Seanad Éireann debate -
Thursday, 4 Jul 2013

Vol. 224 No. 9

Promoting a Sustainable Future for the Post Office Network: Statements

Minister for Communications, Energy and Natural Resources (Deputy Pat Rabbitte)

First, I thank the Members of the House for inviting me to discuss the Oireachtas Joint Committee on Transport and Communications report on the post office network. I commend the committee for undertaking this useful piece of work and on the level of consultation it has undertaken with interested parties. The number of individuals and organisations which responded is testament to the public interest in the network and in its future.

This is the second significant report on the post office network in the space of a year. The Irish Postmasters' Union commissioned Grant Thornton to produce a report on the future of the post office network which provides a number of interesting proposals to enhance the viability of the network.

Turning to the report of the Oireachtas committee, in general I agree with the thrust of the report which examines the current configuration of the network, the importance of government contracts and makes suggestions for extra business for post offices. In its recommendations, the report acknowledges the vital role that post offices play in local communities in both financial and social terms.

In financial terms, post offices serve as a financial hub and as the front office for Government business and utility providers. Equally important, the post office serves as a social hub for local communities. The desirability of channelling more Government business through the network is emphasised, although the requirement to adhere to EU procurement obligations is also recognised. Improvements to the manner in which An Post handles the closure of post offices are recommended, as is the desirability of managing the cost of operating the network. The recommendations reflect a common-sense approach to improving the viability and sustainability of the network and I am pleased to say many of the suggestions made have been adopted, at least in part, by An Post.

The local post office is seen as an immutable, unchanging part of the Irish landscape. That is true, however, only up to a point.

Senator Rónán Mullen

I apologise to the Minister, but are copies of his statement available?

Deputy Pat Rabbitte

I do not have copies, but I shall autograph some and circulate them to all Members of the House.

Acting Chairman (Senator Ned O'Sullivan)

As soon as they are available, we will distribute them.

Senator Rónán Mullen

I would be grateful for that.

Deputy Pat Rabbitte

An Post and postmasters have recognised that in order to remain relevant to the needs of local communities, the network needs to move with the times. While offices might look traditional on the outside, the network has experienced some significant developments, the most significant of which is that it is now fully computerised. This investment was necessary, as post offices now operate in an increasingly competitive environment and face challenges from other retailers with electronic payment options and from online payment channels. The national payments strategy envisages the increased use of card payments in order to align our payments infrastructure with that of competitor countries. Financial institutions and utilities can make significant savings in switching customers to online channels and many are aggressively doing so.

An Post has responded to these changes and, to be fair to the company, the network has come a long way in the past ten years. The investment in computerisation has broadened the range of services which can be offered to customers and increased the number of organisations which are prepared to do business with An Post. In order to illustrate the scale of the changes, I will briefly list some of the services now available which have been introduced in the past ten years: banking business with AIB and Danske Bank such as cash lodgements which generate over 4 million transactions per year; foreign exchange for cash and card transitions; and One for All gift vouchers. It is also worth mentioning that State savings worth €17 billion, which represent over 15% of household deposits in Ireland, are handled by the network. Again, the extra business has translated into increased payments for postmasters, growing from €55 million in 2003 to €79 million in 2012.

In addition, the post office network secures about €126 million worth of business from the Government each year. The most significant contract is that with the Department of Social Protection. I understand from my colleague, the Minister for Social Protection, Deputy Joan Burton, that An Post has been selected as the preferred bidder for the social welfare payments cash contract. This is very good news for the network as, in addition to the social welfare payments, much of the bill payment and other revenue streams flow from the social welfare business. The fact that An Post won the contract after a competitive process augers well for the future of the post office. As I have mentioned, the reality is that electronic payments options will become the norm, including for welfare clients. Strengths such as automation, the physical scale of the network and the strong ethos of customer service will allow An Post to continue to be involved in welfare payments and I understand it will pitch strongly for e-payment business when it is put out to tender.

With the social welfare contract secured, continuing to build on the strengths of the network to obtain extra business is the next step. I agree with the Oireachtas joint committee's report that there is scope to generate more business from the financial services sector and the Government. The report recognises that extra business will be won through a tendering process or that business is offered to all players with point of sale facilities.

The model operated for the payment of the property tax also brought a new concept to the post office, namely, user charges for making payments. While I understand these charges are not popular, they represent a fairly simple way of generating extra business and, by extension, extra revenue for the network. After all, customers clearly value the network and the access it provides. While the social dimension is important, the economic reality is that individual post offices are not viable unless the postmaster can make a living from the business. If the payment of a small user charge helps to secure the future of individual post offices, I doubt that many customers would begrudge it.

The public sector reform agenda being pursued by the Government includes the use of outsourcing options in some circumstances. I have written to my colleague, the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, to suggest the post office network is ideally placed to service more Government transaction services. I understand An Post has met officials from that Department to explore options.

I agree with the Oireachtas joint committee that An Post should have a strong input into the roll-out of the basic bank account as many of the potential users of these accounts are already customers of An Post and know and are comfortable with using the post office. Again, I will continue to remind my colleagues, in particular the Minister for Finance, Deputy Michael Noonan, that without the post office network, it is difficult to see the adoption of these accounts gaining major traction. When I addressed the postmasters' annual conference in May, I mentioned they also had a strong role in improving customer experience such as extended opening hours, where appropriate, and improved layouts, especially as the amount of cash throughput decreased in offices.

