GOVERNMENT REFORM IN ITALY: STATE OF THE ART

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GOVERNMENT REFORM IN ITALYSTATE OF THE ART

• Franco BASSANINI
• Cabinet Minister for Public Administration
• Italy Today Public Administration Issues
• AD HOC COUNCIL - Rome November 13, 2000
• www.funzionepubblica.it

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The need for Reformin the early nineties

• An obsolete administration no government-wide
  reforms since 1865
• An inefficient administration islands of
  excellence in a sea of general inefficiency
• A costly administration crucial need to balance
  the budget and reduce public debt

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The need for Reformpublic debt up to 1994 ( of
GDP)
Source Italy - Ministry of the Treasury
4
Calls for Reform

• The need for change drives large calls for
  Reform and consequently a large consensus among
• Public
• Business
• Labor
• Parliament (a bipartisan reform)

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The Tools of Reform

• A broad delegating law (legge delega) 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 (delegificazione) 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

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The Main Areas of Reform

• Devolution, outsourcing and administrative
  federalism
• Reorganization of Central Government
• Civil Service Reform
• A performance-oriented public sector management

• Simplifying regulatory and administrative burdens
• The new Public Budgeting
• A more transparent and comprehensible Government
• e-Government

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Devolutiona leaner but more efficient State

• Horizontal subsidiarity - focusing Government on
  its core business
• closing unnecessary Government activities
• outsourcing and/or privatizing activities that
  can be more efficiently undertaken by the private
  sector (business and non-profit organizations)
• liberalization of public utilities

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Devolution liberalization and privatization

• Liberalization. Three examples
• 110 fixed telecommunication licenses and 86
  operators instead of Telecom Italia monopoly
• unbundling of local loop from end 2000
• ENEL control of electricity market from 90 in
  1990 to less than 40 in 2003
• Privatization of public utilities ENI, BNL, INA,
  ENEL, Telecom, Alitalia, Autostrade
• world largest privatization program (total
  revenue up to end 1999 approx. 87 billions US
  Dollars)

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Devolutionrevenues from privatization in OECD
countries (1993 - 1998)
Millions US Dollars France (F)
48.530 Germany (G) 15.392 Italy (I)
63.473 Spain (S) 34.441 Un. King.
(UK) 28.709 Japan (J) 46.721 USA (US)
3.100 Canada (C)
7.024 Australia (AUS) 45.000
Source OECD
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Devolutiontotal stock mkt cap/GDP
The privatization program has contributed
fostering the growth of the Italian equity market
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Devolutionstrengthening local Governments

• Strengthening stability of local Governments
• direct election of Majors (since 1993),
  Presidents of Provinces (1993), Presidents of
  Regions (2000)
• Strengthening financial autonomy of local
  Governments the 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 Governments
• transferring general legislative powers to
  Regions (constitutional bill presented by the
  Government)
• Strengthening efficiency of Local Administrations
• reform of control mechanisms, city managers,
  local public managers chosen also from private
  sector, salaries linked to performance

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Devolutionthe administrative federalism

• 1997 law n. 59 identifies a mandatory list of
  State tasks and plans the devolution of all other
  tasks to Regions, Provinces and Municipalities
• 1997-1998 five legislative decrees identify in
  detail the tasks to be transferred from central
  to local Government
• 1999-2000 Prime Minister decrees transfer groups
  of tasks together with related human and
  financial resources
• January 1st, 2001 end of devolution process

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Devolutionopinions of the public
Has the Bassanini reform improved the
efficiency of local Governments?
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Reorganization of Central Governmentthe general
strategy

• The first government-wide Reform since 1865 a
  system up to now grown only by adding layers
• Merging bodies with similar missions eliminating
  duplication and segmentation
• Functions assigned by law internal organization
  established by a more flexible secondary
  regulation. End of the traditional pyramid
  model for Ministries
• Reducing the Ministries from 22 (in 1995) to 18
  (present) to 12 (in April 2001)
• Introducing Agencies non-ministerial bodies
  with technical and executive tasks
• Central Government Local Offices merging
  several State local offices into a single
  interministerial body

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Reorganization of Central Governmentreform of
the Prime Ministers Office

• Making the role of stimulating, guiding and
  coordinating more effective
• A leaner but stronger, more flexible structure
• 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 to
  sector administrations

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Reorganization of Central Governmentfrom 18 to
12 Ministries

• 1 Ministry of Foreign Affairs
• 2 Ministry of the Interior
• 3 Ministry of Justice
• 4 Ministry of Defense
• 5 Ministry of Economy
• and Finance

