Minister tells unions An Post will not get State subsidies after 2009

State subsidies will not be made available to An Post to help it compete in the fully liberalised postal market after January 2009, Minister for Communications, Marine and Natural Resources Noel Dempsey warned yesterday.

"Maintaining the status quo and assuming that things can continue as they are, just because An Post has always been here is not an option," Mr Dempsey told the An Post group of unions' annual conference.

"Neither is the view that the postal service is a social service and consequently we should rely on State subsidies and protections from the inevitable changes in the marketplace.

"They may seem to be superficially attractive, but they are divorced from commercial reality."

In a fully liberalised, competitive marketplace, companies dependent on subsidies will not survive, he said.

The protection of Universal Service Obligation, which obliges An Post to deliver a five-day weekly service to every person in the country, in a liberalised market and ensuring that Irish citizens continue to receive a broad suite of postal services will remain an important policy goal for Ireland, the Minister said.

An Post's Universal Service Obligation was a competitive advantage for the company, he said. "No other company will be in a position to offer the same levels of service throughout the country as An Post," the Minister said.

Ireland's demographics and the 60:40 urban-rural divide, mean it is unlikely an end-to-end competitor to An Post will enter the market, said Mr Dempsey.

But he said the necessary measures must be in place to safeguard against big players coming in and "cherry picking" at the expense of the less commercially attractive parts of the country.

However, John Pedersen, assistant general secretary of Uni Postal, the international network of postal unions, warned that the Universal Service Obligation cannot exist in a liberalised market.

He said that the losers would be the Government and taxpayers as there was a risk that they would have to compensate for the new mechanism.

Other losers will be consumers who live in more remote areas as they may be forced to pay higher prices for the distance their post travels, he said.