The post office network is the largest retail network in the country. In a network of that size, inevitably, there will be closures and I understand the upset this can cause in local communities. It would be fair to say the process adopted by An Post where a post office was to be closed was less than transparent in the past. In response to my efforts with An Post and pressure from the Oireachtas joint committee, a new protocol for closures has been introduced. It has been used six times in the last year and given local communities a greater say on whether a post office should be retained.

I again thank the Acting Chairman for the invitation to address the House. I welcome the publication of the report of the Oireachtas joint committee and the opportunity it gives to discuss the future of the network. I am interested in hearing the views of the Members of the House.

Senator Darragh O'Brien

I welcome the Minister. I was one of the lucky few who received a copy of his statement. It is quite light on detail and I can advise other Members not to scramble to obtain a copy.

I have some questions for the Minister. As he knows, I have a lot of regard for him. While he welcomed publication of the report of the joint committee, does he accept it or any of its specific recommendations? It is positive that he has welcomed the report, but I draw his attention to recommendation No. 5, namely, that the post office network be considered for use in paying other State charges such as motor tax, hospital charges, water charges, property tax, business rates and other such payments.

The Minister and many of his ministerial colleagues have consistently stated they fully support ensuring the post office network is sustainable.

That is certainly welcome, but what is the Government actually doing to ensure it happens? Most of the changes we have seen within the post office network in recent years were driven by private sector operators, particularly the banks, outsourcing some of their functions to the network. I fully appreciate the level of financial expenditure by the State in the area of social protection and the payments that go through the post office network. I am, however, trying to square the circle with regard to the plan outlined by the Minister for Social Protection whereby, by December 2017, only 3% of social welfare payments, as compared with the current figure of 50%, will be made by way of cash transactions. I accept the need for savings and the importance of security. However, if that plan is implemented, what will fill the gap in terms of the threat to the viability of the post office network? If it is done without the provision of support in the areas I mentioned, such as motor tax renewals, we will probably see an additional 400 post offices closing throughout the country. None of us wants that to happen.

This is an issue of particular concern in rural areas. We have already seen the closure, for example, of a large number of rural Garda stations and banks. We heard this week that Ulster Bank is to close between 38 and 41 of its branches in the State. Many rural people see the local post office almost as the last bastion of their communities. Post offices perform functions which banks simply do not. I commend An Post, both management and workers, on the level of service it provides to customers. It far exceeds the service provided by banks, which no longer want any customers coming through their doors. That is patently obvious to anybody who goes into a bank, where it is usual practice to have only one teller in place at any given time. It is important, therefore, that we support the post office network.

I am concerned at the canard thrown out by the Minister - one which previous Ministers in previous Governments also put forward - in regard to EU procurement rules. We in this country have followed those guidelines to the very letter of the law. We do not unbundle tenders as is done in France and other member states. A minimum of 17% of all State business goes abroad, and it is probably closer to 40% in practice. I worked on a report on this issue in the last Dáil, in my capacity as Vice Chairman of the Committee of Public Accounts and in conjunction with the then Chairman, former Deputy Bernard Allen. I wholeheartedly agree that we must abide by EU procurement law. At the same time, however, we would do well to be a bit more clever in how we go about it. We might, for instance, consider unbundling tenders to allow An Post a better chance of winning them. I often point out in these discussions that the French police drive Citroens because, in doing so, they are supporting French business. Many of our fellow member states do not really give two hoots about EU procurement law. In fact, the average across the Union for overseas expenditure by states is some 2% of total spending. The closest to Ireland is Cyprus on 6%. That is an issue of concern to me.

The Minister referred in some detail to State savings, which are worth €17 billion. I agree with the points he made in this regard. I am concerned, however, that the changes the Government has made in terms of the interest paid on those savings will see a sizeable reduction in that book of business. A similar reduction in prize bonds sales is a likely consequence of the reduction in prize funds, another change the Government managed to slip under the radar.

The fundamental issue here is whether the Government has an actual plan for the post office network. The Minister referred to the Grant Thornton report commissioned by the Irish Postmasters Union and the report by the Joint Oireachtas Committee on Transport and Communications. There has, however, been no plan from Government. The Minister must take a lead on this, in collaborations with his colleagues, the Minister for Public Expenditure and Reform, the Minister for Social Protection and the Minister for Finance. We are all agreed that our post office network is vital; the challenge is to ensure it is sustainable. The committee has done a good job in its recommendations, but I would like to see the Minister being more specific in terms of the actions he intends to take on foot of those recommendations.

The Minister indicated that he has written to the Minister for Public Expenditure and Reform suggesting that the post office network is ideally placed to service a broader range of Government transactions. Will he elaborate on this suggestion? What, for example, is his definition of "more"? Did he ask his colleague to consider specific services such as motor tax renewals? That information would be very helpful. I thank the Minister for attending this debate and assure him of my intention to offer constructive engagement on this issue. We all want to ensure the viability of the post office network, but that requires a proper plan with which everybody can get on board.

Senator Tony Mulcahy

I welcome the Minister to the House. I take this opportunity to thank the members of the Joint Oireachtas Committee on Transport and Communications and its former Chairman, Deputy Tom Hayes, for their efforts in producing this report. I wish Deputy Hayes well in his new role as Minister of State at the Department of Agriculture, Food and the Marine.

