1. PUBLIC ADMINISTRATION REFORM IN ITALY Franco BASSANINI Minister for Public Administration Third Global Forum Naples, March 15-17, 2001 www.funzionepubblica.it

2. The need for Reform in the early nineties An obsolete administration: no government-wide reforms since 1865An obsolete administration: no government-wide reforms since 1865 An inefficient administration: islands of excellence in a sea of general inefficiencyAn inefficient administration: islands of excellence in a sea of general inefficiency A costly administration: crucial need to balance the budget and reduce public debtA costly administration: crucial need to balance the budget and reduce public debt

3. The need for Reform public 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 Public Business Business Labor Labor Parliament (a bipartisan reform) Parliament (a bipartisan reform)

5. The Tools of Reform A broad “delegating law” (legge delega) n. 59 of 1997: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: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

6. The Main Areas of Reform Devolution, outsourcing and “administrative federalism”Devolution, outsourcing and “administrative federalism” Reorganization of Central GovernmentReorganization of Central Government Civil Service ReformCivil Service Reform A performance-oriented public sector managementA performance-oriented public sector management Simplifying regulatory and administrative burdensSimplifying regulatory and administrative burdens The new Public BudgetingThe new Public Budgeting A more transparent and comprehensible GovernmentA more transparent and comprehensible Government e-Governmente-Government

7. Devolution a leaner but more efficient State Horizontal subsidiarity - focusing Government on its core business: closing unnecessary Government activities closing unnecessary Government activities outsourcing and/or privatizing activities that can be more efficiently undertaken by the private sector (business and non-profit organizations) outsourcing and/or privatizing activities that can be more efficiently undertaken by the private sector (business and non-profit organizations) liberalization of public utilities liberalization of public utilities

8. Devolution liberalization and privatization Liberalization. Some examples:Liberalization. Some examples: 110 fixed telecommunication licenses and 86 operators instead of Telecom Italia monopoly 110 fixed telecommunication licenses and 86 operators instead of Telecom Italia monopoly unbundling of local loop from end 2000 unbundling of local loop from end 2000 ENEL control of electricity market: from 90% in 1990 to less than 40% in 2003 ENEL control of electricity market: from 90% in 1990 to less than 40% in 2003 Liberalization of commercial activities and 30 other productive activities (no more licenses or authorizations) Liberalization of commercial activities and 30 other productive activities (no more licenses or authorizations) Privatization of public utilities: ENI, BNL, INA, ENEL, Telecom, Alitalia, Autostrade …Privatization of public utilities: ENI, BNL, INA, ENEL, Telecom, Alitalia, Autostrade … world largest privatization program (total revenue up to end 1999: 91 billion Euro)

9. Devolution revenues from privatization in OECD countries (1993 - 1999)

10. Devolution total stock mkt cap/GDP The privatization program has contributed fostering the growth of the Italian equity market

11. Devolution strengthening local Governments Strengthening stability of local GovernmentsStrengthening stability of local Governments direct election of Mayors (since 1993), Presidents of Provinces (1993), Presidents of Regions (2000) Strengthening financial autonomy of local Governments: the “fiscal federalism”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 GovernmentsStrengthening sovereignty of Local Governments transferring general legislative powers to Regions (constitutional bill approved by the Parliament) Strengthening efficiency of Local AdministrationsStrengthening efficiency of Local Administrations reform of control mechanisms, “city managers”, local public managers chosen also from private sector, salaries linked to performance

12. Devolution the “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 Municipalities1997 : 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 Government1997-1998 : five “legislative decrees” identify in detail the tasks to be transferred from central to local Government 1999-2000 : 97 Prime Minister decrees transfer groups of tasks together with related human resources (23.000 units) and financial resources (18.6 billion Euro)1999-2000 : 97 Prime Minister decrees transfer groups of tasks together with related human resources (23.000 units) and financial resources (18.6 billion Euro) January 1 st, 2001 : end of devolution processJanuary 1 st, 2001 : end of devolution process

13. Devolution opinions of the public Has the “Bassanini reform” improved the efficiency of local Governments?

14. Reorganization of Central Government the general strategy The first government-wide Reform since 1865: a system up to now grown only by “adding layers”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 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 MinistriesFunctions 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 12Reducing the Ministries from 22 (in 1995) to 18 (present) to 12 Introducing “Agencies”: non-ministerial bodies with technical and executive tasksIntroducing “Agencies”: non-ministerial bodies with technical and executive tasks “Central Government Local Offices”: merging several State local offices into a single “interministerial” body“Central Government Local Offices”: merging several State local offices into a single “interministerial” body

15. Reorganization of Central Government reform of the Prime Minister’s Office Making the role of stimulating, guiding and coordinating more effective Making the role of stimulating, guiding and coordinating more effective A leaner but stronger, more flexible structure A leaner 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 to “sector” administrations Transferring all other executive tasks to “sector” administrations

16. Reorganization of Central Government from 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 6 – Ministry for Production Activities - Ministry of Industry, Trade and Crafts - Ministry of Foreign Trade - Ministry of Communications - P.M.O. Tourism Dept. 7 – Ministry of Agriculture

