Regional Authorities’ Madcap Spending

Outgoings up 75% in ten years in the name of autonomy.

“€454,000 for Zelkova!” When Sicilians read the news, they might have thought Zelkova was one of the bunga bunga girls. But no. It’s actually a rare plant that the island’s regional authority wants to protect, starting with a €150,000 consultancy contract (“having verified the lack of staff on the payroll”). It’s an egregious example of how, in the name of autonomy, Italy’s regions remain deaf to belt-tightening appeals. Sicily’s regional chair Raffaele Lombardo writes in his blog that the recent financial law is “a budget of extraordinary rigour”. Well, if he says so... But there again Sicilian newspapers have been pointing out for weeks that nothing has changed.

Take CEFOP, which employs about 8,000 trainers. It’s one of Italy’s bloated professional training bodies, which for decades have been devouring €250-400 million a year. Following the example of Alitalia, the regional authority set up a “bad company”, to shoulder CEFOP’s €82 million debt, along with a pristine “new company”, to which it gave a dowry of €29.5 million. Or take the application to central government to use €269 million from FAS development area funds to paper over some of the region’s healthcare deficit. Take the decision to obtain a new €500 million loan. Take the authorisation of municipalities, provided they can afford it (pre-election hot air – the municipalities have no money), to give open-ended contracts to 22,000 short-term workers, despite nationwide hiring bans. And so it goes on. The stories get even more astounding. Mr Lombardo donated Zorro, an elderly horse, to the spinal injury centre at Villa delle Ginestre so it could be used for hippotherapy and kept for €2,335 a month (twice as much as thoroughbred therapy costs, pool physio included) before so much as a saddle had been purchased for the patients.

Let’s cross the Strait and head north. The Corriere di Calabria reports that 55-year-old regional councillor Pietro Giamborino has taken his pension, minus a 5% penalty, having served just one legislature, when millions of Italians will now have to wait until age 67 to collect their own retirement pensions. Then there are the “entertainment expenses” of regional assembly president Francesco Talarico, for which a jaw-dropping €185,000 has been set aside in 2012. This is more than twice as much as the president of Germany Horst Köhler spent on entertainment in 2006.

Travel further north and you find that Campania’s right-of-centre governing majority has just done away with all the bother of finding funds before it passes a law. It had taken nine years to put serious restrictions in place. In 2002 during Antonio Bassolino’s first administration, a regulation was introduced to make sure that financial cover was identified before any decision was taken but the rule was never applied. Finally, a March 2011 vote approved the creation of an office of the regional executive council to verify the financial cover of proposals put to the council. It was the only way to combat pork barrel politics. But there was an about-turn a few days ago, despite the crisis and government warnings. Thanks to the votes of twenty-four councillors, bills presented to the regional assembly will no longer have to be approved by the financial control office. All that is needed to set in motion a possibly spendthrift regional law is a “technical report” from the “offices of the regional council with competence for finance and budgeting”, which is another matter entirely.

Who pulled off this coup? As we were saying, it was supporters of regional chair Stefano Caldoro, who was counting on the now-defunct office to stem the endless flow of spending. Worried about the accounts, Mr Caldoro went on the attack with a proposal to write the new constitutional principle of budget-balancing into the regional statute. Will he pull it off? Who knows but he could well be tilting at windmills.

“Autonomy!” is the cry from regional chairs every time central government attempts to trim their privileges. The Constitutional Court is logjammed with their protests, most of which are successful. There are actions appealing the limit on engine size of official cars, the privatisation of local services, the tolls on ANAS-managed roads and the new IMU property tax. To say nothing of protests at cuts to regional councils. Eleven regions have appealed to the Constitutional Court against article 14 of Giulio Tremonti’s final budget last August, which would trim 343 seats from their assemblies from the next election. Eleven. The reason? “It is absolutely imperative to oppose the wave of measures targeted at our prerogatives”, explained Ugo Cappellacci, who chairs the Sardinian regional authority. The trouble is that peevish claims of autonomy (“it’s up to us to do away with provincial authorities, allowances and patronage jobs”) have turned all twenty regions into no-go areas where spending is out of control.

The proof is that whereas per capita GDP shrank five points between 2000 and 2009, spending by Italy’s regional authorities rose from €119 billion to €209 billion. Today, the regions account for more than a quarter of all public spending. The Mestre-based CGIA small business association says that the regions spent 75.1% more, or 53% in real terms after taking inflation into account. This is more than twice the already astronomic rise (25%) in public-sector spending overall, which went from €581 billion to €727 billion net of interest. We’re talking €89.7 billion more every year, of which barely half (€45.9 billion) is attributable to healthcare, the most intractable item on regional authority balance sheets. Leading the charge of the spendthrifts is Umbria, where outgoings rose by 143%, followed by Emilia-Romagna (+125%), Sicily (+125.7%), Basilicata (+115.2%), Piedmont (+91.8%) and Tuscany (+84.6%).

If Italy’s wealth had increased by a similar amount, we’d be all right. But does the – admirable – right to autonomy justify this cash haemorrhaging? Is it acceptable that healthcare costs, for which the regions have been responsible since 1978, should present such huge contrasts? Or that every resident in Lombardy should fork out €21 for regional authority staff against €70 in Campania, €173 in Molise or €353 in Sicily? If all the regions toed the Lombard line, we would save €785 million a year. Can Italy still afford the “hand-out laws” that have seen Lazio, for example, pass 250 resolutions (all of which have attracted the attention of the Court of Auditors, according to l’Espresso magazine) worth around €8.6 million for initiatives including a re-enactment of the battle of Lepanto at Sermoneta and Sezze’s artichoke fair? There are also the grandiose projects, the public-private enterprises often set up merely to distribute patronage and a general megalomania. Our twenty regions have twenty-one offices in Brussels, of which Veneto’s alone cost €3.6 million. Twenty regions have 157 mini-embassies abroad, from the US to Tunisia. Those twenty regions also have hundreds of offices and properties up and down Italy at unimaginable expense.

Like an example? A Left, Ecology, Freedom (SEL) exposé reveals that the Lazio regional authority has thirteen residential buildings and 367 flats yet still manages to spend €20 million a year on rent. The region has also green-lighted extension work on its Pisana offices, where two new buildings will go up at an estimated cost of €10 million. Is it really necessary? And in times like these was it necessary to invest €16.3 million, as the Piedmont regional council did, in purchasing and restructuring the former Turin branch of the Banco di Sicilia? Or allocate €87 million for the new Puglia regional council building, contracted last August? Or spend an astonishing €570 million on a new building for the Lombardy regional authority, a palace complete with heliport and chairman’s apartment whose furnishings alone cost €127,000?

English translation by Giles Watson

www.watson.it