According to the committee's report, An Post currently has 1,050 post offices in Ireland and some 9,500 staff, both full-time and part-time. It is, therefore, a major employer with a network that operates in every part of the country. This report adds greatly to the debate on the role of the post office network in this State in the 21st century. As a consequence of Ireland's obligation to comply with the third EU postal directive, we have seen sweeping changes to the postal service. This process began with the decision by the Council in 1994 to open national postal markets to competition. Directive No. 97/67/EC, which issued in December 1997, set out common rules for the development of the internal market of Community postal services.

The market in Ireland has been open to competition since 2000, which has seen significant benefits for end users of postal services. An Post's designation as universal postal service provider has helped to safeguard its key role in the delivery and collection of mail. ComReg, as the designated national regulatory authority for postal services, granted An Post its designation for a 12-year period. There have been many changes for users of postal services over the years. The age of the telegram is long gone. Personal letter volumes have fallen as technological innovations led to greater use of electronic mail. Social media platforms such as Facebook and Twitter are increasingly used as primary methods of communication. Mobile telephone texting is probably the main medium of communication among young people and adults alike. It is a fast-changing world in which stakeholders must constantly adapt and develop new services if they are to prosper.

In that context, it is important to acknowledge that the local post office, as much as the local shop, is a vital focal point in rural areas. Of the 4.6 million people living in Ireland in 2011, 1.74 million, according to the census, resided in rural areas. We cannot afford to see the post office network become obsolete. It must adapt and be innovative in the services it offers. After all, the days of selling stamps and delivering letters are no more. There is competition out there, including potentially from operators who are interested only in making a profit from the Irish market and have little regard for social responsibilities. I agree that Ireland, with a population of 4.6 million and a large, dispersed rural population, cannot be compared with Sweden, whose population of 9 million is concentrated around cities.

The joint Oireachtas committee made nine recommendations in its report. It recognises the social benefit of providing advice and face-to-face contact in rural areas. I have spoken to people living alone who go from day to day without any contact with another person except when they go to the local post office to collect their pension. There are 136,000 people aged 65 and over living alone in this country, according to the census. Given our aging population, that figure is set to rise rapidly in the coming years. We have an obligation to ensure that people can access services as close as possible to where they live. No provider should be allowed to cherry-pick the areas in which they will operate.

The report recommends the continued delivery of Government services to the public. In 2012 the Irish Postmasters Union commissioned a report by Grant Thornton. Given that the current social welfare and National Treasury Management Agency contracts make up 29 and 27%, respectively, of the post office network's retail revenue, that report reflected a considerable concern that its viability might be under threat. In this regard, I welcome the extension of the social welfare contract for a further two years, which will afford An Post more time to develop alternative income streams. Several reports have identified particular services which it could and should be offering, such as motor tax renewals and payment of business rates, local authority rents and hospital charges. I welcome the facility to pay the property tax at one's local post office.

It is a pity this facility was not available last year with the household charge. Other financial collecting services that are currently carried out by local government could be carried out in local post offices. In addition, with the closure of rural Garda stations which were only open for a few hours daily, some services, such as providing insurance documents, licences and passport application forms, could be carried out at local post offices. Items could be scanned and e-mailed to the relevant Garda database and passport office, etc.

The Financial Times reported in January this year that Scotland Yard and the postal service are looking at this type of service. Local post offices are open five and a half days a week and this time should be exploited to the maximum. The report also recommended an early warning system, whereby local communities would have advance notice if their local post office was in danger of closure. This is a very good idea. There is nothing better to catch one's attention about a service that one takes for granted, than the threat of its disappearance or closure. We have had this experience over the past couple of months in County Clare.

The committee identified a phenomenon, particularly in rural areas, whereby the resignation of postmasters and mistresses is leading to the closure of local post offices. The committee heard from Donal Connell, CEO of An Post, that one-third of resignations by postmasters since 2011 resulted in post office closures. Some will say that younger people are not attracted to the challenge of taking on a post office as a career option. I say that if the conditions are there to provide a livelihood, they will queue up to take them on. The more services post offices offer, the more people will come through the door. While post offices offer some banking services, there is scope for more to be added along with some local credit union services. In the age of the microchip anything is possible if we put our minds to it. We produce IT graduates of the highest calibre every year and should employ them to come up with new systems for the post office network that will offer fast, secure, cost effective methods of operating.

The committee's report states: "The department of Finance's strategy for Financial Inclusion 2011 also refers to the important role that An Post could play in the creation of a Basic Payment Account". The banks recognise the growth in the services it offers through the post office network, with AIB reporting that more than 3 million AIB transactions took place in the post offices. Bank of Ireland and Danske Bank also recognise An Post as a suitable business partner. As we are all aware from announcements made this week, Ulster Bank proposes to close more of its branches, both here and in the North. Post offices should be allowed to fill this vacuum. They should not be tied to one or two particular banks, but be able to offer customers of all the banks the same common services they get in their local branches.

