John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Our engagement today is to follow up on the meeting we held with the Irish Postmasters Union. I welcome the delegates from An Post: Mr. John Daly, retail operations director, and Mr. Liam Sheehan, sales and marketing director.
By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the joint committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a person or an entity by name or in such a way as to make him, her or it identifiable. The opening statements submitted to the committee will be published on its website after the meeting. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable.
I invite Mr. Daly to make his opening statement.

Paudie Coffey (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Before we start, I would like to ask a question and I mean no disrespect to the delegation in asking it. Is there any reason the CEO of An Post is not before the committee today?

Mr. John Daly:

When the invitation was received, the chief executive noticed straightaway that he would not be available because he had another commitment. We contacted the committee straightaway to alert its secretary to this. The committee was happy that Mr. Sheehan and I, the directors responsible for the operation and business development of the organisation, would attend.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I presume that if we need the CEO on another occasion, he will be available.

Mr. John Daly:

As Mr. Connell has attended meetings of the committee on various occasions, he is certainly not committee shy.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

That clarifies the matter.

Mr. John Daly:

I thank the joint committee for the invitation to attend. I am retail operations director of An Post. I am accompanied by my colleague, Mr. Liam Sheehan, director of sales and marketing. Our appearance is timely and welcome, given the debate of recent weeks on the future of the national post office network.

In recent years we have had a number of interactions with the committee and much of what I will outline in my opening remarks will be familiar to members. Let me start by saying An Post does not have a plan or proposal to close post offices, nor is it part of our business strategy to allow post offices to close by stealth. In fact, the opposite is actually true. We continue to invest heavily in the retail business.

As Mr. Connell, the chief executive, previously told the committee, the size of the post office network is crucial to our commercial agenda and its very scale allows us to service our customers’ needs across the country. Scale is a key factor in our retaining and winning more business. It is worth repeating that the reach of our network has attracted business as diverse as bill payment and banking services for major organisations, the provision of social welfare payments, savings, foreign exchange and retail products such as PostFone and gift vouchers. Our analysis, using our geodirectory data, shows that 99% of addresses in the country are within 10 km of a post office and that 93% are within 5 km. In the recent contract we signed with the Department of Social Protection the Department specified that outlets must be available within 3 km of 95% of customers in an urban area and within 15 km of 95% of customers in a rural area. The post office network comfortably exceeds these requirements.

The post office network is the largest retail network in Ireland. We handle some 1.7 million customer visits to post offices nationwide each week. We have 1,147 offices nationwide, 57 of which are operated directly by An Post, with the remainder run by independent retailers - postmasters - as contractors. Postmasters are largely paid based on the level of business they perform and they have benefitted well from the increase in business in the last number of years.

We run this network in a business environment that is tough both for us and, perhaps most importantly, for all of our customers. We trade in difficult conditions, not least of which has been a sharp decline in mail volumes.

In the past few years, we have introduced a number of new products, some of which, such as our foreign exchange, FX, business, are very successful. We started with foreign exchange cash and last year enhanced the service through the introduction of sterling and US dollar PostFX cards. We are actively looking at introducing further currencies based on feedback from our customers. We estimate that we have more than 30% of the consumer foreign exchange market after only three years in the business. This is an illustration of the type of sustainable business we are seeking to introduce in the post office network.

We have continued to expand our banking business with AIB and Danske Bank, the latter of which, unfortunately, is withdrawing from personal banking this year, and we are talking to other financial institutions about extending the service.

In 2013, we grew the State savings funds, on behalf of NTMA, by another €1.9 billion. This demonstrates the trust our customers have in these products and in the An Post brand and the post office network. We have also introduced dedicated insurance zones in a number of larger post offices where customers can get quotes for their motor, home and travel insurance needs or for life assurance. In post offices where these zones are not present, customers can provide their details and our call centre will contact them directly to discuss their insurance needs.

The provision of Government services is a key part of what we do. The breakdown of retail income is as follows: mail services, 15%; Department of Social Protection services, 29%; the successful State savings products, 27%; bill payments on behalf of local authorities and energy and other utilities, 10%; licence services, 6%; money transmission, including foreign exchange, 7%; and the remaining 6% is accounted for by banking and other services, such as gift vouchers. It can be clearly seen from these figures that the network is dependent on revenue from the two key Government contracts, the Department of Social Protection and the NTMA, which together directly account for 56% of revenues in the retail business of An Post.

We were recently successful in retaining the Department of Social Protection cash payments business by winning the tender for these services. This contract is for two years and can be extended for up to another four years. Retaining this contract was critical because, as we have previously told the committee, the DSP business is a significant part of our activity and our revenue. DSP clients, as well as collecting their welfare payments, are major users of other services at post offices, such as bill payments, savings, mobile top-up and money transmission. The winning of this contract provides certainty for the foreseeable future to welfare clients who receive their payments in cash at their local post offices.

We are aware that the Department of Social Protection is moving through a phase of significant transformation aimed at delivering more modern and efficient services to their clients and providing value for taxpayers and the economy. This transformation includes moving to electronic payments and bank accounts over the coming years.

An Post is determined, within the context of a workable business model, to further develop products in order to compete for any future tenders. We believe that An Post and post offices can play a major part in the area of financial inclusiveness in the future. As leaders in the development and application of post office counter technology, we will continue to innovate and invest in next-generation systems and products to ensure we can continue to meet the needs of the Department and our other current and future corporate customers. We have demonstrated, through our links to the AIB and Danske Bank systems among others, our ability to perform efficient transaction processing on behalf of many clients. We note the publication by the financial inclusion working group of the report on the standard bank account, which lists, in the group's view, the key elements required for a successful national roll-out of this type of bank account. One of these listed elements is that there must be greater involvement by the credit unions and An Post to have the best possible channel for reaching the target cohorts, in particular, making the standard bank account available through the credit unions or An Post. We welcome the opportunity to discuss the potential business in this area that can be undertaken in post offices nationwide.

There is much discussion about financial inclusiveness and the cashless society. An Post supports the Government's programmes, and in this regard we believe we can play a major part in ensuring their success. Many of those without bank accounts currently use the post office as their preferred location for the management of their finances, including collecting their social welfare entitlements; paying their bills, many on a part-payment basis; saving through the Post Office Savings Bank for important family events such as first communions and Christmas; topping up their mobile phones; buying gift vouchers as gifts; obtaining foreign currency when travelling abroad; and using our postal money order, sterling draft and Western Union services if they want to send money either nationally or abroad. Many citizens are nervous about banks, bank charges and direct debits, and by using our services they can manage their money efficiently in a cost-effective manner.

In addition to providing additional services to our customers, we continue to invest in the network in other ways. In recent years we have invested significantly in updating our security, with additional alarms, CCTV, etc. This is to ensure that staff, postmasters, their staff and our customers can conduct their business in a safe and secure environment. We also continue to invest in significant marketing of our post office network and the products we provide.

We are continually looking at our service standards and the standards of our post offices. I am sure many members will have seen significant improvements in many offices around the country. We have opened new offices in City West in Dublin and Glencar in Letterkenny, both of which are performing well. Recently, we reopened an office in Terenure in Dublin. In the past two years, we have renovated or relocated almost 80 post offices. These include offices such as Newcastle West in Limerick, Walkinstown and Malahide in Dublin, Gracedieu in Waterford and Ballisodare in Sligo. Customers all around the country are reacting favourably to these improvements and this is evidenced by increased sales and activity in these post offices.

A good example is our office in Blackpool in Cork, which was relocated about this time last year. Customers have reacted favourably, so much so that on Sunday last this office was named as the Customer Plus Post Office of the Year for 2013, based on the increase in sales and the improved customer service offering. I take this opportunity to again congratulate it and all of the other post offices which have invested in new or improved offices and have seen their business increase as a result.

