I have had a number of private notice questions on the subject matter of the proposed reorganisation of An Post. I will call the Deputies in the order in which they submitted their questions to my office. I call, therefore, first, Deputy Pat McCartan to put his question.
Private Notice Questions. - Proposed Reorganisation of An Post.
asked the Minister for Tourism, Transport and Communications if his approval has been sought for the restructuring plan announced yesterday by An Post, involving (1) the shedding of 1,500 jobs, (2) the closure of more than 500 sub-post offices and (3) increases in postal charges; if, in the light of the implications of these proposals for employment and for the impact of the proposed sub-post office closures on communities, especially in rural Ireland, he will consider using the powers available to him under section 51 of the Postal and Telecommunications Services Act, 1983 to direct An Post to continue with these services; and if he will make a statement on the matter.
Deputy Toddy O'Sullivan will now please put his question.
asked the Minister for Tourism, Transport and Communications if, in view of (1) the financial crisis in An Post, (2) the threat to the viability of the postal service, (3) the impact upon rural Ireland by the closure of 550 sub-post offices, (4) the loss of 1,500 jobs and (5) the consequent major disruption to the distribution network for a wide range of payments and financial services, he will outline the action he proposes to take in conjunction with An Post; and if he will make a statement on the matter.
Deputy Austin Currie will now please put his question.
asked the Minister for Tourism, Transport and Communications if he will make a statement on the proposed reorganisation of An Post.
I propose to take the Private Notice Questions together.
The Postal and Telecommunications Services Act, 1983, requires An Post to provide a national postal service to meet the industrial, commercial, social and household needs of the State for comprehensive and efficient postal services and so far as the company consider reasonably practicable, to satisfy all reasonable demands for such services throughout the State. That Act also obliges An Post to conduct their affairs so as to ensure, inter alia, that their revenues are not less than sufficient to meet all charges properly chargeable to revenue account, to generate a reasonable proportion of capital needs and to remunerate capital and repay borrowings. Therefore, the company have a statutory obligation to ensure that they have sufficient revenue to fulfil their statutory duty.
An Post are suffering unsustainable financial losses and there is a need for urgent action to restore the company to profitability. The company lost £3.6 million in 1989 and an estimated £10 million last year. On present policies An Post would lose £16 million this year and incur accelerating losses in the years ahead. This crisis cannot be allowed to continue. The main reasons for An Post's problems are increasing operating costs, low mail volume growth and competition from modern telecommunications services and couriers. Staff costs, which account for 80 per cent of total operating costs, have increased sharply in recent years despite substantial staff reductions.
An Post announced their viability plan yesterday. The plan is aimed at reducing costs and improving operating efficiencies. The plan was drawn up by the company as a response to their serious and deteriorating financial situation.
In reply to a question on 5 February 1991 the then Minister for Communications informed the House that he had approved proposals for certain increases in postal charges. These increases will take effect on 2 April next. The increases work out at an average of 7 per cent or 2p on a standard letter. My approval is not required for An Post's proposals to reduce their workforce or to close a number of their sub-post offices.
I do not see a need to direct An Post to provide any loss-making services, as provided for under section 51 of the Postal and Telecommunications Services Act, 1983. That Act gave An Post a commercial mandate and I am satisfied that the course of action suggested by the Deputies is not warranted.
My statutory involvement in the operation of the plan is, therefore, limited to the approval of price increases and borrowings proposed by An Post. Implementation of the plan is a matter for An Post and I do not propose to interfere with the company in that regard.
An Post will have detailed discussions with the unions on the plan. I am confident that, with the goodwill and co-operation of the unions and of staff of An Post, the board and management of the company will succeed in returning An Post to profitability. I will, of course, keep in close contact with An Post and will monitor very closely the implementation of the plan.
The prospect of goodwill on the part of the workforce and indeed the public at large is very unlikely in view of the wide-sweeping draconian measures proposed in the so-called plan for the reorganisation of the postal services.
