken away from post offices. The Minister should be asked to clarify the position without any further delay and give a commitment not to undermine the viability of the post office network.

We have a clear vision and strategy for ensuring that post offices are part of this country's future. We believe that the local post office plays a vital part in the economic and social life of communities throughout the length and breadth of the country. By adopting our ideas, Government can do the following: ensure greater access to services such as banking and local authority services, especially in rural areas; free up limited public resources and achieve efficiencies; and enhance the viability of the post office network.

For our part, the union has commissioned Grant Thornton to produce a report on the future of the post office network in Ireland, with a focus on growing the business to make it more sustainable. We have worked closely with An Post to develop a strategic approach to securing a viable future for the retail network.

The union has, in conjunction with An Post, launched a competition for postgraduate students in the institutes of technology to design a post office of the future. The competition has two elements, namely, to design an urban post office and to design a rural post office. We believe that by taking initiatives such as this we will get people, especially young people, to think about what they want the post office to be for them in the future.

However, what is needed now is the political vision to take on board our ideas and create a roadmap that will ensure the survival of the post office network in the future. We must ensure that the local post office survives as a focal point for communities and to ensure that Irish citizens have an institution serving their needs in which they can place their trust and which is accessible to them within their own community.

We ask this committee to call on the Government to engage with the IPU and An Post to deliver a commercially-based solution that will improve access for customers, drive real savings and deliver on Government strategy. A plan should be drawn up and implemented that will achieve the following: ensure a sustainable network of post offices in the future; identify opportunities to drive more business through the post office network such as banking, motor tax, local authority payments, etc.; and invest in the post office network, especially in rural areas, to ensure that consistency in standard of office and service offering is achieved.

We believe that the post office can play a part in Ireland's economic recovery. The Government can achieve substantial cost savings by outsourcing transaction type services to post offices. Removing non-core activities will allow those who remain in the public service to be redeployed to do essential services. Post offices will become more economically viable by driving more business through the retail network and the public will have greater accessibility to services within their community. Because the network infrastructure is already in place, much of this new business can be taken on at a marginal cost making it cost effective. The benefits to everyone are clear.

We believe in taking a positive approach to securing the future of local post offices and we believe that our ideas are practical, realistic and achievable. As I stated earlier, we are not here to talk about what the Government can do for us. We are here to talk about what we can do for the Government. We are the post office and we are open for business.

I thank the committee for inviting the Irish Postmasters Union to make a presentation. We need the committee's support to help us secure the future of the post office network. We need action now. We need a strategy, a vision and a plan. We cannot afford to wait as, day by day, we see the disintegration of infrastructure within our communities. If we lose the post office we lose the heart of the community.

Vice Chairman

I thank Mr. McGann for that thought-provoking and important presentation. We will go straight to questions.

Deputy Thomas Pringle

I thank Mr. McGann and the delegation for its interesting and thought-provoking presentation. As we have seen over the past year or so, there are a number of threats to the post office network, most notably the liberalisation of the postal market. In my county of Donegal, a number of post offices closed recently. It seems An Post has decided that the only way it can offset the loss of business in the postal market is by closing some of the branch network and trying to save costs in that way.

Mr. McGann's presentation today gives a good opportunity to hear the novel way the post office can be reused, and remodelled within society as well, as he outlined in terms of motor tax renewals and basic payment accounts. The post office has that role and as Mr. McGann stated, it has respect within the communities. It would be the ideal mechanism to address financial exclusion. I fully support the Irish Postmasters Union's call that this committee write to the Minister asking that the Department would engage with the union in how that could be rolled out because it is vitally important.

The Department of Finance's final report on financial exclusion makes interesting reading. The vast majority of those financially excluded are welfare recipients. Welfare recipients already have a relationship with local post offices in terms of collecting payments and doing their business there. There is an important role that can be played by the post offices in provision of the basic payment account.

I note the Department's final report states that other parties have the potential to play a key role, in particular, An Post and the credit unions. It should be noted that the role of the post office as an access point to the basic payment account will have an important part to play in ensuring the sustainability of the post office network. On that comment in the report, the Department has established the implementation group within the Department and the financial inclusion strategy. Given that the Irish Postmasters Union and An Post are not represented, does the IPU have any role in respect of the implementation group?

While we realise the importance of social welfare payments to An Post will the representatives expand a little further on the implications for An Post if they are lost and the impact for the network?

As stated in the presentation, An Post provides banking services for AIB and National Irish Bank. How easy would it be to roll out the service for the rest of the institutions? As I understand it, the basic payment account would be An Post facilitating the banks and giving access to accounts rather than an actual banking account run by An Post. How easy would it be for that system to be rolled out within the post office service? I note the representatives asked for the committee's assistance. In our discussions afterwards we will see what we can do in that area. The role to be played by the Irish Postmasters Union in respect of financial inclusion is vitally important and I would be interested to hear what the other members have to say.