We undertake mystery shopping on a monthly basis at 300 of our busiest offices. This is done on our behalf by an internationally recognised organisation in this field. In the last number of years, we have seen an increase in the scores given for customer service. Just as importantly, we have seen an increase in our net promoter score, which is measured by the mystery shopper's willingness to recommend the office to family and friends; this increased by 11 percentage points in 2013. This is further evidence of the strength of the post office network and the level of customers' trust and satisfaction in us.

Much of the network was developed at a time when Ireland was a very different place and, like so many organisations, it has not been immune to the considerable social and economic changes in the country. Over the years we have seen a reduction in the number of post offices, reflecting decisions by local contractors to leave the business. In many instances, this decision has been prompted by a belief that local levels of business are no longer sustainable as their customers choose to shop in other locations. In large part, we have worked to maintain the network at something approaching its current level of coverage. However, from time to time one of our contractors may decide to retire or pursue other business opportunities and terminate his or her contract with us. There are also circumstances in which contractors die, or in rare circumstances we terminate a contract as a result of irregularities in the running of an office.

In these cases we assess the need for the retention of the office in question, and if we are of the view that services should continue in that location we will advertise the contract as usual. In cases in which we determine that we can serve our customers just as effectively at our other post offices, we notify this to the local communities, we seek comments from interested parties and we then consider any inputs before making a decision. This was a process that we put in place following my last visit to this committee. During this process we take into account the following parameters: national network coverage, because we need to maintain the geographical national network spread; business levels; customer access; the requirements of our mail delivery service; and the capacity of neighbouring offices to satisfactorily handle the business that would be transferred to them. I stress that it is the viability of the overall network that is important to us in reaching any decision.

The drive for change and improvement must continue and we must have the flexibility to add new goods and services as we work to maintain the network. We must also continue to take decisions on a commercial basis so that our costs match our revenues.

As I outlined, there is much that we already do in acting as the trusted intermediary between the State and its citizens, who are our customers, and there is more that we can do. It is in no one's interest to talk down the future of post office network or talk up the challenges we face. We are very clear about the impact of change and the challenges we face but we are confident in our ability to deliver new services and adapt. All new business has to be done in a sustainable way.

We welcome the huge level of goodwill towards the post office network and our staff, as evidenced by the debate in recent weeks. We were also heartened by the level of support for the post office network during last week's Dáil debate. We particularly welcome the Government's motion, which endorses a whole-of-government consideration of the issue, proposes the post office network as a "front office of government", and encourages the maintenance of the post office network at the heart of national and local community life.

We have proven that we have the capacity, technology and flexibility to process multiple services for our customers. We have shown the ambition to grow our business. We are ready, as always, to work with the Government, postmasters and our customers and business partners to generate extra business for our post offices and ensure the success of the national post office network.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Before I call the members, I have a few questions for Mr. Daly. As he said, this issue has been highlighted at this committee and during a debate on a Private Members' motion in recent weeks. To set the platform for the debate today and the questions members may have, we have heard during the debate in recent weeks that everyone - An Post, the Irish Postmasters' Union, the Minister and the communities - wants to retain the post offices and the post office network, but at the same time there is a great deal of crossfire from all the different groups. They all say they want to retain the post office network, but everyone is blaming everyone else for the reason it is under threat. That is a summary of the debate so far.
When representatives of the Irish Postmasters' Union appeared before the committee two weeks ago, they spoke about all of the major stakeholders engaging in a period of a consultation or negotiation, as there has not been meaningful consultation. They would say it isa fait accompliwhen there is engagement between An Post and the IPU; in other words, that there has not been meaningful negotiation. I believe I am reflecting what they said in that respect. I would be interested to hear Mr. Daly's comments on that.
Another big issue that arose in the debate in recent weeks is the partnership between An Post and Tesco in recent times. I believe there is a pilot partnership between the two. Mr. Daly might comment on that. It is happening, but does it not conflict with or dilute the service that the post office offers? While it is slightly different in large urban areas, if the post office service in Swinford, a town of a few thousand people in my own constituency, went into the Tesco branch in the town, it would destroy the business of the local post office. That would be a major issue locally.
Mr. Daly mentioned that following his last visit to the committee An Post had changed its consultation process with communities in regard to their local post offices. As he will be aware, we had a report that pushed hard for that. I was pushing at the time for something more than that. The major stakeholders are the communities. There are allegations that even though consultation takes place, at the end of the day sometimes the decision is made without reference to that. I am only saying what is reflected in what we hear. Could this be taken a stage further - that is, if a worrying trend was developing in an area, could the community be offered the opportunity to demonstrate over a trial period that it wanted to keep its post office? I would like to get Mr. Daly's observation on that suggestion.
Mr. Daly mentioned that An Post is in discussion with banks and so on, because the issue of banking facilities arose. I believe it is in discussion with Ulster Bank. He might comment on that.
Another issue reflected in the recent debate was that the post offices have delivered efficient services in the provision of passports, property tax collection and so on. I would like to hear Mr. Daly's ideas on how such services could be expanded.
A further issue is the contracts with postmasters. Are the contracts for five years? Has there been consultation on that? In the past a post office could be passed on to a family member, but I believe that practice has finished. Those issues are causing concern on the ground. There are a fair few points there and Mr. Daly might comment on those before I call the members.

Mr. John Daly:

I will comment on some of those points and I will ask Mr. Liam Sheehan to comment on the others. We continue to engage with the IPU. Its members might get a little frustrated at times that we do not engage with them as early as they might like, but that comes about when we are in confidential discussions with parties and we are subject to non-disclosure agreements. We communicate with them and with the Communications Workers' Union with regard to our staff at the earliest opportunity. We have also had several meetings with them to discuss the potential for the future of the social welfare business. We have told them that we are in discussions with several parties and that when we have established possible sustainable business models we will engage further with them. I do not accept that we have not engaged with them, as I believe we continue to do so.

In terms of the consultation process, since the last meeting we have gone through the process in eight locations. In two of those, Broadford in County Clare and Greencastle in County Donegal, our final decision was to advertise the offices. In the other six locations, we had a mix of representations from the local community, ranging from many to almost none in some cases. We have listened to the local communities and in six cases we decided that the business could be done at alternative nearby post offices that have the capacity and that, in our view, were a suitable distance away.

In terms of trial periods, our decisions are not made on the commercial viability of each individual post office. If we had to make a decision on every individual post office, there would be many more post offices, which would not be financially sustainable. We look at the network as a whole, and the bigger offices subsidise the smaller offices in the network. If we were to look at individual offices on a financially sustainable basis, a lot more would close. We do not look at it like that but according to the criteria I outlined - namely, the distance to other offices, the capacity of other offices, etc.

The contract with the postmasters has been in place for a very long time, as has the payments system; in fact, it has been in place since well before the foundation of An Post.

It is incumbent on us, like any other organisation, to review contracts and payment systems from time to time to get the best value and customer service regarding standards of premises and service, etc. That is what we are doing. We introduced the five years in 2012. Approximately 35 offices have a five-year contract. We do not believe a contract for life, which the old contract effectively was, is appropriate in the commercial world in which we live.

The same issue arises regarding family transfers. Because we provide State contracts we have an obligation to advertise all posts rather than just hand contracts to individual people. In many cases the family members will be in a prime position to go for an office that is advertised, particularly if they have experience of running the office. In may cases the family member will be at an advantage even before we begin.

Mr. Liam Sheehan:

Post and Pay is not a partnership with Tesco. We have a subsidiary called PostPoint which operates limited services such as top-ups, postage sales and bill payment in approximately 2,000 non-post office outlets. This is a limited trial initiative by PostPoint. It does not necessarily compete with post offices in that it is a very limited product set.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

How many Tesco outlets is it in?

Mr. Liam Sheehan:

There will be a total of ten outlets. It is in four Tesco shops but the next outlets it will go into are not Tesco.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Where will they be?

