As Minister, I am acutely conscious of the value placed by communities in both rural and urban areas on services provided by post offices and I am concerned to ensure the needs of those communities continue to be met. I believe there is enormous potential for An Post to create additional competition and increase the availability of banking facilities throughout rural Ireland.
An Post recently announced its plans for a modernised post office network, which centres around the availability of new services in a modernised, revitalised network. Such services will include a better range of Government services, financial services and e-commerce services for shoppers and small businesses. The announcement by An Post is supported by an agreement reached with the Irish Postmasters Union, IPU, executive following three months of intensive negotiations, which has subsequently been endorsed by 80% of IPU members. I want to publicly acknowledge the tremendous work done by Turlough O'Donnell, who I appointed to assist with these negotiations and to come to a conclusion, which was accepted by 80% of the membership.
The agreement represents a positive first step in reinvigorating our national post office network. It is the first agreement in regard to the revision of the post office contract since 1907, so it is far older than most Members of this or the other House and, in fact, older than the State itself. It provides for adapting the post office network to the changing environment in which it operates by providing a service that meets the needs of communities across the country, particularly in rural areas.
An Post has the largest retail network in the country and provides savings and investments, lending, payments and insurance services to retail customers. An Post already offers a significant range of financial services to customers and is now looking at extending the range of services provided. It is actively looking at what other postal services across Europe and elsewhere are doing, looking at what has worked and looking at different models that have been tried. We are already seeing a number of important new initiatives. An Post has invested in the launch of a current account in 2017, which is now available in each of its branches. The account has been well received, with an average of 100 accounts being opened on a daily basis and 25,000 customers in less than a year. It provides agency banking services for three of Ireland’s retail banks, AIB, Ulster Bank and National Irish Bank. These services are available to consumers and business. I understand discussions are ongoing with other financial institutions. In 2017 there were over 4.5 million agency banking transactions at a value of €1.5 billion.
In 2017 An Post administered more than €20 billion of State savings for the National Treasury Management Agency.
State savings are estimated to be 16.5% of national household deposits. At the end of 2017, over 480,000 customers held fixed-rate savings products and over 1.2 million customers have a post office savings bank account.
An Post had sales worth over €300 million in the provision of foreign exchange services in both 2016 and 2017. A further five currencies are being added in 2018, which will also see an enhanced online presence and a mobile app developed. The intention over the coming weeks is to extend the foreign exchange cash provision. An Post offers bill payment services for over 100 companies, including Electric Ireland and Bord Gáis, with over 1.6 million bills processed through the network in 2017. Post Insurance employs over 160 staff and has over 160,000 policy holders. Through its network, An Post has already established relationships with local small and medium enterprises, for whom it provides cash services. Over €275 million was lodged by local businesses in 2017. It is clear that An Post is already providing a significant range of financial services to over 1.7 million customers across its network and online channels. It will continue to add new products and evaluate new propositions through partnership models.
In so far as the Kiwibank model is concerned, A Programme for a Partnership Government envisaged that An Post, the Irish League of Credit Unions and other interested stakeholders would be asked to investigate and propose a new model of community banking, such as the Kiwibank model in New Zealand. The programme for Government also includes a commitment to investigate the German Sparkassen model for the development of local public banks. A project team comprising officials from the Department of Rural and Community Development and the Department of Finance was established to progress this commitment. The project team carried out detailed research into the concept of a public banking model.
In addition, a public consultation process seeking views on the concept of a community banking model ran for four weeks. A total of 16 replies from a range of stakeholders were received. As part of their research, officials from both Departments met representatives from the Savings Banks Foundation for International Co-operation and Irish Rural Link. These organisations put forward a proposal as to how a local public bank, based on the Sparkassen model, could work in Ireland. The Department officials have now finalised their report and have submitted their findings. The report has been submitted to the Government for consideration and will be published in due course.
Turning to State services, the Government is actively working on further opportunities for government business through the post office network, particularly the payment of motor tax. Government policy is to offer government services online but there is always likely to be a segment of the population that is not comfortable or proficient in accessing online tools or services. One in seven people in Ireland has never used the Internet. The post office network is the obvious choice as the "offline gateway" for citizens with its nationwide network and existing strong relationship with offline citizens. I have asked my officials to actively engage with An Post, the Office of Government Procurement, the Office of the Government Chief Information Officer and other Departments to assess how additional State business might be channelled through the post office network. I know discussions have been positive and I hope to be in a position shortly to expand on some measures under consideration.
My colleagues, the Minister of State, Deputy Kyne, the Minister for Rural and Community Development, Deputy Michael Ring, and the Minister for Employment Affairs and Social Protection, Deputy Regina Doherty, and I are committed to ensuring more government services are channelled into the local post office network. We are determined but also cognisant of the need to adhere to public procurement procedures. The first practical step that the Government is taking is the digital assist pilot programme. Under that programme, post offices will provide access to a wide range of government services. Government funding of €80,000 has been secured for the roll-out of a pilot digital assist scheme to ten post offices, which will be equipped to help citizens with online government interactions. The ten pilot schemes will be located in rural post offices and will be in place later this year.
A pilot e-Local service was launched by An Post last year in three districts, Bantry, Mullingar and Ennis. This service combines the strengths of online commerce with that of An Post mails network for the benefit of local business. It gives local business an edge over national and international online operators by connecting retailers with their customers both online and in person. A key feature of the eLocal.ie service is that An Post will give each retailer an online presence, displaying their goods and services, and enabling online orders. This ensures any business in the three towns can guarantee next-morning delivery through the local post van to any home within the mail district. Based on the development of these three locations, the intention is to expand the service across the country. This will ensure that more of the €14,000 per minute currently spent online by Irish customers will be spent on goods in this country. Currently, €10,000 of the €14,000 per minute spent is spent on goods and services outside this country. I want to see a greater proportion spent on goods and services in this country, particularly in provincial towns. The eLocal.ie service facilitates that.
The affiliation with the Department of Employment Affairs and Social Protection remains a significant feature for the future of the post office network. In April the Minister for Employment Affairs and Social Protection renewed her Department’s contract with An Post to provide pensions, child benefit and other social welfare payments in cash at post offices. Last year's contract amounted to €51 million for 33.6 million payments, and the value of the 2018 contract is expected to match that. This reaffirms the Government's policy that sees the post office network as a key piece of the country’s financial and social infrastructure, particularly in rural areas. Accordingly, A Programme for a Partnership Government commits to actively encourage payment at post offices. All avenues are being explored to ensure services available through the post office network are enhanced in order that we have a strong, sustainable customer-focused network. I look forward to hearing your views and suggestions on this important matter.