Chairman

To get the protocol right, Deputy Ferris has indicated but Deputy Ó Cuív-----

Deputy Éamon Ó Cuív

I apologise for not being present at the beginning. I suggest Deputy Ferris be taken first and that I be taken last because I was not here.

Deputy Martin Ferris

I thank Mr. Brian McGann for his presentation on behalf of the Irish Postmasters Union. The tremendous service An Post provides for rural areas and the social contact associated with it is invaluable. In current circumstances in many isolated areas it is probably the only point of contact for people to engage with each other given that other aspects of society prevent such contacts.

Mr. McGann mentioned the possibility of the closure of 600 post offices as a knock-on effect if the social welfare element is lost. Will he elaborate on that statement and on what are the statistics based? He also mentioned the implications for the implementation group being set up to pilot the strategy. Is the IPU part of that implementation group and has it had an input into the implementation group, either verbally or through submissions?

Many post offices have closed in the past 20 years. What has been the social impact of those closures and have studies been carried out on that issue? An Post is closing post offices in many parts of rural Ireland. What is the IPU's view on this policy by the company? Has any consultation taken place on such closures or was the IPU presented with a fait accompli.

Rural areas are under constant pressure with services being lost to communities on a weekly basis. What is the IPU doing about this, other than lobbying? Mr. McGann asked if the committee could, by motion or otherwise, protect the services. I would fully support moving a motion to that effect and I would hope that the other Deputies and Senators who are members of the joint committee would do likewise.

I commend the IPU on the valuable service An Post provides on a daily and weekly basis. It makes a substantial contribution to the fabric of society, including the social contact which is probably the only contact for many elderly people.

Chairman

I will continue with the order of indication. I call Deputy Harrington.

Deputy Noel Harrington

I declare before the committee that I am also a member of the Irish Postmasters Union since 1991 or 1992. I welcome the IPU delegation before the committee. Obviously everything it has said resonated strongly with me. We have witnessed huge changes in the services being provided by post offices both in retail and mails, put particularly in retail. When I started it was an entirely paper-based system of accounting and work but is now an almost 100% automated system, which has opened up the scope of the small rural and urban post office business in which they can engage. The post office network has come through huge challenges in achieving those changes and has been very successful. It has added enormously to the business communities in the towns and villages throughout the country but it has been underutilised. Since the foundation of the State when the post office was identified as a focal point for doing Government business that never happened. From time immemorial we have heard of the efforts of the IPU to get Government business whether the one stop shop or other initiatives that would have achieved great support for the network and for communities. The IPU is continuing to seek such business. The opportunities for the post office network have never been stronger. In an environment where stamps are liberally available one can walk into almost any shop and buy a postage stamp. There is no longer a monopoly with An Post in respect of most of its business and the post office network has competed.

The other reality is that post offices close because there is not sufficient business as people do not use them as much as they should. They survive in the communities where people use them. They will not survive if people do not use them. One does not get a hand out or a retainer; one is paid per business transaction. In some parts of west Cork the people who shouted the loudest about the closure of post offices were those who never used them. That was a shame. Those who reflect on getting their allowances paid through direct credits in financial institutions are often the most vociferous about the closure of post offices. This is not just an An Post, a Government or a post office network issue it is also a community issue. Those who can keep the post offices safe in their communities are the communities they serve.

Specifically, An Post has scope in terms of staff training and expertise. This is not about the building but the strengths of the staff. They are all regulated by the Financial Regulator for the most part and have an ability to take on regulated financial business which, I understand, was a stumbling block in the past; that should be relayed to the Departments of Finance and Communications, Energy and Natural Resources. Without going into all the details outlined by the general secretary I strongly urge that the committee - I say this with caution because I will probably be a net beneficiary - take on board the points made by the IPU, in light of the failure of the banking system, in respect of the provision of financial services. An Post and the post office network in general is primed to take on that extra business and is willing and able to do it with the trust of the community quickly and efficiently. That is the message the IPU is trying to get out. I hope the committee will endorse that view and recommend it to the relevant Departments for consideration more strongly than was done in the past. During past decades, successive governments paid lip service but nothing substantial ever happened. I hope there will be a positive development for the future.

Vice Chairman

We have three speakers indicating, Deputy Éamon Ó Cuív, and Senators Michael Comiskey and Mark Daly. I propose that we deal with the questions that have already been asked and then revert to those indicating. Is that agreed?

Mr. Brian McGann

I am happy with the Vice Chairman's suggestion. I will respond to the questions but not necessarily in the order they were asked.

