Banks should subsidise post offices

Business & Finance: Banks should subsidise post offices O’Rourke
From THE IRISH TIMES, April 5th, 2001

By DENIS STAUNTON Commercial banks should pay millions of pounds each year to
subsidise rural post offices, according to the Minister for Public
Enterprise. The subsidies should take the form of annual cash
payments over and above any transaction charges the banks agree to
pay the post offices for taking over some bill-paying services. In Luxembourg yesterday, Ms O’Rourke said that, although the major
banks had signalled their intention to close many rural branches,
they owed a debt of honour to the communities that had supported
them over the years. ‘In the vein of social-economic integration, the banks should seek
to give subvention to the upkeep of post offices where they are
pulling out, far above the payment of transaction fees,’ Ms O’Rourke
said. Adding that the big banks had reported profits exceeding (pounds) 1
billion (E 1.27 billion) last year, Ms O’Rourke said they stood to
benefit handsomely from a cut in the corporation tax rate from 36
per cent to 12.5 per cent. The lower tax rate could contribute
(pounds) 200 million a year to each bank’s profits. Ms O’Rourke declined to say how much the banks should contribute but
officials suggest the annual post office subsidy could amount to
(pounds) 10 million a year. In a deal to be announced next week, the
banks are likely to agree to pay the post offices transaction fees
for services such as bill-paying. Ms O’Rourke this week announced
the establishment of an inter-Departmental group of experts to look
at ways of stemming An Post’s losses. A report on An Post has
predicted that the postal service will soon be bankrupt unless the
State changes the way it is funded. The report by Mr Phil Flynn, an industrial relations consultant,
suggested An Post would need a subsidy of (pounds) 83.2 million by
2005 to keep its entire post office network open. The Minister said she would present her proposal to the
inter-Departmental group but insisted she was not attempting to
coerce the banks into action. ‘I am not putting pressure on the
banks. I am putting forward my opinion. I think it’s feasible and
possible,’ she said. Ms O’Rourke was in Luxembourg for a meeting of EU ministers to
discuss the deregulation of Europe’s telecommunications industry.
She said that, although the Government had hoped to award 3G mobile
phone licences by next month, the announcement could be delayed by
discussions with the telecoms regulator over how high the licence
fee should be. The EU Telecommunications Commissioner, Mr Erkki Liikanen, said
yesterday that many new telecoms companies had no incentive to
pursue access to phone lines connecting individual homes and
offices. These local connections, also known as the local loop, are
generally owned by former national monopolies and Mr Liikanen said
the liberalisation process should be speeded up.
Copyright 2001 Irish Times.
Source: World Reporter (Trade Mark) – FT McCarthy.THE IRISH TIMES, 05th April 2001