An Post says cost reductions insufficient

The management of An Post has indicated that its current application for an increase in the price of a stamp may be the last one that the market could bear.

An Post chief executive, Mr Donal Curtin, told the Oireachtas Joint Committee on Communications, Marine and Natural Resources that the company's financial position "could not be rectified by cost reductions alone and that a further tariff increase would be required".

However, he said that at that point An Post would have reached the limit of the capacity for price increases and that any additional rises could lead to price resistance, fall in volumes and financial losses.

Mr Curtin did not comment on suggestions made by members of the committee that the current application made to industry regulator ComReg would see the price of a stamp increase to 57 cent. He said that the company needed a rise in fees from the Department of Social and Family Affairs for handling social welfare payments, which had not increased since 2002.

He also warned that the company was facing demands from the National Treasury Management Agency (NTMA) for cuts of around 34 per cent in fees for services provided by An Post in relation to the Post Office Savings Bank.

Committee chairman Mr Noel O'Flynn asked whether the Department of Social and Family Affairs and the NTMA had raised concerns about their relationship with the company "being characterised by poor communications and a reluctance to engage in meaningful negotiations on service improvement".

Mr Curtin said that he was unaware of such concerns and would be surprised at the comments. He told Labour Party Senator Ms Kathleen O'Meara that the company had a "significant" problem of staff being paid over-time for hours not worked.

He said that An Post was now in a break-even situation and was "close to a small profit". However, he said that the finances were quite sensitive.

He said that An Post had budgeted to pay increases under Sustaining Progress, but that this had to be in the context of an ongoing change of management programme.

Mr Curtin also said that 10 of 400 mainly rural post offices would be computerised on a pilot basis this year.