Italy

VII - Six-Pack

The ‘Six-Pack’ is a package of six legislative measures (five regulations and one directive) improving the Economic governance in the EU. The Commission made the original proposals in September 2010. After negotiations between the Council and the European Parliament, the package was adopted in November 2011 and entered into force on December 13, 2011. Part of the ‘Six-Pack’ measures applies only to the Eurozone member states (see the individual titles below).        
The ‘Six-Pack’ measures reinforce the Stability and Growth Pact (SGP), among others by introducing a new Macroeconomic Imbalances Procedure, new sanctions (for Eurozone member states) and reversed qualified majority voting. Also, there is more attention for the debt-criterion.
(
http://ec.europa.eu/economy_finance/economic_governance/index_en.htm)

Negotiation
VII.1
What positions did Italy adopt in the negotiation of the ‘Six-Pack’, in particular in relation to the implications of the ‘Six-Pack’ for (budgetary) sovereignty, constitutional law
, socio-economic fundamental rights, and the budgetary process?

The position of the Italian government in the negotiation of the “Six Pack” has been essentially in favor of the agreement, with the expression of no clear opposition to some particular measures, and with the traditional bi-partisan support (see question V.3, and also question I.1) of both the main center-right (at that time, the majority supporting the government Berlusconi IV) and center-left parties.

The relevant reports «on the participation of Italy to the European Union» issued by the Department for the European Affairs of the Government (Presidenza del Consiglio dei Ministri)[1] did not formalize any particular point raised by the Italian representatives, if not the contribution in identifying and develop transparent methods, based on clear and shared analysis, for the assessment of national progress in implementing the Europe 2020 Strategy.[2]

The only specific debate held in Parliament was in the context of the XIV Committee of the Senate on European affairs, on 11 and 16 November 2010 (see http://leg16.senato.it/japp/bgt/showdoc/frame.jsp?tipodoc=SommComm&leg=16&id=512051; http://leg16.senato.it/japp/bgt/showdoc/frame.jsp?tipodoc=SommComm&leg=16&id=512300). General critical remarks were made on the «effective involvement of the Parliament», apparently both regarding the negotiation of the measure and regarding the possible consequences for the budgetary process (see in particular Senator Marinaro, PD, in the debate on the 16 November); and, in terms of preoccupations on national budgetary sovereignty, a point was made in the same context by Senator Di Giovan Paolo (PD) on the fact that «this procedure will affect, in a substantial manner, the preparation of financial maneuvers of the 27 countries of the European Union».

A general report on all the measures, in the framework of the Reasoned Opinion on Subsidiarity, was issued,[3] pleading for a «degree of flexibility» in the evaluation of economic and budgetary policies adopted by Member States, in the context of macroeconomic surveillance; for a «global approach based on several factors» with particular reference to the criteria to assess whether the reduction of the public debt by a Member State can be considered satisfactory; for a limitation of the criterion of reverse majority only to the part of the sanctions on interest bearing and non-interest-bearing deposits for “non virtuous” Member States, keeping the current system of voting (by qualified majority) for each subsequent sanction («otherwise an imbalance between the right of initiative of the European Commission and the permanence of the ultimate decision-making power in the hands of the Council» would arise).

What is in any case relevant to note in answering such a general question, is that the course of action for the resignation of Silvio Berlusconi as head of the government, and its replacement with the so called Monti’s “technical” government in November 2011, developed in the context of the strengthening of mechanisms for coordination and monitoring of economic policies, but was perfectly coincident with, and influenced by, the negotiation of the Six Pack and its aftermath (see Question I.1).

Directive 2011/85/EU       
Council Directive 2011/85/EU of 8 November 2011 on requirements for budgetary frameworks of the Member States

Implementation
VII.2
What measures are being taken to implement Directive 2011/85/EU on requirements for budgetary frameworks (required before 31 December 2013, article 15 Directive 2011/85/EU)?

 Under Italian law, the «Legge comunitaria» was historically the regulatory measure (typically the bill of law to convert a previous ad hoc Decree into law) that the Italian Parliament every year enacted (and was compelled to enact, pursuant to Law 9 marzo 1989 n. 86 before and Law 4 febbraio 2005 n. 11 afterwards) to incorporate into its domestic legal order all the norms produced and the standards set by European Union law (obviously, if these were in need of implementation).

A new procedure has been dictated by Law 234 of 2012 based instead on the splitting of the annual «Legge comunitaria» in two distinguished legislative provisions: a «Legge di delegazione europea» and a «Legge europea». The content of the first is confined to those provisions of delegation necessary for the transposition of EU directives by the government; while the latter, in general, should contain provisions directly designed to ensure the adjustment of the internal legal order to European constraints.