Deputy Pringle referred to the financial inclusion strategy. The Irish Postmasters Union has a view on the financial inclusion strategy and submitted a respond to the initial strategy document. Prior to that we had made representations, and as a consequence of our representations, I think the post office was included in the final draft of that report. We believe the strategy is flawed if the recommendation is for the banks to become the provider of the basic bank account. Many people do not have a bank account, because the last place they want to do business is with the bank. If one read the newspapers yesterday, one will see that the bank account of Galway Airport was raided by its bank and the money was taken from it unilaterally. That begs the question as to how a person with literacy problems or who was feeling insecure or isolated would manage to deal with a banking system that treats a company that is funded by the State in that manner. People have concerns about the banking system. We have looked at how other countries operate, for example, Brazil has successfully operated a bank account designed to achieve financial inclusion for about ten years. It has been successful because those without a bank account use the post office to do their business. We are not certain that a basic bank account is the solution, but if we must travel that road, then the post office network is the vehicle to use.

An Post is represented on the implementation group. We sought a place on the implementation group but were not offered one. The view was taken that as An Post was represented on it, why should the Irish Postmasters Unionbe representedalso. I would draw a comparison to the representation of the Department of Social Protection in addition to a representative from the INOU. I do not think anybody would suggest that there was no rationale for the INOU being represented on it. In the course of their work, postmasters meet and deal with people without a bank account day in, day out. They have a relationship with people and understand them. In trying to develop a solution that achieves financial inclusion, the Irish Postmasters Union has a contribution to make that is distinct and different from An Post's contribution.

The payment of welfare cheques has always been critical to the maintenance and sustainability of the post office network. The computerised systems that are in use were developed specifically for the purpose of delivering the welfare payments business. The design of the system was so successful that it was sold to other postal administrations over the years. For many years, the business that underpinned the post office network was the delivery of welfare payments. It has worked well. If one takes that business from the post office network, it would cause a significant setback across the network and an even greater blow to the post offices that deal almost exclusively with welfare payments. The withdrawal of that business would have a substantial impact on all post offices. It is difficult enough to provide a physical infrastructure, but if one takes away the very significant Government services that underpin it, the viability of the service is called into question.

An Post has done some work in this area, and has formed the view, and we are aware, that the postal service would lose up to half of its network. We are certain that within a year An Post would lose up to half the network if the welfare business was taken from it. The effect of that, especially on communities, would be catastrophic. The post office is a fundamental part of the community, in both rural and urban areas. Its importance to society is not confined to rural communities. I know that for my mother, who will reach her 80th birthday later this year, the post office is of major importance, not just to collect her pension but to meet and talk to people and remain connected to the community. When a person loses his or her job, one does not just lose a job but a social network, and all the social interaction and contact one has with people. The last thing one wants to do to people who find themselves in that situation is further isolate them by putting them into a situation where they do not have to go out to do their shopping or collect the welfare payment and in effect cut them off from their communities. The post office plays a significant role in maintaining the fabric of society.

The greatest impact of post office closures is on the communities that are served by these post offices. As a result of the closure of the local post office, many must travel greater distances to access post office services. It is not always easy for older people, single parents, or parents with a number of children to travel another five or ten miles, which might be a ten or 20 mile round trip, to access a service. It is not always easy when one is dependent on public transport, particularly in a situation where public transport is being scaled back. Not only does one travel further, but one may not have the same number of opportunities when using public transport to go to the post office.

A study was done in the United Kingdom of the impact of post office closures in Devon. The impact was significant. In 57% of cases, where it was a combined shop and post office, the shop closed because it was not sustainable on its own. The community not only lost a post office but the local shop. It is not just older people or those on welfare who use the post office. Small businesses use the post office for banking or sending parcels and mail. The closure of a post office increases the burden on them. It is small businesses that provide local jobs in local communities.

The Irish Postmasters Union is opposed to post office closures on an ad hoc basis. We recognise that An Post is being forced to close offices, especially in rural Ireland, on foot of a commercial mandate that is given to it by the shareholder. The closure of post offices, especially in rural areas, is not just an economic but a social issue and in our view it is a political issue. We argue that while the cost of maintaining these post offices has been looked at, the cost of closing them has not been examined. If one is to look at the cost of deconstructing communities, all one has to do is look to the United Kingdom, where there were riots in many cities over a sustained period last summer. We believe that type of social problem stems from people becoming disconnected from communities. If one does not have strong communities, people become disconnected from them and start to do things that would not be accepted or tolerated in society. We are not saying that there is no case for rationalisation of the network, but we are saying that if it is done on a piecemeal and ad hoc basis, it does not make sense.

We would like to see An Post take a strategic approach to the overall service that involves and engages all the stakeholders. That would allow everybody who is affected to participate in the discussion and look at the impact of what is being proposed, rather than waiting for somebody in the post office to die or resign, giving An Post a reason to then close it. We believe it is far better to invite everybody to engage in a debate and arrive at decisions that are rational and sensible. Let us make rational decisions that allow for things to happen in a coherent and structured way.

