Liz McManus (Wicklow, Labour)

I regret that the Minister has left, although I am sure he had important business. The most important statement I can make is to urge him to have an open mind, because this legislation is flawed and it is important that it is amended. I had hoped he would listen to what the Opposition had to say about amendments we will be tabling, so I regret that he has now left the Chamber.

The premise underpinning this Bill is that liberalisation is good for the postal consumer. It is 20th century legislation, based on an ideology that is fast becoming out of date in today's harsh economic climate. It presumes that a market solution for postal services is always progressive. However, the one-size-fits-all approach devised by the EU has had mixed effects in different countries. In some cases, far from improving the service, it has led to deterioration, job losses and the undermining of equal access. In a country such as Ireland, with a small market and a large scattered rural population, there are genuine concerns that the negatives resulting from liberalisation will outweigh the benefits. Large companies may benefit, but for the general public and for SMEs there is a danger that higher prices and a poorer service will result.

I hope the Minister adopts an open mind to amendments that the Labour Party will be putting forward on Committee Stage. Our concern is that this Bill, unless amended, may put undue strain on an essential public service. This is not a good time for An Post. At a time when electronic communication is having a major impact on postal communication, the Minister should be conscious of his responsibility to protect the consumer and the universal nature of the postal service. In 2005 an ECORYS report commissioned at EU level listed Ireland as a country in which the potential for the development of competition in a liberalized environment in the medium term was relatively low.

This Bill transposes the third postal directive, which eliminates all remaining obstacles for a fully liberalised postal market. Its purpose is to establish an open and competitive market across the EU by opening the final reserved area - the delivery of letters of less than 50 g, which makes up around 40% of the revenue of An Post - to competition. It is worth remarking that we are introducing this legislation after the deadline has passed. In fact, Ireland's postal market has been open to full competition since 1 January 2011. It is not clear, even at this late stage, whether there is any significant interest from private operators in entering the under 50 g market. We must presume there will be such interest, and improve the legislation accordingly, if we are to meet the needs of public.

I have reservations about the political approach to the liberalisation of essential services in Ireland. We should learn lessons from our past. It has taken years of costly effort to open up the electricity market, for example, and the consumer has paid a heavy price. Competition only began when one semi-state company, Bord Gáis, took on another, the ESB. The small scale of the Irish market, whether in energy, postal services or telecommunications, should influence how we protect essential public services.

If we are not careful we could end up sacrificing our competitiveness on the altar of competition. We have done so in the past and we cannot afford to do it again. The Eircom privatisation debacle should be the lodestar for our decisions now. The proud boast in 2004 by the then Minister for Communications, Marine and Natural Resources, Deputy Dermot Ahern, that Ireland would be a world leader in broadband provision has disintegrated to dust. Instead, we ended up with a company that has changed ownership six times and at every stage declined deeper into debt. By failing to protect an essential telecommunications infrastructure, Ireland has lost out badly.

In the Dáil we often ask parliamentary questions about broadband provision and regularly highlight the problems affecting businesses, homes and services across the country. The Minister's reply to such questions is revealing. He has stated many times: "The provision of telecommunication services, including broadband, is a matter for the private sector". This means we are not delivering next-generation broadband, and other countries are passing us out.

While the Labour Party does not intend to vote against this Bill, I am asking the Minister to be aware of the concerns being expressed about the implementation of this directive and open to addressing them. The postal market has changed in the last two years. The recession has had a heavy impact: mail volumes are down by approximately 16%, and the Minister claims this will grow to 20% or more. Each percentage point drop represents a decline of millions of euro in revenue. We all recognise the inevitability of the substitution of e-mail for traditional mail and the growth of e-billing, and that challenges have opened up for An Post as a result. That is the way life is. Nobody will be able to hold back such development, nor should we. However, we must ensure that consumers always have choice. I raised the issue of certain mobile telephone companies that tried to pull a fast one on consumers, forcing them to use e-billing even if they did not own a computer, and I was glad that ComReg took an initiative in that regard.