Legge Comunitaria 2012

In relation to the implementation of the Directive 2011/85/EU, some steps were already taken in the first half of 2012 with the proposal of the Legge comunitaria 2012 (already approved at the Camera dei Deputati as Bill C.4925, then under examination at the Senato as Bill S.3510, see http://leg16.senato.it/leg/16/BGT/Schede_v3/Ddliter/38910.htm), and finally implemented by means of Law n. 97/2013 («legge europea» 2013): a specific Article 8[4] was added during the examination by the internal Committees, in order to dictate a guiding principle for the government to implement with a «Decreto legislativo» (a delegated act with the force of law) the Directive 2011/85/EU on requirements for budgetary frameworks of the Member States. The provision compels the government, as delegated legislator, to «coordinate the implementation of the Directive with the institution by Constitutional Law. n. 1/2012, of an independent body which will be assigned the tasks of analysis and monitoring the developments in public finance and evaluation of compliance with budgetary rules, as well as the introduction of specific budgetary rules».[5]

As a general framework, one can rely in any case on the European Commission Interim Progress Report on the implementation of Council Directive 2011/85/EU[6] , and conceptualize the existing Italian legislation we already mention in other answers (and recently reformed, as we say) as already complying with the large part of the European provisions, in this sense:

·         in terms of accounting and statistics, the objective of harmonising accounting systems and budget schemes across the general government sub-sectors is met in Article 2 of Law 196/2009 on Public Accounting and Finances — covering all general government sub-sectors excluding regional and local (municipalities and provinces) governments — and in the amendments to Law 42/2009 on fiscal federalism — covering regional and local governments; furthermore, Article 14 of Law 196/2009 requires the Ministry of the Economy and Finance to publish monthly cash- based fiscal data for central government, and quarterly consolidated cash-based fiscal data covering local government and social security are also available on the Ministry of the Economy and Finance’s website. A reconciliation table is then produced under the joint responsibility of the Ministry  and the ISTAT (Italian National Institute for Statistics).

·         In terms of forecasts, the same Ministry is responsible for delivering macroeconomic and budgetary forecasts; and Article 2(4) of Law No 39/2011 amending Law 196/2009 states that a separate methodological note detailing the assumptions used to produce macroeconomic forecasts is to be attached to the second section of the Economic and Financial Document (DEF). All these assumptions are published, as well as the results of their ex-post evaluation.

·         In terms of fiscal rules and of mechanisms of coordination across sub-sectors of general government (with the aim to strengthen fiscal discipline), the constitutional amendment adopted in April 2012 introduces the principle of a budget balance for the entire general government sector and the principle of a sustainable public debt (Article 1 amending Article 81 of the Constitution, see Question IX.4 also for the other linked relevant constitutional amendments); and sub-national governments -municipalities, metropolitan cities, regions, provinces and autonomous provinces – are required to contribute to public debt sustainability (Article 2(c) of Constitutional Law 1/2012, see again Question IX.4). Moreover, the so called ‘Internal Stability Pact’ defines the measures enabling local and regional authorities to «contribute to the achievement of public finance targets», with conditions for taking on new long-term secured loans and other sources of market financing («annual debt service has to remain below a ceiling defined in terms of a percentage of the revenue collected in the two years before the year when loans are contracted»).

·       In terms of medium-term budgetary framework – as already said under Question VI.2 – in 2009 the so called new “national accounting law” (L. 31 dicembre 2009, n. 196) was enacted, and soon some new amendments in 2011 (L. 7 aprile 2011, n. 39) with the aim of coordinating the Italian budgetary timeline with the European Semester. In this sense, the so called Economic and Fiscal Document (Documento di Economia e Finanza — DEF) is the annual key document for the rolling medium-term budgetary framework (see the details later under Question II.1), prepared by the Ministry of Economics and Finance and submitted to parliament by the government in April. It includes a “Stability Programme” (with objectives of economic policy and public finance forecasts for at least the next three years, broken down by sub-sector; a forecast of the main budgetary aggregates; an update of the budgetary forecast for the current fiscal year; a report on the sustainability of public debt; an analysis of sensitivity to GDP growth and to interest rates); detailed analysis, for at least the next three years, of macroeconomic trends, main fiscal aggregates assuming unchanged policies, results and forecasts for public administration debt and for the main expenditure categories, in particular public employment, social and healthcare; a scheme for the National Reform Programme. It can be then updated in September by the ‘Nota di aggiornamento del DEF’ (updating note); and in October, a budgetary package consisting of the budget bill and the stability bill is presented to parliament by the government, with the qualitative and quantitative measures for achieving the fiscal objectives set in the DEF (and in any September update), for the three reference years (Article 2-3 of Law 39/2011).

Implementation difficulties 
VII.3
What political/legal difficulties
did Italy encounter in the implementation process, in particular in relation to implications of the directive for (budgetary) sovereignty, constitutional law and the budgetary process?

As already mentioned under question VII.2, the implementation process was formally troubled: some steps were already taken in the first half of 2012 with the proposal of the Legge comunitaria 2012 (already approved at the Camera dei Deputati as Bill C.4925, then under examination at the Senato as Bill S.3510, see http://leg16.senato.it/leg/16/BGT/Schede_v3/Ddliter/38910.htm), and finally implemented by means of Law n. 97/2013 («legge europea» 2013): a specific Article 8[7] was added during the examination by the internal Committees, in order to dictate a guiding principle for the government to implement with a «Decreto legislativo» (a delegated act with the force of law) the Directive 2011/85/EU on requirements for budgetary frameworks of the Member States.

