Dáil debates

Thursday, 13 July 2017

Topical Issue Debate

Postal Services

9:45 pm

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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I wish to raise the future of the Portlaoise mail centre. It is a major hub for An Post in the midland region that deals with a large volume of mail every night. I hope this will be a useful and positive debate at this late hour. I also hope the Minister will be able to confirm that all is well and in order and that Portlaoise mail centre will be secure into the future. As we debate this tonight, the Portlaoise mail centre is processing up to 450,000 mail items in addition to approximately 28,000 parcels. It is one of the busiest mail centres in the country.

It is the largest post hub outside Dublin and the national hub for processing all international parcels arriving in the country. The mail centre has a customs service presence which means that high security measures are in place to detect illicit items that could arrive in the country by parcel post for onward distribution. The unit in Portlaoise is very active in conjunction with the customs service.

We must all recognise that the decline in mail volumes has placed postal services under pressure and that An Post must adapt to meet the future needs of its customers. The recent initiative whereby parcels will be delivered in the evening and on Saturdays is a great response to customer demands.

I understand An Post commissioned a report from McKinsey & Company which did not make any negative finding in respect of the Porlaoise mail centre and did not recommend scaling down or closing the centre. While there may be excess capacity in the country generally, its strategic geographical location makes Portlaoise mail centre a central hub in the network. The centre needs to be maintained for a variety of reasons. Few areas of the country cannot be reached by road within two hours from Portlaoise. I am sure I will meet one or two mail trucks on the road from Dublin to Portlaoise tonight. As a result, substantial sorting and onward distribution will take place at the Portlaoise hub during the course of the night. We all remember the mail trains which have been replaced by trucks because the improved road network makes it more efficient and faster to move mail from Dublin to Cork, Limerick, Galway or Sligo by road at night.

I ask the Minister to express his views on the future of the An Post mail centre in Portlaoise. I believe it has a great future as it is in an excellent strategic location. It should be developed and strengthened. I compliment An Post on taking a proactive approach to the future role of its distribution centres. The Portlaoise mail centre should be an example for all others to follow.

I recently met representatives of the Communications Workers Union who I understand met other Deputies from the area. I hope and expect the Minister will confirm that he had a positive discussion about this matter with my constituency colleague, the Minister for Justice and Equality, Deputy Charlie Flanagan, who I understand has been in direct contact with the Minister or An Post management. I look forward to hearing the Minister's response on the matter.

9:55 pm

Photo of Denis NaughtenDenis Naughten (Roscommon-Galway, Independent)
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I thank the Deputy for raising this matter and welcome the opportunity to outline the position on it. The Deputy is correct that the Minister for Justice and Equality, Deputy Charlie Flanagan, has spoken to me about it.

As Minister for Communications, Climate Action and Environment, I have responsibility for the postal sector, including the governance of An Post to ensure the company is fully compliant with the code of practice for the governance of State bodies and the governance functions included in the statutory framework underpinning An Post. Day-to-day operational matters, including decisions on the restructuring of An Post and the operation of the post office and mail centre networks, are for the board and management of the company; they are not ones in which I have a statutory function. Nevertheless, as a Minister and public representative, I am acutely aware of the impact any issue relating to An Post operations has on communities, both rural and urban.

It is Government policy that An Post remain a strong, viable company in a position to provide a high quality, nationwide postal service and that it maintain a nationwide customer focused network of post offices in the community. However, the postal sector as a whole is undergoing systemic change as a result of the growth of the digital economy. The continuing decline in mail volumes, combined with the ongoing impact of e-substitution on retail businesses transacted through the post office network, is a significant challenge for the company and has an impact on its financial well-being.

An Post is operating in a challenging environment and facing an extremely difficult financial position. The company published its annual report and financial statements for 2016 and recorded an operating loss of €13.7 million for that year. Clearly, this is a very significant loss and losses of this scale cannot be sustained. An Post, assisted by McKinsey, is carrying out a fundamental review of the company, with a view to identifying the strategic changes and restructuring necessary to maintain it on a sound financial footing. As the process is nearing completion, speculation at this stage on the future of any part of the national mails network is premature until the full analysis is complete.

I have spoken to many of the staff at the Athlone mail centre, many of whom are my constituents. I am fully aware, therefore, of concerns about the future outlook for the mail centre network. Transforming the postal business will be difficult and will require tough decisions, but the new changes will be designed to make An Post fit for a future in which the organisation can be confident, robust and a winner in the digital world. Government policy is to offer Government services online. In time, it is likely that this will represent the default option in accessing services. For the foreseeable future, however, a segment of the population will not be comfortable or able to access services digitally. The post office network is the obvious choice for citizens as the offline gateway, with its nationwide network and existing strong relationship with offline citizens.