I am somewhat confused with regard to recommendation No. 9 of the report which states: "The committee recognises that the introduction of postal codes will lead to efficiencies through changes to work practices. However, the committee expresses concern as to whether some of these changes, involving likely centralisation of sorting, could have negative impacts on the viability of rural post offices." In fact, post goes every night to central locations to be sorted. Once the letter is put in the post box, we need it to get to the recipient as quickly and efficiently as possible. A proper post code will speed this up and will make deliveries to rural areas quicker.

I hope the Minister takes on board the recommendations of report. I have no doubt he will and no doubt that the future of the postal network is bright.

Senator Mary Ann O'Brien

I welcome the Minister to the House. I am delighted we are having this discussion on the sustainability of the Irish post office network.

Our post office network is undervalued and few people fully appreciate and consider the vital and important role it plays in Ireland's social fabric. Undoubtedly, with the rapid developments in new forms of instant communication, its importance has been diluted somewhat. Nevertheless, it remains a significant player in the functioning of Ireland's communications infrastructure. I would like to draw attention to the following facts. An Post is a major commercial organisation, providing a wide range of services, encompassing postal, communication, retail and financial services. It is one of Ireland's largest companies, directly employing over 10,000 people through its national network of retail, processing and delivery points. Each week, 1.7 million Irish citizens visit the network of over 1,050 post offices nationwide. Each day, some 2.5 million mail items are delivered to 2.1 million businesses and residential addresses.

These details illustrate the fact that our postal network is extremely vibrant, whether concerned with the servicing of Irish business needs or assisting people in their daily tasks, particularly people in remote, isolated areas of the country. However, the current Government's attitude to our postal network needs close scrutiny. The Minister will tell me that the Government's position on the network is clear, as it has vowed to protect it in its programme for Government. This is of little comfort to me. Perhaps I am becoming increasingly cynical about the promises and commitments offered in politics by governments and parties. I judge people and governments by their actions rather than their words. For this reason, I am deeply concerned for the future of our postal network.

In the past, I have spoken in this Chamber about the lifeblood of local communities right across the country, focusing my comments on small businesses in the main. However, I feel that 400 post offices right across the State symbolise and are at the heart of our communities. We must strive to protect them. As we are aware, post office income is based on each transaction processed on behalf of clients and customers. This brings me to my main concern if the Government presses ahead with its drive for all social welfare payments to be delivered electronically by the end of 2014. This will decimate the income of post offices as the social welfare contracts account for 35% of post office business. Such a move will result in post offices being forced to close as they will no longer be viable. This will be a catastrophe for the network and communities, both urban and rural. This move would see the lifeblood ripped out of communities who depend on their post offices for saving money, paying bills, buying postal orders or stamps, obtaining dollars or sterling commission free, using passport express and paying Garda fines and many other expenses. I am not being dramatic here, just pointing out that this is what will happen in a few years if we do not think clearly now and make the right move.

Leaving business aside, post offices are also an important point of social contact for many vulnerable and elderly citizens. The closure of some post offices would lead to people having to travel long distances to obtain services such as those I have outlined. Some will travel, others will not and some will simply not be able to travel to another post office. At a time when our not so kind-hearted banks are closing branches right across the country, in a drive to encourage people to bank electronically so as to enable banks cut costs and boost profits, the Government must proceed with extreme caution when it comes to any decision which may lead to post office closures, which ultimately results in less consumer choice and increased social isolation.

I am all for creating sustainable businesses and the environment to allow this happen. My passion to see the post office network protected is not based on a false, nostalgic postcard picture of a lovely post office. My vision is based on a sound and tested business model for the network. It is an added plus that this will have a positive social impact. The Minister might well ask what this vision is. Senators will be glad to know that the Government could not make this all happen with the stroke of a pen, but it could be done with not much more than that. Simply, the Government needs to direct more government business through the network. I welcome the analogy Senator O'Brien made with Citroen in France - EU procurement rules how are you. The French approach with Citroen works well.

The recent report by Grant Thornton found that if motor tax renewals alone were diverted through the post offices, this would save taxpayers some €60.6 million. Other services which could be directed to the post office network include: over the counter payments for water charges, local authority rents, driving licence renewals, electronic signing-on, the updating of the register of electors and credit union transactions. The options and choices for protecting the post office network are vast. There is no excuse for us arriving at a situation where there is widespread closure of post offices or any further dilution of the network. It is time for the Government to act and to live up to its promise in the programme for Government to protect the postal network.

Senator Jimmy Harte

I will share my time with Senator John Kelly. I welcome the Minister to the Chamber. In many towns in Ireland the post office is where people make contact with their neighbours. Nowadays many people live in estates but do not meet their neighbours on the street. However, once a week or more often they meet them in the post office, which most often also has a small shop attached to supplement its income.

I refer to the important news last week from the Minister for Social Protection about the other preferred bidder for dealing with social welfare payments. I live in Letterkenny and this week, a second post office was opened in a built up area of the town. I have been calling for such a facility for years but for some reason, An Post would not contemplate a second post office even though there is a queue of 80 yds to 100 yds long every day outside the Letterkenny post office. I raised the matter two years ago at the local town council. Members of the town council who had outside interests voted against it while the same councillors welcomed the recent opening of the second post office. I will not go into the details of why they voted against it. An Post was very slow to recognise the need for a second post office when every person and every dog in the street can see customers are queuing in the rain and demanding a second post office. It took An Post about three to five years to come to that conclusion.

