GOVERNMENT REFORM IN ITALY Franco BASSANINI Cabinet Minister for Public Administration II Global Forum Brasilia – May 29, 2000

GOVERNMENT REFORMGOVERNMENT REFORMIN ITALYIN ITALY

Franco BASSANINICabinet Minister for Public Administration

II Global Forum

Brasilia – May 29, 2000

F. Bassanini - Government Reform in Italy2

The needs of ReformThe needs of Reformin the early ninetiesin the early nineties

An obsolete administration: no government-An obsolete administration: no government-wide reforms since 1865wide reforms since 1865

An inefficient administration: islands of An inefficient administration: islands of excellence in a sea of general inefficiencyexcellence in a sea of general inefficiency

A costly administration: crucial need to A costly administration: crucial need to balance the budget and reduce public debtbalance the budget and reduce public debt


The needs of ReformThe needs of ReformPublic debt up to 1994 (% of GDP)Public debt up to 1994 (% of GDP)

57,7 59,964,9

70

86,390,5 92,6

124,9

101,598

108,7

119,1

82,3

75,2

95,6

55

65

75

85

95

105

115

125

135

Source: Italy - Ministry of the Treasury


Calls for ReformCalls for Reform

The need of change drives large calls for The need of change drives large calls for Reform and consequently a large consensus Reform and consequently a large consensus among:among:

PublicPublic

BusinessesBusinesses

LaborLabor

ParliamentParliament


The Tools of ReformThe Tools of Reform

A broad “delegating law” (A broad “delegating law” (legge delega)legge delega) n. 59 of 1997: n. 59 of 1997:Parliament delegates Government the power to adopt “legislative decrees” (primary level regulation) in defined areas, pursuant to the principles set by the law

The “delegislation” (The “delegislation” (delegificazione)delegificazione) mechanism: mechanism:Parliament authorizes Government to substitute primary laws with Governmental decrees (secondary level regulation) in two main sectors: administrative procedures and organization of public offices


The main Areas of ReformThe main Areas of Reform Regulatory ReformRegulatory Reform

Devolution to Local Devolution to Local Authorities: Authorities: “administrative federalism” “administrative federalism”

Reorganization of Central Reorganization of Central GovernmentGovernment

Civil Service ReformCivil Service Reform

A performance-oriented A performance-oriented public sector managementpublic sector management

The new Public BudgetingThe new Public Budgeting

A more transparent and A more transparent and comprehensible Governmentcomprehensible Government

ee-Government-Government

7 F. Bassanini - Government Reform in Italy

Regulatory ReformRegulatory Reform1 - the problems1 - the problems

Regulatory inflation:Regulatory inflation:over 35,000 primary laws (of State and Regions)

Regulatory costs:Regulatory costs:unnecessary burdens on the public, on businesses and even on public administrations

Regulatory pollution:Regulatory pollution:ambiguity, contradictions, overlapping, layers of rules generate uncertainty on the existing law


Regulatory ReformRegulatory Reform2 - the simplification strategy2 - the simplification strategy

Reducing red tape: a broad program of Reducing red tape: a broad program of “delegislation”, deregulation, simplification, “delegislation”, deregulation, simplification, codificationcodification

“annual simplification laws” identify procedures (disciplined by primary law) that Government is authorized to repeal or to streamline with “delegislation” decrees, downgrading the level of regulation

more than 180 procedures already abolished or streamlined under the “delegislation” program

drafting of consolidated texts, containing primary and secondary regulation, that at the same time substitute every previous regulation and simplify procedures in a specific area


Regulatory ReformRegulatory Reform3 - simplification tools3 - simplification tools

““Self-declarationsSelf-declarations”” replace 90% of the certificates replace 90% of the certificates

““Notification of the beginning of an activity”Notification of the beginning of an activity” and silent consent and silent consent replace authorizations and licensesreplace authorizations and licenses

A “A “conferenza di servizi”conferenza di servizi” (combined services conference) replaces (combined services conference) replaces many administrative actsmany administrative acts

Fixed deadlines to end a procedureFixed deadlines to end a procedure

One stop shop (on-line): a single procedure to start up a new One stop shop (on-line): a single procedure to start up a new productive plant, replacing 43 previously needed authorizationsproductive plant, replacing 43 previously needed authorizations

Towards a costless and quicker establishment of new companies, of Towards a costless and quicker establishment of new companies, of any kind: no more judicial authorization and publication on official any kind: no more judicial authorization and publication on official bulletins bulletins


