SELECT COMMITTEE ON COMMUNICATIONS, MARINE AND NATURAL RESOURCES debate -
Tuesday, 22 Jun 2004

Universal Postal Union: Motion.

Acting Chairman

I welcome the Minister of State, Deputy Browne, and his officials. This meeting has been convened to consider the motion regarding the Universal Postal Union referred to the select committee by the Dáil and the Electricity (Supply) (Amendment) Bill 2004. I suggest that we consider the motion first. If we do not conclude by 6 p.m., a further meeting will be considered, or, if it is the wish of the committee, we may continue until our consideration of both the motion and the Bill has been completed. Is that agreed? Agreed. The Minister of State will make an opening address which will be followed by an address by each of the Opposition spokespersons and a question and answer session. I understand a briefing note on the motion has been circulated to members. The motion reads:

That Dáil Éireann approves the terms of Certain Acts of the 1999 Congress of the Universal Postal Union, signed at Beijing on 15th September, 1999, namely: the Sixth Additional Protocol to the Constitution of the Universal Postal Union; the General Regulations of the Universal Postal Union; the Universal Postal Convention and the Final Protocol thereto; and the Postal Payment Services Agreement; copies of which have been laid before Dáil Éireann on the 26th day of May, 2004.

Minister of State at the Department of Communications, Marine and Natural Resources (Mr. Browne)

I thank the committee and its officials for deferring the meeting for half an hour to facilitate me. I greatly appreciate this.

I bring before the committee a motion seeking Dáil approval for the sixth additional protocol to the constitution of the Universal Postal Union and amendments to the basic Acts consisting of the general regulations of the Universal Postal Union and the Universal Postal Convention, as well as the postal payment services agreement. On the advice of the Attorney General, the motion is necessary under Article 29.5.2o of the Constitution which requires that Dáil Éireann approve the terms of international agreements involving a charge on public funds. Following approval of the motion the Minister for Foreign Affairs will arrange for ratification of the sixth additional protocol and approval by Ireland of the other Acts.

I start by providing some background information on the Universal Postal Union that may prove useful. The Universal Postal Union, UPU, a specialised agency of the United Nations since 1948, is the body governing international postal services. Ireland became a member in 1923. The basic Act of the union is its constitution which was adopted in 1964 and to which an amendment can only be made at Congress, its supreme body, by means of additional protocols.

At the last UPU Congress in Beijing in 1999 the Irish delegation signed, pending approval by the Government and the Dáil, the sixth protocol and other Acts. In addition to the UPU constitution, the other Acts which are binding on members are the general regulations that set out various international rules of procedure and the Universal Postal Convention containing common rules applicable to the international postal service. Ireland also signed a postal payments services agreement which was optional and enabled fund transfer via electronic networks.

I shall provide the committee with some relevant information on the four Acts and the key amendments to their text. I will start with the sixth additional protocol to the constitution of the UPU. The main change brought about by the protocol was to allow the Postal Operators Council which represents the interests of postal operators greater autonomy to revise operational rules between Congresses in order to improve the effectiveness of the international postal service. In addition, this will allow the UPU Congress to focus more specifically on postal policy.

The general regulations outline in detail the functions of the four elements of the UPU structure - the post of director general, the two elected bodies - the council of administration and the postal operations council - and the international bureau or permanent secretariat. The principle amendment to this Act concerns the union's annual budget. Expenditure ceilings for 2000 were set at €24.2 million approximately and €24.5 million per annum for the years 2001-04. As an UN agency, the UPU observes the principle of zero nominal growth in preparing budgets.

With regard to the universal convention on the final protocol which sets out the framework for the exchange of international letters and parcel mail between member countries, among the many revisions to the text at Beijing the following are of note. The universal service principle was enshrined in the Acts with long-term benefits expected to accrue in terms of a greater degree of harmonisation globally, both in the basic postal services provided and in the relevant quality standards which must be met. Each country is obliged to have adequate security arrangements in place for mail processing. Rules on the conveyance of radioactive substances were streamlined.

In regard to terminal dues, the system used to compensate a country's postal administration for the delivery of letters from abroad has been restructured. In global terms, the group of 30 countries classified as industrialised by the United Nations adopted a system linked to the cost of the domestic tariff in the country of destination. Furthermore, from 2005 compensation payable will be linked to quality of service. The other 59 members operating in the developing economies continue to use a flat rate system which is far less onerous financially.

The provision of an alternative option to access the domestic service of another country is an integral part of terminal dues reform. In practice, this means that a customer may opt to be treated in the same manner as a domestic customer in terms of discounts in the country of destination, that is, the discounts provided for domestic bulk mailers. A 7.5% levy on terminal dues payments by industrialised to developing countries was introduced. It funds quality of service projects in developing countries and is administered by an independent board of trustees.