In the meantime, as already said, Law 234 of 2012 reformed the system of annual implementation into the Italian legal order of European directives, and some of the measures inserted in the bill of the Legge Comunitaria 2011 were actually replicated elsewhere, and the law never fully adopted.[8] Remarkably, a bill for the Legge Comunitaria 2012 was already presented in Parliament, with the aforementioned Art. 8 (see question VII.2) fully devoted to (the delegation to the government for the future) implementation of the Directive.

In the context of the discussion in the Camera, the only relevant debate arose during the examination of the XIV Committee (for European affairs, 4 April 2012, see http://documenti.camera.it/leg16/resoconti/commissioni/bollettini/pdf/2012/04/04/leg.16.bol0634.data20120404.com14.pdf).

In this context MP Gozi (PD) highlighted that «many of the provisions of the Directive have already been transposed into Italian law n. 196/2009, on public finance and accounting. But the most significant provision of the Directive is not implemented yet, and concerns the establishment of an independent authority for the control of the financial statements and the performance of public finances». He then went on and stated that the constitutional reform on Article 81 of the Constitution, at the time still under examination, provides that for the establishment of such an authority a law enacted by a qualified majority is necessary: this coincidence could in fact pose a problem of coordination, and even a possible antinomy in terms of procedural norms. He asked therefore for a clarification from the government. See further under question VII.5 for the chosen solution of the establishment of the Budgetary Committee.

Macroeconomic and budgetary forecasts     
VII.4
What institution will be responsible for producing macroeconomic and budgetary forecasts (article 4(5) Directive 2011/85/EU)? What institution will conduct an unbiased and comprehensive evaluation of these forecasts (article 4(6) Directive 2011/85/EU)?

In the current system, the Ministry of the Economy and Finance is responsible for delivering macroeconomic and budgetary forecasts, and for their evaluation (see Question VII.2), at least until an independent Fiscal Council will be actually established (see Question VII.5).

Article 2(4) of Law No 39/2011 amending Law 196/2009 stipulates that a separate methodological note detailing the assumptions used to produce macroeconomic forecasts is to be attached to the second section of the Economic and Financial Document (DEF). As already said before (see Question VII.2), all assumptions underpinning the macroeconomic and budgetary forecasts, as well as the results of their ex-post evaluation, are published by the Ministry of the Economy and Finance, in accordance with article 4(6) Directive 2011/85/EU.

Fiscal Council  
VII.5
Does Italy have in place an independent Fiscal Council (article 6(1) Directive 2011/85/EU: ‘independent bodies or bodies endowed with functional autonomy vis-à-vis the fiscal authorities of the Member States’)? What are its main characteristics? Does Italy have to create (or adapt) a Fiscal Council in order to implement Directive 2011/85/EU?

Italy did not already have an independent Fiscal Council in place as did some other Member States.

Constitutional Law[9] n. 1/2012 (the same law, adopted with the procedure of constitutional reforms, which amended the Constitution inserting the golden rule standards, see under Question IX.4) provides, in Article 5, for the establishment «of an independent body to be assigned the tasks of analysing and monitoring the developments in public finance and the evaluation of compliance with budget rules»; Article 1, section5, lit. D of the same Constitutional Law states that the body shall assume the name of «Parliamentary Budget Office» («Ufficio parlamentare di bilancio»), shall be based in Rome, in the context of the Parliament, and shall have «full autonomy and independence of judgment and evaluation».

As also provided by Law 243/2012, the Office will be composed of three members (one of whom is the Chairman) appointed with a decree adopted in agreement by the Presidents of the two Chambers, and chosen from a list of 10 personalities of «recognized independence and proven expertise and experience in the field of economics and public finance at the national and international levels» compiled by the competent parliamentary Committees on public finance.

The mandate of the members will last 6 years, and will be not renewable.

All these provisions were initially meant to enter into force, and therefore the Office was expected to be established, in January 2014.[10] Actually, the members have been finally selected on the 30th April 2014.[11]

Regulation No 1176/2011 on the prevention and correction of macroeconomic imbalances 
(
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32011R1176:EN:NOT)

MEIP difficulties    
VII.6
What political/legal difficulties
did Italy encounter and what debates have arisen, in particular about implications of the regulation for (budgetary) sovereignty, constitutional law, socio-economic fundamental rights, and the budgetary process?

No legal or political difficulties have arisen, nor have debates taken place on the implications of the regulation apart from the broader debates on Euro governance (see Question VII.1).[12]

As for the new macroeconomic imbalances procedure, the Italian rules on the budgetary process have undergone, in the last four years, important reforms. In 2009 the Italian Parliament passed the so called new “national accounting law” (L. 31 dicembre 2009, n. 196), and soon some new amendments in 2011 to (obviously) adapt it to the new timing of the European Semester (L. 7 aprile 2011, n. 39).

