John Browne (Wexford, Fianna Fail)

The Minister for Communications, Marine and Natural Resources, Deputy Noel Dempsey, who is out of the country, extends his regret that he cannot be in the House today to address Members on this matter.

The Government recognises the critical importance of a nationwide, reliable and efficient postal service. Despite the changes that have taken place in recent years, particularly with regard to electronic communications, postal deliveries and the range of services available at the post office counter are an integral part of the daily lives of our business communities, public services and the citizens of every town and village. There is no wavering of the Government commitment to postal services. It is precisely because of this commitment that urgent action is now needed to put in place the necessary measures to ensure An Post can deliver a quality service to its customers and to the community at large.

However, we must all recognise that the challenges facing the postal sector at the start of the 21st century are not the same as those that existed at the start of the 20th century. Like all businesses, if An Post is to prosper and grow, it must adapt to the demands of its customers and must develop a genuine partnership relationship with its employees that places delivery of quality services to its customers as its primary focus and objective.

It is worth emphasising that the universal postal service provided to every address in the country is enshrined in EU and Irish law. The European Community (Postal Service) Regulations 2002 make specific provision for a universal service obligation, featuring nationwide deliveries of mail at a uniform tariff and with guaranteed frequency. This is a statutory obligation which An Post must meet. On the other hand, An Post also has the benefit of having normal letter post deliveries reserved solely for itself. This reserved area, as it is known, represents a significant commercial advantage for An Post, one on which it must capitalise if it is to be fully prepared for liberalisation of the market when that comes on stream, probably in 2009.

There has already been part liberalisation of postal services in the parcels area. Unfortunately, An Post's specialist parcels delivery service, SDS, has been unable to survive in this competitive market. Nobody can say Irish consumers do not have available a range of fast and efficient service providers for parcel delivery, but it is a source of regret that An Post has not been able to compete effectively with other players in this market.

However, An Post management is taking steps to integrate its parcel service back into the main business, thereby saving the jobs of 180 SDS employees. The redundancies required will be entirely voluntary. The management of An Post and the Communications Workers' Union have been working with the national implementation body over the last number of months to resolve outstanding issues surrounding the reintegration of SDS. This process of change in the parcels service will shortly be addressed by the Labour Court to ensure it is completed in a fair and transparent way, with full regard to the rights of employees.

The proposal to go to the Labour Court, which was accepted by both sides, will see both parties bound by the court's decisions on SDS reintegration and also on Sustaining Progress issues. Labour Court hearings on these matters are scheduled to commence in February. While the impending closure and reintegration of SDS is regrettable, it is a timely reminder to us all that if consumers are to have the benefit of competition in all sectors, including the postal area, existing players in the market must adapt to the competitive world. Our citizens are demanding the right to have choice available to them, wherever possible. Accordingly, the way forward for our postal services is to ensure that we have both adequate competition and no diminution of the universal service.

Commission officials in Brussels have embarked on an extensive analysis of postal services throughout the 25 member states. Over the next two years, it will continue with that analysis with a view to proposing a model for EU postal services that combines competition and the delivery of a reliable service to all 450 million EU citizens. This is a daunting task to which Ireland will contribute, with particular regard to the need to cater for both our significant rural population and our fast growing and vibrant economy.

I have concentrated on sketching out the rapidly changing business environment in which our postal services operate because it is important that we are under no illusion about the challenges facing An Post. I turn now to some of the specific issues that An Post management and unions are attempting to resolve so that the company can be placed on a firm financial footing. An Post lost €43 million in 2003. This fact cannot be disguised and nobody can possibly dispute that, following losses on this scale, the workers, management and the Government were facing a crisis. During 2004, however, management and unions working together have made some progress in dealing with the crisis situation and, despite the negative comments we have heard on the issue, there is a joint commitment by all parties to restructuring.