A question was asked on AIB and National Irish Bank for which we provide services. We have had discussions with An Post on the matter and we believe that we could easily provide banking services for all of the banking sector. Our provision of banking transaction services would have a number of benefits. First, it makes the service more accessible to the community. Second, it concentrates service provision through one physical infrastructure as opposed to having organisations trying to maintain such infrastructure at different levels. If there is a cost to providing a physical infrastructure then it makes sense to use the one system and structure to push things through. In that way it is more cost effective and sustainable in the long term. The banks are trying to cut their costs and rationalise and this would be an opportunity for them to maintain and expand the service. Many people have said to us that it would be beneficial and handy for them to have an AIB transaction service available in post offices. Many people do not want to use ATMs. They are uncomfortable standing on a street withdrawing their money and would much rather conduct their financial transactions in a premises like a post office.

In terms of what we are looking for the committee to do, we have made a number of recommendations. It is heartening to hear the committee's support for our aims. Obviously we would be delighted if the committee took our recommendations on board. In essence, we would like it to contact the Ministers for Social Protection, Finance, the Environment, Community and Local Government and Communications, Energy and Local Government and through parliamentary party meetings to emphasise the importance of taking action now to ensure the future of the post office. If we do not deal with the problem now by the time people begin to realise a problem exists it will be like the railways where tracks were taken up and we will not be able to restore a service easily. This is the time to address the issues and examine the hurdles that must be crossed in a planned and sustained way. I think I have covered most of the questions.

I thank Mr. McGann and I am sorry to have missed some of his presentation. I have a good idea of the issues from hearing the replies and reading the presentation.

First, I shall talk about the sustainability issue. As somebody who has been passionately involved in rural development for many years I sometimes think we make the mistake of chasing the thing that inevitably has been overtaken by change. When we fight a sustainability battle we must ensure that it is something the people want, use and is relevant to their everyday life. I will give a simple example. I remember receiving a frantic call to save the local telephone kiosk. I rang Eircom who said they would leave the box but only three telephone calls were being made per week from it. Everyone had moved on and rural Ireland had adapted to new technology fairly fast. Inevitably a service with little patronage will wither and die and is hard to fight for. My view, from fighting for things in rural Ireland, has been to talk about the modern relevance for people rather than a nostalgic past. Nostalgia passes and one is left fighting a losing battle. People move on rapidly.

I also remember attending a meeting with ten people, including the postmistress, at which people demanded an ATM machine. In other words, people are ruthless and they will play two sides of the street at the one time. They all want to keep something but do not use it in reality. I do not know if any of the members know the story about Todd Andrews and the train. The story goes that a delegation met Todd Andrews at his office to ask for the railway lines of west Cork to be kept open. The first thing he asked them for was their rail tickets which they did not have because they travelled by car. He asked why, if they did not use the train, they would go to him looking for it. There was a certain sense in that and I am heartened by the IPU's presentation as a result. The IPU looks to the future and has outlined a number of ways for the post office to remain relevant and not just supply stamps for letters. It asked how many post offices we really need in a motor car age. Churches and other things were originally located to accommodate people walking and cycling to them. I always got the impression from postmasters and postmistresses that if some post office down the road earning €10,000 per year closed that they would expect to get the business, make their place viable and provide themselves with a family income. They were secretly quite pleased even though they had to go through the motions of not being pleased. We do need viable post offices. A post office earning between €5,000 and €8,000 per year will not last because nobody lives on that kind of money and the basic dole for a single person is €10,000 per year. I am hard headed enough to say, from what was said by the IPU, that the sustainability plan is vital.

Someone who does not really understand people will say that everyone uses cashless payments. That is true and untrue. It took 100 years for the telephone to become pervasive. It is still my experience that many people from where I live travel 40 miles to tax their car at the counter in the county council office even though they could do so online or post it using the envelope supplied. I used to laugh at that. I was a member of Galway County Council for a long time and was at the council office five times a month yet I posted my car tax application and now I apply online. People have their habits and they will persist for a long time. The number will slowly reduce over time. More pensioners will receive their payments via direct debit into their bank accounts resulting in a big demand for money in their pockets. The only thing that will save post offices are new services but the status quo will not save them. The volume of mail is dropping. Is that correct?

Mr. Brian McGann

Yes.

Deputy Éamon Ó Cuív

Postal orders are not a draw in the same way they used to be. Things are changing and we must change too. I do not need the answer now but are all post offices automated? The delegation seemed to indicate that it was. Does the IPU see a need for further planned rationalisation? My question may have been answered already. Should rationalisation happen by the casual attrition that has happened up to now, in other words, if somebody gets too old or whatever and retires voluntarily? Three people could quit in one area while nobody quits in another area. Should we figure out how many post offices are viable?