We had, then, the constitutional amendments of 2012 – following the ratification of the Fiscal Compact – and the related L. cost. 1/2012 and legge 24 dicembre 2012, n. 243 implementing the new principles of balanced budget. All these measures are discussed in detail in the directly related parts of this questionnaire. In any case, it is important to note that they all embody some important aspects of flexibility, and some important instruments for ex-post controls of the national and subnational budgets. In this perspective, relying also on some first academic commentaries,[13] one can consider Italy to have already implemented the necessary rules to accommodate the new Macroeconomic Imbalances Procedure of Regulation (EU) No 1176/2011, and therefore, it seems, no additional changes followed after its adoption. Const. Law 1/2012 also calls for a reform (still to be implemented) of the internal procedural rules of the two parliamentary Chambers. They will possibly contain new rules on the monitoring of the national and subnational budgets, and maybe also new tools pertaining to the envisioned “permanent dialogue” of art. 13 of Regulation (EU) No 1176/2011 with the European Institutions.

Both in the 2012 and 2013 application of the Alert Mechanism the European Commission decided that an in-depth review was warranted for Italy.[14]

More in particular, in the 2012 application it found that «(W)hile private sector indebtedness is not excessive in Italy, the high level of public debt and the need to consolidate public finances could exert pressures on private sector balance sheets»; and, in terms of country-specific commentary, Italy’s «scoreboard values are above the indicative thresholds in the areas of competitiveness and public debt. Italy has had a significant deterioration in competitiveness since the mid-1990s which is also seen through the persistent losses of market shares. These losses are only partly reflected in the steady worsening of Italy’s external position, given the relatively subdued growth of domestic demand. Weak productivity developments are the main explanatory factor. While private sector indebtedness is relatively contained in Italy, largely thanks to the financial position of households, the level of public debt is a concern, especially given the weak growth performance and structural weaknesses. This, in turn, potentially puts strain on private sector balance sheets».[15]

In its 2012 in-depth review of Italy, the Commission concluded that «Italy is experiencing serious macroeconomic imbalances, which are not excessive but need to be addressed. In particular, macroeconomic developments in the area of export performance deserve attention as Italy has been losing external competitiveness since euro adoption. Given the high level of public debt, enhancing the growth potential should be a key priority so as to reduce the risk of adverse effects on the functioning of the economy».[16]

In its 2013 in-depth review of Italy, the Commission concluded that Italy “is experiencing macroeconomic imbalances, which require monitoring and decisive policy action. In particular, export performance and the underlying loss of competitiveness as well as high public indebtedness in an environment of subdued growth deserve continued attention in a broad reform agenda in order to reduce the risk of adverse effects on the functioning of the Italian economy and of the Economic and Monetary Union, notably given the size of the Italian economy.”[17]

The National Reform Programme submitted by then Prime Minister Mario Monti and Minister of the Economy and Finance Vittorio Grilli, in accordance with Minister for European Affairs Enzo Moavero Milanesi in April 2013 contains a number of measures to correct to macroeconomic imbalances. (http://ec.europa.eu/europe2020/pdf/nd/nrp2013_italy_en.pdf).

In the complete Italian version of the document (http://ec.europa.eu/europe2020/pdf/nd/nrp2013_italy_en.pdf, but not in the aforementioned version in English), at pages 111-316, one can find a specific analysis of all the reforms undertaken, «in detail».

Those include various measures on:

V.1 debt reduction, efficiency and quality of public expenditure;

V.2 Health;

V.3 Education & Research;

V.4 Labour market and training;

V.5 Welfare and Poverty;

V.6 programs co-financed by the European Structural Funds;

V.7 Enhancement of cultural heritage;

V.8 tax reform and fight against tax evasion;

V.9 Competition;

 V.10 Infrastructures;

 V.11 Energy and Environment;

V.12 support for entrepreneurship;

V.13 Simplification of bureaucracy and transparency;

V.14 a report on the State of art in the implementation of reforms


presented in the English version (pages 3-12) as measures:

I1) keeping «Italy and Europe along the same path»; I.2) taking «the crisis as an opportunity»; and with attention to: I.3) Balance of the public accounts; I.4) A Public Administration closer to businesses and citizens; I.5) More support to businesses and a more favourable entrepreneurial environment; I.6) Southern Italy: an occasion for relaunching the economy; I.7)           A grater impulse to the market; I.8)   Research and innovation: businesses and digital households; I.9) More quality in the educational system; I.10) Legality and certainty of the law; I.11) A modern and competitive fiscal system; I.12) a more flexible and inclusive labour market; I.13) Keeping up the guard: monitoring.

Regulation No 1175/2011 on strengthening budgetary surveillance positions    
(
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:1997R1466:20111213:EN:PDF)

MTO procedure
VII.7
What changes to the rules on the budgetary process are made to accommodate the amended Medium-term Budgetary Objective (MTO) Procedure?

The concept of MTO was introduced in Law 243/2012, which, adopted by an absolute majority of the members of both Houses of Parliament under the new sixth paragraph of Article 81 of the Constitution at the end of 2012, dictates the basic standards and criteria to ensure the balance between revenue and expenditure in budgets and sustainability of the debt of all Italian levels of governments.

