Mr. Alex Pigot:

I thank the Chairman for the invitation to present to this august group. I have a short Powerpoint presentation. What I have to say is contained in the report, copies of which are available if anybody wants one. Apparently, it is also available online. I will be as brief as possible.

I am the owner of the company which is an SME. I would be seen around the world as an addressing and postal expert. For 14 years I have been a member of the consultative committee of the Universal Postal Union, the United Nations affiliated organisation which regulates the terms and conditions postal operators around the world use with each other in dealing with cross-border mail.

Postage cost is an important issue for Tico Mail Works, a bulk mail provider. We produce 15 million pieces of mail every year. We provide An Post with one of every 50 pieces of mail it delivers and an income stream of €7 million.

Corporate social responsibility is extremely important to us. The sustainability of our customers and our suppliers is extremely important. An Post helps us achieve those objectives. The quality of service it provides is world class and its staff, network and initiatives at community level provide this country with a huge amount of the social inclusion we are looking for as a society. We want An Post, as I believe does everybody else here, to be sustainable also. That is the first reason we are here.

The second urgent reason we are here is that we are looking at legislation which will remove our domestic price cap. According to the press releases we saw at Christmas, the domestic tariff of 72 cent could increase the price of a stamp to as much as €1.06. In terms of the reasons given for that, we have heard falling mail volumes and that tariffs are not comparative with An Post's peers. I will agree that letter mail volumes around the world are falling on a regular basis, and they have been doing so for ten years, but the e-commerce side of An Post's business, as the regulator has told us, is bringing huge numbers of packets and parcels into the business. In fact, in terms of the income stream from those volumes, what post offices around the world are losing in letter mail they are gaining in this packet and parcels area.

With regard to the tariffs being lower than those of our peers, I suggest that we look at our nearest neighbour, which provides us with possibly as much as 90% of our inbound international mail. Its headline tariff today is 64p. At today's rates, that works out at about 73 cent where the rate here is 72 cent but the United Kingdom has a second class tariff of 55p, which is in the 64 cent rate, so I would say that our tariffs are comparable to those of our biggest trading partner.

The last published An Post accounts we have seen are the 2015 accounts. If we look at its business, members will see that mail domestically in Ireland, which turns over about €360 million in those accounts, lost just €1.6 million, so it is effectively a sustainable business within the four corners of this island. The problem, if we look at those accounts, is that the international inbound and outbound mail is causing An Post to lose in the order of €20 million, and there is another element on that chart, which is in this report, which is that the registered mail is not being charged at a high enough rate. As members will see in the corner of that chart, I am saying that the average amount of money being paid by foreign postal operators for An Post to deliver its mail here in Ireland is 44 cent, whereas if the members or I were to go down to the post office and mail a similar item with a stamp on the front that somebody has written on the outside, that would cost us 72 cent.

The solution to the problem of this €24 million loss in those 2015 accounts is the three points I have outlined. First, increase the tariffs for registered mail, which would make that service sustainable. Second, increase the tariffs for the outbound mail to make that service sustainable. Those areas are outside the price cap area and An Post can do that themselves. The third area is to negotiate new bilateral agreements with the largest deliverers of mail into this country, the largest being Royal Mail.

There is one other reason we would increase the charges foreign postal operators are paying for mail into this country, and it goes back to this EU directive which states: "Whenever universal service providers [that is, An Post] apply special tariffs, for example for services for businesses, bulk mailers or consolidators of mail [consolidators being Royal Mail and Tico Mail Works] from different users, they shall apply the principles of transparency and non-discrimination with regard both to the tariffs and to the associated conditions." This directive states that An Post should be charging Royal Mail not 44 cent for those pieces of mail but somewhere closer to the 72 cent rate or at least 43% more than it is charging currently to make that service sustainable for An Post.

I was before this same committee in 2003 and, more or less, I made the same statement. In 2003, An Post was losing €20 million on international inbound and outbound mail. A quick examination of the accounts shows that nothing seems to have changed in the 14-year period. An Post is still losing the guts of €20 million on that international traffic. I am sure people in An Post have tried hard to renegotiate those agreements and, as a small postal operator, I will guess that it has been difficult so perhaps we should be looking at these international agreements to see if we can work with their terms and conditions to provide ourselves with sustainable cross-border, by which I mean international, mail traffic.

There are two multilateral agreements which An Post has signed up to. One is called Reims, which is effectively with European post offices. The other is the Universal Postal Union terminal dues agreement, which is more or less with the rest of the world. Under these agreements, An Post gets 80% of its headline tariff for each piece of mail so it should be getting 57.6 cent, based on the 72 cent rate, for every piece of mail that comes into the country from European postal operators, and 39.6 cent from the rest of the world.

If we increase the headline tariff by, say, 43% to €1.03, An Post will have a sustainable service, we will be getting 84.8 cent from the Europeans and the rest of the world will be paying 58.3 cent, but what would be the effect of that increase? As we heard earlier, increasing the headline tariff will have a detrimental effect on postal mail volumes in Ireland. Around the world there is no price elasticity with regard to consumer mail, which represents about 10% of the market. That is common knowledge, outside this country anyway, so even if we increased the price to €2, and I apologise to Age Action, there will be very little change in this market. That is consumer mail and by that I mean consumer to consumer or consumer to business.

However, business mail is a completely different picture. Business mail is highly price elastic, as we have heard already. Every time An Post increased its rates over the past 30 years, I got telephone calls from my customers saying they have a budget for postage this year and asking what they can do about it, and the only real solution has been to reduce volumes. If we are to increase the headline tariff to what has been suggested, namely, €1.03, then in this business mail area there should be no tariff increases or as few as possible. There should definitely not be tariff increases for bulk mail products.

The solution is the same as before. We need to increase the tariffs for registered mail and increase the tariffs for international outbound mail. If we cannot renegotiate those multilateral agreements, we should not increase the prices for business mail and especially the bulk mail. I thank the members for listening to me.