JOINT COMMITTEE ON COMMUNICATIONS, ENERGY AND NATURAL RESOURCES díospóireacht -
Wednesday, 16 Jan 2008

Post Office Network: Discussion with Kilmallock Partnership and An Post.

Chairman

I welcome Mr. Michael Riordan, chairman, and Mr. Ben O'Sullivan of the Kilmallock Partnership. The joint committee agreed to invite representatives of that body to this meeting to discuss their concerns about the downgrading of Kilmallock post office from a company office to an agency. We have also invited representatives from An Post to respond to the discussion with the Kilmallock Partnership on the changes being made and to questions raised by members.

I welcome the representatives and their colleagues who have travelled with them from Kilmallock. As a public representative from the area I am well aware of the concerns being expressed locally. I compliment the Kilmallock Partnership on taking up this case on behalf of the community. I look forward to hearing its presentation.

I welcome the representatives from An Post who are, Mr. John Daly, director retail operations, and Mr. Con Conway, regional manager retail south. I propose to take the representatives from the Kilmallock Partnership first and invite questions from members and then ask the representatives from An Post to make their presentation, after which we will invite further questions.

Before we begin I draw everyone's attention to the fact that members of this committee have absolute privilege but this same privilege does not apply to witnesses appearing before the committee. The committee cannot guarantee any level of privilege to witnesses appearing before it. Further, under the salient rulings of the Chair, members should not comment on, criticise or make charges against a person outside the House, or an official by name or in such a way as to make him or her identifiable.

I invite Mr. Riordan to make his opening remarks after which I will invite some questions from members.

Mr. Michael Riordan

On behalf of the delegation, I thank the joint committee for giving us the opportunity to make the case for the retention of Kilmallock post office. Let me expand on the socio-economic context. Kilmallock is situated in south-east County Limerick at the meeting point of the R515 to Bruree, the R515 to Elton to the north-east and the R517 to Kilfinane. The population of the parish is approximately 2,300. It has increased by 10% in recent years, while the local housing stock has increased by 40%. Kilmallock has had mixed economic fortunes in recent years. In particular, it was dealt a severe blow in 2004 when Diamond Engineering, the town's major employer, closed resulting in the loss of over 100 jobs. This loss represented 20% of the total workforce in the area and was, therefore, catastrophic. Although catastrophic, it served as the impetus for the formation of Kilmallock Partnership.

Kilmallock Partnership comprises Shannon Development, Limerick County Council, the Limerick County Enterprise Board, Ballyhoura Development Limited, Kilmallock Association of Trade and Commerce, Kilmallock Community Council, FÁS and the IDA. The group meets once per month and has been responsible for priming a number of initiatives to promote the positive economic development of the town. These initiatives include the development of 300 private housing units on five sites; the construction of a 15,000 sq. ft. advance factory on foot of the acquisition of a business expansion scheme through the administration of Shannon Development Limited; the master plan for existing industrial land owned by Shannon Development Limited to make available serviced industrial sites to develop or expand new or existing businesses at economic cost; the introduction of broadband to Kilmallock in August 2005; the development of small incubator units to encourage entrepreneurs to start their own businesses; and the exploitation of the substantial tourism potential of the town, for example, through the introduction of a medieval festival in 2006.

Deloitte & Touche has been employed to seek suitable clients for both the advance factory and the serviced sites and for the marketing of the sites. The aforementioned structure is ideally suited to delivering many more benefits to Kilmallock. Training and marketing the town as a place in which to do business will be a priority. Since the drafting of this presentation, we have sanctioned a minimum of €30,000 through FÁS for the setting up of a pilot scheme for developing Kilmallock Inc. as against any particular business within the town. This is unique in this country.

There has been significant financial investment in the socio-economic development of the town in recent years, particularly in infrastructural development. To that end, Limerick County Council spent over €9 million six years ago on developing the town's infrastructure. This investment came from both the public and private sector and pertains to the upgrading of the sewerage scheme —€10 million; the development of a new school —€5 million; the provision of social services in the existing girl's national school —€1 million; the development of a new hotel, whose owner is present —€4 million; the development of a new fire station; the development of new county council area offices —€8 million; the development of a new library; the development of the advance factory —€1.5 million; and the creation of incubation units, for which €250,000 has been allocated in the past month through Enterprise Ireland. We hope to get backing funding for that soon to make up the advertised €500,000. A further development is the publication of a conservation plan for the town walls with an initial allocation of €80,000. Those figures for the socio-economic development of the town are dramatic for a population of 2,500.

Kilmallock is the urban centre of the Ballyhoura country. It is a vast rural area which incorporates much of east County Limerick and north County Cork. The region comprises many small villages and remote rural conurbations. Many post offices in these villages have been closed recently and many others may not be sustainable. The residents of these locations depend on the services provided by Kilmallock post office. In addition, the rural bus scheme provides a service from Granagh and Effin to Kilmallock. This is for social welfare recipients who do not have access to cars or standard public transport. There is a proposal to increase this service which will create an influx to Kilmallock and increase the numbers likely to use the services of the post office.

The many positive economic indicators for Kilmallock and continued inward investment will be sustained only where essential services are available, of which the post office is one. It has employed 28 people for some years despite the loss of the telephone exchange. Existing post office staff have resisted all inducement to take over the operation of the post office. No retailer in the town is interested in providing an alternative service. An Post is obliged by legislation and its own articles of association to provide a service that satisfies reasonable demands. On this basis it has no option but to retain services in the existing location.