Mr. Liam Sheehan:

I presume they will be outlets of SuperValu, Dunnes Stores and so on.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Is the maximum ten?

Mr. Liam Sheehan:

The maximum is ten for the trial. There will be a review period. The purpose of this is to generate extra revenue and extra profit, particularly postage and parcel revenue. If we find it is cannibalising existing businesses, there will be no point in it.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I am sure the members will tease this out further. Mr. Sheehan is saying that if it affects the existing post offices it will not go ahead.

Mr. Liam Sheehan:

Yes, if it cannibalises the existing business it will not go ahead. The whole point of this initiative is that, in common with most European posts, we have significant challenges in postal volumes. One of the ways to address that is to increase one's distribution of those items. There has also been a change in people's shopping patterns. Post offices have a very loyal clientele. Some people do not go to post offices and it is about trying to match our offer as best we can with modern shopping habits. For instance, Post and Pay does not have social welfare, NTMA products, banking products or cash foreign exchange. It is designed on a very limited product set, which is aligned to what PostPoint is already offering through 2,000 non-post office outlets.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Mr. Sheehan said some people do not go to post offices. Maybe it should be argued that we should get them to the post offices rather than providing alternative outlets.

Mr. Liam Sheehan:

From the point of view of other banks and businesses, I am subject to non-disclosure agreements on a number of conversations. I would prefer not to comment on what was in the press last week but we are in discussions with a number of banks about offering services to them. Our current arrangement with AIB is seen as very successful. Transaction levels for AIB grew by approximately 15% last year and that is a mature contract, so there is a significant opportunity there. We have just been notified that we are going into contract discussions with Irish Water for bill payment. There is a strong pipeline of new products and contracts that will come to fruition in the next 12 months. Unfortunately, the type of publicity that has been around about the network closing does not necessarily help the conversations with multinational companies. It is important we portray the network for what it is, a strong, viable network that touches virtually every community in the country.

Michael Moynihan (Cork North West, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

An Post has two strengths - the network and the trust the public has in it. After Mr. Sheehan's brief exchange with the Chairman, I am even more fearful. It is very worrying if the management of An Post think, in their wisdom, that having PostPoint in Tesco or any other retail outfit is not going to cannibalise the network and they will stop the trial if this happens. The dogs on the street would realise that if An Post is going to proceed with the trials, which were not mentioned in the opening remarks, it will cannibalise them. That is common sense. Regarding changing the way people do business, and the Chairman alluded to this, putting the points in Tesco, SuperValu or any other places will pull them away from the existing networks. It is so fundamental to our communities, both urban and rural that there should be a provision put into An Post that the networks must be maintained. Then, maybe, An Post might go after the business to maintain these post offices.

When was the last time An Post did a huge media advertising campaign on what is available in the post offices, rural or urban? I want to know not just about the investments but about what is available in the average post office throughout the country. The witnesses have outlined what they are doing regarding discussions with banks, financial institutions and utility companies etc. to bring the message in there. There is a serious issue with marketing. The witnesses have talked about communities losing their post offices and family members not taking them up and the policies. The perception out there is that there is no attempt by An Post management to say we have these retail outlets and strengths, we can lose them and bring it all back to base, or we can go out and source business for these retail outlets. There are many companies out there that would die for An Post's retail outlets.

What is An Post's policy on parcel deliveries? Some parcel delivery companies have come in behind An Post. It beggars belief that the witnesses can come here and tell us that the trials with Tesco or others will not have a detrimental effect on the retail outlets. The dogs on the street would see that as a threat. Whatever the trials will be, if that is the route An Post wants to take it will be the death knell. An Post must be honest with the people. It is high time that An Post was directed to maintain the existing network. Then, maybe, the management of An Post would go after the business to maintain these post office because there is plenty of business to maintain them.

Mr. John Daly:

As I outlined in my address, we have never done as many activities as we currently do in post offices. We have introduced many more new services over the last number of years and continue to seek new services.

There is no business we are not examining, in terms of transaction processing or anything involving the customer having to attend at a counter.

The trial post and pay locations have high footfall with extended opening hours. As Mr. Sheehan outlined, the services available include stamp sales, bill payment and mobile top-up. We are not alone in providing these services and we have significant competition. If we do not go into these locations, where people like to do their shopping and go more often, our competition will grow and we will create even bigger competitors. The pilot is about increasing our market share in these products and preventing the competition from growing even further. One can pay bills in many retailers. Parcel companies are building chains through retailers. If we do not go into these retailers our competition will increase. We are examining An Post's share of these markets.

Mr. Liam Sheehan:

Last year we spent almost €3 million on advertising, promotions in post offices and merchandise promoting services available in post offices. At present we have a television advertising campaign for our foreign exchange services. A significant investment is made in post office services on an ongoing basis.

Mr. John Daly:

We also have digital marketing screens in 300 of our busiest post offices which advertise services. Our Customer Plus programme encourages and trains postmasters so they can tell their customers about the services. They play a big part in ensuring customers know the services of which they avail in post offices.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thank the witnesses for coming before the committee. I am from Newcastle West in County Limerick and between the mid-1990s and 2005 eight post offices in a ring around the town closed for the reasons described by Mr. Daly. People opted for places with increased footfall and the commercial viability of the post offices was affected. An enhanced relationship between An Post and retail outlets such as Tesco, SuperValu or Dunnes Stores will make centralising footfall par for the course and a self-fulfilling prophecy. Centralising a service to where there is increased footfall will invariably lead to having more than the original ten locations. How many more of these locations does An Post estimate there will be? What are their successes at present? Are the rates of pay for staff comparable to the rates of pay for staff working for postmasters or in An Post-owned offices throughout the country?

Online shopping is a fact of life for many people throughout the country. While I see people availing of Internet-based shopping I see little evidence of An Post being a driver for the delivery of parcels. Its competitors are streets ahead.

Last week we met the postmasters and we have also had discussions with other stakeholders. What level of engagement has An Post had with the NTMA, the Department of Finance and the credit union movement with a view to enhancing the banking services available? A very good savings scheme is available but in isolated rural areas there may be a lack of critical mass between the credit union, the post office and the bank. A person could go into the post office to draw down a small loan regardless of the bank involved.

There is no point in putting 500 people into a hall on the night it is announced the post office will close because it is already gone. Has An Post ever considered an early warning system, on an annual basis or every three or four years, so a community could see how much support its post office receives locally? There is a rush to support them when it is too late. The witnesses stated they want An Post to go into areas of high footfall to take on its competitors but this draws people out of communities already in danger.

Mr. Daly stated up to 95% of the population live within 5 km of a post office. This means more than 250,000 people live more than 5 km from a post office. I could almost identify where these people are. They are west and south of the Shannon in massive geographical areas. Some of them may be more than 15 km from a post office and the round trip is what exercises people.

I presume An Post has a social commitment. I know it has a commercial remit and it must wash its own face but there is a social element. Not everybody has a SuperValu or Tesco in their community. A concentration on this mentality will have implications for the post office network and communities, but also for the staff working in post offices. On what basis has this concept been formed? Is it fair? Are the rates of pay, the opening hours and the services the same? We have seen this happen before. As I stated, my area lost eight post offices over 15 years in a five mile radius of the town of Newcastle West.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

As Senator Mooney must go for a vote I will call him next.

Paschal Mooney (Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I am very grateful to the Chairman. Will An Post explore its relationship with the Irish Postmasters Union, IPU? There seems to have been a breakdown of communications. The word on the street we heard was there is deep distrust in the IPU of An Post. Is there a liaison committee by which the IPU is kept fully informed or is it a case it is met when a new initiative is announced? It would be much more productive to have a regular structured meeting format. The feedback we receive is it is not kept informed on what is going on. I came to the conclusion the problem lay not so much with the Government but with An Post itself because it does not give any indication of its business model. The witnesses have outlined much in their presentation, but they have not sold the idea An Post promotes, supports and defends the post office network. This is not what comes across I must say.

