PBFI Proposal on the Future of Post Offices and An Post:
Issued by the Public Banking Forum of Ireland 28/8/2017
Some 500 to 700 Post Offices are in immediate danger of closure and An Post’s future is precarious. However, there is light at the end of the tunnel if Government, An Post & the Postmasters are willing to embrace it.
The launch of An Post’s NEW Smart Current Account is a significant development and could be the important first step in securing the future of the Post Offices & An Post.
Yes, An Post is now offering their own Current Accounts. This development has the potential for so much more if progressed along the lines of the Kiwi (Post) Bank in New Zealand. Established in 2002 Kiwi (Post) Bank now has over 12% of the overall banking market on the island of 4 million people, a model which could be replicated in the Republic of Ireland.
This concept has already been presented to the Dáil and was passed. The motion, outlined hereunder, was placed on behalf of the Rural Independent Group by Mattie McGrath TD & Michael Healy-Rae TD. The Rural Independent Group also includes Michael Collins TD, Noel Grealish TD, Michael Harty TD, Danny Healy-Rae TD & Michael Lowry TD.
Post Office Network: Motion [Private Members] Wednesday, 16 November 2016
— implement a new community banking service operated by An Post to be made available in all post offices throughout the country – this post community bank should be based on either the New Zealand Kiwibank model or the German Sparkassen model, both of which have been found to be valid models;
Ellen Brown, President, Founder and Senior Advisor of the U.S. Public Banking Institute had the following to say in her article
‘The Kiwibank Model: Postal Banks to Serve Local Communities’ –
“… Postal banks are now thriving in New Zealand, not as a historical artifact but as a popular new innovation. When they were instituted in 2002, it was not to save the Post Office but to save New Zealand families and small businesses from big-bank predators. By 2001, Australian mega-banks controlled some 80% of New Zealand’s retail banking. Profits went abroad and were maximized by closing less profitable branches, especially in rural areas. The result was to place hardships on many New Zealand families and small businesses.
Suddenly, New Zealanders had a choice in banking. In an early “move your money” campaign, they voted with their feet. In an island nation of only 4 million people, in its first five years Kiwibank attracted 500,000 customers away from the big banks. It consistently earns the nation’s highest customer satisfaction ratings, forcing the Australia-owned banks to improve their service in order to compete.”
The Kiwi (Post) Bank option is possibly the last chance to save Ireland’s Post Offices & An Post. Rising stamp/postal cost prices are not sufficient to save them; the problem is much bigger.
We must consider that in Ireland the Commercial Banks have over 95% of the market, whereas in Germany the Commercial Banks including Deutsche Bank & Commerzbank AG have only 12% of the market. 70% of German Banking is provided by Community Banks, lending locally to the productive economy, without engaging in speculation or securitisation. Community Banks in Germany have a 200 year history; they have built & continue to fund the 4th biggest economy in the world and have never needed any taxpayer’s money.
There is no reason why An Post & the Post Office network could not take its rightful share of the banking market in Ireland and secure their future. Your local Post Office could become your local community bank and part of the proposed comprehensive publicly owned banking network which would include SME focused Community Banks and also the Credit Unions, together providing an alternative and competition to the current commercial banking monopoly.
Please lobby your local political representative to support, promote and implement this initiative before it is too late.
The PBFI also propose that An Post Bank become the primary administrator of Mortgage Credit for first time buyers of the average priced house, for those on the average wage. This service can be provided for a nominal percentage administration fee as opposed to charging interest for the life of the mortgage.
The current mortgage process works as follows; the customer signs a ‘loan contract’, legally this is considered to be a ‘promissory note’ (a promise-to-pay or a security), the bank is purchasing this security. It then owes the customer the said amount in the contract; but the bank does not pay-out. They just record it as a ‘credit’ in the record of their debts. No money is transferred from elsewhere.(1) The bank simply types this ‘credit’ into an account for the customer. We use this credit as money and the bank charges interest on it. The bank puts nothing of actual value into the transaction. The only value in the transaction is provided by the customers ‘promise to pay’.
The banks are essentially gouging huge sums of interest payments from the public for merely administering the nation’s credit, on which they have a total monopoly.
Lessons must be learned from the crash of 2008 and the subsequent private commercial bank bail-out; a recurrence, or the export of another generation is not an option. The current private commercial banking system fully controls our credit system and thereby controls and shapes our economy. We desperately need a banking system that works in the public interest and supports the local economy, as opposed to the current risk-prone, profit-maximising and shareholder return focused commercial banking duopoly.
1. Reference Professor Richard Werner 2014/2016: