Italian Reform Agenda 2014 · FDI attraction plan Planned In progress Done 4 . Proportional system...

Italian Reform Agenda 2014

Ministry of Economy and Finance

June 9, 2014

Schedule for reforms


STRUCTURAL REFORMS

Actions Mar. Apr. May Actions Jun. July

Jobs Act (simplification of

FTCs and Apprenticeships)

Measures to fight corruption in the

public administration

Social housing plan

Reform of administrative justice and

governance

Cut in labour tax wedge

(IRPEF and IRAP)

Single labour market code

Implementation of the

Youth Guarantee Plan for Italy

Enabling law to improve work - life

balance

Reform of the public administration Enabling law to reform active and

passive labour market policies

Open data plan for the public

administration

Administrative simplification and

efficiency

Approval of the National Airports

Strategic Plan

Enabling law to reshuffle

unemployment schemes

Reform of the maritime sector,

transport infrastructure and

logistics

National plan for school facilities

Planned In progress Done

2



STRUCTURAL REFORMS

Actions Sep. Actions Sep. Oct.

New electoral law Simplification and transparency of local public

services

First approval of the Constitutional Reform Annual law on competition

Incentives to private investments in R&D Implementation of ‘Destinazione Italia’ strategy

Strengthening the Central Guarantee Fund for

SMEs Full implementation of the National System for

Evaluation of Schools

Strengthening the Allowance for Corporate Equity

(ACE) National Plan for tourism and culture

New resources for networks of firms and venture

capital Infrastructure plan

Reduction of energy costs for businesses Stable framework for settling the PA trade

payables

Voluntary disclosure of financial information on

undeclared taxable revenue or income held abroad

Additional funding to complete the settlement

of PA’s payments in arrears


3



STRUCTURAL REFORMS

Actions Oct. Nov. Dec. Actions Dec. 2015 2016 2017

New framework for Public

Private Procurement

National extension of the

experimental social inclusion

programme

Regulatory review

(simplification)

Implementation of a strategic

revision of defence

Measures for environmental and

land protection

Healthcare reform

Measures in favour of agriculture

and agri-food industry

Privatisation and dismissals

programme

Reform of the real estate market

Spending Review: €4,5 bn in

2014, €17 bn in 2015 and €32 bn

in 2016

Reform of the Italian Road Rules Implementation of the enabling

law on tax reform

Restructuring in rail and local

public transport

Reform of the educational

system to overcome skills

mismatch

Implemention of the European

Infrastructure Plan

FDI attraction plan


4

Proportional system with a

majority bonus

Winning party with more

than 37 per cent of the vote gets a

majority

(at least of 340 out of 630 seats)

If no party reaches 37

per cent, run-off for the two

leading parties or coalitions

(two-round system)

A minimum number of

votes required to

enter Parliament

Seats for each voting district in proportion to its

population

Electoral rolls must

ensure gender equality

THE INSTITUTIONAL ARCHITECTURE

PURPOSE

A stable government over the entire 5-year term.

Electoral law reform

TIMELINE

The bill has already been passed in the Chamber of Deputies and is now being

considered by the Senate. Final approval is expected by September 2014.


5

Single chamber (Chamber of Deputies) is

elected and can form the

Government.

The new Senate

represents localities.

Reduction in senators from

315 to 143

Lower legislative operating

costs

Reform of Title V to abolish ‘concurring’

State-Regional powers and redefine ‘exclusive’ powers of

the State and ‘residual’ powers of

the Regions

Abolition of the National

Economic and Labour Council

(CNEL)

THE INSTITUTIONAL ARCHITECTURE

PURPOSE

Reduce the time needed to pass laws, cut the cost of politics and reduce

conflicting jurisdictional claims.

Constitutional reform

TIMELINE

Bill has been presented to the Parliament.

Final approval is expected by December 2015


6

Cut personal income tax (IRPEF) by

approximately €10 billion, funded in part by savings from the

spending review

Net pay increase of approximately

€1,000 per year for employees with pre-tax earnings under

€26,000

Cut the regional business tax (IRAP) paid by companies by at least 10 per cent, funded by a

simultaneous increase in the

financial transactions tax

THE STRATEGY

PURPOSE

Increase in the disposable income of low earners by reducing the tax wedge and

stimulating consumption. Foster business competitiveness.

