Hildegarde Naughton (Galway West, Fine Gael) | Oireachtas source

I thank the Deputies for their contributions and for the opportunity to address this motion today. I know Deputies raised the important matter of the post office network in October last year and the motion before us today recognises the views of the Members who participated in that debate. I noted at the time I was in agreement with many of the sentiments expressed by Deputies and the Government does not intend to oppose today's motion from the Regional Group.

The Government's programme is clear and a modernised post office network will provide a better range of financial and e-commerce services for citizens and enterprise as part of our commitment to a sustainable nationwide post office network. The Government's objectives for An Post include harnessing the opportunities presented by e-commerce and the digital economy, capturing and retaining market share in parcels and delivering a sustainable nationwide post office network offering a range of e-commerce, financial and Government services.

Deputies are aware of the scale of the transformation that An Post is undergoing, which is a vital part of the delivery of its strategic plan. In order to implement the plan, the cost of which was estimated to be in the region of €150 million, the Government provided a long-term low-interest loan of €30 million to the company in December 2017 to support and protect the renewal of the post office network and the continued fulfilment of a five day per week mail delivery service. An investment loan of €40 million from the European Investment Bank has also been made available to finance innovation and modernisation projects. This borrowing is being used to help to fund the capital costs associated with five investment programmes that form part of the transformation plan, including post office renewal. A capital expenditure programme has also been approved, which, as part of the company's commitment to the sustainability of its network, is designed to develop the newer elements of An Post's financial services business and mitigate declining core mail volumes and revenues on the retail side of the business.

The deal agreed between An Post and postmasters in 2018 centred around a renewed vision of the post office network and a revised postmaster contract. There is an acceptance that new business lines were required, with a focus on financial and new government services, along with a capital investment plan for the renewal of existing offices. The agreement reached between An Post and the Irish Postmasters' Union underpinned significant change and investment to redefine the post office network, including reducing the number of post offices, modernising the postmaster contract and updating the brand.

The consolidation of the post office network has assured the widest possible distribution across the State with an ever-improving network. The key focus continues to be to future-proof the company and keep it relevant to customers in the types of services it provides. This restructuring has seen the development of new areas of business, particularly in parcel delivery but also in new retail areas and financial services, resulting in a return to annual profitability since the implementation of the plan.

Acknowledging that the transformation plan has been severely affected by Covid-19 and the transformation payments to postmasters provided under this agreement ceased at the end of June, my officials and I have been engaging extensively with An Post on the matter. I am pleased to advise Deputies that An Post reached an agreement with the Irish Postmasters Union in late June for an €8.5 million fund that will benefit all post offices over the next 18 months. Due to the improving financial position of the company, An Post will fund this programme from its own resources.

The agreement is in line with An Post's strategic plan and it recognises the central role of the post office network to the company. It provides for a tailored payment for each post office based on the forecasted business loss and it will benefit the entire network. It will take account of products affected during Covid-19, such as foreign exchange transactions. An Post has invested in its network and as part of this proposal it will equip postmasters with commercial training and marketing support to promote their businesses, as well as maintaining continued investment in new products and services. I stress that the terms under which postmasters are contracted to An Post is a matter between postmasters and An Post and any negotiations are a matter for both parties directly.

An Post is transforming its retail network by delivering new products and formats, including, among others, the diversification and growth of financial services products that it provides for individuals and small and medium enterprises, including loans, credit cards and more foreign exchange products. It will also provide local banking in association with major banks and a full range of State savings products.

An Post is a strong commercial semi-State body and its strategy, as approved by the Minister, seeks to build on its growth and diversification. The post office network is one of the company's core strengths and the continued development of the network and its services is a vital component in its sustainability. As with many businesses, the post office must continue to develop commercial strategies to enable it to grow and maintain its relevance for users. We are working with An Post to investigate the scope to channel additional services through the network. All options will be considered fully and the ongoing transformation in the company aims to ensure the commercial viability of An Post and the continued fulfilment of its mandate to provide mail delivery services and ensure a viable post office network.

It is important to note that An Post is a commercial State body with a mandate to act commercially. It has statutory responsibility for the State's postal service and the post office network. Decisions relating to the network, including those relating to the size, distribution and future of the network, are operational matters for the board and management of the company. It is long-standing Government policy that postal services would not be directly subsidised by the Government but we remain fully committed to a sustainable post office network as a key component of the economic and social infrastructure in both rural and urban areas.

At a recent meeting of a joint Oireachtas committee, the chief executive of An Post noted that the company has been commercially successful and self-sufficient and there are no plans to bring forward a public service obligation at this time. If An Post, postmasters and the Government continue to work together, we can ensure the network can emerge as a central hub for a wide variety of valuable, community-focused services. We want to have a sustainable post office network available to all our citizens, both urban and rural, in the medium and long term.

The Government continues to provide significant business to An Post through the Department of Social Protection social welfare contract and National Treasury Management Agency business, which sees over 44 million transactions through the post office network. This includes €20.6 billion of State savings administered for the National Treasury Management Agency, 520,000 Department of Social Protection clients paid every week, with an annual value of €7.2 billion, €160 million in television licence income and 198,000 passport applicants.

The Government decided in March to set up an offline services group to explore the potential of a one-stop approach, including the identification of suitable services based on the recommendations of the offline services report, and to examine the feasibility of directing more Government business to the post office network. The group is co-chaired by the Department of the Environment, Climate and Communications and the Department of Public Expenditure and Reform. The Departments of the Taoiseach; Transport; Foreign Affairs; Rural and Community Development; Social Protection; Housing, Planning and Local Government; and the Revenue Commissioners are represented, along with the Road Safety Authority and the Local Government Management Agency.

In conducting its work, this group is considering the increased use of the post office network for the delivery of government services. Like many other aspects of our lives, the way in which the public accesses government services is likely to have been profoundly affected by the pandemic and we must consider these changes and our response to them very carefully. The group is increasingly looking at the strengths of An Post in terms of brand, digital presence and reach and its characteristic of being a unique human network. It is clear An Post has the capability to compete for more than just offline services and can offer an "omni-channel" agency role to the Government and other customers.

We must consider our approach to government service provision in light of our experience not in terms of individual offline services, such as offline applications for motor tax, but as a modern, customer-focused collective whole. The Government is committed to working with An Post and postmasters to ensure the network can continue to play a strong role in delivering State services. While respecting An Post's commercial mandate, every effort will be made to give effect to the Government's commitment to ensure a sustainable and viable post office network.

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