Joint Committee on Transport and Communications díospóireacht -
Wednesday, 26 Feb 2014

Sustainability of Post Office Network: Irish Postmasters Union

Chairman

The purpose of this morning's meeting is to engage with representatives of the Irish Postmasters Union on the sustainability of the existing post office network. I welcome Mr. Ciaran McEntee, Mr. Padraig McNamara, Mr. Brian McGann and Mr. Sean Martin of the Irish Postmasters Union.

By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. If they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. The opening statements witnesses have submitted to the committee will be published on the committee's website after the meeting. Members are reminded of a long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House, or any official by name or in such a way as to make him or her identifiable.

I will need to excuse myself for a few minutes during the meeting and will be asking Deputy Coffey to take the Chair at that stage. The union's submission has already been circulated to members and I know there will be many questions. I ask the witnesses to make their opening statements as brief as possible to give as much time as possible to members for questions.

Mr. Brian McGann

I thank the committee members for allowing the Irish Postmasters Union the opportunity to make a presentation to it today. My name is Brian McGann, general secretary of the union. I am accompanied by our union's president, Mr. Ciaran McEntee, our vice president, Mr. Padraig McNamara and our treasurer Mr. Sean Martin, each of whom is a serving postmaster.

The Irish Postmasters Union represents the vast majority of the 1,100 postmasters in Ireland. Postmasters, many of whom come from generations of postmasters, are deeply rooted in the communities they serve. They and 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 that 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.

In 2011 the union launched its Open for Business campaign which is based on making the country's sub-post offices more sustainable by making greater use of the retail network of post offices. A key element of this campaign was the development of a suite of business proposals which the union argues could be implemented to the benefit of the post office network and the taxpayer.

In 2012, the union commissioned Grant Thornton to independently assess our proposals. Following its assessment of a number of the union's proposals, Grant Thornton prepared a report and this was published by the union. The Grant Thornton report found that each of the proposals examined would have a positive cost-benefit outcome and it estimated that if these proposals alone were implemented, more than €80 million in savings could be achieved, much of which would accrue to the taxpayer.

However, despite the benefits that would accrue to all parties from adopting the approach put forward by the union, the Grant Thornton report recognised that these proposals alone could not replace the very substantial undermining of the viability of the post office network if the welfare payments business was taken away from An Post.

In 2013, following extensive investigation and consultation, this committee published a report on promoting a sustainable future for the post office network. This report contained many ideas and valuable recommendations on how the post office network could be sustained. In 2014, at our request, Grant Thornton undertook a second study of the issues facing the post office network. Its findings, published last week, make for stark reading.

While much good work has been done, both by this committee and by the IPU, no real action has been taken to secure the future of the network. Indeed, much has happened since last year to give rise to real concerns that the post office network could be in greater danger of collapse than ever before.

This morning we wish to address some of the key problems facing the network and also highlight some of the main findings of the most recent Grant Thornton report. Members will be aware that the postmasters, through a number of Independent Deputies, have put forward a motion which, if adopted, would greatly help to secure the future of postmasters, their families and staff and would also help to underpin the future existence of many communities throughout the country.

Before I deal with some of the issues facing post offices today, I wish to dispel a few myths about postmasters.

First, postmasters are not employees with good salaries and pensions. In fact, postmasters get paid for the transactions they conduct and if they do not have business to transact, they do not get paid. In the House last night the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte stated that he was not going to close any post offices. The fact is that if there is no business to transact in post offices, then post offices will be closed in any event. While the Minister may not actively sign any order closing post offices, Government inaction in this regard will close post offices.

Sometimes people maintain the post office is part of the old way of doing things. The reality is that we have the most up-to-date technology available in every post office and our systems have the capacity and flexibility to take on new business easily and quickly. There are modern technologies in the marketplace but some things can only be done face-to-face. Computers cannot smile at us and one cannot squeeze a loaf of bread online.

Sometimes people tell us that we are too expensive but that comparison is unfair because the post office offers far more than a simple transaction. Post offices are an important strategic asset for Ireland and we must ensure that the network is sustained for the future. The Grant Thornton report highlights how important the post office is for communities, especially in rural and disadvantaged urban areas and for the elderly, disadvantaged and financially excluded.

An Post recently won the contract to deliver welfare payments on behalf of the Department of Social Protection. The contract, which is for two years, can be extended for a further four years beyond that. Many people believe that this has dealt with the welfare payments issue and that everything is rosy in the garden but that is not the case. The Department of Social Protection stated in the current contract document that An Post will be required to assist the Department in achieving its objectives to move to electronic payments based on the Department's electronic payment strategy. This will involve forcing many of the 51% of people currently receiving welfare payments over the counter to move to using a bank account.

The Department plans to issue a second tender and has already issued a request for information. This tender will see the introduction of a system of direct electronic payment of welfare and, if implemented in its current form, the Irish Postmasters Union is gravely concerned that the sustainability of the post office network will be undermined to such an extent that hundreds of post offices throughout the country will close and this will have a seriously negative impact on people, especially in economically disadvantaged urban areas and in rural areas as well.

Despite winning the contract, post offices are losing business since it is being driven out of our offices into the banks on a daily basis by the Department of Social Protection. I have before me an example. It is a letter to a claimant and it states that in order to give a decision on the person's claim the Department needs the following information: the name and address of the bank, account number, sort code and the name of the account holder. What person looking for payment of a benefit from the State would refuse to give that information if it is demanded of him? There is no choice in that letter and no option. Clearly, the Department of Social Protection is driving people out of post offices and into the banks. People are not being given a choice and if this continues by 2017 post offices will not have the welfare payments business and hundreds of offices will be forced to close.

The State savings contract is due for renewal this year and the revenue from the contract is almost of equal value to the welfare payments contract. Any loss of remuneration from this contract will also seriously undermine the sustainability of the network. Rural post offices have been subject to the loss of rural mail delivery offices and the closure of these facilities undermines the financial position of post offices in the longer term since this represents an important source of income for postmasters. The greatest issue facing post offices is the fact that the Government does not have a plan. Despite making a commitment in the programme for Government to maintain the post office network, the Government has no plan to ensure that the commitment is delivered on.

Government policy is forcing An Post to operate on a commercially feasible basis without any recognition of the social role played by post offices throughout the country. This policy is leading to the closure of post offices but more concerning is the establishment by An Post of an alternative network to the existing post office model.

Deputy Paudie Coffey took the Chair.

Vice Chairman

I apologise for interrupting Mr. McGann. This submission has already been circulated to members and they have read it. I understand Mr. McGann intends to make a presentation. Is the presentation being made as well?

Mr. Brian McGann

I am using a script associated with the presentation. I can go through it as well but I took the view that it was quicker to read it.

Vice Chairman

It is fine if the script refers to the presentation.

Mr. Brian McGann

It does. I am aware that it was circulated. From the point of view of getting through it quicker, it is probably better that I do not go through the slides.

Vice Chairman

That is what I wished to clarify.

Mr. Brian McGann

An Post has partnered with Tesco to develop an alternative network under the Post and Pay banner. This move is a direct consequence of the lack of a Government plan for the network. While some products and services are not currently available, the systems employed in this network are capable of offering the full range of services. We know that An Post plans to extend this network to other supermarket multiples. The Post and Pay offering is different to the Postpoint channel in that it is a branded network but to the average man or woman on the street it simply looks like a post office without the protective screen. However, the staff operating these outlets are not fully trained or vetted nor are they bound by official secrets legislation. We are not aware that the staff are trained in anti-money laundering requirements. All this represents a downgrading of the post office network and an increased risk to the certainty that customers have that their business can be transacted on a confidential basis.

