Alan Dukes, the minister for finance, and his cabinet colleague, John Bruton, the minister for industry, trade, commerce and tourism, disagreed over the impact of a price increase on the finances of An Post.
The minister for communications, Jim Mitchell, brought a request to Cabinet from An Post, for price increases to be approved.
While the company sought a number of increases in charges for posting larger packages, it wanted to leave the basic letter rates unchanged, at 22p and 26p, and apply those rates to mail sent to other EEC countries.
An Post wanted moderate increases in postal rates in order to remain competitive and to expand its volume base.
There had been no increase in the cost of postage stamps in three years, but, in the three years previous to that, it had risen 100%.
However, Irish postal rates were already considered high compared to the UK and to many other European countries — a perception that was misleading, as they were cheaper than in most other EEC member states.
Mr Mitchell said the company, which was facing a projected deficit of IR£8.5m in 1985, would break even if it increased its basic rates by 2p, but such a price rise was opposed by An Post.
Mr Dukes believed the proposed increases were “inadequate” and “unacceptable”, as they would result in a loss of IR£2.5m.
He said An Post should be required to achieve a surplus in 1985, so that it could begin to repay back IR£50m of Exchequer funding it had received.
Mr Dukes said An Post had provided an inadequate response to its requirement, under the National Plan, to operate without a subsidy and to attain greater productivity.
Such a position was unacceptable, as it implied An Post was abandoning the government’s strategy, even though it was capable of achieving profitability.
A 2p increase in the basic rates of postage stamps — representing a 7.6% price rise — could easily be justified, said Mr Dukes, because general inflation was running at about 22%.
However, Mr Bruton opposed any price increases, on the basis they would erode industrial and tourism competitiveness.
“Anything which increases manufacturing costs also reduces the competitiveness of Irish exports,” said Mr Bruton.
He accused An Post of being concerned principally with adverse reaction from ordinary customers, if the rates for standard letters were increased.
Mr Bruton said previous rate increase had put Irish postal charges out of line with international rates in a large number of postal categories.