John Browne (Wexford, Fianna Fail)

The communications sector is changing rapidly. As part of that sector, the global market for postal services is facing a number of significant challenges, including an increasing amount of correspondence conducted by e-mail, falling mail volumes and the threat to post office business from a move to the on-line provision of services. There are, however, a number of opportunities for postal operators, including An Post, particularly in the stimulation of parcel business caused by increased Internet use. However, the opportunities arise in an increasingly competitive environment. For this reason it is key that An Post continues with its current phase of restructuring in order to provide the range of products and services necessary to thrive in a competitive environment.

The Government is firmly of the belief that there will continue to be a key national role for An Post, both in delivery of mail and as a quality service provider of Government and financial services through its nationwide network of post office outlets but, like all national postal operators, it has to change rapidly to stay competitive and commercial in the European postal market. One thing is certain: it is absolutely imperative that An Post avoids a return to the loss-making situation. In order to achieve this it will require hard work, a commitment to achieving the goals set out in the company's recovery plan and a strong entrepreneurial outlook to exploit opportunities as they arise. This can be done by making the best possible use of its long-established and trusted brand name and deploying its resources in a manner which continues to serve existing customers' needs and attract additional customers for a range of new services.

Deputies will be all too aware of the financial difficulties An Post has faced in recent years, where it recorded losses in excess of €70 million between 2001 and 2003. There is widespread agreement that change is required if the postal services of An Post are to adapt to the modern business environment and the likely increase in competition to ensure it continues to offer a top class nationwide delivery service to the customer into the future. With this in mind, the board and management of An Post prepared a recovery plan, incorporating details of proposed new collection and delivery arrangements which are now in the process of being implemented and which will re-establish the company on a more secure financial footing.

To successfully overcome the range of challenges presented by the prospect of greater competition and electronic substitution, it is important that changes in the company's collection and delivery operations are implemented. In this regard, the company's recovery plan provides for a reduction in numbers of approximately 1,400 in collection and delivery, through voluntary redundancies and non-filling of vacancies, together with changes in existing work practices. The changes will increase operational flexibility and significantly reduce the company's existing cost base. Such changes will enable the company to provide a cost effective mail service and quality of service standards which meet customer expectations. Furthermore, a key element of the plan concerns the continuing implementation of a major change programme throughout the company to deliver significant cost savings and efficiencies. The scale of the change required is, inevitably, having an impact on staff throughout the organisation, as it involves the restructuring and rationalisation of management positions, reductions in staff numbers and curtailment of overtime, as well as substantial non-pay cost cuts. Members will recall that the recovery plan was the subject of a very difficult industrial relations exercise last year and has now been resolved successfully.

I understand all pay increases provided for under Sustaining Progress, including the payment of €20 million in back pay, which were the source of much of the industrial unrest at the company have now been paid to staff members and passed on to the company's pensioners. It is up to all parties to ensure the process for full implementation of the change programme that is so essential to placing the company on a firm financial footing and securing its future is achieved fully.

With regard to the post office network, the Government and the board of An Post are fully committed to the objective of securing a viable and sustainable nationwide post office network through a strategy of maximising the volume of both public and private sector business handled by the network. This is set out clearly in the programme for Government.

The An Post network has many competitive advantages and comprises the single largest number of retail outlets in the country. In the European context, Ireland still has one of the highest number of post offices per head of population with 4.2 outlets per 10,000 inhabitants, compared to a European Union average of 2.7. In line with similar trends across Europe, there has been in recent years some network restructuring.

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