GOVERNMENT REFORM IN ITALY Franco BASSANINI Cabinet Minister for Public Administration CLAD - V International Congress on State and Public Administration Reform S. Domingo - October 25,

F. Bassanini - Government Reform in Italy2 The need for Reform in the early nineties An obsolete administration: no government-wide reforms since 1865 An obsolete administration: no government-wide reforms since 1865 An inefficient administration: islands of excellence in a sea of general inefficiency 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 A costly administration: crucial need to balance the budget and reduce public debt

F. Bassanini - Government Reform in Italy3 The need for Reform public debt up to 1994 (% of GDP) Source: Italy - Ministry of the Treasury

F. Bassanini - Government Reform in Italy4 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)

F. Bassanini - Government Reform in Italy5 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

F. Bassanini - Government Reform in Italy6 The Main Areas of Reform Simplifying regulatory and administrative burdens Simplifying regulatory and administrative burdens Devolution to Local Authorities: “administrative federalism” Devolution to Local Authorities: “administrative federalism” Reorganization of Central Government Reorganization of Central Government Civil Service Reform Civil Service Reform A performance-oriented public sector management A performance-oriented public sector management The new Public Budgeting The new Public Budgeting A more transparent and comprehensible Government A more transparent and comprehensible Government e-Government e-Government

F. Bassanini - Government Reform in Italy7 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

F. Bassanini - Government Reform in Italy8 Simplification a specific policy on regulatory reform Regulatory impact analysis Regulatory 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 Consultation Consultation the “Osservatorio per la semplificazione”: a consultative body with representatives from Ministries, Regions, Local Authorities and social parties

F. Bassanini - Government Reform in Italy9 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 Fixed deadlines to end a procedure Fixed deadlines to end a procedure One-stop-shop (on line): a single procedure to start up a new productive plant, replacing 43 previously needed authorizations (see specific slide) 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 Few consolidated texts replace thousands of laws and decrees

F. Bassanini - Government Reform in Italy10 Simplification a rolling program to reduce red tape “Annual simplification laws” Each year Government asks Parliament to: identify new procedures (disciplined by primary law) that Government is subsequently authorized to repeal or to streamline with “delegislation” decrees, downgrading the level of regulation directly abolish unnecessary authorizations or licenses and to introduce new simplification tools authorize Government drafting consolidated texts, containing primary and secondary regulation, that at the same time: i) substitute all previous regulation and ii) simplify procedures in specific areas

F. Bassanini - Government Reform in Italy11 Simplification a rolling program to reduce red tape In addition, the most recent “annual simplification law” (autumn 2000): disciplines a costless and quicker establishment of new companies, of all kinds, as well as company mergers and de-mergers: no more judicial authorization and publication on official bulletins introduces e-procurement as a general rule for public administration purchasing improves the “conferenza di servizi” mechanism (no more “veto powers” of single administrations)

F. Bassanini - Government Reform in Italy12 Simplification the international dimension of regulatory reform The OECD “Regulatory Management and Reform Working Group” The OECD “Regulatory Management and Reform Working Group”  the importance of learning from other countries’ best practices and establishing common principles of good regulation The need of coordination at EU level The need of coordination at EU level  Lisbon European Council accepted Italian proposal to “set out a strategy by 2001 for further coordinated action to simplify the regulatory environment … at both national and Community level”  the meeting of European Ministers of P.A. under the French Presidency: towards a common European strategy on better regulation and benchmarking of public services

F. Bassanini - Government Reform in Italy13 Simplification some initial results 180 procedures ruled by primary law have already been “delegislated” (ready to be abolished or simplified by Government decree) 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 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 35 procedures to be simplified by end 2000 (new simplifications regarding business, but also pensions and public budget) 35 procedures to be simplified by end 2000 (new simplifications regarding business, but also pensions and public budget) 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 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

F. Bassanini - Government Reform in Italy14 Simplification # of certificates issued per year Source: Italy – Department of Public Administration * Data 2000: 8-month projection of the year 2000