The only outcome of this move by An Post will be to dilute the existing business of the network. In the past the supermarkets flirted with the idea of 24 hour opening but since it made no significant contribution to increasing the overall level of business for the most part they have abandoned the idea. This partnership with Tesco and others alone could destroy the network within two years. On behalf of postmasters in Ireland, the union cannot allow this development to go ahead unchallenged and if An Post continues to push ahead with this ill-fated plan, the union will take action to oppose the establishment of an alternative network that will cannibalise the existing post office network.

While it is Government policy to support the post office network, the realisation of this support requires a significant degree of political will and the development of a conscious regard at departmental level of the benefits of utilising more fully the network of post offices. An example of the mismatch between Government policy and departmental actions is the recent decision by the Department of Transport, Tourism and Sport not to make the provision of driver licence renewals available through the 1,150 post offices. Instead, the Department decided that the provision of driving licences should be restricted to just over 30 locations. In addition, members of the public can no longer apply by post to renew their driving licence. Instead, people must travel to one of the few locations to have their photograph taken. Given the distance that people may be required to travel and the time that will be taken to process driving licence applications at these locations, the new system is less accessible, more costly and more time-consuming for customers.

People may ask why An Post did not win the contract. Simply put, calling on a network of 1,150 outlets to bid for a contract requiring only 30 outlets gives the post office little chance of competing fairly with other operators. In the light of the well-established and highly successful passport express model, why did the Government not simply replicate that model for driving licences instead of spending time and money reinventing the wheel? It makes no sense unless the purpose was to create yet another quango. We believe there is a strong argument to ensure that all Government agencies actively examine the benefits of using the network but a strong political will is required to make this happen.

When it comes to drafting tenders for Government business, the IPU believes that all tenders should be structured to ensure that they can be evaluated on the basis of economic and social policy criteria. In France, for example, the Government adopts this approach and one does not find the French police driving Fiats.

In 2012 we asked Grant Thornton to assess some of our business proposals. Based on the firm's assessment, our proposals on motor tax alone could save the Exchequer €60 million over a five year period while other proposals could realise further savings of €16 million over the same timeframe. The committee has examined the issue of sustaining the post office network and many of the findings mirrored the conclusions of Grant Thornton. Late last year we asked Grant Thornton to revisit its earlier study and to report on the issues facing the network today. The findings are a matter of grave concern to postmasters throughout the country. As committee members will have seen from the presentation slides that were circulated, Grant Thornton highlighted the heavy reliance of the network on the welfare and National Treasury Management Agency contracts. This is consistent with the findings from the committee's report last year. What Grant Thornton is altogether clear about is that without the revenue generated by these two contracts the network cannot survive.

Grant Thornton also revealed in the report that between 2006 and 2012, a total of 209 post offices closed, a decline of 15% in the network. Grant Thornton examined some scenarios and concluded that if 75% of the welfare payments business was lost, fully 444 offices would close, while if the network loses all of the welfare payments business then the number of post offices that would close would number 557. Clearly, the effect on the post office network would be devastating.

Grant Thornton highlighted the fact that the post office network is a key element in the Government's financial inclusion strategy.

It stated that any weakening of the network will dilute the role it can play in helping to attain greater financial inclusion and went on to state that, given the level of bank branch closures, the role of the network in providing financial services is more vital than ever. Grant Thornton questioned the perceived wisdom of the Department of Social Protection moving to a direct electronic payment system and highlighted the important role the network plays under the current system such as the fraud deterrence element of face to face transactions, and the return of moneys to the Exchequer from uncollected payments. Grant Thornton concluded that a direct electronic payment method cannot realise these savings and questioned whether direct electronic payments would be any more cost-effective, concluding that this question remains unanswered by the Government.

The Grant Thornton report concludes that the post office network's future sustainability is at risk and that the network cannot survive without maintaining its current revenue. Options for new business, while helpful, cannot deliver income to sustain the network. Grant Thornton has also concluded that the Government needs to act now to sustain the network and, in doing so, address the issue from the perspective of both economic and social policy.

Following the publication in 2012 of the first Grant Thornton report, this committee conducted its own investigation and published its own report, which was fully supported and endorsed by members of all political parties, including Government and Independent Deputies and Senators. What has happened since the publication of this report and the earlier Grant Thornton report? What have Ministers and their Departments done to implement its recommendations? The answer, as far as we can see, is nothing, other than to give cleaning staff in Departments more work to wipe dust off another report. In the face of such inaction, when the future of the post office network is more uncertain than ever, the need for an action plan from the Government is greater than ever before. This is why the postmasters of Ireland have drafted a Dáil motion, and thanks to the facilitation of Independent Deputies like Seamus Healy, John Halligan and others, our motion will be put to the House this evening. We may not be proposing and seconding the motion, but it is our motion. It is what postmasters want to see happen. We believe that support for our motion is the only way something will be done and we hope that the Government parties will agree to support our motion tonight.

The post office network will never be fully viable on a purely economic basis alone. A value must be placed on the social policy element of what the post office is about. The post office is too valuable to the 1.7 million customers who use it each week. To illustrate how people feel about their post office-----

Vice Chairman

A time slot of ten minutes was allocated for the presentation. All committee members have a full copy of Mr. McGann's speech, and I am anxious to get questions and answers going. Can Mr. McGann move to the conclusion, please?

Mr. Brian McGann

I will, but before I do, I would like to refer to a woman called Ada Power.

Vice Chairman

We have this on the record. I apologise for interrupting, but ten minutes were allocated and we are over 17 minutes at this stage and I am anxious to let members interact with Mr. McGann.

Mr. Brian McGann

I have no difficulty with that. I have a letter which shows that Ada Power and other customers throughout the country place a very high value on the post office network and on their post office. It is not something remote or impersonal but something that is valuable to people on an individual basis. It is too valuable to lose.

Do we want to let this important facility wither on the vine? Do we want to have a modern, vibrant, sustainable post office for ourselves and for future generations, or do we want a society where communities disintegrate and where people become disengaged from the society within which they live, and all the social disorder that follows from that sort of breakdown? Today we have a choice. Tonight in the House, Deputies will be able to vote on the motion looking for an action plan. We do not want yet another review. We do not want some vague and unspecified commitment that something might happen. We want an action to deliver on the commitment in the programme for Government.

Vice Chairman

I thank Mr. McGann. I call Deputy Dooley.

Deputy Timmy Dooley

I welcome the witnesses and thank them for the detailed presentation. On behalf of all of us, I thank them for the work they do in their communities, which they represent in the post office network and the postmasters. Mr. McGann has outlined in great detail what I see as a call to action by the postmasters on behalf of their customers for the Government to follow through on commitments made in the programme for Government. On page 62 of that programme, the Government clearly sets out its intention to maintain the local post office network. I support fully the motion before the House tonight. The witnesses have used the facilities of the Independent Deputies, but as Mr. McGann pointed out, it is a motion on behalf of the postmasters and the people they serve.

I do not know whether the witnesses have seen the Government amendment to the motion. If they have, do they believe it meets their needs? Is it representative of the commitments given in the programme for Government or do they believe it is yet another vague commitment to provide services some time in the future and some assistance to the post office network? What level of interaction has the Irish Postmasters Union had with its customers? Do the witnesses believe the motion they have put forward, which the Government will attempt to amend tonight, would meet the needs and expectations of the customer base they serve?

