Ms Patricia Cronin:

I thank the committee for the opportunity to appear before it. By way of background, I will explain the role of the Department of Communications, Climate Action and Environment, which is responsible for the postal sector, including the governance of An Post. It is responsible for ensuring the company is fully compliant with the code of practice for the governance of State bodies and the governance functions included in the statutory framework underpinning An Post.

The committee facilitated a very informative and useful discussion on the challenges facing An Post last January. Since then there have been a number of developments which I will now update the committee on. To start, the committee will be aware that the Minister for Communications, Climate Action and Environment briefed the Government last week on the comprehensive strategic plan that An Post has prepared, the objective of which is to secure the long-term viability of both the post office and mails businesses and return the company to a sound financial footing.

The current financial challenges facing An Post have been well documented over the past year. They have arisen mainly from the decline in mail volume and the move to electronic transactions in both the mail and post office network. In my previous appearance I indicated that mail volume decline accelerated to 5.5% in 2016. This trend has continued this year with volumes to date down 7.5%. This is a global trend and is not unique to the Irish postal service. However, the action taken by the Minister and approved by the Oireachtas to facilitate the repeal of the price cap mechanism has worked to stabilise turnover on the mails side. This has resulted in an improved financial forecast for An Post for 2017 with a much lower level of losses now anticipated.

Despite the improved financial forecast, the Government accepts the long-term challenges facing An Post in both the mails and post office business. In response, the Government has agreed to make available State funding of €30 million to enable An Post to move quickly in delivering on the vision of the plan, building on the momentum of actions taken this year. The €30 million has been ring-fenced for the five day a week universal postal service in order that it continues to every address in the country and to support and develop services in the post office network. This funding will be provided in the form of a repayable long-term loan. To ensure its long-term success against the backdrop of an accelerated decline in mail volume and falling revenues, An Post is embarking on a significant transformation programme. As this loan represents an Exchequer injection to An Post, it will be subject to a degree of oversight including a new letter of expectation from the shareholding Ministers. The detail of how this will be managed is being worked on.

The strategic plan prepared by An Post harnesses the company's existing strengths such as its nationwide reach, trusted brand and the relationship of postmasters with communities, both urban and rural. At the same time, An Post has recognised it cannot and should not fight the digital agenda. It must be embraced and this is reflected in the plan, especially in the emphasis on growing the parcels business. For example, the company now offers Saturday and evening deliveries and has launched new product lines such as AddressPal and ReturnsPal, embracing the rising trend of online shopping. Enhanced banking services are becoming available through the post office network with the smart bank account. It is expected that further such opportunities will be available across the network, especially as high-speed broadband becomes widely available through the roll-out of the national broadband plan.

The Government decision last week also formally transferred the post office network back to my Department from the Department of Community and Rural Development. The community banking model will be finalised by that Department.

The Government has also committed to exploring the potential for extra business for the post office network, including motor tax. The nationwide reach of the post office network makes it uniquely positioned to act as a gateway to Government. The local post office and local staff who deliver mail are still an important part of the fabric of local communities, especially in rural areas, and the Government recognises the importance of ensuring this continues into the future. Part of the Government response includes the development of the digital assist concept where the post office will act as a digital gateway to Government. This project will be developed on a pilot basis working with Government, An Post and postmasters.

There are concerns about the closure of post offices and it is something that also concerns the Minister. Overall activity levels are down by 15% since 2013 and annual payments to some post offices have reduced by up to 20%. These reductions mean the income model is becoming unsustainable, especially for postmasters operating smaller post offices.

The Minister is extremely conscious of the value placed on local post offices in towns and villages across the country. While it is accepted that in light of the ongoing decline in activity the network must be renewed, it is also important that this is done in a controlled and transparent manner. An Post is entering into a period of significant change but this change is critical to ensuring the long-term success of our national postal operator and a sustainable post office network. Doing nothing is simply not an option.

Once again, I thank the committee for the opportunity to address it.