My next question is on agencies that were set up in lieu of post offices. Are they members of the IPU? What payments do they receive? Where does the IPU see the agencies going in the long term?

The next big issue is what would happen if the social welfare contract ceased. It would be a disaster. On the other hand, I know from my time spent at the Department of Social Protection that the service works on a wing and a prayer. I was not long in the Department when I examined the issue but decided that it was too risky to do anything permanent in the timescale I had. I suggest, Chairman, that we invite the Minister for Social Protection, Deputy Joan Burton, to address us on the issue. It would be terrible if anything were to happen to it, perhaps through a European challenge, because I understand that it is an ongoing contract which gets us over a legal challenge. It is a kind of hair splitting operation but I would not like to rely on it forever. We should invite the Minister here to outline the social welfare situation. The contract should remain with the post office but we must devise a system. I had an idea on how it might be done but, again, I was short on time and was afraid that I would only get half way through the job. I believe one could construct the tender in such a way that the level of service demanded was so high that only the post office could achieve it. I was short on time. I was afraid I would do half of the job but I would be gone before I could finish it. One could construct the tender in such a way that one would make the demand for a certain level of service so high that it could, in practice, only be achieved by the post office. In other words, if there was a requirement for an office to be provided in every community of a certain size, it might be challenged but it would probably get through. One would have to be able to justify all of that on the basis of objective service criteria, rather than on the basis of trying to ensure a particular group gets the job.

Have officials from the Department of Social Protection spoken to the representatives of the Irish Postmasters Union about the public services card? When I was Minister for Social Protection, I often heard rumours - they may have been vastly exaggerated - to the effect that many people living in Poland were drawing the dole in Ireland. The only way they could do that would be to send somebody else to claim jobseeker's allowance in their place. One has to turn up to collect one's payment on a weekly basis. I thought the key to dealing with that was the public services card. I said the post offices should be given the equipment to validate that the person presenting himself or herself to make a claim was the person on the card. If that were rigidly done to the highest standard, as in the case of a passport, it would reduce the possibility of engaging in cheating or double identification. In other words, the post offices need the technology. Have the postmasters been contacted about the possibility of getting the technology to validate people's claims for payments? It is very important.

I suggest we ask the Minister, Deputy Varadkar, or somebody from his Department to address the committee on the subject of motor tax. When I asked the Minister for Communications, Energy and Natural Resources a parliamentary question about this matter, the answer I was given was that it was not his business. I thought that was a little bit of a push-off, but we will let that pass. We should go to the mountain and ask the Minister, Deputy Varadkar, to come in. It seems to be a no-brainer. People have to travel 30 or 40 miles to get motor tax. They would have to travel a much smaller distance to get to a post office, regardless of the number of post offices in the country. Even where I live, the spread of post offices means one would be travelling two or three miles rather than 30 miles. Some people currently have to travel 60 or 70 miles.

I suggest it is a no-brainer to allow local authority payments to be made in post offices. I refer to rent payments, etc. I will not mention some of the other payments as they might be controversial. It would be a good idea for this committee to invite the Minister for the Environment, Community and Local Government, Deputy Hogan, to address it on this issue. We should receive clear direction from the local authorities in this regard.

When I was in government, I always felt the State was very slow to push its own savings schemes. It used to promote them in years gone by, but it has been very slow to do so in the last 20 or 30 years. I refer to schemes like prize bonds and the new solidarity bonds. Perhaps the committee could invite an official from the Department of Finance to discuss how people can be further encouraged to save in the State. Regardless of the rate of interest we are paying on such savings, at least we are paying it to our own people who will probably spend the money they make in the economy or put it back into the same scheme. It is better than borrowing money abroad from that point of view. It makes a whole lot of sense. It is very local. It is a tangible way of asking people to help their country in a practical way. I am sure the Government would be delighted to get another €2 billion or €3 billion from the people of this country, rather than having to borrow it from the EU, the IMF or any other foreign source.

The postmasters' agenda is very reasonable. I suggest they can do a great deal by acting in a practical manner. I like the way they have approached this. If everything they have proposed were done, it would solidify the base. That is better than hoping to be saved by sticking with the status quo. I do not believe the status quo will save the post offices. We can all make noise. It is inevitable that any decision to abide by the status quo, rather than pursuing a radical programme, will catch up with the post offices.

I would like to make a final comment on the space into which the postmasters have moved. I note what they said about the private banks. I do not know whether the actual delivery of post and letters has even been mentioned. It is certainly not the biggest item on the agenda. We have to accept it is inevitable that this sector will continue its slow decline. I regret that An Post does not have a greater section of the parcels market. It provides a very good service in that respect.

