Privatisation of Postal Services - A great little neoliberal country to do business in…

Mick Wallace Dail Diary for 12th June

Privatisation of Postal Services - A great little neoliberal country to do business in…

Yesterday afternoon in the Dáil, we discussed the Communications Regulation (Postal Service) (Amendment) Bill 2015 – a piece of legislation that represents the latest push by this Government to further its neoliberal agenda through the privatisation, or “outsourcing,” of public services in this country. Under this new legislation, our new national postcode system – Eircode – will be privatised and administered by Capita Ireland, which is part of the £7bn Capita multinational corporation, a global conglomerate with vast experience of snapping up lucrative state contracts around the world.
I asked the Minister why at least €27m of taxpayers’ money is being pumped into a postcode system that many in the delivery industry have described “lacking vision” and utterly useless, while at the same time, rural post offices are being closed down, further isolating the communities they serve. Rural Ireland, and in particular those most vulnerable, are being abandoned in favour of big business. Here’s my contribution in the Chamber. –

"A key legacy of this Government will be the privatisation - or, as it is more politely called, the external service delivery - of our public services. In the four years since the coalition took the reins, we have witnessed the outsourcing of countless essential health care services, said goodbye to the State’s share in our national airline and stood over the privatisation of Bord Gáis, to name but a few. Added to this, the indiscriminate cutting of essential services through austerity measures has left many people with no real option but to turn to the private sector. Irish properties are being sold by NAMA way below their value to vulture funds from the US which very often turn them over shortly afterwards for ridiculous profits, while 100,000 people wait for scant social housing. This legislation proposes to effectively privatise the national address system.

One matter on which we can commend the Government is its dedication to consistently upholding its neoliberal philosophy and programme. According to the Minister’s response to a parliamentary question I tabled last week, the company awarded the tender for the national address system, Capita Business Support Services Ireland, has been paid €12 million, excluding VAT, to date for the development and roll-out of Eircode. The Minister stated that the contract is expected to cost €16 million, excluding VAT, in total, plus €1.2 million a year for the remainder of the licence period, amounting to €27 million in total for implementation. These figures do not include the millions of euro spent on consultations on this issue since 2003. The Freight Transport Association of Ireland estimates €80 million to be a more realistic overall cost. Will the Minister confirm his figures for this?

The frenzied selling off of public goods has been touted by this Administration as a good in itself, a cost-cutting measure that will increase efficiency and improve standards of delivery.

SIPTU disagrees, but its warnings that outsourcing could actually result in higher costs on the Exchequer have fallen on deaf ears. Capita Ireland is part of a £7 billion multinational corporation, a company which over the past decade has made a sport out of collecting Government contracts in the UK. Capita has almost completely taken over local council service provision in the London borough of Barnet and in doing so will conveniently not have to put up with the same kind of scrutiny as democratic government. Training courses, which under the local authority would have been provided in-house for minimal cost, are now carried out by Capita at much higher prices. For example, a day’s training for one person on the taking of minutes now costs the taxpayer in the Barnet area £800.

Last week, Aditya Chakrabortty wrote, in an article in The Guardian addressing this issue:

"...an arm of Britain’s local government has in effect agreed to a friendly takeover by a £7bn multinational. Whoever Barnet residents vote for in local elections, they will always get Capita. Whenever they phone or email or visit, they will speak to a Capita employee. The FTSE giant will face no competition for the next decade; nor will it endure the same scrutiny as democratic government, as previously public information is veiled under “commercial sensitivity”.

I hope the Minister is a little concerned that the private sector would not always deliver quite as well for the citizen as the public sector. James Meek, in describing the situation in the UK, could have easily been referring to Ireland when he stated:

“The privatisation, disaggregation and foreign takeover of Britain’s universal networks since Thatcher has enabled the great lie of the post-Thatcher era, that tax has fallen, when in reality the tax burden has simply been shifted from progressive taxes on income, where the wealthy pay more, to the flat fees for private universal networks such as water, energy and transport, where the poorer pay more. The original principle of universal networks - that society as a whole would provide a service for everyone, through a levy proportionate to each citizen’s means - has been turned on its head.”

Perhaps the most unbelievable part of the Eircode venture is the fact that millions of euro of taxpayers’ money is being pumped into a system that will be inaccessible to many people. The randomised sequencing of the postcodes, which is not done in any other European country, means that to make sense of an Eircode, a user will have to pay to access a commercially licensed database. Like many services in the country, this is all fine if one can afford to pay. Big business is favoured while the SMEs lose out. Furthermore, as the service is not compulsory, many people will not bother using it. Several industry players have identified Eircode as having little, if any, added value. In fact, the Freight Transport Association of Ireland, which represents 200 freight businesses, has stated it will not use Eircode.

Luckily for the Government, it can justify its decisions by the fact that there was some manner of consultation process on Eircode, but how can a consultation process be in any way meaningful if the advice of the State-appointed national postcodes project board and private consultancies for a hierarchical postcode system is ignored? The 2010 report on postcodes by the Oireachtas joint committee called for a self-financing public code. Again, this was ignored. We have seen this in the case of the Climate Action and Low Carbon Development Bill, which is going through the House. God knows how it will turn out, but it is very hard for us to be optimistic.

An Post has named Eircode a "20th century solution to a 21st century problem". Surely this €27 million, or up to €80 million if the cost of consultants is included, could have been more effectively allocated. With 220 post offices having been closed down in Ireland since 2006, more support could be given to the rural communities which have been abandoned. What good is some random postcode to an elderly person who due to post office closures has to try to find a lift to pick up his or her pension?

In April, I addressed the issues of the post offices with the Minister. In his reply he stated that " he was conscious of the importance of a vibrant post office network." He also stated that "we must ensure that post office network services are commercially viable as well as socially significant". I do not do parish pump politics. I do not even have clinics, but people contact my office here from villages such as Tomhaggard, Pallas, Crossabeg, Ballymurn, Gusserane, Ballycarney, Ballyhoe, Castledockrell, Duncormick, Ballymitty and Rathnure. They want to know why, if the Minister believes what he said in his reply to me, he does not reopen their post offices. I am firmly of the belief that it would not cost a fortune to do so. I agree that doing so would probably not make money, but would it provide a very worthwhile service? It probably would, and it would mean a lot to these people. The Minister does not need me to tell him, even though he lives in Dublin, as I do most of the time, that rural communities are struggling to survive. The post office means a lot to them, particularly older people who have less access to computers and banking. As we know, the banks are far more geared towards and focused on turning profits than providing services. The day of the bank providing a service is long gone and the post office can fill this role well.

It may be said that not every community needs one and that one cannot be put everywhere because it is not economically sustainable, and that while they are good socially, if they are not economically sustainable it is not possible to keep them all open, but I would like the Government to look at what it would cost to do so. I know An Post has a mandate not to lose money, but the Government has a mandate to provide a service to the people. I would like the Government to look at the prospect of reopening the post offices it has closed and see what it would cost and if it could afford to do so, because we make choices and it is not that we do not have any money. I know money does not grow on trees, even if it is made from paper, although plastic is used a bit more now, but a post office network represents value for money in a social sense. The Government did not start this - Fianna Fáil did - and I would not blame the Government one bit for not taking lectures from Fianna Fáil on this, because it closed more post offices than the Government, but if the Government would examine this and ask whether it could afford to reopen the post offices, it would be brilliant."