Mr. Brian McGann

I looked at the amendment proposed by the Minister yesterday evening and I looked at the motion written by the postmasters. The postmasters are asking for action. The Minister is possibly offering us some sort of review that might do something at some point in the future. What we want is action. What our customers want is action. What is happening on the ground is that by 2017, we will have lost the welfare payments business and €20 million in revenue will be lost directly by postmasters. They will be forced to close the door of their offices. We are calling on the Government to take action. The Government made its promise in the programme for Government. All we are asking is how that promise will be kept.

The Minister's motion essentially proposes that the Government is prepared to sleepwalk into a situation where the welfare payments business disappears by stealth. On behalf of postmasters in this country, we are not prepared to accept that as an outcome. We want to know what is the plan. We are prepared to put our shoulder to the wheel. We have been proactive in developing business proposals and having them costed. We will come up with the ideas and do the business where and when it needs to be done. We will meet our obligations, but the Government needs to have some plan and needs to give direction to An Post.

Our customers are overwhelmingly asking us to ensure we start a petition they are prepared to sign at every post office throughout the country demanding that their post office be kept. I think our customers clearly feel that what is proposed in the Government's amendment would not meet their needs in the long term.

Deputy Timmy Dooley

Government backbenchers in the Labour Party and Fine Gael who tonight will vote for the Minister's amendment will walk out the gate and attempt to say they are still supporting the network. Is it Mr. McGann's view that they are not supporting the post office network and they are not supporting the postmasters in their effort to retain the post office network?

Mr. Brian McGann

Anybody who does not support action to ensure a sustainable future for the network in this country is not supporting the post office, because what is needed is an action plan. In our view, the amendment does not come within an ass's roar of that. If the postmasters' motion is lost tonight, we will not just be talking about the sustainability of a network, we will be talking about the sustainability of communities and the disintegration of rural and urban communities in this country. This will become a much bigger issue.

Deputy Noel Harrington

At the outset, I would like to declare an interest. I am a sub-postmaster and have been a member of the Irish Postmasters Union since 1992, so this is my 22nd year as a postmaster. When I took over that office, it was a manual office like all other offices throughout the country. It became automated in the mid 1990s. In 1997, I recall a protest taking place.

I remember it because it was the only time I carried a coffin with nobody in it. We went up Molesworth Street and it represented the death knell of post offices. I commend the union on bringing the issue of sub-post offices to the attention of the Government and the Dáil and into public consciousness. The protest in 1997 led to negotiations between the Irish Postmasters Union, IPU, An Post and the Government that were facilitated by Mr. Phil Flynn as mediator, which led to an interdepartmental group. The group published a report in 2001 and the conclusions or recommendations, which we have not heard much of since, closed 600 offices directly. The report recommended severance payments for postmasters and for them to open up agencies. It recommended that for the future viability of post offices, there had to be consolidation of the network. Regrettably for communities, that is what happened. In my area, since I became postmaster in a small peninsula, I have seen post offices such as Cahermore, Garinish Island, Waterfall, Adrigole, Trafrask and Coomhola all shut. A few closed before the report was published, many of them since then. I am not talking about postmasters, An Post or the IPU but about communities that have lost the service. In 2001, at the time of publication of the report, there were 2,000 An Post post offices in the country . Over the past four or five years, post offices have continued to close, regrettably, but the rate has been greatly reduced.

I want to address the contention of Deputy Dooley about Government inaction and the motion. The committee published its report on the future sustainability of the post office network. I am conflicted in this matter but I recall the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, saying that a Cabinet sub-committee would be set up to see how national and local government could use the post office network to deliver Government business. The issue of how post offices can deliver Government business has been ongoing since the foundation of the State, but there is a fundamental difference between a Cabinet sub-committee and an interdepartmental group of senior civil servants in the relevant Departments discussing the future of the network. When the interdepartmental committee discussed the network, 600 post offices closed. That is the action we do not want. After the vote, it would be great if we could get a contract to say that the Government will do X, Y and Z through post offices, negotiate it over the next six months and deliver it in 12 months. However, that will not happen. Instead, a Cabinet sub-committee will discuss how local and national government and State agencies can pull business in through the post offices.

We got the signature on the social welfare contract to be delivered through An Post. I agree it gives us breathing space but the contract will ultimately expire, as contracts did before. There is a bigger and more fundamental issue beyond the social protection contract, which is the movement in this country and globally to a cashless transaction system. Has the IPU negotiated with An Post and received commitments on how to meet the challenge head-on? Coming in here and railing against the introduction of a cashless society in 2017, 2020 or 2025 is setting ourselves up like King Canute.

Specific reference was made to Department of Social Protection contracts and the Government, by stealth and by design, actively trying to take the business away. Reference was made to a letter, which I have also seen and on which I seek clarification. There was discussion about this letter issued from the social welfare office in Bantry. I have seen a copy of the letter and it includes a handwritten notation by a clerk within the Department of Social Protection seeking bank details. My information is that the letter is the only letter of this kind and may have been written in error. It is referred to as the Bantry letter from the Department of Social Protection office. Perhaps the witnesses can confirm this is not the policy of the Department of Social Protection. In almost all cases, an option is given for the post office to be used for payments, with examples of exceptions including adoptive benefit, family income supplement, the health and safety benefit, maternity benefit, disablement benefit and the bereavement grant. These are not available in post offices but every other payment in the social welfare system can be made through post offices.

I commend the union on having raised awareness. Some 50% of payments are over the counter payments and I submit to the union that some 95% of social welfare claimants can access payments through the local post office. I will not ask for a show of hands but all Oireachtas Members can ask themselves whether their utility payments, which can quite easily be done, child benefit payments or State pensions - and there are a few pensioners in the Oireachtas - are paid through the banks or the post office. Based on the figures submitted, I would suggest that half of those voting for the motion tonight have no payments going through the post office and half of those opposing the motion and voting for the amendment do not use the post office when they could. There is an important point to be made to the consumer. People who use the post office will keep it and if they do not use it, they will lose it.

Mr. Brian McGann

I would like to respond to those points. Deputy Harrington refers to the Bantry letter, as it is called. I do not know that it is the only one in existence but I am getting calls from postmasters throughout the country who tell me they are losing customers because the customers have been pushed towards the banks. I am not in a position to say whether it is the only letter but there are other items of correspondence suggesting people should use the banks because the post office is a nuisance. From the reports we have received from around the country, there is no doubt that on the ground the Department is pushing people into banks. Regardless of the letters in existence, I refer the Deputy to the tender document the Department of Social Protection issued when it put the contract out to tender. A table shows the payments being driven by the Department from 51% to 3%. Effectively, this is driving the business out. It is not a matter of whether we get the odd letter from around the country. The Department's document sets out its timetable to try to drive the business out of the network.

If the business is driven out of the network, the post office network as it stands faces collapse.

This brings us back to a question I put to the committee earlier. The Government made a promise to maintain the network of post offices. How will it do that? I acknowledge that in recent years the number of closures has been less, but generally the pattern is cyclical. Let me assure members that if the Department of Social Protection continues on the road it has taken and if no Government plan is put in place, another 600 post offices will close by 2017.

Members have suggested that this contract gives the post office network breathing space. I am not sure how much breathing space it really gives us but in terms of moving to a cashless society, I think the voice that speaks loudest is the people. In the pub on a Saturday night one will not find too many people paying for a drink in anything other than cash. Talk about moving to a cashless society is easy but whether it happens is another matter. We believe An Post and the post office network should be in a position to offer a proper banking service to the people. In doing so, we believe that many of the problems associated with the security of moving cash could be mitigated. Under the current model the post office gives cash to its customers, so cash has to be transferred in the network to give it out. If there were a proper banking system in An Post with cash coming in and going out, one could mitigate many of the issues surrounding the movement of cash. The Irish Postmasters Union would certainly find that helpful.