Senator Michael Comiskey

I would like to welcome the representatives of the Irish Postmasters Union to this meeting. It is good to have them here. Anyone who grew up in rural Ireland will appreciate the value that post offices have provided to rural Ireland. That was certainly the case in my time. It is disappointing and worrying that so many rural post offices throughout the country have closed. I welcome the postmasters' presentation, which contained a great deal of good stuff. It is worrying that a further 600 post offices could close. I am sure they appreciate that would be a total disaster. The postmasters have outlined many ideas. Deputy Ó Cuív might not agree with my suggestion that it would be ideal for people to be able to pay the household charge at post offices.

Senator Mark Daly

What about the septic tank charge?

Senator Michael Comiskey

Indeed. I have been approached-----

Senator Mark Daly

The €5 could be taken off us at the post office.

Deputy Éamon Ó Cuív

There would be no money in that unless the post office were allowed to keep the €5 as commission.

Senator Michael Comiskey

When I meet people at marts and at mass, etc., they are wondering how to pay these charges. Many older people, in particular, are not able to log onto computers. This is another item that can be added to the list in as reasonable a manner as possible. Would it be possible for post office services to be restored in small rural towns and villages that have lost those services in recent years? Would it be possible for an unemployed person with a premises in such an area, who might be glad to earn a little extra income, to get back into the post office business? I support the postmasters and agree wholeheartedly with what they are trying to do.

Senator Mark Daly

All the questions I had intended to ask have been asked at this stage. I support what my colleague, Deputy Ó Cuív, said about contacting the various Departments and Ministers. This committee should ask why payments like motor tax and the household charge cannot be made at post offices. Social welfare payments must constitute one of the key areas of business if post offices are to be sustainable. There is no plan for rural Ireland. I know there is a television programme about rural Ireland fighting back. When various matters are added together, it is clear that rural Ireland does not have a bright future. An Post and the Irish Postmasters Union have an important role in putting a strategy in place.

The postmasters spoke about what happened in Devon. It might be no harm to send every Member of the Oireachtas a one-page document outlining what happened in Devon and setting out the experiences of people there since their post offices were closed. We saw what happened when small post offices in very rural parts of this country were closed. It seems that bigger areas of the country are about to be left without any service. Perhaps the one-page document on Devon could be accompanied by a note mentioning that this committee has asked various Ministers to respond to the union's queries on the issues of motor tax, social welfare, the overall plan, the €100 household charge and other Government services that could be provided by post offices in order to make them viable. I know they are not here today. The responses the union gets from the Ministers should be circulated to all Members of the Oireachtas. A follow-up telephone call never does any harm. I apologise for having to leave this meeting but I must go to the Seanad to speak on the EU.

Mr. Brian McGann

I will start by assuring the committee that I will speak to An Post to ensure we will have plenty of €5 notes if we start to take payments for the septic tank registration charge. We are keen to provide these services. It makes sense to provide them through post offices. Many of our customers have told us they want to pay the household charge or register for it. They are very surprised to be told they cannot do so because we are not in a position to provide such services. We would be anxious to do so. I know An Post is similarly keen to see that happen. It is a question of giving people a choice and allowing them to access services in a way that suits them at a particular point in time.

To respond to Deputy Ó Cuív, whose comments I appreciate, the post office network is fully automated. In terms of the capacity of the network any service can be provided and any transaction completed at any post office. We were fortunate to reach that position at the end of 2010 and it is great that this investment in the network is taking place. We must now make use of the network and maximise its potential.

The Deputy is correct that we need to take a hard-headed approach. Let us not focus on times gone by or all the things we would like to have. Let us instead make the greatest possible use of the network, ensure it is accessible and make it as cost-effective as possible. It is in that context that we should have a rational discussion about what should be the size and geographical spread of the network. Rather than discussing these issues in isolation, we should take an overall, coherent and strategic approach, one where we agree to drive business through the network while taking account of what can be sustained practically and what is important in terms of the economy and the social fabric of communities. We must allow everyone who is affected to contribute to the discussion. Once we have reached that point, we can make decisions on how we move forward. This would be a sensible approach in contrast to reacting in an ad hoc fashion by taking decisions to close post offices on the basis that someone dies here or resigns there. The outcome of that type of approach is that people become highly upset and start campaigns. We would be much better off if time and energy were invested in a positive discussion on what the post office network should look like in future.

There are in excess of 180 agencies and the agents are not members of the Irish Postmasters Union. Many of those who have taken agencies have found it has not been worthwhile and the little they receive is not enough to allow them to join the union, even if we were to give them a special septic tank rate. The agency model has not worked terribly well. The focus in the initial stages should be on ensuring we sustain the network.