I pay tribute to An Post and its staff for its long record of service. This was brought home to me, like Deputy Varadkar, particularly during the recent snows. Coming up to Christmas, people were expecting letters and parcels, and An Post carried on delivering these in a commendable way. It should be no surprise that in 2010 it was assessed as the seventh most efficient operator out of 29 from various countries. Its management and workers have played a vital and progressive role in developing the public service. An Post has fulfilled its brief. The universal service obligation ensures a legal guarantee of equal access for every citizen to the postal services. It guarantees the delivery and collection of mail five working days per week, regardless of where one lives, and for the same price. As has been said here, An Post has been providing this service without having to resort to any State aid or subvention.

The Bill provides that An Post is designated as the universal postal service provider for a period of seven years. As stated in the explanatory memorandum, "ComReg is to review this designation before the end of the seven years and may designate An Post again, or designate another postal service provider or decide that no such designation is required, as the market is meeting users' reasonable needs." The question is whether that brief can be fulfilled in the future. How feasible is the notion of more than one postal operator running different aspects of the universal service obligation? It could cause immense confusion in terms of delivery, cost and quality of service. While the seven years' grace for An Post is welcome, it is important that there is political involvement in determining the future after those seven years. It should not be left to ComReg.

The principle underpinning An Post, as has been said by the Minister, the Fine Gael Members and myself, is its importance in the social and cultural fabric of Irish society. That visit by the postman or postwoman - that certainty, that connection - is valuable, particularly at a time when communities are becoming more atomised. The Minister of State with responsibility for the elderly, Deputy Áine Brady, is present; she may be conscious of this aspect, and play her part in ensuring that the Minister amends the Long Title of the Bill to reflect the social and cultural significance of the postal service.

The trade union representing postal workers, the Communications Workers Union, has been an important participant in the modernisation of An Post. It has raised key issues on financing the universal service obligation, which I want to put on the record. The CWU stated:

Liberalisation will remove the restricted monopoly that An Post currently uses to fund the loss-making parts of the USO. The Government view appears to favour the establishment of a compensation fund, referred to in the Bill as a sharing mechanism. However the CWU would prefer [and I agree with its view] that all funding options would be included in the legislation – nothing should be ruled out until we know what a liberalised market in Ireland looks like. We must learn from the lessons of other countries, such as the UK, where the USO is now under serious threat due to the regulatory choices made there.

The sharing mechanism as set out in this Bill in section 31, states:

...where the commission makes a determination under section 30 that the net cost of provision of a universal postal service represents an unfair financial burden on the universal postal service provider within the scope of the universal postal service and such providers shall make a contribution, in accordance with the cost apportioned to each of them, for the purposes of meeting that burden.

According to the Minister, the sharing mechanism will be funded by new companies entering the Irish postal market to deliver the letter post on a profitable basis. If new companies do not enter the market and make a sustained profit there will be no money contributed to the sharing mechanism. Similarly, if new companies do not even enter the market there will be no funding for the sharing mechanism. What will happen if that is what emerges? Money will not be contributed to the sharing mechanism or there will be certainly great resistance to making that contribution if it is required.

There is no plan B if the sharing mechanism does not function as planned. The CWU has suggested that this kind of funding model has not been proven to work anywhere to date. This must be taken seriously in order to have a more comprehensive section in the Bill that allows for different options if required. This levy on operators is similar in part to the risk equalisation fund in private health insurance, which has been the subject of repeated court proceedings. It is additional to the levy required on operators to fund the regulator, ComReg.

We must learn from experience, otherwise we are condemned to making the same mistakes. It is not that long ago since a furore was created by a similar levy imposed on radio and television broadcasters to fund the Broadcasting Authority. I regret that this legislation has not offered the opportunity to provide one new regulator combining the Broadcasting Authority and ComReg. It was an ideal opportunity to rationalise one regulator instead of having two. Professor Colm McCarthy recommended it in his report, yet the Minister, who has a blind spot in this matter, insists on having two regulators in an area where only one should apply with resulting efficiencies of scale.

Returning to the funding of the Broadcasting Authority levy, there was a protracted campaign by radio and television broadcasters, but particularly the small local radio stations which were badly hit. It was interesting that it took so long to get the message through, although finally there was a response to the distress caused by the levy. It revealed an ignorance on the part of the Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan, as to the reality of a country in recession. In particular, the SMEs have had to endure the pain of recession. That ignorance was significantly revealed, so we must be conscious of what we are doing with the legislation and how its provisions are being applied in that sector.