I do not understand the thinking in An Post generally but I welcome the opportunity for An Post to provide extra services. At one time, the town of Raphoe had a post office, three banks, two building societies and now it has one bank, one post office and a credit union. There is an opportunity for An Post to develop its services in all areas. I proposed that the motor tax should be payable through the post office system 25 years ago when I was in business in Raphoe. People were taking out car insurance with me and then they had to go to Lifford to queue up to pay their motor tax. The county manager at the time said my suggestion was a good idea but he said the Revenue and the tax service would not allow that to happen. I ask the Minister to clarify if motor tax payments and other services could be facilitated at An Post offices in the future. The Revenue deals with the property tax but in my view motor tax is straightforward. County council charges are another payment that could be dealt with at the post office counters. It does not matter the size of the office because the post office provides a vital service.

The future of post offices is more secure now than previously. The closure of bank branches could be an ill wind because the post offices can deal with money lodgments and it may be time to consider allowing customers to withdraw money from their bank accounts at the post office counter. For example, Raphoe has one ATM in the town - this situation is quite common in other towns - and if it is not working the nearest town is nearly ten miles away. Some shops are able to supply cash to customers but this is not always available. The post office is open on Saturdays and could provide cash when the banks are closed or the ATM is out of order which is a regular occurrence.

Senator John Kelly

I welcome the Minister to the House. I have always been a strong supporter of the small rural post office. I have said on many occasions that every effort should be made to retain them. I have a historical vested interest in that my father grew up in a post office and my sister has continued as the post mistress in the same post office. I must inform the Minister that she is not making a fortune, she is just ticking over. I am in favour of post offices providing a variety of services. Other speakers have made passionate pleas for retention of postal services but one cannot put a price on the social service which the post office provides. The postmaster knows his customers. He knows when Mary does not turn up as usual on a Wednesday that something may be amiss and he will act on that. Many of the banks are closing branches in small rural towns and customers must do their banking in an adjacent town. Social welfare payments are payable in small post offices and the postmaster of postmistress knows his or her customers. I would say that multiple identity fraud is rampant in this country but at least the postmaster will know whether a person has the correct social welfare card. I spent 28 years as a community welfare officer dealing with people on social welfare. If money is paid into a bank account the payee could be in Timbuktu and it could take six months to find out and all the while the money is being paid out. I am concerned at any threat that the post office network might lose the social welfare tender.

Senator Sean D. Barrett

I welcome the Minister to the House. He is well known for his wisdom and his wit although I do not know whether this topic will lend itself to that.

Great credit is due to the post office, as the Minister said, for the way in which it has transformed in light of the very strong decline in mail volumes. I note An Post made €2.2 million profit in 2011 and it has reduced its staff by 1,200. The company has adapted and remained profitable and this is to its credit. Many other bodies in both the private and public sectors did not adapt to a changing market. I note the Minister's statement that the payments to the postmasters rose from €55 million in 2003 to €79 million in 2012. The business has re-orientated away from the transfer of mail to the financial services that the Minister has described.

It was strange that the rate of interest from the post office was reduced on foot of pressure from the banks. The Irish Banking Federation issued a statement that it was in favour of this reduction because it was in favour of fair competition. That was a remarkable body to endorse fair competition, having walked out of Government Buildings with €64 billion or maybe €90 billion on 29 September. A case could be made that a post office which did not go bankrupt is able to pay its savers more than outfits which did go bankrupt. I ask the Minister to look at this again. A part of the utility function of banking was to promote thrift and savings, particularly among young people. Banks used to do this before they were taken over by the casino types and perhaps there is a role for the post office.

I refer to Senator O'Brien's point about electronic payments and the payment of social welfare benefits. In the trash section of my computer I have electronic communications from banks with which I have never had an account. Therefore, I avoid electronic payments and I stick with the cheque book. I suggest the Minister, Deputy Burton, should beware of using the electronic method for social welfare payments. Ulster Bank went AWOL about a year ago and it was forced to apologise profusely to people. I ask if this technology will be able to deliver and how does it compare with the current reliable system.

I hear warm praise for the passport application system through the postal system as being an excellent alternative to a queue in Molesworth Street. Regulations exist to prevent money-laundering through use of prize bonds. However, a little old lady attempting to buy a present of a prize bond for her grandson is not likely to be a front for some criminal organisation. I suggest the Minister might have discussions with An Post on that matter. I hear praise also for the provision of foreign currency and gift vouchers. A minor cavil would be that very fine boxes of stamps bought in bundles were replaced by just bundles. I found the boxes much more useful.

I agree with the Minister that the opening hours need to be examined. Some competitors based in filling stations, for example, are open longer. The post office has a problem with the queues in its offices and it may take time to reach the top of the queue.

I have some other thoughts allied to the fortunes of the post office. As a consumer I am wary of the post codes proposal which I understand the Minister is bringing to Cabinet. My constituency includes people on both sides of the Border. Clones is in County Monaghan so I can write to my constituents there but I can never remember what the codes are for Lisnaskea, to give an example of ten or 12 miles down the road. I read last week in The Irish Times that the post codes system is estimated to cost €15 million, plus an annual running cost of €2.5 million. I thought it was intended to save money. Might we have a full cost benefit analysis of that proposal? Undoubtedly, there are salesmen for such technology, going around telling us it is wonderful, saying they would like €15 million of public money. Will we be better off afterwards?

