Thursday, 20 January 2011
Communications Regulation (Postal Services) Bill 2010 [Seanad]: Second Stage (Resumed)
Olivia Mitchell (Dublin South, Fine Gael)
In these dying days of the 30th Dáil, I welcome the opportunity to contribute to the debate on this Bill because the issue it addresses has been on the agenda for as long as I have been a Member, which is 13 and a half years. I welcome the Bill. It has two main parts, which are the deregulation of the remaining protected segment of the postal market and the provision for the introduction of postal codes. Both measures are long overdue and are welcome.
Most people recognise that they were coming, although Members in both Houses have expressed various concerns, one of which is the belief that there is a hidden agenda behind the introduction of competition into the remaining closed sector of the market, which relates to the 50 g letter. Others expressed concern that even if no harm is intended to the existing role of An Post, there may be unintended consequences. In remote parts of the country, as a result of the introduction of competition, there is concern people will not get post. This will be dealt with by designating An Post as a universal service provider for seven years following enactment of the legislation. ComReg has been nominated as regulator and it is up to its staff to ensure the seven year term is enforced.
Following that period, the service is not guaranteed. Perhaps there is justification for people's concerns because one would wonder why a provision for what will happen after the seven year term is needed as nobody knows how the postal market will evolve over the next while, given communications are changing at such an enormous rate. However, if the regulator does its job, there should not be concern about this matter.
The closure of post offices is an issue and people are worried that the social service role they play, particularly in remote areas, may be lost. This is probably an unnecessary concern because the deregulation of the 50 g letter service will not result in the introduction of competition and, therefore, the Bill will not have an immediate impact on the number of post offices. However, it is possible that competition in the future could result in greater efficiencies, which could result in the reduction in the price of a stamp, which is the purpose of the legislation on the one hand. It would be good for the economy and for jobs but it might preclude the subsidisation of uneconomic post offices, which are being subsidised currently by the stamp regime.
There will not be a significant increase in competition in this sector but post offices play an important social services role in rural areas. It is a tribute to An Post that it has succeeded in being a profit making organisation and a postal service provided on the strength of a regime based on the 55 cent stamp. I question whether it is the role of a post office to provide a social service but, as there is no alternative, I understand people's concern that this role could be lost without an alternative being put in place.
There is concern among An Post workers and those operating in the wider postal services market that snail mail is being replaced by electronic mail. That has been going on for a number of years and alternative roles such as the provision of banking facilities have been sought for An Post in an attempt to maintain the post office network throughout the State. Letters will not disappear but they will become less common.
In the past ten years we have seen a significant drop in the number of letters. As a public representative it is amazing to see the difference in the amount of post coming in the door compared to what it was ten or 12 years ago. Nevertheless, as one door closes for An Post and postal services, another one opens. I refer to parcel mail which is a significant growth area. An opportunity is generated for An Post by the growth in online shopping, which is definitely the next big thing in the retail business. In fact, it is here already. I was amazed speaking to young people over the Christmas who scarcely visited a shop to buy their Christmas presents. I am not sure the shops would be too happy about that. Every present was bought online and delivered by DHL, An Post or whoever. There is an opportunity for An Post to get involved in that area. If An Post is to survive and prosper it must capitalise on the opportunities the growth in parcel post present. It must gear up to compete with the other providers that are already in the parcel market. There are considerable giants in the market already. Nevertheless, it is a natural job for An Post and it is well placed to step up to the mark in that regard.
It is crucial that An Post remains competitive from the point of view of its survival, ability to prosper and for it to continue as the major player in the market. There will be fewer letters but they will remain a significant and important part of the market. Post also has an important jobs element which is sometimes forgotten. One thinks only of the postman but there is so much else involved in delivering a letter once it has been posted.
I wish to comment on the wider postal market, the downstream services, postal providers who are licensed to provide postal services in the processing, printing and packing of letters which they then buy the services of An Post to deliver. That is a significant jobs market. It is important that those jobs are not lost to this country. There is a practice in An Post at the moment which I am sure other speakers have raised, namely, of charging less to overseas providers of the service than it does to Irish providers. The result is that batches of letters that originate in this country are bulk dispatched overseas to be processed, printed, packed and sent back to be delivered by An Post because An Post is offering a cheaper rate to Royal Mail, Swiss Post or the French postal service than they offer to Irish providers of the service. It is madness to allow a semi-State organisation to do that. It is losing jobs to this country and it is inefficient from an environmental perspective. I invite the Minister, Deputy Eamon Ryan, to pay attention. The two Green Party members do not appear to be desperately interested in the debate. The situation is highly undesirable from an environmental point of view. As well as that An Post maintains it loses money on providing the service to overseas providers. It is difficult to understand why it pursues such a policy. I will submit an amendment on the matter. Jobs are being lost to this country and the matter must be rectified. This is a highly anti-competitive measure from the point of view of a Bill that is concerned with introducing competition into the market. I refer to the segmentation of the market and charging a different price to local providers than others. The competition issue must be examined. I urge the Minister to consider the amendment favourably.
