John Gerard Hanafin (Fianna Fail)

I welcome the Minister of State, Deputy Brian Lenihan, to the House. Why did 10,000 CWU workers turn out to protest in Dublin on 8 December 2004? It was the largest number since the tax marches of the 1970s. The reason for that march is clear. In the 12 years prior to the arrival of the current management in An Post, there were no major industrial relations problems. In recent years, however, there have been significant problems. The problem does not lie either with the Government or the unions, but squarely with the management. Management techniques in An Post need to be examined and changed if necessary.

The following national agreements have been breached: Sustaining Progress; the SDS rescue agreement, June 2003; the Transforming through Partnership in An Post agreement, July 2000; the revised working arrangements agreement, Dublin mail centres, 2002; the agreed grievance and disciplinary procedures, 1990; Labour Relations Commission settlement terms, March 2004; and Christmas arrangements, LRC agreement, November 2004.

There appears to be no economic vision, so while the population is growing, An Post is retrenching. The current An Post management purchased a company that declared a loss of €25 million the following year. If workers had been responsible for that there would have been repercussions.

We must restate An Post's current position in society. An Post is an important part of the social capital of Ireland. The company's social aspect is important; it is part of the value of its brand and should not be lost through taking a narrow commercial view. An Post has been successful in transforming from a Government Department into an independent corporation. It provides universal postal services at prices which, until January 2004, were among the lowest in Europe, and are still in the medium price range. The company did this while also spending €250 million on modernising its transport fleet, post offices and sorting services. The expenditure came from its earnings, without borrowing or Government subvention.

An Post operated on a profitable basis until 2001. Given its resources and strong brand, the company has a bright future. It is a major business with a turnover of €700 million. It employs 10,000 people and is a core infrastructure of economic and social development. However, achieving future stability will require the active involvement of all stakeholders in an atmosphere of co-operation and openness.

The vacuum caused by the loss of An Post's SDS services will be filled at a significant cost to small and medium enterprises. That, in turn, will affect our competitiveness as an island nation. We need an efficient postal system. We needed SDS but the management showed no vision in dealing with the difficulties in that subsidiary. It did not deal with proposals from the union and did not examine possibilities for building the company. An Post adopted management techniques from the "cut and slash" school, rather than examining real opportunities in an island nation whose population is expected to grow by 1 million over the next 15 years and where economic growth is running at a minimum of 5% per annum.

The context in Ireland and internationally in which An Post is operating is continuing to change rapidly. Many of the traditional assumptions on the organisation of postal services warrant re-examination. As much postal policy is defined by the Government and the European Union, a forum is required which will involve all the stakeholders in order to examine the future. Such a forum would also help to modernise thinking with regard to the nature and organisation of modern postal services.

Serious questions can justifiably be asked about the quality of management decision making and its modus operandi. Much of the company's decision making lacks positive long-term vision and there is little integration between overall policies and individual decisions. There is a lack of acceptance of responsibility for bad decisions and a failure to grow the business. Examples of this chaos and lack of integrated decision making included the expenditure of €250 million of cash reserves on technology modernisation when losses and a possible cash shortage for maintaining the business was already an issue and management was stressing the need for cutbacks. If needed at that time, the investment should have been made from long-term borrowing.

The company had no historical debt and interest rates are low. One of the reasons the company found it so difficult to obtain sanction for a rise in the cost of sending a letter was that the regulator considered An Post's cash position to be so strong that it did not require a price rise to maintain the universal service. In 2002, An Post bought two companies which lost €25 million and contributed significantly to the losses of 2003 — a fact that is barely referred to in the annual report.

In 2003, An Post decided to withdraw from attempts to form international alliances with postal operators in other member states and focused only on operating in the Irish market. It has long been recognised that relying solely on the domestic market is not a strategy for economic success. One does not have to be an economics expert to understand that view. Why is An Post's management unable to engage with international companies and form such alliances? The ability to offer clients an international service is now seen as an essential part of competitiveness for postal services. However, An Post's vision of competitiveness seems to be retrenchment and reduction of capacity for a local business market which it defines as being in decline. How can An Post management decide that the Irish market is in decline?

Throughout the world Ireland is seen as a shining example of growth, development and opportunity. The problem is there is a lack of respect for the process of partnership in decision making. There is also a lack of care and concern regarding the effect of language and public statements on relations and the value of the brand. This applies in simple things that none of us would consider doing. For example, a meeting was arranged between the unions and the Labour Relations Commission for 22 January and an An Post employee received a letter telling him he was being transferred from his current position on a certain date and suggesting that he had requested the transfer. He had not requested a transfer and it created major difficulties. This is not the first time major difficulties have been created in An Post by senseless and insensitive decisions that affect workers.

The overall tone of the language used in the recent recovery plan of An Post is abusive of partnership and conveys the view that the workers are the cause of the problems facing An Post. The unions and workforce have accepted major changes within the company and are working towards making a sound economic proposal and ensuring the company is viable, but management is undermining the workers in this regard. The management recovery plan displays obsolete thinking, referring to obsolete or declining industry when there are new opportunities, including the Internet. It has been proved that people who use the Internet, many of whom purchase items thereon, use An Post services. People who use the Internet send three or four times as many letters or post as people who do not. Therefore, the level of Irish mail volumes can reasonably be expected to grow. The changing mail flow trends the new technology allows and the use of zip codes will also assist the company in becoming more profitable, and the workers are willing to negotiate and to assist An Post to come back on track with that. Growing affluence and the economic climate suggest that An Post should be spending money and investing in its people instead of creating industrial relations problems and representing to the public that workers are to blame when there are serious questions over management.

A visionary An Post looking to a bright future for postal services and growing volumes of mail in Ireland and growing revenues from mail and other products and services would borrow money to overcome short-term cash crises rather than dismantling its network and damaging its brand. It would place the creation of a partnership culture at the centre of its concerns for the future. It would modernise its thinking and analysis of postal services and how their economies operate.