The number of transactions processed per week by the staff of Kilmallock post office substantially exceeds best practice. It is an understatement to say that trying to get this information is like pulling teeth. Following consultation with the local post office the following products will be highlighted locally at public meetings and by advertising — BillPay, Fortis Bank, savings services at competitive rates, Western Union, passports, savings stamps for television licences and the personal touch not available in any other arrangement. The agreement between An Post and the CWU stipulated that downgrading would be on the basis of profitability. We need statistical information on a continuing structured basis to quantify our progress in that respect.

Kilmallock was not on the original list of post offices to be downgraded. At some point two post offices were removed from the list, one each in counties Cork and Clare. Kilmallock was then added to the list and we are at a loss to understand why. County Limerick has only two staffed post offices of which Kilmallock is one. For example, County Cork has 11 staffed post offices.

Another point is that outside Limerick city there will only be one post office run by An Post if this goes through, an extraordinary statistic. We are unable to understand how County Limerick could be left with only one remaining staffed post office, which is in the city. We contend that in the spirit of partnership between An Post and the local community as represented by the community council, the Kilmallock Partnership and the Kilmallock Association of Trade and Commerce, that Kilmallock post office can enjoy a very bright future.

Chairman

Does Mr. Ben O'Sullivan want to add anything to the comments already made?

Mr. Ben O’Sullivan

I just want to say that, as can be seen from our presentation, Kilmallock is a community that has pushed the self-help button. We are willing, ready and able to support these sentiments, but losing our post office would be a serious blow.

Deputy Simon Coveney

I welcome the delegation.

Mr. Michael Riordan

A good friend of the Deputy sends his best wishes.

Deputy Simon Coveney

Mr. Riordan is trying to get on my good side already. This is an important issue. Kilmallock is not the only town to find itself in this position, but the reason it is important for the committee to consider a case study such as this is that there are very similar examples to be found in other parts of the country. Kilmallock is a large rural town which I know quite well, primarily from playing sport there. I have also campaigned there during European elections and so on. It is, without doubt, a key economic town in that rural region. Post office services have a crucial role in making up part of an economic infrastructure for an area such as that, as well as being part of the social infrastructure. This is where the problem arises for An Post. I shall come to my question if the Chairman will excuse the preamble.

The problem for An Post is that it is preparing for a much more competitive marketplace, which will be introduced in a number of years, whereby competition will be introduced into the postal market. An Post will still be obliged to abide by the universal service obligation to provide equality of service to everybody, both in urban and rural Ireland. We need to look at the consequences, however, of decisions being taken by An Post and the impact they will have on a region, both economically and socially. That is what the delegation is putting its finger on here. It is saying Kilmallock has borne a serious blow in recent years in terms of lost employment, and the community is trying to build that up again. Not alone is it not helpful, but it puts it at a disadvantage to lose a social and economic service such as the post office, which serves not only the town but the region as well.

The obvious questions relate to the figures. Can this post office justifiably stay open, based on the amount of interaction that goes on there? If we are to be responsible we must see the figures that justify the proposed closure. Obviously, from a political viewpoint, there is a social as well as a commercial responsibility on An Post, as the only player in this postal market providing the type of services post offices supply. The figures Mr. Riordan describes as difficult to get are statistics, I believe, that An Post has an obligation to outline to this committee so we can make realistic decisions based on the activity of the post office over recent years. If it is as busy as Mr. Riordan says, then it is up to An Post to provide justification for its closure. I thank the delegation for appearing before the committee and raising the issue. This is a case study that may well be repeated and has already happened in towns of similar size to Kilmallock. We need to have a robust dialogue with An Post to establish what exactly is happening, try to measure the consequences of closure and the justification for staying open.

Deputy Liz McManus

I thank Mr. Riordan for his presentation and I compliment him on his comprehensive argument about the existing An Post service in Kilmallock. I also compliment him on his timing. It was not intentional, but the delegation is appearing before the committee just after we visited the An Post mail centre, which was a very informative visit. It was certainly a very positive experience because the message we received from An Post is that the business grew by 8% between 2006 and 2007. My expectation was that An Post would be struggling for business because the market has been changed, opened up to an extent and will be opened even more. However, it has 1,250 offices around the country serving the public which is a tremendous resource.

I have great difficulty getting information from the Minister on this whole issue. Every question I ask is referred to An Post. Can the witnesses outline their experiences with An Post? That is where the information lies and it seems they had difficulties in getting hard facts about their case. The question also deals with the approach by An Post in this area. I got a positive message this morning that change was being made on the basis of partnership. There has been much work with the trade unions. If a change is to occur in Kilmallock, it can only be done through co-operation, yet that has not been the experience of the witnesses. I hope they can elaborate a little on that.

Mr. Riordan mentioned that Kilmallock was not on the original list and another two were taken off. Is he saying he does not know why? That seems to be a fairly crucial strategic decision that was made by somebody. We should know and the witnesses should know why that decision was made. Mr. Riordan also stated that Kilmallock has a big catchment area. My experience in representing a rural constituency is that when small post offices closed the argument was about streamlining the service, but the bonus has often not emerged from the centralised office. What is the size of the catchment area?

Mr. Ben O’Sullivan

We are talking about a population base of about 17,000, which extends right across the region.

Mr. Michael Riordan

The first question was about the issue of information. We made direct contact ourselves and we made contact through Deputy Cregan on trying to establish the information required on the viability or profitability of the operation. We were effectively trying to find out what the situation was on a comparable basis regarding the number of transactions, because that appears to be one of the yardsticks used. Our understanding is that this only applies to the counter service. This does not apply to the postal side of the business.

