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Communications Regulation (Postal Services) (Amendment) Bill 2016: Second Stage (Continued)

Wednesday, 18 January 2017

Dáil Éireann Debate
Vol. 935 No. 1

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(Speaker Continuing)

[Deputy Timmy Dooley: Information on Timmy Dooley Zoom on Timmy Dooley] The news from the reports and various interest groups that we have spoken to is clear. There are solid options for the post office network to diversify its business model and to move to a more sustainable footing. Our post offices are ready to make the changes necessary to ensure their survival. Communities around the country are depending on us to make sure that it is allowed to do so and is supported in doing so, yet the Government is still dragging its heels and making it ever more difficult to take the type of action we need to save the post office network. It is nothing short of abhorrent.

To sum it up, while I heartily welcome this first sign of progress on the issue, I ask all Members of the House to avoid complacency. Further action is needed to preserve our post office network and ensure its survival, particularly in rural communities. Fianna Fáil will not stand by as one of the few remaining community centres in many areas is placed under unbearable financial stress. We will not ignore the concerns of postmasters and rural residents who feel completely abandoned by the policies and actions of the Government. Instead, we will be consistently searching for new and more comprehensive solutions to the issue of financial losses and we will co-operate with all interest groups to help post offices put these solutions into effect. I hope that we will be joined in addressing this issue by all who sit in the Chamber today.

The Minister will be aware that yesterday evening the Joint Oireachtas Committee on Communications, Climate Action and Environment had what I can only describe as a very open and frank discussion with all the stakeholders. I was impressed by the presentation of the chief executive of An Post, Mr. David McRedmond. He has a clear vision on how to turn around An Post as a company. That he has undertaken a period of consultation and the preparation of a report with the assistance of McKinsey and Company is a welcome development. That he has set a timeframe for the publication of the report by the end of the second quarter of this year is also welcome. He is putting in place the kind of timelines that, unfortunately, the Government has not put in place in respect of the issue. He indicated to the committee that the output from the exercise will be a series of decisions that will have to be taken by the board of the company. If anything emanates from it that requires policy change or legislation, that responsibility will lie with the Government. It is clear that he has a focused approached and that we are now on a path towards a series of decisions that need to be taken to put An Post on a firm financial footing.

Given McKinsey and Company's experience of working with other postal companies around the world, I hope that there will be a recognition of the opportunities as well as the constraints in the market. There is an awful lot of talk about the diminishing and dwindling postal service because of the way in which we now communicate, which is by electronic means. However, with the advent of electronic communication and the way in which retail activity has changed, an awful lot more of our citizens are purchasing goods, in particular, and services over the Internet. This has created an increased demand on the parcel side of the postal business. Unfortunately, An Post has been tardy in recognising the potential benefit and some of the commercial operators have stolen a march on it. My impression from Mr. McRedmond is that An Post sees the opportunity. Given its strong presence and significant infrastructure and architecture throughout the country, I would hope that it would be in a strong position to grab hold of that business and to make it a meaningful input into the viability and preservation of the company and ensuring the future viability of the post office network.

I have very real concerns but, given the financial position presented by the Minister, we feel we have no choice but to support the price increase to ensure the financial viability of the company in the period before the McKinsey report and the decisions that will flow from it to put the company on a firm footing can be put in place. It is to some extent with a heavy heart that we support a price recognition. We recognise that there is an impact on small to medium-sized enterprises when the price of the stamp is increased. It will be just a matter of switching to electronic communication for larger companies that have great enough volumes and they will probably save money in the long run. However, this will place a burden on those small to medium-sized companies that are caught in the middle. They do not have the capital to invest in electronic communication means and will have to pay the additional postal charges. This will place a burden on them and it more difficult for them to survive.

In taking this action and supporting the legislation, we recognise the positive impact it can have on An Post, the post office network and those who are employed in the provision of the service, but by no means is it a recognition that this is the way forward or the solution to An Post's problems. We need to see a reorientation and reconfiguration of the business that is based around the vision for the future and how the company will position itself having recognised the trends. It cannot be a head in the sand approach. It cannot be just a case of saying this is the solution, away we go and more of the same. We cannot do that because it would not be sustainable in the long term. That is our position. We support the removal of the cap and are happy to do so in light of the circumstances but recognise that the ultimate solution needs to flow from the McKinsey report, the efforts of Mr. McRedmond and his management team and the board of An Post. I would hazard a guess that the Fianna Fáil Party will not be found wanting in supporting the kind of change that is necessary to put the company on a viable footing. It is then over to the Government to drive that change when the report is published.