According to Article 3 of Law 243/2012, the budget balance can be considered as achieved when the structural balance meets at least one of the following conditions:

a) it is at least equal to the medium-term objective or shows a deviation from the medium-term objective lower than that considered significant by the European Union norms (excessive deficit procedure) and by the international agreements on the matter (Fiscal compact), i.e. up to 0.5 percent of GDP;

b) it ensures the respect of the adjustment path towards the medium-term objective in cases of exceptional events and programmatic differences giving place to correction mechanisms, or it shows a deviation from the same adjustment path significantly lower than that considered as significant by EU norms (i.e. up to -0.5 per cent in relation to the aim).

European semester 
VII.8
What changes have to be made to the rules and practices on the national budgetary timeline to implement the new rules on a European Semester for economic policy coordination (section 1-A, article 2-a consolidated Regulation 1466/97)?

Law 7 April 2011, n. 39 has modified the budgetary cycle of Law n. 196/2009 (see above) and the means used for budget planning in order to create an alignment between national planning and the timing of the European Semester.

To allow this:

– the Government, by 10 April of each year, submits to the Parliament the Economy and Finance Document (DEF), which has replaced the Public Financing Decision (DFP) introduced by Law n. 196/2009, and includes both the Public Financing Decision – previously to be submitted in mid-September – and the content of the Economy and Public Financing Report. This DEF also specifies the Stability Plan scheme (with measures to accelerate the reduction of public debt) and the National reform plan scheme (outlining country’s priorities, main reforms to be made, national macro-economic imbalances, macroeconomic factors that affect competitiveness, the progress of reforms which have already been set up, foreseeable effects of suggested reforms), these to be submitted to the EU Council and Commission by 30 April of each year

– an integration of the DEF, by 30 June, the Minister of Economy and Finance submits to the Parliament an attachment outlining the results of the monitoring on the public financing balance deriving from the measures stated in the budget manoeuvres implemented during the year

– an updating note to the Economy and Finance Document is supposed to be submitted by the 20th September, no longer in connection to the occurrence of considerable gaps in public financing fluctuation patterns, but as a mandatory requirement, with an update of the programmatic objectives and a macro-economic and public financing estimate

– the Stability bill and the State Budget bill have to be submitted to Parliament by 15 October of each year.

MTO difficulties        
VII.9
What political/legal difficulties
did Italy encounter and what debates have arisen, in particular about implications of the regulation for (budgetary) sovereignty, constitutional law and the budgetary process?

Italy did not encounter proper problems or obstacles in the reform process.

But some critical points were debated in Parliament, including:

– the balance of powers between the Chambers and the executive in the budgetary process, not only in terms of a budgetary process becoming more and more a dialogue among executives (MP Duilio, plenary discussion of the lower house, 7 February 2011: «Here we measure not only a complex and a bit sophisticated issue, but also the level of centrality of the Parliament in carrying out such operations. In fact, to put it differently, and more briefly, the process that is developing also at the European level – moving from the European Semester, previously recalled – is likely to refer to a dialogue between the executives, rather than between the legislative assemblies»),[18] but also in relation to the timing for a proper examination of the related bills by Parliament

– the coordination of the reform on the budgetary process with the ongoing reform on the so called “fiscal federalism” (Law n. 42/2009), and the related problems of budgetary coordination between the different administrative levels.[19]

Some of these problems were then tackled by Law 234/2012 (General rules on Italy’s participation in the formation and implementation of legislation and policies of the European Union) (see Question VIII.6).

Respect MTO     
VII.10
How is respect of the Medium-term Budgetary Objective included in the national budgetary framework (section 1A, article 2a consolidated Regulation 1466/97)?
Chapter II of Law no. 243 of 2012 regulates the principles and rules of the budgetary process in relation to all levels of government. They relate to: definition of a balanced budget, the introduction of norms on the evolution of expenditure and rules concerning the sustainability of public debt.

The principle of a balanced budget for government is defined in Article 3, precisely in relation to the medium-term objective (MTO) established under European Union law as a benchmark for the evaluation of the financial position of each Member State. In particular, in the programming phase the budget policy objectives should be set to allow “at least” the respect of the MTO or otherwise respect of the adjustment path towards the objective. In the ex-post evaluation phase, the equilibrium is considered achieved if the structural balance of the consolidated budget of the public administrations is at least equal to the MTO, or coherent with the adjustment path as indicated in earlier planning documents.

For the case of a deviation from the MTO, a specific procedure for the invocation of “exceptional circumstances” was formalized in Article 6 of  Law no. 243 of 2012. It was used for the first time on 16th April 2014.[20]

Current MTO    
VII.11
What is Italy’s current Medium-term Budgetary Objective (section 1A, article 2a consolidated Regulation 1466/97)? When will it be revised?

0.0 % since 2005 (see P. Biraschi, M. Cacciotti, D. Iacovoni and J. Pradelli, “The New Medium-Term Budgetary Objectives and the Problem of Fiscal Sustainability After the Crisis.”, Ministry of Economy and Finance – Department of the Treasury Working Paper[21] , 2010, page 19), confirmed in 2012.

