Pat Rabbitte (Dublin South West, Labour) | Oireachtas source

Indeed.

This will afford an opportunity for a holistic review of the range of services which could be provided by the post office network and could perhaps yield synergies among the different agencies.

I must stress one point, however. An Post is a commercial State company that earns its own keep and receives no Exchequer subsidy. My colleagues and I cannot arrange a hidden subsidy for it by dictating that all or even any Government business is automatically given to An Post. These are commercial contracts that must, under EU and Irish public procurement law, go out to competitive public tender between all interested parties. Deputy Pringle's point about adding in a few social clauses that he claims surmounts these barriers in France and Germany does not happen, and I do not advise him to try it.

The Department of Social Protection is in the course of making significant changes in the delivery of its services on a nationwide basis. Notwithstanding this, it will remain for the foreseeable future the most significant corporate customer of the post office network. The winning by An Post of the tender for the over-the-counter cash payments for social welfare during 2013 will have an important stabilising effect on the company in the short to medium term.

However, technological change, consumer choice and expectations and the actions of An Post's competitors will give rise to substantial new challenges in the years ahead. The priority for Government is that An Post is in a position to compete and win contracts for payment services independent of the technology platform.

An Post may be the best-known and most successful indigenous brand we have. However, this will not suffice if it is not able to provide the services demanded by its customers in the way that those services are required and in the location where those services are needed. The nature of the post office counter business and the traditions embodied by it do not make transition easy when change is required. I believe it is fundamentally wrong for the State as shareholder to constrain the capacity of the company to provide competing services where these are demanded by its customers.

It is important to reflect briefly on the experience of the Irish retail sector as a whole over the past decade. Deputies will be aware of the enormous changes wrought on the sector by a number of key structural forces. The first is the scale of the recession and pre-existing credit bubble which has, more than any other single factor, led to retail shutdowns. The evidence is that post offices - particularly larger offices - have been protected from the worst impact of economic decline because their business is social in nature, relying on a high volume of transactions conducted on behalf of the Department of Social Protection. However, the smaller offices have been affected by movements in trade resulting from the closure of adjacent business.

Post offices have traditionally been based on the high street. This is fine so long as the bulk of retail activity takes place there. However, when activity moves to a nearby shopping centre, consumers show a preference for on-site provision of service, rather than walking to a separate location to conduct their business. An Post might regret that this physical transfer of business is taking place, but it will ignore it at its peril. It is certainly not ignored by An Post's competitors. This is where they are establishing their points of presence.

The second factor I would list is the scale of youth emigration, particularly from the regions, which has happened as a result of the recession. The third is the extent of e-substitution, which is rapidly changing the shape of bricks-and-mortar retailing, most notably in the whole area of over-the-counter business and services. Companies and businesses that do not have an electronic channel to market will suffer. The Government's digital strategy recognises this reality and seeks to accelerate the move forward by SMEs. There is not much point in expecting the world to stand still while An Post remains committed to over-the-counter business. The reality is that An Post's competitors are moving quickly into electronic transactions. An Post is obliged to respond to this if it is to retain its pre-eminent position in the market place. If competitors can offer electronic services at a cost much lower than over-the-counter transactions, it is unreasonable for us to impede An Post from also providing these electronic services.

Fourth, there is the phenomenon of retail concentration. Commercial and trading businesses are moving out of small rural towns into supermarkets based in larger county and provincial centres. An Post's competitors are establishing a point-of-sale presence in the larger retail outlets, where the bulk of the population conduct the bulk of their weekly shopping. That presence represents a significant threat to the company if it does not respond.

The Government's amendment to the motion is based on three principles. It builds on the core strengths of the existing post office network. It addresses the need for future sustainability by focussing on competing for and winning new business. It engages all key public sector stakeholders in a whole-of-government consideration of the scope for service provision.

The long-term health of the post office network requires focussed, long-term company action, in co-operation with the Government, and not an approach that may be based on the best of intentions but is not based on an enduring capacity to deliver competitive services, freely chosen and locally provided.

There is no doubt that further challenges will present themselves in the years ahead. Prevailing against these challenges will require dedication and hard work. I am convinced that An Post possesses the capacity and drive to adapt to the changing needs of customers, as well as the necessary commitment and resolution to continue to develop the post office network. In doing so, it will have my active support and that of the Government.

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