Regulatory ReformRegulatory Reform4 - a specific policy on regulatory quality 4 - a specific policy on regulatory quality

(following OECD guidelines)(following OECD guidelines) Regulatory impact analysisRegulatory impact analysis

to measure the cost of new regulations on the public and businesses

A central “Regulatory Simplification Unit”A central “Regulatory Simplification Unit”a task force of experts in P.M.O., exclusively monitoring “regulatory quality”

ConsultationConsultationthe “Osservatorio per la semplificazione”: a consultative body with representatives of Ministries, Regions, Local Authorities and social parties

Coordination with EU and OECDCoordination with EU and OECDto learn from other countries’ best practices and establish common principles of good regulation


DevolutionDevolution1 - a leaner but more efficient State1 - a leaner but more efficient State

Horizontal subsidiarity: focusing Horizontal subsidiarity: focusing Government’s task on its core Government’s task on its core business:business:

closing unnecessary Government activities outsourcing and/or privatizing activities that

can be more efficiently undertaken by the private sector (business and non-profits organizations)

liberalization of public utilities


DevolutionDevolution2 - strengthening local Governments2 - strengthening local Governments

Strengthening stability of local GovernmentsStrengthening stability of local Governmentsdirect election of Majors (since 1993), Presidents of Provinces (1993), Presidents of Regions (2000)

Strengthening financial autonomy of local Governments: Strengthening financial autonomy of local Governments: the the “fiscal federalism”“fiscal federalism”transformation of State financial transfers to local Authorities into local taxation or participation in main State taxes (VAT, Income tax…)

Strengthening sovereignty of local GovernmentsStrengthening sovereignty of local Governmentstransferring general legislative powers to Regions (constitutional bill presented by the Government)


DevolutionDevolution3 - the “administrative federalism”3 - the “administrative federalism”

1997: law n. 59 identifies a mandatory list of State tasks and 1997: law n. 59 identifies a mandatory list of State tasks and plans the devolution of all other tasks to Regions, Provinces plans the devolution of all other tasks to Regions, Provinces and Municipalitiesand Municipalities

1997-1998: five “legislative decrees” identify in detail the 1997-1998: five “legislative decrees” identify in detail the tasks to be transferred from central to local Governmenttasks to be transferred from central to local Government

1999-2000: Prime Minister decrees transfer groups of tasks 1999-2000: Prime Minister decrees transfer groups of tasks together with related human and financial resourcestogether with related human and financial resources

January 1January 1stst, 2001: end of devolution process, 2001: end of devolution process


Reorganization of Central GovernmentReorganization of Central Government1 - the general strategy1 - the general strategy

The first government-wide Reform since 1865: a system up to now The first government-wide Reform since 1865: a system up to now grown only by “adding layers”grown only by “adding layers”

Merging bodies with similar missions; eliminating duplication and Merging bodies with similar missions; eliminating duplication and segmentationsegmentation

Functions assigned by law; internal organization established by a more Functions assigned by law; internal organization established by a more flexible secondary regulation. End of the traditional “pyramid model” for flexible secondary regulation. End of the traditional “pyramid model” for MinistriesMinistries

Reducing the Ministries from 22 (in 1995) to 18 (present) to 12 (in April Reducing the Ministries from 22 (in 1995) to 18 (present) to 12 (in April 2001)2001)

Introducing “Agencies”: non-ministerial bodies with technical and Introducing “Agencies”: non-ministerial bodies with technical and executive tasksexecutive tasks

““Central Government Local Offices”: merging several State local offices Central Government Local Offices”: merging several State local offices into a single “interministerial” bodyinto a single “interministerial” body


Reorganization of Central GovernmentReorganization of Central Government2 - reform of the Prime Minister Office2 - reform of the Prime Minister Office

Making the role of stimulating, guiding and coordinating more effectiveMaking the role of stimulating, guiding and coordinating more effective A slimmer but stronger, more flexible structureA slimmer but stronger, more flexible structure Additional specific responsibilities of P.M.O.:Additional specific responsibilities of P.M.O.:Government reform, regulation, P.A., dialogue with supra- and intra- national Authorities (EU, Regions, Municipalities)

Transferring all other executive tasks Transferring all other executive tasks to “sector” administrationsto “sector” administrations


Reorganization of Central GovernmentReorganization of Central Government3 - from 18 to 12 Ministries3 - from 18 to 12 Ministries

1 – Ministry of Foreign Affairs1 – Ministry of Foreign Affairs2 – Ministry of the Interior2 – Ministry of the Interior3 – Ministry of Justice3 – Ministry of Justice4 – Ministry of Defense4 – Ministry of Defense

5 – Ministry of Economy5 – Ministry of Economyand Finance and Finance

-- MinistryMinistry of the Treasury and Budgetof the Treasury and Budget- Ministry of Finance- Ministry of Finance

6 – 6 – Ministry for Ministry for Production ActivitiesProduction Activities

- Ministry of Industry, Trade and Crafts- Ministry of Industry, Trade and Crafts- Ministry of Foreign Trade- Ministry of Foreign Trade- Ministry of CommunicationsMinistry of Communications- P.M.O. Tourism Dept.P.M.O. Tourism Dept.