- Ministry of the Treasury and Budget - Ministry
of Finance

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

6 Ministry for Production Activities
7 Ministry of Agriculture
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Reorganization of Central Governmentfrom 18 to
12 Ministries

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

• 8 Ministry of the Environment and Protection of
  the Territory

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

9 Ministry of Infrastructure and Transport
10 - Ministry of Employment, Health and Social
Policies

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

11 - Ministry of Education, Universities and
Research

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

12 - Ministry of Heritage and Culture
- Ministry of Heritage and Culture - P.M.O. Dept.
of Sport - P.M.O. Dept. of Entertainment
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Civil Service Reformdistinguishing Politics from
Administration

• Politicians are responsible for Policies
• Ministers define policies and strategies, assess
  results, appoint general directors but have no
  further direct involvement in administration
• Public managers are responsible for
  Administration
• public managers are given broader powers but
  also greater responsibilities, and higher
  salaries linked to results and performance

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Civil Service Reformthe privatization of
Civil Service

• Civil law for civil servants
• public administration has the same powers as
  private sector employers
• Jurisdiction for civil service disputes
• since 1998 transferred from the Administrative
  to the Civil Courts

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Civil Service Reformthe contractualization of
Civil Service

• 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.
• an Agency created to represent the State in
  labor negotiations in place of the Minister (but
  following Government guidelines)
• Reform of labor representation
• for 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

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Civil Service Reformthe Resistances

• Strong contradictions and incoherencies remain
  in
• The behaviour of Trade Unions
• the choice, in principle, in favour of
  professionalism and merit, responsibility and
  decentralisation is sometimes contradicted
• The behaviour of Politicians, administrators and
  public managers
• no global vision in salary increases
• strong defence of privileges and of the maze of
  charges
• Parliament choices
• The choice, in principle, in favour of collective
  bargaining, meritocracy and quality is
  contradicted by the constant enactment of rules
  creating favouritism ope legis promotions,
  permanent hiring without concours of pro-tempore
  workers etc.

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A performance-orientedpublic administrationthe
new approach

• Before a formal/juridical approach to
  government
• compliance with laws and procedures without
  regard to quality and results
• Now 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
  businesses
• favors the allocation of investment capital
• acquires relevance beyond the national borders
• partially sheds its authoritative nature

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A performance-orientedpublic administrationthe
new public management

• An interministerial body of public managers, with
  few exceptions
• Access by concours, a formal competitive
  examination
• (no more than 5 of managers may be chosen from
  outside the Civil Service for a fixed term)
• No more jobs for life individual contracts
  (fixed term 2-7 years) determine assignment,
  duties and salaries
• Managers salaries vary depending on
  responsibilities and performances

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A performance-orientedpublic administrationthe
Resistances

• Administrations and judges still show a
  legalistic and statist culture
• The defence of irremovability and
  irresponsibility of top civil servants in the
  name of administrative neutrality
• The fear of the spoils system (it exists in the
  USA, but not in Italy)
• The refusal of the culture of evaluation and merit

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Simplificationthe problems

• Regulatory inflation
• over 35,000 primary laws (of State and Regions)
• Regulatory costs
• unnecessary burdens on the public, on businesses
  and even on public administrations
• Regulatory pollution
• ambiguity, contradictions, overlapping, layers
  of rules generate uncertainty on the existing law

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Simplificationa specific policy on regulatory
reform

• Regulatory impact analysis
• to measure the cost of new regulations on the
  public and business
• A central Regulatory Simplification Unit
• a task force of 65 experts and staff in P.M.O.,
  exclusively monitoring regulatory quality,
  drafting simplification decrees and consolidated
  texts
• Consultation
• the Osservatorio per la semplificazione a
  consultative body with representatives from
  Ministries, Regions, Local Authorities and social
  parties

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Simplificationthe tools

• Self-declarations replace more than 95 of the
  certificates
• Notification of the beginning of an activity
  and silent consent (in 194 cases) replace
  authorizations and licenses
• One conferenza di servizi (combined services
  conference) replaces many administrative acts
• One-stop-shop (on line) a single procedure to
  start up a new productive plant, replacing 43
  previously needed authorizations (see specific
  slide)
• Few consolidated texts replace thousands of laws
  and decrees
• Annual simplification laws enabling government to
  abolish or simplify existing procedures,
  authorizations and licenses.

