Frequently Asked Questions
Question: What measures has the Monti government taken, or is planning to take?
What is the ‘spending review’?
The spending review is the government's analysis of the expenditure of government departments and agencies. Upon completing it,.the government draws up a plan to cut costs where necessary, make savings, and render government service more efficient.
Government service is often said to be "wasteful" and inefficiently managed. Yet many of the expenses incurred by government are necessary at the time they are budgeted. Later on, as needs change, and thanks to technological and social advances, these expenditure items have to be revised, and the government structures re-organised accordingly.
The purpose behind the spending review is to update the expenditure items, taking account of the socio-economic phase through which Italy is currently passing. The spending review is not only a "cost-cutting" exercise, but also addresses investment in and improving the effectiveness of the public sector.
Here is a summary of some of the measures adopted:
A) Government service
Goods and services. Government departments and agencies are required to procure goods and services through the Consip centralised system, according to an organisational model which links government requirements to following market dynamics.
Any contracts not concluded through this system are null and void and create tax liability and attract disciplinary penalties. All government departments are required to reduce their spend on goods and services, to ensure saving of 480 million euro in 2013, 960 million in 2014 and 1,600 million in 2015.
Personnel. Ten per cent of all civil service posts will be lost, and 20% of executive grade civil servant posts. The latter may placed on standby for two years, and be paid an allowance equivalent to 80% of their basic salaries.
Meal vouchers. The value of meal vouchers for all, including executive grade, civil servants is capped at seven euros.
Rents. The government may use local authorities’ real estate assets free of charge, and rents paid to third parties will be renegotiated with a discount of 15% as from 2015. The procedure for the sale of service accommodation owned by the Ministry of Defence will also be stepped up.
Official cars. Beginning in 2013, expenditure on procuring, using, maintaining and leasing vehicles will be reduced by 50%. On July 17, the Civil Service Department published the number of official cars withdrawn from service in the first six months of 2012 on its website.
External advisers. Retired civil servants may not be retained as external advisers.
Public bodies and agencies. A number of public bodies will be abolished, including Associazione Luzzatti, Fondazione Valore Italia and the Agenzia per lo sviluppo del settore ippico-ASSI. The Amministrazione autonoma dei Monopoli di Stato and Agenzia del territorio were merged, respectively, into the Agenzia delle dogane and the Agenzia delle entrate on December 1, 2012. On January 1, 2014, Società per lo sviluppo dell'arte, della cultura e dello spettacolo - ARCUS S.p.A., will be put into liquidation.
Directors’ emoluments. Directors of unlisted companies with direct and indirect links to government agencies and departments may not be paid annual emoluments in excess of 300,000 euro.
B) Schools and universities
Undergraduates who fail to complete their course within the prescribed deadlines. Universities may increase the standard fees for students failing to keep up with their courses: by 25% in the case of household incomes of up to €90 million, by 50% for incomes between €90,000 and €150,000, and by 100% in the case of incomes in excess of €150,000. Students who pass all their examinations during the course will not have their fees increased if their household income is below €40,000.
Fifty per cent of the revenue from increased fees will be used to provide bursaries, with the remainder to subsidise student accommodation services, counselling, catering and care services.
C) Justice
Phone tapping. The costs of phone tapping will have to be be rationalised, saving an estimated €25 million in 2012.
D) Health care.
Drugs and medicines. As from 2013, pharmacies will have a 2.25% discount on drugs and medicines, and pharmaceutical companies 4.1%.
Doctors are also required to indicate the active principle alone on prescriptions and not the name of any specific product. They may, however, specify the brand, but must indicate the reason for so doing on the prescription.
The National Health Service. NHS funding will be reduced by 4.7 billion between now and 2014.
Hospitals. Hospital bed numbers will be cut to 3.7 per thousand inhabitants.
E) Provinces-Regions-Municipalities
In the spending review decree, a number of Provinces will be abolished, based on their size and population: on July 20, the Council of Ministers laid down the criteria for reorganising the Provinces: the Local Authorities Council will submit a reorganisation plan, Region by Region, within 70 days. The Regions will have a further 20 days to forward it to the government to take a decision in the form of an Act of Parliament. Provinces at least 2,500 km² in size and with a population of at least 350,000 will not be abolished.
Measures will be issued to encourage mergers between small municipalities, and for the institution of 10 metropolitan cities: an ad hoc Conference will be tasked with drawing up and adopting the Charters or Statutes of these cities.
Provinces will no longer be able to recruit personnel under indefinite term contracts.
Personal income tax revenue payable to the Regions running a health care deficit will rise from 0.5% to 1.1%.
F) Defence
At the 6 April, 2012 Council of Ministers meeting the government approved the bill to reform the structures, organisation and the military and civilian personnel employed by the Ministry of Defence. The purpose of the reform is to better rationalise available resources while enabling the Army, Navy and Air Force to fall into line with the quality standards of other countries, raising the expenditure of the Ministry to 50% for personnel and 25% for training and investment. The spending review decree also deals with Ministry of Defence expenditure by requiring cuts and savings totalling €1 billion in 2013 and 2014, and €100 million in 2012. These savings will be achieved through goods and services procurement and from the sale of Defence Ministry real estate assets.
Page published on the Augyst 30, 2012.
