Dáil debates

Wednesday, 23 October 2013

Topical Issue Debate

Post Office Network

2:30 pm

Photo of Robert TroyRobert Troy (Longford-Westmeath, Fianna Fail)
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I wish to put on the record of the House that I have a personal interest. I am a postmaster of eight years in my constituency. I am the fourth generation to do so and I am fortunate to serve the community. I also wish to put on record, and with no disrespect to the Minister of State, Deputy Perry, that I am disappointed the Minister with direct responsibility for this area is not present. The moving of Topical Issues to this time of the day was to facilitate the relevant line Minister to be present to hear the concerns, especially of Opposition Deputies because Government Deputies have the opportunity to speak to relevant Ministers at parliamentary party meetings about concerns they may have. I am very disappointed in this regard. I hope and expect the Minister of State to bring back to the Minister the concerns I raise, and I expect a direct reply from the relevant Minister.

The Minister of State knows about the great anxiety among members of the public who use their local post offices, the future of which is far from certain given the Department of Social Protection's desire to move social welfare payments to electronic payments. If An Post loses this contract, in the region of 50% of its network will be unviable. I am unashamedly supportive of An Post and the pivotal role and service it provides to the community it serves, be it rural or urban Ireland. The An Post network brand inspires possibly the greatest degree of confidence in the country.

Rural Ireland has seen a severe reduction in services in recent years. We have seen the closure of Garda stations and the forced amalgamation of small schools. Community welfare officers no longer go out to rural communities and rural pubs are closing. All of this is happening as a direct result of Government policy or the lack of support from Government. We have also witnessed the closure of sub-branches of banks. The blame for that cannot be laid at the door of Government because it is a commercial decision.

On 16 July 2013, this House heard statements on the future of the post office network. Deputies from all sides of the House spoke glowingly of the service provided to communities by An Post, but we do not need platitudes, niceties or words of encouragement. We need action. The Department of Social Protection has a crucial play in the sustainability of our post office network. I acknowledge that the Minister for Social Protection has deferred the sending out of the tender until the first quarter of 2014. In the intervening period, she needs to conduct a cost-benefit analysis to see how this would benefit the Exchequer, both economically and socially. A cross-departmental working group needs to be set up involving the Departments of Communications, Energy and Natural Resources, Justice and Equality, the Environment, Community and Local Government, and Public Expenditure and Reform because An Post, which is a State-owned agency, is under-utilised.

The Irish Postmasters' Union commissioned a report by Grant Thornton which looked at ways in which post offices could better serve the community and enhance the services they provide. They could be given a banking licence to ensure they operate as banks. The post office network could be utilised as a citizens' information bureau. Gardaí could use the post office network as a one-stop-shop in locations where Garda stations have closed. We see a reduction in staff in the various councils. People could pay their motor tax and fines and renew their driving licences through the post office network. There is an opportunity to ensure An Post's network is viable while reducing costs for the State. I hope the Minister of State will bring this issue back to the Minister for Social Protection. At very short notice, I collected 3,000 signatures in part of my constituency from people who were afraid of losing their post office and who are calling on this Government to take direct action to support the future of our post office network.

Photo of John PerryJohn Perry (Sligo-North Leitrim, Fine Gael)
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I thank Deputy Troy for raising this very important issue. I am taking it on behalf of the Minister for Social Protection who regrets she cannot be present. Deputy Troy should be assured she is aware of the issues he raises. The concerns raised by the Deputy have been raised by other colleagues in the House and I am pleased to allay some of their concerns by setting out the Department's plan to modernise the payment of welfare on a progressive basis over the coming years. The Department is a key player in the payment services sector in Ireland, being the largest issuer of electronic funds transfer, EFT, payments in the country and given the scale of cash payments disbursed weekly. The decisions made by the Department about how payments are made to customers impact on the State, most notably in respect of costs.

The Department undertook a root and branch examination of its payment processes, methods and approaches. This resulted in the preparation of a payment strategy which was approved recently by the Government. The strategy has the goal of reducing significantly the level at which welfare payments are made in cash. At present, 50% of all social welfare payments are disbursed in cash. This amounted to approximately €9.5 billion distributed over 43.7 million transactions last year. The analysis undertaken for the payment strategy indicates the very significant variation in the cost of different payment methods. The movement of cash imposes security risks on customers and staff alike who handle, distribute and receive these moneys. Cash limits the options for customers to make onward transactions, limits the scope for customers to avail of cheaper prices online and curtails financial inclusion of customers.