F. Bassanini - Government Reform in Italy15 Simplification # of certified signatures issued per year Source: Italy – Department of Public Administration * Data 2000: 8-month projection of the year 2000

F. Bassanini - Government Reform in Italy16 Simplification annual savings (in Italian billion liras) for certificates and certified signatures * Data 2000: 8-month projection of the year 2000 Source: Italy – Department of Public Administration

F. Bassanini - Government Reform in Italy17 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

F. Bassanini - Government Reform in Italy18 Simplification the Resistances “Penelope’s shroud” (or: the never-ending task) “Penelope’s shroud” (or: the never-ending task) Government and Parliament daily re-introduce new regulations and new administrative burdens: – statist culture and carelessness for regulatory costs and administrative burdens on businesses, families, and administrations are hard to die (both in the Right- Wing and in the Left-Wing parties) – permanent trend to enact Parliamentary legislation in detail: from de- legislation to re-legification “Hand brake used by public administrations”: “Hand brake used by public administrations”: – scant cooperation in drafting and enforcing simplification measures – cultural resistances: simplification reduces arbitrariness and bureaucracy’s power

F. Bassanini - Government Reform in Italy19 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

F. Bassanini - Government Reform in Italy20 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

F. Bassanini - Government Reform in Italy21 Devolution liberalization and privatization Liberalization. Three examples: Liberalization. Three 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 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: approx. 87 billions US Dollars)

F. Bassanini - Government Reform in Italy22 Devolution revenues from privatization in OECD countries ( ) Millions US Dollars France (F) Germany (G) Italy (I) Spain (S) Un. King. (UK) Japan (J) USA (US) Canada (C) Australia (AUS) Source: OECD

F. Bassanini - Government Reform in Italy23 Devolution total stock mkt cap/GDP The privatization program has contributed fostering the growth of the Italian equity market

F. Bassanini - Government Reform in Italy24 Devolution strengthening local Governments Strengthening stability of 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” 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 Strengthening sovereignty of Local Governments transferring general legislative powers to Regions (constitutional bill presented by the Government) Strengthening efficiency of Local Administrations Strengthening efficiency of Local Administrations reform of control mechanisms, “city managers”, local public managers chosen also from private sector, salaries linked to performance

F. Bassanini - Government Reform in Italy25 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 Municipalities 1997 : law n. 59 identifies a mandatory list of State tasks and plans the devolution of all other tasks to Regions, Provinces and Municipalities : five “legislative decrees” identify in detail the tasks to be transferred from central to local Government : five “legislative decrees” identify in detail the tasks to be transferred from central to local Government : Prime Minister decrees transfer groups of tasks together with related human and financial resources : Prime Minister decrees transfer groups of tasks together with related human and financial resources January 1 st, 2001 : end of devolution process January 1 st, 2001 : end of devolution process

F. Bassanini - Government Reform in Italy26 Devolution opinions of the public Has the “Bassanini reform” improved the efficiency of local Governments?

F. Bassanini - Government Reform in Italy27 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 Ministries 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) 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 Introducing “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

F. Bassanini - Government Reform in Italy28 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

F. Bassanini - Government Reform in Italy29 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

F. Bassanini - Government Reform in Italy30 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

F. Bassanini - Government Reform in Italy31 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

F. Bassanini - Government Reform in Italy32 Civil Service Reform the “privatization” of Civil Service Civil law for civil servants Civil law for civil servants public administration has the same powers as private sector employers Jurisdiction for civil service disputes Jurisdiction for civil service disputes since 1998 transferred from the Administrative to the Civil Courts

F. Bassanini - Government Reform in Italy33 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 representation 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

F. Bassanini - Government Reform in Italy34 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.

F. Bassanini - Government Reform in Italy35 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 approach 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”: Public administration “close to citizens and businesses”: favors the allocation of investment capital acquires relevance “beyond the national borders” partially sheds its authoritative nature

F. Bassanini - Government Reform in Italy36 A performance-oriented public administration the new public management An interministerial body of public managers, with few exceptions An interministerial body of public managers, with few exceptions Access by concours, a formal competitive examination 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 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 Managers’ salaries vary depending on responsibilities and performances