The post office network can play a role in simplifying back office functions to facilitate better and more efficient processes. In relation to the parcels market, this week An Post launched its new worldwide open advertising campaign aimed at its e-commerce parcels business. The company aims to grow its current 25% share of the parcel deliveries market by making it easier for consumers to trade goods. Owing to the growth of online shopping, the volume of parcel traffic through the mail centres is increasing.

I am closely monitoring the position and hope a pragmatic approach that will ensure the long-term sustainability of An Post and the post office and mail centre networks can be agreed to. The Oireachtas will be briefed once a definitive strategy has been agreed for the company. Until that time, however, it would not be appropriate for me to comment further on the process.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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I thank the Minister for his reply and acknowledge that he has come to the House to outline the position on An Post. We all understand the company is in a serious position, with a decline in activity, especially in the area to which the Minister referred. I am a little concerned by his comment that Government policy is to offer services online and that this is likely to be the default option. He stated that in the meantime An Post will have an important role to play as an offline gateway. He has sounded the death knell for the company by stating it will have a temporary role. He is effectively saying the moment broadband is rolled out, the need for An Post services will be substantially diminished. This is a negative view of the company's future. Essentially, according to the Minister, An Post will become redundant if everyone can do his or her business online. He must take a much more imaginative approach to the future development of the company. He has adopted a traditional way of looking at the company, which is not one that would allow a modern business to succeed. I hope An Post is not planning to fail because, if so, it most surely will. If that is the policy the company has in mind, the Minister's role is to shake that idea out of management heads and ensure they will think of the services the company will provide in the decades ahead, rather than bemoaning current changes.

While the Portlaoise mail centre is a national hub for onward distribution to all other major locations, it also deals with local mail deliveries. It covers counties Laois, Offaly, Kildare, Kilkenny, Carlow, Wexford and Tipperary and parts of counties Wicklow and Waterford. It is responsible for a large amount of local distributions, in addition to its onward distribution activities. As I stated, it is responsible for distributing approximately 18,000 parcels nationwide every night, including 5,000 in the catchment area I set out.

The Minister will appreciate, given his reference to the Athlone centre, that the Portlaoise mail centre is a great employer in the region. Some 200 people work in it, including approximately 50 who work in the parcels section which must be a growth area, given the current discussion about increased online shopping.

There are couriers delivering-----

10:05 pm

Photo of Pat GallagherPat Gallagher (Donegal, Fianna Fail)
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The Deputy has exceeded his time. The Minister to conclude.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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I will conclude. I thank the Leas-Cheann Comhairle for that.

Photo of Pat GallagherPat Gallagher (Donegal, Fianna Fail)
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The Minister must make a brief response.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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This is a great service and it needs to be developed. An Post can have a bright future if we have a positive attitude.

Photo of Pat GallagherPat Gallagher (Donegal, Fianna Fail)
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The House was due to adjourn at 11.30 p.m., so the Minister should make a brief response.

Photo of Denis NaughtenDenis Naughten (Roscommon-Galway, Independent)
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There is no point in trying to hold the tide back. The digital economy is growing, and either An Post will be a part of that or it will not. More State and non-State services will go online. If we intend to use the old An Post model, then An Post will be in very serious difficulty.

The digital economy presents significant opportunities. This is not just a question of providing services, including digital ones, to older people. What can we do to bring young people into post offices? It should not be the case that the only time any of us goes to a post office is at Christmas or during the summer for foreign exchange or passport purposes. What will bring the next generation into post offices? The parcel service will be one aspect of that, as will banking and other financial services. There are significant opportunities for the company in that regard.

Thanks to the commitment agreement that I have penned with Eir, 97% of post offices will have direct access to high-speed broadband within the next 75 weeks. This is a significant opportunity to be exploited by the post office network. The digital economy is growing. Currently, Irish people are spending €14,000 every minute. The sad part about it is that €10,000 of that is being spent on goods and services from outside Ireland. This year, the digital market in Europe is worth €600 million. There are considerable opportunities for businesses at every crossroads in Ireland to exploit that situation. In order to do so, they must have access to an accessible postal service. That can be available. The front office is the local post office and the back office is the parcel service through the mail centres across the country.

The Dáil adjourned at at 11.35 p.m. until 10 a.m. on Friday, 14 July 2017.