The last time representatives from An Post came before the committee I raised the issue of its marketing. I am astonished to hear it spends €3 million. Perhaps it is time for it to revise its marketing strategy. Perhaps it might consider that it may not be productive to spend all of the money internally. Perhaps it should spend more on radio, television and social networks giving more details of the type of services it provides. A slogan used by the IPU for years was use it or lose it. This does not come across at all. I understand perfectly the sensitivities involved and that An Post does not want to spread a message the network is in danger.

Did An Post make representations to the Government on the changes in the interest rates? The banks seemed to go in the back door when An Post went out the front door, in that An Post enjoyed a superior interest rate which was very attractive to savers and could have been built on.

The ground was swept from under An Post by a Government decision that seemed to have resulted from lobbying by the banks to reduce the interest rate on An Post products and make them more competitive with bank interest rates, which seems to be an oxymoron.

What I think is important is communication between An Post and the Irish Postmasters Union and better marketing of services. I would be interested to learn from An Post its input into the decision on interest rates.

Mr. John Daly:

I will touch on a number of issues. I will respond to Senator Paschal Mooney's questions as he must leave early.

We provide State savings products on behalf of the National Treasury Management Agency. The interest rates on An Post products were out of step with what was happening in the marketplace and the NTMA sought to bring them back into line with rates in the marketplace. We did not make representations to the Department of Finance or other bodies because we perform these services on behalf of the NTMA and it is the agency that sets the rates. Our rates have changed a number of times in the past 18 months or so, but these changes have not impacted on the level of inflows into the Post Office Savings Bank, prize bonds, saving certificates or bonds. As I stated in my address, in spite of cuts in interest rates, we took in €1.9 billion last year and continue to take in savings in very high figures every week. The interest rate changes have not impacted on savings. The NTMA was bringing the rates back into line with those in the marketplace, not into line with what the banks were insisting on. I am not aware of what happened with the banks, but I know our rates are back into line with those in the marketplace.

An Post engages with the Irish Postmasters Union and is constantly in contact with its general secretary, not only when issues arise but all the time. There will always be times when relationships between an organisation and its subcontractors will be tense. They are particularly tense at present because An Post wishes to change the contract for the payments system. I think that is what is driving much of the tension. My colleague, Mr. Sheehan, will deal with the marketing issues.

I am sure Deputy Patrick O'Donovan has seen the nice new offices in Newcastle West. Post offices have closed around Newcastle West, as they have in other places, but these closures have assisted the viability of post offices such as the one in Newcastle West, ensuring they have a future. The rates of pay are in line with what competitors pay retailers for the types of service outlined in Post and Pay.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Are the rates in line with what An Post pays in An Post run post offices?

Mr. John Daly:

No, they are not. Postmasters are paid more than retailers.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Are the staff offering An Post services trained to a similar level as staff in an An Post-run post office?

Mr. Liam Sheehan:

Yes, there is a full training programme for counter staff. The employees of the multiple providing the service are not Garda vetted, but An Post has a full training programme for them.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

May I have an issue clarified? Could there be a situation in a town where a postmaster, a contractor for An Post, is paying staff a particular rate of pay and down the street PostPoint, offering the same services, is paying staff a reduced rate of pay?

Mr. John Daly:

They are completely different entities. A post office is different from a PostPoint outlet. As Mr. Sheehan outlined, PostPoint outlets offer limited services such as mobile top-ups, bill payment services and so on. PostPoint is not alone in providing these services for retailers. There are other competitors providing these services. If PostPoint does not do this, the competitors of the post office and An Post in general will grow stronger.

Rates of pay are an issue for the postmaster, as they are for Tesco and SuperValu. We pay on the basis of the activities performed. Post offices receive a higher level of remuneration than PostPoint staff, but the post office provides the full range of services, exclusively, for An Post. This has implications for it, as opposed to a PostPoint outlet, in terms of security and cash controls. There is a rationale for paying the staff of post offices a greater fee because their services are exclusive to us.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

That is not the point I am making. My point is that services are being offered under the auspices of An Post at PostPoint locations, with the An Post livery emblazoned on everything. To the person walking in off the street into the shopping centre it looks like a post office. It is of the same colour as a post office and essentially the consumer will see it as an outlet of An Post. My question did not refer to what An Post competitors were doing in regard to bill pay services. I asked whether, in respect of the services being offered under the auspices of An Post at PostPoint outlets, there was a reduced rate of pay from that offered in the post office network?

Mr. John Daly:

We pay a reduced rate for providing the services. What they pay their staff has nothing to do with An Post. We pay PostPoint retailers a reduced rate than postmasters. As I stated, if we do not do it, the competition will. Nobody should be under any illusion that, if PostPoint was not operating today in shopping centres, people would be going into post offices to pay their bills or top up their phones; they would be going to the competition. We are making sure An Post is in the strongest position to provide services and that An Post's retail business is viable.

Patrick O'Donovan (Limerick, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I also asked about the relationship An Post had with the Central Bank, the NTMA and the credit unions, with a view to expanding its banking services.

Mr. John Daly:

I ask my colleague, Mr. Sheehan, to reply to that question.

Mr. Liam Sheehan:

We had many discussions with the various parties, particularly on the basic payment account and the financial inclusion programme, in which we have played a full part. The original trial of the basic payment account did not include post offices and I think the recent report suggested very strongly that if the issue of financial exclusion was to be addressed, post offices had to play a central role. Given the correct business model that is viable for An Post and postmasters, we will be very happy to play a full role in the roll-out of the basic payment account.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I thank the delegates for their presentations. We are concerned about the sustainability of post offices, as is An Post. Will the delegates address the issue of the sustainability of An Post? There are 1,147 post offices in the network. I presume this figure incorporates very large facilities, as well as smaller and dedicated facilities and facilities that form part of a family store, that open one or two days a week. I would like to receive a breakdown of the number of 1,147 post offices. I wish to know whether all of them have an IT infrastructure that is capable of processing electronic transactions. Is there a standard template for the security measures needed in handling cash in all 1,147 post offices or does it vary, depending on the size or nature of the outlet?

An Post states it is discussing the question of extending services to customers. I am aware that it was in discussions with the Irish League of Credit Unions and other financial institutions. While I understand the need for sensitivity surrounding these discussions, I do not believe we have the luxury of time. With banks closing down, opportunities will arise and An Post should be ready to take up the slack. An undue delay will result in a missed opportunity.

We are not going to stop electronic funds transfer, so An Post will have to consider - and from what has been said here, it is considering - its business model. It is an opportunity for further work and exploration of the business model.

According to the Grant Thornton report the level of closures has reduced. Up to two years ago there were roughly 200 closures, but that number has fallen. Were the closures predominantly due to a lack of facilities or IT infrastructure? What was the main reason for the closure of 200 premises?

If I accept that neither the Government nor An Post wants to close post offices, given that the service is dependent on either footfall or the volume of electronic transactions, is there a list of endangered outlets in An Post? Is there an amber alert system that would remind An Post to talk to the people who work in the post offices - the postmasters - and the communities? If communities were aware of the potential risk to "their" post office - and that is the how people consider them - perhaps they could do more to safeguard their facility.

Either Mr. Sheehan or Mr. Daly said that newspaper headlines claiming the network was at risk were unhelpful. I accept that the Government and An Post have said they have no plan to close post offices, but today was the first time anybody explained the Tesco and PostPoint link-up. That fact has not been made clear to the public and to politicians. Perhaps something was sent to me but I did not notice it. We need to know what services will continue to be made available at post offices rather than through the PostPoint facility and at Tesco or other retail outlets, and we need to know what will be available through these facilities but not at post offices. I found the same confusion in the Minister's response to a question on post office closures last week. He said it was not the Government's wish to close post offices, but a little later he said An Post would be foolish to ignore the reality of high-footfall locations in major retail areas. I interpreted that to mean that the aim was to shut down the high street in every town and village, so it is not just post offices that should be concerned. The public and politicians need more information on the matter. Those are all of my questions for the moment.