F. Bassanini - Government Reform in Italy37 A performance-oriented public administration the Resistances Administrations and judges still show a legalistic and statist culture 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 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 merit The refusal of the culture of evaluation and merit

F. Bassanini - Government Reform in Italy38 The new public budgeting from financial to economic budget The new public budgeting from financial to economic budget Before : a segmented spending model with more than expenditure units Before : a segmented spending model with more than expenditure units Now : about basic budget units, matching each Ministry’s target and responsibility Now : about basic budget units, matching each Ministry’s target and responsibility Only one administrative office responsible for each basic unit Only one administrative office responsible for each basic unit New economic budget showing the link between the use of resources and achievements New economic budget showing the link between the use of resources and achievements

F. Bassanini - Government Reform in Italy39 The new public budgeting new spending procedures Drafting the budget: no longer the traditional criteria of incremental spending 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 An effective cost analysis to back the annual financing law and the spending legislation More effective constraints on Government expenditure bills and parliamentary amendments More effective constraints on Government expenditure bills and parliamentary amendments An electronic mandate An electronic mandate Towards a permanent electronic market for public purchases Towards a permanent electronic market for public purchases Planning hiring of civil servants Planning hiring of civil servants

F. Bassanini - Government Reform in Italy40 The new public budgeting public sector personnel cost (% of GDP) Source: OECD and Italy DPEF

F. Bassanini - Government Reform in Italy41 The new public budgeting public deficit (% of GDP) Source: ISTAT and Italy DPEF

F. Bassanini - Government Reform in Italy42 The new public budgeting public debt (% of GDP) Source: ISTAT and Italy DPEF

F. Bassanini - Government Reform in Italy43 The new public budgeting primary expenditure in Italy and EU (% of GDP) Source: ISTAT and European Commission

F. Bassanini - Government Reform in Italy44 e-Government IT: the best resource for a leap forward in quality change IT: the best resource for a leap forward in quality change Electronic management of administrative documents, procedures and archives Electronic management of administrative documents, procedures and archives 12,000 billion liras (5,2 bill. USD) for investments in (11,000 already allocated, 1,300 coming from the UMTS licenses) 12,000 billion liras (5,2 bill. USD) for investments in (11,000 already allocated, 1,300 coming from the UMTS licenses) Electronic ID card (under experiment) Electronic ID card (under experiment) The “Government Portal”: a single gateway for public administrations The “Government Portal”: a single gateway for public administrations Towards electronic public procurements Towards electronic public procurements

F. Bassanini - Government Reform in Italy45 e-Government some first results «Electronic Revenue Service»: 100% income tax returns (40 millions per year) are filed and reviewed electronically «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) 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 Electronic signature (having legal value from 1998): more than 1 million signatures already certified by 8 companies A Single Administrative Network A Single Administrative Network

F. Bassanini - Government Reform in Italy46 The Italian Action Plan for e-Government Citizens will obtain any public service by simply applying to any front-office administration in charge 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 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) Each administration will be able to gather the information needed, wherever stored (all public services on line)

F. Bassanini - Government Reform in Italy47 The Third Global Forum On Reinventing Government The organization of the III Global Forum On Reinventing Government has been assigned to Italy The organization of the III Global Forum On Reinventing Government has been assigned to Italy The III Global Forum will take place in Naples from 15 to 17 March Delegations from more than 100 Countries are going to participate The III Global Forum will take place in Naples from 15 to 17 March Delegations from more than 100 Countries are going to participate Following the Italian proposal, the subject will be: “Fostering democracy and development through e-government” Following the Italian proposal, the subject will be: “Fostering democracy and development through e-government”

F. Bassanini - Government Reform in Italy48 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?

F. Bassanini - Government Reform in Italy49 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

F. Bassanini - Government Reform in Italy50 The Future of Reform Communication disseminating and sharing information to explain to citizens their new rights

F. Bassanini - Government Reform in Italy51 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

F. Bassanini - Government Reform in Italy52 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