Effectively, the line we were given back — although I may stand corrected on this — was shown by Mr. Con Conway's answer in one of the letters we received that while negotiations were ongoing with staff, management did not wish to make any comment on the issue. I understand that position, but it is many months since those negotiations concluded, as far as I am aware. We did not receive one scintilla or screed of information on the viability of the post office or the number of transactions processed there, and there was no flagging its closure or anything to that effect. I can only describe it as a complete clamming up on the part of management.

Deputy Liz McManus

On the issue of Kilmallock being taken off the list, has Mr. Riordan received any indication of why that was done?

Mr. Michael Riordan

We have had absolutely no indication.

Deputy Mattie McGrath

I thank the Chairman for facilitating the representatives of Kilmallock Partnership and An Post. The issue we are discussing is one that arises throughout the State. At our meeting with the chief executive officer earlier today, I expressed my extreme dissatisfaction with the way An Post has treated postmasters and postmistresses throughout the country. Previous speakers observed that post offices are valuable assets. A far more valuable asset is the tremendous service provided by postmasters, postmistresses and their staff to their communities. They have been badly treated.

I was aghast this morning when I asked the chief executive officer about the opposition to the changes that have taken place. I have no doubt from my own experience that there is huge opposition in communities. However, the chief executive officer stated that there is little or no opposition anywhere. That is a downright untruth unless he is totally unaware of what is going on. Different towns and villages have had--

Chairman

I must stop Deputy McGrath for a moment. To be clear, my understanding of the answer he received was that it arose in response to the question I asked on post offices being changed from company to contract. My question related to the public's response to that aspect of the business.

Deputy Mattie McGrath

Yes, it is the same issue. In my own town of Cahir, for example, there was a major campaign of opposition for several years, involving thousands of signatures. It is totally unacceptable to say there was no opposition to the changes.

In the case we are discussing, no information was given and the decision to close seems to have been plucked from the sky. This has happened in hundreds of cases involving smaller post offices. There is no accountability; decisions come from the top down but those at the top are completely and sadly out of touch. The issue should go back to the Minister because there is a moral and political responsibility to retain what are vital service providers and social outlets. This is an issue that must be taken into account along with considerations of financial viability.

Deputy Edward O’Keeffe

I thank the Chairman for inviting me to attend this meeting. I also thank Councillor Paddy McAuliffe for bringing the situation in Kilmallock to my attention. The town is close to my constituency, over the road from Ardpatrick up to Kildorrery.

Mr. Michael Riordan

I am from the Deputy's constituency.

Deputy Edward O’Keeffe

I fully recognise the importance of Kilmallock within County Limerick because I have done business there myself. The only issue the delegates did not mention was the hurlers of Kilmallock, who might be a threat to us in Cork. We will have to watch them.

Losing the status of the post office represents a downgrading of the town. It is an influential town within the county with one of the largest livestock marts in the country that attracts great numbers of visitors. Kilmallock has already lost its cheese plant and dairy industry. This is another body blow to the town. These were good employers and it would be unacceptable if it were to become merely a service town. I do not know how we can overcome this but the delegates have my full sympathy. I travel regularly to the town, especially when I am travelling to Limerick city on that side. The delegates have my full support in their efforts to retain their facility. Perhaps we will deal with the hurling some time in May.

Kilmallock has enjoyed significant infrastructural improvements that will help it to expand and attract more industrial development. All this can be attributed to Deputy Cregan and Councillor Paddy McAuliffe who have always been to the forefront in defending services for the town. This measure is unfair because it represents a degrading of the town through loss of status.

The witnesses made this point clearly. It constitutes a further body blow to this rural area and rural Ireland is under threat. At the same time, a highly active Leader group operates in that area. Ballyhoura Development Limited has been doing great work in the field of infrastructure. Given the factors in favour of Kilmallock, some of which I have mentioned, I ask An Post to consider the position. As the witnesses are aware, the Minister does not regulate An Post, which is itself a regulatory authority. Consequently, I ask the board of An Post to reconsider the position in this regard. Perhaps it could put a stay on the proposals for five years to see how matters develop. I thank the Chairman and the witnesses, who have my full support.

Senator Joe O’Reilly

I wish to join in the welcome to the witnesses and I congratulate them on their presentation and the effort involved in its preparation. At the outset, my colleague, Deputy Simon Coveney, made the point to the witnesses that this was happening in the context of the opening up of the country to international competition. The point was made to members this morning in their briefing sessions that this will be the issue in future and is what An Post is preparing for at present. That is fair enough and it is the case.

Consequently, it is interesting that the Kilmallock Partnership is prepared to highlight services such as BillPay, Fortis Bank, the Western Union service, Passport Express and savings stamps for television licences. If An Post is to be met halfway in this regard, the challenge for communities is to ensure that post offices are used. Perhaps local and small communities should have been more proactive in their use of post offices in the past. The witnesses should comment further on this subject because this proposition is interesting. They should comment on the extent to which they have thought it through in terms of detail and what they have to offer. Were they able to make a reasonable offer on that basis, An Post would be obliged to meet and accept it. Were the witnesses able to develop their proposition, it could become a model for the rest of the country as it has much potential. Perhaps this should have happened to a greater extent in the past. However, there is potential for it to happen in future. The witnesses should build it up, develop it, itemise it and make a proposition on the basis of what precisely can be done. A community can do much to activate its own citizens into a pattern of behaviour, particularly when their interests are seen clearly.