Mr. John Daly:

The 1,147 post offices provide a full service with full hours and are fully computerised, so there is no difference between them. We also have agencies that provide limited services for social welfare. The 1,147 post offices are fully computerised and operate with full hours. They all have similar security procedures. We have invested in safes, alarms, CCTV and so on through both An Post and the postmasters. They are all fully secured and there is no difference between those post offices.

The Deputy mentioned that the number of closures had decreased over the past number of years, but it had nothing to do with not being computerised or not having services. The only differential is that some of the post offices may not offer all of the products. For instance, not all offices have foreign exchange cash facilities because of the cost and the risks associated with a stock of cash. They all have the ability to operate foreign exchange cards.

The Deputy mentioned sustainability. An Post management is working hard at sustainability for itself and for the post offices. We have taken out annualised costs of €100 million over the past five years, of which €17 million was pay and €30 million was non-pay costs. We have taken out many full-time staff and full-time staff equivalents and there are plans in place to take out another 1,000 members of staff over the next four or five years. We are working very hard to sustain An Post as well as the post office network. I ask Mr. Sheehan to talk about the banks.

Mr. Liam Sheehan:

We engage with all of the banks proactively on a regular basis and are open for business in the sector. For legal reasons I must be careful about what I say because we are in active discussions and negotiations with a number of banks. We make regular - I would say monthly - contact with the banks that we are not in discussions with and inquire about their plans, their distribution plans and what help we can provide with their implementation plans. The relationship with AIB has worked very well and is between eight and nine years old. Its reaction and the reaction of its customers to using the post office has been virtually universally positive and the level of transactions continues to grow in double-digit figures. We are definitely open for business in the sector.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Does the figure of 1,147 post offices include agencies?

Mr. John Daly:

No.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

How many agencies are there?

Mr. John Daly:

About 158 at the moment.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

What is the future for them?

Mr. John Daly:

The only business that they undertake on our behalf is social welfare payments, and there has been a small reduction in that work over the past while. We have also computerised them. They used to do the payments on a manual basis but now they do them on our computerised system. That did encourage a few of them to exit the business.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Mr. Daly mentioned the process used for closures in his statement. He said: "[W]e notify this to the local communities [and] we seek comments from interested parties". That process was not followed in the recent closure of an agency in Ballintogher in County Sligo.

Mr. John Daly:

No.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

A new post office was opened in Ballisodare, which is welcome, but the process was not followed for the closure in Ballintogher in County Sligo.

Mr. John Daly:

The process is followed for post offices but not for agencies.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

If I were an agency person I would feel vulnerable.

I have a question about the standard of security across the 1,147 post offices. Is the same level of security required for the PostPoint and Tesco outlets?

Mr. John Daly:

The Tesco and PostPoint outlets are individual retailers and this service is just an adjunct to their business. The post offices are dedicated outlets and the rationale behind security for post offices relates to the level of cash, particularly for social welfare payments. As Mr. Sheehan and I have already pointed out, PostPoint agents do not provide social welfare payments. The level of cash payments that they operate for An Post is very low. We do not have any obligations regarding these deals but that has to do with the cash in the social welfare business.

This is a pilot of four offices. PostPoint has been around for more than ten years, as have its competitors. It is important to note that PostPoint is not new.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Does Mr. Daly wish to comment?

Mr. John Daly:

We are aware of the generational issue. Traditionally, many of our customers were of the older generation. Certainly we have been working hard in recent years to introduce products such as foreign exchange, gift vouchers and Postfone, which would bring these people across our doors. The deals we had with AIB and Danske Bank have brought some of their young customers into An Post. We are conscious that we need to introduce products that will bring these customers through our doors; in fact, they have been coming through our doors. The post offices have never been busier than today. That is due to all the additional products we have introduced. I accept that there is still a concentration on social welfare, but many new products are bringing new customers through our doors.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I call Deputy Fleming. I apologise to him, but the routine is that we have speakers in the order Government, Opposition, Government, Opposition. I am bound by the rules.

Tom Fleming (Kerry South, Independent)
Link to this: Individually | In context | Oireachtas source

The post office network of 1,147 outlets is a tremendous organisation and a huge infrastructure. As explained by the witnesses, it is fully serviced, computerised and staffed. Much more use needs to be made of such an asset for the future sustainability and longevity of the post office system. I am sure that can be done by maximising usage to the fullest extent. Every day, and particularly at weekends, multinational companies take out huge advertising spreads in our national newspapers. I do not say that An Post should take out a huge advertisement at any one time, but perhaps a quarter page to list the tremendous services it provides. The multiplicity of services that are available have been listed in the presentation. I do not think the general public realise that on their doorstep such a array of services is readily at hand. An Post should advertise its products so that the public is made aware of the convenience of utilising all the available services.

Local development partnerships, which are prevalent in every corner of the country, should liaise with An Post. Is there any communication with those companies, given that they are operating on the ground in rural areas and are positive for the upkeep of those areas? I believe there is a role for the partnerships, and perhaps An Post should be in contact with them to ascertain the demands of the local community and any additional enhanced services that may be required.

Currently the national lottery is operated by a consortium including An Post. The least that could be done is that the lotto be made available in all 1,147 outlets, where people can buy their weekly lotto ticket. Does An Post have plans to upgrade any of its 150 agencies? I believe there is a possibility that some of those could be upgraded. Again, I emphasise the importance of advertising and a sense of awareness.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I will finish with the members and then call Deputy Michael Healy-Rae.

Paudie Coffey (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I welcome Mr. John Daly and Mr. Liam Sheehan to the committee. This is an important engagement following the debate last week. They will have heard there is genuine concern among stakeholders in regard to the future of the post office network. I am not one for scaremongering but I believe we must listen when alarm bells are ringing. The online environment alone represents a challenge. I could have sent 100 e-mails while the witnesses were speaking; I could have paid bills; I could have consulted with my bank accounts, all online and in real time. As previous speakers have said, there is nothing one can do about that. There are also services such as electronic financial transactions, online shopping and online bill paying, much of which was traditionally done through the post office. This poses a huge challenge for An Post.

What are we to do about it and what does the future hold? In this regard I wish to put a direct question to the management in An Post, which has huge trust and respect throughout the country. That is not something we can take for granted. As modern challenges present themselves, does An Post carry out risk management strategies on the various sectors that are now challenging its business? If so, surely these would identify where the challenges are coming from and where new opportunities might arise.

Mr. Daly spelled out where An Post gained business traction, for example, with vouchers. In the presentation, he mentioned new savings products, money transmission, banking, vouchers and other products offered by An Post, but there should be an alignment of strategy between An Post and its stakeholders. When I say stakeholders, the post office network is an important stakeholder. They are on the front line and hear and see the challenges, and I presume they are feeding back to An Post, as their business partner. I wonder what level of engagement An Post has with those to manage the risk that is presenting itself.

Government is also an important stakeholder. I note Mr. Daly welcomes the announcement by the Minister last week that there will be a review and the Government would like the post office network to be the front office of government. There are such opportunities, whether in motor tax, HSE payments, identification and other financial transfers, that could be explored further and realistically by An Post. That is an area in which Mr. Daly would need to get more involved.

I am concerned about the PostPoint initiatives as well. I understand why An Post wants to compete with competitors and why it needs to get out there, but there is a real risk of displacement or undermining existing networks. Tesco is not in every community but, let us be honest about it, members of every community shop in Tesco. I would like to see a more real engagement with An Post's existing network to see how it can enhance or empower those to do more before it goes down the route of centralising. If they are made fully aware of that service and it is made available to them, An Post might find that consumers will vote with their feet and go where the service is traditionally. Certainly, that would be the hope of us all. If the network is to remain sustainable, as I stated in the Dáil, the citizens and the communities need to be proactive as well and need to realise that when they do not put business through their post office or their network, if it cannot sustain itself, it is at risk of closing.

