Bernard Durkan (Kildare North, Fine Gael)
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Question 657: To ask the Minister for Communications, Marine and Natural Resources the progress which has taken place in relation to the future development of An Post and the postal services with particular reference for the need to provide a cost effective and efficient service coupled with the equally important need to expand the scale of service and upgrade the maximum number of post offices; and if he will make a statement on the matter. [2203/06]

Noel Dempsey (Meath, Fianna Fail)
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The future development of An Post and its postal services is, in the first instance, a matter for the board and management of An Post.

I believe that there will continue to be a key national role for An Post, both in delivery of mails and as a quality service provider of Government and financial services through its nationwide network of post office outlets but the market for traditional postal and post office services is changing globally and meeting customer needs has become more important than ever. With globalisation, liberalisation and developments in technology that are changing the way people communicate, all national postal operators, including An Post, have to change very rapidly to stay competitive and commercial in the European postal market.

In order to remain competitive, An Post needs to make the best possible use of its long established and trusted brand name and deploy its resources in a manner which continues to serve existing customers' needs and attracts additional customers for a range of new services.

There is also agreement that change is required if the postal services of 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. With this in mind, the board and management of An Post prepared a recovery plan, incorporating details of proposed new collection and delivery arrangements, which I believe is vital to the re-establishment of the company on a more secure financial footing.

Following extensive negotiations between An Post management and An Post trades unions, the parties accepted Labour Court recommendations on proposed new collection and delivery arrangements.

This welcome development will now pave the way for full implementation of the change programme that is so essential to placing the company on a firm financial footing and securing its future in an increasingly competitive and technologically changing market.

With regard to the future of the post office network, this Government and the board of An Post are committed to the objective of securing a viable and sustainable nationwide post office network as set out in the programme for government. Notwithstanding the commercial remit of An Post, there is clear Government recognition of the social benefits of maintaining the nationwide post office network. Accordingly, An Post development strategies for the network continue to take full account of these social benefits.

As a commercial company, the challenge ahead for An Post is to develop a strategy that satisfies the needs of existing customers, while attracting new customers into the post office. An Post has already had some success in winning new business and continues to benefit from a considerable amount of Government business, especially in the areas of social welfare payments and savings products.

The An Post network comprises the single largest number of retail outlets in the country. In the European context, Ireland still has the highest number of post offices per head of population. In recent years some network restructuring has been undertaken. This activity is in line with similar trends across Europe. In addition to the post office network, An Post has also established 2,864 Postpoint outlets in retail premises of which 600 can be used for bill payment.

It is the Government's objective to maintain the largest, economically sustainable post office network possible. The challenge for all stakeholders in An Post is to generate sufficient profitable business to maintain the network at its current size. While the Government will support the network in any way it can and has demonstrated its commitment in a tangible fashion, with a €12.7 million capital injection in 2003, the way forward is for An Post to enhance existing services and, building on existing strengths, to develop new product offerings.

The network has a high footfall and to capitalise on these advantages it is essential that existing and new services are developed to meet customer requirements. The network also has the capacity and potential to deliver more private business especially in financial services and opportunities are actively being pursued by An Post in this area. Indeed, on foot of substantial investment in computerisation, a significant amount of extra business has already been obtained for the network in terms of banking and utility business. Currently 95% of An Post's business is conducted through automated offices.

I have also asked the company to ensure that any strategy for the development of the company should ensure the long term viability of the post office network and in this light, An Post is currently working on a new financial services initiative which could see the development and expansion of the range of financial services that it can deliver through its network of post offices. If the initiative proves to be successful, it could lead to a significant increase in post office business and contribute to the viability of the network.