17. Reorganization of Central Government from 18 to 12 Ministries 8 – Ministry of the Environment and Protection of the Territory - Ministry of Environment - Ministry of Public Works (part) - P.M.O. “Servizi Tecnici” Dept. 9 – Ministry of Infrastructure and Transport - Ministry of Public Works (part) - Ministry of Transport - P.M.O. Dept. for Urban Areas 12 - Ministry of Heritage and Culture 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 - Ministry of Heritage and Culture - P.M.O. Dept. of Sport - P.M.O. Dept. of Entertainment

18. Simplification 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

19. Simplification the tools “Self-declarations” replace more than 95% of the certificates “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 “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 “conferenza di servizi” ( combined services conference ) replaces many administrative acts Few consolidated texts replace thousands of laws and decrees Few consolidated texts replace thousands of laws and decrees Annual simplification laws enabling government to abolish or simplify existing procedures, authorizations and licenses.Annual simplification laws enabling government to abolish or simplify existing procedures, authorizations and licenses.

20. Simplification some initial results 207 procedures ruled by primary law have already been “delegislated” (ready to be abolished or simplified by Government decree) 207 procedures ruled by primary law have already been “delegislated” (ready to be abolished or simplified by Government decree) 91 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 91 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); 4 of them already in force 8 consolidated texts drafted (on local Governments, cultural heritage, administrative documentation, building activities, expropriations, university, civil service, justice expenses); 4 of them already in force relevant progress in regulatory capacity shown by the draft report of the OECD regulatory review relevant progress in regulatory capacity shown by the draft report of the OECD regulatory review

21. Simplification # of certificates issued per year Source: Italy – Department f Public Administration

22. Simplification # of certified signatures issued per year

23. Simplification annual savings for certificates and certified signatures

24. Simplification a specific policy on regulatory reform Regulatory impact analysisRegulatory impact analysis to measure the cost of new regulations on the public and business A central “Regulatory Simplification Unit”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 ConsultationConsultation the “Osservatorio per la semplificazione”: a consultative body with representatives from Ministries, Regions, Local Authorities and social parties

25. Progress in regulatory capacity indicators, 1998-2000 Source: OECD, Public Management Directorate, 2000.

26. Simplification the 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

27. Simplification – the one-stop-shop example “not 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 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 Before : 2-5 years to get a final answer Now : normally no more than 3 months in most cases, max 11 months 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 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 An e-structure, accessible through the net

28. One stop shops Average duration of proceedings in 100 one stop shopsAverage duration of proceedings in 100 one stop shops 56,6 days from the presentation of the request one stop shops realisedone stop shops realised (data by 30/06/2000) 37,8% of Municipalities with 59,5% of residents Turn-key contract for the supply of 109 one stop shops serving 785 municipalitiesTurn-key contract for the supply of 109 one stop shops serving 785 municipalities

29. One stop shops The difficulties Half of the municipalities is not equipped with it (40% of the Italian population) Lack of collaboration of many central and local administrations The answers Simplification, acceleration, a unique proceeding and a unique person in charge Government action plan for spreading and improving one stop shops

30. A performance-oriented public administration 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 businesses”:Public administration “close to citizens and businesses”: favors the allocation of investment capital acquires relevance “beyond the national borders” partially sheds its authoritative nature

31. A performance-oriented public administration the new public management An interministerial body of public managers, with few exceptionsAn interministerial body of public managers, with few exceptions Access by concours, a formal competitive examinationAccess 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 salariesNo more “jobs for life”: individual contracts (fixed term: 2- 7 years) determine assignment, duties and salaries Managers’ salaries vary depending on responsibilities and performancesManagers’ salaries vary depending on responsibilities and performances

32. The high civil service payment system BeforeBefore: no distinctions in the salaries of high civil servants considering the position and the performances Now: salaries taking into account the responsabilities and the achievement of the results.

33. Relationship between fixed and variable salary before and after the reform (head officers of local administrations) Before d.lgs 29/93After the CCNL

34. A performance-oriented public administration the Resistances Administrations and judges still show a legalistic and statist cultureAdministrations and judges still show a legalistic and statist culture The defence of irremovability and irresponsibility of top civil servants in the name of administrative neutralityThe 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 fear of the spoils system (it exists in the USA, but not in Italy…) The refusal of the culture of evaluation and meritThe refusal of the culture of evaluation and merit

35. Civil Service Reform distinguishing Politics from Administration «Politicians are responsible for Policies»:«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 responsible for Administration»: public managers are given broader powers but also greater responsibilities, and higher salaries linked to results and performance

36. Civil Service Reform the “privatization” of Civil Service Civil law for civil servantsCivil law for civil servants public administration has the same powers as private sector employers Jurisdiction for civil service disputesJurisdiction for civil service disputes since 1998 transferred from the Administrative to the Civil Courts

37. Civil Service Reform 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 following Government guidelines) Reform of labor representationReform 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

38. Civil Service Reform the Resistances Strong contradictions and incoherencies remain in: The behaviour of Trade Unions: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: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: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.