Another concern relates to the provision for burden sharing. This is the mechanism whereby in the event of the universal postal service provider designation becoming unsustainable from An Post's perspective, other providers in the market would in some way subsidise it. I understand the thinking behind the measure but the reality is that, first, the opening up of the market to the 50 g letter will not result in new entrants but, nevertheless, An Post is well able to compete as it has the network, expertise and experience of the market which nobody else has and has had a long-standing monopoly and, therefore, it should be able to outperform any newcomers into the market.
The fear of cherrypicking in urban areas has been mentioned by others. The suggestion is that a provider would move into a discrete market, for example, Athlone town, and that it would seek to do the easy job where housing density is concentrated. The reality is that such activity should not be a threat to An Post which has had a long-standing monopoly and has all the expertise and experience and would be well able to undercut new entrants into a small part of the market and see off competition. That fear is not justified.
As a commercial semi-State company offering universal service provision An Post has succeeded in meeting all of its costs to date from its own resources based on the 55 cent stamp. I do not see why that would change in the future. My worry is that the insertion of the provision for burden sharing, should An Post find itself unable to continue in its role, could cause the foot to be taken off the pedal in terms of ensuring efficiency within the company. That is a natural human reaction. If one feels someone will pay one for losses incurred, one will not be fully motivated to achieve all efficiencies possible. The reality is that instead of burden sharing it becomes just a subsidy for inefficiency. I do not say that will happen but there is a danger attached in having the cushion as offered in the provision outlined.
I am also conscious of what happened in the health insurance area where there was an attempt to introduce burden sharing. The measure was challenged in the courts and the challenger won the case. I wonder why it was necessary to put it into the legislation. If An Post were to find itself under such intense competition that it could not continue to provide a service, the Government of the day would have to consider what could be done to ensure there was a service. The point of introducing competition is that there would be competition, not that individual firms would be supported by other firms. While I understand the reason the measure is in the Bill, it is not in the public interest and probably not in An Post's interests either in the longer term.
My final point relates to the introduction of postcodes. We have been talking about them for a long time. I am delighted to hear that it is happening. I believe the scheme is due to go out to tender soon. I fully support the concept. It is absolutely essential, in particular for parcel post, which is the next big thing. Whatever about having a postman wandering around trying to deliver a letter, who might have local knowledge, it is not acceptable to have vans driving up and down laneways looking for the correct Mrs. Murphy for the delivery. I welcome postcodes. People seem to have a fear of them on the basis that they might be targeted for marketing purposes. We are targeted for marketing purposes anyway so we might as well be targeted for something in which we might have an interest.
I favour the use of a global positioning system, GPS, for the postcode system. The GPS uses latitude and longitude. I refer to it because I understand it is not the system An Post favours and it may not be what the committee has recommended either. However, whatever system we use must stand the test of time. To choose one that happens to suit the incumbent does not represent good, long-term thinking. I call on the Minister to consider something that will stand the test of time. The Minister must recognise that technological advances are ongoing and that technology has changed dramatically since the system An Post favours was first recommended and since the committee's recommendation, which is relatively recent.
I realise the An Post choice may suit its current system but I do not believe it is the best system in terms of international best practice. We should not base any system on arbitrary lines on a map, which constitutes the postal system at present, because lines on a map may change. Presumably, at some stage, we will begin building more roads and there will be changes. The topography and the face of any mapping area may change but latitude and longitude will never change. The system is fool-proof as well. It is of great benefit to the emergency services, which are able to find a caravan on the side of a mountain or anywhere. It is always fool-proof and never changes. Also, it is value-free, which is not the case with the current postal service. Having Dublin 4 after one's address may add several million euro to the value, although no longer billions. However, it adds value to one's property.
When An Post moves to a postal system based on the current lettering, which is apparently what it plans to do, there will be war because in many cases people do not live where they believe they live. In my constituency, some people believe they live in Dublin 16 but, in fact, according to the An Post sorting system they are living somewhere else.