The move to digital transactions is in line with wider Government policies and objectives on better public services and more effective electronic payments as set out in the public service reform plan and the eGovernment strategy 2012-2015. The goal is also shared by the national payments plan and the roll-out of the standard bank account. These initiatives have made the case quite strongly for a move to electronic payments which will contribute to improved national competitiveness.

Cost containment and efficiencies must be sought by all public bodies and the Department is required to examine the means through which all welfare services are delivered, including payment processes. The payment strategy is a multi-phase strategy that will be implemented over a number of years. The first phase has commenced and contract negotiations are currently under way with An Post for the provision of over the counter cash services to ensure that customers can continue to receive their payments in cash at local post offices for the foreseeable future and provide an assurance on the continuity of cash payments to customers for up to six years while other aspects of the strategy are progressing.

The next phase of the strategy will be the progressive migration of customers to electronic funds transfer, EFT, payments. The move to electronic payments for social welfare transactions is a trend that has been apparent for some time and most new social welfare customers, aside from jobseekers, are choosing EFT as their preferred method of payment. The Department does not intend to migrate higher risk customers to an electronic payment until appropriate and robust measures are defined and fully implemented to mitigate the potential for increased risk of fraud within an electronic payments environment.

Undeniably, a loss in the current revenue stream from social welfare payments would impact An Post. I understand that in anticipation of the increasing use of EFT generally, An Post has prepared and implemented a strategy which aims to address the reality of increased use of electronic payment methods within the economy. On the revenue side, An Post has made significant progress in developing new commercial opportunities with other financial and payments institutions and insurance services bodies, notably AIB, Danske Bank and Aviva. New lines of business have been generated, such as foreign exchange where An Post now holds 30% of the domestic foreign exchange business. Post offices were also used as a payment channel for the property tax.

My colleague, the Minister for Communications, Energy and Natural Resources, envisages a strong future for the post office network in which it remains a key player as a front office provider of Government services. The Department of Social Protection is happy to continue to work with the post office network, which delivers excellent and trustworthy services to customers. I assure the House that the phased move to electronic payments and the fact An Post is the preferred bidder for the cash services tender, subject to contract, will provide the board of An Post with the time necessary to ensure its network and services can continue to meet the needs of a changing society.

Photo of Robert TroyRobert Troy (Longford-Westmeath, Fianna Fail)
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The Minister of State noted that 50% of the payments made through post offices are in the form of cash. People chose to collect their payments in cash from rural post offices for a variety of reasons, such as fear of the banks or convenience. This cash supports other businesses in a local community, from the grocer and butcher to the petrol station. The cash inflow is very welcome to the local community. However, the Government's strategy aims at reducing significantly the proportion of welfare payments made in cash by progressively migrating customers to electronic fund transfers. If that happens the future of 50% of our post office network is finished, along with all the other services that have been eroded in rural Ireland over the past several years.

This Government can make policy decisions that will support the post office network. We have seen what happened in parts of England where the post office network was eroded. This is more than simple economics; it is a social service to a community. I urge the Government to consider the recommendations in the Grant Thornton report commissioned by the Irish Postmasters' Union in regard to enhancing the services provided, such as providing a banking licence to An Post so that people can have their money paid into a bank account and withdrawn from local post offices. An Post is working on an e-payments card to facilitate electronic payments but it needs the Government's support. It is a State owned agency and it is under utilised at present. I hope the Minister for Communications, Energy and Natural Resources and the Minister for Social Protection can put aside the difficulties they appear to have with each other in order to work alongside the other relevant Departments to develop a robust strategy that maintains one of the pillar services for our communities. I do not want An Post to suffer the fate of many other services over the years, of being gone and never to be seen again.

Photo of John PerryJohn Perry (Sligo-North Leitrim, Fine Gael)
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The Government is pursuing a multi-phased strategy with the final element being the cash payments. The transformation of post offices around the country has entailed significant change, such as the introduction of e-commerce systems and banking facilities. They are facilitating a wide range of services. The Government is very supportive of the post office network, which does a fantastic job in providing a critical service. However, we must move towards a certain level of technology. I have no doubt that the strategy will allow post offices to develop their own concepts for allowing payments in cash and other methods. Approximately €9.5 billion was distributed over 43.7 million transactions last year and that is assured for the next six years. That shows the modernisation approach the Government is taking with the post office network. It will not diminish the role of post offices in any sense. It will only expand the services provided, which are already multiple and varied. I assure Deputy Troy that his concerns will be brought to the attention of the Ministers, Deputies Rabbitte and Burton. The post office network is part of the Government's plans for continuing to provide services to the consumer.