All sides are to be commended for their efforts to date. The Government is not trying in any way to ignore or minimise the significant disagreements that exist between the management and the Communications Workers' Union but we must concentrate on the process, which is well under way, of resolving the issues subject to dispute. Nevertheless, the Minister, Deputy Dempsey, recognises that we are not yet in the position where we can say that the necessary restructuring programme to secure the future of An Post has been agreed.

This is essentially the nub of the problem. The unsustainable losses of 2003 have been stemmed by implementing a number of tough measures including the non-payment of Sustaining Progress increases and the vigorous control of costs. It is regrettable that Sustaining Progress payments have not been made to the workers and pensioners of An Post. The welcome intervention of the national implementation body has ensured that the issue of Sustaining Progress increases will be addressed by the Labour Court as a matter of urgency during February. In particular, the court will investigate the "inability to pay" clause adopted by the company. Both sides in the dispute have agreed to be bound by the Labour Court decision.

Much good work has been done to date by management and unions under the auspices of the Labour Relations Commission. It is essential that both sides continue to work together in conjunction with the State's industrial relations machinery to broker a deal that will allow the company to deliver quality services to our citizens, while at the same time providing sustainable well-paid employment to its staff. That is the challenge facing us and the board and management, together with the unions, should not allow themselves to be deflected from meeting that challenge.

I commend the work of the Labour Relations Commission and the national implementation body in dealing with the serious issues facing An Post. There can be no doubt that they have made a significant contribution towards teasing out the possible way forward for unions and management in the company. With hearings in the Labour Court due to commence this month on the restructuring programme, Sustaining Progress increases and SDS reintegration, the Minister, Deputy Dempsey, urges both parties to embrace this opportunity to reach agreement on how best to work together to secure the future of the company.

One regularly hears concerns expressed about the future of our extensive urban and rural post office network. I emphasise that the Government and An Post remain committed to our nationwide service. To enable the post office network to face the challenge of modernisation, the Government has already provided An Post with an equity injection of €12.7 million.

For its part, An Post has introduced new service delivery models to improve access to post office services. It has 1,000 automated post offices, 475 non-automated post offices and 160 postal agencies. It has also established 3,000 postpoint outlets in retail premises of which 600 can be used for bill payment. Automation of the post office network has also been completed. The automated network accounts for more than 95% of counter business while 475 non-automated offices undertake 5% of business. This figure clearly illustrates the level of business transacted by individual non-automated offices.

The board and management of An Post are in no doubt that the Minister and the Department will be extremely supportive of them in their efforts to ensure that our post office network continues to develop and thrive. I am aware that An Post, in partnership with the postmasters, has had some recent success in acquiring new business for our post offices. For example, many Senators will be aware that in accordance with a contract between An Post and AIB, customers of that bank can now transact business at more than 1,000 post offices throughout the country. Other business opportunities in the public and private sectors are being explored by the company and the postmasters' union. An Post has been assured that the Government will play its part in assisting An Post to secure additional Government business, wherever possible, whether it be in the fields of social welfare or the development of e-Government services. With the roll-out of e-Government services, the automated element of the post office network is ideally placed to capitalise on opportunities arising in this area.

All of these efforts help to underpin the future of our post office services. They also illustrate that the core objective for the Government and An Post continues to be the retention of access to post office services in as many locations as possible, in the manner which best meets customer needs, whether services are provided via post offices, postal agencies or the postpoint network.

I return to the immediate and underlying problem of agreeing a restructuring plan for An Post. The Minister for Communications, the Marine and Natural Resources, Deputy Noel Dempsey, has met separately with the board, management and representatives of the Communications Workers' Union to discuss the future of postal services and of An Post. The Minister has emphasised that it is an absolute imperative that both sides approach the difficulties arising in a spirit of partnership, while at the same time making full use of the available industrial relations machinery, which represents the only way forward.

While it would be easy to be downbeat about An Post in the current environment in which it is operating, I am convinced that the company has significant strengths to build on if it can get the fundamentals right. The future for An Post can be bright if the company and its workers seize the moment to implement change that all agree is necessary to secure the future of the company.