Fianna Fáil will support this vital Bill which offers a valuable lifeline to our post office network. There will be another opportunity to address the difficulties faced by the post office network such as the one we had yesterday evening at the joint committee where we met all the stakeholders.
With 1,130 post offices around the country, An Post is Ireland's largest retail network and one with considerable reach into some of Ireland's most underserved communities. It is one of our most vital assets, particularly in rural areas where post offices have long since served as informal community centres and hubs of administration. Post offices are where we go not only to send post or to pick up our pensions, but to catch up with neighbours and to hear the local gossip. For many people living in rural Ireland, the post office is one of the few places where they can still go to socialise and meet other people. Post offices offer a particular sense of security and a feeling of not having been forgotten, something which is especially important as we see more and more rural Garda stations, pubs, and community centres being forced to close their doors.
Unfortunately, most of us are familiar with the difficulties experienced by the An Post network, particularly in recent years, as we have seen the population shift from rural to urban areas. The advent of digital technology combined with this Government's neglect of the network has left many branches struggling to make ends meet. Between 2011 and 2014, there were 24 net closures and, indeed, since 2014, a further 16 offices have closed. This means that in just five years, approximately 3.5% of our post offices have had to close their doors. I have met many of these postmasters and postmistresses who, despite every effort to the contrary, have been forced to close the doors of their post offices. For these people and the people that they have spent decades serving, the decision to close a post office cannot be taken lightly or ignored. It is devastating and has caused a lot of anxiety for people around the country who are running and relying upon post offices in their various guises. As such, we are all in agreement that something must be done to save our post office network.
In its programme for partnership Government, the Government pledged to act swiftly on the recommendations of the post office business development group and to take a number of immediate actions to ensure the sustainability of the An Post network. These recommendations were very much welcomed when they were announced. Fianna Fáil has been persistent and explicit in its calls on the Government to meet these promises and in this regard we have not been alone. The wider An Post network, the Irish Postmasters' Union, and several other organisations have joined us in demanding that the Government take meaningful action to preserve the post office network.
Over eight months after the Government entered office, we are still awaiting action on the post office network. In this regard, I welcome the Bill being brought before the House as it is the first real action we have seen on the issue in a long time.
We cannot allow the Government to rest on its laurels should the Bill be successful as the support the Bill can offer to An Post is insufficient. As it stands, mail delivery services represent a limited and ever-dwindling portion of An Post's business. This is due to an increasing number of companies and bodies using means other than the postal delivery service to get information and bills to consumers and an increase in the use of electronic means of communication.
An increase in stamp price can be expected to accelerate this process. Clearly, the law of diminishing returns will apply. I am not entirely convinced of the numbers I have seen. The diminishing return will be greatly exacerbated as a result of this necessary decision.
We have reached a point where the unsustainability of the An Post business model has been widely acknowledged, not least by the Bobby Kerr report commissioned by the Government. The report, which estimated that up to 500 more post offices can be expected to close unless we take decisive action, outlined a number of measures that could be used to diversify An Post's business model and to provide for its continued survival. The Bobby Kerr report offers 23 recommendations that will facilitate the expansion and diversification of the post office network and ensure its long-term financial viability.
We debated the report in the House about a year ago, so I will not delve too far into its details. However, I will restate that it was a strong and positive report. It offered real and specific solutions to the issues faced by the post office network and paved the way for us to move forward. This is all that a report can do. It cannot change legislation to allow An Post to change, nor can it work with shareholders to implement some of the reforms it recommends. That is up to those who sit in this Chamber, in particular those on the other side of the House who commissioned the report.
Almost a year after the publication of the report, we are awaiting the implementation of its proposals. Anyone with a rudimentary business knowledge knows that when faced with diminishing profitability, one must act as early as possible to minimise losses. Running up additional losses will not help us to make the network more sustainable and financially viable in the future.
It is of deep concern to Fianna Fáil that the Government has yet to recognise this point. We have offered it numerous ideas on how the post office network might be best supported and preserved, yet it continues to rest on its laurels, apparently unconcerned, but the heart of our villages and towns is under grave threat.
We welcome the move to remove the price cap that is currently enforced on stamps. Ireland’s stamp prices are currently about 21 cent below the European average of 93 cent, so it is no surprise that the post office network has been struggling to deliver a mail delivery service without experiencing significant difficulties. Throughout its mail network, An Post delivers 2.5 million items every day to 2.1 million homes and businesses. To do this, it employs 7,620 collection and delivery staff, who operate out of 1,130 post offices around the country. This is a very serious operation, and while I understand that An Post has been working hard to reduce losses in this area, it is necessary to raise stamp prices in order to ensure the future sustainability of the An Post delivery service.