Does the Minister not recognise that in essence, the plan will involve the tearing out of the heart of rural communities? Can he say whether these proposals were discussed or made known to the social partners in the negotiations on the Programme for Economic and Social Progress or are they now being foisted on the workforce by him on his arrival in his new portfolio? Would the Minister comment on whether he accepts that the 1983 Act, in spirit, recognises a wider function than merely a commercial mandate to An Post? Furthermore, does he recognise that he has a role to play in the maintenance of the postal services?
Would the Minister not agree that the delivery of post is something more complex than the selling of apples and oranges; that perhaps it is time we now re-examined at the tenure of the chairman and board in view of the disaster now being encountered by An Post.
An Post clearly need substantial modernisation. As I said, I will be monitoring the implementation of the plan to ensure there is the least possible damage done to the social fabric of various parts of the country. Obviously I would like to see the plan implemented in a sensitive, phased and orderly manner. I understand from An Post that their plans are to deal with this matter over a period, that, at this stage, they are not seeking compulsory redundancies but rather are inviting a number of post offices to submit their retirement, as it were——
Close their doors.
——and that it will proceed in that way.
I might also advise the Deputy that a group representative of my Department, of the Department of Social Welfare and An Post has been established to ensure that any potential inconvenience to social welfare recipients — to which I will be particularly sensitive — is minimised.
In reply to Deputy McCartan the Minister said there would be no compulsory redundancies. I would suggest to the Minister that they will be unable to do so by virtue of the fact that their workers are protected under the provisions of the 1983 Act. Is the Minister aware that, at this very moment, there are in existence draft proposals for a Green Paper by the EC on cohesion which intends to provide for areas such as Ireland which would be deemed to be disadvantaged. By virtue of the volume of post to which the Minister referred earlier, I would suggest that we could advance a very good case for this and that there would be funds available for this purpose. I know it is intended to introduce this Green Paper in March 1991. Is the Minister so aware?
Is the Minister aware also that a problem was created from their very inception in as much as An Post were promised a sum of £50 million for capital expenditure and for improvement of their plant and equipment whereas, to date, £7 million only have been paid? In addition, is he aware that there was to be an annual subvention to An Post for a period of three years amounting to a total of £20 million which has not been paid and that, as a result, from their very inception, An Post have been working against the tide, unable to prove viable because they were short-changed by the Government?
I understand that there are some EC proposals afoot but I do not believe they will address this particular difficulty. I am opposed to subsidising An Post in terms of their day-to-day operating losses. I perceive that they do not have an alternative but to agree to a recovery plan and implement it in as sensitive a manner as is possible. We must be quite clear about this: within two-and-a-half to three years An Post would be totally insolvent unless we stand behind some form of action. It is proposed to have serious and thorough discussions with their workforce.
The Minister referred to the dismal future for An Post. He and I have something in common in that we are new to this portfolio; probably he saw this report yesterday as I saw it this morning. I wonder did the same question occur to him as occurred to me which is: how have things been allowed to deteriorate to such an extent that the picture now being painted is of a serious financial crisis, amounting almost to a doomsday situation? I agree with the Minister that urgent action is now required. Would he agree that this urgent action is required not only in the interests of An Post, its management and workers, but in the interests of the community in general? Would he accept that, while efficiency and viability are essential, there is a human face to this crisis which cannot be overlooked, that is, the human face represented by the workers of An Post, the 1,500 people likely to lose their jobs and who will be unable to find alternative employment and the future of rural Ireland in terms of the social difficulties that will be encountered by the closure of these sub-post offices? Where are the alternative services to be provided? Who is to replace the postman?
The Deputy is tending to make a speech.
Who is to replace the postman who carries out such an important social service in rural areas? Will the Minister examine some options because there are bound to be others? I, for one, will be examining such. I hope also he will be doing what I am doing, entering into discussions with management and unions to ascertain whether something else can be done.
