Seán Kyne (Galway West, Fine Gael) | Oireachtas source

As I mentioned, internationally the mail and post offices businesses are experiencing long-term structural challenges and this is not just an issue solely related to An Post. One of the main elements of the postal service in Ireland is the daily delivery of post to every address in the State. The Government is extremely cognisant of the value placed on this service by communities in both rural and urban areas, and recognises the importance of ensuring that An Post has the capacity to continue to fulfil its obligations in this regard.

Clearly, the company is entering a period of significant change to cope with the rapidly changing environment in which it operates. In this regard, it has started a fundamental review to identify the strategic changes and restructuring necessary to maintain it on a sound financial footing. The Government supports this review fully and an outcome to it is expected early in the second quarter of 2017.

The Government accepts that the company requires some financial headroom to implement the findings of the review while continuing to deliver on its universal service obligations. In consequence, the Government has agreed to introduce this Bill as a matter of priority to repeal the price cap mechanism. This is the most viable option to support An Post in the short term while a restructuring plan is being implemented. This is not a decision which was taken lightly. NewERA has conducted an in-depth review of the company in recent months on behalf of the shareholding Ministers and has confirmed the seriousness of the situation it faces. In addition, the Minister, Deputy Naughten, met with the chairman and CEO of An Post, ComReg and representatives of the Communication Workers Union to discuss the matter in detail. Having considered all matters, the Minister acted swiftly in taking appropriate action.

The impact of the legislation will involve a substantial increase in the price of the stamp. As it stands, Ireland falls well below the European average in terms of stamp prices and it is expected that proposed increases will bring the price in line with European norms. Cognisant of the impact such a measure might have on consumers and the SME sector, the Bill also provides that the Commission for Communications Regulation, ComReg, will undertake a review of the consequences of the repeal of the price cap mechanism after a two-year period. ComReg will report to the Minister on its findings within six months. The Bill also enables ComReg to undertake such consultation as it considers appropriate in carrying out this review. In addition, the Minister will issue a policy direction to An Post instructing it that the price increases introduced following the repeal of the price cap mechanism must be subject to prior consultation with the ComReg and have due regard to the tariff principles set out in section 28 of the Communications Regulation (Postal Services) Act 2011. These principles must be complied within the provision of a universal postal service and include the following requirements: prices must be affordable and such that all users can avail of services provided; prices must be cost oriented; and tariffs must be transparent and non-discriminatory. Under the 2011 Act, ComReg has a role in ensuring compliance with the tariff principles outlined in section 28.

Consideration must also be given to the impact on personal customers and the SME sector. It is important to remember that An Post provides a high quality mail service to Irish business and personal customers across the country. The mail network undertakes the delivery of 2.5 million mail items every working day to 2.1 million homes and businesses. It includes 7,620 collection, processing and delivery staff, 160 local delivery units, and four national mail centres. The company has a number of strengths such as its brand and nationwide reach. Significant work has been done by Mr. Bobby Kerr on the post office network which has resulted in a number of recommendations around network renewal. It is expected that these will be considered in the context of the strategic review of the company. An Post is also a significant employer with over 9,000 staff. Payroll costs amount to €40 million per month which also includes payments to postmasters who run the bulk of the post office network. Despite the difficult financial situation, I want it to be clear that there is no threat to the mails delivery or the universal service obligation. An Post will continue to deliver post to every address every working day, which is an EU requirement. The amended approach to pricing aims to ensure that An Post can continue to fulfil this obligation.

I will now outline the main provisions of the Bill. For the convenience of the House, a detailed explanatory memorandum has been published and this provides a synopsis of the provisions. The Bill is relatively short and consists of three sections. Section 1 provides for the repeal of section 30 of the Communications Regulation (Postal Services) Act 2011, which provides for the price cap mechanism. The section also provides that any price cap decision within the meaning of section 30 will cease to have effect. Section 2 provides for an amendment to section 10 of the Communications Regulation Act 2002 to enable ComReg to carry out a review of the consequences of the repeal of the price cap mechanism in section 30 of the Communications Regulation (Postal Services) Act 2011. In this regard, the functions of ComReg, as set out in section 10 of the Communications Regulation Act 2002, as amended, are amended to enable it to undertake this review. This review is to commence two years after the coming into operation of the Communications Regulation (Postal Services) (Amendment) Bill 2016. ComReg will report to the Minister on its findings within six months of the commencement of the review and the Minister will lay the report prepared by ComReg before each of the House of the Oireachtas as soon as practicable. In addition, provision is made to enable ComReg to undertake such consultation as it considers appropriate in carrying out the review. Section 3 contains general provisions relating to the Short Title, commencement, collective citation and construction.

It would be prudent to have legislation in place to give An Post pricing freedom by the end of the first quarter of 2017. As it stands, An Post must give one month's notice of its intention to increase prices. As such, there will be a delay before a price increase can take effect even after the commencement of the legislation. In light of the seriousness of the situation facing An Post, it is important that mechanisms are in place to facilitate the introduction of price increases at the earliest possible time. I look forward to hearing the views of the House on the Bill, to a constructive Committee Stage debate and to the assistance of Members in facilitating its early passage into law.

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