7 – Ministry of Agriculture7 – Ministry of Agriculture


Reorganization of Central GovernmentReorganization of Central Government4 - from 18 to 12 Ministries4 - from 18 to 12 Ministries

8 – Ministry of the 8 – Ministry of the Environment and Environment and Protection of the TerritoryProtection of the Territory

- Ministry of Environment- Ministry of Environment - Ministry of Public Works (part)Ministry of Public Works (part)- P.M.O. “Servizi Tecnici” Dept.P.M.O. “Servizi Tecnici” Dept.

9 – Ministry of Infrastructure9 – Ministry of Infrastructureand Transportand Transport

- Ministry of Public Works (part)Ministry of Public Works (part)- Ministry of TransportMinistry of Transport- P.M.O. Dept. for Urban AreasP.M.O. Dept. for Urban Areas

12 - 12 - Ministry of Heritage Ministry of Heritage and Cultureand Culture

10 - Ministry of Employment, 10 - Ministry of Employment, Health and Social PoliciesHealth and Social Policies

- Ministry of Employment and Social Security- Ministry of Employment and Social Security- Ministry of Health- Ministry of Health- P.M.O. Dept. of Social AffairsP.M.O. Dept. of Social Affairs

11 - Ministry of Education, 11 - Ministry of Education, Universities and ResearchUniversities and Research

- Ministry of Education- Ministry of Education- Ministry of Universities and Scientific ResearchMinistry of Universities and Scientific Research

- Ministry of Heritage and Culture- Ministry of Heritage and Culture- P.M.O. Dept. of Sport- P.M.O. Dept. of Sport- P.M.O. Dept. of Entertainment- P.M.O. Dept. of Entertainment


Civil Service ReformCivil Service Reform1 - distinguishing Politics from Administration1 - distinguishing Politics from Administration

«Politicians are responsible for Policies»:«Politicians are responsible for Policies»:the Ministers define policies and strategies, assess results, appoint general directors but have no more direct involvement in administration

«Public managers are responsible for Administration»:«Public managers are responsible for Administration»:public managers are given broader powers but also greater responsibilities, higher salaries but linked to results and performances


Civil Service ReformCivil Service Reform2 - the “privatization” of Civil Service2 - the “privatization” of Civil Service

Civil law for civil servantsCivil law for civil servantspublic administration has the same powers as private sector employers

Jurisdiction for civil service disputesJurisdiction for civil service disputessince 1998 has been moved from the Administrative to the Civil Courts


Civil Service ReformCivil Service Reform3 - the “contractualization” of Civil Service3 - the “contractualization” of Civil Service Labor Contracts:Labor Contracts: collective bargaining (at national and local levels) replaced the law in

determining employment conditions, salaries and tasks. The “integrative negotiation”

promoting efficiency and professionalism through individual integrative contracts

«A.R.A.N.»«A.R.A.N.»an Agency created to represent the State in labor negotiations in place of the Minister (but under Government’s guidelines)

Reform of labor representationReform of labor representationfor each public sector (Ministries, Education, Health …) bargaining with the State is allowed only to those Unions having more than 5% of the consensus in that sector


A performance-orientedA performance-orientedpublic administrationpublic administration

1 - the new approach1 - the new approach Before: a formal/juridical approach to government:Before: a formal/juridical approach to government:

compliance with laws and procedures without regard to quality and results

Now: a consumer-oriented approachNow: a consumer-oriented approach quality service and customer satisfaction new performance control complementing traditional legal control public service charters promoting professional growth: a special training program

Public administration “close to citizens and business”:Public administration “close to citizens and business”: favors the allocation of investment capital acquires relevance “beyond the national borders” partially sheds its authoritative nature


A performance-orientedA performance-orientedpublic administrationpublic administration