Adoption MTO  
VII.12
By what institution and through what procedure is Italy’s Medium-term Budgetary Objective adopted and incorporated in the stability programme (Eurozone, article 3(2)(a) consolidated Regulation 1466/97)?

Art. 9 of Law 196/2009, as amended by Law 13/2011, states that «(I)n preparing the update of the stability program to be presented to the Council of the European Union and the European Commission, the Government transmits to the Chambers of the Parliament and to the Permanent Conference for the coordination of public finance» – this last, a new organ set by Art. 5 of Law 42/2009 and Articles 33/37 D.Lgs. 68/2011, chaired by the President of the Council of Ministers and composed of representatives of the various institutional levels of government, which contributes to the definition of the objectives of public finance, and works for the monitoring and control of the financial system of regional and local authorities and for the conciliation of the interests of central and local governments in the implementation of fiscal federalism – «within fifteen days prior to the date of submission agreed at the European level, an updated scheme of the Stability Programme which includes a picture on medium-term prospects of Italian economic policy within the European Union, with an indication of the guidelines for its implementation at the level of national policies».

Art. 12 of Law 196/2009 provides that an annual «Report on the Economy and Public Finance» (to be presented by the government to the Parliament by 15 of April of each year) shall also give information, when available, on the opinion of the Council of the European Union on the updating of the Stability Programme.

Regulation No 1177/2011 on the excessive deficit procedure
(
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:1997R1467:20111213:EN:PDF)

EDP difficulties           
VII.13
What political/legal difficulties
did Italy encounter and what debates have arisen, in particular about implications of the regulation for (budgetary) sovereignty, constitutional law and the budgetary process?

No legal or political difficulties were encountered nor did any significant debates specific to Regulation 1177/2011/EU arise apart from the general debate on the six pack (see under Question VII.1).

There are no specific changes to the budgetary procedure to accommodate the new amendments to the excessive deficit procedure.

The only recent, relevant change in this respect is the new Art. 4 of the Government Decree («decreto legislativo», delegated legislation) n. 91/2011, according to which, with a view to the harmonization of budgetary systems of the various public administrations, «(I)n order to achieve the quality and transparency of public finance data, as well as the improvement in the capacity of connection of the budgets of all the levels of government with the European System of accounting records, the public administrations … are required to adopt a common plan of accounts», among the other things «aimed to ensure compliance with Regulation (EC) No. 479/2009 of the Council of 25 May 2009 on the application of the Protocol on the excessive deficit procedure annexed to the Treaty establishing the European Community, and subsequent modifications»[22] .


Regulation No 1173/2011 on effective enforcement of budgetary surveillance
(
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32011R1173:EN:NOT)
Sanctions
VII.14
What political/legal difficulties
did Italy encounter and what debates have arisen, in particular about implications of the regulation for (budgetary) sovereignty, constitutional law and the budgetary process?

No legal or political difficulties were encountered nor did any significant debates specific to Regulation 1173/2011/EU arise apart from the general debate on the six pack (see under Question VII.1).

But, as already highlighted in that context, it is important to note that in connection with the debate held in the XIV Committee of the Senate on European affairs, on 11 and 16 November 2010 (see http://leg16.senato.it/japp/bgt/showdoc/frame.jsp?tipodoc=SommComm&leg=16&id=512051; http://leg16.senato.it/japp/bgt/showdoc/frame.jsp?tipodoc=SommComm&leg=16&id=512300), a general report on all the measures, in the framework of the Reasoned Opinion on Subsidiarity, was issued,[23] criticizing, among the other things, the use of the criterion of reverse majority in the imposition of sanctions.

General changes     
VII.15
What further changes have to be made to the rules on the budgetary process in order to comply with the Six-Pack rules?

There were no amendments to the rules on budgetary process to accommodate the possibility of sanctions for non-compliance with the Medium-term Budgetary Objective Procedure. pursuant to Art. 7 of the Decree 149/2011, there was already the possibility for the central government to impose sanctions on regions, local authorities and other public administrations in case of failure to respect the “Internal Stability Pact” (see Question VII.2).

Moreover, according to Law n. 234/2012 (see Question VIII.6) there is today the possibility of an «azione di rivalsa» (a retaliatory action) of the State against Regions whenever the violation of EU Law implies a responsibility of the Italian Republic and an infringement proceeding reaches the Court of Justice and eventually ends up with a condemnation.

And also, it is relevant to note in this respect that in the last years the Italian Constitutional Court has started to strike down sections of regional laws that infringe Art. 81.4 of the Constitution on the balance between revenue and expenditure (see for instance the cases for Campania and Friuli-Venezia Giulia in the decisions n. 70/2012[24] and 115/2012[25] ). See also on this matter the judgment n. 8/2013 of the Constitutional Court discussed under Question X.12.

 

Miscellaneous
VII.16
What other information is relevant with regard to Italy and the Six-Pack?