The economic value of An Post is significant. It is self-financing and successful. It is one of the largest employers in the State and delivers 3 million items of mail per day. There are approximately 6,000 post-box points and several thousand customer collection points. Every week, An Post serves 1.7 million customers through its unique national network. The rate of next-day delivery - although not perfect and behind target - has been improving.

An Post has made a profit, even though the profit is going down, so clearly there is pressure which we must acknowledge. It is worth restating certain facts, however. An Post has the eighth lowest postage costs out of 29 European countries. It is the seventh most efficient operator out of 29 countries. In 20 years, the price of a stamp increased on only three occasions and lags inflation for the same period.

We are talking about a good operation, so my feeling is "If it's not broke, don't fix it". We may say that nobody else coming in from the private sector would have a major impact on An Post in these hard times. However, the legislation is all about opening up the market, so we must have safeguards in place. We need to make changes in this legislation to protect the common good and the public interest.

Other issues have been raised in a useful commentary on the Bill by the Communication Workers Union. They include job losses and social dumping, downstream access, and cherry-picking of profitable routes. I wish to outline these matters in more detail. We must maintain certain employment standards to avoid job losses and social dumping. I understand that, if properly implemented, Recital 16 on social protection from the European Directive will protect employment standards.

On the issue of downstream access, the CWU states

Looking at the experience of Royal Mail in the UK we can see how important it is to get downstream access right. If it is handled badly it could spell the end of An Post and 10,000 jobs. Access to the An Post network must be on a commercial basis and not based on a price imposed on it by the regulator. In addition, access to the network must not be below the mail centre level as this would render useless much of the investment in technology that An Post has made in recent years and require the entire delivery network to be reconfigured.

We may have different views on that issue but there is a genuine concern in terms of how we will have a viable An Post company in future that would have a nationwide network delivering for our people.

Another concern is cherry-picking, which occurs when An Post competitors compete for business on profitable postal routes only. The effect of this is twofold. It reduces vital revenues for An Post, leaving it only with the loss-making routes, which in Ireland's case are substantial; and, in turn, it threatens the viability of the USO. That is a central issue. I am sure the Minister will argue that the protections are in place, but we need to tease out that out on Committee Stage. This matter must be crystal clear. It is blatantly obvious that, because of our widespread rural population and urban centres of critical size, cherry-picking of profitable postal routes can be very attractive to a private operator. Such an operator may wish to pick off what will make money, while leaving An Post to bear the loss-making routes.

The price control mechanism, as outlined in the Bill, should take into account declining mail volumes. This is a feature of price controls in other European regimes, such as Royal Mail and Groupe La Poste. It is essential that An Post can continue to ensure its prices are cost-oriented. There also appears to be a conflict in the Bill regarding the terms and conditions which require all USO prices to be approved in advance by ComReg. Section 19(2)(b) gives ComReg ex ante control over all prices for all services within the USO. This appears to conflict with the concept of a price cap, which is set out in section 1.

Part 3 provides that the Minister for Communications, Energy and Natural Resources may establish, maintain and operate a national postcode system. The Minister is persisting in taking a bewildering approach, to say the least. Ireland is the last country in the European Union to develop a postcode system, despite our technological capabilities. However, the Minister, who talks a good deal about the smart economy, persists with the notion of a location-based cluster system even though a unique identifier system could be introduced at far less cost, with a far less significant maintenance requirement and with many more possibilities to develop follow-on applications in line with technological advances in satellite navigation and so on. I am bewildered and frustrated by the Minister's persistence in plodding along as if his way is the only way. It is an inadequate approach in terms of the current and future needs of a smart economy. It is also a ponderous and burdensome way to approach the development of a postcode system because it will require continuous and costly maintenance as properties are added to particular clusters.