It is great that a Cabinet sub-committee will examine this issue. I understand from the Minister that it is the Cabinet sub-committee on social policy. We certainly believe this is an issue that needs to be considered from the perspective of social policy. I would like to know when that committee published an action plan. I cannot recall a Cabinet committee on social policy or any other Cabinet committee publishing an action plan. We want an action plan.

Deputy Michael Colreavy

I thank the delegation for their presentation. I apologise for leaving in the course of the presentation, but I took the opportunity to read it. I represent the Sligo-North Leitrim constituency, in which Sligo is the major town and the rest of the constituency is mainly rural with small towns and villages. I think any member of the Oireachtas who represents a similar area will fully appreciate the benefit and value of the post office network. The service it provides is much more than selling stamps and paying out social welfare payments. It is part of the fabric of the communities in which it is located. I am passionate in my defence of the post office network. We will be supporting this motion tonight. I have not yet seen the Government amendment to the motion that will be voted on tonight, but I am sure I will see it at some stage during the day.

We need to be realistic. We will not stop electronic mail or electronic funds transfer. It is disturbing to learn that Government is putting undue pressure on people to accept electronic funds transfer. If that assertion is accurate, it is disturbing because people should have a choice. Any business model that is built on resisting the increasing electronic funds transfer or electronic communications will fail. It will be like King Canute trying to hold back the tide with a rake. It will not work.

Mr. McGann stated we need a Government action plan. In my view An Post needs a business model and an action plan. Government must give its full support to that action plan. I do not think the Government should come up with the business model for An Post but An Post should have Government support for its proposed model. It is a reasonable expectation that An Post, together with the post office network and the postmasters, would have Government support for its plan, once it is in place.

What was the value of the licence for the national lottery before its withdrawal from the post office network ? Were arrangements made to compensate An Post for the withdrawal of the national lottery? It appeared to be running successfully and be of benefit to the post office network.

It is not clear from the Grant Thornton report on its analysis of An Post whether its staff met the management of An Post or explored different possible business models with An Post.

I attended a briefing by the postmasters' association last week at which I suggested that at a time when the banks are closing left, right and centre, it must present an opportunity for An Post to work with the Irish League of Credit Unions to give credit union members easy access to a full range of credit union services at the post office. That is an example of the lateral thinking that is needed by the credit union movement. Someone must have been listening last week as I was delighted to learn the Minister picked up on that point.

This issue is greater than politics. Not only was I disappointed by the Minister's response last night, I was also disturbed. While I welcome a whole-of-government analysis, that should have been done when this committee issued its report. We have lost valuable time. I see commercial and trading businesses moving from small rural towns into supermarkets based in larger county and provincial centres. That is deeply disturbing.

Chairman

A question, Deputy.

Deputy Michael Colreavy

If I were a high street retailer in a small town, I would be very concerned about that.

I have a final question. Given the intrinsic value of the post office network is the ease with which every citizen can access the range of services provided in the post office, did Grant Thornton try to figure out with An Post management how the range of services could be widened? We talk about competitive tenders, but we must take account of how business can benefit from the huge plus of a post office network that is accessible to the public. If it is the intention of Government to minimise travel to access essential and desirable services, can it not see the benefit of the post office network? It will not happen by accident but An Post must develop a business model that exploits its strengths.

Mr. Brian McGann

I will respond to the points made by Deputy Colreavy. We were in the House last night to listen to the Minister. He referred to the phenomenon of retail concentration with businesses based in larger county and provincial centres, but that raises the issue of what will happen to small towns and villages throughout the country. From what we heard last night it seems the Minister and the Government are presiding over the death of communities in the country.

We have no problem locating post offices wherever they are needed. What we will not accept is the establishment of an alternative network that will destroy the current network. That is our problem.

The Deputy is correct when he said that we are not trying to stop the tide and are not unrealistic in that regard. We want the tools to offer the services that people want. If we are given the tools to do the job we believe that people will come in the door because we are valuable, useful, helpful and reliable. We want to be able to compete on a fair and level playing field. The Government, when it looks at the awarding of over the counter contracts, etc., needs to recognise that there are 1,150 outlets in the network and not 30 outlets. It must also recognise the social policy value and aspect of the post office network.

The Deputy is correct that An Post must come up with a business plan. The major Government shareholders are the Minister for Communications, Energy and Natural Resources and the Minister for Finance. They decide at a strategic policy level the sort of approach that An Post should take. Recently Deputy Rabbitte, in response to Deputy Healy-Rae, said that An Post must be commercially viable. The fact of the matter is 48% of the network does 11% of the business and the Minister referred to this point last night.

There is a need to put a value on the social policy element of the network. The Government needs to tell An Post to come up with a business model or plan that meets the future needs of the people of this country. We will play our part by making sure that there is a value put on the social policy element and that a contribution, somewhere along the way, is made either through driving Government to make it more economically viable or using some other mechanism in support of that aim. There has been no change to the national lottery because we are paid as agents. The Minister had guaranteed that the current fee paid to agents will remain unchanged.

We are interested in the Irish League of Credit Unions. About a year and a half ago we sought a meeting with the league and met a number of its people who were very interested in what we had to say. We asked them to think about the venture and they said that they would get back to us but we never heard any more about it, which is a great pity.

One of the questions asked was did Grant Thornton work out the figures with An Post. Grant Thornton received some information from An Post but An Post would be very cautious about me giving out information that it regards as commercially sensitive. We have argued that, as partners in the business, we should be proper and full partners The people that I represent are business people, they have good business ideas and know how to make the business work so their voice should be listened to. That is why we have gone to Grant Thornton ourselves to get proposals costs. It is why we are trying to make a difference because we know how important our service is to people.

Mr. Sean Martin

I wish to answer some of the questions asked by Deputies Harrington and Colreavy. It is important to put on record that the postmasters are prepared to deliver social welfare payments in whatever form the Government wants, electronic or otherwise. We are prepared to work with the company, An Post, to ensure that we will offer electronically operated systems through the post office. As Mr. McGann alluded to, the difficulty we have is that the social welfare report stated that the Department wants to go from 47% down to 22%. That is a reduction of 25% of our business that the Government wants to transfer through the bank. If that happened it would decimate post offices. As we have all said, the bedrock of the post office is the social welfare contract. Unless we can continue the social welfare contract at its current level then we will not be able to sustain the network. Grant Thornton also reports in its independent report that it will be no less costly to deliver social welfare electronically through the post office than is presently being delivered. That means there will be no cost savings for the Government in terms of electronic delivery.

It is important that Deputy Colreavy understands what the amended Fine Gael motion stated, which was stated by the Government Department last night. It states that it wishes to debate "the role of An Post, as a commercial State company, to provide a nationwide retail network of economically sustainable post offices". That is the most important part. My colleague, Mr. McGann, alluded to the fact that 48% of the network does 11% of the business. That means that 48% of the network is unsustainable and is not economically viable. The Government has now told us to get rid of the 48% of the uneconomical post offices, run the business through the remainder of the network and let it set up an alternative network through Tesco or any other operation that wants to do the business, to the detriment of rural communities and societies. That is not what we, as postmasters, want for our communities. We want to sustain our communities and deliver Government front office services whatever way the Government wants us to do so. We are not here to stop progress. We are here to deliver on whatever the Government wants to deliver as front office through our network - electronic or otherwise.

