PUBLIC ADMINISTRATION REFORM IN ITALY

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

3. 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)

5. 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

6. 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 The Main Areas of Reform

7. 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

8. Devolutionliberalization and privatization • Liberalization. Some 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 • 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 … world largest privatization program (total revenue up to end 1999: 91 billion Euro)

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

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

11. Devolutionstrengthening local Governments • Strengthening 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” 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 approved by the Parliament) • Strengthening efficiency of Local Administrations reform of control mechanisms, “city managers”, local public managers chosen also from private sector, salaries linked to performance

12. 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: 97 Prime Minister decrees transfer groups of tasks together with related human resources (23.000 units) and financial resources (18.6 billion Euro) • January 1st, 2001: end of devolution process

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

14. 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 • Introducing “Agencies”: non-ministerial bodies with technical and executive tasks • “Central Government Local Offices”: merging several State local offices into a single “interministerial” body

15. Reorganization of Central Governmentreform of the Prime Minister’s 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

16. 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 -Ministryof 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

17. 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

18. 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

19. 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 • Few consolidated texts replace thousands of laws and decrees • Annual simplification laws enabling government to abolish or simplify existing procedures, authorizations and licenses.

20. Simplificationsome initial results • 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 • 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

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. 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

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

26. Simplificationthe opinion of the public Do you think it is useful? Do you know that in most cases all you need is a self-declaration? 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 • 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

28. One stop shops • Average duration of proceedings in 100 one stop shops 56,6days from the presentation of the request • one stop shops realised (data by 30/06/2000) 37,8%of Municipalities with59,5%of residents • Turn-key contract for the supply of109 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-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

31. 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

32. The high civil service payment system • Before: 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 29/93 After the CCNL

34. 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

35. 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

36. 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

37. 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

38. 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.

39. 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 Ministry’s 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

40. The new public budgetingnew 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

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

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

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

44. The new public budgetingprimary 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 change • 6,2 bill. Euro for investments in 2000-2002 • Electronic ID card (under experiment) • electronic public procurements • «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) • Electronic signature (having legal value from 1998): more than 1 million signatures already certified by 8 companies

46. 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

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

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