Mr. Seamus Maye:

I will try to keep my contribution to five minutes. I think it runs to a little more than that. I thank the Chairman, members and the staff of the committee for giving the PBFI the opportunity to make such an important presentation on the future of the post office network and its intrinsic link to the future of Ireland’s indigenous economy.

I am Seamus Maye, co-chair of the Public Banking Forum of Ireland and also chair of the International Small Business Alliance. On my left is PBFI's secretary and head of research, Mr. Gerry Duddy, and on my right is Mr. Tom O'Callaghan who looks after the post office side of things. He is also chairman of the Independent Postmasters Group.

Together with our extensive membership, we bring many dozens of years of experience in business, banking, credit unions, post offices and the indigenous economy. As a business person with over 40 years’ experience and a commerce degree, I had a basic understanding of banking and little to no understanding of credit creation, nor the crucial difference between funding the productive economy and funding speculative bubbles. PBFI is a solution-based forum. Its members work voluntarily and do not receive any remuneration or expenses. We are wholly independent from vested interests. We might also refer to our extensive letter to the committee, dated 27 June, which comprises appendix 2, and to an update on the current position, which is provided in appendix 1.

We hope, over the course of the exchange, to outline the wider issues our country faces in respect of both banking and driving our indigenous economy and how crucial a role our valued post office network can play in assisting the transformation of the Irish socio-economy. What do we mean by transforming the economy? In 2011 we wrote a letter of congratulations to the then incoming Taoiseach, Deputy Enda Kenny, in which we pointed out that Ireland’s cost base was unsustainably high and that we had an over-reliance on foreign direct investment, FDI, underpinned by a corporate tax structure that was incurring the wrath of the US, the EU, the OECD and our near neighbours in the UK. Since then, those influential players in international trade have taken steps that may ultimately wipe out Ireland’s corporate tax advantages. The Apple case will also prove to be a defining moment in the future of FDI in Ireland.

Post offices are the other side of the coin. The reality is that we have only been paying lip service to our indigenous economy. Like it or not, the responsible and sustainable development of our indigenous economy is crucial to our future. We must create a competitive platform that facilitates the long-term future of our socio-economy. This view is somewhat at odds with the views put forward by retired Secretary General of the Department of Finance, John Moran, who suggested, in a speech made in May 2016, that Ireland can no longer afford rural Ireland. One can see the reference in appendix 3. Clearly, there are choices to be made but we must be careful not to confuse any rural-urban divide with the overriding importance of our indigenous economy. What is patently clear is that the current structure and behaviour of our banking sector is wholly incompatible with driving our indigenous economy. The pillar banks are not lending in any meaningful way to citizens, small and medium enterprises, SMEs, and farmers and where they are, the rates charged are exorbitant - two, three, four and up to five times what our counterparts in Germany and France are paying in interest. Last year, AIB gouged €1.6 billion in profit and Bank of Ireland is gouging profits of approximately €1 billion per year. It appears that neither institution will pay corporation tax for up to 20 years.

I will shorten my contribution in view of the time constraints. Last autumn, PBFI carried out an exercise comparing the cost of a mortgage in Ireland with that in Germany in the context of a house costing €315,000. Over the lifetime of the mortgage - 30 years - an Irish person would pay €121,000 more than his or her German counterpart, which is a penalty of €4,000 per year, as a result of the difference between the interest rate in Germany and Ireland.

Germany’s development bank KfW states in its 2015 report that the German economy boasts almost 4 million SME and microenterprises. These account for 99.95% of all companies and 87% have a turnover of less than €1 million. Germany is the fourth largest economy in the world. Why? One of the reasons is that it is underpinned by a public and community bank network that prioritises people and local economies over profit maximisation. Public and community banks account for some 70% of the German banking sector. German pillar banks including Deutsche Bank and Commerzbank have only 12.5% of the German market in contrast to the Irish pillar banks which hold 95% of the Irish market.

The Irish Government agreed and committed to the introduction of competition to the Irish banking market as a quid pro quoduring the banking bailout but instead we have seen a mass exodus of banks, including Irish Nationwide, Anglo, ACC, ICC, Bank of Scotland (Ireland) and EBS. Article 45(2)[iv] of our Constitution holds that in whatpertains to the control of credit, "the constant and predominant aim shall be the welfare of the people”. Under our Constitution, the Oireachtas is bound to enshrine this directive principle but as it stands, this has not been happening.

In November 2016, Dáil Eireann unanimously passed a motion that allowed for the remodelling of the post office network along the lines of either the German Sparkasse or New Zealand Kiwibank model. Ireland’s post office network, along with our credit unions, can become a core plank of rebuilding Ireland just like the Kiwibank has done in New Zealand. The current narrative on post offices is all wrong. All we hear from media is talk of saving our post offices and subsidising them but we can, at the stroke of a pen, turn the network into a thriving, profitable bank and multi-service provider. The post office network is failing in terms of monetary returns but the reason for this is quite simple, namely, the business model is wrong. Kiwibank makes $100 million in profits each year for the people of New Zealand. It provides creditat competitive rates and has proved the saviour of the people and SMEs of New Zealand. The current An Post proposals are bizarre and ill-thought out. We are presiding over the destruction of one of our finest national assets, with 159 post offices closing, 231 with no future and the remaining 690 depending on An Post winning the social welfare contract again after the current one expires on 31 December 2019. Having regard to European procurement law, there is no certainty that An Post will be successful in winning this contract once again.

As a country, we need to start thinking outside the box. In the words of Professor Steve Keen of Kingston University, "the financial sector should be the servant of the rest of the economy, not the master but at the moment, it’s the master of not just the economy but of the politicians as well [...] to break the nexus, we need a complete political shift." We appeal to this committee today to immediately call a halt to the wanton destruction of our post office network and turn it around to serve the needs of a modern indigenous economy. There is plenty of help and guidance available to the committee and the Minister. Professor Richard Werner of Southampton University is one of the world’s leading banking experts whom we believe could bring invaluable perspective to the committee and we would urge members to engage with him. We are sure members will have lots of questions for us and we will endeavour to be as helpful as possible going forward. I thank members for their time.