Hildegarde Naughton (Fine Gael) | Oireachtas source

I welcome the Minister to the House. There are many commendable aspects to this legislation. The first, section 3, deals with payment service providers and changes the legislation to allow the Department to enhance the services it provides and their proper supervision. Contrary to some commentary on the Bill, the Government has no intention of denuding the post office network. This morning I received correspondence from the Irish Postmasters' Union, IPU, in which it states that it understands that An Post cannot be named in the Bill in the context that has been sought. The company is, however, specified in the related regulations.
The Government wishes to reinvent and modernise the post office network. No announcement has been made and no legislation introduced to allow for the closure of post offices in the near future. The Government is committed to protecting the existing network in so far as possible. It made this clear as recently as 25 February when it announced a whole-of-government review of the nature and number of services that can be undertaken by post offices as a "front office" for the State. The intention is to have post offices do more rather than less. The Cabinet sub-committee on social policy is considering these issues on which it hopes to report in September.
The Fine Gael Party fully understands the concerns expressed by the Irish Postmasters' Union. Representatives of the party recently met representatives of the union to discuss these concerns and consider how best to ensure the future of our post office network. As to the charge made by the Opposition that the Government is intent on dismantling the network, it should be noted that in 2010, the final full year in office of the previous Government, 72 post offices were closed, while only 17 have closed in the period since. Ireland has one of the most extensive post office networks per head of population in the European Union. The Government is fully cognisant that two thirds of post offices are located in rural areas where they provide a much needed and welcome service.
An Post recently won a competitive tender process run by the Department of Social Protection for the provision of over-the-counter cash services for social welfare customers. This contract is worth more than €50 million annually to An Post and its initial two years' duration can be extended to six years. Every party and Senator knows or should know that post offices are considered to be a network of commercial businesses under EU competition law. No Government, irrespective of its composition, can guarantee that An Post will forever win such tenders. An Post is a commercial State body and the rules in place apply to it as they do to all other companies. An Post is free to bid for any business of a public or private nature in a competitive market.
To dispel any doubt on the matter, I propose to discuss in some detail the EU legal position on An Post's position vis-à-visdepartmental tendering. Following the Government decision in 1999 to extend the An Post contract for the delivery of social welfare payments for a further three years, a complaint was lodged with the European Commission under the procurement services directive. On 20 December 2002, the Commission issued a reasoned opinion against Ireland in which it recognised that the only obligations imposed in relation to the services were the prohibition of discriminatory technical specifications and that the result of the award process must be sent to the EU Official Publications Office. This had been the argument put forward by Ireland. However, the Commission also stated that, in addition to these obligations, an awarding authority should respect the EU principles of non-discrimination, equal treatment and transparency. These additional conditions compelled the Minister to advertise the payment delivery service on a Europe-wide basis and uphold the principles of non-discrimination, equal treatment and transparency in the award of any contract.
The Department, in consultation with the Office of the Attorney General, rejected the reasoned opinion on 19 February 2003. The case was referred to the European Court of Justice on 1 December 2003 and a hearing took place in Luxembourg on 4 April 2006. The Advocate General to the court gave an opinion on the case on 14 September 2006 which upheld the European Commission claim that Ireland breached competition rules by not publicly advertising the An Post contract. The opinion concluded that the court "should declare that, in deciding to entrust the provision of services to An Post without a prior notice, although there were no circumstances which would have allowed no advertising at all, Ireland has failed to comply with its obligations under the [EU] Treaty". In addition, the Commission retained the right to take further action against Ireland under Article 228 of the treaty if it believed there had been a delay in implementing the judgment of the court.
The court issued its judgment on 13 November 2007 in which it ruled that Ireland did not breach EU rules. It stated that "in entrusting the provision of social benefit payment services to An Post without undertaking any prior advertising, Ireland has not failed to fulfil its obligations under Articles 43 EC and 49 EC and the general principles of Community law in connection with a contract for the supply of such services." However, this case was won on a technicality. In its judgment, the court stated that the Commission had failed to provide sufficient proof that the welfare contract was of "interest" to companies located in different member states. It also found that the Commission had failed to prove that any interested parties would have been unable to express their interest in the contract because they did not have access to relevant information. The ruling maintained that "a mere statement by it [the Commission] that a complaint was made to it in relation to the contract in question is not sufficient to establish that the contract was of certain cross-border interest and that there was therefore a failure to fulfil obligations." The court concluded that the Commission had failed to provide sufficient proof that the contract in question was of sufficient interest to firms across the Community. This was, however, a failure of proofs as opposed to the legal argument presented by the Commission and endorsed by the Advocate General. The Commission's action was dismissed.
While Ireland's victory in the case was technical, the court stipulated that if a contract is of sufficient interest to firms in the Community, it must be subject to a degree of advertising to alert the EU market and allow firms to be given an opportunity to express an interest in obtaining the contract. Clearly, therefore, the State is not in a position to do anything other than advertise and tender for payment contracts from the Department of Social Protection. Such contracts have been tendered and advertised since the relevant judgment was issued. Contrary to what some Opposition Members appear to believe, no Government is in a position to snap its fingers and magic contracts into the hands of An Post ad infinitum.
The post office has completed a programme of complete computerisation and should be in a good position to provide front office services for the State following the current review. It is also uniquely equipped to do so for the financial services sector generally. As with every other company in the State which wishes to maintain a presence, however, An Post must seek new business. While the Government and Fine Gael Party will provide every legal incentive and support to An Post in doing this, they cannot do everything. An Post needs to innovate and provide new services in response to demand.
The second aspect of the Bill I wish to highlight is a scheme of PRSI refunds relating to employers' PRSI paid in respect of certain seafaring employees that has been in operation since 1997.

This intervention is intended to give Irish operators the same advantage, in so far as possible, as their competitors who use low-cost labour. The clarification in section 6 to bring matters in line with EU state aid rules is appropriate and necessary.

I welcome the provision in section 7 whereby an employer qualifying for a refund of PRSI while owing a debt to the Minister due to non-payment of statutory redundancy will have that refund offset against the debt owed. Section 8 offers a welcome tightening of the regulations in respect of the qualifying adult of a claimant who is not resident in the State or in prison. This is a welcome and common sense provision. This restriction, as the Minister has noted, will not prevent ongoing claimants receiving such allowance or assistance as they are entitled to as long as they remain in the State or are not in prison. Section 11 provides for a warranted tightening of the habitual residence condition. The Bill also enables the youth guarantee scheme by providing for very limited age discrimination on the basis that it is discrimination aimed towards a legitimate goal, namely, the provision of employment schemes for young people.

I commend the Minister on bringing forward legislation that is a further addition to the quality work she has done in the Department of Social protection in the past three years.