A few years ago, my native town experienced a spate of vandalism and the single facility in the town that was never vandalised was the local community swimming pool that the community had paid for and put in place themselves, because they felt ownership of it. Similarly, the belief on the part of members of the community that they were saving the post office could have great potential. This idea is interesting and is worthy of development and a response from An Post.

The witnesses' submission also states that none of the existing staff are willing to take over the operation of the post office and that none of the businesses in the town want it. If this is the case, it would be interesting to hear what An Post proposes to do. This is an extraordinary state of affairs that did not pertain in other cases. If this is the case, the absence of a shop or individual seeking the opportunity is extraordinary. Have the witnesses orchestrated this state of affairs using some traditional methods or whatever? In all seriousness, it is interesting that this is the case. However, the Kilmallock Partnership's other proposition is also interesting and An Post should meet them to develop it.

Mr. Michael Riordan

A full examination of the presentation on the Kilmallock Partnership would demonstrate that it is a unique concept in Ireland at present. Without showing disrespect to politicians, it is apolitical and driven by a realistic agenda. We are willing to put our money where our mouth is regarding a partnership and the promotion of services in the local post office. While I am unsure whether I should put on record how much money we can contribute, I assure members it is a substantial amount. The local businesses make contributions in this regard on an ongoing monthly basis. We agree a charge with them on a biannual basis and have a substantial amount of funding of our own at present. That is not bluff; it is fact.

Chairman

It is called loyalty.

Mr. Michael Riordan

The answer to the second one is loyalty, yes.

Senator Terry Leyden

I welcome the delegation, particularly Michael Riordan, Ben O'Sullivan, Councillor Paddy McAuliffe, the Reverend Father and all the delegates who travelled at their own cost to appear here to put their case.

As a Minister of State for Posts and Telegraphs in the 1980s, I appointed post office staff. I did not close post offices. That was my policy then and I have not changed my view on that policy. There was massive competition at that time for the sub-post offices so they must have been viable.

I am familiar with Kilmallock because I have canvassed Paddy McAuliffe on many occasions for the Seanad. That is the reason I went to the town of Kilmallock where I am always well received. Kilmallock is a wonderful town and I congratulate the delegation members on the work they are doing.

Mr. John Daly and Mr. Con Conway from An Post are welcome and I am delighted they are here to respond to the situation. I will not go into great detail but I say to An Post that two issues arise. First, the senior staff of Kilmallock post office wish to retain their status and positions as employees of An Post with full pension rights and all the benefits that accrue from a semi-State company. Second, the senior people have decided they will not take this over as a sub-post office or a privately run post office. In my own county in Boyle, County Roscommon, the people went down that route, which would be against my advice. I did not receive any representations from anyone in Boyle regarding the change of status in that town. It is not on the list but as far as I know it has happened.

In this particular case, the vital aspect is that the staff themselves are not agreeable to the change of status. If that cannot be got through, it is imperative that An Post decides that Kilmallock can retain its status. That is the position put simply. With respect to the Chairman as a Deputy for the area, if senior staff had decided otherwise, he could do little about it because it would be an end to negotiations.

I summarise the position in that clear way because I have worked in the Department. I am familiar with the 1984 Act and this was not envisaged in it. Any change made against the will of the staff should be a ministerial decision. That is my advice but, in this regard, it was never envisaged. It would not have been envisaged in the past that a State run post office in an expanding town like Kilmallock, which is developing constantly, would not be retained and made viable, and it is viable currently.

I am here in support of the Kilmallock delegation and I ask An Post to review the position. It has many other post offices. It cannot win them all. If it is not agreeable at this time, I suggest it retains the services of the staff in Kilmallock and make it a strong, viable and profitable exercise.

Chairman

Does Senator Cassidy want to comment briefly?

Senator Donie Cassidy

As a former postman, I am familiar with the workings of this process. I have been familiar with Kilmallock for years having been in another line of business before I became a Member of the Oireachtas. I am here to support you, Chairman, and the people from Kilmallock in their attempt to retain the post office as it was. A case could have been made for this 15 or 17 years ago but our population is continuing to increase and all the indications are that it will increase by another 1 million within the next 12 to 15 years. It has already increased by 1 million. Seventeen years ago, there were 1.1 million people working in Ireland. Today, that figure is 2.1 million. There is no good reason to suggest demand for the service will not increase.

I compliment the Chairman and the members of the delegation on what they are trying to do on behalf of their people. In the words of Paudge Brennan, a great former Minister of State and Member of the Dáil and the Seanad, there is never a wrong time to do the right thing and the right thing here is to continue the post office as it was, particularly when there will be such a demand for the service.

I fully support the delegation. Many people deserve credit for the great work done down through the years to bring rural Ireland to the point at which it is today. The community spirit we see in Croke Park on St. Patrick's Day at the club championship finals reminds me of the plight of the delegation. As Leader of Seanad Éireann, it has my full support in its very reasonable request to the powers that be.

Chairman

How did the people of Kilmallock find out that this decision had been taken and that the post office was about to change from a company office to a contract one?

Mr. Michael Riordan

We found out from the newspaper. It was absolutely terrible.

Chairman

Does anybody have anything to add before we call on An Post to respond?

Mr. Ben O’Sullivan

In the spirit of partnership, we will work with An Post to expand the services in Kilmallock. We will not be found wanting.

