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01/18/2017 12:00:00 AM


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Ryan, Eamon

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Communications Regulation (Postal Services) (Amendment) Bill 2016

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Second Stage

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Communications Regulation (Postal Services) (Amendment) Bill 2016\Second Stage
Bills\Communications Regulation (Postal Services) (Amendment) Bill 2016\Second Stage

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Communications Regulation (Postal Services) (Amendment) Bill 2016

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Senator


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Deputy Eamon Ryan

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Eamon Ryan

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Snippet Contents:

An Post is a very highly-respected company in Ireland. The postmasters have been there for several hundred years and have gained real trust among people. Trust is a not an insignificant aspect of any business and it is vital in terms of dealing with people's money, social welfare payments and savings. An Post deals with over 1 million transactions every day and has the skills and competences to do that efficiently and quickly. However, this company is in real crisis. The scale of that crisis should not be underestimated by anyone in this House. Last year we discovered the figures showing the downturn in core business mail, which is two thirds of the company's business. Instead of the expected 3.5% decrease in volumes in a year, those figures showed that the reduction was almost double that, at 6.7%. That is why we are considering this Bill and why there is real concern for the future of the company and for its people working in urban and rural post offices and in every aspect of the network.
I have a real concern that the provision for increases in the cost of a basic stamp could precipitate that crisis into a really fast downturn. I know why it is being done and there are no easy options but consultancy reports suggest large mail volume users such as banks and telecommunications companies, who are among the last big users of this service, will flip very quickly and the company will not only lose the Irish Water charges mail. I understand the company has already lost one of the big banks - perhaps the Minister might confirm this. When the price rises go through then, perhaps within a matter of months, rather than yielding an increase in revenue to give the company the room to get into an alternative business model we may see a further precipitous fall in volumes and revenues and this will not create the conditions to allow for the restructuring of the company that everyone agrees has to take place. This is my primary concern with regard to this legislation.
Whether I am wrong or right, there is only perhaps one year for the company to completely reconfigure its business and to start developing other revenue streams to cope with the ongoing downturn in mail revenues, which is almost certain regardless of whether or not we increase the price as expected.
I will reflect on from where a couple of new businesses might come or the circumstances in which a new model of engagement might happen. The first, as many previous speakers have suggested, is in the area of financial transactions and banking, which the company is already developing. We have to be careful about that. I remember, from bitter experience, having to be part of the management of the closure of Fortis Bank, the previous incarnation of development banking activities. I asked the people involved what their core business was, where the revenue was and how profit was going to be made and a glint came into the eye of the executives - good people - as they suggested mortgages would be where they could make a handsome profit. It was part of the culture of the time and the world and his wife were thinking they would make money out of mortgages. That was a huge mistake. I do not think we will turn An Post into a mainstream big commercial or mortgage bank. I do not think it will have the expertise in that regard and while we might try to develop the expertise in other areas, I do not believe it will be in An Post. It should be possible for An Post, in conjunction with credit unions and other institutions, to develop the new-style banking system, which is developing around the world, which uses mobile apps to put everything online, such as cash and payment services as well as microlending services. This will serve smaller-scale domestic businesses and will provide very small SME lending without big risks and with different expertise. There is a need to do something significant in public banking for SME lending at levels around €30,000 or €50,000 and we will be publishing legislation in this regard. One has to lend to make a profit in banking but with large volumes, small margins and highly-automated low-cost payment systems, the post office network can move into that space.