This being said, a 10 cent or 20 cent rise in stamp prices is not a silver bullet for the An Post network. Over the past decade, mail delivery has been an increasingly small share of An Post’s overall revenue. Since the peak of mail in 2007, we have seen a 38% decline in mail delivery, and my understanding is that this trend is set to continue as businesses and personal customers find new means of communicating and doing business. For better or worse, we cannot reverse the tide on this and it is up to us to work with An Post to find new and innovative means to adapt to these changes in communications technology. Indeed, with specific regard to a potential price increase, we need to be highly conscious of how a price rise will impact on existing customers, from small to medium enterprises who may find other means of contacting their customers to rural customers who have fewer options.
In this sense, I welcome the provision in the Bill for a review to be conducted in advance of any price change to allow us to assess the potential impact of any change. It is important, however, that this is not used as a self-preservation mechanism for the current government, and allowed to stretch on for months without any real action being taken. We have seen this with regard to other working groups and reviews in the context of An Post’s reforms, and we cannot let it happen once again.
Unfortunately, the Government’s disregard for the post office network goes beyond inaction. It has also threatened actions that would have a seriously detrimental effect on An Post. For example, in 2014, at a time when the post office network was facing increasing challenges, the Department of Social Protection was actively encouraging people in receipt of welfare payments to use electronic and bank-based systems to receive their payments. Given that social welfare payments make up about 30% of An Post’s revenue, it does not take much to recognise that redirecting these payments towards the bank system could have caused hundreds of post offices to fold.
As such, while the Government was preaching its support for the Irish post office network, it was simultaneously making rapid and serious moves to undermine a key source of revenue for the network. This is a practice which continued right up until late 2016, when the Government finally performed a U-turn on this policy, partly in response to Fianna FáiI’s consistent lobbying on the issue. Even now, the Government has yet to fully secure An Post’s future with the Department of Social Protection by refusing to offer An Post a long-term contract to deliver cash social welfare payments. This contract represents a considerable portion of An Post’s overall business; in 2015, it was worth approximately €54 million and allowed over 38 million social welfare payments to be made.
We know that An Post exceeds the requirements of its contract with the Department of Social Protection in terms of its geographic reach, and that the post office network is capable of delivering this service. Instead of recognising this and extending some minimum security to An Post, the Government has decided to renew its contract with An Post on a yearly basis. We are awaiting its decision for the coming year. This is no way to support our post office network. Why is the Government insisting on keeping such an important and efficient service in the lurch? These are the types of contradictions that are prevalent in the Government’s approach to the An Post network, such that we are left wondering how real is its commitment to the post office network.
As I have emphasised, in order to ensure the long-term viability of the An Post network we will need more than a continuation of existing services. To survive in the dynamic and ever-changing marketplace, An Post will need to be enabled to change, grow and adapt to new consumer demands. With this in mind, Fianna Fáil has brought forward a number of promising proposals which build upon An Post’s excellent reputation and strong base around the country.
There is no reason that the An Post network could not deliver more State services to the people of Ireland. Given that it has a strong presence in Irish villages, towns and cities, An Post’s network of post offices is uniquely poised to become hubs for all State payments and charges and for other types of services, such as local access to State services. This would be of huge benefit to our post offices and the communities they serve. Not only would it make it more convenient to make these payments, but it would increase footfall in post offices and create an additional source of revenue for the post office network.
We share this view with the Grant Thornton report, which underscored the benefits associated with this measure. Across the five potential integration options that the report analysed, such as allowing customers to make hospital payments and household charges through the post office network, a positive cost-benefit ratio was observed. In short, there are significant benefits to be accrued by adopting such an approach for more than just the post offices. This proposal could work very well with a further measure to allow post offices to become multi-purpose locations that offer a range of Government services. For example, the closure of rural Garda stations is of serious concern to rural residents, and we should be exploring avenues for multiple State services to share the same space. The current Government has dragged its heels on this proposal. Furthermore, the viability of the An Post network could be greatly enhanced by the expansion of financial services available in post offices. Currently, Allied Irish Banks, Ulster Bank and Danske Bank allow their customers to make lodgements, credit card payments and withdrawals at the post office network. This is greatly welcomed by our party, particularly because it comes at a time when many banks are closing their branches in rural Ireland due to the relatively high overheads.
Excluding large swathes of our population from banking services is simply not acceptable, and allowing An Post to expand its current financial services and to engage with all banks active in Ireland would go a long way toward counteracting this negative trend. Fianna Fáil has been very exercised in our requests for this and the previous Government to examine these proposals in detail and to consider their implementation.