Vice Chairman

Before I call Deputy O'Donovan I acknowledge the call for Government action which has been well sounded here this morning. Even the motions have been spoken about it, on the political front. I ask the union to tell me the tangible efforts that An Post is making to attract new business. For example, AIB does some business through the network but other banking outlets around the country are closing. Has An Post made an effort to engage on a realistic level to deliver business through the network?

Community awareness is a fundamental issue and Deputy Harrington also referred to it. If a survey was conducted the union would be surprised by how many members of the public and citizens are unaware that when they do business through the banks that it has a serious consequence on the postal network. Has An Post or the union launched campaigns to raise awareness of the negative consequences of such actions on the rural postal network? Has the union seen tangible efforts being made by An Post? The issue needs to be addressed.

Mr. Brian McGann

With regard to new business, An Post tendered for the driving licence renewals contract but it was something that it could never compete for because it has a network of 1,150 offices. Somewhere in Government a decision was made to have 30 or so locations where a person could renew a driving licence. It is important to remember that when decisions like that are being made it is very difficult for companies like An Post to tender successfully for such business if they are not being asked to compete basis on the strength of its network.

An Post has also sought the motor tax renewals business. I am aware that the chief executive of An Post met a number of people in the Department. Nothing has happened except a local government efficiency review which does not appear to have achieved anything or there has been no outcome.

An Post needs to compete for the business but the Government needs to recognise the extent and structure of the network and what the network can and cannot do. One of the things that An Post and the post office network can offer is accessibility to people for face-to-face over the counter transactions. That is the business that the post office network is in, that is the business that the post office network is good at and that is the business that many people want. The company must be able to compete fairly for contracts.

Deputy John O'Mahony resumed the Chair.

Mr. Brian McGann

Equally, in terms of banking, there needs to be a political will to drive a new banking solution here. Somebody in Government needs to get An Post and the credit unions to meet and let them know that what the country needs is a bank that people can trust in, that people can sign up to and one that people will want to do business with. The one thing that we are certain of is that there is no banking system in this country that people trust, want to sign up to and want to do business with so there is an opportunity to be availed of. The Government needs to give everybody a push and to make sure that they come up with a plan to do so. Have I covered the Vice Chairman's question?

Deputy Paudie Coffey

That answers the question.

Chairman

Does Deputy Coffey wish to finish his questions?

Deputy Paudie Coffey

Yes. There is no doubt that the alarm bells are ringing and I want to commend the Irish Postmasters Union. The union's political actions are raising public awareness, as is the fact that this committee is also engaged. I have met Mr. McGann previously and he knows my experience of this. I witnessed the closure of Kill post office in County Waterford, which An Post handled very badly by not communicating with the public. Hundreds of people packed a hall after the horse had bolted because the closure had already happened. That is the problem as I see it. Many of those people had inadvertently moved their business away from the post office and had thus contributed to the closure. Whether we like it or not, that is a fact and the public needs to understand that.

As a Government backbencher I will be trying to force Departments to take the necessary action. As we all know, however, Departments operate as silos. They examine their budgets to make savings but there is no interconnectivity. The An Post network is falling down because there is not a cross-cutting strategy by all Departments to address the issue of sustainability. I commend the Irish Postmasters Union on its ongoing efforts, but packing hundreds into a community hall after the horse has bolted is not the answer. We need to get these issues addressed now, rather than after the event.

Deputy Tom Fleming

I welcome the delegation here today. It is clear the post office network is the largest infrastructural organisation in the country. It comprises 1,100 postmasters in 1,100 post offices as well as thousands of jobs and many more from the spin-off of that valuable work. The inaction being displayed on this important matter reminds me of the Department of Health's policy some years ago, through the health boards, which closed down district hospitals. They are now known as community hospitals and we are fortunate that they survived. At the time, the government did a health policy U-turn. The current post office situation reminds me of the community aspect involved because we can now see how valuable our community hospitals are. They form the bedrock of the health service. Similarly, local post offices are the economic bedrock of the community. In addition, the one-stop-shop facility is socially important. My local post office, for example, is also a shop and filling station so all these services complement each other. It also acts as a visitor centre for finding information. We could roll out tourist information centres in such post offices which should be tied into all aspects of State and local authority services.

An Post is part of a consortium that will be in charge of the national lottery, so the Government should amend the regulations and allow all post office outlets to be national lottery agents. It is a glaring omission in the regulations, given An Post's involvement in the new lottery licence.

The activity of the Irish Postmasters Union is timely following the Grant Thornton report. I hope decisive action will be taken so that, hopefully, we will have a positive outcome. It is a complex situation but most of all we need to restore many of the services that are being outsourced to major corporate firms, which is totally wrong. We are getting away from the concept of support for our post offices.

Mr. Brian McGann

I thank Deputy Fleming for his comments. We would certainly say that every post office should be able to offer national lottery products because the network should be used to its maximum extent. Whether people live in Donegal, Kerry or south Dublin, we firmly believe they should be able to avail of the same service at every post office. We agree with Deputy Fleming about the national lottery.

Deputy Patrick O'Donovan

I apologise for being late. I welcome the presentation by the Irish Postmasters Union, including the Grant Thornton report that has been circulated. An issue that arose last week at one of the briefings resonated with many people - it concerns how we can encourage people to avail of the existing post office service, rather than seeking increased electronic funds transfer. Our experience as public representatives includes filling out forms for people. A party colleague said it all in stating that when he first entered the Dáil the vast majority of people would gladly have received social welfare benefits over the post office counter. Now, however, social welfare recipients want to receive payments electronically through a bank. That will have an impact on the post office network. What suggestions does the Irish Postmasters Union have to encourage the public to avail of the post office network's services while they are still there? As Deputy Coffey said, putting 200 people into a hall when the post office sign has been taken off the wall is a total waste of time.

A second point concerns the competing strength of businesses when it came to An Post's application for the driving licence franchise. Did the IPU engage with An Post either before or after that application? During last week's presentation, Mr. McGann referred to the number of centres that are currently available to process driving licence applications versus what the post office network could have provided under the auspices of An Post. Did An Post, the IPU or anyone else challenge the baseline number of outlets that were to be provided by the national driving licence service?

Chairman

I call Senator Mooney followed by Deputy Healy-Rae, and we will take the witnesses' answers after that.

Senator Paschal Mooney

I welcome the delegation and thank them for their presentation. I had the opportunity of listening to them last week as well at the briefing in Buswells Hotel. I agree with most of the contribution made by my colleague Deputy Colreavy. As I also come from County Leitrim, I am fully aware of the social importance of the continuing viability of the post office network. It is interesting that even though I would be involved actively across several counties, most of the representations I have received on this issue have come from County Leitrim. People are very concerned there about post office closures because it is a sparsely populated region. It seems that the elephant in the room is An Post. The changing nature of Irish society is such that people are voting with their feet and increasingly receive payments electronically, rather than through the post office network.

I have tried to explore the attitude of the banks and their relationship with An Post, which is rather interesting. In the submissions the banks made to this committee last year in advance of the report, all of them had a common theme. For example, AIB said that such is the importance and breadth of the existing and potential relationship between AIB and An Post, that AIB will ensure that the relationship continues to be managed at a senior level in the bank. Danske Bank viewed the services provided by An Post as crucial to its business model and meeting the needs of its customers. The bank said that the partnership with An Post has been a very important, positive, professional, solutions-oriented and customer-focused development. That is praise indeed for the post office network and its professionalism.

