c) health, through a new agreement on health;d) welfare, through a new organisation of the welfare system.The spending review and the green book of public expenditure: improving quality and efficiency of
public expenditure
In April 2007 the Prime Minister indicated the first five ministries that will carry out a spending review
(Justice, Home Affairs, Infrastructure, Transport and Education), which account for about a third of the
State’s current expenditure (net of other interest costs and other financial accounts).
The Green Paper on public spending was submitted in September and provides clear indications on how
to improve the effectiveness and efficiency of some sectors of public spending4.
Measuring the effectiveness and efficiency of public spending is not an easy task; it requires paying great
attention to homogeneous spending sectors and aggregates on the basis of a rigorous analysis: this is the
approach that has been followed in drawing up the Green Paper.
The approach to the spending review followed in drawing up the Green Paper, which is based on
microeconomic analysis, also envisages an analysis of individual programmes within the various
spending areas.
In addition to the spending review programme, a Technical Public Finance Commission has been set up
with the task of coordinating the activities of Ministry experts and consultants.
The first data5 gathered through this activity shows that it is necessary to proceed with four major types
of action:
(i) rationalisation of the regional and local government organisation;
(ii) review of administrative procedures and staff organisation;
(iii) review of the public transfers policy;
(iv) review of the structure of budgets and relations with the Ministry of Finance.Problems have been identified in the distribution of resources at regional and local level, especially in the
cases of the Ministry of Home Affairs and the Ministry of Justice.
The spending review has also pointed out the need for some ministries to overhaul their administrative
and organisational procedures, especially with regard to work organisation and manning strength.
With regard to the public transfers policy – especially as far as infrastructure is concerned – inefficient
practices have been identified, such as transfers to firms for temporary purposes that have gradually
become permanent and which need to be reviewed on a cost-benefit- analysis basis.
The spending review is actually showing that a critical issue is the actual transparency, simplicity and
usefulness of the current ways in which budgets are drawn up and relations of local government entities
with the Ministry of Finance are maintained (off-budget debts of general government, sizeable and
constant discrepancy between initial and final appropriations leading to a delayed allocation of funds,
failure to reallocate typical revenues, revenues for which individual ministries are responsible that are not
booked by the Ministry of the Economy and often only partly and belatedly transferred to the relevant
ministries).
An important contribution to the rationalisation of spending has also been made by the Prime Minister’s
Directive laying down the guidelines for the drawing up of the 2008 Budget envisaging that local
(^4) The complete report is available on the internet site: http://www.tesoro.it/web/apri.asp?idDoc=18185
(^5) See Mid - Term Review on Public Expenditure available on the internet site:
http://www.tesoro.it/web/apri.asp?idDoc=18406