Reduce the tax wedge

TIMELINE

May 2014


7

Completion of the spending

programmes co-financed by the

2007-2013 structural funds,

also by additional reprogramming

Adoption of the the 2014-2020

Partnership Agreement to

ensure a timely launch of the new NOP and

ROP

Launch of the new

programming under the

Development and Cohesion

Fund

Make the National Regional

Cohesion Agency operational

THE STRATEGY

PURPOSE

Use available EU and national resources to boost the competitiveness, promote

employment and social cohesion, as well as strengthen the administrative capacity to

guarantee the effective use of funds

Cohesion policy and Southern Italy

TIMELINE

August 2014 and 2015-2017


8

Boost R&D investment

and tax credits for research

activities and hiring of

researchers

Tax benefits for firms to upgrade

production capacity

Strengthen the Central

Guarantee Fund to support

lending to SMEs

Cut energy bills for SMEs by 10 per cent diversify supplies and

complete deregulation in

electricity and gas markets

Implement ‘Destinazione Italia’ with simplifications

and incentives dedicated to

foreign investors

THE STRATEGY

PURPOSE

Help boost investments focused on innovation and revitalise corporate lending. Cut costs for

SMEs by improving business environment. Promote investment attraction in Italy.

Boost investment and cut energy costs

TIMELINE

September 2014 and December 2014 (for investment attraction)


9

Expand institutional

investment in SMEs,

incentives for credit

alternatives such as mini-

bonds

Strengthen and refinance the Allowance for

Corporate Equity (ACE)

Funds for Business Networks

Incentives to invest in

publically traded SMEs

Support seed and venture

capital as well as new

innovative firms

THE STRATEGY

PURPOSE

Extend the sources of corporate funding, consolidate corporate financial structure

and reinforce business networks.

privati

Corporate finance for growth

TIMELINE

September 2014


10

Re-organise regulations

governing local public services and upgrade

municipal companies and

local utilities

Deregulate and implement

existing regulations.

Adoption of the Annual

Competition Law

Enhance marketing of

‘Made in Italy’ products

Tax relief and streamlined

procedures for FDI.

Strengthen the Customs One-Stop Shop for Companies

Overhaul rules governing

deductible costs of business

transactions with suppliers in blacklisted countries

THE STRATEGY

PURPOSE

Release market potential. Support internationalisation and exports of Italian companies,

facilitate doing business in Italy for foreign companies.

Facilitate competitiveness and internationalisation

TIMELINE

September 2014


11

Electronic invoicing

compulsory for the entire PA by March

2015

Ban on hiring for agencies not meeting

payment deadlines

Possibility to reschedule

debt in case of temporary lack

of liquidity

State Guarantee for

current payables

transferred to financial

intermediaries

Payment of debts through

cash advances to local

authorities for additional €13

billion

Fund for financing localities’

payments to subsidiaries

THE STRATEGY

PURPOSE

Turn the account settlement deadlines of general government compliant with the EU

Directive. Full payment of past due payables by the PA.

Settle PA trade payables in accordance with EU directives

TIMELINE

October 2014


12

Extend the maximum duration of

FTCs without causality

requirement from 12 to 36

months

Limit FTCs to 20 per cent of

total workforce, unless waived by collective agreements

FTCs can be

extended up to 5

times in 36 months

Apprenticeship contracts must

be established. Simplification of vocational

training

Apprentice compensation set at 35 per

cent of employee

compensation outlined in the

national labour

agreement

Digitise the Social Security

Compliance Certificate (DURC)

THE FRAMEWORK

PURPOSE

Reduce rigidities and streamline the labour market, encouraging the use of flexible

contracts for young people entering the labour market.