Mr. Michael Riordan

I refer to Robert Kelly who was county manager in County Limerick. At the time, it was not an easy sell for him to get the type of funding he got. It was before the Celtic tiger. He came to Kilmallock and saw the work of another group, Kilmallock tourism development, and embraced the whole package very early on. He could see in the early 1990s that there was a huge infrastructural deficit in the town. He is not forgotten in Kilmallock.

Chairman

We will move on to An Post. I thank Mr. Daly, who I met this morning, and Mr. Conway for their patience in waiting for us. I reiterate what Deputy McManus said in that we had a pleasant and positive exchange of views this morning with the chief executive officer, Mr. Donal Connell, and other senior staff members and management of An Post. I call Mr. John Daly to make a presentation after which we will ask questions.

Mr. John Daly

I thank the committee for the opportunity to attend this session and to respond to the presentation from the Kilmallock delegation. I would like to say a few words to put the change in the business model in Kilmallock in context. I will then come back to some of the comments made earlier.

An Post is committed to continuing to provide a top class service to the people of Ireland. We operate through various business models which include offices run by company staff and by contractors. It is important to say that the same level of service is provided at both company staffed and automated contractor offices.

An Post, as a commercial semi-State company, has an obligation to operate in a commercial manner. In the late 1990s, we recognised the challenges we faced in our retail business. These arose principally from greater choice being available to customers for many of our traditional services and price pressure from our corporate clients. These included the direct transfer of funds to bank accounts for social welfare payments, the availability of direct debit and on-line channels for bill payments and the advent of on-line banking services. Our task was to ensure the post office business not only remained viable but also that post offices remained relevant to the people both then and in the future.

To address these challenges, we undertook a review of the retail business, the services we offered, the models under which we operated and the cost base of the business. The review outlined a strategy which included targeting new income streams as well as reducing the cost base. Part of reducing the cost base was to reduce the number of company staffed post offices by changing them to the contractor model while ensuring we continued to provide the same services to customers in those offices.

It is important to note that the contractor model has provided the bulk of post office services throughout the history of An Post. Currently, 94% of post offices are operated by contractors rather than company staff. Another important point to note is that the presence of a company staffed post office in a particular location was not necessarily originally down to the business need for such an office but, in many cases, was due to other factors such as a railway station in that location necessary for the mail service at the time. This resulted in some offices being company staffed while offices in other bigger towns were operated by contractors.

In reviewing the company-staffed network we looked at it from a commercial point of view. This led, in 2002, to an agreement with the Communication Workers Union for a change programme in up to 50 offices. The offices selected were to be on a commercial basis with the lowest business volume offices to be changed.

To date the model has changed at 22 locations. These include Midleton, Curragh Camp, Ballinrobe, Lifford, Castleblayney, Belturbet, Muine Bheag, Kinsale, Kildare, Cahir, Roscrea, Athenry, Cootehill, Ballyhaunis, Clifden, Ballymote, Cashel and Kilrush, and four others in Dublin. Two more are planned for this month: Boyle, as was mentioned earlier, and Wicklow which is planned for the end of this month.

The committee will note from the list of locations given that the towns range significantly in size, with populations from approximately 1,000 to over 7,000 in some cases. It is fair to say that the level of service in these towns has been maintained and in many cases an improved service is being provided. We have received little or no adverse comments since the offices changed and in fact have received much positive comment.

Of the 1,250 plus post offices in Ireland today, just 74 are company staffed. Plans are in place to change the business model at another 18 offices this year, including Kilmallock. Kilmallock post office ranks third lowest in terms of business volume among these 74 offices. It may also be of interest to the committee that there are 176 existing contractor-run post offices where business volumes exceed that of Kilmallock post office. While this includes city offices, it also includes towns such as Carrigaline, Tramore, Portalington, Edenderry, Newcastle West and Buncrana. These towns share the same services as company staffed offices.

I outlined the rationale for the change programme but I would reiterate that changing the business model of a post office, as part of this programme, does not impact on the level or variety of services which are available to customers of that location. Continuation of service is of key importance to An Post. All services available before the change remain available after the change. In addition, as I stated earlier, in many cases the premises and facilities available have been improved.

I mentioned earlier that part of our strategy was also to increase the number of services available to our customers and increase our income base. We have seen some success to date in this area. As well as continuing to grow existing businesses such as State-guaranteed savings and bill payments, we have seen the introduction and growth of services such as Western Union, AIB banking services, gift vouchers and payment of Garda fines. Last, but not least, was the significant introduction of Postbank services in the past year. We intend to continue introducing new services but also need to continue with our cost reducing programmes. This will ensure that we continue to be in a viable position to provide post office services on a nationwide basis and, just as importantly, ensure that we remain relevant in an ever changing Ireland.

I want to finish by assuring the people of Kilmallock that the change in business model of their post office will not in any way change our desire to continue to provide them with all post office services. I also want to assure them that the change will not impact on the mail services or staff in their town. We are committed to providing them with the highest level of services for the future.

I will address some of the comments, beginning with those of Mr. Riordan. He mentioned the retention of Kilmallock post office. An Post has no intention of taking the post office out of Killmallock. What we are talking about is changing the business model. We are committed to retaining what he called, and what we agree is, an essential service.

He mentioned that none of the retailers are interested. We have not yet advertised the office. He might be in a position to know the retailers are not interested but as of yet we are not because we have not advertised the position.

On the question of staff, we have not yet received option forms from all of the staff telling us of their options. It is a little early to state that none of the retailers are interested. In all of the other towns — the 22 to date or 24 including Boyle and Wicklow — we have encountered no issues in filling the offices.