39. The new public budgeting from financial to economic budget Before : a segmented spending model with more than 6.000 expenditure unitsBefore : a segmented spending model with more than 6.000 expenditure units Now : about 1.000 basic budget units, matching each Ministry’s target and responsibilityNow : about 1.000 basic budget units, matching each Ministry’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 resources and achievementsNew economic budget showing the link between the use of resources and achievements

40. The new public budgeting new spending procedures Drafting the budget: no longer the traditional criteria of incremental spendingDrafting the budget: no longer the traditional criteria of incremental spending An effective cost analysis to back the annual financing law and the spending legislationAn effective cost analysis to back the annual financing law and the spending legislation More effective constraints on Government expenditure bills and parliamentary amendmentsMore effective constraints on Government expenditure bills and parliamentary amendments An electronic mandateAn electronic mandate Towards a permanent electronic market for public purchasesTowards a permanent electronic market for public purchases Planning hiring of civil servantsPlanning hiring of civil servants

41. The new public budgeting public sector personnel cost (% of GDP) Source: OECD and Italy DPEF 2000-2003

42. The new public budgeting public deficit (% of GDP) Source: ISTAT and Italy DPEF 2000-2003

43. The new public budgeting public debt (% of GDP) Source: ISTAT and Italy DPEF 2000-2003

44. The new public budgeting primary expenditure in Italy and EU (% of GDP) Source: ISTAT and European Commission

45. e-Government IT: the best resource for a leap forward in quality changeIT: the best resource for a leap forward in quality change 6,2 bill. Euro for investments in 2000-20026,2 bill. Euro for investments in 2000-2002 Electronic ID card (under experiment)Electronic ID card (under experiment) electronic public procurementselectronic public procurements «Electronic Revenue Service»: 100% income tax returns (33 millions per year) are filed and reviewed electronically«Electronic Revenue Service»: 100% income tax returns (33 millions per year) are filed and reviewed electronically Land Register (80% of documents 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 companiesElectronic signature (having legal value from 1998): more than 1 million signatures already certified by 8 companies

46. The Italian Action Plan for e-Government Citizens will obtain any public service by simply applying to any front-office administration in chargeCitizens 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 onceCitizens 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)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 lineAll the public services for which it is technically possible will be delivered on line

47. Action Plan points Information portals Portals for supply of services National networks Local administrations on line Integration of personal data National index of personal data Exchange of information system for local land-registries Electronic identity cards Promotion of digital signatures Informatic Protocols e-procurement Foundation courses Specialist courses

48. Global Forum On Reinventing Government Italy organises the III Global Forum On Reinventing Government. The Global Forum will be held in Naples from the 15th to the 17th of March 2001 and the delegations of more than 100 countries are going to participate. Following Italy’s proposal the theme of the Global Forum will be: Fostering democracy and development through e- government.

49. Towards “a common European space for public services” (the principles) the organization of different administrative systems is an exclusive prerogative of the EU Member States (the EC Treaties do not deal with public administrations) it is indispensable to establish homogenous standards of administrative actions at European level

50. Towards “a common European space for public services” (the reasons) The quality of the regulation and administrative action is relevant for: the competitiveness of Europe the effectiveness of the Internal Market (the competition can be altered by “bureaucratic costs”) the rights of the European citizens

51. Towards “a common European space for public services” (the first steps) Letter from the Italian and Spanish Ministers of Public Administration to their European colleagues (December 1997) Indication of a first set of themes: quality of regulation and simplification of the procedures; training of high civil servants; definition of performance indicators for public services Conference of Manchester on Better Government with a more effective regulation (March 1998) European conference of the Ministers responsible for administrative reforms and public administrations (November 1998) Decisions on: benchmarking; exchange of best practices; comparison of quality of administrations; European training of civil servants

52. Towards “a common European space for public services” (recent developments) The European Council of Lisbon (March 2000): underlines that the administrative action and the quality of regulation are important factors of growth for the employment and for the creation of wealth The conference of Lisbon (May 2000): illustration of initiatives to activate mechanisms of benchmarking and exchange of best practices, as well as for the creation of a Common Assessment method The European Council of Feira (June 2000) underlines the role of public administrations and the importance of better regulation for the competitiveness of the Union and its Member States. The “eEurope 2002” is approved

53. The “common European space for public services (The Strasbourg meeting - November 2000) The EU Ministers of Public Administration: recognise the importance of a “co-ordinated modernisation effort”, and the building up of a “European space for quality in public services”; agree on the necessity of organising regular ministerial meetings and participating in the Internal Market Council meetings; adopt specific resolutions on social dialogue, e-government, quality of regulation and quality and benchmarking of public services in the EU. The European Council of Nice recalled the resolutions of Strasbourg encouraging their implementation

54. 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?

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

56. The Future of Reform Communication disseminating and sharing information to explain to citizens their new rights

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

58. 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