Dáil debates

Tuesday, 23 June 2015

7:35 pm

Photo of Jonathan O'BrienJonathan O'Brien (Cork North Central, Sinn Fein)
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I thank the Minister of State, Deputy Kevin Humphreys, for attending to take this Topical Issue, which is one that has been raised with me by postmasters in my constituency in recent weeks. I am sure that postmasters have been contacting Deputies in other constituencies about it as well. It relates to the revised application form for pensions that was sent out by the Department of Social Protection asking people to consider financial institutions - banks - as their first option for payment. Postmasters believe that this was biased. As one stated, postmasters were being asked to put themselves out of business by recommending that their customers use financial institutions for certain Department of Social Protection payments rather than the post offices themselves.

The postmasters also pointed to the facts that more than 200 post offices have closed in recent years, approximately two thirds of which were in rural communities, and that Department of Social Protection payments constituted one third of post offices' revenue. That is a large chunk of revenue. If people were to move en masse to financial institutions, the Irish Postmasters Union, IPU, contends that approximately 400 of the 1,100 remaining post offices would be put at risk.

A review of the future of post offices was published recently. It made a number of recommendations on how to expand their services. The Minister of State might be able to indicate where those recommendations lie within Government policy or thinking.

We should recognise that the post office network is the largest retail sector in the State, employing approximately 3,700 people. Apart from the employment aspect, there is a social element to the post offices, particularly in rural areas, but also in urban centres. For example, my constituency of Cork North-Central has large urban areas like Farranree, Knocknaheeny, Parklands and Onslow Gardens that do not have a bank. In fact, there is no bank across the north side of the constituency. They are all centred in the valley. Elderly people must travel several miles to the nearest bank even though there is a post office just around the corner.

We need to examine policy on this matter and take the recent review on board. That review made a number of recommendations that should be examined. Asking people who are reliant on social welfare payments to consider as their first option banking institutions would be unfair. The letters that I received from the postmasters asked for the Government at the minimum to withdraw the application form and return the original, which placed the post office as the first option and made no recommendation as to which institution people should use. Their request could be considered.

This is a pressing issue. I have spoken to postmasters in other areas. They are raising the matter and there is some lobbying. Will the Minister of State comment on the review and the rationale behind the Department's decision to make banking institutions the preferred option?

Photo of Alan FarrellAlan Farrell (Dublin North, Fine Gael)
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I thank the Deputy. That was perfect timing.

Photo of Kevin HumphreysKevin Humphreys (Dublin South East, Labour)
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I thank the Deputy for raising this matter. He was right about the number of post offices that had closed. I have just noticed in my notes that 198 post offices closed between 2007 and 2010.

I reassure the Deputy that the Government has consistently stated its commitment to maintaining the post office network, as is clear in the programme for Government. It is a key piece of the social infrastructure in urban and rural areas. A part of the strength of the post office brand and one of its chief selling points is that it reaches all parts of the country and can be accessed by everyone. In particular, we support the concept of the post office as a front office of government, in other words, a way by which an array of State services can be delivered.

In that regard, the Department of Social Protection contract is the single most important contract for An Post. Under it, my Department will pay more than €50 million to An Post this year for cash payment services to welfare clients. This is a significant sum and a vital source of business for post offices around the country. This indicates our commitment to the network.

The Post Office Network Business Development Group, chaired by Mr. Bobby Kerr, has decided that the future of the post office will be best secured through the development of a more sustainable business model, including the development of financial services, which is identified by the group as fundamental to the future of the network. The development by An Post of a payment account will be critical to a more sustainable business model as society moves to electronic payments rather than cash payments, for example, standard bank accounts. This approach was mentioned in Mr. Kerr's report and An Post is excited about developing it.

Concerns have been raised recently regarding the format of some of the Department's scheme application forms and how they may impact on the post office network. I assure the House that these application forms do not remove the option for clients to be paid at the post office. This option still remains on the forms and clients can continue to receive their payments at post offices if they so wish. Some of these forms were amended in the past year to recognise the general societal trend towards electronic payments.

I emphasise that the forms provided by the Department to enable clients to apply for social welfare entitlements are continuously reviewed to ensure that they are amenable and relevant to all clients. However, in order to ensure that the Department's forms present payment options equally, I have asked it to update them to contain neutral wording in respect of payment options so that one option is not favoured over another. Changing the wording will take a bit of time.

I assure the Deputy that current payment options will remain in place in order to reflect the different circumstances and needs of our clients, as has always been the case, and in the interest of serving our clients in the best way possible.

Like the Deputy, I am from an urban area where post offices are as valued as they are in rural ones, but we must change the business model and work with An Post to do so. I am sure that the Deputy has friends and acquaintances who have retired and who, having received their salaries by way of electronic payment, will opt for the electronic payment of their pensions. We must work with An Post with a view to a more sustainable financial model. The Deputy may have read today about-----

Photo of Alan FarrellAlan Farrell (Dublin North, Fine Gael)
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The Minister of State will have more time after Deputy O'Brien's supplementary question.

Photo of Jonathan O'BrienJonathan O'Brien (Cork North Central, Sinn Fein)
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I thank the Minister of State for his reply and welcome his statement that the wording of the application form will be changed as soon as possible so as to provide a neutral option. One of the postmasters' criticisms related to how the new form recommended financial institutions as the preferred option. I understand that some people may want to receive their payments electronically via financial institutions, but the Department's application forms should not cite preferred options.

I agree that much more work is necessary so as to secure the future of the post office network. This is why I welcome the report of the group chaired by Mr. Kerr. It contained some excellent recommendations that could go a long way towards ensuring that the network's future is guarded as much as possible. Obviously, there will be other challenges apart from this issue involving Department of Social Protection contracts, so we must factor in that possibility.

I welcome the commitment to change the application forms. I hope that it will be done sooner rather than later, as this issue is taxing the minds of postmasters.

7:45 pm

Photo of Kevin HumphreysKevin Humphreys (Dublin South East, Labour)
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The Kerr report comes under the remit of the Minister of the Minister for Communications, Energy and Natural Resources, Deputy Alex White, but as far as I am aware it is open for public consultation. I suggest that all Members and the general public make submissions in that area. We are all used to An Post, but the model of business is moving very quickly. We have only to look at our own offices to become aware of the vast amounts of correspondence that come in by e-mail. I notice that queries come in through social media, so the model has to change and probably has to change quickly. Bobby Kerr will not thank me for calling it the Kerr report. That report lays out a roadmap. There are options from An Post. The standard bank account is an excellent way for it to expand and develop. An Post is anxious to move into that area. I also know that postmasters believe that will play a key role.

The Government is developing pilot schemes for microfinance - that is, micro-loans for people on low incomes. Those payments could be made through An Post. We need to be positive about developing a business model that will lead An Post for the next couple of decades. If it remains in its current model it will not survive. Therefore, that model has to grow and expand.

The volume of money that flows from the Department of Social Protection to An Post is €53.8 million. That volume will decrease naturally as people go back to work and there is a drop-off in the payments we make to An Post for paying out dole money on a weekly basis. Those numbers have dropped significantly in the past four years. A net total of more than 100,000 jobs have been created in the economy. That represents 100,000 customers An Post had last year that it does not have this year and 100,000 payments it will not receive.

Photo of Alan FarrellAlan Farrell (Dublin North, Fine Gael)
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I thank the Minister of State.

Photo of Kevin HumphreysKevin Humphreys (Dublin South East, Labour)
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That is positive for the economy and for society. The unintentional consequence is that there is less business from the Department of Social Protection going through the post office network. Therefore, there is an urgency in developing that business model to ensure that post offices survive the next decade.