I have a criticism here because of my experience of the communication or consultation with communities when a post office is at risk. I had a direct experience in mid-County Waterford, the constituency I represent, when Kill Post Office closed and the initial engagements between An Post and the communities was poor as regards consultation and information. I respect the commercial or security sensitivities there might be in some cases, but when a post office serving a mid-county geographical area with a 10 km radius is closing, there is a need for real engagement so that residents will understand exactly what is going on. I attended public meetings there. Further to the closure, the community made realistic proposals to An Post to try to keep the post office open. Despite a former postmistress being willing to take it over and the community having identified business opportunities and received petitions that residents would commit to supporting the post office, unfortunately, it all fell on deaf ears. It was as if the decision was made and that was the end of the business. Even if that is the end of the business and the decision is made, An Post should learn from such experiences and engage in a more open and transparent way with communities rather than after the event, which is what I experienced and certainly did not like.

Finally, what realistic proposals has An Post made to Government to compete for and attract new business in areas such as motor tax and HSE payments? Mr. Daly briefly mentioned Irish Water as well. He might outline, as far as he can, what real engagement he is making with Departments to pitch for that type of business.

Noel Harrington (Cork South West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I was getting fairly fed up with this for the past month or so and I suppose at the outset I must declare that I am a postmaster and contractor with An Post.

On a personal point, Mr. Daly, in his presentation, describes us as "independent retailers - postmasters - as contractors". My office is a stand-alone post office. I could not tell him how many stand-alone offices there are in the country. It is not aligned to any other store, shop, retail unit or anything else. Maybe this is the way the thinking has shifted within An Post. We now become independent retailers - postmasters. I would have thought that would have been the other way around. That is merely a personal gripe. I hope it does not reflect the attitudes in An Post.

I will address an important point under the discussion on security. I get concerned when I hear discussions about post offices' cash holdings, etc. I acknowledge An Post's support over the past number of years, with the co-operation of the postmasters, in beefing up security, not only in procedures but in equipment. A strong message should go out that the suite of time-lock safes, safes, alarms, CCTV, counter technology, etc., will more often than not leave empty-handed anybody who wishes to take it on. It would be a dangerous idea to put about that post offices are easy targets. Post offices are not easy targets, not anymore anyway. I look forward to continuing engagement with An Post in that regard.

I welcome the new system where a post office or local communities might be alerted to the possibility of closure. Regrettably, it is far too late for 800 or 900 offices that have closed over the past decade or more, but it brings me to another point. This is a partnership approach between An Post, the post offices, Government and the communities, and it gives communities a chance to react. I am encouraged by Mr. Daly's figures that An Post has reversed or offered contracts in a few cases where communities engaged. Regrettably, sometimes, as a previous speaker mentioned, the only time they realise a post office is there is when they get a notice that there is a closure. That is in a minority of cases, but, unfortunately, that happens. An amber alert system to communities on a use-it-or-lose-it basis is important.

I have a few direct questions. Has An Post entered into any negotiations with Government, Government agencies or Departments? I refer, in particular, to looking at issues such as delivering citizens' information, MABS services, outreach services, outreach social protection information services, Department of Agriculture, Food and the Marine outreach services, particularly for rural areas, where An Post could become strong agents of Government agencies or Departments. In many cases, some post offices do that business anyway, and they do it for nothing. I have seen it so often in my own office. We can come in with a social protection client, complete the form and, quite often, it is satisfactory. Sometimes, the last question seeks the person's payment preference as his or her local post office or bank, and the person prefers to go to the bank and thanks us for filling out the form stating that the bank is much more convenient, and one is left frustrated. What if we could turn that around? Has An Post held any negotiations or had communications with State agencies or Department to see whether post offices can attract that business because there are many rural areas in which those agencies do not have a full-time presence? We could provide those outreach services for our customers and for the citizens.

The technology in the post offices is modern and has been since the automation was introduced in the early 1990s. It continues to be state-of-the-art, but there are significant deficiencies in providing services to customers. For example, on a daily basis we receive memos but we cannot sent a memo back. If we communicate with somebody, even with An Post, it is over the telephone, which is laborious and time consuming.

There could be some way of addressing the issue to provide the consumer with the full suite, including customer complaints and extra information based on increased business for post offices.

The contract issue is a serious one for smaller offices with lower numbers of business transactions. It is still important to note that the An Post payment is per transaction, it is not a salary. The vast majority of business is conducted on the basis of a fee per transaction on a sliding scale that decreases with the volume of transactions. There is support for very small post offices - I hope I do not fall into that category - but I am concerned that the support for smaller rural and urban offices will be withdrawn. An Post could return in 18 months or two years time and state it did not actively seek to close the post offices. However, what will have happened is that it made it difficult for them to sustain themselves. If a contract comes up for renewal, no one will be bothered to take up because the remuneration will not be worth it. Complying with security requirements, providing the counter and for the different options that must be provided for will not be worth it and the community will lose out. I am very concerned that support be maintained for smaller post offices in rural areas to maintain proximity to the consumer and the citizen.

I welcome what the delegates said about the need for further business. Most post offices depend too strongly on two major contracts, those from the Department of Social Protection and the NTMA. Having all eggs in one basket is a precarious position to be in for smaller offices and communities. The debate in the past few weeks has highlighted that post offices will not survive if people do not use them. People have options in every area. They can receive payments from the Department of Social Protection through the bank or they can make bill payments through direct debits. They can still use these options free of charge in 99% of cases through An Post. The debate on what is an ongoing issue is worthwhile. The Government, the company and contractors must put in place the building blocks required. If not, consumers will vote with their feet. As sure as night follows day, post offices will close and we will have public meetings to attend.

Michael Healy-Rae (Kerry South, Independent)
Link to this: Individually | In context | Oireachtas source

On a lighter note to Deputy Noel Harrington, on the Kerry side of the border, when we are filling in the forms, we fill the last part first. We confirm that people want the payment to be made through the post office and then fill in the form.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

That is tactical detail.

Noel Harrington (Cork South West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

They know their dates of birth.

Michael Healy-Rae (Kerry South, Independent)
Link to this: Individually | In context | Oireachtas source

My advice to people on the Cork side of the border is that they should do the same.
I thank the delegates for coming. I must register my disappointment that the CEO is unable to attend. Everyone is busy and people have different places to be, but I cannot think of where is more important for the CEO of this organisation than before the committee. Mr. Daly and Mr. Sheehan are perfectly credible and efficient delegates but the CEO should be here.
I must declare that I am a postmaster. For generations, postmasters had a contractual right to apply to transfer their appointment to a family member or, in some cases, an assistant who had been in situfor many years. This contributed to post offices being held by families for generations and providing continuity for communities. The same families served the same families for decades. The Irish Postmasters Union, IPU, stated An Post had removed this right for families to apply for a transfer and it has caused difficulties for many postmasters and their families. Why was this done? This loss of opportunity for postmasters to hand on the post office to the next generation is unfair. The An Post delegates may respond that it is a requirement that the post office contract be put out to open tender, but our post office is about community and continuity of service more than anything else.
The delegates referred to the trials they were carrying out. I highlight the commitment of Tesco to its customers in a frank way. In the town of Killarney Tesco became involved in the retail business selling petrol and reduced prices to such a level that existing service stations could not buy fuel at the Tesco sales price. Tesco continued for weeks and months and, after a couple of years, succeeded in closing down 12 or 13 family run businesses that had been operating in the town of Killarney for decades. When that was done and it realised it would not get rid of anymore, it controlled the price by increasing it. Today it is kept grossly high because it has done away with the competition. The delegates think it is proper to take An Post services to people who deal in that way, but it is wrong. Although I cannot use the word, it is criminal to do what An Post is doing.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Deputy used the word, even though he said he would not do so.

