One of the main causes of slow growth is the low productivity of the public sector, which makes up
about 50 per cent of Italy’s economy.
Improving the productivity of the public sector is believed to be one of the key drivers of economic
growth and sustainable public finances as it would free up resources for new spending priorities.
(i) Key institutional drivers that may contribute to improve public sector efficiency could be found,
mainly, in:
(ii) budgetary reform (focused on performance);
(iii) streamlining roles and responsibilities of the public administration (e.g. redistribution of
responsibilities, definition of new regulatory roles, reduction of bureaucracy),
(iv) functional and political decentralisation to sub-national governments;
(v) certain human resource management practices (e.g. performance evaluation and merit systems,
human resource planning and internal labour mobility, training, pay increase and incentives,
public servants’ mobility between public and private, recruitment effectiveness such as capacity
to attract and keep top talent);
(vi) using of the new technologies (e-government, e-procurement).Improving the productivity of the public sector entails increasing its effectiveness, efficiency, quality and
the benefits of services which citizens require in exchange for paying taxes.
“Productivity of public spending” 3 is seen as the synthesis and solution to the main priorities of Italy’s
economy: the productivity and the sustainability of public finances.
It is therefore one of the main challenges which the government has to face and one of the critical success
factors if growth is to pick up again.
The Italian government has identified the spending review as the modern tool for public finance planning
to improve the quality and efficiency of public services while ensuring a cost-effective use of resources.
2. Outline of 2007 Budget Law
The strategic priority of the 2007 budget package is to reconcile the structural adjustment of public
finances with measures aimed at supporting economic growth and greater social justice.
The goal is to bring developments in public finance, especially current expenditure, back onto a track
leading to a balanced budget and sustainable public finance in the medium/long term through the
reduction and rationalisation of public spending.
In 2007 Financial Law, the effort to review public expenditure programs is based essentially on four
actions:
(i) the spending review;
(ii) reforming the budget transparency and accountability through the budget reclassification;
(iii) the reexamination of parliamentary procedures;
(iv) performance based budgeting (definition of performance indicators).(^3) See: Padoa Schioppa, T, speech “Presentation of the OECD 2007 Economic Review Italy ”, Rome 4th June 2007,
available on the internet site http://www.tesoro.it/web/area_Ministro/disind.asp?mCod=30&docType=2