I thank the committee for allowing the Irish Postmasters' Union the opportunity to meet and to make a presentation to it today. My name is Mr. Brian McGann, general secretary of the union. With me today is our union president, Mr. Sean Maher, our vice president, Mr. Simon Murphy, our treasurer, Mr. Sean Martin, and Ms Breid Gallagher, all of whom are serving postmasters.
The Irish Postmasters' Union represents the vast majority of self-employed postmasters who, on behalf of An Post, run the country's network of 1,100 post offices and who, in turn, employ approximately 3,000 people in local jobs within their community. Postmasters, many of whom come from generations of postmasters, are deeply rooted in the communities they serve. They, with An Post, are trusted servants of the community, providing valuable services such as banking, welfare payments, mail services, foreign exchange, investment products, postfone and many other products and services.
The post office serves 1.7 million customers every week over five and half days, including Saturday. Every post office is fully automated and is capable of providing any of An Post's services in any part of the country. The post office is trusted, flexible and accessible. When customers walk through the door of a post office, they know they are dealing with people they can rely on and trust and that the sensitive information they provide in order to do their business will be safe, secure and treated in confidence. The post office provides banking transaction services for Allied Irish Banks and National Irish Bank, while savings and investment products, many tax-free and DIRT-free, are also available at post office counters.
Post offices provide welfare payment services to 800,000 people and the provision of this face-to-face service plays a significant role in fraud deterrence. Approximately 18% of people in Ireland are "unbanked", and we believe this figure is rising. For this group, the post office is the supplier of first choice and is their only point of access to financial services. The post office is the institution that allows people, in these hard times, to make part-payments on their bills and, for those in straitened circumstances, we provide a household budgeting service.
The post office is about much more than the services it provides. Many people turn to the post office to get Government application forms, seek advice on a range of citizen information issues and, in some parts of the country, post offices provide a valuable source of tourist information and local knowledge of the area's heritage. Indeed, the value of the post office goes even further than that. In many cases across the country, the post office is a focal point of the community, giving citizens an opportunity to exchange information on what is happening within their area and keep connected with their community. The post office plays a vital role, even in this age of technology, in creating a sense of connectedness and belonging.
The upgrading of technology at post offices has taken place with the introduction of flexible systems that can easily be adapted to provide a range of services to customers within a short timeframe. Among the many achievements and innovations in the post office that we have taken on in recent times are as follows: banking transactions for AIB and National Irish Bank; Passport Express; mobile phone services with postfone; commission-free foreign exchange; Garda fines payments; and various bill pay services. In terms of State savings, we have grown the fund to €12 billion. We deliver a faultless welfare payments service to 800,000 customers each week and we developed a fully integrated solution for Garda fines in a very short turnaround time.
This clearly shows we are flexible, efficient and adaptable in regard to embracing new products and services. In this context, we believe the post office has the capacity and appetite to take on much more business. We are not here to talk about what the Government can do for us; we are here to talk about what we can do for the Government.
In the banking area, given the major banks are trying to reduce infrastructure costs, the post office could become the provider of banking transaction services for major banks such as Bank of Ireland and Permanent TSB. Apart from helping the banks manage their cost base, making banking services available through the post office will make these services much more accessible to many communities, especially in rural areas. Studies in the UK show that SMEs regularly use the post office for banking services and, therefore, local availability would help local businesses keep costs down. We ask this committee to request the Department of Finance to ask all of the major banks to offer banking transaction services through the post office network, especially in rural areas.
Motor tax renewal is another service that could ideally be offered through the post office. A majority of people do not renew their motor tax online and either renew by post or by going to a local authority office in person. According to figures seen by the union, the average cost of a motor tax renewal is in the region of €5 and the average transaction time is five minutes. Quite simply, we can do it faster and cheaper. In the context of 25,000 people being taken out of the public service, we all know that those who remain cannot do the same level of work with fewer resources. We would argue that non-core activity in the public service, such as payments and transaction-type services, should be transferred to the post office to allow the staff remaining to concentrate on delivering essential front line services. In addition, making services such as motor tax renewals available through the post office will make these services much more accessible to many communities throughout the country. We ask this committee to request the Minister for the Environment, Community and Local Government to direct local authorities to transfer motor tax renewal payments to the post office as a matter of the highest priority.
Among the other services that we could provide are: driver licence renewals based on a Passport Express-type model; the new household charge payment; water charges, rates, rents and other local authority payments; lodgements and withdrawal services for credit unions; and value-added services for the Department of Social Protection such as signing-on and identity validation.