However, they go on to say that the introduction of a common payments system to facilitate day-to-day banking transactions between An Post and all banks is one of the initiatives that should be considered in order to expand An Post's banking services. I hope the witnesses will have a view on that.

Bank of Ireland is the most critical bank in this regard because it still has a significant network across the country. Despite the fact it has reduced its branch network, it would still be the dominant banking entity in most towns and villages. It states that it has a number of banking and commercial arrangements with An Post which are linked to the Department of Social Protection, for example, encashment of cheques which are issued by the Department of Social Protection but it states that the future of these arrangements are linked to the future payment strategy of the Department of Social Protection, which is currently under review. However, we all know the Department of Social Protection is moving towards a cashless society. Some 84% of its client base has a bank account and, increasingly, people are opting to receive payments through bank accounts. What choice, if any, does the public have in this regard? It had not occurred to me before that the Department of Social Protection is automatically and increasingly, it seems, sending payments through bank accounts rather than by other means. Do people have a choice in deciding whether they want their money paid through the post office or through the banks?

Bank of Ireland also expects that the initiatives outlined in the national payment plan will be geared towards the reduction of cash in circulation. In this context, it states the post office network should be able to diversify into areas that have less reliance on cash handling, perhaps by providing other State services that require a local physical presence and personal contact. Much of this has been pointed out by the IPU in its presentation. However, the IPU presentation also said that the Department of Social Protection has stated in the current contract document that An Post will be required to assist the Department in achieving its objectives to move to electronic payments based on the Department's e-payment strategy. The IPU then goes on to talk about it forcing people, but is it really forcing people? Is the entire trend not towards an increasingly cashless society in Ireland? The statistics prove that we Irish use cash more than any other European country and, even last week, there was a statement from Bank of Ireland referring to increasingly wanting to move towards a cashless society.

We are facing very real problems in this regard. I am curious to know what is the relationship between the IPU and An Post in terms of developing new business models. We do not seem to hear very much about new business models being developed. It seems there is, as Deputy Colreavy said, a King Canute attitude somewhere, whether within the IPU or An Post, which seem to think they can hold back this trend. It is happening and it is going to continue to increase, so how is the IPU or An Post going to address that and ensure that the post office network remains intact?

I wish to deal with the question of viability. Ultimately, it seems, the Government must make a statement that there is a strong social dimension to every policy relating to the post office network. Otherwise, if there is not that commitment in government, it would seem that the post office network is going to continue to decline. Therefore, the question of viability should not necessarily enter into it. I understand the French Government has taken that initiative over many years. As was pointed out to me - rather ironically, by a Department of Social Protection official, though not necessarily supporting the IPU view - in towns and villages across France the only entity is the post office because the French Government continues to subsidise them, but there is nothing else - no shops, no schools, no businesses except the post office. I am sure that is not a situation any Government here is going to countenance, particularly when we have severe economic difficulties and a money problem going forward. The question remains as to how the IPU can encourage a Government, whether it is this Government or the next one, to adopt a social dimension policy.

Has the IPU any comment to make on Deputy Eamon Ó Cuív's proposal last week at the briefing, which received a lot of positive reaction from the IPU representatives, that the Government in negotiating contracts under EU tendering laws should add an amendment that there has to be a diversified and inclusive network? This would prevent what happened on the driving licence issue. In other words, the way that the contract was written meant it could end up stating there would be only 30 outlets across the country when, in fact, if it was to be put in writing that there had to be an inclusive network which had to be accessible to all the population, then this would have meant An Post would have been a prime candidate to receive that contract. Does the IPU see any merit in that sort of case being made?

Chairman

Has Deputy O'Donovan a supplementary question?

Deputy Patrick O'Donovan

Yes, it is related to my original question. In regard to IPU engagement with the Government, has it discussed with the Department of Social Protection the possibility of post offices being used as a measure to reduce the amount of social welfare fraud, on the basis that the more often a person presents at a counter, the more likely they are to be detected if they are claiming fraudulently? I know the Department of Social Protection has significant targets to reach in terms of the detection of social welfare fraud, which is a huge problem and is a cancer in society that needs to be removed. Has the IPU, in its engagement with the Department, raised the issue of the service it can provide in terms of providing information to the Department of Social Protection on people who either do not present or present irregularly for payment?

Deputy Michael Healy-Rae

At the outset, under ethics legislation, I would like to declare an interest in that I am a postmaster and I own a small post office, which has one full-time employee. I welcome the witnesses and thank them for the campaign they have been running over the last weeks and months in trying to highlight the problem that is facing our post office network throughout the country.

I must lead a boring life because the last thing I did before closing my eyes last night was to re-read the speech the Minister gave in the Dáil yesterday. It deserves to be reread. I would like to hear the views of the witnesses of my take on the speech. Does the IPU take the same impression that I do from his speech, namely, despite what he said, the thrust behind it amounts to the final death-knell over the coffin that is our post office network? The reason I say this is because of his assertion that people are moving away from the high street and, if we do not follow or, in other words, if the postal service does not tie up with the big multinationals, it is going to be left behind. Right away, what does that tell us about the real rural network of-----

Chairman

Can the Deputy get to his questions, if possible?

Deputy Michael Healy-Rae

That was a question.

Chairman

Okay.

Deputy Michael Healy-Rae

If we tease out the Minister's speech and what it is going to mean to rural post offices, does the IPU consider that I am right, despite the Minister's assertion that the Government is not going to close down any offices? The Minister made great play yesterday in the media of trying to say the Government is not closing down post offices and so on. However, if one takes his speech to its ultimate, is he not saying that yes, post offices are going to close? That is one question.

With regard to an item touched on by other Deputies and Senators, the issue of the post office working in an ad hoc way in conjunction with members of the Garda Síochána, does the IPU agree that, as has been proven, gardaí and those who want to carry out checks on who is who and what is what have always found the knowledge in local post offices to be very beneficial in dealing with their affairs?

With regard to the Department of Social Protection, it is true to say it is asking people for their bank details, in other words, it is telling them that it wants to pay them through the bank. The Department tells us, and has told me on numerous occasions in response to parliamentary questions, that for it to direct people to the post offices would be unfair as it would give the post offices an unfair advantage, and that it could not do that.

If the Department cannot actively encourage people to use post offices, how is it acceptable that it continues to direct people to use banks? These are the same banks which failed people in this country and continue to be a shambles. Surely common sense should prevail. If the Department is able to direct people to banks, it should equally be able to direct them to post offices. I am interested in the delegates' views on that.

It is not so many years ago that a Minister announced in Dáil Éireann the imminent closure of certain district hospitals, including those in Killarney, Kenmare and Cahersiveen and two in west Cork. That Minister believed he was making the right decision at the time. We all know what would have ensued in the following years if those district hospitals had closed. Where would we be now in terms of caring for elderly people in local communities? It is the exact same situation with the post offices. As Deputy Coffey rightly stated - it was the soundest statement we have heard today - there is no point in everybody dancing around after the post office network has disappeared, organising public meetings where we all go in shouting and roaring. Now is the time to take action.

I thank the Chairman for facilitating this debate. We must show the Government in no uncertain terms that the maintenance of the post office network is not just an aspiration. It is vital that every post office that has survived thus far is still there in 20 or 30 years time. We have an opportunity in this meeting, in advance of the vote in the Dáil, to make history. We must ask ourselves whether we are doing all we can to ensure the survival of the post office network not just for our children but for our grandchildren. The community hospitals I referred to, instead of being shut down, received the investment they required and we now realise we could not have done without them. At one time in the 1980s, however, a former Minister, in all good faith, considered it the best option to get rid of them. Politicians and officials sometimes get it wrong. We in this committee must ensure we get it right on this occasion.

