Noel Dempsey (Meath, Fianna Fail)

I repeat that a strong, viable post office network is the best guarantee of a future for postmasters and postmistresses. That is the commitment we gave in our programme for Government and it is precisely what we have delivered in the last ten years. Although the organisation of the post office network is a matter for the board and management of An Post, the programme for Government clearly sets out our commitment to the objective of securing the largest and most economically sustainable nationwide post office network possible. We have backed up that rhetoric with our actions in government.

The An Post post office network comprises the single largest number of retail outlets in the country, consisting of 986 automated post offices, 371 non-automated post offices and 171 postal agencies. In addition, An Post has also established 2,991 postPoint outlets in retail premises throughout the country, of which 609 can be used for bill payment. In the European context, Ireland still has one of the highest number of post offices per head of population, with 4.2 outlets per 10,000 inhabitants compared with a European Union average of 2.7. This is a testament to Government support for the service in the last decade and in the longer term, since the foundation of the State. Research commissioned by the Irish Postmasters Union in 2006 confirmed these figures.

Some network restructuring has been undertaken in recent years, and this activity is in line with similar trends across Europe. On a national basis, 80% of the post office network is situated in rural areas, that is, in settlements of fewer than 1,500, and serves 40% of the population. To ensure the continued viability and size of the network, it is essential that all efforts are made to build on its intrinsic strengths in terms of nationwide reach, high customer footfall and strong relationship between postmasters and their customers.

A key step in this regard is the automation of the network, with just under 1,000 outlets conducting more than 95% of post office business. On foot of this large-scale investment in the computerisation of the network, involving an investment of €13 million by the Government, the company has also had success in securing business growth in its contractual arrangements with AIB and Western Union, for which it sells gift vouchers, and in respect of the payment of Garda fines and various bill payment facilities. However, automation alone will not bring in the business required to support the network. The challenge for the company is to develop a strategy that satisfies the needs of existing customers, while attracting the new customers who will allow it to maintain as large a network as is viable.

It was to this end that the Government gave its approval last September for An Post to enter into a joint venture agreement with a Belgian bank, Fortis, to set up a retail banking business. One of the first points I made to An Post management when I became Minister for Communications, Marine and Natural Resources was that it should seek new opportunities, including those in banking and financial services. I offered it every encouragement to do so and, in fairness, it responded strongly. The joint venture with Fortis will entail the provision of a range of financial services operated through the post office branch network, using the An Post brand and other An Post assets. Key to the Government approval of this joint venture was that it not only offers a genuine opportunity for the growth and development of An Post and the post office network but that it will, in time, greatly benefit the income streams of postmasters.

The venture is being developed at a crucial time that sees the An Post network facing several key challenges in coming years, including the possible migration of the bulk of its business to other payment channels. Another challenge for An Post is its reliance in terms of revenue for the network on certain Government contracts, including social welfare payments, and the National Treasury Management Agency's retail savings products. Some 65% of An Post's business is Government business. I understand agricultural payments are paid directly by the Department of Agriculture and Food to recipients. Any decision to alter this arrangement would be subject to the proper tendering procedures.

Social welfare payments continue to be paid via the post office network. The reality, however, is that increasing numbers of people are choosing alternatives to the post office because of the convenience of electronic fund transfers. Moreover, the European Court of Justice is examining the contract of the Department of Social and Family Affairs with An Post. The Advocate General to the court recently issued her opinion that the contract that An Post holds with the Department should have been advertised. The court is expected to rule on the case shortly.

The introduction of full electronic fund transfer functionality is envisaged as part of the new financial services joint venture between An Post and Fortis. The Government remains committed to the long-term viability of the post office network and sees the successful implementation of the An Post joint venture as a tangible opportunity to develop the business necessary to maintain the viability and current size of the network. Like all businesses, however, if An Post and its network are to prosper and grow, it must adapt to the demands of its customers and place delivery of quality services as its primary focus and objective.

I join Senator Bannon in acknowledging the role played by postmasters and postmistresses in the provision of services through the years. It was for this reason that I asked Mr. Eamon Ryan to facilitate talks between An Post management and unions to find a way forward. I am pleased both parties are talking. I said at the beginning of this particular campaign that the postmasters and postmistresses would be better inside talking rather than outside shouting at the other party. I am glad they took that advice, as did An Post management. I hope the ongoing talks will come to a successful conclusion quickly.