The other proposal concerns the television licence for people who do not have a television, which I find very strange. I can think of variations - a dog licence fee for people who do not have a dog, which would bring in a very large amount of money. It introduces a new principle to public finances - being taxed for something one does not have. Perhaps the Minister, Deputy Noonan, will give the Minister a special prize for that idea but I would be reluctant to go there, even if more people without television sets would be buying such licences in the local post office.

In general, progress has been made in a difficult situation and I commend the Minister and the post office management, the postmasters and their employees. They have a very splendid public image in the way they serve the country which is good to hear in times of recession. I commend all involved, from the Minister down.

Senator Feargal Quinn

The Minister is very welcome. I am delighted to have this debate on An Post, where I was chairman for ten years, from 1979 to 1989. Rather, I was chairman of An Bord Poist for four years and then we changed the name to An Post-----

Senator Martin Conway

The Senator did a great job.

Senator Feargal Quinn

As Senator Barrett noted, there is a team of people there who are dedicated and very anxious to succeed. I think it was in Ballinasloe that the people involved told me that the night before they had discovered one letter that had not been delivered because it had slipped between two drawers. They went out and found somebody who would deliver it that night, all because of their commitment to ensure that service was delivered. That is a huge strength. It is one of the reasons I believe there is need to listen very well to customers. In my own business I always spent time each week, and arranged for everybody else to do the same, doing the actual work of the business. I encouraged the senior executives in An Post to go and work in the post offices, whether delivering the mail, being behind a desk doing pensions, or whatever. Some said, "We did that 20 years ago, Chairman". I told them a lovely seanfhocal I remembered, "Éist le fuaim na h-abhainn agus gheobhaidh tú breac". Listen to the sound of the river if you want to catch a fish and you will catch a fish. I told them the water in that river was not the same as it was last week, last year, or 20 years ago. One really needs to keep in touch with what is happening.

There are so many developments that would benefit An Post, as a number of speakers have indicated, including the Minister. Post offices can be the glue that keeps a community together, particularly in rural areas. There must be things we can do on that basis. If one goes around Europe, one seldom goes into a post office where one does not see a very broad range of services. We are touching some of these here, whether banking, insurance or retailing, but one sees that range of goods on offer. We can do the same. In the past I have had the opportunity to visit post offices in New Zealand and Japan, both of which have privatised their post office system. I do not say this should not be considered - everything should be considered at this time. An Post has the ability to expand because it is trusted by the population to a considerable degree. Some 18% of our population are "unbanked" - a nice word. As the movement away from cash takes place something of that kind will happen here.

It is interesting to see what happens in France. Taxes there are collected to a very large extent by the post office; so are rates, electricity bills and motor taxes, which were mentioned today. I imagine we have all been approached, as I was, by the Irish Postmasters Union which is concerned about the anti-money laundering movement that will affect prize bonds. They believe if there is to be anti-money laundering the rate should not be as low as €25 but should be set at €100. I doubt very much if money launderers are going to launder sums of money at that level.

Another issue is the delivery of mail. In 1983, when relevant legislation was going through, there was a big battle to ensure there would be delivery to each home. Is that still on? Does it make sense? When one goes to France, and other countries, in particular the United States-----

Deputy Pat Rabbitte

I am sorry, I did not hear that point.

Senator Feargal Quinn

In 1983 the new postal regulations stated that delivery to every home was a condition and this was included in the legislation, at the behest of the unions who were very worried that they might lose out. That was 30 years ago and I wonder if the same should still apply. When one goes to other countries one sees post boxes at the beginning of a road or an estate, or in the centre of the town, so that people collect their own mail rather than have door to door delivery. I realise this would not be popular and is not something the postal unions would be happy to see. There is a word for another service - parcel hotel - and it is interesting to see these items dotted around. With increasing Internet shopping it does not make sense for the Internet provider to make deliveries to a home where there is nobody present during the day. That is well thought out and is something An Post could be doing - perhaps it already is.

The steps the Minister has taken and is taking, having his eye on the ball, encourages the management of An Post. There is a very strong commited team there and the public has strong confidence in it. Businesses throughout Ireland would give their eye teeth to have that sort of confidence. I wish the Minister well.

Senator Trevor Ó Clochartaigh

Tá céad fáilte roimh an Aire. Seanfhocal eile sa Gaeilge ná, "Mair a chapall, agus gheobhair féar" - live horse and eat grass. That is also important in the post office scenario and it is important that we sustain them. Mar fhear ó Chontae Mhuigh Eo, agus as iarthar na hÉireann, tuigeann an tAire an tábhacht atá ag baint leis na pobail tuaithe agus cé chomh riachtanach agus atá oifig an phoist i lár na bpobal sin. The post office network is a key natural and rural resource so we should not measure its success primarily on financial measurability. The socio-economic impact of a post office must also be taken into account. I take a certain amount of umbrage with one of the suggestions made by Senator Quinn, namely, that we look at privatisation of the post office service. I hope we do not. If we go down that route it will sound a death knell, particularly to rural postal services.