On fraud prevention activity by the Department of Social Protection, the recent introduction of photographic identification cards has been very useful for identification purposes.

Deputy Éamon Ó Cuív

I was involved in introducing the new cards. Without the corresponding equipment, the system cannot work properly. While I do not mean any disrespect, depending on how distinctive a person's features are on a photograph, the postmaster will not be able to verify his or her identity without authentication equipment in the post office. Postmasters are looking at photographs with the naked eye.

Mr. Brian McGann

Yes.

Deputy Éamon Ó Cuív

They will not be familiar with many of the people who come to the post office and will find it difficult to distinguish one person from another.

Mr. Brian McGann

The technology is in place in post offices to facilitate the type of equipment to which the Deputy refers. The technology we have developed on the delivery side, that is, for mail, is such that if one signs for a parcel or letter, one signs on an electronic screen. This type of technology could also be used at post office counters if people are required to sign on, for example. This is a very efficient and effective way of-----

Deputy Éamon Ó Cuív

The Department of Social Protection was developing such technology when I was Minister. Has the Department discussed with the Irish Postmasters Union the possibility of delivering this technology on the ground?

Mr. Brian McGann

The Department has not spoken to the union. We sought a meeting with the Minister for Social Protection last March and I recently wrote to her reminding her of our request and seeking a meeting. I appreciate that all Ministers are extremely busy - I do not doubt that for a moment - but this is an issue of great importance and the Irish Postmasters Union is anxious to be part of the solution, rather than part of the problem. If we could sit down with the Minister and her officials, they would begin to see that we want to be part of the solution. My concern is that they view us as part of the problem. We have a strong role to play, especially in fraud deterrence where major opportunities are available by virtue of the fact that transactions in post offices are face to face. This offers much greater potential for fraud deterrence than an electronic system, which is faceless. We are all familiar with cyberfraud and the fraud that takes place on the Internet. The more one shifts towards electronic systems, the greater are the chances that fraud will increase.

Deputy Éamon Ó Cuív

I do not mean any disrespect but a person with electronic support is much more effective than a person without it. One of the major issues I examined while serving as Minister was the immense amount of expenditure generated by signing on. I was on the point of abolishing the signing on system because it is time consuming to have departmental officials dealing with thousands of people at counters, especially when they could be deployed to investigations. The alternative available to me was to give postmasters electronic equipment to supplement their role of examining documents by eye. It is much better if a postmaster has access to equipment that can indicate when a person at a counter is not the person in a photograph. While postmasters may have the advantage of local knowledge, they also need the benefit of identification equipment, especially in large urban areas.

One of the ideas I had about social welfare was to provide claimants with a card and pin number once one was certain as to their identity. As electronic forms are developed, an area in which the Department has been slow to make progress, postmasters could then be trained to assist social welfare claimants in filling out electronic forms. This would enable older people and so on to make applications in a post office with the assistance of a member of staff who had been trained in filling out forms electronically. First, however, one must be certain about the applicant's identity.

I am disappointed to learn that representatives of the Irish Postmasters Union have not met the Minister because there is great scope for improving the service, whether by ensuring people have access to the service, assisting them in filling out forms or making sure the right people receive their payments and are physically present at post offices. Postmasters have a major role to play in this regard but they cannot do so without technology.

Mr. Brian McGann

I concur with the Deputy. We have the capacity to play a greater role and are anxious to do so. I am also heartened by his comments on State savings. We need to encourage State savings. Apart from being tax free and, in some cases, exempt from DIRT, availing of the State savings schemes is a little like holidaying at home in that it supports the State at a time when it needs support. The post office has played a major role in increasing the State savings fund to €12 billion. I agree with the Deputy's view on the issue.

To respond to Senator Comiskey, I believe I have covered the household charge. It is always difficult to get things back. This is precisely the point we are trying to make and the reason we were so anxious to appear before the committee. If one sits down and plans a strategy that delivers a functional sub-post office network in advance, one does so in a positive way. When one is trying to chase a post office or have a post office reopened, one is immediately trying to convince people to reverse decisions they have made. It would be much better to have a discussion upfront in which it is explained what is proposed, the reason for a proposal, what the network is capable of doing and how communities can deal with any decisions that are taken.

Deputy Thomas Pringle

I have one final question on an issue that just occurred to me. In the Irish Postmasters Union's discussions with An Post on the basic payment account, I assume An Post has indicated it is agreeable to managing such a system.

Mr. Brian McGann

Yes, that is without doubt. We need to work together with An Post to develop a sustainable approach for the network in the future. We would work quite closely with it in terms of looking at products that might be suitable or services that are capable of being delivered. It would not make any sense for us to go in and say we should do A and for An Post to say it thinks we should do B. We spent a lot of time in the past 12 months talking to An Post and working through some of these issues and ideas. What we are about is trying to develop that future as opposed to coming in and saying, "You should keep this because it is a nice thing to keep". We think there is a good practical business proposition here. What we really need is the political will to take our ideas on board and make that happen.