2 - the new public management2 - the new public management

An interministerial body of public managers (few An interministerial body of public managers (few exceptions). Aexceptions). Access by ccess by concoursconcours((no more than 5% of managers may be chosen from no more than 5% of managers may be chosen from outside the Civil Service for a fixed term)outside the Civil Service for a fixed term)

Individual contracts (fixed term: 2-7 years) Individual contracts (fixed term: 2-7 years) determine assignment, duties and salariesdetermine assignment, duties and salaries

Managers’ salaries vary depending on Managers’ salaries vary depending on responsibilities and performancesresponsibilities and performances


The new public budgetingThe new public budgeting1 - f1 - from financial to economic budgetrom financial to economic budget

Before: a segmented spending model with more than 6.000 Before: a segmented spending model with more than 6.000 expenditure unitsexpenditure units

Now: about 1.000 basic budget units, matching each Now: about 1.000 basic budget units, matching each Ministry’s target and responsibilityMinistry’s target and responsibility

Only one administrative office responsible for each basic unitOnly one administrative office responsible for each basic unit

New economic budget showing the link between the use of New economic budget showing the link between the use of resources and achievementsresources and achievements


The new public budgetingThe new public budgeting 2 - new spending procedures2 - new spending procedures

Drawing up the budget: no longer the traditional criteria of Drawing up the budget: no longer the traditional criteria of incremental spendingincremental spending

An effective cost analysis to back the annual financing law An effective cost analysis to back the annual financing law and the spending legislationand the spending legislation

More effective constraints on Government expenditure bills More effective constraints on Government expenditure bills and parliamentary amendmentsand parliamentary amendments

An electronic mandateAn electronic mandate

Towards a permanent electronic market for public purchases Towards a permanent electronic market for public purchases


A transparent and A transparent and comprehensible Governmentcomprehensible Government

Since 1990 Administrative Procedure Law n. 241: access Since 1990 Administrative Procedure Law n. 241: access to administrative acts is the rule, secrecy the exceptionto administrative acts is the rule, secrecy the exception

A «Style Manual» to simplify administrative jargon:A «Style Manual» to simplify administrative jargon: a practical tool for employees involved in written communication proposals for the standardization and simplification of the most

common official forms


ee-Government-Government IT: the best resource for a leap forward in quality changeIT: the best resource for a leap forward in quality change

An action plan for the “electronic government”An action plan for the “electronic government”

Electronic signatureElectronic signature

Electronic management of administrative documents, Electronic management of administrative documents, procedures and archivesprocedures and archives

Electronic ID cardElectronic ID card

A Single A Single AdministrativeAdministrative Network Network

The “Unique Portal”: a single gateway for public The “Unique Portal”: a single gateway for public administrationsadministrations

Towards electronic public procurementsTowards electronic public procurements


First Achievements - 1First Achievements - 1

Reduction of deficit and public debtReduction of deficit and public debt

Downsizing of the GovernmentDownsizing of the Government

Increased efficiency and effectivenessIncreased efficiency and effectiveness

Reduction of red tape and certificatesReduction of red tape and certificates

Representation and transparency in labor negotiationRepresentation and transparency in labor negotiation


First Achievements - 2First Achievements - 2 public personnel cost (% of GDP) public personnel cost (% of GDP)

12

11,611,5

11,4

10,810,6

10,5 10,410,1

10,2

12,5

12,712,712,8

10

10,5

11

11,5

12

12,5

13

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Source: OECD and Italy DPEF 2000-2003


First Achievements - 3First Achievements - 3public deficit (% of GDP)public deficit (% of GDP)

11,110,1

9,68,5

9,2

7,76,6

2,7 2,71,9

11,50,6 0,1

0

2

4

6

8

10

12

Source: ISTAT and Italy DPEF 2000-2003


First Achievements - 4First Achievements - 4public debt (% of GDP)public debt (% of GDP)

98

101,5

108,7

119,1

124,6122,4

118,7114,9

124,9

125,3

100

104,6

112,9109,4

95

100

105

110

115

120

125

130

Source: ISTAT and Italy DPEF 2000-2003


First Achievements - 5First Achievements - 5primary expenditure in Italy and EU (% of GDP)primary expenditure in Italy and EU (% of GDP)

37

38

39

40

41

42

43

44

45

1990

37

38

39

40

41

42

43

44

45

1998

ItalyEU

Source: ISTAT and European Commission


First Achievements – 6First Achievements – 6liberalizations and privatizationsliberalizations and privatizations

Liberalization. Three examples:Liberalization. Three examples: 110 fixed telecommunication licenses and 86 operators instead of 110 fixed telecommunication licenses and 86 operators instead of