I do propose to watch the implementation of the plan very carefully indeed, particularly to ensure the minimum disruption and damage to our social fabric; that is my clear intention. I agree with the Deputy that there is a human aspect to this problem and I understand his view of it. The Deputy asked how the position had become so bad. I suppose everybody will advance their own reasons therefor.
The Minister should know the reason for that as well.
I have some thoughts that might help the Deputy. For a start, strong competition has emerged in that area——
That is nothing new.
Competition has bitten hard; they have lost their market share; their revenue has declined whereas the revenues of other competing organisations have increased.
They have increased elsewhere as well.
Indeed. Unfortunately the pace of modernisation has its effects on staff. When one starts investing heavily in technology then its obvious impact is on staffing levels. That is something that has to be considered in a labour-intensive organisation where 80 per cent are comprised of staff costs.
I will hear a brief question from the Deputies concerned. First, Deputy Toddy O'Sullivan.
Might I suggest that the Minister abandon the spectator's role he envisages for himself and become actively involved rather than continue to look from the sideline because it is a serious problem that must be addressed.
Would the Minister not agree that part of the problem was that An Post were not allowed develop into the banking area since the person supposed to be their chief executive, Mr. Tom Garvey, had the idea of expanding into the banking area and would have had a branch in every village in the country? Unfortunately that idea was not taken up, I would suggest, simply because the Government would not allow it be developed. I contend that, had An Post been allowed become involved in that activity, it would have provided the requisite revenue and rendered the company profitable.
Is it not the case that one of the principal contributory factors to the losses incurred by An Post was that the Government themselves reduced their usage of the services of An Post by something of the order of £16 million per annum? Second, is it not the case that the plan proposed by the board of An Post has been on the Minister's desk for over a month, that his predecessor did nothing about it? Would the Minister not consider it to have been a more prudent approach to have asked the board of An Post to delay announcing the plan until he, the new Minister, had had a fuller opportunity to examine it and direct An Post in the matter?
I should make it clear in relation to the proposals and the stated intentions of the board of An Post, that they will now commence a thorough and full round of discussions and offers in the organisation. Under the Act to which I referred earlier, the board have a commercial mandate. It is not appropriate for a Minister to try to run the company on a day to day basis. It is important that I make that distinction. I have undertaken to monitor this closely, to take particular account of the social and human side and if I have suggestions to offer from time to time I will not be too slow to offer them.
As you did in relation to the BES scheme.
Order. Deputy Power if he wishes to put a final question.
He is not even offering.
That may be so. I have already called Deputy Gilmore whose name was with Deputy McCartan's. I will hear Deputy Sherlock.
Will the Minister now use his power under section 51 of the Postal and Telecommunications Services Act, 1983? Under section 51 the Minister considers that, having regard to the statutory obligations of the postal and telecommunications company to provide postal or telecommunications services, the specified postal or telecommunications services should be provided or maintained in the public interest——
Brevity please.
——and with the consent of the Minister for Finance, even though that might be a loss making situation. The Minister has that power.
Too many Deputies are offering.
Will the Minister use that section?
It is not my intention to use that section to direct the company to continue loss making operations.
Is the Minister not aware that an important social service is involved here and that in the operation of certain State bodies it is impossible to expect them to provide a social service and make a profit? Many of the activities of An Post are social services and it would be impossible to expect them to subsidise those social services out of profit. Would the Minister not agree that the State has an obligation to provide a sum of money which should be specified in the accounts of the company, as the cost of the social service to An Post? Would the Minister not agree that it is essential for the commercial life of this country that we have a proper postal service? The postal service has worsened instead of improving over the last number of years.
To some extent one can carry loss making services but the extent of the figures available to me suggest that these loss making services are widespread. To carry them to the extent that they will drive a company into virtual insolvency is going too far. I understand from the board of An Post that what is involved here is a phasing maximum agreement, not denuding whole areas but rather trying in a structured way to continue to provide a postal service and to try to balance social needs with commercial needs.
That disposes of questions for today.
(Interruptions.)
I strongly object to that.