My colleagues and I appreciate this opportunity to attend and meet the committee members.

Vice Chairman

Deputy Harrington has a question.

Deputy Noel Harrington

I might be able to get this information from the Department of Social Protection but the delegates might have it at their fingertips. During the meeting we heard that new applicants or entrants to the Department's schemes, such as jobseeker's benefit or whatever, are now obliged to come to the post office to claim their payment. However, there are still many people in the system who get direct credit into their account and can access ATMs for cash whenever or wherever they wish. The point is this may not happen within this jurisdiction. A person signs on once a month but only new entrants to the system within the past 12 months-----

Deputy Éamon Ó Cuív

It was Mary Hanafin who changed that.

Deputy Noel Harrington

I would prefer to ask the question of-----

Deputy Éamon Ó Cuív

I merely wish to correct the information. That change was made by the then Minister, Mary Hanafin, before I became Minister.

Deputy Noel Harrington

I can get this information from the Department in any event. However, as far as I am aware, this requirement applies only to new entrants. In one respect, the post offices have reduced what they do. It is not only that they can point to a person and observe that he or she came in but because there was a person behind the counter the claimant recognised, he or she walked out again, and was not about to claim the money which may not have been theirs in the first place.

In my office, this has happened several times. People have come in and chanced their arm. My point is about the very idea that one would have to walk in and meet a person and therefore one would have to be the person so entitled. That is only a small part of the issue. The major issue is that those who sign on at local social welfare offices are not seen again until the following month. That remains a problem and I seek clarification. Do we have figures from the total number of social protection claimants showing those who claim at post offices and those who draw benefit from the direct credit system, through the banks? Do the delegates have that information?

Mr. Brian McGann

No.

Deputy Noel Harrington

With respect then, I will refer to the Department.

Deputy Éamon Ó Cuív

The Deputy should table the question but only for the record. There are several points here. First, when he checks the figures he will find that the number of people who have been signing on continuously for more than two years is quite small. Some 60% of people who sign on are gone within a year. They may sign on again but the next time their signing on is a trigger and they have to come in. Therefore, one will find an increased number. Second, signing on in labour exchanges should be done away with; it should be about collecting one's payment. Third, the postmaster cannot do this work efficiently unless he or she has the technology to be sure, just as the labour exchange is, that the person who presents is the person who should present.

Finally, to nail this for the record, there have been significant rumours. One hears many things through rumours. For example, I heard one person say that each person from a certain African country was signing for three others. I said that was one great bit of news because that means there are only 1,800 such people in the country, judging by the numbers claiming.

When the famous ash cloud occurred and so many people did not sign on during those weeks, we did an analysis of claims by country. When one removed countries such as Australia, as being too far away for people to return home, and one included Ireland and England, one found that the number of Poles, Lithuanians and others who did not sign on that week was the exact same as it was every other week. The number signing on was less by 10% and 90% of those who did not sign on during those weeks were Irish. I remember getting the answer before it was issued. The facts clearly showed the ash cloud had made no difference to the numbers who had not signed on. I said, "That kills that story". However, the story went out and the media purposely kept touting the "fact" that so many people had not signed on, even though they had the breakdown by country and knew right well they were taking away the good name of people without any evidence because all the facts were to the contrary. It is only fair that people and countries should be treated fairly, using facts not urban myths.

Another story one heard was that half of Ireland was living in Portugal, claiming three months' jobseeker's benefit while holidaying there. We looked at what they would have had to do to get jobseeker's benefit. The sum total of those claiming, who were probably Portuguese, to boot, was 16.

Deputy Noel Harrington

The point I was trying to make was that social welfare fraud happens. People who are not entitled to claim very often will try to come in and collect the cash. It does not matter who they are. If they come in and have to deal with a person rather than an ATM the savings the Department of Social Protection can make, and has made, in this regard are enormous compared with the amount the post office charges for the service.

Vice Chairman

A person acts as a deterrent.

Deputy Noel Harrington

Absolutely.

Vice Chairman

Returning to the original question, can Mr. McGann provide the information?

Mr. Brian McGann

I am happy to provide the information to the committee.

Vice Chairman

I thank Mr. McGann and his delegation for attending. It was a very good presentation, with good interaction from all members. I am sure Mr. McGann detected strong cross-party support for the important future of post offices in Ireland.

As regards the presentation, we will discuss the number of requests and recommendations made at coming meetings and will clarify with Ministers some of the points made. We take it all on board and thank the delegation.

The joint committee adjourned at 4.20 p.m. until 2 p.m. on Tuesday, 14 February 2012.