I also welcome Mr. Riordan's observations. He wants to highlight the services available locally and in fact Senator O'Reilly also picked up on that. I welcome that. I ask that all communities would promote their post offices. The most important element in maintaining the viability of post offices is getting people to use them. Mr. Riordan mentioned a number of services and I referred to a number of others. We are losing business in the area of social welfare payments because we are not attracting new claimants when they reach pension age or those who have children for the first time and can claim child benefit, as they opt to use banks. This is an area that could be pursued.

Mr. Riordan also put emphasis on the fact that we are not prepared to share profitability or transaction information with his group but that is purely for commercial reasons. The deal was done on the basis of an agreement with the union where all the staff, including those in Kilmallock, would receive a 12.5% allowance and the change programme would provide that pay increase to staff. It is important to note costs are associated with the project and we need to save money to remain viable.

I do not understand where Mr. Riordan is coming from when he stated that Kilmallock was not on the original list. As I stated in my presentation, the agreement with the union was to change the model in up to 50 offices. In phase 1, a list of 14 offices was introduced, which did not include Kilmallock. However, it was on the second list in phase 2, which included the next 16 offices.

Deputy Simon Coveney

Paragraph 5 of this submission outlines the history of the decision by An Post to set up different business models, one of which is contract-based and other is company-staffed. It was decided to deploy company staff in post offices not because of the size of the towns but on the basis of their proximity to a railway station and so on. This could potentially be the case in Kilmallock but An Post proposes to change the business model from company-staffed to contract on the basis of population size and number of transactions.

I live in Carrigaline, which has a population of 14,000. Its post office uses the contract-based business model but when the business model changed, the population was much smaller. However, different towns and regions have different types of demands. The population of Carrigaline has increased by 1,000 a year over the past ten years. The structure of the town is totally different from Kilmallock, the population of which has not increased to the same extent. The town faces different challenges to attract business. Comparing towns such as Carrigaline and Kilmallock to justify downgrading the Kilmallock post office from company staffed to contract run is not fair. Of the remaining 74 company-staffed post offices, Mr. Daly says Kilmallock has the third lowest business volume. Where are the two post offices with lower business volumes than Kilmallock? Is it proposed to change them from company staffed to contract run?

An Post is taking it for granted that a retailer in Kilmallock will be willing to take on this contract. If that does not materialise, what will the company do, given it cannot force somebody to take on the business? I presume this is a voluntary process whereby the company offers a contract that will be attractive to somebody, which will allow the company to change its business model. Has An Post come across a town where there has not been a retailer willing to do that? If Kilmallock is the first town where that may be the case, how will An Post deal with that scenario?

Mr. John Daly

Carrigaline was never a company office, it was always a contractor office. I do not know why Kilmallock was originally a company office, but I suspect it was something to do with the lord in the area at the time it was made a company office.

Mr. Con Conway

I think Kilmallock got a post office because of Lord Kilmallock and because peers of the realm got a post office for their area

Mr. John Daly

The two post offices below Kilmallock on the list are Clones and Cahirciveen and they are on the list to be done. The staff at those locations are aware of that.

We have never had difficulty in filling an office in a town such as Kilmallock. In towns and urban areas retailers see the benefit of having the post office in their shop, because it brings in footfall and the benefit of more business. To answer the specific question, if we have difficulty finding a retailer, we will have to review our options. We do not intend, however, to remove the post office from Kilmallock.

Deputy Liz McManus

I welcome that response. There is some security in the statement the services will be retained in Kilmallock. However, a question remains with regard to the approach adopted by An Post. I note from the Kilmallock presentation that the post office employs 28 people. That is a sizeable operation and is not something that can just be added to an existing shop.

Mr. John Daly

Five of those 28 people are involved in the retail business. The other 23 work in the post office and will remain employed.

Deputy Liz McManus

Then the service we are talking about concerns 23 people. The impression one gets is that the information which should have been provided in a structured manner was broadcast by way of an advertisement. This seems an inappropriate way to deal with a significant change for a particular community. Will An Post give us more detail on the process involved? It has been said that An Post has not got all the information back from the staff and it has not sought tenders from retailers. However, this is a hot issue in Kilmallock. Does An Post not think the process should be rather different to that adopted, in terms of providing information, engaging with the local community and trying to ensure the change is managed in a different way? The approach adopted seems an unfortunate one.

Perhaps I am wrong, but the impression I get is that the intention of An Post is to get all, or almost all, post offices to go the contractor route. A significant number have already gone that way. The plan seems to be that everywhere this can be done, it will be done. Am I right in that?

Mr. John Daly

That is not the intent. When we started this programme we had 96 company-staffed post offices. We now have 74. The agreement was to do up to 50. We may not do up to 50, but we will certainly do up to 40 or 45. We see ourselves as remaining with a core network of 50 company-staffed offices. We do not intend to go below that.

Deputy Liz McManus

Are they the big ones?

Mr. John Daly

They are the ones in places like Cork, Galway, Limerick etc.

Deputy Liz McManus

So, it is the large urban post offices that will be retained by An Post, but everything else will go.

Mr. John Daly

Yes. In terms of the process, part of the agreement with the union is that the staff in the offices are offered a number of options. One of those options is to apply to take on the contractor position. We do not advertise any of the offices until such time as we have spoken to the staff, because it is only fair to first speak to staff concerned. It is only after speaking to the staff and confirming that none of them is interested in taking on the contract that we advertise the position. In half of the offices we have done this, the post office has remained in the same premises and we have leased it to the staff member taking on the contract. It is only after the staff have given us their preferred options, which we have not got in this case, that we advertise the position.

