Mr. Tom O'Callaghan:

I thank the Chairman. I have been a retailer adviser for eight years for a large cash-and-carry group and I have been self-employed for over 22 years. I set up the Independent Postmasters Group in November 2016, and our ethos is one of a solution-based organisation. I have also been the head of research for the post office section of the Public Banking Forum of Ireland since 2015. I have been the city postmaster for over 20 years.

The current pandemic crisis has brought to the fore our core values, the essence of our community and what services the State must provide when all life is stripped back to the very basics. The post office network has been proven to be essential to our very existence. During the lockdown, the post office network provided essential services. It was one of the few State-owned assets that kept money circulating and local economies going. We can no longer ignore or pay lip service to the realities of the financial gravity in which the network will soon find itself.

It is incumbent on the Government to implement a sustainability plan. It should implement the Private Members' motion passed by Dáil Éireann in November 2016 which sets out an action plan enabling the sustainability of the network. A tight timeframe for implementation is a priority. There must be a focus on new products, capital investment and government services for the network. It is crucial that there is a five-year holding plan and that there will be no more downward revisions of post office incomes. Otherwise, there will be no network to salvage.

Community banking must be re-investigated and developed as a survival option in light of the global economic depression. The New Zealand and German community banking models must be considered. This can be part of the overall recovery of small business and local communities, post Covid-19. The community and social value of the network, so visibly present during the pandemic, must be recognised as a separate asset to the State, must be protected by the State and must hold a separate currency for the network when tendering for business.

Currently, the Government strategy is to reduce budget deficits and open competition for national contracts. The Department of Social Protection is working towards the e-transfer of all social welfare payments, the reduction or elimination of cash transactions, open competition for contracts and reduced transaction fees for social welfare payments. The post office is not really a concern.

Postmasters would like to see the introduction of an An Post-provided sole bank account for social welfare payments. As we have said, An Post and banking is certainly an area that needs to be addressed. Investment in facilitating this banking through the post office needs to be looked at. All Departments can pay through the post office. Overall, we are asking for the sustainability of the post office to be delivered.

The key to the sustainability of the post office network is for An Post to be the sole provider of bank accounts and to facilitate the Department of Social Protection's strategy to move to e-payments. Users' accounts must be linked to the post office, thus maintaining services in the community and facilitating the customer locally, while also controlling potential fraud.

An Post is partly working under the agency banking model. A State community banking model would be more sustainable, provide funding for local communities and also provide welfare bank accounts to facilitate social welfare payments. The provision of banking through the post office network will require investment. Currently, the National Treasury Management Agency has over €20 billion in deposits. These should be incentivised for investment in public banking.

Postmasters believe that many other financial and administrative transactions between State Departments and service users can be put through the post office network. An example of that is motor tax. This was identified by Grant Thornton, the joint Oireachtas committee and the post office network group.

The post office network is a key State institution.

Government policy in its current form is detrimental to that. A healthier vision for our society is one that includes tried and trusted institutions such as An Post and has a progressive vision for them. An Post and postmasters are facilitative, forward-thinking and open for business. We believe we can work in conjunction with the Government to achieve budget targets and technology enhancements in the provision of service. If that is not done, there may be difficulty in terms of the issuing of social protection payments through post offices to customers on a cash concept. As the committee is aware, we are moving towards a cashless society. This matter urgently needs to be addressed.

In the context of the sustainability of post offices, I believe it is required that the current social welfare contract be reviewed each year. That income is currently dropping by 3.2%, which will diminish the viability of post offices. Post offices will not survive on cash transactions alone in light of the Government policy to move to electronic transfers. This will be detrimental to stakeholders including An Post, postmasters, customers and communities. As a result of the transition to a cashless society, the current model will not survive without constructive Government action.

On tendering, the tendering process does not take into account the unique selling point of the post office network. Post offices are not competitive under economic tenders but the post office network provides a valuable service in terms of a social and economic value system. Post offices are among the last Government agencies operating in communities. During Covid, post offices were the only example of a Government agency trading in towns and villages. Is the Government going to let that go?

I refer to the S52 contract. The current situation is that there are approximately 300 offices. It involves a scaled payment review every three years based on transactions. Their income is dropping significantly, by between 25% and 30%, due to social welfare payments moving online. The current time bomb relates to the new contract signed by approximately 600 postmasters in July 2018. Under that agreement, their salaries will be subsidised until June 2021. Payments are based on transactions. Post offices are facing a 25% decline in transactions due to Covid and social welfare payments moving online.

On the issue of Government intervention, temporary Government subvention is acceptable and necessary until a long-term solution is found. It needs to be repayable and it would be best if it is short term. I refer to the Grant Thornton report published in 2014 and the experience in the UK in terms of subvention. The UK Government has used subvention-----