Fixed-term contracts (FTCs) and apprenticeship contracts

TIMELINE

March 2014


13

Draft a unified

regulatory code for all

forms of employment

contracts

Introduce, on an

experimental basis, a

minimum hourly wage, to be applied

to all permanent employees

Streamline and simplify hiring and

employment procedures

and requirements

Require a single notice to the PA for each event, while the PA must notify the other relevant agencies

Revision of the

employment sanctions

regime

Electronic communication instead of paper filing

requirements

THE FRAMEWORK

PURPOSE

Strengthen opportunities for labour market entry and streamline existing labour

contracts. Streamline procedures related to hiring and employment.

Streamline contracts and simplify employment procedures

TIMELINE

July 2014


14

Young people can access an ICT platform,

with a network of customised services on

training, employment and job opportunities

Lines of actions: i) reception; ii) placement training; iii) orientation; iv) apprenticeship; v) traineeship; vi) civil service; vii) support to self-employment and entrepreneurship; viii) professional mobility; ix) employment

bonus. These measures will be included in the ‘Youth Guarantee’ National Operational

Programme

Monitor the implementation and financing of individual measures through

performance indicators

THE FRAMEWORK

PURPOSE

Ensure that young people (ages 15-29) receive an offer of quality employment, apprenticeship

or training within four months of leaving formal education or becoming unemployed.

Implement Italian ‘Youth Guarantee’ Plan

TIMELINE

May 2014


15

Streamline existing

incentives for hiring and self-employment.

Establish a National

Employment Agency

Streamline entities providing safety-nets and active policies.

Upgrade public/private

partnerships in employment

services

Universal maternity

benefit and social security

contributions for working mothers

Tax credit for female workers and encourage employers to provide child-care services

THE FRAMEWORK

PURPOSE

Ensure that users can benefit from essential services relating to active labour market

policies nationwide. Achieve work-life balance.

Employment services, active labour policies and work-life balance

TIMELINE

September 2014


16

Revise eligibility criteria and

procedures to benefit from wage supplementation

schemes

Allow access to the ‘Wage

Supplementation Fund’ only after all other possibilities

of reducing working hours

have been exhausted

Change unemployment insurance (Assicurazione

Sociale per l’impiego - ASpI), extending it to short-term workers

Revise the eligibility requirements for universal income

support to families to adjust benefits and incorporate

features of labour market inclusion

projects

THE FRAMEWORK

PURPOSE

Ensure a universal guarantee system to all workers in case of involuntary

unemployment. Launch a programme to fight absolute poverty.

Income-support measures and fight against poverty

TIMELINE

July 2014. Extend universal income support nationwide by the end of 2014.


17

New regime for directors and more efficient

distribution of

personnel

Limit executive salaries.

ensure civil servants’ integrity

Strengthen e-government. Fully integrate

databases, statistics and

develop a national open data platform.

Regulatory review to simplify the

legal framework. Simplify planning

permission procedures and

reform the ‘Conferenza dei

servizi’

Merge mandatory

administrative communicatio

ns into a single notice

Measures to prevent and

suppress corruption and

illegality in PA.

Legislative measure to

regulate lobbying

THE FRAMEWORK

PURPOSE

Upgrade and improve skills of public employees. Efficiently organise offices. Increase

general government accountability, participation and reuse of public data. Simplify the

regulatory framework and reduce costs.

Modernise the Public Administration (PA)

TIMELINE

May 2014. October 2014 for simplifications.


18

Simplify the relationship between

citizens and tax authorities. Revise tax

expenditures, company income tax and consider flat-rate

taxes for smaller taxpayers

Ensure stable tax rules and legal certainty.

Protect the environment through new fuel and environmental taxes.

Reform the land register

Improve transparency and

access to tax procedures

through ‘tutoring’ and ‘cooperative

compliance’

Allow ‘voluntary disclosure’ to

repatriate unreported overseas

assets through a request submitted by the taxpayer

THE FRAMEWORK

PURPOSE

Design a simpler, more equitable and growth-friendly tax system.

Identify unreported income and improve voluntary tax compliance.

A more equitable and growth-friendly tax system

TIMELINE

All decrees to be adopted by March 2015. For voluntary disclosure: September 2014.