Time and time again, the Minister for Communications, Climate Action and Environment, Deputy Denis Naughten, the Minister for Arts, Heritage, Regional, Rural and Gaeltacht Affairs, Deputy Heather Humphreys, the Minister of State, Deputy Michael Ring, and their predecessors have spoken in the House to reassure us that this process is under way. We have been repeatedly told that these issues, and many more, are being considered by the post office network renewal implementation group. The Minister of State, Deputy Ring, informed the House last November that the group would be publishing its recommendations in December of last year. This has yet to transpire.
Similarly, a Minister has highlighted the establishment of a post office hub working group to examine the possibility of post offices becoming community hubs. We have yet to hear back from this working group. While we understand that the need to examine these issues carefully, there is no need for the substantial delays we have seen to date.
The news from the reports and various interest groups that we have spoken to is clear. There are solid options for the post office network to diversify its business model and to move to a more sustainable footing. Our post offices are ready to make the changes necessary to ensure their survival. Communities around the country are depending on us to make sure that it is allowed to do so and is supported in doing so, yet the Government is still dragging its heels and making it ever more difficult to take the type of action we need to save the post office network. It is nothing short of abhorrent.
To sum it up, while I heartily welcome this first sign of progress on the issue, I ask all Members of the House to avoid complacency. Further action is needed to preserve our post office network and ensure its survival, particularly in rural communities. Fianna Fáil will not stand by as one of the few remaining community centres in many areas is placed under unbearable financial stress. We will not ignore the concerns of postmasters and rural residents who feel completely abandoned by the policies and actions of the Government. Instead, we will be consistently searching for new and more comprehensive solutions to the issue of financial losses and we will co-operate with all interest groups to help post offices put these solutions into effect. I hope that we will be joined in addressing this issue by all who sit in the Chamber today.
The Minister will be aware that yesterday evening the Joint Oireachtas Committee on Communications, Climate Action and Environment had what I can only describe as a very open and frank discussion with all the stakeholders. I was impressed by the presentation of the chief executive of An Post, Mr. David McRedmond. He has a clear vision on how to turn around An Post as a company. That he has undertaken a period of consultation and the preparation of a report with the assistance of McKinsey and Company is a welcome development. That he has set a timeframe for the publication of the report by the end of the second quarter of this year is also welcome. He is putting in place the kind of timelines that, unfortunately, the Government has not put in place in respect of the issue. He indicated to the committee that the output from the exercise will be a series of decisions that will have to be taken by the board of the company. If anything emanates from it that requires policy change or legislation, that responsibility will lie with the Government. It is clear that he has a focused approached and that we are now on a path towards a series of decisions that need to be taken to put An Post on a firm financial footing.
Given McKinsey and Company's experience of working with other postal companies around the world, I hope that there will be a recognition of the opportunities as well as the constraints in the market. There is an awful lot of talk about the diminishing and dwindling postal service because of the way in which we now communicate, which is by electronic means. However, with the advent of electronic communication and the way in which retail activity has changed, an awful lot more of our citizens are purchasing goods, in particular, and services over the Internet. This has created an increased demand on the parcel side of the postal business. Unfortunately, An Post has been tardy in recognising the potential benefit and some of the commercial operators have stolen a march on it. My impression from Mr. McRedmond is that An Post sees the opportunity. Given its strong presence and significant infrastructure and architecture throughout the country, I would hope that it would be in a strong position to grab hold of that business and to make it a meaningful input into the viability and preservation of the company and ensuring the future viability of the post office network.
I have very real concerns but, given the financial position presented by the Minister, we feel we have no choice but to support the price increase to ensure the financial viability of the company in the period before the McKinsey report and the decisions that will flow from it to put the company on a firm footing can be put in place. It is to some extent with a heavy heart that we support a price recognition. We recognise that there is an impact on small to medium-sized enterprises when the price of the stamp is increased. It will be just a matter of switching to electronic communication for larger companies that have great enough volumes and they will probably save money in the long run. However, this will place a burden on those small to medium-sized companies that are caught in the middle. They do not have the capital to invest in electronic communication means and will have to pay the additional postal charges. This will place a burden on them and it more difficult for them to survive.
In taking this action and supporting the legislation, we recognise the positive impact it can have on An Post, the post office network and those who are employed in the provision of the service, but by no means is it a recognition that this is the way forward or the solution to An Post's problems. We need to see a reorientation and reconfiguration of the business that is based around the vision for the future and how the company will position itself having recognised the trends. It cannot be a head in the sand approach. It cannot be just a case of saying this is the solution, away we go and more of the same. We cannot do that because it would not be sustainable in the long term. That is our position. We support the removal of the cap and are happy to do so in light of the circumstances but recognise that the ultimate solution needs to flow from the McKinsey report, the efforts of Mr. McRedmond and his management team and the board of An Post. I would hazard a guess that the Fianna Fáil Party will not be found wanting in supporting the kind of change that is necessary to put the company on a viable footing. It is then over to the Government to drive that change when the report is published.