Michael Healy-Rae (Kerry South, Independent)
Link to this: Individually | In context | Oireachtas source

Yes, but I said I did not want to use it. It is criminal. Two weeks ago the Minister said that if people were not shopping on the high street we would put the service where they were going for fear of losing business. He repeated this yesterday in response to Deputy Michael Moynihan at Question Time and the An Post delegates seem to have the same idea. If we nurture and promote the 1,100 post offices and work together to provide more services, we will get over this hump and retain the network. I am glad that in December 2006 a Fine Gael motion tabled by the excellent Deputy Bernard J. Durkan was supported by Fine Gael. I was disappointed that it did not do the same two weeks ago in respect of a motion tabled by the IPU through the Technical Group. We all want to ensure we will hold what we have and that we will not lose more post offices, but as sure as night follows day, by carrying out trials, the delegates will help to send us down the slippery slope. People will say they will go to Tesco and do it all there, including their shopping and buying petrol, and conduct the business they should be doing in the local post office. When this happens, when more post offices are closed down and when we lose half of the network, people will cry and say it is wrong. Deputy Paudie Coffey said he did not want to have to go into a hall to fight a big campaign about how it was a fright people had lost their post office, but An Post is a big player in retaining the post office network.

When they are leaving this meeting, the delegates should be rubbing shoulders with representatives of the IPU and going into a quiet room to ask what they can do to work together to ensure Government policy will be to retain services and the way in which they can enhance and attract more business and provide more services.

They should think about how to make leaving the high street and moving to the big shopping centres less attractive.

Paudie Coffey (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Much of what Deputy Healy-Rae says is right, but 200 post offices were closed when his father supported the previous Government, and since this Government came into office fewer than 20 have been closed. That is important.

Michael Healy-Rae (Kerry South, Independent)
Link to this: Individually | In context | Oireachtas source

Am I speaking?

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I do not intend to allow a political debate to develop here.

Michael Healy-Rae (Kerry South, Independent)
Link to this: Individually | In context | Oireachtas source

The Chairman is dead right. If Deputy Coffey wants to put the boot in he will get the boot back.

Paudie Coffey (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Deputy has got the message.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I ask both Deputies to refrain from creating a political debate because-----

Paudie Coffey (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Two hundred closed when the Deputy’s father was supporting the previous Government.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Deputy Healy-Rae should put a question and we will leave it at that.

Michael Healy-Rae (Kerry South, Independent)
Link to this: Individually | In context | Oireachtas source

To clarify that point, people are talking about putting in the boot. I will use the sledgehammer.

Paudie Coffey (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Deputy already did that.

Michael Healy-Rae (Kerry South, Independent)
Link to this: Individually | In context | Oireachtas source

Deputy Coffey will be very glad to know that on the night of 6 December 2010 the then Deputy Jackie Healy-Rae voted with Fine Gael on a motion. Did Deputy Coffey know that?

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Deputy Healy-Rae and Deputy Coffey, it is one-all. We will leave it at that.

Michael Healy-Rae (Kerry South, Independent)
Link to this: Individually | In context | Oireachtas source

I think it is ten-nil, because I want to clarify-----

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

If the Deputy has a question, please put it to Mr. Daly or Mr. Sheehan.

Michael Healy-Rae (Kerry South, Independent)
Link to this: Individually | In context | Oireachtas source

I have. I hope the Chairman will not let somebody give the wrong impression of an event.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Deputy, please-----

Michael Healy-Rae (Kerry South, Independent)
Link to this: Individually | In context | Oireachtas source

Please allow me to clarify. On the night of 6 December Deputy Healy-Rae voted twice, first against a Fianna Fáil amendment and then with the Fine Gael motion, which was an excellent motion. Deputy Coffey may not know that because of his inexperience.

Paudie Coffey (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I have more experience than Deputy Healy-Rae thinks.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

That situation has been clarified.

Michael Healy-Rae (Kerry South, Independent)
Link to this: Individually | In context | Oireachtas source

Deputy Coffey slipped in the mud.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Do you have a question, Deputy Healy-Rae?

Michael Healy-Rae (Kerry South, Independent)
Link to this: Individually | In context | Oireachtas source

I have. I would like to ask one final time: will An Post engage with the IPU representatives? Will it do everything it can to ensure the postmasters and the excellent service continue for generations to come?

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Deputy Colreavy has a supplementary question.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I asked one question but did not hear the answer, if there was one. Is there a table showing post offices by address along with catchment populations and the number of transactions by transaction type? I referred to an amber alert system for An Post to identify post offices that might be vulnerable so that the community might have an opportunity to react before facing the spectre of closure.

Mr. John Daly:

I will try to answer the questions together. I addressed some of Deputy Healy-Rae's comments about my chief executive when I spoke to Deputy Coffey before my presentation. He was invited but he was not available. We communicated that immediately to the committee.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

That was confirmed at the beginning of the meeting.

Mr. John Daly:

Deputy Coffey also asked whether we undertook risk management strategies. We do. We have a very formal risk management process in the company, which is followed up to board level. Management undertakes it and presents it to the board, which discusses it in a two-day away session every year. We identify risks and strategies and decide what we will do to address them. It is a very formal process. Part of the process involves our engaging with numerous parties, as we have outlined today. We look forward to engaging with the Government on its motion. We look forward to engaging with the committee on our involvement with the standard bank account. Mr. Sheehan will comment on his sales teams, which engage with several Departments.

Mr. Liam Sheehan:

Deputy Coffey also asked about motor tax. Over the past three years we have made two formal proposals to the Department regarding moving motor tax to the post office, which is the natural home for it. We could improve the service to the community and save costs too. We engage regularly with the HSE and are discussing the possibility of moving HSE payments to post offices. That is part of a larger discussion within the HSE. We are anxious to play an active part in it. We are in regular contact with Departments and are very anxious to follow up on any opportunities and to bring them to fruition.

One of our strategies in maintaining the size of the network is to ensure we do not allow space in the market for an alternative network to develop that could compete for Government contracts. There is no doubting the strength of the post office network or the trust in it, but it behoves us as a management team to put the proper defensive strategies in place and maintain the post office as the premier network. Services such as PostPoint have an active role to play in defending that status.

We are the market leader in Ireland in parcel deliveries. That is hidden by the fact that they are delivered in An Post trucks or by local postmen and not by separate liveried transport. One of the big advantages of the digital age is that it offers us significant opportunities to deliver online purchases. We deal with most of the market leaders in that area.

Mr. John Daly:

The amber light warning system has come up several times. The network is developed nationwide, which is important for us in retaining and getting new business. To an extent the large urban offices subsidise the small rural ones. An amber light system would be in place for many small offices. I encourage all customers to use rural and urban post offices more. We are not open to providing information on transaction volumes because that would only lay out locations for the competition to pursue. The information is confidential to us and our corporate clients. We would not be able to provide specific information on transaction volumes. There has been comment today that people only use the post office when it is at risk. People should support local post offices now and not wait for that to happen.

Michael Healy-Rae (Kerry South, Independent)
Link to this: Individually | In context | Oireachtas source

I asked An Post about sitting down with the IPU to work together.

Mr. John Daly:

I apologise. I addressed some of Deputy Healy-Rae’s points earlier so did not come back to them. We addressed the issue of transfers earlier. They are Government contracts and have to go through the procurement process. We engage with the IPU. We have had various sessions with it on matters such as the welfare business. We are committed to having more sessions with it.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Deputy Harrington asked about a basic or retained payment for the small rural offices under contract.

Mr. John Daly:

We are considering a new contract and payment system, but having a nationwide network is very important to us. While the payment system may be different, it will not be set out in such a way as to reduce the payments to smaller offices. It will be to reduce our cost base in total, not at the risk of taking from the small offices to give to the big offices.

