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community banking

'Brexit-like impact on rural Ireland': Independent TD rules out supporting the Budget over post office closures

The Clare TD said the government has reneged on their promises to roll out a community banking system.

LAST UPDATE | Aug 31st 2018, 1:15 PM

INDEPENDENT TD MICHAEL Harty has said he is unlikely to support the government’s Budget this year due to the actions it is taking to close rural post offices. 

Harty, who agreed to support the government from opposition, said he was instrumental in ensuring that a commitment to roll out more services in post offices, including advancing a new model of community banking, be included in the programme for government

However, he said the government has reneged on these promises, with Finance Minister Paschal Donohoe stating last month that there is no compelling case for the State to establish a local banking system. 

Speaking to, the Clare TD said his support for the government has been wavering in recent months.  

“Over the past while my support for government has been dwindling,” he said, adding that he sat on the committee tasked with coming up with a plan for reforming the health service – which produced the Sláintecare report. 

However he said there has been “no political will” to implement the Slaintecare report and the government’s response has not been adequate. 

Similar to Sláintecare, Harty said there is also a lack of political will towards implementing a community banking system, despite the programme for government committing to advancing such a model. 

‘Community banking system critical to saving postal network’

A community banking system “would challenge the pillar banks. It would have been a critical factor in maintaining the postal network,” added Harty, stating: 

I can’t support what is happening at the moment.

When asked specifically about his support for October’s Budget, he said: 

If this is the process it is going to be in relation to post offices, I won’t be supporting government.

Harty said the expansion of services such as ensuring social welfare payments are paid through post offices, as well as rolling out motor tax services, and using the post office as a “hub” between state services and the public would make a difference to the viability of the postal network. 

However, he said it is the expansion of financial services that would save the skin of rural post offices – as it has done in places like New Zealand. 

In fact, the report on establishing a sustainable postal network, carried out by businessman Bobby Kerr, states just that. 

The report said it is “essential that An Post develops an increased capability in financial services as the main banks are withdrawing from rural Ireland”.

Conflict of interest 

Harty said the government is aware of this, but claims there is a conflict of interest due to the State being a major shareholder in three major Irish banks – AIB, Bank of Ireland and Permanent TSB. 

He argues the government does not want a competitor to enter the market if it challenges the business of the main pillar banks.

Photo: Eamonn Farrell/ Eamonn Farrell Eamonn Farrell

“In my view, there is no political will to competition to the pillar banks. A community banking system would challenge that,” he said, adding that such a new model could roll out loans to local small and medium businesses, with lower loan rates. 

There is room for a competitor, it would be great,” he said, adding that it would help drive down rates, which are high in Ireland compared to some other EU countries. 

Harty said the government are driving the message that no one will have to travel more than 15 kilometres to a post office; however he argues that this isn’t the issue. 

Financial institutions leaving rural Ireland 

“The post office is the last financial institution in these villages. The pillar banks have all left; once financial institutions leave, that is the end of the commercial viability of those villages,” he said, stating that where this has already happened, the villages are left as “shells of their former selves”, with shops and businesses disappearing, followed by population decreases. 

“The community essentially unravels,” he said. 

The Clare TD said the government are dedicating a lot of time to prevent the impacts of Brexit from causing damage, but said closing the post offices in rural Ireland is like encouraging an “internal Brexit”.

“The issue for rural communities is they are facing extinction. I would equate it to an internal Brexit – the effects of closing post offices in small villages will be far greater, there will be a detrimental effect similar to what a hard Brexit would have nationally,” he said. 

Last year, Harty predicted that some 500 post offices could go, which he said is not far off the 390 proposed closures. 

This week’s announced closures come as some 159 post offices take up a remuneration package.

“The remaining 230 post offices will now come under pressure to leave in the not to distant future,” said Harty.

A statement from a spokesperson for the Department of Communications said: 

There is a rapid expansion of banking services happening in our post offices.

US, Canadian and Australian dollars and Sterling cash and currency cards are now available in local post offices without having to order it in advance. Post offices will soon have credit card services and will be able to provide loans to small businesses, and personal loans along with their An Post Smart current account, added the statement.

The government is financially supporting the ‘Digital Assist’ service so that people can be assisted in using online services at their local post office.

A commitment has been given by An Post today that the remaining 960 post offices in the network will benefit from enhanced services and products, new opening hours and an investment package aimed at improving services for customers.

Retiring workers thanked for their service

The Irish Postmasters Union (IPU) today “thanked and wished well postmasters and postmistresses across the country who have voluntarily opted to close their post offices”.

The closures are part of a €50 million investment plan that was agreed by the IPU Executive and An Post last April and supported by 80% of IPU members in a ballot.

IPU General Secretary Ned O’Hara said: “It is with regret that any post office is closing.

“However, the IPU would like to thank all postmasters and postmistresses who have opted for the exit package for their service as colleagues and as community people over many years. The union understands and respects their decision.

“For many years the IPU has highlighted the serious challenges faced by the post office network and we backed a reform and development plan last May. This plan aims to secure as strong a future as possible and we believe it is the best way forward”, he said.

With reporting by Órla Ryan

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