Telecom Italia Telecom Italia monopolymonopoly unbundling of local loop from end 2000unbundling of local loop from end 2000 ENELENEL will control less than 50% of electricity market from 2003 will control less than 50% of electricity market from 2003

Privatization of public utilities: Privatization of public utilities: ENI, BNL, INA, ENEL, ENI, BNL, INA, ENEL, Telecom, Alitalia, AutostradeTelecom, Alitalia, Autostrade … …world largest privatization program (total revenue up to end 1999: world largest privatization program (total revenue up to end 1999: approx. 83 million US Dollars)approx. 83 million US Dollars)


First Achievements - 7First Achievements - 7Revenues from privatizations in OECD Revenues from privatizations in OECD

countries (1993 - 1998)countries (1993 - 1998)

F

I

EUK

J

USC

AUS

0

10000

20000

30000

40000

50000

60000

70000

France MD 48,530

Germany MD 15,392

Italy MD 63,473

Spain MD 34,441

United Kingdom MD 28,709

Japan MD 46,721

United States MD3,100

Canada MD 7,024

Australia MD 45,000

D

source: OECD

MD


11,5 15,117,9 18,4 20,6

30,8

45,7

66,4

77

0

10

20

30

40

50

60

70

80

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

(fe

b.)

The privatization program has contributed to foster the growth of the Italian equity market

First Achievements – 8First Achievements – 8total stock mkt cap/GDP

Source: Ministry of the treasury


First Achievements - 9First Achievements - 9

«Electronic Revenue Service»:«Electronic Revenue Service»:

100% income tax returns (30 100% income tax returns (30 million/year) are filed and reviewed million/year) are filed and reviewed

electronicallyelectronically


First Achievements - 10First Achievements - 10# of # of certificates issued per yearcertificates issued per year

19961998

1999

68.630.268

49.884.104

34.797.235

0

10.000.000

20.000.000

30.000.000

40.000.000

50.000.000

60.000.000

70.000.000

Source: Dipartimento funzione pubblica


First Achievements - 11First Achievements - 11 # of c# of certified signatures issued per yearertified signatures issued per year

19961998

1999

35.186.550

20.199.919

7.426.909

0

5.000.000

10.000.000

15.000.000

20.000.000

25.000.000

30.000.000

35.000.000



First AchievementsFirst Achievements - 12 - 12 decrease ofdecrease of annual costs (in Italian annual costs (in Italian lirasliras))

for certificates and certified signaturesfor certificates and certified signatures

19961998

1999

2.977.875.143.551

1.956.981.726.971

1.107.893.417.674

0

500.000.000.000

1.000.000.000.000

1.500.000.000.000

2.000.000.000.000

2.500.000.000.000

3.000.000.000.000



The Future of ReformThe Future of Reform

The crucial phase of implementationThe crucial phase of implementationthe Reform is almost achieved in its laws and the Reform is almost achieved in its laws and

decrees, but laws alone cannot change decrees, but laws alone cannot change citizens’ livescitizens’ lives



Changing the cultureChanging the culture

Acquiring and disseminating new approaches:Acquiring and disseminating new approaches: to technological and organizational innovationto technological and organizational innovation to simplification (releasing unnecessary administrative to simplification (releasing unnecessary administrative

burdens)burdens) to quality of service and performanceto quality of service and performance to citizen-user satisfactionto citizen-user satisfaction to rewarding professionalism and meritto rewarding professionalism and merit to promoting, encouraging and energizing citizens and to promoting, encouraging and energizing citizens and

businessbusiness



CommunicationCommunicationdisseminating and sharing disseminating and sharing

information to explain citizens information to explain citizens their new rightstheir new rights



Investing on Public AdministrationInvesting on Public Administration

in training, to improve knowledge and awareness in training, to improve knowledge and awareness of the main interpreters of the Reformof the main interpreters of the Reform

in IT, to exploit the enormous opportunities of in IT, to exploit the enormous opportunities of digital revolutiondigital revolution

in financial incentives, to promote quality of in financial incentives, to promote quality of services and professional growthservices and professional growth



The «Maastricht approach»The «Maastricht approach»

EURO example: Italy is a country capable EURO example: Italy is a country capable of finding hidden human resources to of finding hidden human resources to

face the most difficult tasksface the most difficult tasks

Documents

GOVERNMENT REFORM IN ITALY Franco BASSANINI Cabinet Minister for Public Administration II Global Forum Brasilia – May 29, 2000