Noel Harrington (Cork South West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

What is the possibility of allowing, for example, Department of Social Protection or Department of Agriculture, Food and the Marine payments through a direct credit system and the post office savings bank? This is where much business is being haemorrhaged.

Mr. John Daly:

There is the issue with the Department of Social Protection, with which we have a contract for cash payments. The alternative it has is electronic funds transfer, which costs it very little and it does not really pay the banks. Anything we need in future must be sustainable and the business model must make sense. If we moved to EFT, the Department of Social Protection would pay us the same as it pays the banks for EFT payments. It would be a different business model. That is what we are attempting to do in our discussions on the standard bank account, financial inclusiveness and the cashless society. We are looking to formulate business models that make sense for the post office network.

Arthur Spring (Kerry North-West Limerick, Labour)
Link to this: Individually | In context | Oireachtas source

I am being very productive. I was listening to the debate earlier in my room. I have a couple of questions. In the past couple of weeks there has been much anxiety about the idea of 500 rural post offices closing in the event that social welfare payments no longer go through the post office mechanism. My concern is that the anxiety has nearly seeped into people's imagination to become a reality. Will the witnesses describe the context of the contract with the postmasters' union? Some people have engaged in a system in which they put up posters on the front door of the post office that "name and shame", and my name is an example. It has been suggested that I have voted for the closure of rural post offices. Is there anything that can be done about this and what is the nature of the contract with these union members?

Mr. John Daly:

That is the first comment I have heard about such action. If anybody has any issues with notices in post offices, they should bring it to our attention and we will address it with the postmasters concerned.

Arthur Spring (Kerry North-West Limerick, Labour)
Link to this: Individually | In context | Oireachtas source

Is it unacceptable behaviour?

Mr. John Daly:

Yes, it is unacceptable behaviour. We have responsibilities to corporate customers and the community in general. We will deal with anything inappropriate.

Arthur Spring (Kerry North-West Limerick, Labour)
Link to this: Individually | In context | Oireachtas source

I thank the witness. The claims are also untrue. To get to the nitty-gritty, some of the postmasters have identified the unit payment reduction in certain social welfare payments as something that could jeopardise the viability of their post offices. For example, the social welfare payment under jobseeker's allowance is to reduce from 4.7 units to 2.07 units. What kind of effect has been modelled with regard to the viability of those rural post offices? Could that jeopardise their well-being?

Mr. John Daly:

As I stated, post offices are very busy and postmasters have done very well over the past number of years. In answering a question regarding sustainability of An Post, I indicated that we are taking costs out at all levels in the company, with €100 million in annualised costs taken over the past five years. The one area of cost we have not addressed is what we pay postmasters, and I will not get into negotiations with postmasters in this forum. The rates mentioned are part of the negotiation and will impact on the postmasters' revenue, which has increased very significantly in the past number of years. It is an area of cost among many that we must address.

Arthur Spring (Kerry North-West Limerick, Labour)
Link to this: Individually | In context | Oireachtas source

Is the witness saying the income of post offices has increased as a result of an increase in unemployment?

Mr. John Daly:

Very significantly.

Arthur Spring (Kerry North-West Limerick, Labour)
Link to this: Individually | In context | Oireachtas source

There is a rebalancing to be done.

Mr. John Daly:

Yes.

Arthur Spring (Kerry North-West Limerick, Labour)
Link to this: Individually | In context | Oireachtas source

That is to get it to a point where it is acceptable for them to adhere to services to be provided.

Mr. John Daly:

We have just signed a new contract with the Department of Social Protection and our costs must match revenue, as I stated at various times in my earlier address.

Arthur Spring (Kerry North-West Limerick, Labour)
Link to this: Individually | In context | Oireachtas source

I thank Mr. Daly for clearing that up as there is a lack of clarity on the ground on the issue. The business model will evolve and the post office must consider the social responsibility that is now of greater importance than before. I can think of particular areas where AIB and Bank of Ireland have closed facilities and one of my Government colleagues referred to the idea that 95% of people are within 5 km of facilities. What about the people outside that range? I know the post office provides some services with AIB. The Government has an approximate 16% stake in Bank of Ireland; I sit on the finance committee and we will have the chief executive, Mr. Boucher, before it soon. Is there anything we should impress upon these people regarding services that can be provided by the post office?

The Department of Finance and the Department of Social Protection are relevant here and the Department of Foreign Affairs and Trade is involved because of passports. The Departments of the Environment, Community and Local Government and Agriculture, Food and the Marine have a number of payments, so has the post office engaged with them to develop a wider ambit of offerings? Perhaps people could look at the post office not as a place to post a letter but a one-stop shop for rural Ireland in accessing facilities and making payments.

Mr. Liam Sheehan:

We are in regular conversation with financial institutions. Our current dealings with the bank have been very positive for both customers and the bank in question. We offer it a variable cost model as opposed to a fixed cost model. As I mentioned earlier, we made a number of proposals to the Department of the Environment, Community and Local Government, particularly regarding motor tax, as it is a real opportunity to save money, which is important. Equally important is the chance to offer an enhanced service to the community, as people could go to a local post office rather than travelling 80 or 90 miles to get a tax disc. We engage with those parties on an ongoing basis. Some banks have a strategy of moving to an outsourced model and some do not. We intend to work with such businesses where strategies align.

Arthur Spring (Kerry North-West Limerick, Labour)
Link to this: Individually | In context | Oireachtas source

If any of us within the finance committee can help, the witnesses should contact us. There is talk of mobile banks in some areas but it is not appealing for people to have to stand in the rain and queue. Perhaps we can work with the post office on that. A large number of rural post offices were closed under the last Administration, with the figure of 197 being bandied around. There have been 17 closures since. What is the predominant reason for the closures and will the sustainable model exclude closures over the next two to three years?

Mr. John Daly:

There were years when the number of closures was bigger. That was due to a voluntary exit programme agreed between the Irish Postmasters Union and us. It came about because many postmasters at the time were elderly, lived in areas where the business did not exist and they sought to leave. The exit programme has not been in place for a number of years and as I mentioned those who exited in the past few years have done so to retire, pursue other business opportunities or people have stopped using the shops. The earlier period where there was a large number of closures coincided with an exit programme. Many people wanted to go for a long time and they went in a short period. We are now down to people who want to retire in the natural course of events.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

A Deputy asked about financial transactions and the witnesses have indicated they cannot be discussed for commercial reasons.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I understand the response.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Is this in the context of consultation or the "use it or lose it" scenario? Perhaps I misinterpreted the answer. If business is going downhill, would it be a positive move to alert the community?

Mr. John Daly:

From a strict profitability perspective, all rural post offices do not make money for us and they are subsidised, to a large degree, by urban offices.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Are any post offices in urban areas in difficulty?

Mr. John Daly:

There are very few in difficulty. Where the population is greatest, the post offices get most business. The busier post offices, including nearly all urban offices, make money for us.

We would not want our competitors to know that we do X Western Union in this office or Y BillPay in that office because it just opens up an opportunity for them to say that maybe it is worth their while to do that.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The point I was making is that if information that could be put out there would help to improve the business through the post office, I cannot see why there would be reluctance.

Mr. John Daly:

The simple message I would give to people is that they should use the post office now and make sure that the business is there.

John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context | Oireachtas source

We finish on a positive point. I thank John and Liam for their presentation and engagement. The committee will consider what we heard from the IPU and An Post and will follow up the matter further. I thank the witnesses for their presence and they way they approached and answered the questions.

The meeting is adjourned until next Wednesday 26 March at 9.30 a.m. when RTE will be in to discuss the five-year strategic plan, the salaries and compensation paid in the organisation and the issues arising out of "The Saturday Night Show" broadcast on 11 January. Is that agreed? Agreed.