Derek Nolan (Galway West, Labour)

At the outset it is good to ask what we like about the postal service we have. People around the country say they like the price of the stamp, at 55 cent, the extensive delivery network across the country and the fact the service is reliable. In almost all cases a letter arrives the day after it is posted. People relate to and personalise the postal service.

Most people in my constituency in Galway know their postman to see and there is an element of trust in the relationship. There is the daily collection of the post and a daily delivery. It sounds quite basic when it all works properly, but this is what people look for in a postal network, and it is what we have. The Bill seeks to open this to competition, as a result of a European directive under which we are obliged to introduce competition to this market. However, the suitability of this market to be opened to competition has been raised by several speakers. It is a vital public service, and not every market has to be viewed in the same light in terms of competition. There are some businesses and industries that should be treated differently on the grounds they serve a vital social function and the postal service is one of these.

It impacts not just on business and commerce on a daily basis, but is the lifeblood of many offices in terms of their communication with customers and other businesses, while it also has an enormous impact on the personal lives of people. Whether it is receiving correspondence from Revenue or personal letters, the postal service impacts on every aspect of people's social lives. In that respect we must look upon this legislation as something we have to get right first time. There is no room for error. We cannot come back in two or three years when serious damage could have been done to the postal network to say, in effect, the damage should not have happened, that we should have got it right.

We all remember with regret what happened with Eircom, where a vital company with a key role in new technologies such as broadband was privatised. As a result, the country is only now catching up and is almost a decade behind the rest of Europe. One shudders to think what would have happened if the ESB had been privatised, particularly given the intense capital infrastructure and expenditure required in upgrading the network. One can only wonder whether that would have been feasible if such a small market, as Ireland, had been divided and opened to competition between small providers lacking the scale or ability to invest in their networks.

It is worth examining what we are moving from. As Deputy Tuffy mentioned, postage costs in Ireland are the eighth lowest of the 27 countries in the European Union and An Post is the seventh most efficient operator. In 20 years, postal costs only increased on three occasions and continually lagged behind inflation. We are moving from an efficient, well operated State company that requires no State subvention into the unknown. We are moving towards uncertainty and are fixing a system that in many ways is unbroken. We have a system that does not require State subvention, yet we are talking about introducing competition and a mechanism that will require subvention from the taxpayer for that competition. Therefore, we are moving from no State support to competition, with the potential of State support. This does not make much sense.

The United States could be considered one of the most free market countries in the world, yet it has resisted all attempts to introduce competition in its postal market, believing it to be a market that cannot sustain such competition. The fact there are 300 million people in the US as against our 3 million suggests we should ask questions about changing. Unfortunately, we are where we are and the European directive has been made and agreed by the Government at European level. Therefore we must implement it. We must ensure now that it is implemented as carefully and properly as possible to ensure we maintain the positive aspects of our service of which we are so proud.

Any debate on this legislation cannot be divorced from a debate on An Post. We cannot talk about the postal market without talking about the State postal provider, which has a staff of approximately 10,000. On a daily basis, An Post processes and delivers more than 2.5 million items of mail to 2.2 million business and residential addresses and it has 2,700 cars and almost 1,700 bicycles. These bicycles should be a key component of our climate change policy. These services are all available for the price of a stamp.

There has been much discussion of what occurred when the Royal Mail was broken up following competition. There large pension obligations were left with the parent company. I see no reason the cost of a stamp and the service provided should not cover those obligations. Why can we not subvent these obligations via the cost of a stamp and work that into the new regime?

An Post faces a difficult time over the next number of years. We must commend its staff and management over the past two to three years. Having spoken to workers in An Post, I understand that some 402 staff left in 2009 and that 260 have left this year to date. The overall target reduction of 1,400 has been agreed with the unions, which is another example of unions playing a positive role, recognising the difficulties in the market and ensuring businesses survive for the benefit of the workers remaining.

There are immediate challenges for An Post. It is good and positive news that An Post will remain the universal service provider for 20 years, as committed to in the programme for Government, although the legislation only stipulates a period of seven years. The environment in which An Post operates, where it made a €5.7 million profit in 2009 on a turnover of €804 million, shows that the service basically breaks even. A percentage ratio profit of only €5 million out of €804 million is very low, but this demonstrates the target is not profit. However, in the time since 2009 there has been a decline in mail volume of 16%. Looking at a postal organisation seeing such a decline, one would wonder whether any private operators would enter the market, particularly given the dominance of a single player and the shrinking market. Another factor is the prevalence of electronic substitution and the factor that many utility providers and banking institutions are moving from postal billing.

I have watched this debate from my office and in the Chamber. It has been a good debate, but some themes have recurred constantly, including the viability of the universal service obligation in the liberalised market. Everyone in the House agrees that must continue. I represent a constituency which consists of Galway city, the east of Galway which has a village structure and Connemara where single detached houses are spread over a broad area. The quality of service to all three is excellent and it is important to maintain that quality when the Bill is implemented.

We should not undermine An Post in the future through this structure. Representations have been made with regard to downstream access and ensuring mail enters the postal service network via the mail centres in which An Post has made significant capital investment over the years. Not doing this would represent a waste of taxpayers' money and would place an undue capital burden on An Post, requiring it to reinvent itself. Given the context of a declining market and customers, this would put an unfair burden on An Post. It would be fairer to set up a system from the outset with those requirements. This would be fairer for both An Post and new operators as they would know the game they were entering and the playing field within which they should operate.

I intended mentioning social dumping and job losses. With regard to job losses, we must not create a situation where competition breeds such ferocity that we see temporary agency workers replacing full-time employees. A statement on the social value of the postal service in the legislation is important and would be welcome. We need careful debate on this issue. We must get it right first time as we cannot revisit it. If we damage the postal service, we damage it irreparable. As Deputy Tuffy said, we need a good committee debate to ensure we get the best possible system.

See this speech in context