It is worthy in any case to mention the amendments set by Law 183/2011 and Law 228/2012 to the discipline of the “Internal Stability Pact” (see Question VII.2), in particular in relation to sanctions (see Question VII.15) and to the inclusion of municipalities under 5000 inhabitants in its financial plans.[26]

It is submitted that parliamentary standing orders should be amended in the future, otherwise legislative updates cannot receive an effective implementation in practice

[1]               See in particular http://www.politicheeuropee.it/attivita/18197/relazione-consuntiva-2011-e-programmatica-2012, and the archive of all the reports, including the more recent ones, at the page http://www.politicheeuropee.it/attivita/44/archivio-relazioni.

[2]               «The Italian government has played an important role in the definition of the excessive imbalance procedure (procedures Macroeconomic imbalances – MIP) proposed by the Commission and now part of the “six-pack”. In the analysis of the means for preventing macroeconomic imbalances (Alert Mechanism Report and Scoreboard), contained in the new economic governance package, the attention of the Member States countries has focused in particular on the indicators to be used in the two areas chosen for identify macroeconomic imbalances: the competitiveness and the internal and external imbalances. The Government has repeatedly stressed the need to develop transparent methods, based on clear and shared analysis, the assessment of national progress in implementing the Europe 2020 Strategy.»: Relazione Programmatica 2012 (see note 24),  p. 15.

[3]               http://leg16.senato.it/japp/bgt/showdoc/frame.jsp?tipodoc=SommComm&leg=16&id=512300, Allegato 1, “OSSERVAZIONI APPROVATE DALLA COMMISSIONE SUGLI ATTI COMUNITARI NN. COM (2010) 522 definitivo, COM (2010) 524 definitivo, COM (2010) 525 definitivo, COM (2010) 526 definitivo E COM (2010) 527 definitivo SOTTOPOSTI AL PARERE MOTIVATO SULLA SUSSIDIARIETA’”.

[4]               Art. 8:
«Criterio direttivo di delega al Governo per il recepimento della direttiva 2011/85/UE del Consiglio, dell’8 novembre 2011, relativa ai requisiti per i quadri di bilancio degli Stati membri).

                 1. Nella predisposizione dei decreti legislativi per l’attuazione della direttiva 2011/85/UE del Consiglio, dell’8 novembre 2011, relativa ai requisiti per i quadri di bilancio degli Stati membri, il Governo è tenuto a seguire, oltre ai princìpi e criteri direttivi di cui agli articoli 1 e 2 della presente legge, anche il seguente criterio direttivo specifico: coordinare l’attuazione del capo IV della direttiva con le disposizioni della legge di cui all’articolo 81, sesto comma, della Costituzione, come sostituito dalla legge costituzionale 20 aprile 2012, n. 1, da approvare entro il 28 febbraio 2013, cui sono riservate in particolare l’istituzione di un organismo indipendente, al quale attribuire compiti di analisi e di verifica degli andamenti di finanza pubblica e di valutazione sull’osservanza delle regole di bilancio, nonché l’introduzione di specifiche regole di bilancio.»

[5]               The process for the setting up of the independent body is still ongoing: see law n. 243/2012, the Joint Protocol of  the two Chambers of December 2013, and below under Question VII.5.

[6]               http://ec.europa.eu/economy_finance/publications/occasional_paper/2013/pdf/ocp128_en.pdf.

[7]               Art. 8:
«Criterio direttivo di delega al Governo per il recepimento della direttiva 2011/85/UE del Consiglio, dell’8 novembre 2011, relativa ai requisiti per i quadri di bilancio degli Stati membri).

                 1. Nella predisposizione dei decreti legislativi per l’attuazione della direttiva 2011/85/UE del Consiglio, dell’8 novembre 2011, relativa ai requisiti per i quadri di bilancio degli Stati membri, il Governo è tenuto a seguire, oltre ai princìpi e criteri direttivi di cui agli articoli 1 e 2 della presente legge, anche il seguente criterio direttivo specifico: coordinare l’attuazione del capo IV della direttiva con le disposizioni della legge di cui all’articolo 81, sesto comma, della Costituzione, come sostituito dalla legge costituzionale 20 aprile 2012, n. 1, da approvare entro il 28 febbraio 2013, cui sono riservate in particolare l’istituzione di un organismo indipendente, al quale attribuire compiti di analisi e di verifica degli andamenti di finanza pubblica e di valutazione sull’osservanza delle regole di bilancio, nonché l’introduzione di specifiche regole di bilancio.»

[8]               http://www.senato.it/leg/16/BGT/Schede/Ddliter/37909.htm. See on this F. Socci, L’ingorgo europeo al Senato e la riforma della legge comunitaria, in Rassegna del Forum dei Quaderni Costituzionali, available at the website http://www.forumcostituzionale.it/site/images/stories/pdf/documenti_forum/paper/0402_socci.pdf.

[9]               In Italy a constitutional law is a law adopted with the same procedure of constitutional reforms and enjoying the same rank among the sources of law as the Constitution (although it is external to the text of the Constitution).

[10]            See the “Protocollo per l’attuazione del Capo VII della legge 24 dicembre 2012, n. 243, relativo all’istituzione dell’Ufficio parlamentare di bilancio”, available at the website http://documenti.camera.it/leg17/resoconti/commissioni/bollettini/pdf/2013/11/21/leg.17.bol0125.data20131121.com15.pdf, p. 10.

