Denis Naughten (Roscommon-Galway, Independent) | Oireachtas source

I propose to take Questions Nos. 29 and 30 together.

I thank both my colleagues for their questions. It is Government policy that An Post remains a strong, viable company in a position to provide a high quality, nationwide postal service and that it maintains a nationwide customer-focused network of post offices in the community. Members of the House will be aware from recent discussions on the Communications Regulation (Postal Services) (Amendment) Act  2017 that An Post is entering a period of significant change in order to cope with the rapidly changing environment in which it operates.

Nationally and internationally, mail and post office businesses are experiencing long-term structural challenges, with electronic substitution having a significant impact.  This trend has been evident for some years in An Post. The mail volume decline of 38% between the 2007 peak and 2015 accelerated in 2016 with An Post recording a doubling year-on-year volume decline, resulting in a serious financial impact for the company. To put this into context, every 1% decline in mail volume equates to a loss of revenue for An Post of €4 million. The impact of a 2.5% Labour Court pay recommendation last year has added further pressure to an already difficult financial situation. Reflecting the scale of employment provided by An Post, a 1% increase in pay adds €4.5 million to payroll.

As soon as I became aware of the financial situation in An Post late last year, I acted swiftly to examine a number of options to assist in giving the company financial headroom. I met with the chair and CEO of An Post to discuss this matter in detail and also met other stakeholders such as ComReg and the Communications Workers' Union.  In order to stabilise the company's financials, the repeal of the price cap mechanism was identified as the only measure which could be implemented quickly.  I received Government approval in December to introduce legislation to repeal the price cap.  I am glad to acknowledge the co-operation of Deputies across all sides of the House in supporting the passage of the legislation which was enacted last week.  It is important to restate that this was not a decision that was taken lightly. NewERA had conducted an in-depth review of the company in recent months on behalf of myself and the Minister for Public Expenditure and Reform, as the shareholding Ministers, and confirmed the seriousness of the situation facing An Post. It is worth noting that stamp prices in Ireland are well below the European average and it is expected that the proposed increases will bring the price in line with European norms.

The repeal of the price cap is only one of a series of measures which will be necessary to provide the financial underpinning to An Post to allow it to continue to provide mail and post office services.  Fundamental decisions are required about how the company will operate in the future, and the company has started an in-depth review to identify the best approach to the necessary restructuring, the outcome of which is expected in the next month or so.  I continue to monitor the position closely and meet regularly with the chair and chief executive of the company. I look forward to hearing the outcome of the An Post review but it would not be appropriate for me to comment further while this process is still under way.

The Government is acutely aware of the value placed on daily postal deliveries 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 that regard.  It is important to remember that An Post provides a high quality mail service to businesses 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.

I accept that the scale of the price increase proposed is significant for both business and personal customers of An Post. While the price increase should provide additional financial headroom for the company, it is important, in the context of any restructuring proposal that management, unions and staff of the company engage in meaningful discussion in order to position An Post to meet the current and future customer requirements.

Additional information not given on the floor of the House

The operation of the post office network is an operational matter for An Post and not one in which I have a role.  On foot of a reconfiguration of Departments in July last year, responsibility for the post office network transferred to the Minister for Arts, Heritage, Regional, Rural and Gaeltacht Affairs.  The implementation of the Kerr report and plans in relation to the network are a matter for that Department and the company.  Any decisions regarding the network of post offices will be given due consideration by all parties in the context of the overall review of the company as a whole.

The Government decision of 19 July 2016 agreed, in accordance with the programme for Government, to transfer responsibility for the post office network from my Department to the Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs.  As the network is an integrated business run by An Post it is not possible to disaggregate urban and rural post offices and therefore the network as a whole is transferred to that Department.  Delivery of the programme for Government commitments, in particular, implementing the report of the post office business development group and actions on post offices and Community banking will be the responsibility of the Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs.

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