It is important that the post office network is seen as more than a commercial entity. It serves an important social role in communities throughout the country. Obviously there are problems in the network, with falling revenues, branch closures and a high dependence on the single contract with the Department of Social Protection. Based on an analysis of the staffing systems, the network has the capability of easily facilitating additional services, something we would all like to see. Currently, turnover is derived from the three main sources outlined, traditional mail service, Government contracts and financial services. Banking accounts for 3% of revenue, social welfare 29%, NTMA saving contracts 27% and traditional post 16%. Taken together, this means social welfare and NTMA contracts account for 56% of total revenue so it is obvious we need to diversify, if possible. There is a high dependence on State-related contracts for survival and therefore the State's role in maintaining postal services and the network is very important.

In terms of strength, the network is Ireland's largest retail network, with more than 1,100 post offices in the country. It has a very strong brand and is a household name, with positive customer perception.

It is a household name with positive customer perception and a large customer base. It enjoys a considerable goodwill and trust and also provides community and social centres. Those who work in the system possess impressive local knowledge. It has the capacity to handle additional businesses. However, it also has certain weaknesses. It is heavily dependent on State contracts and its offerings are inconsistent. Its financial performance has been varied and it has faced restrictions on marketing. The remuneration system is possibly outdated and inconsistent.

Other Senators have suggest potential sources of income, such as motor tax, court services and fines, local authority charges and ticket sales. In my area of Connemara, the Courts Service's decision to close the administrative office of the local court left people asking how they might pay fines locally. This could be an opportunity for An Post. Reference was made to EU legislation and the fact that competition rules may make it more difficult for An Post to tender for certain contracts. Can the EU also offer benefits, such as some kind of communications or information disseminating element that could be done through the post office network? For example, the EU has established information points in libraries so that people can find out about the service it makes available. Could we tap into the EU for potential contracts for the dissemination of information or services?

I am concerned that An Post is urbanising services. Our current debate is about its office but postal staff provide an extremely important resource. In the hinterland of Galway city, An Post is pushing to urbanise services by not replacing retiring staff in rural areas within a radius of ten to 15 miles of Galway. It is important that post masters and delivery staff are based in communities.

Complaints have been made about the lack of communication with communities in regard to changes. The Government should be rural proofing any policies that are introduced. We have tabled a Private Members' motion on this subject. If, for example, the Minister for Social Protection was required to rural proof all of the policies she introduced, the closure of rural post offices might be prevented because they would be in a better position to retain the social welfare contracts. I urge the Minister, Deputy Rabbitte, to publish the criteria for analysing the viability of post offices. What makes a post office viable from the Government's perspective? If the Department of Social Protection proceeds further with electronic payments, 400 post offices could be in jeopardy.

Will the most recent proposal on post codes be sent to open tender and will they be GPS based? Most of the private delivery companies use GPS systems. It was indicated in previous discussions on the matter that the Minister did not intend to go down that route.

Tá na hoifigigh poist, na máistrí poist agus na daoine atá ag obair sna seirbhísí poist iontach tábhachtach. Tá sé tábhachtach iad a choinneáil faoi scáth an Stáit, go dtabharfaidh an Stát gach tacaíocht dóibh agus go mairfidh agus go méadóidh siad.

Senator Martin Conway

This is my first opportunity to welcome the Minister, Deputy Rabbitte, to the House and to acknowledge his incredible intellect and ability to read a situation. This is why An Post is in good hands with him. The post office network is a strong brand. Not many people realise the variety of services that it provides. PostPoint is a strong product. The national lottery is also operated by An Post. We should move to a position whereby the post office is more a one-stop Government shop than a post office. There is no reason small financial transactions between citizens and the Government should not take place in post offices. One should be able to purchase a dog licence or pay a parking fine in the post office. Not everybody is Internet aware.

The 1,100 post offices in the network can remain financially successful. We had bad local government in the past because we did not need as many local area offices. The post office network could have managed many of the financial transactions that are currently being carried out in area offices.

I look forward to seeing the ten year strategic plan that the Minister and his officials are working with An Post to prepare. I hope the brand can be developed for the betterment of all our citizens.

Minister for Communications, Energy and Natural Resources (Deputy Pat Rabbitte)

I thank all the Senators who have contributed to this debate. There is a large degree of agreement on the strong points of An Post but I would be churlish to avoid the points of disagreement raised. As Senator Conway pointed out, the brand enjoys tremendous recognition, respect and trust. That is a worthwhile place from which to start. I agree with Senator Quinn that the commitment of An Post's workers to delivering a public service is recognised throughout the country.

Senator Darragh O'Brien asked whether I was going to respond to specific issues. He referred in particular to recommendation No. 5 on providing additional Government services through the post office network. I can respond specifically to that recommendation. Payment of the property tax is one example of the services that post offices already offer. An Post and its postmasters have acknowledged the need to diversify, create new products and provide services at their counters. They have been doing that. The Senator also referred to hospital charges. A pilot scheme is in operation with the HSE to investigate what might be done on hospital charges.

His comments reflected a central theme in this debate but we must be practical about these matters. There is a good reason most local authority tenants go to their local authority offices to pay rent, namely, because they will also be conducting other business related to the fact that they are renting from the local authority. It is not a matter of one size fits all. An Post's management has been imaginative in developing new services but it makes sense to make certain payments elsewhere.