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Simplificationsome initial results

• 180 procedures ruled by primary law have already
  been delegislated (ready to be abolished or
  simplified by Government decree)
• 71 procedures already simplified by Government
  (50 in the year 2000, with the support of the
  new central unit). They include the
  one-stop-shops for new productive plants, car
  drivers, import-export trade
• 8 consolidated texts drafted (on local
  Governments, cultural heritage, administrative
  documentation, building activities,
  expropriations, university, civil service,
  justice expenses) 3 of them already in force
• relevant progress in regulatory capacity shown
  by the draft report of the OECD regulatory review

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Progress in regulatory capacity indicators,
1998-2000
Source OECD, Public Management Directorate, 2000.
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Simplification of certificates issued per year
Data 2000 8-month projection of the year 2000
Source Italy Department of Public
Administration
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Simplification of certified signatures issued
per year
Data 2000 8-month projection of the year 2000
Source Italy Department of Public
Administration
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Simplificationthe opinion of the public

• Do you know that in most cases all you need is a
  self-declaration?

Do you think it is useful?
Source ISPO
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Simplification the one-stop-shop examplenot
only a single access, but also a single answer

• Since 1999 a single procedure to start up a new
  business, replacing 43 authorizations previously
  needed
• Before 2-5 years to get a final answer
• Now normally no more than 3 months in most
  cases, max 11 months
• (average time 57 days in a sample of 100
  operational one stop shops)
• One single office to deal with businesses and a
  new role for Municipalities in the development of
  their territory
• An e-structure, accessible through the net

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The new public budgetingfrom financial to
economic budget

• Before a segmented spending model with more than
  6.000 expenditure units
• Now about 1.000 basic budget units, matching
  each Ministrys target and responsibility
• Only one administrative office responsible for
  each basic unit
• New economic budget showing the link between the
  use of resources and achievements

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The new public budgeting new spending procedures

• Drafting the budget no longer the traditional
  criteria of incremental spending
• An effective cost analysis to back the annual
  financing law and the spending legislation
• More effective constraints on Government
  expenditure bills and parliamentary amendments
• An electronic mandate
• Towards a permanent electronic market for public
  purchases
• Planning hiring of civil servants

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The new public budgetingpublic sector personnel
cost ( of GDP)
Source OECD and Italy DPEF 2000-2003
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The new public budgeting public deficit ( of
GDP)
Source ISTAT and Italy DPEF 2000-2003
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The new public budgeting public debt ( of GDP)
Source ISTAT and Italy DPEF 2000-2003
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The new public budgeting primary expenditure in
Italy and EU ( of GDP)
Source ISTAT and European Commission
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e-Government

• IT the best resource for a leap forward in
  quality change
• Electronic management of administrative
  documents, procedures and archives
• 12,000 billion liras (5,2 bill. USD) for
  investments in 2000-2002 (11,000 already
  allocated, 1,300 coming from the UMTS licenses)
• Electronic ID card (under experiment)
• The Government Portal a single gateway for
  public administrations
• Towards electronic public procurements

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e-Governmentsome first results

• Electronic Revenue Service 100 income tax
  returns (40 millions per year) are filed and
  reviewed electronically
• Land Register (80 of documents are filed and
  reviewed electronically)
• Electronic signature (having legal value from
  1998) more than 1 million signatures already
  certified by 8 companies
• A Single Administrative Network

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The Italian Action Plan fore-Government

• Citizens will obtain any public service by simply
  applying to any front-office administration in
  charge
• Citizens will communicate variations in their
  personal information to the administration only
  once
• Each administration will be able to gather the
  information needed, wherever stored (all public
  services on line)
• All the public services for which it is
  technically possible will be delivered on line

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Action Plan points

• Exchange of information system for local
  land-registries
• Electronic identity cards
• Promotion of digital signatures
• Informatic Protocols
• e-procurement
• Foundation courses
• Specialist courses

• Information portals
• Portals for supply of services
• National networks
• Local administrations on line
• Integration of personal data
• National index of personal data

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The Future of Reform

• The crucial phase of implementation
• the Reform has almost been achieved in its laws
  and decrees, but laws alone cannot change
  citizens lives
• What are now the main challenges?

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The Future of Reform

• Changing the culture
• Acquiring and disseminating new approaches
• to technological and organizational innovation
• to simplification (releasing unnecessary
  administrative burdens)
• to quality of service and performance
• to citizen-user satisfaction
• to rewarding professionalism and merit
• to promoting, encouraging and energizing citizens
  and businesses

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The Future of Reform

• Communication
• disseminating and
• sharing information to
• explain to citizens their new rights

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The Future of Reform

• Investing on Public Administration
• in training, to improve knowledge and awareness
  of the main interpreters of the Reform
• in IT, to exploit the enormous opportunities of
  digital revolution
• in financial incentives, to promote quality of
  services and professional growth

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The Future of Reform

• The Maastricht approach
• EURO example Italy is a country capable of
  finding hidden human resources to face the most
  difficult tasks