Seanad Éireann debate -
Wednesday, 10 Oct 2001

Vol. 168 No. 4

Adjournment Matters. - Post Office Network.

Mr. Costello

This matter relates to sub-post offices. I call for urgent action to be taken to ensure the network of sub-post offices in cities and rural areas is maintained and that the 12% increase in remuneration is paid immediately to postmasters and postmistresses.

I need not go into any great detail to explain the importance of the network of sub-post offices throughout the country and the role they have played in providing a very valuable community service as well as an economic service. They are located in every village and city. The present threat is looming very large. Last year 52 post offices closed while two reopened.

There is very little interest among people in replacing post offices when, for one reason or other, the postmaster or postmistress shuts down the operation. The reason is obvious since only 30% of all postmasters or postmistresses are earning the average industrial wage and 70% earn less than the average industrial wage. Clearly we have not been looking after our postmasters and postmistresses in an economic sense. Their remuneration has been bad and overheads, costs and rental for premises have been going up. The situation has been deteriorating in the past few years to the extent that we can now see the post office system going deeply into the red in the future. At the same time we must recognise that this is a service which is necessary and a service of community solidarity as well as an economic service. We must come up with a plan which will mean that service can be provided.

The Minister has produced her own plan, which involves putting a forum in place – everyone will sit around the table and that will resolve the matter. However, the problem now is that the contract won by the postmasters and postmistresses in relation to the PostPoint service is seen as a dangerous one from their point of view in that the services being provided by the different agencies connected with Eircom are viewed as points whereby further post office services would be offered, further undermining the post office network. The PostPoint service is now a major bone of contention.

As the Minister of State well knows, there was a protest outside Leinster House when the Dáil and Seanad resumed. Balloting was due to finish on 5 October, last Friday. All indications are that industrial action will be announced on 12 October. Clearly the situation is dire.

The decision to link the 12% remuneration to the forum has meant we are in a state of chaos, as PostPoint and remuneration are now tied together and a strike ballot will result in total stalemate. What is required is a commitment from the Minister to get on with the package. It has been indicated by the postmasters' union that approximately half, or 500, of their members would be willing to accept a decent redundancy package. That is the way to go about it, not using a big stick as the Minister seems to be doing at present, introducing all sorts of conditions for the forum. She should go about this by using an incentive, bringing postmasters and postmistresses on board while seeing how we can maintain the network of post offices and expand their services – we saw recently that the banks are withdrawing from face to face and customer contact. We must ensure also that the promised remuneration is paid quickly so there is not a sour taste or a strike which could easily be avoided. We can see the situation deteriorate and we could easily see a strike early next week and further protests outside the House. I hope the Minister of State has some good news regarding a way out of this morass.

Minister of State at the Department of Public Enterprise (Mr. Jacob)

I thank Senator Costello for raising this issue and I am glad to be here to respond. In February last year the Minister requested Phil Flynn to carry out a review of the sub-post office network in the context of the Government's explicit commitment to the retention of the rural sub-post office network in the White Paper on rural development, given that regional and rural development are cornerstones of the Government's economic and social development policy. Mr. Flynn's terms of reference were twofold, first, to review the financial and business environment of the sub – post office network and, second, to examine options and make recommendations on the sustainable development of the rural sub-post office network against the background of the obligation of An Post to provide a nationwide service.

The facts as outlined in the report are stark. The company operates a network of 1,914 offices, the highest per capita in the EU, and 97 of these are staffed by the company – 1,817 are subcontracted offices. A significant proportion of these sub offices are loss-making, with a very small volume of transactions. The post office division made a loss of nearly £3 million in 2000 on a turnover of £83 million. Due to increasing costs and falling margins, further significant losses are projected by the management of An Post based on current tariffs and the existing network structure, rising from £12 million this year to nearly £28 million in 2004. Total losses over the four year period 2001-04 are forecast at nearly £80 million. These projections have been independently verified as accurate. The post office division is critically dependent on just three contracts for 80% of its revenue, the Department of Social, Community and Family Affairs for social welfare payments, the National Treasury Management Agency for saving services and RTE for licence collection. These customers are held under short-term contracts, all of which are either currently or shortly up for renewal.

The implications of the report for the network are clear. The current situation, which I have briefly outlined, is unsustainable and threatens the continuation of the existing level of services as well as the future viability of the An Post group. The Government, An Post and the union representing postmasters, the IPU, agree that remedial action is urgently required to ensure the future of the network and the widest range of quality services to its customers.

The Flynn report outlined a wide range of scenarios, options and recommendations to guarantee the future viability of the network. In light of the report the Minister announced on 4 April last that the Government had decided to establish an interdepartmental group to assess options for the long-term viability of the post office services. The group's report, published in July, provides the framework for the development of a viable post office network service, which meets the requirements of both the customer and the operator.

In the context of the report, the Government has agreed first that short-term actions by An Post need to focus on the pilot introduction of postal agency arrangements and, second, that in situations where it is impossible to continue a post office service on an agency basis, a Government services outlet network would be developed, having regard to the availability of already existing equivalent community-based or statutory services so as to meet the needs of the community within each county.

The Government also agreed to an equity injection of £10 million to An Post on the basis that this would facilitate the implementation of the overall package of reforms, in particular through payment of the increase for sub-postmasters recommended in the Flynn report. This equity stake is subject to clearance by the European Commission as it may constitute a State aid. We have therefore made a submission to the Commission for clearance under the State aid regime. The Minister also met representatives of the Commission to press Ireland's case for an early and positive response to our request.

The Minister decided to establish a partnership forum to oversee the developments in the network. The first meeting of the forum, which is chaired by Phil Flynn, took place on Monday, 1 October. One of the first commitments the Minister gave when appointed in June 1997 concerned the post office network. She promised that there would be no forced closures of post offices, and that position has not changed since. The Government remains committed to a viable and competitive post office network. I am aware of and appreciate the work undertaken during the years by postmasters and postmistresses in the provision of excellent services for customers, particularly in rural areas. The Minister and the Government are committed to ensuring the pub lic service ethos of the post office network will remain.