Denis Naughten (Roscommon-South Leitrim, Fine Gael)

I welcome the opportunity to speak on the Communications Regulation (Postal Services) Bill 2010. The reality is that An Post has never received state aid as a semi-State company. In fact, it has been one of the more profitable semi-State companies. Throughout its history it has been seen as one of the leaders in Europe in regard to its efficiency as an operator. It is the seventh most efficient operator of 29 countries surveyed by DHL last year. That survey also showed that An Post is the eighth cheapest in regard to postal costs. Last week, we saw the appalling situation in regard to the VHI and the dramatic increase in premiums. In 20 years An Post has increased the cost of a stamp on three occasions. It is semi-State company which has done well.

This side of the House has made the argument that we need to restructure and reform our semi-State companies to deal with the challenges in our economy and An Post has met those challenges head on. We do not want to see badly managed and poorly regulated competition introduced into the postal market that will end up with the State and the taxpayer having to subsidise An Post. The company and its employees do not want that situation to arise either.

It is vitally important that we do not repeat the mistakes made in other EU countries. In other EU member states services, in particular rural services, have been degraded. There has been a dramatic impact on rural services in many of the countries which have deregulated the sector in regard to the letter market. The UK is a prime example where the situation is a complete mess. The British postal system will never be repaired. It will cost a significant amount of taxpayers' money in the UK to address the situation on foot of deregulation taking place there.

The postal service is a vital public service. I spoke to an elderly person earlier this week and he made the point that unless he meets the postman in the morning, he does not know what is going on in the local area because he will not see another individual for the whole day. If he misses the postman, he will not know what is going on, whether a neighbour is sick, someone has passed away or whatever. It is a communications lifeline for many people in rural and isolated areas.

We must acknowledge that our country is largely rural and that the population is very dispersed. One cannot compare what happens in Ireland to what happens in other European countries where there are high proportions of densely populated areas. Large proportions of our population live in rural areas. There is a crucial social service aspect to the postal service and that must be acknowledged.

On foot of this legislation, there is a question mark over the five day postal delivery service in rural areas. As my colleague, Deputy Leo Varadkar, pointed out earlier, section 17 allows ComReg to remove this requirement without ministerial approval. Many of us who have had direct experience of ComReg down through the years would not exactly sing its praises in regard to its performance in the telecommunications sector. We are now giving ComReg a role in regard to the postal service. There is a real and genuine fear that because of costs, An Post will be forced into a situation where it will reduce the five day per week rural delivery service, which it currently provides, to a two or three day per week service. It is imperative that the nationwide door-to-door postal delivery service remains in place and that it remains a cornerstone of policy for this Government, or the next one. As far as Fine Gael is concerned, it will be a cornerstone of our national policy on the postal service.

We must ensure this legislation guarantees the continuation of that vital aspect of the postal service, that An Post remains a truly nationwide company and that it continues to run in a cost effective and efficient manner, something which it has done down through the years. Over the past number of years it has made significant investment in its mail system and the last thing that should happen is for that system to be undermined by this legislation. We do not want a situation to arise where there is a requirement to turn to the Government for a subsidy. The protections must be enshrined in this legislation to ensure that does not happen.

Not only are we looking at the possibility of a threat to the daily delivery service, we are probably looking at a significant increase in the cost of postage in rural areas. What will in all likelihood happen is that a zonal system in regard to charging will be introduced with the cheapest delivery cost being the main urban centre of Dublin, with the next rate being the other urban centres throughout the country. Then as one moves further from Dublin, additional costs will be involved. We will lose the universality which has been the cornerstone of our postal system to date. This will also have an impact on isolated individuals and rural communities. They are not prepared to accept a reduction in service. We have a company which is able to provide a cost effective and profitable service to every home in the country.

There is also a huge security aspect in rural areas. Over the past number of years the Government has downgraded or closed many rural Garda stations and run down many of the other services available in rural communities. Having the postman call on a daily basis gives that added element of security to elderly people and individuals living in isolated areas.

It seems the Government is trying to use a telecoms model of liberalisation in this legislation. As we know, the telecoms model has failed dismally. My fear is that if we introduce this, we will destroy the services that have been so important to rural areas.

I also have serious concerns about the proposed compensation fund which seems very like the proposal put in place for the health insurance sector. Introducing a compensation fund in the health insurance sector has been an unmitigated disaster. As we have seen, the VHI has hiked its premiums for the third year in a row, this time with a massive increase of 45%. We will now use something similar in regard to the postal service. It has not worked in regard to the health insurance sector, nor has it worked in any other EU country where it has been introduced. It is a failed system and if it has failed in another EU country, I do not see why we should try to adopt it when it has not, nor is likely, to work. We should consider the Finnish model which seems to be very successful. That country has a very dispersed population similar to Ireland. There has not been the cherry-picking we have seen in other EU countries.

It is also important that the Minister should have powers to direct the regulator. This has been a fundamental flaw in energy regulation here and we have had debates in the House when the Minister stated he should not give a direction to the energy regulator. It is imperative that the Minister should have the ability to give such direction to the regulator. Let him lay those directions before the House and put them in the public domain.

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