Completing the reform of the land register will require at least four years.


19

Reform of administrative

justice. Transparency

and simplification of tendering processes

Improve the efficiency of civil

proceedings, accelerate the

process to obtain a writ of

execution. Expand

mandatory mediation

Implement e-civil proceedings

(Processo Civile Telematico - PCT) in all offices, and rollout of PCT in

the criminal justice sector

Revise criminal procedures and

the statute of limitations.

Introduce the crime of self-

money-laundering

Establish traineeships to

provide experience to new entrants into legal

professions. Increase

administrative staff

THE FRAMEWORK

PURPOSE

Improve access to the justice system, primarily for businesses. Design an efficient and

effective system to meaningfully guarantee legal rights.

Fast-paced and accessible justice system

TIMELINE

By 2014


20

Revise the prison system.

Non-prison sentencing alternatives

Reduce pre-trial detention in prison facilities. Increase cooperation with

surveillance judges

Reduce tax and social security

contributions for companies hiring ex-convicts

Specific action plan on prison

health care

Fully implement the ‘prison plan’, to significantly increase prison capacity from 2014 levels

THE FRAMEWORK

PURPOSE

Solve the problem of prison overcrowding, improve prison conditions and increase

rehabilitation opportunities for offenders.

Transparency and guarantee of rights

TIMELINE

June 2014


21

Build new schools

Implement safety, energy efficiency and anti-seismic measures

More effective management of national, EU and INAIL funds for

school construction through a system of real-estate funds and 30-year

mortgage loans with EIB and other entities. Set up a dedicated

Government mission unit. Streamline procedures for awarding contracts

and completing projects

Implement a Register of school

buildings to monitor

infrastructure conditions and

renovation projects

CHALLENGES AND OPPORTUNITIES

PURPOSE

Ensure school safety and adequacy, improve infrastructure for students through a more

efficient allocation and use of available funds.

A plan for schools

TIMELINE

July 2014


22

Fully implement the Regulation on

the use of the National

Assessment System in Schools. Assess and design incentives for the best universities

Reward the best skills by revising hiring practices

and employment contracts for teachers and

principals

Re-launch the ‘Foundation for

Merit’, to bring the labour market

closer to the best students. Provide fast-track financial

aid to students

Strengthen student loans with income-contingent repayment

Strengthen the Erasmus

programme. Facilitate visas

for students and

researchers


PURPOSE

Provide schools with benchmarks, as well as with tools to conduct assessment and reward

merit. Increase the number of university enrolments and promote meritocratic systems

rewarding students’ commitment. Increase the internationalisation of Italian universities.

Merit, assessments and internationalisation of education

TIMELINE

By 2014. For the National Assessment System: September 2014.


23

Support apprenticeship, traineeship and

alternation mechanism

between education and work. Synergy with the Youth

Guarantee

Strengthen technical

education to reward

experience. Measures to

promote hiring of researchers by

businesses

Measures to speed up private sector research. Programmes for innovative start-

ups and university spin-offs

Extend English teaching to

primary schools.

Provide Wi-Fi in every school

Introduce digital

technologies in teaching

methodologies, language and

content


PURPOSE

Provide students with work opportunities during the school years.

Ensure productivity gains through education, innovation and research.

An educational and research system open to labour market

TIMELINE

2014 - 2015


24

Appropriate regulations on public-

private partnerships

(PPP)

Manage tenders centrally, by

establishing a single management unit

with specific responsibilities. Provide single standards for

tenders, procedures and contracts

Establish a national fund for PPP

investments in quality infrastructure projects (Equity fund

for greenfield projects), in terms of

economic and financial

sustainability

Set a timeline for funding

projects under PPP agreements

Ensure transparency

and monitoring during

construction and later stages of project

management


PURPOSE

Bring private capital on board in the construction of major infrastructure projects and

develop clear private-public partnership arrangements.