[11]            See the public announcement of the Presidents of the two parliamentary chambers at the website http://www.senato.it/comunicato?comunicato=47307.

[12]              As already said in the answer to question VII.1, a specific allusion to the enforcement measures of the Regulation 1174/2011 came in the Reasoned Opinion on Subsidiarity attached by the Parliament to the official “parliamentary acts” of the Commission XIV of the Senate on European Affairs (http://leg16.senato.it/japp/bgt/showdoc/frame.jsp?tipodoc=SommComm&leg=16&id=512300), in which an argument was made for the limitation of the criterion of reverse majority voting only to the part of the sanctions on interest bearing and non-interest-bearing deposits for “non virtuous” Member States, keeping the current system of voting (by qualified majority) for each subsequent sanction («otherwise an imbalance between the right of initiative of the European Commission and the permanence of the ultimate decision-making power in the hands of the Council» would arise).

[13]              G. Rizzoni, Il “semestre europeo” fra sovranità di bilancio e autovincoli costituzionali: Germania, Francia e Italia a confronto, in Rivista dell’Associazione Italiana dei Costituzionalisti, 4/2011, available at the website http://www.associazionedeicostituzionalisti.it/sites/default/files/rivista/articoli/allegati/Rizzoni.pdf .

[14]              Alert mechanism report 2012. 14.02.2012. COM(2012) 68 final, p. 19 (http://eur-lex.europa.eu/Result.do?T1=V5&T2=2012&T3=68&RechType=RECH_naturel&Submit=Search). In the 2013 report the Commission concluded that it “finds it useful, also taking into account the identification of a serious imbalance in May, to examine further the risks involved and progress in the unwinding of imbalances in an in-depth analysis.” Alert mechanism report 2013. 28.11.2012. COM(2012) 751 final, p. 11 (http://eur-lex.europa.eu/Result.do?T1=V5&T2=2012&T3=751&RechType=RECH_naturel&Submit=Search).

[15]              Alert mechanism report 2012. 14.02.2012. COM(2012) 68 final, p. 15.

[16]              European Commission, Macroeconomic Imbalances Italy, Occasional Paper 107, July 2012, p. 3. http://ec.europa.eu/economy_finance/publications/occasional_paper/2012/pdf/ocp107_en.pdf

[17]              European Commission, Macroeconomic Imbalances Italy, Occasional Paper 138, March 2013, p. 3. http://ec.europa.eu/economy_finance/publications/occasional_paper/2013/pdf/ocp138_en.pdf.

[18]              http://documenti.camera.it/leg16/resoconti/assemblea/html/sed0430/stenografico.htm, p. 15.

[19]              Ibidem, MP Cambursano, p. 25.

[20]              See http://www.lastampa.it/2014/04/16/economia/def-giallo-della-lettera-di-padoan-allue-c-lok-in-commissione-venerd-il-cdm-p52FgGea9IpaM0GA8D6g8M/pagina.html.

[21]              http://www.dt.tesoro.it/export/sites/sitodt/modules/documenti_en/analisi_progammazione/working_papers/WP_8_.pdf

[22]              Art. 4

                 Piano dei conti integrato

                 1. Al fine di perseguire la qualità e la trasparenza dei dati di finanza pubblica, nonchè il miglioramento della raccordabilità dei conti delle amministrazioni pubbliche con il sistema europeo dei conti nell’ambito delle rappresentazioni contabili, le amministrazioni pubbliche che utilizzano la contabilità finanziaria, sono tenute ad adottare un comune piano dei conti integrato, costituito da conti che rilevano le entrate e le spese in termini di contabilità finanziaria e da conti economico-patrimoniali redatto secondo comuni criteri di contabilizzazione.

                 2. Le voci del piano dei conti sono definite in coerenza con il sistema delle regole contabili di cui all’articolo 2, comma 2, nonchè con le regole definite in ambito internazionale dai principali organismi competenti in materia, con modalità finalizzate a garantire il rispetto del regolamento (CE) n. 479/2009, del Consiglio, del 25 maggio 2009, relativo all’applicazione del protocollo sulla procedura per i disavanzi eccessivi, allegato al Trattato che istituisce la Comunità europea, e successive modificazioni.

[23]              http://leg16.senato.it/japp/bgt/showdoc/frame.jsp?tipodoc=SommComm&leg=16&id=512300, Allegato 1, “OSSERVAZIONI APPROVATE DALLA COMMISSIONE SUGLI ATTI COMUNITARI NN. COM (2010) 522 definitivo, COM (2010) 524 definitivo, COM (2010) 525 definitivo, COM (2010) 526 definitivo E COM (2010) 527 definitivo SOTTOPOSTI AL PARERE MOTIVATO SULLA SUSSIDIARIETA’”.

[24]              http://www.cortecostituzionale.it/actionSchedaPronuncia.do?anno=2012&numero=70.

[25]              http://www.cortecostituzionale.it/actionSchedaPronuncia.do?anno=2012&numero=115.

[26]              http://leg16.camera.it/522?tema=104&Patto+di+stabilit%C3%A0+interno#paragrafo2384.