The parcel post provisions have been transferred from the former parcel post agreement to the convention, the effect of which is to make the provisions mandatory in all countries which were signatories of the agreement, including Ireland. The maximum weight of parcels was raised from ten to 20 kilograms. Increasing the maximum weight to 20 kilograms facilitates the creation of a better customer service on the international stage. The compensation available under the terminal dues system is not affected by the rerouting of mail through developing countries.

New provisions were made to the postal payments services agreement which covers the international transfer of postal funds using UPU financial products such as money orders, giro accounts, postal cheques and cash-on-delivery services. The new provisions make possible the electronic transfer of funds and the establishment of new links with non-postal networks such as the banking industry, for example. Unlike the Acts mentioned, this agreement is not mandatory. Although a signatory, Ireland does not rely on these provisions to operate international financial services. For example, as we are all aware, An Post prefers to regulate its international financial services using bilateral and multilateral arrangements.

I ask Deputies to support the ratification of the sixth protocol and approve the Acts. The Acts of the 1999 Beijing Congress streamline the structures and procedures of the UPU, improving international mail handling arrangements and enhancing quality of service for its customers.

Mr. Coveney

At the time of the last committee meeting a number of weeks ago when it was agreed to bring forward this motion I was out campaigning. Therefore, I was not involved——

Chairman

I congratulate the Deputy on his election.

Mr. Coveney

Thank you. On the face of it, Fine Gael does not have a problem with the motion and I am happy to give approval subject to hearing the comments of the other Opposition spokespersons.

Mr. Broughan

The Dáil has just referred this motion to the committee, on which we could have done with a more in-depth briefing in terms of the way in which the universal international service operates. Clearly, this protocol which adds to best practice in supporting a universal postal service for the entire planet is meritorious. I am not clear about the impact of this sixth protocol. On the issue of deregulation, for example, the Minister of State may remember the problem we referred to the Minister, Deputy Dermot Ahern, on a couple of occasions, which emerged in the Christmas post where people received mail from the United States via a US privatised operator and ended up having to pay substantially, sometimes more than the cost of the gift, to acquire goods when they arrived in Ireland. Does the protocol have anything to say about the more deregulated markets? We in the Labour Party felt at the time this was a clear attack on the universal postal service, which we cherish and which helps to develop the connection between populations in different countries. I wonder whether that matter is included in the protocol.

To what extent does the protocol include the other issues such as the REIMS agreement which we have discussed on numerous occasions during Question Time? Prior to our meeting with Mr. Curtin and his An Post officials, we received a good briefing from an Irish private company which partially blamed significant problems in An Post on the bad international deals which An Post had with other operators, in particular, Consignia or Royal Mail. How are any of these issues affected by this? Obviously the Labour Party would be very supportive of the universal postal service, which is one of the benchmarks of a civilised society. Will we create difficulties by ratifying this protocol?

Mr. Eamon Ryan

I want to pass on my condolences to the Minister on the loss of his friend today. On a brighter note, I congratulate Deputy Coveney on his election to the European Parliament where no doubt he will address these international issues on an ongoing basis.

On behalf of the Green Party, I am quite happy to welcome and approve this protocol, particularly the provision of a 7.5% levy which is being transferred from the industrialised countries to the poorer developing countries for the development of their postal services. That is a measure I am happy to approve and see brought into force.

Mr. Ferris

I too welcome what is being put before us. I concur with Deputy Ryan regarding the 7.5% levy on industrialised countries. Anything that improves the operation between each area and improves the quality of operation of international postal services is to be welcomed, and I fully support it.

Mr. Coveney

I have a few questions for the Minister of State on two of the areas under the UPU Convention. Does the official recognition of the universal service concept mean this is becoming enshrined in the convention and that countries are required to have a universal service obligation? Would that impact on policy in Ireland which has worked quite well?

More important, it is stated that there is an increased focus on the security of mail. What implications will that have in a practical sense for people sending or receiving mail? Will there be screening or assessment of risk before mail is delivered? Will it add further to potential delays in the delivery of mail because, as the Minister of State will be aware, there are problems with next day delivery which is far less than satisfactory?

Mr. Kelly

I welcome the affable Minister of State, Deputy Browne, to the committee. I also take this opportunity to congratulate Deputy Coveney on his election to the European Parliament. Are we looking forward to a by-election in Cork or what are the Deputy's plans?

Mr. Coveney

One never knows. We might keep people guessing for a while.

Mr. Kelly

I have been guessing all my life anyway and that is no harm.

My party would not have any problem with the ratification of this worthwhile protocol. I am more a local political than an international one. Locally I would be concerned about the future of An Post and of the postal service in my county, County Longford. What is the future for An Post and for rural post offices? Is An Post selling off its parcel post section?

I use the post office a great deal. I find it excellent in every way, except when I look at the balance sheet at the end of the year. Apart from that, everything is terrific in An Post. I find that the staff do a good job and project a good image, but I would be concerned about the future of An Post. I would like to see An Post put on a strong stable footing.

