Tony Killeen (Clare, Fianna Fail)

Gabhaim buíochas leis na Seanadóirí a labhair ar an rún tábhachtach seo. Is oth leis an Aire Ryan nach féidir leis bheith i láthair ach tá sé páirteach i gcruinniú na Comhairle Aireachta Thuaidh/Theas inniu.

The Government recognises the critical importance of having a nationwide, reliable, efficient and competitively priced postal service. It has set out in its programme the clear objectives of much improved next-day delivery rates and the maintenance of a strong, viable post office network which reaches into every community in Ireland and which properly remunerates all those involved in it. Senator Reilly asked about the postcode project. It is set out in the programme for Government and work is ongoing to quantify the full benefits and costs involved.

The economy and society at large also need a strong and vibrant postal service in light of the many internationally traded sectors operating in the country. There is also, however, a need for An Post to be competitive. In this regard, there is universal agreement that change is required if the postal services offered by An Post are to adapt to the modern business environment and to continue to offer a top class nationwide delivery service to the customer into the future.

Like all businesses, if An Post is to prosper and to grow, it must adapt to the demands of its customers and place delivery of quality services as its primary focus and objective. The Commission for Communications Regulation, ComReg, in its role as regulator of the postal sector, is responsible for the monitoring and measurement of levels of service to be achieved by An Post. It also is responsible for setting target levels and, in this regard, has set a quality of service target of 94% next day delivery for An Post.

We accept that An Post's quality of service has failed to meet the required standards. An Post management has accepted this reality and knows there is a long way to go before it achieves acceptable levels of service. However, its programme of action to improve its standards of service, conducted over the past two years, has begun to bear fruit. A 78% next-day delivery rate was recorded for the first six months of this year, up 5% over the same period last year. Levels are set to improve for 2007, with 80% target levels achievable by year end.

To maintain this rate of momentum, the company recently put in place a special initiative that is set to achieve ComReg's target of 94% incrementally over the next three years. There is no doubt this is a significant challenge for An Post but, if the company is to prosper, it will need to meet and be seen to meet the required service standards. Furthermore, to incentivise An Post to reach this standard, ComReg has said that no future price increases will be granted until such time as An Post reaches a satisfactory level of service.

The timeframe for meeting these standards will coincide with the period leading up to 1 January 2011, the date now set for full market opening of the postal sector in Ireland. It is therefore of the utmost importance that An Post improves its levels of service to place itself in a prime position to compete successfully with existing operators and new entrants into the market and to remain the operator of choice.

The protection of the universal service will remain important in the context of a fully liberalised market. As enshrined in EU and Irish law, An Post is currently designated as the universal service provider with a remit to deliver mail no less than five times per week to every address in Ireland at a standard tariff. The draft directive proposes that there is no change in the existing levels of universal service, a position the Government supports. A key objective of Government will be to safeguard the universal service in a liberalised market, to ensure that Irish citizens continue to receive a broad suite of postal services at competitive prices.

Another important issue that may arise is the cost of meeting the universal service obligation. The draft directive sets out a number of options for meeting this cost from which member states may choose. A number of international studies, however, suggest that there may not be a net cost associated with the USO. In addition, a number of countries, including Sweden and Britain, have already fully liberalised their postal markets and none has provided for a specific compensation mechanism for funding the USO. The Department of Communications, Energy and Natural Resources intends to conduct a public consultation when the directive has been ratified and this is one of the issues that will be explored in more detail. This will likely take place early next year.

Another Government objective is the continued viability of An Post in the face of open competition. In this regard, the Government is firmly of the belief that there will continue to be a key national role for An Post, both in the delivery of mails and as a quality service provider of Government and financial services through its nationwide network of post office outlets.