I want to deal with a number of key concerns of the union and highlight the importance of these in ensuring that we have a sustainable network of post offices for the future. The Department of Finance published a strategy on financial inclusion last year. Under this strategy, those who do not have a bank account would be given a basic bank account. The strategy, driven largely, it must be said, by the Department of Social Protection, envisages that the "unbanked", mainly welfare recipients, would then be paid their welfare payments through this bank account.
This strategy is flawed in that the provision of a bank account, in itself, will not lead to financial inclusion. Indeed, last year alone 100,000 credit card accounts were closed as people moved away from the mainstream banking services and back toward more direct forms of controlling their finances. People, especially the unbanked, do not trust the banks and many do not want to be forced into a relationship with institutions which they fear will take control of the small amount of money they have. If financial inclusion is to be achieved, the post office must be at the centre of any solution.
People trust organisations such as the post office and the credit union. However, the post office alone has a single, coherent, accessible infrastructure that can deliver the banking solution that will help to achieve financial inclusion. The experience in other countries, such as Brazil, has shown that financial inclusion measures work best when the post office is the vehicle used to provide basic banking services. We recommend that this committee ask the Minister for Finance to ensure that the post office is at the centre of any plan to address financial inclusion.
Moving on to the Department of Social Protection, the union would like to highlight the importance of the welfare payment business to the long-term sustainability of the post office network. Much investment was made in computerising the post office network to facilitate the delivery of the welfare payments business for the Department. The union is gravely concerned that the Department is planning to take this business away from the post office as early as 2013. The union has received many reports that the Department is actively trying to drive business away from the post office by forcing persons to have payments made though bank accounts. We believe in consumer choice but persons should be free to choose the post office if they want payments to be made to there.
If the welfare payments business is removed from the post office network, the union believes that this would lead to the immediate closure of up to 600 post offices. The effect of this, particularly in rural areas, would be catastrophic. Not only would post offices disappear, but many shops in towns and villages would disappear too as in many cases the shop can only exist if the post office remains open. Studies have found this to be the experience in the UK.
The union has been seeking a meeting with the Minister for Social Protection since March last but, to date, we have not been granted a meeting. We ask that this committee would write to the Minister for Social Protection highlighting its concern regarding the impact on the network if the welfare payments business is taken away from post offices. The Minister should be asked to clarify the position without any further delay and give a commitment not to undermine the viability of the post office network.
We have a clear vision and strategy for ensuring that post offices are part of this country's future. We believe that the local post office plays a vital part in the economic and social life of communities throughout the length and breadth of the country. By adopting our ideas, Government can do the following: ensure greater access to services such as banking and local authority services, especially in rural areas; free up limited public resources and achieve efficiencies; and enhance the viability of the post office network.
For our part, the union has commissioned Grant Thornton to produce a report on the future of the post office network in Ireland, with a focus on growing the business to make it more sustainable. We have worked closely with An Post to develop a strategic approach to securing a viable future for the retail network.
The union has, in conjunction with An Post, launched a competition for postgraduate students in the institutes of technology to design a post office of the future. The competition has two elements, namely, to design an urban post office and to design a rural post office. We believe that by taking initiatives such as this we will get people, especially young people, to think about what they want the post office to be for them in the future.
However, what is needed now is the political vision to take on board our ideas and create a roadmap that will ensure the survival of the post office network in the future. We must ensure that the local post office survives as a focal point for communities and to ensure that Irish citizens have an institution serving their needs in which they can place their trust and which is accessible to them within their own community.
We ask this committee to call on the Government to engage with the IPU and An Post to deliver a commercially-based solution that will improve access for customers, drive real savings and deliver on Government strategy. A plan should be drawn up and implemented that will achieve the following: ensure a sustainable network of post offices in the future; identify opportunities to drive more business through the post office network such as banking, motor tax, local authority payments, etc.; and invest in the post office network, especially in rural areas, to ensure that consistency in standard of office and service offering is achieved.
We believe that the post office can play a part in Ireland's economic recovery. The Government can achieve substantial cost savings by outsourcing transaction type services to post offices. Removing non-core activities will allow those who remain in the public service to be redeployed to do essential services. Post offices will become more economically viable by driving more business through the retail network and the public will have greater accessibility to services within their community. Because the network infrastructure is already in place, much of this new business can be taken on at a marginal cost making it cost effective. The benefits to everyone are clear.
We believe in taking a positive approach to securing the future of local post offices and we believe that our ideas are practical, realistic and achievable. As I stated earlier, we are not here to talk about what the Government can do for us. We are here to talk about what we can do for the Government. We are the post office and we are open for business.
I thank the committee for inviting the Irish Postmasters Union to make a presentation. We need the committee's support to help us secure the future of the post office network. We need action now. We need a strategy, a vision and a plan. We cannot afford to wait as, day by day, we see the disintegration of infrastructure within our communities. If we lose the post office we lose the heart of the community.