Bringing the private sector on board for major infrastructure work

TIMELINE

October 2014


25

Complete network projects, including the Italian sections

of cross-border networks. Complete

the European corridors financed by the European

Union

Complete reforms as part of the European Network Design, including: reform of CIPE and project approval procedures; reform of ‘objective law’ to clarify roles of various levels of government; as well as the extension

of existing tax rebates and concessions to telecommunications network


PURPOSE

Provide flexible and innovative regulatory tools to the implementation process of the

major European network infrastructure programmes.

Complete infrastructure

TIMELINE

September – December 2014


26

New resources for the national

Fund supporting

access to rent and mortgages

Plan to fund renovations of

public buildings and dwellings,

including energy efficiency,

electrical, plumbing and anti-seismic

upgrades

Measures to promote

renovations to convert existing

buildings into social housing estates.

Improved the fight against squatting

Deregulate the

commercial and industrial rental market. Facilitate land use upgrades

Standardise tax regulations for Real Estate

Public companies

(SIIQ) in line with those of real-estate

funds


PURPOSE

Support controlled rents and increase the supply of social housing estates.

Facilitate real estate investment and boost the state property federalism process.

The Housing Plan and the real estate market

TIMELINE

April 2014. For the real estate market: November 2014.


27

Approve the National

Airport Plan

Reform the sea transport

system through a

Harbour and logistics Plan

Reorganise local public transport with

national uniform criteria. Allocate

public funds based on performance

criteria with penalties for non-performance

and effective monitoring systems

Co-financing of integrated transport

projects (PUM). Optimise national

and regional universal services.

Allow subcontracting in public

procurement

Reform the Road Code.

Support intermodal links

with rail and sea

transportation


PURPOSE

Streamline the national airport system and reorganise the entire port industry. Industrial

reorganisation of local public transport and rail services. Improve transport services for citizens.

Air, sea, rail and road transport

TIMELINE

May 2014 for air and sea transport. October 2014 for local public transport and

December 2014 for rail services. By 2014 for road transport.


28

Established a ‘mission unit’ to

implement measures to

prevent hydro-geological risk

and soil protection

Clean-up polluted sites of national interest (SIN).

Relocate heavy industrial plants currently in

densely populated areas. Design regulations on

proper waste management tariffs

Incentivise environmental clean-up and rehabilitation

efforts by polluters and promote

industrial redevelopment

projects

Simplify procedures to access CAP funds.

Establish an Organic Farming Information System. Implement

labelling laws to protect the ‘Made in Italy’

trademark


PURPOSE

Make the most of Italy’s resources, land and environment. Promote competitiveness and

export potential of agricultural sector and the quality of the Made in Italy products.

Green growth and efficient use of resources

TIMELINE

November 2014


29

Strengthen prevention policies to reduce reliance

on the NHS. Prepare a New

National Prevention Plan.

Systemise data collections to enable the use of electronic health files. Finalise the New Health Pact

for the 2014-2016 period

Reorganise hospital health care, shifting activities to Regions and strengthening service networks.

Strengthen the role of pharmacies

Strengthen monitoring of health care adequacy and

grant minimum standards of service

provision


PURPOSE

Increase the efficiency and financial sustainability of the NHS, improve the quality and the

appropriateness of services. Improve the local health care system.

The health sector

TIMELINE

2014 - 2015


30

Adopt the National Strategic

Tourism Plan. Introduce financial

tools to encourage

entrepreneurs and upgrade

facilities

Support tourist and cultural business networks. Grant

incentives to greenfield and brownfield tourist

development projects that create jobs. Start a

digitisation plan to increase the online presence of hotels

and tourism facilities

Develop a single set of nationwide

regulations on hotel

classification, establishing

minimum standards of excellence

Encourage investment, develop specialised tourist

centres, primarily in Southern Italy.

Improve the schools for professionals in

tourism related services


PURPOSE

Take advantage of the Italian tourism potential.

Affirm the uniqueness of Italy by protecting and promoting cultural activities and assets.