Mr. Brian McGann

I will work backwards with this set of questions, beginning with Deputy Healy-Rae. As far as we can see, what the Minister proposed in the Dáil last night amounts to little more than a recipe for doing nothing. The view among the postmasters in the Visitors Gallery was that it is another example of a Minister kicking the can down the road. What we asked for in our motion - with respect to those who are facilitating its passage, it is our motion - is action. What we have got in its place are some vague non-specific promises that a Cabinet committee might look at social policy and something might be done. Two years ago, we showed the Government that it could save €60 million over a five year period by implementing our motor tax proposals. What became of those proposals? Where is the action on the report this committee produced last year? As far as we can see, there has been none.

Many people find postmasters' local knowledge very useful, including the Garda Síochána. In terms of the Minister presiding over the vetting of post offices, the reality is that any post office which is not getting the business through the door will eventually close. The Minister might not sign a piece of paper to close the office, but if the business is taken away, the door will close. The Deputy knows this because he is in business the same as every other postmaster.

Senator Mooney referred to Deputy Éamon Ó Cuív's suggestion of framing contract tenders in respect of the provision of services and the accessibility of those services within a specific radius. That is a very sensible suggestion which would ensure people have access to services in accordance with their preference, whether online or over the counter. The Government has a huge role to play in the framing of those tenders.

Reference was made to the emergence of a cashless society. The reality is that people in this country are wedded to cash. I do not like walking out the door of my house without cash in my pocket because I do not know when the next banking system crash will occur. I do not know when I will be faced with an ATM that will not dispense cash because the banking system has collapsed. I know many customers of Ulster Bank who, a year or so ago, were left without the ability to pay for their weekly shopping because the system collapsed. That is why people want cash. In particular, people who do not have much money want cash because it gives them more control over their spending. When one has to decide between buying a loaf of bread and a bottle of milk or paying €10 off an ESB bill, cash offers greater flexibility and control. One does not want the bank pressing a button and taking money out of one's account.

It is true that people vote with their feet. The question is what we can do to encourage people to use our services. The first thing a shop owner does is make sure the products customers want to buy are on the shelves. People will not come in to buy bread if there is no bread on the shelf. One has to put in place the products and services that people are seeking. Banking is an integral part of the future of the post office network in terms of the delivery of welfare payments and other transactions people find useful. If postmasters are given the tools to do the job, they will get the customers in. The 800,000 welfare customers who come through our doors every week appreciate the services we provide and how we help them to manage the small amount of money they have to manage. They are fully aware of the services we provide. By expanding those services, we will attract many more customers.

I will use an analogy to illustrate my point and ask members to think about it. Some years ago people would not get on buses in this city because one could not go anywhere in them. A structure was put in place by the Government to provide bus corridors and now the bus service offers one of the most efficient methods of motorised transport. We are saying to the Government that an action plan is needed that will achieve a similar result, in tangible terms, for the post office network. An Post absolutely has to be driven to develop a better business model. In particular, the post office network needs to become a full partner in the banking system.

Deputy Healy-Rae is absolutely right in his point regarding the Department of Social Protection. We are repeatedly told that people cannot be encouraged to use post offices, but it is apparently acceptable, without any objection at all, to drive people into using the banks. We are simply asking for a fair opportunity. New mothers are being signed up to banks to receive their child benefit while they are still in the maternity hospital. Where is the post office being promoted? Why is the Department of Social Protection, as an arm of government, promoting the use of private profit-making enterprises over the post office network? We are mystified by that.

Senator Paschal Mooney

There was a suggestion of an additional cost of €60 million per year.

Mr. Brian McGann

My response to that is to point to the fraud deterrence element. Post offices play a very significant role in terms of the return of unclaimed payments to the State. How much will it cost the State if it loses that fraud deterrence element - if the money just disappears into the ether and is never seen again?

Deputy O'Donovan asked whether An Post challenged the driving licence tender. Companies do not challenge Departments when they issue a tender. No one does that, in either the private or public sector, because it is not permissible to do so. Somebody at Government level signed off on a tender document in respect of a process which we could have done much more efficiently. Why is it that one can renew a passport, which is a more important document, at any post office in the State, but one has to take a day off to renew a driver's licence?

That does not make sense. Somebody sitting in an office somewhere did not realise the solution was in front of them and chose instead an option with which the post office network could not compete. A Government action plan is required. The issue is not solely the responsibility of the Government because the Irish Postmasters Union, An Post and other stakeholders must have an input in the plan. What is clear is that we need a post office network for the future, one which provides the services that people want, when and where they are wanted. While we are prepared to play our part in achieving this, we also need other people to be on the pitch, playing the game.

Deputy Patrick O'Donovan

What was the difference in the prices proposed by An Post and the company that successfully secured the driving licence service? What was the difference between the tenders?

Mr. Brian McGann

I am not aware of the difference in cost. The point is that one cannot expect a network of 1,150 offices to compete for a service that will only be provided by 30 of them.

Deputy Patrick O'Donovan

If we knew the difference in price, we would be able to put the issue in context.

Mr. Brian McGann

With respect, the issue is not the amount of money involved but the failure to consider replicating an already successful model. It is probable that every person in this room renews his or her passport using the passport express service, under which one submits an application at the local post office and receives one's passport within ten days. Why could this not be done with a driver's licence? That is the real issue.

Senator Paschal Mooney

What choices are provided by the Department of Social Protection?

Mr. Brian McGann

With regard to Bank of Ireland and the arrangements for payment by cheque, we understand people are not being given a choice. They are being informed that the current system is being abolished. As such, they are not being given a choice and, furthermore, they cannot have their payments paid into a post office savings account. Many people use their post office savings account as it does not incur banking charges. We are being told, however, that they will not be allowed this option.

Senator Paschal Mooney

The Department has indicated that the electronic transfer system does not give rise to costs. A figure of €60 million was cited. The Department states it would not cost anything if everybody used the electronic payments system through the banks.

Mr. Brian McGann

While it may not cost the Department for Social Protection the €60 million it currently pays for the service, it may cost the State in some other shape or form. The Grant Thornton report highlights this issue where it asks what value has been placed on the fraud deterrence role of post offices and the amount of money being returned to the Exchequer and what value has been placed on the possibility that financial exclusion may increase if the post office network deteriorates. This issue is being viewed in a highly simplistic manner. The Government has not considered what would be lost if we moved to direct electronic payments.

Chairman

Would the problem be solved if the electronic system was implemented in the post office?

Mr. Brian McGann

Yes, if An Post were a proper player in the banking system, the welfare payments business could be delivered through that mechanism.

Senator Paschal Mooney

That would require customers to have a post office bank account.

Deputy Noel Harrington

I am aware, as are all postmasters, that we have making electronic fund transfers for years, whether through interest payments or salaries to An Post staff being paid by electronic transfer through a facility in An Post or the Post Office Savings Bank. Has the Irish Postmasters Union engaged in discussions or negotiations with An Post to ascertain how the role of the Post Office Savings Bank could be expanded to allow for electronic transfers of salaries and social welfare payments? I would prefer customers to continue to claim their social protection payments over the counter using their social services card. The card is photographic identification and allows postmasters to verify the identity, signature and date of birth of the claimant. We can be certain, therefore, that we are paying the correct person the correct payment every week when the person presents. We are unable to facilitate customers who wish to have their funds transferred into an account through electronic transfer. Customers must be given this option if the post office network is to remain viable. Has the Irish Postmasters Union had discussions with An Post as part of an effort to expand its role in this area and ensure post offices remain viable?

