Fine Gael TD Joe O'Reilly spoke during the resumed debate on the Social Welfare and Pensions Bill to stress the importance of preserving small post offices.

He said that Minister for Social Protection Joan Burton should look at their role.

“If the department is going to farm out the administration of social welfare it should be parked nowhere other than in the post office network,” he said. “I would think that would be a very important piece of social engineering for the country in general.’’

Mr O’Reilly, who represents Cavan-Monaghan, said post offices had a huge role in the administration of social welfare in the past and for dispensing money. There were merits to the post office performing that function, he added.

Employment

“It provided employment . . . continues to do so and must be preserved, but in addition, it was a disincentive to fraud as someone had to turn up at the post office for payment.’’

Ms Burton said the Bill would strengthen An Post’s position in the delivery of cash payment services for her department.

“This is particularly important in rural areas, but it is also important in many of the suburbs and towns.’’

She added that the awarding of an open-ended contract to An Post to provide cash payment services for the department was incompatible with EU competition law. "The EU Commission had made it quite clear to us that we could not extend our contractual arrangement with An Post.''

Ms Burton said her department must comply with EU procurement law, which was why it went to the market to procure cash payment services.

Bidder

She was glad that An Post was the successful bidder and won the tender to provide the services for her department. The contract had been awarded for two years, commencing in January, with the potential to be extended annually for up to four years thereafter, an accumulated period of up to six years.

The contract, said Ms Burton, gave certainty to An Post in the delivery of cash services, enabling it to build on its payment services provision for potential future contracts. “No other arm of Government has given any such certainty to An Post.’’

Ms Burton said she was sure TDs would appreciate that across the economy more and more financial transactions were carried out by electronic fund transfers rather than through cash payments.