As I stated previously, I do not expect An Post to make massive profits - that would be dreaming anyway - but I do expect the company to break even. I do not expect the company to be returning massive losses. There should not be any need for that.

We would be concerned about the future of An Post, rural post offices and the parcel post service to which I referred. We have had a good postal service for a long time. Anybody can see that with the proper will and proper management, any business can be turned around. We would like to see all the An Post jobs being made secure. They will be secure, not by operating on a wing and a prayer but by giving serious consideration to the future of An Post. What does the Minister intend to do to make sure that An Post continues?

Mr. Browne

I thank the Deputies generally for their support. Deputy Kelly has broadened the issue to more localised matters.

Deputy Broughan and others raised the matter of the implications for Ireland. The UPU Acts primarily cover international mail operations and therefore the impact is primarily on An Post. However, implementation of the obligations of the UPU does not present any problems for An Post and is ongoing in nature under the provisions of existing legislation followed by administrative measures. The company is fully aware of and is complying with all the obligations imposed by the UPU Acts.

There is no significant impact on the international mail sector as a result of the UPU Acts. Although the terminal dues system is in place within the UPU framework, Ireland, as a part of the officially designated industrial countries, regulates the exchange of international letter post with most of the developed economies through an alternative agreement outside the UPU framework. This agreement, as Deputy Broughan stated, is known as REIMS. It includes all new member states with the exception of the Netherlands. The REIMS agreement is perceived as being more advantageous to Ireland as the level of compensation offered is higher than under the UPU system. I also want to inform the Deputy that the REIMS agreement is being looked at later this year.

Deputy Coveney raised a few issues about the universal service. I suppose it was driven by the EU originally and was then taken on board by the UPU.

The issue of 11 September and security concerns was raised. Since 11 September 2001 there has been serious concern about the security of mail. That is borne out by the conference that takes place in Bucharest later in 2004, at which there will be something like 80 motions from different countries concerning security. Serious discussions will take place on that particular area.

I recognise the issues surrounding the security of post in terms of the impact on next day delivery. Postal security is a major issue for the congress to be held in September 2004, and I can certainly ask An Post to address the concerns raised here in regard to security in that area.

Mr. Coveney

We are ratifying an agreement coming from a convention. According to the briefing note, there was an increased focus at that convention on the security of mail. Have there been any specific agreements on security procedures that were not there previously? If so, what are the implications for An Post? Has it budgeted for them? Will there be implications for mail delivery and so on?

Mr. Browne

What we are ratifying today is already in force. Future security arrangements will be discussed at the Bucharest conference and decisions will be made to improve the security arrangements after 11 September and address the serious concerns that exist. As I said, there are something like 80 motions on security, so it is obvious that changes will come about following the Bucharest conference to be held on 11 September 2004.

I shall reply briefly to Deputy Kelly, who talked about the SDS parcel post system. This has consistently operated at a loss. In 2003, as a result of worsening financial and commercial circumstances, a fundamental review of the operation was undertaken by management. Subsequent to this review a recovery plan was developed in conjunction with the communications workers' union. Despite the implementation of changes associated with the recovery plan, which were intended to make SDS competitive by providing with a more flexible cost base and increased productivity levels, SDS continues to incur losses.

Earlier this year a further review of the business was initiated by the board of An Post in the context of unfolding under-performance against the SDS recovery plan. The board has in recent months received a number of progress reports and examined various options concerning the future of the division. No decision has been made as yet. In the meantime, SDS continues to under-perform against budgetary targets for 2004.

The present policy in rural post offices is that there should be no post office closures. However, vacancies within the network do arise as a result of illness, death or retirement. In such cases An Post advertises the post at least twice and actively canvasses for suitable persons to fill the vacant positions. It is only when a suitable candidate for a vacancy cannot be found that a post office is closed.

Discussions are ongoing between An Post and the unions on the survival of An Post. In September 2003 the Government was advised that the financial situation in An Post had deteriorated significantly in 2003. Following his appointment in July 2003 the new chief executive, Donal Curtin, conducted a full financial review and reported to the board and the Department in September. The operational loss for 2003 was €42.9 million. After the contributions from assets, disposals and subsidiaries, the net loss for the year was €29.7 million.

In order to start the necessary restructuring process the board of An Post approved an outline draft recovery document which committed the board to return the company to profitability by 2005. The detail and implementation of the draft recovery strategy is contingent on the outcome of negotiations with trade unions in An Post, principally the CWU, which is the largest union in the company. There are essentially two main areas of contention between An Post and the CWU - non-payment under Sustaining Progress and implementation of the changed programme, Transformation through Partnership. Discussions are ongoing in that area.

Acting Chairman

I thank the Minister of State for his comprehensive replies. The clerk will arrange to have a draft report prepared, copied and circulated to members. This will be taken when consideration of the Electricity (Supply) (Amendment) Bill 2004 has been completed.