Chairman

On the point raised by Deputy McManus, which I also raised this morning with the CEO, Mr. Daly was at pains to point out that the same level of service will be retained. I am at a loss to understand how. At present there is an office in a landmark building with five people working behind the counter. However, if that is transferred to an area at the back, front or side of a supermarket, to all intents and purposes it becomes a cage with only one person working behind the counter who might also have to do other chores in the store. I accept there might be same variety of products for sale and that the product line could be enhanced. However, if one person is doing a job in a smaller office that was previously done by five people, and there is a queue through the shop and possibly out into the street, I cannot see how that is giving the same level of service to the customer. The point being made is a good one. There certainly would not be the same quality of service to the customer.

Mr. Daly mentioned that in some cases where a staff member took up the contract, he or she remained in the same premises. Is that an option in Kilmallock? Is the building in the ownership of An Post?

Mr. John Daly

The building in Kilmallock is leased by An Post. We could look at the option of subleasing if one of the staff members wanted the contract. I am not familiar with the premises in Kilmallock but I am informed that it is not in good condition and is not wheelchair accessible. We are very conscious that all our post offices should be wheelchair accessible.

Chairman

There is one more point I want to make before I go to the other contributors. An Post rightly takes pride in putting the customer at the centre of its business and trying to work around the customer. When this story broke in Kilmallock it came as a shock to everybody. It was assumed that this was a downgrading. When I was canvassing door to door in Kilmallock during the general election campaign there were signs stating "Save our post office" at 95% of the doors. There was a perception that Kilmallock was losing its status, that it would lose its post office.

If what Mr. Daly says is correct, that in every case where the post office has moved to contract it has worked well and has enhanced its services and the quality of service and there have been no complaints from the public or from customers, why does An Post not meet the community, the chamber of commerce or the relevant group in the town in question, to inform them as to what is proposed and the reasons for same? In the absence of such communication from An Post, a whole parish will automatically be up in arms, mainly because of misinformation or lack of information. That is not a good way to do business.

Mr. John Daly

I take on board the communications issues around the change programme. As I have already said, the first people we should tell are the staff.

Chairman

I accept that.

Mr. John Daly

After that, we need to look at having a communications programme that is better than we have had to date.

Senator Terry Leyden

We have made some progress in this regard. I compliment the manager and staff in Kilmallock who are not prepared to sell out and go private as contractors. They have taken a stand and their position should be respected. I am sure that Mr. Daly or Mr. Conway would not be too keen to be offered a contract to do their job and might reject it as quickly as the manager in the office in Kilmallock. That is only right because it is important to retain one's status in An Post. I am aware of that for some time. In that regard I recommend that this issue be left alone. Kilmallock wants to keep its post office. The staff want to be retained. Any building can be modified. There is no architectural mystery to doing something about providing wheelchair access. There is no building that could not be modified. Even this House was modified to provide wheelchair access.

I can say no more about this issue. I request that An Post reconsider this issue and if the staff are not prepared to go with the contractor, the people of Kilmallock should not be offered that because the post office will end up being located in the back of some supermarket and would not provide the services the people of Kilmallock have had available to them for the past 100 years.

Deputy Edward O’Keeffe

Much has been said already and I do not want to ask the same questions but why is it necessary to downgrade this post office? I take it An Post is working on a profit and loss basis. It would be aware of the costs, profits and margins in terms of each post office. Why is it necessary to change the status of the post office? If there are too many staff, why not scale down the number? Why is the status being changed? The status is important for the town. It is a general post office in the eyes of the public. There are many sub-post offices. Carrigaline has a sub-post office. The status of a post office is important to an area in terms of having that recognition. Kilmallock will have sub-post office status but on what does An Post base its argument for the change? I accept post offices faced difficulty in recent years but is this about a marginal business or profit and loss?

I was interested to hear about Lord Kilmallock. There was not a Lord Kilmallock but Mount Coote was a famous place. I understand that in the building of the railway from Cork to Dublin he was an influential landlord and insisted that Kilmallock would be on the line. Since then we have J.P. McManus.

Chairman

Do the An Post gentlemen want to comment briefly?

Deputy Edward O’Keeffe

The bloodstock industry is famous in that area and racing is vital to the country.

Chairman

In An Post's experience with changeovers in the recent past, how many have gone to stand-alone business premises and how many became part of shops or supermarkets? If Mr. Daly does not have the exact figure he might provide a rough estimate.

Mr. John Daly

It is about half and half. Of the 22 to date, 11 have remained in the same premises so it would be fair to say they would be stand-alone.

Chairman

Would An Post have a preference?

Mr. John Daly

Our preference is to provide the best service possible in a town.

Chairman

And where it can only be second best--

Mr. John Daly

We have examples of stand-alone businesses and where they are not stand-alone where equal levels of service are given.

Deputy Edward O’Keeffe

Why change the status? Kilmallock is losing its status. It is a recognised general post office in an area that is being downgraded to a sub-post office. If it is a marginal or profit-making business, why will An Post not view it differently and let Kilmallock post office retain its status and continue the business? Why does An Post have to change it?

Mr. John Daly

It is a viability issue for the retail business.

Deputy Edward O’Keeffe

In that case how can it be viable for the people who will take it over?

Mr. John Daly

That is because the contractor model is much more economically advantageous to us. When the staff, premises and pension costs and everything that goes with them are taken into account, it is more advantageous for the company on a commercial basis to have a contractor run it.