Deputy Patrick O'Donovan

We need a system that offers the best of both worlds, in other words, the person must present and the transaction can proceed once he or she signs a stub at the counter. This requirement is in place for obvious security reasons to ensure the claimant is not outside the State and so forth. Further, the postmaster needs to be able to make an electronic funds transfer at the counter into a person's bank account or post office savings account. One of the key issues, however, is that An Post must want to get involved in providing enhanced levels of banking services. If it cannot present a model that generates savings, while also offering security and allowing the postmaster to process the transaction electronically, we will face a serious problem.

Mr. Brian McGann

Postmasters will deliver the welfare payments business in whatever way the Government wants us to deliver it. However, without the €20 million revenue we receive for delivering that business, postmasters will not be in business. The bottom line is that we need income from business to survive. We are flexible and we will do what is needed. At one point, social welfare recipients had to a have a book of vouchers and if a social welfare payment increased, one could end up with three or four such books. That system was eliminated when a card system was introduced. Post offices can continue to be flexible in future.

Senator Paschal Mooney

With respect, it cannot do so without a full banking system.

Mr. Brian McGann

I was about to address that issue, which Deputy Harrington also raised. We have had discussions with An Post on the use of State savings accounts. The company tells us that the National Treasury Management Agency is not willing to allow these accounts to be used for that purpose. We are, therefore, in a position where one arm of the State is preventing us from doing what another arm of the State requires. What we need is a banking solution that will allow us to deliver the social welfare payments contract and other payments business through the post office network. We need the tools to do our job and the income we receive from that business to keep our doors open. That is the bottom line for post offices and anybody else in business.

I have listened to Professor Ray Kinsella, an expert in retail banking with whom some members may be familiar, speak on this issue. Professor Kinsella is strongly of the view that we need another banking force. Why does the Government not invite An Post, the Irish Postmasters Union, the credit unions and Professor Kinsella to a meeting at which we could have a substantial conversation on the issue? We could then find out who is prepared to step up to the mark and who is not prepared to do so. Postmasters are certainly willing to do so.

Chairman

I thank our guests for attending and making their presentation. They have done the committee a service. As they will be aware, following lengthy deliberations, the joint committee published a report last March. At the time, we asked whether the document would end up on a shelf. The delegation, by appearing before the joint committee, has helped to ensure this will not happen, as has the decision to table a Private Members' motion in the Chamber last night. I listened to all the arguments and counter-arguments in the debate last night. I assure our guests that representatives of An Post will come before the joint committee in a couple of weeks to respond to many of the points they raised in their submission. While the committee does not have the power to call everyone into a room, we will certainly ensure everyone involved comes into this room to try to advance this issue. The witnesses articulated the problems, suggested solutions and identified what they were willing to do. As I stated privately to a number of those present last night, it is important that all stakeholders step up to the mark here.

I say this in a non-partisan way. The Minister cannot order members of the public to use post offices. He and the Government can create an environment whereby people will use the services provided - whether it is those relating to banking or whatever - in post offices. As I stated last night, it is important that whatever action is necessary in this regard should be taken.

An Post must also step up to the mark in the context of how it implements policy. Our guests have already stated that they are willing to play their part. As many of the members indicated, communities must also play their part. We have all been present at meetings that were attended by up to 500 people. I do not know whether it is because they are unaware of their existence or whatever but 300 or 400 of those individuals do not use the services available at their local post offices. This is an issue which must be addressed and a holistic approach must be taken in respect of it.

The most important aspect of this matter is that the post office network must be saved, particularly at a time when every other network - including that relating to the banks - is being withdrawn. Reference was made to what the Minister said during the Private Members' debate in the Dáil last evening. Will our guests comment on that and provide their interpretation in respect of it? I was surprised when the Minister indicated that between 2006 and 2010 some 197 post offices were closed and that only 17 have been closed in the interim. In light of some of what has been said, I will not be offering an interpretation of that. What do our guests believe to be the reason for the closures to which I refer?

Mr. Brian McGann

We believe that the closure of post offices can be cyclical. One must, therefore, look at the longer term. From 2006 to date, 209 offices have closed. If, as I said earlier, the welfare payments business is removed from post offices, then within three years the network will be halved. Grant Thornton has stated that in its estimation and based on the loss of that contract, 557 post offices will close.

Chairman

I am not disputing that. I am merely stating that the impression has been given that this just happened in the past couple of years.

Mr. Brian McGann

Unfortunately, one of the things which has sustained the network in recent years is the high number of jobseekers. As a result of their being made unemployed, many people have unfortunately been driven to use the post office network. I could go back 20 years and show members huge figures in respect of this matter or I could show them very small figures from last week. I am absolutely certain that if we lose the €20 million we get from the social welfare payments contract, then hundreds of post offices will close. If any of us are still here in three years time, that is what we will be contemplating.

Senator Paschal Mooney

In response to that the Department indicated that those closures came at a time of an unprecedented level of social welfare payments. The number of payments rose dramatically between 2008 and this year as a result of the economic downturn. However, during the so-called boom times closures were still taking place.

Mr. Brian McGann

Yes but that is the point. The Minister stated that there have been few closures since 2010 but that is because since the end of the boom times very large numbers of jobseekers have been coming through the doors of post offices. Those individuals would have taken a little time to flow through. That is why there has been a smaller number of office closures in the past couple of years. When one looks back, one will see that the numbers are much greater.

Senator Paschal Mooney

The inference from all of that is that post offices needed to diversify in the context of the services they provide. Despite the business relating to social welfare payments - on which the network has been over-reliant - closures were still occurring. This illustrates that even from the mid-part of the previous decade there was a need for An Post to provide a more broadly based and diversified service. I return to my original comment to the effect that An Post remains the elephant in the room. The company must develop a new business model.

Mr. Brian McGann

With respect and while that may be true to some extent, 48% of the network does 11% of the business. In pure monetary terms, that section of the network will never be economically viable on its own. There is a social policy aspect and that must be valued. There is a need to sustain the network and this must not simply be from the point of view of economic or commercial concerns. The approach must be broader than that and that is where Government must play its part.

Deputy Paudie Coffey

I welcome the fact that representatives from An Post will be invited to come before the committee to respond to members' queries and also to some of the issues raised by the delegation. In light of the commitment contained in the programme for Government and that provided by the Minister last night to the effect that a Cabinet sub-committee will review this matter, I am of the view that he and his officials should be requested to come before the committee in order that they might provide an update on progress in the context of how it is proposed to sustain the network.

Chairman

We are involved in a process and representatives from An Post are due to come before us next. The committee has a responsibility in respect of this issue and it will certainly do whatever it can to ensure that progress is made.

I thank Mr. McEntee, Mr. McNamara, Mr. McGann and Mr. Martin for their presentation and submission and for engaging with members during these proceedings. This has been a very worthwhile exercise and I am of the view that it is perhaps easier to tease this matter out to an even greater extent here than in the Dáil Chamber. We fully appreciate that the Irish Postmasters Union plays in respect of the post office network. We all want to get this process across the line in order that the post office network will be maintained and sustained. I hope the latter will be the outcome when the process to which I refer has concluded.

The joint committee adjourned at 11.45 a.m. until 9.30 a.m. on Wednesday, 5 March 2014.