Deputy Brian Stanley: Information on Brian Stanley Zoom on Brian Stanley The post office and postal services are highly valued by the public and people trust the service. The universal service obligation, which delivers 94% of all domestic mail the next day, is unrivalled in Europe. It is a fantastic service. However, the fall in business in the postal services and in post offices generally has put the future of this service at great risk. To maintain the service, we must work to ensure that people have good reason to use the postal services, visit post offices and do business there. The problem with the Bill is not just the price increase. Sinn Féin sees that action has to be taken, but the defects in An Post were highlighted as far back as 2002 and 2003. That point was reinforced in our discussions at the committee yesterday. However, there is no point in going backwards. We know that action should have been taken through the noughties, but it was not, so we must take it now.

There is a problem with just repealing section 30 of the 2011 Act and removing the cap ComReg can currently impose. ComReg can set a range and I understand the current range is 60 cent to 75 cent. Removing this power is a negative move. We believe that there should be freedom to increase charges but ComReg needs to play a role. The Bill removes ComReg's role, which is counterproductive and will push more customers away. This is particularly the case given the price increase that has been mentioned. The Bill does not simply raise the price cap but gets rid of it completely. We need to be careful because it removes the checks and balances currently in place in this important public service.

Significantly increasing the price of postage before the development of an enhanced An Post service will jeopardise the viability of the company further. By lifting the cap on postal pricing, we are told that it is expected that the increase in the cost will be in the range of 12% to 38%. It is a certainty that an increase at the higher end of the scale will dissuade people from using the postal service. The Bill may temporarily help to tackle the financial challenges faced by An Post but people will vote with their feet in the medium to longer term. The General Secretary of the Irish Postmasters' Union has expressed concerns that the price increase will reduce the volume of business and threaten the postal service. Age Action, whose representatives also attended yesterday's committee meeting, also raised serious concerns about the intention to repeal the price cap and remove the ability of the Commission for Communications Regulation, ComReg, to impose a price cap, citing the effects of previous price increases. The organisation argues that the increase will affect older people disproportionately as they are more likely to use postal services. It noted that only 3% of those aged over 75 years used electronic mail. The repeal of the pricing cap also represents a weakening of the power of the regulator. ComReg's role will become one of a spectator or commentator at best.

The postal service industry in Ireland had a turnover in 2015 of approximately €540 million. An Post's losses in the same year amounted to €25 million, the bulk of which, as we learned yesterday, can be attributed to international mail delivery and the registered mail service. An Post receives only 44 cents per standard letter item for international mail. Domestically, however, postal services are almost breaking even.

The consulting group, McKinsey, has been hired to conduct a strategic review and advise An Post on the future of the business. It is surely premature, therefore, to implement price hikes. While Sinn Féin accepts it is necessary to take action, it is wrong to remove the role of the regulator and its ability to impose a cap on prices before the McKinsey report has been published. I understand the report is due in April or early May.

Although An Post and the broader postal service network in Ireland are separate entities, they cannot be viewed in isolation from one another. The post office network must be considered in any examination of postal services. The financial health of the postal network and the well-being of the corporate structure of An Post are related. Sinn Féin supports the expansion of the services provided by the post office network. Giving post offices the ability to sell insurance, process motor tax, offer single payment accounts, provide banking services and process the payment of bills to local authorities are positive moves which Sinn Féin supports. We support most of the recommendations of the Kerr report and want them to be implemented speedily. As I stated, these issues have been discussed for years. The initial Kerr report was produced 12 months ago and a supplementary report has been produced in the meantime. It is time to act on them.

It is crucial that the Government does not encourage business away from post offices by directing people to have welfare payments paid directly into bank accounts. There is broad agreement among An Post and other stakeholders on the key recommendations of the Kerr report. The success of the recent pilot scheme between post offices and credit unions demonstrates the scope for bringing additional financial services to the post office network. There is no reason for not rolling out this scheme across the entire network of 1,130 post offices.

The local post office is an essential component of the cluster of businesses needed in any small town or village. The post office network must be protected and the services provided must be enhanced. The removal of the local post office has detrimental knock-on effects on other small business in a small town or village. The Government must take action in this regard and ensure the position of the local post office is cemented before resorting to permitting price hikes.

Sinn Féin is committed to creating a vibrant post office network across the country. We want to protect the universal service obligation, ensure adequate funding for it and avoid potential threats to pay and conditions of staff who recently received a 2% increase. We want to ensure competition in the postal sector does not reduce quality of or access to service, retain An Post in public ownership and protect rural communities from further decline. While a price increase may be necessary, pushing through this Bill prior to the McKinsey report being completed and the Kerr report recommendations implemented is ill-considered and puts the cart before the horse.

The purpose of the Bill is not to permit price increases but to sideline the Commission for Communications Regulation. We complain a great deal about the inactivity of regulators. This legislation sidelines and removes a regulator from the pitch, which will result in ComReg becoming a spectator or, at best, a commentator. This is the wrong approach and Sinn Féin will seek to amend the Bill.

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