Deputy Simon Coveney

On whether it is a stand-alone building or incorporated into a supermarket, I assume An Post has no role in choosing what is and is not appropriate and that it depends on who responds to its invitation for interest to take on the contract. If the existing staff management in Kilmallock decide not to and if a supermarket owner takes it over, presumably the person who takes on the contract is the person who makes the decision, not An Post.

Regarding the 28 staff referred to earlier by Mr. Riordan, five of those are behind the counter staff. What happens to those people within the An Post infrastructure if it is decided to put it out to tender and if a local business person with a supermarket decides to take it over and incorporate it on a contract basis into their supermarket? They may need no extra staff or perhaps just one person. Is it a case of voluntary redundancy or relocation for those An Post employees? How does it work?

Mr. John Daly

We do not take the first person who comes along and says he or she would like the post office. We have standards and contracts with which people must comply. People must provide a service and a premises to a suitable standard.

The staff in all these offices have been given five options, as agreed with the union. They all got the 12.5% pay award. The five options are as follows. People can choose to take voluntary severance; take voluntary early retirement if they are of a particular age; apply for the contract to run the office and still take the severance or early retirement options; be transferred; or be seconded to the contractor coming in. There are no compulsory redundancies in this programme.

Deputy Simon Coveney

If they were to choose to be seconded to the contractor coming in, presumably the contractor will not need five sales staff if it is attached to a supermarket. If the preference of the staff concerned is to stay in Kilmallock and in the post office in the new contracted structure, it is surely up to the person who takes over the contract to decide who works in his or her new structure. I do not understand how that can be voluntary.

Mr. Con Conway

That option is only open if the contractor wants two people out of the five. That option is only open to senior people.

Deputy Simon Coveney

That is based on seniority of staff. The other three staff only have four options rather than five.

Mr. Con Conway

That is correct.

Deputy Simon Coveney

None of which includes continued employment in Kilmallock.

Chairman

I do not want an exchange between both sides but An Post asked for clarification from Mr. Michael Riordan on one issue. I will allow Mr. Riordan respond to that issue. Likewise, if the Kilmallock delegation wants one point of clarification from An Post, I will allow that.

Mr. Michael Riordan

There was more than one point of clarification because I wrote them down. On the question of the retailers, I can categorically state that no retail outlet in Kilmallock will take up the option. The passage of time is the only way to prove that. I understand none of the staff is availing of the option of taking on the post office. The forms might not all be back and I do not want to prejudice their position one way or the other but I am going on what I have been told.

On the social welfare payments and the fact one is not losing any of the existing holders but is losing any future business, we will not be found wanting in highlighting that gap and that people are going for direct debt options and other banking options. That is part of the equation I outlined in my presentation.

Information was given in a very shoddy way and I stand over that statement. I was going on the information given to me when the presentation was drafted that two other towns were on the list at the time. Obviously, for reasons of sensitivity, I was not going to name them in a public forum. We were led to believe that Kilmallock was not on the A list but was added afterwards.

We have had a comprehensive debate. One of the key points in the presentation was the question of the profitability of the post office in Kilmallock. That was not addressed at all. That has been the key issue from day one.

Deputy Edward O’Keeffe

I asked the question.

Mr. Michael Riordan

Deputy Ned O'Keeffe asked the question but it was not addressed in this document. There was also selectivity in the listing. It was stated that it was in the last three of the 74 which are company-run. There was no mention of the position in the 1,250. Going on the basis of the information provided, if it is accurate, An Post stated that it is under a legal obligation to run a profitable office. On that basis, it is obviously profitable, otherwise An Post has been breaking the law since 1990.

Chairman

Would Mr. John Daly like to comment? Will he refer to the profitability, viability or otherwise as Deputy Ned O'Keeffe has asked about it?

Mr. John Daly

On Mr. Riordan's last comment, An Post has a commercial mandate to operate in a commercial manner. It does not have a mandate to operate every post office in a commercial manner. If we were to operate every post office in a commercial manner, there would be many post office closures in the country. Therefore, it is done on a global, rather than an individual office, basis.

In terms of making the business, as against each individual post office, viable, this was one of our cost saving measures. I am not saying Killmallock is not profitable. I am not saying it is making losses. What I am saying is in the overall mix this is one of our cost-saving measures to ensure a viable post office network for the forward.

Mr. Michael Riordan

May I make one point on that?

Chairman

Yes, one point.

Mr. Michael Riordan

I understand that it is an overall package where at the end of the year the bottom line must be in the positive, but it does not take a genius to figure out that if An Post is selling it as a commercial venture, it must be profitable as it is, otherwise nobody would touch An Post with a 40 foot pole, to speak plainly. It must be a profitable entity if An Post wants it on a contract basis. An Post is hardly selling it as a Titanic version, is it?

Chairman

As I stated, I do not want a debate to commence between both sides. I have given both sides a fair opportunity. Does Mr. Daly wish to make a final comment?

Mr. John Daly

I will repeat what I stated. We have never stated that Killmallock is not a profitable office. What we have stated is that we must have a viable network overall and this is one of our cost saving measures. By converting it to a different model, it is a cheaper model for us to run while continuing to provide the same service.

Chairman

We must leave it at that. I thank Mr. Daly and Mr. Conway for their presence today and for their presentation, and Mr. Michael Riordan and Mr. Ben O'Sullivan and their colleagues, and Councillor Paddy McAuliffe, who have travelled from Killmallock.