Senator Mary Ann O'Brien's central point was that all I have to do is direct Government business to An Post. I am saddened that a person of such business acumen and well-known altruistic disposition has been infected by the cynicism she observes in the environment of this House. She claimed that it is only the Government's cynicism that threatens the future of the post office network and that all I need to do is direct business to post offices. However, we live in a deregulated environment. I cannot direct contract business to the post office network.

There are rules and regulations, regardless of whether we like them, that require these matters to be put out to tender, just like the contract at the Department of Social Protection, which An Post won fair and square. I would not, therefore, be permitted to do it and not because I necessarily disagree fundamentally with what Senator Darragh O'Brien said about the operation of procurement in Ireland when compared with countries such as France. I am in large measure in agreement with him.

One of the things I have learned since the banking crash is that perhaps not all 28 member states are as equal as we might have thought they were in the official babble. We scrupulously apply procurement and state aid rules. My colleagues and officials in different Departments say this is because we are required to do so, that we are monitored closely and that we largely get the benefit of this. There is no doubt, however, that it also imposes serious demands on us in their preparation and duration and sometimes that confers disadvantage on us. That is a fact. Nonetheless, Senator Mary Ann O'Brien is addressing the central point running through many contributions, that the post office is manifestly good, is held in very high regard by citizens, that all the Government has to do is direct more contracts to An Post and everything will be grand and that a Government that does not do this is cynical. It is not that we are cynical. I would like to see An Post adapting, modernising and innovating, as Senator Tony Mulcahy argued, to ensure it can compete with the best. We passed a postal Bill in this House not too long ago which made it plain that we were functioning in a deregulated environment. If we look at the rate at which e-commerce is growing in Ireland - it was worth €3.7 billion last year, 76% of which came from outside - there are competing companies here for that business. It is a matter for An Post to make sure it can do this as efficiently, if not better. I cannot roll back the clock in that regard. It is the environment in which we are operating.

It is not a cynical Government that is responsible for the challenges confronting An Post - either this Government or its predecessors - but the changing environment. It is technology. The core business of An Post which was to deliver mail has been challenged by e-substitution; it is changing technology, deregulation and other big issues which challenge An Post. As has been acknowledged by a number of Senators, it is adapting. The postmasters produced their own report in which they acknowledged that they had to adapt, innovate and think about new services and provide in their premises for the idea of a one-stop-shop, as mentioned by a number of Senators.

I am in sympathy with a number of issues raised such as an exemption for prize bonds, a matter raised by Senators Sean D. Barrett, Feargal Quinn and others. That makes good sense to me and we have been in communication with the Minister. There are already discussions taking place to which I hope the Minister will agree. I cannot let Senator Sean D. Barrett away without referring to his remarks about the television licence for people who did not have a television, which he said was like everybody who did not have a dog having to pay for a dog licence. The difference is that one cannot take the mutt for a virtual walk with one's iPad or iPhone. The generation coming after Senator Sean D. Barrett and me get their public service content from smart phones and smart tablets and platforms other than the traditional television set in the corner of the room. Therefore, it comes down to whether we believe there is any particular value in maintaining public service broadcasting. If there is such a value and people access this broadcasting through means other than the traditional television set in the corner of the room, it seems they should be required to pay for it. A non-dog owner cannot resort to his iPhone on a Sunday evening and take the mutt for a virtual walk.

The postcodes issue was raised by Senators Sean D. Barrett, Feargal Quinn, Trevor Ó Clochartaigh and others. I can confirm that I put the implementation of a postcode system out to final tender last week. Obviously, I cannot go into financial considerations for very obvious reasons. The bidders will return their tenders by the end of the month and we will evaluate them in August. I will bring a recommendation to the Government in September. The Senators should not rely on the figures about which they have read in the newspapers. They did not come from me and I am happy that the CBA that will accompany the postcodes will show that there is considerable advantage to the State, not just for businesses connected with logistics and other areas but also for public service agencies such as the Revenue Commissioners, the Department of Social Protection and the Department of Agriculture, Food and the Marine which need this information. The services will be more efficient and delivery will be cheaper in the long run. We can have a separate discussion about that issue at some time, but as it is at the tender stage, I do not want to go into detail.

I accept what Senator Jimmy Harte has said. We opened a new post office in Letterkenny recently. The protocol on closures is working quite well. Senator Darragh O'Brien asked whether we had a plan. We do. We are in an environment that is changing significantly. Many of the stakeholders have already put their views into the public domain, like the Irish Postmasters Union. The Department has had NewERA carrying out an assessment of An Post today, while the board and management of An Post will have the basis of a five year plan with us in a few months. That five year plan will have to look at some of the more central issues raised in the debate this afternoon. The brand is trusted and plays an important role in Irish society, but there are major challenges in the way things have changed. We have to take this on board.

I am a rebel in the Government on the State savings issue.

I have made my view known that I did not agree with the change. However, like so many matters, one has to see it in the round. The plight of the banks and the prospect of the losing significant savings to the post office because of a perceived superior interest rate could have potentially added to the difficulties the banks have rectifying their own internal ratios. It has been a big success for the post office. The decision was made by the National Treasury Management Agency, NTMA, which reports directly to the Minister for Finance. Accordingly, it is a matter for him.

It also shows there is still a few bob in the country. It would be marvellous if our citizens would take some of that few bob out of the post office and spend it on the high street.