I was appointed rapporteur when the Oireachtas Committee on Communications, Energy and Natural Resources undertook to produce a report on options for a postcode system. Our report, which was endorsed by the committee, proposed a unique identifier system as offering several advantages such as facilitating a speedy response by emergency services, providing greater efficiency and interaction with GPS technologies, and not requiring a change in the names of townlands. Such a system would have low maintenance costs, support spatial planning and facilitate the delivery of health services. I ask the Minister, Deputy Ryan, to review that report. It is crucial that we use the best available technology. We may be behind our European Union colleagues but we should aim to be the best in terms of delivery. A postcode system based on a unique identifier scheme offers a range of benefits and can utilise the best, most up-to-date technology.

Our report to the Oireachtas committee also recommended that a roadmap outlining precisely how postcodes will operate should be published by September 2010. This would have fully prepared the public, businesses and State bodies for the changes. The Minister is talking about changes being introduced by the end of 2011, but nobody knows what is involved. A roadmap is vital to provide clarity and direction and to ensure people buy into the concept. A new system will not work unless people operate it.

The report also recommended that if a short lead-in time is envisaged, an incentive-based scheme should be introduced to encourage the use of postcodes. This could include free postage for a month for households who opt to participate. That proposal was also favourably received by the committee. As part of our consultation process we received valuable contributions from various organisations including the Health Service Executive and the National Centre for Geocomputation. Both of these bodies of critical mass were crystal clear in their endorsement of a unique identifier system.

What the Minister is proposing, however, is a type of hybrid which has been endorsed by nobody. None of the reports produced by various consultants and interested parties called for such a system. We need a postcode system that represents good investment practice and which is line with the objective to develop a modern and progressive digital economy. It is regrettable that the Minister is not listening. I would be the first to applaud him were he to open his eyes and take that leap into the 21st century. We get a great deal of rhetoric from the Minister, yet here we have a practical example where, given a choice, he has chosen wrong.

The Minister's arguments against a unique identifier system are that, first, people will have difficulty remembering such a number and, second, that there is a data protection issue. Neither argument stands up and the first is insulting. People remember their mobile telephone number and PPS number, for example, without difficulty, and some with good numerical ability can remember entire lists of numbers. Regarding data protection, I will put forward an amendment to deal with that issue, which I hope the Minister will accept. Even without the amendment, the reality is that what the Minister seems to be saying, in his rather convoluted way, is that locational codes can become unique identifiers. If that is the case then data protection is not an issue. In other words, he is developing a very slow route towards the same objective whereas I would urge the fast track.

Coming back to An Post, it has a good record in meeting many difficult challenges. It is blessed in that the staff union has been very active in representing workers while at the same time taking a realistic approach in terms of meeting challenges. There is a good bedrock for new initiatives. At a meeting of the Oireachtas committee some time ago to discuss the demise of Postbank, the Minister painted a rosy picture of all the opportunities available to An Post and of its wonderful network - which is true - yet here was a practical initiative that went into the sand. Will the Minister ask his colleague, the Minister for Finance, why that was allowed to happen? That meeting was attended by Mr. Ian McArdle of the Communications Workers Union, CWU, and he made the point that when BNP Paribas, which was 50% partner in Postbank, decided to pull out, the union had tried to engage with the Minister for Finance based on his declaration at the time that no Irish bank should be allowed to fail. It is extraordinary that this innovation which met a need at local level - particularly in small provincial towns and villages, including many in my constituency, where banking services had been lost - was allowed to go under. The Minister for Finance was asked for the relatively modest sum €50 million, which seems like peanuts compared with the figures involved in the bank bailout, to keep that service going, but it was not forthcoming.

We must be realistic about the challenges facing An Post. I do not go along with the rose tinted view that An Post can do all sorts of lovely things and provide for rural communities in a progressive way. It may be able to do so - I hope it will - but it will be very difficult. We are faced with an extremely harsh climate in which to develop innovative schemes whether in the public or private sector. We must be conscious of that in terms of making this legislation work. I urge the Minister to be open to amendments.

Deputy Varadkar has raised a couple of very valuable points. I hope I can do the same when the time comes. I note we are not to have Committee Stage next week but I suppose it is no surprise that these matters continue into the never-never since the Government wants to do the same. To be cynical, if An Post had been in a position to take the Minister out onto the golf course, perhaps it would have got its €50 million.

See this speech in context