Tourism and culture as drivers of growth

TIMELINE

October 2014


31

Implement the National Strategy

for Deprived Areas by identifying, in agreement with

Regions, a project prototype in every

Region and Autonomous

Province

Use national resources to

improve education,

health services and transport

services in deprived areas

Direct EU funds, supplemented by

national funds, towards development projects

enhancing natural, cultural and productive assets, including local traditions, in deprived

areas

Define a timeline to implement an overall strategy for deprived

areas. Ensure effective coordination

among levels of government and

enforce permanent monitoring of funded

initiatives


PURPOSE

Reverse current population trends in deprived areas, by enhancing their development

potential and bringing essential services in line with the needs of residents.

Revitalising the country’s deprived areas

TIMELINE

2014 for the actual start of 21 prototype projects, one for each Region and Autonomous

Province. A financial report on progress of the funded initiative will be submitted to CIPE

by September 2014.


32

Apply flexibility for reforms with medium- and long-term impact. Mitigate any short-term negative impacts, and

allow the full use of structural funds for investment and the Youth Guarantee

Pursue the strategy to settle the Public Administration’s

payables according to the arrangements agreed with the European Union

Realise savings from the Spending Review

€4.5 billion in total savings in 2014

€17 billion by 2015 and €32 billion by 2016

COUNTRY’S RESOURCES

PURPOSE

Ensure the deficit does not exceed 3.0 per cent of GDP and adopt the best strategies to

comply with the debt and structural balanced budget criteria.

Fully implement the Spending Review.

Compliance with the European rules, flexibility and spending review

TIMELINE

July 2014. 2014-2016 for Spending Review.


33

Divestment of stakes in companies directly or

indirectly owned by the State, through annual

privatisation plans

Full implementation of State property

federalism. Strengthening of the role of INVIMIT to increase

the value of and divesting State property

Design instruments to deliver effective and quick divestment procedures at

local level, as well as town-planning regulations

especially designed for achieving these goals

COUNTRY’S RESOURCES

PURPOSE

Restore greater efficiency and competitiveness to the economy, promote the development of

the stock market, reduce public debt and enhance State property values.

Privatisation and real estate divestment

TIMELINE

Divestment and privatisation Plans for 2014-2017 for 0.7 per cent of GDP per year.


34

Place growth and employment at the centre of European policies. Revitalise the EU 2020 Strategy to focus on employment and poverty reduction, giving impetus to

the reform process by allowing the fiscal flexibility

necessary to implement productive reforms

Continue efforts to complete the Economic

and Monetary Union, building upon the

December 2013 Report ‘Towards a Genuine

Economic and Monetary Union’

Promote better use and monitoring of European

resources (Structural Funds, EIB, Youth

Guarantee, Flagship Initiatives). Proceed with

the banking union to deliver on the agreed-upon

commitments

BRING ABOUT CHANGE IN EUROPE

PURPOSE

Revitalise the European growth strategy and reduce social inequality.

The Italian presidency of the EU

TIMELINE

Second half of 2014


35

THE VALUE OF TIMELY ACTION

Macroeconomic impact of the structural reform


Macroeconomic impact of planned reform measures

Cumulative impact on GDP

2014 2015 2016 2017 2018 2019 2020

IRPEF – personal income tax credit on

employees’ compensation 0.1 0.3 0.4 0.6 0.6 0.7 0.7

IRAP – corporate income tax reduction 0.0 0.1 0.1 0.1 0.1 0.1 0.1

Review of financial activities taxation 0.0 0.0 -0.1 -0.1 -0.1 -0.1 0.0

Spending review -0.1 -0.2 -0.3 -0.2 -0.1 -0.1 0.0

Settlement of Public Administration

trade payables for €13 billion in 2014 0.0 0.3 0.3 0.3 0.2 0.0 -0.1

Deregulation and streamline of

procedures * 0.1 0.3 0.4 0.6 0.9 1.1 1.3

Reform of the labour market ** 0.2 0.3 0.4 0.5 0.8 0.9 0.9

Total 0.3 0.8 1.3 1.8 2.4 2.7 2.9

* L. 27/2012, L. 35/2012, L. 98/2013 and Draft Bill under discussion in Senate No. 958

** L. 92/2012 as amended by L. 78/2014

36

Italian Reform Agenda 2014 · FDI attraction plan Planned In progress Done 4 . Proportional system...

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