An Post, however, like all national postal operators, must change very rapidly to stay competitive and commercial in the European postal market. The increased level of competition that liberalisation will inevitably present is not the only challenge facing An Post. New technologies, that have developed outside the postal sector, such as electronic fund transfer and electronic communications, are currently posing a competitive threat to An Post's business. There is widespread agreement that change is required if the postal services of An Post are to adapt to the modern business environment and the likely increase in competition in order that it can continue to offer a top class nationwide delivery service to the customer into the future. It is worth noting, however, that new technologies have provided new opportunities such as a growth in the parcels market and e-fulfilment.

Senator Hannigan mentioned ebay. An Post has concluded a deal with ebay on an e-parcel card, which allow An Post to benefit from the Internet economy. The idea of e-fulfilment involves the delivery and completion of service for items ordered on the Internet.

It was with this in mind that the board and management of An Post prepared a recovery plan, incorporating details of new collection and delivery arrangements which are now in the process of being implemented. Work practice changes will increase operational flexibility within the company and assist in managing the company's cost base. Such changes will enable the company to provide a cost effective mails service and quality of service standards which meet customer expectations.

With regard to the post office network, this Government and the board of An Post are fully committed to the objective of securing a viable and sustainable nationwide post office network through a strategy of maximising the volume of both public and private sector business handled by the network. This objective is clearly set out in the programme for Government and has been central to policies for the postal sector.

The An Post network has many competitive advantages and comprises the single largest number of retail outlets in the country. In total it comprises 1,312 post offices and 170 postal agencies. In addition, An Post has also established almost 3,000 Post Point outlets in retail premises throughout the country, of which nearly 550 can be used for bill payment. Of the 1,312 post offices, 328 are not automated and the remainder are.

In the European context, Ireland still has one of the highest number of post offices per head of population, with approximately 4.2 outlets per 10,000 inhabitants, compared with a European Union average of 2.7. While some network restructuring has been necessary in recent years leading to the closure of some smaller post offices, it is worth noting that this activity is in line with similar trends across Europe.

The Government will support the network in any way it can and the Minister has made it clear to the board and management of An Post that he will be supportive of them in their efforts to ensure the post office network continues to develop and thrive. The development and continued viability of An Post and its network is, in the first instance, a matter for the board and management of the company. Consequently, the way forward is for An Post to enhance existing services and, building on existing strengths, to develop new product offerings and diversify its and postmasters' income streams.

To be clear, the post office network has a number of significant advantages of which Members are well aware, such as its nationwide reach, its high customer footfall, its strong brand visibility and a solid relationship between postmasters and their customers. The automation of most of the network has been a key factor in An Post securing business growth in its contractual arrangements with AIB, Western Union, Gift Vouchers and Billpay.

Also essential to the continued viability of the network are the Government contracts in place, which include the Department of Social and Family Affairs contract to pay social welfare payments through the post office network, Garda fines, TV licences and NTMA savings products. These contracts account for approximately 65% of the post office network's current revenue.

Automation and technology 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 new customers into the post office to maintain as large a network as is viable.

One such strategy was the Government-approved joint venture between An Post and the Belgian bank, Fortis. Postbank is a retail banking business that was launched in May of this year. It entails 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. This new venture will result in real investment in the post office network in both rural and urban areas at a time when many of the private sector financial institutions are withdrawing their facilities from rural locations.

In addition, the venture should place An Post on a platform to continue to win more business and to be able to compete with other financial services institutions. Postbank, when it is fully operational, will allow people who would not traditionally have been bank customers to avail of a full suite of financial services and products designed to be clear and simple to use at the local post office.

Furthermore, the venture will enable the company to deliver the quality customer services that are now demanded by the public and that also means social welfare recipients will have more options for their preferred method of payment.

We in Government want a strong and vibrant An Post delivering the highest quality postal and counter services to the Irish public on a financially sound basis. The Government also believes that Irish consumers deserve a quality of service comparable to that received by consumers anywhere else in Europe.

A quality postal service is important in the context of a modern competitive economy such as Ireland's.

The way forward for our postal services is to ensure we have adequate competition without diminution of the universal service. The development of further competition, allied with a modernised and customer-focused An Post, will provide the basis for further development of the postal sector here.