Hildegarde Naughton (Galway West, Fine Gael) | Oireachtas source

I thank the Acting Chairman. I thank the committee for the opportunity to give an update today on the future of the post office network. I am joined today by principal officer, Ms Jenny O'Hora from the Department of Environment, Climate and Communications.

Colleagues will be aware that An Post is a commercial State body with a mandate to act commercially. It has a statutory responsibility for the State's postal service and for the post office network.

Postmasters are independent SMEs contracted by An Post to run post offices and the Department does not have a direct relationship or contract with them. They are not State employees, nor are they employees of An Post. As such, they are not paid a fixed salary. Their income is derived on a fee-per-transaction basis.

The agreement reached between An Post and the Irish Postmasters' Union, IPU, in 2018, which was supported by 80% of the IPU's membership, has underpinned significant change and investment to redefine the post office network, including reducing the number of post offices, modernising the postmaster contract and an acceptance that new business lines were required, along with capital investment in the network. This is a vital part of the delivery of An Post's strategic plan. To implement the plan, the cost of which was estimated to be in the region of €150 million, the Government provided a long-term low-interest loan of €30 million to the company in December 2017 to support and protect the renewal of the post office network and the continued fulfilment of a five days per week mail delivery service.

As set out in the programme for Government, we are committed to a sustainable An Post and post office network as a key component of the economic and social infrastructure of Ireland. I have met the chairperson and the chief executive of An Post. They fully understand the Government's position. I have met the IPU three times. I addressed its annual conference last October and will do so again on 4 June.

The Government recognises the importance of a high-value and high-quality post office network to our citizens across the country as well as the central and trusted role of postmasters in our communities. The network's social value was particularly evident during the pandemic and the demonstrated commitment of staff and management to supporting our communities, in particular the elderly and vulnerable, has been commendable. Through its network of 900 post offices, An Post continued to provide key Government services to citizens, including through its existing commercial contracts with the Department of Social Protection and the National Treasury Management Agency, NTMA.

The financial challenges facing postmasters are well documented and arise mainly from the decline in mail volumes and the move to electronic transactions in both mail and the post office network. The pandemic has exacerbated these challenges and impacted the transformation programme for the network. In recognition of this and the significant role played by postmasters during the pandemic, I worked with An Post and introduced the pandemic relief fund in 2021, which was worth €8.5 million over an 18-month period. This commenced on 1 July 2021 and will continue until the end of this year. The fund aims to incentivise new business by increasing product commissions while also incorporating an element of protection for business declines due to the pandemic. In addition, An Post undertook to invest €400,000 over an 18-month period in postmaster training to help equip postmasters with the skills and information they need to maximise the business going through their post offices.

I recognise that there are genuine concerns around the future of the post office network and a potential cliff edge scenario where significant numbers of postmasters choose to retire at around the same time in late June or early July. This could see citizens losing their local post offices as well as the wealth of services available to them through those offices.

I am pleased to advise the committee that, as announced yesterday, I secured approval this week for a proposal that will see a funding intervention by the Government of €10 million per annum over a three-year fixed term from 2023 to 2025, to be distributed by An Post to the post office network. This is the first time that the Government has agreed to introduce such a package. It will help to support a sustainable, nationwide post office network in line with the commitment in the programme for Government. It also aims to ensure access to important services of social value across the post office network and that there is a network of sufficient scale in place for the public to access these services across the country. It also provides clarity for postmasters in terms of any decision that they may need to make about their future. It will be disbursed in a manner that seeks to mitigate the genuine financial challenges faced by many of our post offices while acknowledging the need for continued commerciality and modernisation, as has been the company's strategic goal for the network in line with its agreement with the IPU.

An Post is a strong commercial semi-State and its strategy seeks to build on its growth and diversification. The network is one of the company's core strengths and the continued development of the network and its services is a vital component of its sustainability. An Post will continue to seek and win new business actively and to explore opportunities to develop new or enhanced product lines for the post office network. I understand there are a number of initiatives under active consideration by the company.

The Government is committed to working with An Post and postmasters to ensure that the network continues to play a strong role in delivering State services. The Government will continue to engage on the issue to ensure that we can protect and safeguard the network in line with the programme for Government commitment. The one-off nature of this intervention seeks to copper-fasten the transformation under way and incentivise a network of strong, commercially focused enterprises.

Decisions regarding retirement or closure are ones for each of the independent postmasters to take. The Government's intervention does not mean that some post offices will not close due to retirement or personal decisions, only that they should not close due to lack of Government support. It is the Government's intention to avoid those decisions being necessary on foot of economic hardship. The Government hopes that closures will decelerate in order to facilitate initiatives by the company to take off and bear fruit, permit time to assess the findings of census 2022 and whether demographic changes might change the trajectory of rural businesses, and allow for the transformation programme to conclude and new commercial practices to be adopted.

I thank the committee for affording me this opportunity to address it.