Why Italy’s newly proposed budget is the right step forward

EPA-EFE/RICCARDO ANTIMIANI

Giuseppe Tria, Italy's Minister of Economy, during the press conference after the meeting with Mario Centeno, President of Eurogroup, at the Ministry of Economy in Rome, November 9, 2018.

Why Italy’s newly proposed budget is the right step forward


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New Europe’s Federico Grandesso spoke exclusively with Massimo Bitonci, Italy’s Under Secretary for Economy and Finance, who underlined the positives of the Italian budget plan that was recently rejected by the European Commission, and also discussed some weaknesses that could help get the Italian budget “recipe”.

NE: Undersecretary, your financial plan will be going to ECOFIN (the Economic and Financial Affairs Council)  after being rejected by the European Commission. What is your message to the Eurozone members?

This law is pushing for development and investments, while also having an important social meaning; it is morally important to support poor families through a “citizenship wage”. This is going to be a useful measure, and absolutely not a tool to encourage indolence and laziness in society.

Another important part of this law is the early retirement initiative and the reform of the pension law,  where there will be 400,000 new jobs, 160,000 in the public sector alone. This means a major renewal, with fresh working forces at all levels, including among civil servants and those with high management responsibilities.

There will be an important turnover among the police, which will have a considerable impact on our security. And last but not least, we pushed for a series of measure to unblock €85 billion in investments and a strategy to pacify the difficult relations between citizens and the fiscal authorities. The initiative we introduced – we call it  “fiscal peace” – is not an amnesty, but a new more balanced methodology given to a citizen who wants to close all its outstanding bills on fiscal matters.

The list of measures is long, we have planned for a series of initiatives that tackle the entrepreneurial crisis in Italy which help companies who are in debt to creditors. The only tax we introduced is the one for the money transfer businesses. There is a need for better control of these money transactions that are made by non-EU citizens because we noticed some illegal transactions in the past.

If there are forecasts of growth and GDP reduction, as underlined at EU level and by the ISTAT ( Italian National Statistics Institute), the idea of pushing for a “non-expansionary” financial plan. according to us, is a big mistake.

NE: Are there other parts of this law that the EU should approve?

The revamp of the investment chapter is very important to show how this government is trying to push the dialogue on investments and with companies who have a stake held by public actors like Ferrovie dello Stato (the Italian rail network) and ANAS (Italy highway and motorway manager). We decided to use some of our resources to block VAT growth to the tune of €12.5 billion. I think Brussels should have evaluated this initiative as a net positive because siginificant VAT growth would have hit certain very fragile sectors of the economy and consumers.

NE: Unemployment is a big issue for your government, in this budget plan you have allocated important financial renounces for the reform of employment centres. Can you explain why?

In Italy, the national employment centres are inefficient and are not able to match the realities of supply and demand. Job offers in specific fields are available, but they don’t receive an adequate response from potential candidates. It’s key to reorganise these centres with the interaction of private actors like temp agencies.

NE: Why so many enemies in Europe?

Now that Italy has decided to move ahead with an upstream budget law, some EU countries want to block it in order to maintain their supremacy over the way things are done. This is not going to happen, because in the spring, after the EU parliamentary elections, I hope there will be an overwhelming amount of success for all the movements and parties that are pushing for the maximum autonomy of each sovereign European country.

Without a doubt, there will be a major victory against the euro bureaucracy, against EU obligations, and all these limitations that are purely numerical which even the “technocrats, the ones who put them in place, have declared as purely theoretical.

The famous 3% is the best example. It is just a number. The possibility of “producing” debt should be evaluated on a case-by-case basis. But this is nothing but a cold number that is completely disconnected from the realities of the Italian economy.

NE: It seems that France and Germany are going through a difficult political period, do you think this element could help Italy with the new budget proposal?

The weakness of some governments could encourage the implementation of measures by individual countries. This is also a very delicate period for France and Germany, which could help them accept the concept of sovereignty for a country that wants to determine its own economic policy, one that is centred on the development of the economy.

NE: What do you think about the role EU Economic Affairs Commissioner Pierre Moscovici played in this “battle” for your budget proposal?

He made some speeches and offered even more opinions that were not in line with his role as an impartial referee. More often than not, he made some personal nonsense comments that showed that he did not understand what is happening in Italy. He should respect the policy that needs to be implemented. These are crucial decisions of economic policy where France and Germany absolutely should not step in. Italy is not Germany or France, nor is it an underdevelopment country. We are the second country in Europe for private savings, which are double the public national debt. The EU should consider in their analysis, especially in this case, the very solid assets and savings held by Italian enterprises and citizens.

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